Document:

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                                                                    Exhibit 10.4

                                 VIDAMED, INC.

             AMENDED AND RESTATED 1995 EMPLOYEE STOCK PURCHASE PLAN
                      (As amended through January 4, 2001)

     The following constitute the provisions of the 1995 Employee Stock Purchase
Plan of VidaMed, Inc.

     1.  Purpose.  The purpose of the Plan is to provide employees of the
         -------
Company and its Designated Subsidiaries with an opportunity to purchase Common
Stock of the Company through accumulated payroll deductions. It is the intention
of the Company to have the Plan qualify as an "Employee Stock Purchase Plan"
under Section 423 of the Internal Revenue Code of 1986, as amended. The
provisions of the Plan, accordingly, shall be construed so as to extend and
limit participation in a manner consistent with the requirements of that section
of the Code.

     2.  Definitions.
         -----------

         (a)  "Board" shall mean the Board of Directors of the Company.
               -----

         (b)  "Code" shall mean the Internal Revenue Code of 1986, as amended.
               ----

         (c)  "Common Stock" shall mean the Common Stock of the Company.
               ------------

         (d)  "Company" shall mean VidaMed, Inc. and any Designated Subsidiary
               -------
of the Company.

         (e)  "Compensation" shall mean all regular straight time gross earnings
               ------------
but shall exclude variable compensation for field sales personnel, incentive
bonuses, overtime, shift premium, lead pay and automobile allowances and other
compensation.

         (f)  "Designated Subsidiaries" shall mean the Subsidiaries which have
               -----------------------
been designated by the Board from time to time in its sole discretion as
eligible to participate in the Plan.

         (g)  "Employee" shall mean any individual who is an Employee of the
               --------
Company for tax purposes whose customary employment with the Company is at least
twenty (20) hours per week and more than five (5) consecutive months in any
calendar year. For purposes of the Plan, the employment relationship shall be
treated as continuing intact while the individual is on sick leave or other
leave of absence approved by the Company. Where the period of leave exceeds 90
days and the individual's right to reemployment is not guaranteed either by
statute or by contract, the employment relationship will be deemed to have
terminated on the 91st day of such leave.

         (h)  "Enrollment Date" shall mean the first day of each Offering
               ---------------
Period.

         (i)  "Exercise Date" shall mean the last Trading Day of each Purchase
               -------------
Period. The first Exercise Date shall be the last Trading Day on or before
December 31, 1994.
<PAGE>

         (j)  "Fair Market Value" shall mean, as of any date, the value of
               -----------------
Common Stock determined as follows:

               (1)  If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market of the National Association of Securities Dealers, Inc.
Automated Quotation ("NASDAQ") System, its Fair Market Value shall be the
closing sale price for the Common Stock at the end of the regular trading
session, which as of the effective date of this Plan is 4:00 p.m. New York City
time, as reported in The Wall Street Journal or such other source as the Board
deems reliable (or, if no shares were traded or quoted on such date, as of the
next preceding date on which there was such a trade or quote);

               (2)  If the Common Stock is quoted on the NASDAQ System (but not
on the National Market thereof) or other over-the-counter market in which
closing sale prices are available, its Fair Market Value shall be the closing
sale price for the Common Stock at the end of the regular trading session, which
as of the effective date of this Plan is 4:00 p.m. New York City time, and if no
closing sale prices are available, its Fair Market Value shall be the mean of
the high and low bid and asked prices for the Common Stock at the end of the
regular trading session, as reported in The Wall Street Journal or such other
source as the Board deems reliable (or, if no shares were traded or quoted on
such date, as of the next preceding date on which there was such a trade or
quote); or

               (3)  In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Board.

               (4)  For purposes of the Enrollment Date of the first Offering
Period, the Fair Market Value of the Common Stock shall be the Price to Public
as set forth in the final prospectus filed with the Securities and Exchange
Commission pursuant to Rule 424 under the Securities Act of 1933, as amended.

         (k)  "Offering Period" shall mean the period of approximately twenty-
               ---------------
four (24) months during which an option granted pursuant to the Plan may be
exercised, commencing on the first Trading Day on or after January 1 and July 1
of each year and terminating on the last Trading Day in the periods ending
approximately twenty-four months later. The first day of the first Offering
Period shall be the effective date of the Company's initial public offering of
its Common Stock that is registered with the Securities and Exchange Commission.
The duration and timing of Offering Periods may be changed pursuant to Section 4
of this Plan.

         (l)  "Plan" shall mean this VidaMed, Inc. 1995 Employee Stock Purchase
               ----
Plan.

         (m)  "Purchase Price" shall mean an amount equal to 85% of the Fair
               --------------
Market Value of a share of Common Stock on the Enrollment Date or on the
Exercise Date, whichever is lower.

         (n)  "Purchase Period" shall mean the approximately six-month period
               ---------------
commencing after one Exercise Date and ending with the next Exercise Date,
except that the first Purchase Period of any Offering Period shall begin on the
Enrollment Date and end with the next Exercise Date. The first Purchase Period
of the first Offering Period shall begin on the first day of the first Offering
Period and shall end on the first Exercise Date.

         (o)  "Reserves" shall mean the number of shares of Common Stock covered
               --------
by each option under the Plan which have not yet been exercised and the number
of shares of Common Stock which have been authorized for issuance under the Plan
but not yet placed under option.
<PAGE>

         (p)  "Subsidiary" shall mean a corporation, domestic or foreign, of
               ----------
which not less than 50% of the voting shares are held by the Company or a
Subsidiary, whether or not such corporation now exists or is hereafter organized
or acquired by the Company or a Subsidiary.

         (q)  "Trading Day" shall mean a day on which national stock exchanges
               -----------
and the National Association of Securities Dealers Automated Quotation (NASDAQ)
System are open for trading.

     3.  Eligibility.
         -----------

         (a)  Any Employee (as defined in Section 2(g)), who shall be employed
by the Company on a given Enrollment Date shall be eligible to participate in
the Plan.

         (b)  Any provisions of the Plan to the contrary notwithstanding, no
Employee shall be granted an option under the Plan (i) if, immediately after the
grant, such Employee (or any other person whose stock would be attributed to
such Employee pursuant to Section 424(d) of the Code) would own capital stock of
the Company and/or hold outstanding options to purchase such stock possessing
five percent (5%) or more of the total combined voting power or value of all
classes of the capital stock of the Company or of any Subsidiary, or (ii) if
such option permits his or her rights to purchase stock under all employee stock
purchase plans of the Company and its subsidiaries to accrue at a rate which
exceeds twenty-five thousand dollars ($25,000) worth of stock (determined at the
fair market value of the shares at the time such option is granted) for each
calendar year in which such option is outstanding at any time.

     4.  Offering Periods.  The Plan shall be implemented by consecutive,
         ----------------
overlapping Offering Periods with a new Offering Period beginning on the first
Trading Day on or after July 1 and January 1 each year, or on such other date as
the Board shall determine, and continuing thereafter until terminated in
accordance with Section 19 hereof The first day of the first Offering Period
shall be the effective date of the Company's initial public offering of its
Common Stock that is registered with the Securities and Exchange Commission. The
Board shall have the power to change the duration of Offering Periods (including
the commencement dates thereof) with respect to future offerings without
stockholder approval if such change is announced at least five (5) days prior to
the scheduled beginning of the first Offering Period to be affected thereafter.

     5.  Participation.
         -------------

         (a)  An eligible Employee may become a participant in the Plan by
completing a subscription agreement authorizing payroll deductions in the form
of Exhibit A to this Plan and filing it with the Company's payroll office prior
to the applicable Enrollment Date.

         (b)  Payroll deductions for a participant shall commence on the first
payroll date following the Enrollment Date and shall end on the last payroll
date in the Offering Period to which such authorization is applicable, unless
sooner terminated by the participant as provided in Section 10 hereof.

     6.  Payroll Deductions.
         ------------------

         (a)  At the time a participant files his or her subscription agreement,
he or she shall elect to have payroll deductions made on each pay day during the
Offering Period in an amount not exceeding fifteen percent (15%) of the
Compensation which he or she receives on each pay day during the Offering
Period, and the aggregate of such payroll deductions during the Offering Period
shall not exceed fifteen percent (15%) of the participant's Compensation during
said Offering Period.
<PAGE>

         (b)  All payroll deductions made for a participant shall be credited to
his or her account under the Plan and will be withheld in whole percentages
only. A participant may not make any additional payments into such account.

         (c)  A participant may discontinue his or her participation in the Plan
as provided in Section 10 hereof, or may increase or decrease the rate of his or
her payroll deductions during the Offering Period by completing or filing with
the Company a new subscription agreement authorizing a change in payroll
deduction rate. The Board may, in its discretion, limit the number of
participation rate changes during any Offering Period. The change in rate shall
be effective with the first full payroll period following five (5) business days
after the Company's receipt of the new subscription agreement unless the Company
elects to process a given change in participation more quickly. A participant's
subscription agreement shall remain in effect for successive Offering Periods
unless terminated as provided in Section 10 hereof.

         (d)  Notwithstanding the foregoing, to the extent necessary to comply
with Section 423(b)(8) of the Code and Section 3(b) hereof, a participant's
payroll deductions may be decreased to 0% at such time during any Purchase
Period which is scheduled to end during the current calendar year (the "Current
Purchase Period") that the aggregate of all payroll deductions which were
previously used to purchase stock under the Plan in a prior Purchase Period
which ended during that calendar year plus all payroll deductions accumulated
with respect to the Current Purchase Period equal $21,250. Payroll deductions
shall recommence at the rate provided in such participant's subscription
agreement at the beginning of the first Purchase Period which is scheduled to
end in the following calendar year, unless terminated by the participant as
provided in Section 10 hereof.

         (e)  At the time the option is exercised, in whole or in part, or at
the time some or all of the Company's Common Stock issued under the Plan is
disposed of, the participant must make adequate provision for the Company's
federal, state, or other tax withholding obligations, if any, which arise upon
the exercise of the option or the disposition of the Common Stock. At any time,
the Company may, but will not be obligated to, withhold from the participant's
compensation the amount necessary for the Company to meet applicable withholding
obligations, including any withholding required to make available to the Company
any tax deductions or benefits attributable to sale or early disposition of
Common Stock by the Employee.

     7.  Grant of Option.  On the Enrollment Date of each Offering Period, each
         ---------------
eligible Employee participating in such Offering Period shall be granted an
option to purchase on each Exercise Date during such Offering Period (at the
applicable Purchase Price) up to a number of shares of the Company's Common
Stock determined by dividing such Employee's payroll deductions accumulated
prior to such Exercise Date and retained in the Participant's account as of the
Exercise Date by the applicable Purchase Price; provided that in no event shall
an Employee be permitted to purchase during each Purchase Period more than a
number of Shares determined by dividing $12,500 by the Fair Market Value of a
share of the Company's Common Stock on the Enrollment Date, and provided further
that such purchase shall be subject to the limitations set forth in Sections
3(b) and 12 hereof Exercise of the option shall occur as provided in Section 8
hereof; unless the participant has withdrawn pursuant to Section 10 hereof; and
shall expire on the last day of the Offering Period.

     8.  Exercise of Option.  Unless a participant withdraws from the Plan as
         ------------------
provided in Section 10 hereof, his or her option for the purchase of shares will
be exercised automatically on the Exercise Date, and the maximum number of full
shares subject to option shall be purchased for such participant at the
applicable Purchase Price with the accumulated payroll deductions in his or her
account.  No fractional shares will be purchased; any payroll deductions
accumulated in a participant's account which
<PAGE>

are not sufficient to purchase a full share shall be retained in the
participant's account for the subsequent Purchase Period or Offering Period,
subject to earlier withdrawal by the participant as provided in Section 10
hereof Any other monies left over in a participant's account after the Exercise
Date shall be returned to the participant. During a participant's lifetime, a
participant's option to purchase shares hereunder is exercisable only by him or
her.

     9.  Delivery.  As promptly as practicable after each Exercise Date on which
         --------
a purchase of shares occurs, the Company shall arrange the delivery to each
participant, as appropriate, of a certificate representing the shares purchased
upon exercise of his or her option.

    10.  Withdrawal; Termination of Employment.
         -------------------------------------

         (a)  A participant may withdraw all but not less than all the payroll
deductions credited to his or her account and not yet used to exercise his or
her option under the Plan at any time by giving written notice to the Company in
the form of Exhibit 13 to this Plan. All of the participant's payroll deductions
credited to his or her account will be paid to such participant promptly after
receipt of notice of withdrawal and such participant's option for the Offering
Period will be automatically terminated, and no further payroll deductions for
the purchase of shares will be made for such Offering Period, If a participant
withdraws from an Offering Period, payroll deductions will not resume at the
beginning of the succeeding Offering Period unless the participant delivers to
the Company a new subscription agreement.

         (b)  Upon a participant's ceasing to be an Employee (as defined in
Section 2(g) hereof), for any reason, he or she will be deemed to have elected
to withdraw from the Plan and the payroll deductions credited to such
participant's account during the Offering Period but not yet used to exercise
the option will be returned to such participant or, in the case of his or her
death, to the person or persons entitled thereto under Section 14 hereof; and
such participant's option will be automatically terminated. The preceding
sentence notwithstanding, a participant who receives payment in lieu of notice
of termination of employment shall be treated as continuing to be an Employee
for the participant's customary number of hours per week of employment during
the period in which the participant is subject to such payment in lieu of
notice.

    11.  Interest.  No interest shall accrue on the payroll deductions of a
         --------
participant in the Plan.

    12.  Stock.
         -----

         (a)  The maximum number of shares of the Company's Common Stock which
shall be made available for sale under the Plan shall be six hundred thousand
(600,000), subject to adjustment upon changes in capitalization of the Company
as provided in Section 18 hereof. If; on a given Exercise Date, the number of
shares with respect to which options are to be exercised exceeds the number of
shares then available under the Plan, the Company shall make a pro rata
allocation of the shares remaining available for purchase in as uniform a manner
as shall be practicable and as it shall determine to be equitable.

         (b)  The participant will have no interest or voting right in shares
covered by his option until such option has been exercised.

         (c)  Shares to be delivered to a participant under the Plan will be
registered in the name of the participant or in the name of the participant and
his or her spouse.
<PAGE>

    13.  Administration.
         --------------

         (a)  Administrative Body.  The Plan shall be administered by the Board
              -------------------
or a committee of members of the Board appointed by the Board. The Board or its
committee shall have fill and exclusive discretionary authority to construe,
interpret and apply the terms of the Plan, to determine eligibility and to
adjudicate all disputed claims filed under the Plan. Every finding, decision and
determination made by the Board or its committee shall, to the full extent
permitted by law, be final and binding upon all parties.

         (b)  Rule l6b-3 Limitations.  Notwithstanding the provisions of
              ----------------------
Subsection (a) of this Section 13, in the event that Rule l6b-3 promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or
any successor provision ("Rule 16b-3") provides specific requirements for the
administrators of plans of this type, the Plan shall be only administered by
such a body and in such a manner as shall comply with the applicable
requirements of Rule 16b-3. Unless permitted by Rule 16b-3, no discretion
concerning decisions regarding the Plan shall be afforded to any committee or
person that is not "disinterested" as that term is used in Rule 16b-3.

    14.  Designation of Beneficiary.
         --------------------------

         (a)  A participant may file a written designation of a beneficiary who
is to receive any shares and cash, if any, from the participant's account under
the Plan in the event of such participant's death subsequent to an Exercise Date
on which the option is exercised but prior to delivery to such participant of
such shares and cash. In addition, a participant may file a written designation
of a beneficiary who is to receive any cash from the participant's account under
the Plan in the event of such participant's death prior to exercise of the
option. If a participant is married and the designated beneficiary is not the
spouse, spousal consent shall be required for such designation to be effective.

         (b)  Such designation of beneficiary may be changed by the participant
at any time by written notice. In the event of the death of a participant and in
the absence of a beneficiary validly designated under the Plan who is living at
the time of such participant's death, the Company shall deliver such shares
and/or cash to the executor or administrator of the estate of the participant,
or if no such executor or administrator has been appointed (to the knowledge of
the Company), the Company, in its discretion, may deliver such shares and/or
cash to the spouse or to any one or more dependents or relatives of the
participant, or if no spouse, dependent or relative is known to the Company,
then to such other person as the Company may designate.

    15.  Transferability.  Neither payroll deductions credited to a
         ---------------
participant's account nor any rights with regard to the exercise of an option or
to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 14 hereof) by the participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect, except that the Company may treat such act as an election to withdraw
funds from an Offering Period in accordance with Section 10 hereof.

    16.  Use of Funds.  All payroll deductions received or held by the Company
         ------------
under the Plan may be used by the Company for any corporate purpose, and the
Company shall not be obligated to segregate such payroll deductions.

    17.  Reports.  Individual accounts will be maintained for each participant
         -------
in the Plan. Statements of account will be given to participating Employees at
least annually, which statements will
<PAGE>

set forth the amounts of payroll deductions, the Purchase Price, the number of
shares purchased and the remaining cash balance, if any.

    18.  Adjustments Upon Changes in Capitalization, Dissolution, Liquidation,
         ---------------------------------------------------------------------
Merger or Asset Sale.
--------------------

         (a)  Changes in Capitalization.  Subject to any required action by the
              -------------------------
stockholders of the Company, the Reserves as well as the price per share of
Common Stock covered by each option under the Plan which has not yet been
exercised shall be proportionately adjusted for any increase or decrease in the
number of issued shares of Common Stock resulting from a stock split, reverse
stock split, stock dividend, combination or reclassification of the Common
Stock, or any other increase or decrease in the number of shares of Common Stock
effected without receipt of consideration by the Company; provided, however,
that conversion of any convertible securities of the Company shall not be deemed
to have been "effected without receipt of consideration". Such adjustment shall
be made by the Board, whose determination in that respect shall be final,
binding and conclusive. Except as expressly provided herein, no issuance by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of Common Stock subject
to an option.

         (b)  Dissolution or Liquidation.  In the event of the proposed
              --------------------------
dissolution or liquidation of the Company, the Offering Periods will terminate
immediately prior to the consummation of such proposed action, unless otherwise
provided by the Board.

         (c)  Merger or Asset Sale.  In the event of a proposed sale of all or
              --------------------
substantially all of the assets of the Company, or the merger of the Company
with or into another corporation, each option under the Plan shall be assumed or
an equivalent option shall be substituted by such successor corporation or a
parent or subsidiary of such successor corporation, unless the Board determines,
in the exercise of its sole discretion and in lieu of such assumption or
substitution, to shorten the Offering Periods then in progress by setting a new
Exercise Date (the "New Exercise Date"). If the Board shortens the Offering
Periods then in progress in lieu of assumption or substitution in the event of a
merger or sale of assets, the Board shall notify each participant in writing, at
least ten (10) business days prior to the New Exercise Date that the Exercise
Date for his option has been changed to the New Exercise Date and that his
option will be exercised automatically on the New Exercise Date, unless prior to
such date he has withdrawn from the Offering Period as provided in Section 10
hereof For purposes of this paragraph, an option granted under the Plan shall be
deemed to be assumed if, following the sale of assets or merger, the option
confers the right to purchase, for each share of option stock subject to the
option immediately prior to the sale of assets or merger, the consideration
(whether stock, cash or other securities or property) received in the sale of
assets or merger by holders of Common Stock for each share of Common Stock held
on the effective date of the transaction (and if such holders were offered a
choice of consideration, the type of consideration chosen by the holders of a
majority of the outstanding shares of Common Stock); provided, however, that if
such consideration received in the sale of assets or merger was not solely
common stock of the successor corporation or its parent (as defined in Section
424(e) of the Code), the Board may, with the consent of the successor
corporation, provide for the consideration to be received upon exercise of the
option to be solely common stock of the successor corporation or its parent
equal in fair market value to the per share consideration received by holders of
Common Stock and the sale of assets or merger.

    19.  Amendment or Termination.
         ------------------------

         (a)  The Board of Directors of the Company may at any time and for any
reason terminate or amend the Plan. Except as provided in Section 18 hereof, no
such termination can affect
<PAGE>

options previously granted, provided that an Offering Period may be terminated
by the Board of Directors on any Exercise Date if the Board determines that the
termination of the Plan is in the best interests of the Company and its
stockholders. Except as provided in Section 18 hereof, no amendment may make any
change in any option theretofore granted which adversely affects the rights of
any participant. To the extent necessary to comply with Rule 16b-3 or under
Section 423 of the Code (or any successor rule or provision or any other
applicable law or regulation), the Company shall obtain stockholder approval in
such a manner and to such a degree as required.

         (b)  Without stockholder consent and without regard to whether any
participant rights may be considered to have been "adversely affected," the
Board (or its committee) shall be entitled to change the Offering Periods, limit
the frequency and/or number of changes in the amount withheld during an Offering
Period, establish the exchange ratio applicable to amounts withheld in a
currency other than U.S. dollars, permit payroll withholding in excess of the
amount designated by a participant in order to adjust for delays or mistakes in
the Company's processing of properly completed withholding elections, establish
reasonable waiting and adjustment periods and/or accounting and crediting
procedures to ensure that amounts applied toward the purchase of Common Stock
for each participant properly correspond with amounts withheld from the
participant's Compensation, and establish such other limitations or procedures
as the Board (or its committee) determines in its sole discretion advisable
which are consistent with the Plan.

    20.  Notices.  All notices or other communications by a participant to the
         -------
Company under or in connection with the Plan shall be deemed to have been duly
given when received in the form specified by the Company at the location, or by
the person, designated by the Company for the receipt thereof.

    21.  Conditions Upon Issuance of Shares.  Shares shall not be issued with
         ----------------------------------
respect to an option unless the exercise of such option and the issuance and
delivery of such shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, the rules and regulations promulgated thereunder, and the requirements
of any stock exchange upon which the shares may then be listed, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.

     As a condition to the exercise of an option, the Company may require the
person exercising such option to represent and warrant at the time of any such
exercise that the shares are being purchased only for investment and without any
present intention to sell or distribute such shares if, in the opinion of
counsel for the Company, such a representation is required by any of the
aforementioned applicable provisions of law.

    22.  Term of Plan.  The Plan shall become effective upon the earlier to
         ------------
occur of its adoption by the Board of Directors or its approval by the
stockholders of the Company. It shall continue in effect for a term often (10)
years unless sooner terminated under Section 19 hereof.

    23.  Automatic Transfer to Low Price Offering Period.  To the extent
         -----------------------------------------------
permitted by Rule 16b-3 of the Exchange Act, if the Fair Market Value of the
Common Stock on any Exercise Date in an Offering Period is lower than the Fair
Market Value of the Common Stock on the Enrollment Date of such Offering Period,
then all participants in such Offering Period shall be automatically withdrawn
from such Offering Period immediately after the exercise of their option on such
Exercise Date and automatically re-enrolled in the immediately following
Offering Period as of the first day thereof
<PAGE>

                                   EXHIBIT A
                                   ---------

                                 VIDAMED, INC.

                       1995 EMPLOYEE STOCK PURCHASE PLAN

                             SUBSCRIPTION AGREEMENT

________Original Application                    Enrollment Date:_______
________Change in Payroll Deduction Rate
________Change of Beneficiary(ies)

1.  ____________________ hereby elects to participate in the VidaMed, Inc. 1995
    Employee Stock Purchase Plan (the "Employee Stock Purchase Plan") and
    subscribes to purchase shares of the Company's Common Stock in accordance
    with this Subscription Agreement and the Employee Stock Purchase Plan.

2.  I hereby authorize payroll deductions from each paycheck in the amount of
    ______ % of my Compensation on each payday (1-15%) during the Offering
    Period in accordance with the Employee Stock Purchase Plan. (Please note
    that no fractional percentages are permitted.)

3.  I understand that said payroll deductions shall be accumulated for the
    purchase of shares of Common Stock at the applicable Purchase Price
    determined in accordance with the Employee Stock Purchase Plan. I understand
    that if I do not withdraw from an Offering Period, any accumulated payroll
    deductions will be used to automatically exercise my option.

4.  I have received a copy of the complete "VidaMed, Inc. 1995 Employee Stock
    Purchase Plan." I understand that my participation in the Employee Stock
    Purchase Plan is in all respects subject to the terms of the Plan. I
    understand that my ability to exercise the option under this Subscription
    Agreement is subject to obtaining stockholder approval of the Employee Stock
    Purchase Plan.

5.  Shares purchased for me under the Employee Stock Purchase Plan should be
    issued in the name(s) of (Employee or Employee and spouse only):
    _____________________________

6.  I understand that if I dispose of any shares received by me pursuant to the
    Plan within 2 years after the Enrollment Date (the first day of the Offering
    Period during which I purchased such shares) or one year after the Exercise
    Date, I will be treated for federal income tax purposes as having received
    ordinary income at the time of such disposition in an amount equal to the
    excess of the fur market value of the shares at the time such shares were
    purchased over the price which I paid for the shares. I hereby agree to
                                                          -----------------
    notify the Company in writing within 30 days after the date of any
    ------------------------------------------------------------------
    disposition of my shares and I will make adequate provision for Federal,
    ------------------------------------------------------------------------
    state or other tax withholding obligations, if any, which arise upon the
    ------------------------------------------------------------------------
    disposition of the Common Stock. The Company may, but will not be obligated
    -------------------------------
    to, withhold from my compensation the amount necessary to meet any
    applicable withholding obligation including any withholding necessary to
    make available to the Company any tax deductions or benefits attributable to
    sale or early disposition of Common Stock by me. If I dispose of such shares
    at any time after the expiration of the 2-year and 1-year holding periods, I
    understand that I will be treated for federal income tax purposes as having
    received income only at the time of such disposition, and that such income
    will be taxed as ordinary income only to the

                                   Ex. A - 1
<PAGE>

    extent of an amount equal to the lesser of (1) the excess of the fair market
    value of the shares at the time of such disposition over the purchase price
    which I paid for the shares, or (2) 15% of the fair market value of the
    shares on the first day of the Offering Period. The remainder of the gain,
    if any, recognized on such disposition will be taxed as capital gain.

7.  I hereby agree to be bound by the terms of the Employee Stock Purchase Plan,
    The effectiveness of this Subscription Agreement is dependent upon my
    eligibility to participate in the Employee Stock Purchase Plan.

8.  In the event of my death, I hereby designate the following as my
    beneficiary(ies) to receive all payments and shares due me under the
    Employee Stock Purchase Plan:

NAME:  (Please print)  ____________________________________
                            (First)    (Middle)    (Last)

__________________________             __________________________________
Relationship

                                       __________________________________
                                       (Address)

Employee's Social Security Number:     __________________________________

Employee's Address:                    __________________________________

                                       __________________________________

I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN EFFECT THROUGHOUT
SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME.

Dated:_____________________            _________________________________
                                       Signature of Employee

                                       _________________________________
                                       Spouse's Signature
                                       (If beneficiary other than spouse)

                                   Ex. A - 2
<PAGE>

                                   EXHIBIT B
                                   ---------

                                 VIDAMED, INC.

                       1995 EMPLOYEE STOCK PURCHASE PLAN

                              NOTICE OF WITHDRAWAL

  The undersigned participant in the Offering Period of the VidaMed, Inc. 1995
Employee Stock Purchase Plan which began on___________ 19 (the "Enrollment
Date") hereby notifies the Company that he or she hereby withdraws from the
Offering Period.  He or she hereby directs the Company to pay to the undersigned
as promptly as practicable all the payroll deductions credited to his or her
account with respect to such Offering Period.  The undersigned understands and
agrees that his or her option for such Offering Period will be automatically
terminated.  The undersigned understands further that no further payroll
deductions will be made for the purchase of shares in the current Offering
Period and the undersigned shall be eligible to participate in succeeding
Offering Periods only by delivering to the Company a new Subscription Agreement.

                                    Name and Address of Participant:

                                    ------------------------------------

                                    ------------------------------------

                                    ------------------------------------

                                    Signature:

                                    ------------------------------------

                                    Date:_______________________________

                                   Ex. B - 1<PAGE>

                                                                    EXHIBIT 10.5

                             Distribution Agreement

This Distribution Agreement (the "Agreement") is entered into on this [#] day of
[Month], 2001.

BETWEEN

      (1)   VidaMed, Inc., a Delaware corporation with offices at 46107 Landing
            Parkway, California, 94538, USA ("VidaMed"); and

      (2)   [Company Name], a [Country and Type of Entity], having an address at
            [Address] ("Distributor").

WHEREAS the parties agree as follows:

1.    DEFINITIONS

1.1   "Effective Date" means the date first mentioned above.
      ----------------

1.2   "Minimum Performance" means the sale during the Term of this Agreement of
      ---------------------
      a minimum number of Products each year as set forth in Exhibit B2.

1.3   "Products" means those products listed on attached Exhibit A, which
      ----------
      products may be changed, abandoned or added by VidaMed at any time, at its
      sole discretion.

1.4   "Territory" means [Country].
      -----------

1.5   "VidaMed Trademarks" means the trademarks listed in Exhibit F together
      --------------------
      with any further trademarks and tradenames of which VidaMed may become the
      proprietor on or in relation to the Products at any time during this
      Agreement that VidaMed may choose to add to Exhibit F during the Term of
      this Agreement.

2.    APPOINTMENT

2.1   Appointment. VidaMed hereby appoints Distributor as its distributor for
      ------------
      the promotion, marketing and resale of the Products in the Territory, and
      Distributor agrees to act in that capacity, subject to the terms and
      conditions of this Agreement. VidaMed shall not without prejudice to
      Section 2.2:

      (a)   appoint any other person, firm or company in the Territory as a
            distributor for the Products in the Territory; or

                                                                          Page 1
<PAGE>

      (b)   supply to any other person, firm or company in the Territory any of
            the Products, whether for use or resale.

      Distributor shall be entitled to describe itself as VidaMed's "Authorised
      Distributor" for the Products, but shall not hold itself out as VidaMed's
      agent for sales of the Products or as being entitled to bind VidaMed in
      any way.

2.2   Subdistributors. Distributor may exercise its distribution rights to
      ----------------
      distribute Products in the Territory through the use of any third party
      subdistributor ("Subdistributor") subject to:

      (a)   Subdistributor entering into a written agreement with Distributor
            containing terms substantially similar to the restrictions on
            Distributor contained in this Agreement, or (if Subdistributor is a
            subsidiary of Distributor) Distributor procuring that Subdistributor
            complies with the terms of this Agreement as if it were a party to
            it;

      (b)   Distributor warrants that no person or entity shall be appointed a
            Subdistributor for VidaMed products until Distributor has confirmed
            that Subdistributor has met and continues to maintain the level of
            training and technical expertise equal to that required of
            Distributor under Section 3.5 below;

      (c)   The Distributor accepts full liability for the conduct and technical
            competence of any Subdistributor it appoints; and

      (d)   Distributor shall provide within fifteen days after the end of each
            calendar quarter a listing of the names of all its Subdistributors
            with a report on sales activity of Subdistributors for the previous
            quarter and sales projections for the current calendar quarter.

2.3   Reservation of Rights. VidaMed reserves the right to appoint other
      ---------------------
      authorized distributors or resellers outside the Territory without
      restriction as to number and location. Nothing in this Agreement shall be
      construed to preclude VidaMed from marketing, selling, leasing or
      servicing any of the Products outside the Territory. Distributor herewith
      conveys and assigns all goodwill resulting from or attributable to
      Distributor's efforts in the Territory to VidaMed. Distributor shall not
      attempt to assert rights against VidaMed not permitted under this
      Agreement. All rights in and to this Agreement and the Trademarks and
      Tradenames stated herein not otherwise determined under this Agreement are
      reserved to VidaMed.

2.4   Independent Contractors. The relationship of VidaMed and Distributor
      -----------------------
      established by this Agreement is that of independent contractors, and
      nothing contained in this Agreement shall be construed (i) to give either
      party the power to direct or control the day-to-day activities of the
      other or (ii) to constitute the parties as partners, joint venturers,
      co-owners or otherwise as participants in a joint or common undertaking.
      All financial obligations associated with

                                                                          Page 2
<PAGE>

      Distributor's business are the sole responsibility of Distributor. All
      sales and other agreements including appointment of any Subdistributor
      between Distributor and its customers are Distributor's exclusive
      responsibility and shall not affect VidaMed's obligations under this
      Agreement. Distributor shall be solely responsible for, and shall
      indemnify, defend and hold VidaMed harmless from, all liabilities, claims,
      damages, and lawsuits arising from the acts and omissions of Distributor,
      its employees, servants, agents, Subdistributor or any of them.

2.5   Conflict of interest. Distributor agrees that any efforts by Distributor
      --------------------
      to sell competing products in the Territory would constitute a conflict of
      interest with respect to Distributor's obligations to market the Products,
      and Distributor warrants that it does not currently manufacture or offer
      for sale any products which compete with the Products. If Distributor
      chooses to market, promote or distribute, directly or indirectly, alone,
      or in any capacity with another firm, whether as an agent, consultant,
      indepedent contractor, distributor, broker or otherwise, products that in
      VidaMed's reasonable judgment compete with the Products, Distributor shall
      notify VidaMed of its intent at least sixty (60) days prior to commencing
      such activity and VidaMed shall have the right to terminate this Agreement
      upon thirty (30) days notice to Distributor without any liability to
      VidaMed. Failure to so notify VidaMed shall be deemed to be a material
      breach of this Agreement. A product shall be deemed to compete with the
      Products if it has in VidaMed's reasonable judgment substantially the same
      functionality as a Product.

2.6   Territory. Distributor agrees that it shall not promote, market or
      ---------
      establish any branch or maintain any distribution depot for the Products
      outside of the Territory. Distributor shall promptly submit to VidaMed,
      for VidaMed's attention and handling, the originals of all inquiries
      received by Distributor from potential customers outside the Territory.

2.7   Sales by VidaMed. VidaMed agrees during the term of this Agreement, to the
      ----------------
      extent permitted by law and except as otherwise provided herein, not to
      appoint any other manufacturer's representative, distributor or dealer in
      the Territory as a distributor or reseller of the Products. However,
      nothing contained herein will prohibit VidaMed from soliciting orders or
      selling in the Territory on its own behalf should VidaMed, in its sole
      discretion, determine that such is required for the adequate
      representation of its Products. VidaMed does not intend to compete
      directly with Distributor for orders in the Territory, but does reserve
      the right to sell directly or through other outlets if Distributor is
      unable or unwilling to sell and service certain customers, if the customer
      is dissatisfied with services provided by Distributor, or if the customer
      refuses to do business with Distributor. In that event, VidaMed may sell
      to such customer directly or through others without liability to the
      Distributor and VidaMed will pay to Distributor the difference between the
      selling price to the customer and the standard selling price to
      Distributor less any expenses incurred by VidaMed in a sale in the
      Territory. VidaMed assumes no responsibility with regard to sale of
      Products in the Territory by its other distributors or agents.

                                                                          Page 3
<PAGE>

2.8   Improvements and New Products. Notwithstanding any other provision of this
      -----------------------------
      Agreement, Distributor will not have any right to distribute improvements
      to the Products or additional VidaMed products developed, manufactured,
      produced or sold by VidaMed, which improvements or additional products
      have not been included in this Agreement pursuant to Exhibit A, and
      nothing contained herein will prohibit VidaMed from itself selling, or
      entering into any distribution, sales agent or other agreements with other
      persons, entities or organizations in the Territory for, such improvements
      or additional VidaMed products.

3.    OBLIGATIONS OF DISTRIBUTOR

3.1   Promotion of the Products. Distributor shall use its best efforts to
      -------------------------
      vigorously promote the Products in the Territory and realize the maximum
      sales potential for the Products in the Territory. Such promotion shall
      include, without limitation, promptly responding to all inquiries from
      customers, including complaints, process all orders, and effect all
      shipments of the Products, diligently investigating and pursuing all leads
      with respect to potential customers referred to it by VidaMed and, upon
      request of VidaMed, reporting the status of such leads and inquiries,
      active participation and advertisement of the Products in trade
      publications within the Territory, active participation in trade shows and
      exhibitions with VidaMed participation as appropriate, and direct
      solicitation of orders from customers for the Products. Distributor shall
      stock an adequate inventory of products as appropriate to fulfill the
      demand for Products in the Territory. In no event shall Distributor make
      any representation, guarantee or warranty concerning the Products except
      as expressly authorized by VidaMed.

3.2   Attendance at Meetings. Distributor shall, at Distributor's own expense,
      ----------------------
      send at least one suitably qualified representative to:

      (a)   attend such meetings organised by VidaMed as VidaMed shall
            reasonably request, including, without limitation, the VidaMed
            distributor meeting;

      (b)   attend each year, at least one other relevant international meeting;
            and

      (c)   attend and provide support for the Products at appropriate medical
            trade shows and congresses in the Territory, as agreed upon by
            VidaMed and Distributor.

3.3   Inventory. Distributor shall, at Distributor's own expense, maintain a
      ---------
      sufficient and balanced inventory of the Products at all times during the
      term of this Agreement as necessary in order to meet the requirements of
      any customer or potential customer within the Territory within one (1)
      week after receipt by Distributor of an inquiry or purchase order from
      such customer or potential customer. Distributor shall ensure at all times
      proper storage and handling procedures for the Products, taking all steps
      to avoid subjecting the Products to excessive heat, sunlight, humidity,
      dryness, insects or animals, or other damaging conditions.

                                                                          Page 4
<PAGE>

3.4   Inventory Reports. During the term of this Agreement, within five (5) days
      -----------------
      after the end of each month Distributor will provide VidaMed with a report
      in the form of Exhibit G listing, among other things, the quantities of
      each Product sold since the last report and the quantity of each Product
      currently in inventory. The report will also contain a report of
      maintenance activity, including the quantities, serial or lot number of
      each Product, and the number and types of failures, if any, found during
      such month.

3.5   Personnel. The parties agree that the Products cannot be effectively
      ---------
      marketed, supported or maintained unless Distributor hires, trains and
      supports sufficient sales and technical staff to meet its obligations
      under this Agreement. Therefore, Distributor shall ensure at least one
      individual is trained and dedicated to supporting VidaMed Products and:

      (a)   employ a sufficient number of competent full time sales personnel to
            promote the Products and to generate substantial sales in the
            Territory. Distributor shall equip its sales personnel with adequate
            training, marketing, technical and sales literature, including such
            materials as may be made available by VidaMed;

      (b)   employ a sufficient number of full time technical staff having the
            knowledge and training necessary to meet Distributor's obligations
            to maintain and support the Products distributed within the
            Territory;

      (c)   have at least one (1) of Distributor's employees who are responsible
            for training others with respect to marketing and clinical use of
            the Products and who shall attend at least one (1) day of training
            each year by VidaMed at a location within the Territory specified by
            VidaMed. If at any time Distributor employs fewer than five (5)
            employees who have completed such training, Distributor shall so
            notify VidaMed, and upon request by VidaMed shall have the required
            number of its employees attend such training; and

      (d)   promptly notify VidaMed of any change in Distributor's marketing,
            sales, administrative or technical support services or staff which
            could affect Distributor's ability to meet its obligations under
            this Agreement.

3.6   Customer and Sales Reporting. Distributor shall at its own expense and
      ----------------------------
      consistent with the marketing and distribution policies of VidaMed from
      time to time:

      (a)   provide adequate contact with existing and potential customers
            within the Territory on a regular basis, consistent with good
            business practice;

      (b)   keep VidaMed promptly apprised of potential competitors and
            competitive products in the Territory;

                                                                          Page 5
<PAGE>

      (c)   assist VidaMed in assessing customer requirements for the Products,
            including modifications and improvements thereto, in terms of
            quality, design, functional capability, and other features;

      (d)   submit market research information, as reasonably requested by
            VidaMed, regarding competition and changes in the market within the
            Territory; and

      (e)   provide VidaMed, as frequently as reasonably requested by VidaMed,
            but not more often than once every four months, with a list of
            Distributor's customers, their addresses, telephone numbers, the
            quantities and types of Products purchased including the serial
            numbers of each new generator sold to each new customer.

3.7   Books and Records. Distributor shall maintain and make available to
      -----------------
      VidaMed accurate books, records, and accounts relating to the business of
      Distributor subject to the European Community's Medical Devices Directive
      relating to the Products.

3.8   Right of Inspection. Subject to agreement with the Distributor, VidaMed
      -------------------
      shall have the right, upon reasonable notice and during normal business
      hours, to inspect Distributor's place of business and records for the
      purpose of determining that Distributor is meeting its obligations under
      this Agreement. This right will be restricted to matters relating to
      VidaMed and its products and such other inspection as may be reasonably
      required to check Distributor's compliance with Section 2.5.

3.9   Import Permits. Distributor shall be responsible for obtaining the
      --------------
      appropriate licenses or permits required to import Products into each
      destination country in the Territory. To the extent permitted by law
      within the Territory, all such licenses and permits shall specify VidaMed
      as the approved entity for importation of the Products in the Territory,
      and VidaMed shall have the exclusive rights to all such licenses or
      permits if this Agreement is terminated for any reason.

3.10  Registrations, Licenses and Permits. Distributor shall be responsible, at
      -----------------------------------
      its expense, for obtaining any registrations, licenses and permits
      required to comply with the laws and regulations of each county in the
      Territory for sale and distribution of the Products and the conduct of its
      business operations in accordance with this Agreement; provided, however,
      that such activities shall be conducted in VidaMed's name and on VidaMed's
      behalf, and no activities in connection with obtaining such registrations,
      licenses or permits shall be initiated by Distributor without VidaMed's
      prior written approval. In particular, the Distributor shall register the
      Product and its approvals with the Distributor's national regulatory body
      in VidaMed's name, and provide VidaMed evidence of such registration. In
      the event that all necessary registrations, licenses and permits required
      to sell and distribute the Products in the Territory are not obtained
      within six (6) months after the Effective Date of this Agreement,
      Distributor and VidaMed jointly shall review all actions taken and

                                                                          Page 6
<PAGE>

      determine what further actions, if any, should be undertaken. VidaMed
      shall have the exclusive right to use all such registrations, licenses or
      permits if this Agreement is terminated for any reason.

3.11  Health and Safety Laws and Regulations. Distributor shall comply fully
      --------------------------------------
      with any and all applicable health and safety laws and regulations of the
      Territory as they relate to the Products. In addition, Distributor shall
      monitor the appropriate information sources closely for changes in such
      laws and regulations, and other requirements in the Territory relating to
      the distribution of Products in the Territory, and notify VidaMed promptly
      in writing of any and all such changes.

3.12  Preclinical and Clinical Trials. Distributor shall assist and support
      -------------------------------
      VidaMed in organizing and conducting preclinical and clinical trials
      required to obtain registrations, licenses and permits required to comply
      with the laws and regulations of the Territory for sale and distribution
      of the Products; provided, however, that no activities in connection with
      organizing and conducting such trials shall be initiated by Distributor
      without VidaMed's prior written approval.

3.13  Representations. Distributor shall not make any false or misleading
      ---------------
      representations or statements to customers or others regarding VidaMed or
      the Products. Distributor shall not make any representations, warranties
      or guarantees with respect to the specifications, features or capabilities
      of the Products that are not consistent with VidaMed's documentation
      accompanying the Products or VidaMed's literature describing the Products,
      including VidaMed's standard limited warranty and disclaimers. Distributor
      shall hold VidaMed harmless from and indemnify it against any liability
      which may arise out of, or result from, any such false representation.

3.14  Finances. Distributor shall maintain a net worth and working capital
      --------
      sufficient, in VidaMed's reasonable judgment, to enable Distributor to
      perform and discharge fully and faithfully Distributor's obligations under
      this Agreement. At the request of VidaMed, Distributor shall provide
      financial data and credit information concerning Distributor, including
      but not limited to a current balance sheet and statement of operations and
      banking and credit references.

3.15  Insurance. Distributor shall insure, at its own cost, with a reputable
      ---------
      insurance company, all stocks of the Products as are held by it against
      all risks to at least the full replacement value of such stocks and to
      produce to VidaMed on demand full particulars of such insurance and the
      receipt for the then current premium.

3.16  Changes to Distributor's Business. Distributor shall inform VidaMed
      ---------------------------------
      immediately of any changes in Distributor's organisation or method of
      doing business which might affect the performance of Distributor's duties
      under this Agreement.

                                                                          Page 7
<PAGE>

3.17  Customer Complaints. Upon receipt of any customer complaint regarding the
      -------------------
      Product, Distributor shall complete the Product Complaint Notification
      Form attached in Exhibit G and send such form to VidaMed within one (1)
      day of receipt of such complaint. Distributor shall establish and maintain
      a complaint file of all Product Complaint Notification Forms sent by
      Distributor to VidaMed and any other information, including written and
      oral communications, received by Distributor concerning a complaint
      regarding the Product, including without limitation any complaint
      involving a death or serious injury involving the use of the Product or
      any malfunction of the Product.

3.18  Records and Recall. Distributor shall maintain complete and accurate
      ------------------
      records of all Products sold by Distributor and shall maintain and provide
      such other records and reports as VidaMed may reasonably request.
      Distributor shall notify VidaMed immediately and confirm such notice in
      writing if it obtains information indicating that any of VidaMed's
      Products may have to be recalled, either by virtue of applicable law or
      good business judgment. In the event of a recall of any of the Products,
      Distributor shall cooperate fully with VidaMed in effecting such recall,
      including without limitation, promptly contacting any purchasers that
      VidaMed desires to be contacted and promptly communicating to such
      purchasers the information or instructions VidaMed desires to be
      transmitted, all of which will be provided by Distributor at its own
      expense. Distributor agrees to comply with any and all traceability
      programs in effect at any time as initiated by VidaMed. VidaMed may
      examine and make transcripts of any records required as part of a
      traceability program at reasonable times during business hours.

4.    OBLIGATIONS OF VIDAMED

4.1   Supply of Supporting Documents and Information. VidaMed shall make
      ----------------------------------------------
      available to the Distributor all data documents and information relating
      to the Products which the Distributor reasonably requires to enable it to
      carry out its obligations under Section 3.10.

4.2   Supply of Promotional Material. VidaMed shall make available to
      ------------------------------
      Distributor a reasonable amount of promotional material developed by
      VidaMed (e.g., brochures, data sheets, advertising materials), at
      VidaMed's standard charges to distributors for such items. Distributor
      shall not translate any manuals or written materials supplied by VidaMed
      without VidaMed's prior written approval. VidaMed shall have a right of
      prior approval of any sales promotion materials, sales aids or
      advertisements pertaining to Products which the Distributor intends to use
      or publish in the Territory.

4.3   Joint Marketing Campaign. VidaMed shall agree with Distributor a joint
      ------------------------
      marketing campaign for the Territory to last for the duration of this
      Agreement. Such campaign shall include advertisements and other
      promotional material, seminars and conferences and such other methods of
      promotion as the parties shall agree in order to effectively market the
      Products in the Territory. The form and content of all methods of
      promotion (and any

                                                                          Page 8
<PAGE>

      alterations thereto) shall be agreed by the parties in advance. The costs
      of such campaign shall be borne by Distributor unless previously agreed
      otherwise by VidaMed.

4.4   Training. VidaMed shall provide the one (1) training course per year
      --------
      required under Section 3.5(c) above without charge. Additional training
      shall be available at VidaMed's then-standard rates for such training.
      Distributor shall pay all travel and living expenses for its own personnel
      to attend such training.

4.5   Technical Support. Distributor and VidaMed shall meet regularly at a place
      -----------------
      appointed by VidaMed (approximately once every three to six months) to
      ensure that Distributor receives adequate and necessary technical support
      for Distributor's sales activities.

4.6   Telephone Marketing and Technical Support. VidaMed shall provide a
      -----------------------------------------
      reasonable level of telephone marketing and technical support to employees
      of Distributor who have been trained by VidaMed during VidaMed's normal
      business hours to answer Distributor's questions related to Products.

4.7   Product Changes. VidaMed reserves the right, in its sole discretion and
      ---------------
      without incurring any liability to Distributor, to:

      (a)   alter the specification for any Product or component thereof;

      (b)   discontinue the manufacture of any Product or component thereof;

      (c)   discontinue the development of any improvement to a Product or new
            product, whether or not such improvement or product has been
            announced publicly; or

      (d)   commence the manufacture and sale of improvements to Products or new
            products having features which make any Product wholly or partially
            obsolete, whether or not Distributor is granted any distribution
            rights in respect of such improvement or new products.

      Notwithstanding the above, VidaMed shall use reasonable efforts to provide
      Distributor with prompt written notice of such decisions and will fill all
      accepted purchase orders from Distributor for any such altered or
      discontinued Products of which manufacturing and commercial deliveries
      have commenced.

5.    PRICING AND PAYMENT

5.1   Prices. VidaMed shall sell Products to the Distributor for the prices set
      ------
      out in Exhibit A. VidaMed may publish recommended resale prices in respect
      of the Products but Distributor shall be free to sell, advertise and
      display the Products in the Territory at whatever price Distributor shall
      choose.

                                                                          Page 9
<PAGE>

5.2   Price Changes. VidaMed may revise the prices in Exhibit A at any time upon
      -------------
      sixty (60) days prior written notice to Distributor. Upon notice of a
      change in such prices and prior to the effective date of such change,
      Distributor shall have the right to order any quantity of Product at the
      price in effect prior to such change provided that Distributor agrees to
      take possession of such Product within sixty (60) days of the date on
      which VidaMed notified Distributor of such change.

5.3   Payment. All payments due to VidaMed hereunder shall be made in United
      -------
      States dollars and payment shall be made within sixty (60) days from the
      date of invoice ( together with value added tax). Distributor must give
      VidaMed written notice of any discrepancies among the purchase order, the
      invoice, and the Products received, within thirty (30) days after receipt
      of the Products or the invoice, whichever occurs later. Interest at the
      rate of 1.5% per month, or such lesser rate as is the maximum rate of
      interest permitted by law, will be charged on all overdue accounts. In the
      event that Distributor fails to meet such terms of payment, in addition to
      and not by way of limitation of VidaMed's other rights under this
      Agreement and at law, VidaMed reserves the right at any time to alter
      terms of payment so that future shipments will be made only on such basis
      as VidaMed determines will ensure payment for such shipments.

5.4   Costs, Charges and Taxes. Any and all expenses, costs and charges incurred
      ------------------------
      by Distributor in the performance of its obligations under this Agreement
      shall be paid by Distributor. In addition, Distributor shall be
      responsible for the collection, remittance and payment of any or all
      taxes, charges, levies, assessments and other fees of any kind imposed by
      governmental or other authority in respect of the purchase, sale,
      importation, lease or other distribution of the Products.

5.5   Retention of Title. Title to the Products shall not pass to Distributor
      ------------------
      until VidaMed has received payment in full of the price therefor. Until
      title in the Products has passed, Distributor shall be in possession of
      the Products in a fiduciary capacity and shall not part with possession of
      the Products, shall take proper care of the Products and shall keep them
      free from any charge, lien or other encumbrance and store the Products in
      such a way to show clearly that they belong to VidaMed.

6.    PURCHASES BY DISTRIBUTOR

6.1   Marketing Plan. Distributor shall produce a marketing plan in accordance
      --------------
      with Exhibit H, the first of which shall be received and approved by
      VidaMed prior to the signing of this Agreement, and subsequently as part
      of the sales forecast in Section 6.2 below.

6.2   Forecasts. Distributor will provide VidaMed each month with a rolling
      ---------
      binding forecast of its expected unit sales of Products and revenues from
      such sales during the six (6) month period beginning with the month in
      which the forecast is provided to VidaMed. The first

                                                                         Page 10
<PAGE>

      such forecast shall be due within five (5) days after the Effective Date,
      with subsequent forecasts due on the fifth day of each calendar month
      during the term of this Agreement. Distributor shall provide VidaMed each
      month a completed Distributor Monthly Report in the form of Exhibit G,
      which report shall contain the forecasts required to be furnished under
      this Section 6.2 and such other information requested by VidaMed.

6.3   Order and Acceptance. All orders for Products submitted by Distributor
      --------------------
      (the "Orders") shall be initiated by written purchase orders sent to
      VidaMed and requesting a delivery date, during the term of this Agreement
      and providing details of all information and documents required to be
      included with the Products when shipped; provided, however, that an Order
      may initially be placed by facsimile if a written confirming purchase
      Order is received by VidaMed within five (5) days after said facsimile
      Order. The country in the Territory for all Orders shall specified in the
      Order. To facilitate VidaMed's production scheduling, Distributor shall
      submit purchase Orders to VidaMed at least thirty (30) days prior to the
      requested delivery date. No Order shall be binding upon VidaMed until
      accepted by VidaMed in writing (and VidaMed will accept or reject any
      Order within fifteen (15) days after receiving it) and VidaMed shall have
      no liability to Distributor with respect to purchase Orders that are not
      accepted. No partial shipment of an Order shall constitute the acceptance
      of the entire Order, absent the written acceptance of such entire Order.
      Distributor shall accept or reject Products delivered hereunder within
      thirty (30) days of receipt.

6.4   Terms of purchase orders. The purchase and delivery of Products sold by
      ------------------------
      VidaMed to Distributor hereunder shall be governed by the terms and
      conditions of this Agreement and nothing contained in any purchase order,
      acknowledgment or other such document issued by either party shall in any
      way modify such terms of purchase or add any additional terms or
      conditions.

6.5   Minimum Purchase Commitment. Distributor agrees to the minimum annual
      ---------------------------
      purchase commitment set forth in Exhibit B, and agrees to order, pay for
      and accept delivery of Products to achieve this minimum purchase
      commitment. Distributor agrees to place an initial stocking order
      immediately upon execution of this Agreement for shipment within thirty
      (30) days, for the quantity of Products set forth in attached Exhibit B-1.
      Distributor understands and agrees that the establishment and achievement
      of the Minimum Performance pursuant to this Section 6.5 is the essence of
      this Agreement and that any failure by Distributor to satisfy its
      obligation under this Section 6.5 will entitle VidaMed to terminate this
      Agreement immediately pursuant to Section 14.4, or, alternatively, VidaMed
      will be entitled, in its sole discretion, to convert this Agreement into
      an entirely non-exclusive distributor agreement. Termination of this
      Agreement under Section 14.4 will not, under any circumstances, relieve
      the Distributor of its obligation to pay any sums owed to VidaMed under
      the terms of this Agreement, including without limitation the minimum
      annual purchase commitment set forth in Exhibit B-2. Conversion of this
      agreement to an entirely non-exclusive agreement will not, under any
      circumstances, relieve the Distributor of its

                                                                         Page 11
<PAGE>

      minimum annual purchase commitment set forth in Exhibit B-2 for the year
      in which such conversion occurs.

6.6   Cancellation and Reschedule of Orders. Shipments of Products under order
      -------------------------------------
      in accordance with this Agreement may be deferred or canceled by
      Distributor, upon prior approval by VidaMed.

6.7   Shipping. Unless the parties otherwise agree in writing, all Products
      --------
      delivered pursuant to the terms of this Agreement shall be suitably packed
      for shipment in VidaMed's standard shipping cartons, marked for shipment
      at Distributor's address set forth below, and delivered to Distributor or
      its carrier agent ex-works VidaMed's manufacturing plant or such other
      shipping location as VidaMed may designate at its sole discretion, at
      which time title to such Products and risk of loss shall pass to
      Distributor. Unless otherwise instructed in writing by Distributor,
      VidaMed shall select the carrier. All freight, insurance, and other
      shipping expenses, as well as any special packing expense, shall be paid
      by Distributor. Distributor shall also bear all applicable taxes, duties,
      and similar charges that may be assessed against the Products after
      delivery to the carrier at VidaMed's plant.

6.8   Acceptance. The Products delivered by VidaMed will be subject to
      ----------
      inspection and test by Distributor, and in the event any Product is
      defective in material or workmanship, Distributor shall have the right to
      reject it within thirty (30) days after delivery (the "Rejection Period").
      Products rejected by Distributor shall have a failure report attached, and
      shall be forwarded to VidaMed freight collect. The rejected Products will
      be repaired or replaced at VidaMed's option and returned to Distributor
      freight prepaid. VidaMed shall use commercially reasonable efforts to
      repair or replace the defective Products within thirty (30) days of its
      receipt. In the event VidaMed is unable to repair or replace such
      defective Products, VidaMed shall refund the purchase price paid by
      Distributor for such defective Products. If rejected Products are found
      not to be defective after return to VidaMed, the Products will be
      reshipped to Distributor at Distributor's expense, and each such unit will
      be subject to a service charge of 5%.

6.9   Returns. In the event Distributor returns to VidaMed any Product which is
      -------
      not defective, VidaMed shall charge Distributor a restocking fee upon
      return of each Product equal to ten percent (10%) of the price paid by
      Distributor for that Product and shall credit the balance of this price to
      Distributor's account. Distributor shall be responsible for all charges
      incurred in respect of the redelivery of the Products. Before returning
      any Product to VidaMed for repair or servicing, Distributor shall request
      a Return Material Authorization ("RMA") from VidaMed, and instructions for
      returning Products, including the location for the returned Products which
      shall be at VidaMeds choice, and any and all returned Products shall be
      accompanied by such RMA.

7.    MAINTENANCE

                                                                         Page 12
<PAGE>

7.1   Maintenance. VidaMed will provide all maintenance and repair services to
      -----------
      the Distributor and end user customers for both Products under warranty
      (in accordance with Section 8.1 below) and for Products whose warranty has
      expired. Products whose warranty has expired shall be repaired at
      Vidamed's maintenance and repair fees then in effect. Distributor shall
      not, without VidaMed's prior written consent, perform any maintenance or
      repairs with respect to the Products. Distributor shall request a RMA
      before returning any Product for repair.

7.2   Non-Warranty Repair Service. Products that do not qualify under the
      ---------------------------
      VidaMed warranty may be returned to VidaMed for repair. Charges will be on
      a time and materials basis at VidaMed's then current rates. Before
      returning any Product to VidaMed for repair or servicing, Distributor
      shall request a RMA from VidaMed, and instructions for returning Products,
      any and all returned Products shall be accompanied by such RMA. VidaMed
      shall use reasonable endeavours to ship Products sent in for repair within
      thirty (30) work days of receipt. Distributor is responsible for shipping
      charges to VidaMed. VidaMed will return ship by the method recommended by
      Distributor. Distributor will be responsible for any charges for shipping
      and handling in addition to such other reasonable charges in respect of
      labour and materials as VidaMed shall from time to time require.

7.3   Problem Reporting. Distributor will keep VidaMed informed as to problems
      -----------------
      encountered with respect to the Products and any resolutions, and to
      communicate promptly to VidaMed any and all modifications, design changes
      or improvements of the Products suggested by any customer, or any employee
      or agent of Distributor, and Distributor hereby assigns to VidaMed any
      right, title or interest that Distributor may have in such information.

8.    WARRANTY

8.1   Warranty to Distributor. VidaMed's obligations with respect to the
      -----------------------
      Products are strictly limited to VidaMed's standard written warranty, as
      set forth in Exhibit E attached hereto (the "Warranty"). The Warranty made
      and issued by VidaMed with respect to a Product in the ordinary course of
      its business as of the time such Product is delivered to Distributor will
      not run in favor of Distributor but will run (if at all) in favor of any
      end-users purchasing Products new from or through Distributor. In the
      event of a breach of the Warranty, VidaMed will, at no charge to the
      customer, repair or replace all defective Products at its facilities.
      Prior to returning any Product alleged to be defective, Distributor will
      notify VidaMed in writing of the claimed defect and will include the model
      and lot/serial number of such Product, as well as the number and date of
      the invoice therefor.

8.2   Limitation. VIDAMED'S ONLY WARRANTY WITH RESPECT TO THE PRODUCTS WILL BE
      ----------
      THE WARRANTY REFERRED TO IN SECTION 8.1 ABOVE, WHICH WILL NOT RUN IN FAVOR
      OF DISTRIBUTOR BUT MAY RUN IN FAVOR OF END-USER CUSTOMERS PURCHASING
      PRODUCTS NEW FROM OR THROUGH

                                                                         Page 13
<PAGE>

      DISTRIBUTOR. VIDAMED EXPRESSLY DISCLAIMS ANY EXPRESS OR IMPLIED WARRANTY
      OF ANY KIND OR NATURE TO DISTRIBUTOR, INCLUDING WITHOUT LIMITATION ANY
      WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE
      (EVEN IF THAT PURPOSE OR USE IS KNOWN TO VIDAMED) AND ALL OBLIGATIONS OR
      LIABILITIES ON THE PART OF VIDAMED FOR DAMAGES ARISING OUT OF OR IN
      CONNECTION WITH THE USE, REPAIR OR PERFORMANCE OF THE PRODUCTS. In
      addition, the Warranty in Section 8.1 shall not apply to Products that
      have been modified or altered in any manner by anyone other than VidaMed,
      which have been used in any manner other than for which the Product was
      intended, or to defects caused (a) through no fault of VidaMed during
      shipment or other transportation to or from Distributor; (b) by the use or
      operation in an application or environment other than that intended or
      recommended by VidaMed; (c) by service by anyone other than employees of,
      or persons approved in writing by, VidaMed; or (d) by accident,
      negligence, misuse, other than normal electrical or physical stress, or
      other causes other than normal use. Replacement Products and parts
      supplied under this warranty shall carry only the unexpired portion of the
      original warranty.

8.3   Warranty Repair. In the event that VidaMed receives notice from
      ---------------
      Distributor during the warranty period that a Product ("Nonconforming
      Item") does not conform to its Warranty, VidaMed's sole liability, and
      Distributor's exclusive remedy, shall be for VidaMed, at its sole option,
      to either repair or replace the Nonconforming Item. Nonconforming Items
      replaced under the terms of any such Warranty may be refurbished or new
      equipment substituted at VidaMed's option. A Nonconforming Item may only
      be returned with the prior written approval of VidaMed. Any such approval
      shall reference a Return Material Authorization (RMA) number issued by
      authorized VidaMed service personnel. Transportation costs, if any,
      incurred in connection with the return of a defective Nonconforming Item
      to VidaMed shall be borne by Distributor. Any transportation costs
      incurred in connection with the redelivery of an Nonconforming Item to
      Distributor returned in the manner provided above shall be borne by
      VidaMed if actually nonconforming. In the event a returned Nonconforming
      Item is found not to be Nonconforming, all costs to return such item to
      Distributor shall be borne by Distributor, and such items will be subject
      to a service charge of two hundred and fifty dollars (US$250), which
      amounts shall be invoiced to Distributor and shall be payable within
      thirty days of the date of invoice. All claims by Distributor pursuant to
      the foregoing warranty shall be made in a writing (including a telecopy)
      stating (1) the serial or lot number of the allegedly defective
      Nonconforming Item, (2) the date such Nonconforming Item was delivered to
      or installed for a customer, and (3) a reasonably detailed description of
      the defect.

8.4   Disclaimer. Subject to Section 9 below and except as set forth above,
      ----------
      VidaMed makes no warranties or conditions, expressed, implied statutory or
      otherwise, respecting products, spare parts or this agreement. All
      conditions, warranties and representations expressed or implied by law in
      relation to the products are hereby excluded.

                                                                         Page 14
<PAGE>

9.    LIMITATION OF LIABILITY

      VidaMed's liability arising out of this Agreement and/or the sale of the
Product whether for negligence, breach of contract, misrepresentation or
otherwise shall in no circumstance exceed the amount paid by Distributor for the
Products in question. In no event shall VidaMed be liable for:

      (a)   damage to or loss of the Products or any part of them whilst in
            transit;

      (b)   for defects in the Products caused by abnormal or unsuitable
            conditions of storage or use or any act, neglect or default of the
            Distributor or of any third party;

      (c)   the cost of procurement of substitute products by Distributor;

      (d)   the use of any Product in combination with an apparatus or device
            not manufactured, supplied or approved by VidaMed;

      (e)   the use of any Product in a manner for which it was not designed or
            intended to be used;

      (f)   any modification of any Product by Distributor or any third party
            which causes it to become infringing; or

      (g)   (except in respect of death or personal injury caused by VidaMed's
            negligence), VidaMed shall not be liable to Distributor for any
            loss, damage or injury or for any indirect, punitive, special or
            consequential loss or damage (whether for loss of profit or
            otherwise), costs, expenses or other claims which arise out of or in
            connection with the supply of the products or their use or resale by
            Distributor, even if VidaMed has been advised of the possibility of
            such potential loss or damage.

10.   PROPERTY RIGHTS

10.1  Property rights. Except as expressly set forth herein, Distributor and
      ---------------
      VidaMed agree that VidaMed owns all right, title, and interest in the
      Products and in all of VidaMed's patents, VidaMed Trademarks, trade names,
      inventions, copyrights, know-how, and trade secrets relating to the
      design, manufacture, operation or service of the Products. The use by
      Distributor of any of these property rights is authorized only for the
      purposes herein set forth, and upon termination of this Agreement for any
      reason such authorization shall cease.

10.2  No Warranty. VidaMed makes no representation or warranty as to the
      -----------
      validity or enforceability of the VidaMed Trademarks nor as to whether the
      VidaMed Trademarks infringe upon any intellectual property rights of third
      parties within the Territory.

                                                                         Page 15
<PAGE>

10.3  Use of VidaMed's Trademarks. During the term of this Agreement,
      ---------------------------
      Distributor shall indicate to the public that Distributor is an authorized
      distributor of VidaMed's Products and advertise within the Territory such
      Products under the VidaMed Trademarks. Distrubutor shall not alter or
      remove any VidaMed Trade Mark applied to the Products. Except as set forth
      in this Section 10.3, nothing contained in this Agreement shall grant to
      Distributor any right, title or interest in the VidaMed Trademarks. At no
      time during or after the term of this Agreement shall Distributor attempt
      to register any trademarks, masks or trade names confusingly similar to
      the VidaMed Trademarks.

10.4  Approval of Representations. All representations of the VidaMed Trademarks
      ---------------------------
      that Distributor intends to use shall first be submitted to VidaMed for
      approval, which shall not be unreasonably withheld, of design, color, and
      other details or shall be exact copies of the VidaMed Trademarks. If any
      of the VidaMed Trademarks are to be used in conjunction with another
      trademark on or in relation to the Products, then the VidaMed Trademarks
      shall be presented equally legibly, equally prominently, and of greater
      size than the other but nevertheless separated from the other so that each
      appears to be a mark in its own right, distinct from the other mark.

10.5  Sale Conveys no Right to Manufacture Copy or Modify. The Products are
      ---------------------------------------------------
      offered for sale and are sold by VidaMed subject in every case to the
      condition that such sale does not convey any license, expressly or by
      implication, to manufacture, duplicate or otherwise copy or reproduce or
      modify any of the Products. Distributor shall take appropriate steps with
      Distributor's customers, as VidaMed may request to inform them of and
      assure compliance with the restrictions contained in this Section 10.5

10.6  Notice and Assistance. Distributor shall, at the expense of VidaMed, take
      ---------------------
      all such steps as VidaMed may reasonably require to assist VidaMed in
      maintaining the validity and enforceability of the VidaMed Trademarks and
      any other intellectual property of VidaMed during the term of this
      Agreement. In addition, Distributor shall promptly and fully notify
      VidaMed of any actual, threatened or suspected infringement in the
      Territory of any VidaMed Trade Mark or other intellectual property of
      VidaMed which comes to Distributor's notice and Distributor shall, at the
      request and expense of VidaMed, do all such things as may be reasonably
      required to assist VidaMed in taking or resisting any proceedings in
      relation to any such infringement or claim.

10.7  Patent Marking. Distributor shall not remove from the Products any patent
      --------------
      notices marked on the Products, and shall label the packaging materials of
      the Products with such patent notices as VidaMed may request.

11.   INDEMNITY

                                                                         Page 16
<PAGE>

11.1  Intellectual Property Indemnity. VidaMed shall indemnify, defend and hold
      -------------------------------
      Distributor harmless against all liabilities and expenses paid to third
      parties as a result of any claim or suit for an alleged direct
      infringement of any third party intellectual property rights arising from
      the sale or use by Distributor of the Products as contemplated herein;
      provided that Distributor (a) promptly notifies VidaMed of the claim, (b)
      grants VidaMed full control over the defence or settlement thereof and (c)
      cooperates fully with VidaMed, at VidaMed's request and expense, in
      defence thereof. If a Product is, or in the opinion of VidaMed may become,
      the subject of any claim or suit for infringement of any such rights, then
      VidaMed may, at its option and expense: (i) procure for Distributor the
      right to distribute or use, as appropriate, such Product; or (ii) modify
      or replace the Product, or part thereof, with other suitable Products or
      parts that are substantially equivalent in functionality and performance;
      or (iii) accept return of such Product, or part thereof, and refund the
      aggregate payments paid therefor by Distributor, less a reasonable sum for
      use and damage as amortized over a forty-eight (48) month period.
      Notwithstanding the above, VidaMed shall not be liable for any costs or
      expenses incurred without its prior written authorization.

11.2  Limitation. Notwithstanding the provisions of Section 11.1 above, VidaMed
      ----------
      assumes no liability for (i) any infringement claims with respect to any
      product or process in or with which any of the Products may be used but
      not covering the Products standing alone; (ii) any trademark infringements
      involving any marking or branding not applied by VidaMed or involving any
      marking or branding applied at the request of Distributor; or (iii) the
      modification of the Products, or any part thereof, unless such
      modification was made by VidaMed.

11.3  Entire Liability. The foregoing provisions of this Section 11 states the
      ----------------
      entire liability and obligation of Vidamed and the exclusive remedy of
      Distributor and its customers, with respect to any alleged infringement of
      patents or other intellectual property rights by the Products or any part
      thereof. All warranties of non-infringement, statutory, implied or
      otherwise, are hereby expressly disclaimed.

11.4  Insurance. Each party will carry product liability insurance covering any
      ---------
      loss, damage, expense or liability incurred or suffered by any party other
      than VidaMed and Distributor arising out of any use of a Product. Such
      policy or policies will (a) have aggregate limits of liability of not less
      than $1,000,000 with respect to any incident or occurrence and of not less
      than $10,000,000 in the aggregate; (b) name both VidaMed and Distributor
      as insured parties; (c) provide for a deductible or retained amount of not
      more than $25,000; and (d) provide that such policy may not be canceled
      except upon not less than 30 days' written notice to both VidaMed and
      Distributor. Each party will provide such evidence of the effectiveness of
      such insurance to the other party as may be reasonably requested.

12.   CONFIDENTIALITY

                                    Page 17
<PAGE>

      Distributor acknowledges that by reason of Distributor's relationship to
VidaMed hereunder Distributor will have access to certain information and
materials concerning VidaMed's business, plans, customers, technology and know
how and products that are confidential and of substantial value to VidaMed,
which value would be impaired if such information were disclosed to third
parties. Distributor agrees that Distributor will not use in any way for
Distributor's own account or the account of any third party, nor disclose to any
third party, any such confidential information revealed to Distributor by
VidaMed. Distributor shall take every reasonable precaution to protect the
confidentiality of such information. Upon request by Distributor, VidaMed shall
advise whether or not VidaMed considers any particular information or materials
to be confidential. Distributor shall not publish any technical description of
the Products beyond the description published by VidaMed (except to translate
that description into appropriate languages for the Territory). In the event of
termination of this Agreement, there shall be no use or disclosure by
Distributor of any confidential information of VidaMed, and Distributor warrants
that it shall not at any time manufacture any compositions, devices, components
or assemblies utilizing any of VidaMed's confidential information. Upon request
of VidaMed or termination of this Agreement, Distributor shall return all such
Confidential Information to VidaMed.

13.   COMPLIANCE WITH LAW

13.1  Export Control Regulations. Any and all obligations of VidaMed to provide
      --------------------------
      the Products, as well as any technical assistance, shall be subject in all
      respects to such United States laws and regulations as shall from time to
      time govern the license and delivery of technology and products abroad by
      persons subject to the jurisdiction of the United States, including the
      United States Foreign Assets Control Regulations, Transaction Control
      Regulations and Export Control Regulations, as amended, and any successor
      legislation issued by the Department of Commerce, International Trade
      Administration, or Office of Export Licensing. Without in any way limiting
      the provisions of this Agreement, Distributor agrees that, unless prior
      authorization is obtained from the office of Export Licensing, it shall
      not export, reexport, or transship, directly or indirectly, to country
      groups Q, S, W, Y, or Z (as defined in the Export Administration
      Regulations), or Afghanistan or the People's Republic of China (excluding
      Taiwan) any of the technical data disclosed to Distributor or the direct
      product of such technical data.

13.2  Governmental Consent. Distributor represents and warrants that, as of the
      --------------------
      Effective Date of this Agreement, no consent, approval or authorization
      of, or designation, declaration or filing with, any governmental authority
      in the Territory which has not been made or obtained by Distributor prior
      to the Effective Date is required in connection with the valid execution,
      performance and delivery of this Agreement. Distributor shall be
      responsible for timely filings of this Agreement with any required
      government agencies or commissions in the Territory. In the event any such
      agency or governmental entity objects to or disapproves of this Agreement
      or any provision hereof, VidaMed shall have the right to immediately
      terminate the Agreement.

                                                                         Page 18
<PAGE>

13.3  Currency Control. Distributor represents and warrants that, on the
      ----------------
      Effective Date of this Agreement, no currency control laws applicable in
      the Territory prevent the payment to VidaMed of any sums due under this
      Agreement.

13.4  Foreign Corrupt Practices Act. In conformity with the United States
      -----------------------------
      Foreign Corrupt Practices Act and with VidaMed's established corporate
      policies regarding foreign business practices, Distributor and its
      employees and agents shall not directly or indirectly make an offer,
      payment, promise to pay, or authorize payment, or offer a gift, promise to
      give, or authorize the giving of anything of value for the purpose of
      influencing an act or decision of an official of any government within the
      Territory or the United States Government (including a decision not to
      act) or inducing such a person to use his influence to affect any such
      governmental act or decision in order to assist VidaMed in obtaining,
      retaining or directing any such business.

13.5  Intellectual Property Rights Registrations. Distributor shall promptly
      ------------------------------------------
      notify VidaMed in writing of, and shall assist VidaMed with any
      registrations or filings required to obtain patent, copyright, trademark
      or other intellectual property rights protection, in VidaMed's name, for
      the Products in the Territory under applicable law. VidaMed shall be
      responsible for all fees or expenses incurred in connection with such
      intellectual property rights registrations or filings.

13.6  Non-Compliance as Material Default. Non-compliance by Distributor or its
      ----------------------------------
      employees or agents with this Section 13 shall be deemed to constitute a
      material default under this Agreement.

14.   TERM AND TERMINATION

14.1  Term. This Agreement shall continue in force until [DATE] unless
      ----
      terminated earlier under the provisions of this Section 14. At the end of
      such term, this Agreement shall terminate automatically without notice
      unless prior to that time the parties have agreed in writing to renew the
      Agreement.

14.2  Termination for Cause. If either party defaults in the performance of any
      ---------------------
      material provision of this Agreement, then the non-defaulting party may
      give written notice to the defaulting party that if the default is not
      cured within sixty (60) days the Agreement shall be terminated. If the
      non-defaulting party gives such notice and the default is not cured during
      such sixty-day period, then the Agreement shall automatically terminate at
      the end of that period.

14.3  Termination for Insolvency. This Agreement shall terminate, without
      --------------------------
      notice, (i) upon the institution by or against Distributor of insolvency,
      receivership or bankruptcy proceedings or any other proceedings for the
      settlement of Distributor's debts, (ii) upon Distributor's making an
      assignment for the benefit of creditors, or (iii) upon Distributor's
      dissolution.

                                                                         Page 19
<PAGE>

14.4  Low Orders. VidaMed shall have the option to terminate this Agreement with
      ----------
      immediate effect at any time within three months after the end of any of
      the calendar years specified in Exhibit B2 if the Minimum Performance for
      that year, as specified in that Exhibit, has not been achieved.

14.5  Failure to Pay Invoices. VidaMed shall have the option to terminate the
      -----------------------
      Agreement with immediate effect at any time Distributor has an outstanding
      account balance due to VidaMed which is more than 60 days past due.

14.6  Force Majeure. Either party may terminate this Agreement by giving written
      -------------
      notice to the other party should an event of Force Majeure (as defined in
      Section 15.3 below) prevent such other party's performance under this
      Agreement for a period of 90 consecutive days as more specifically
      provided in Section 15.3 below.

14.7  Limitation on Liability. It is expressly understood and agreed that the
      -----------------------
      right of termination set forth in this Section 14 is absolute, and that
      the parties have considered the possibility of such termination and the
      possibility of loss and damage resulting therefrom in making expenditures
      related to the performance of this Agreement. It is the express intent and
      agreement of the parties that neither party, except as otherwise provided
      in this Agreement, shall be liable to the other for compensation,
      reimbursement or damages on account of the loss of prospective profits or
      anticipated sales or on account of expenditures, inventory, investments,
      leases or commitments in connection with the business or goodwill of
      VidaMed or Distributor by reason of the termination of this Agreement in
      accordance with its terms.

14.8  Effect of Termination.
      ---------------------

      (a)   Distributor shall be permitted for a period of six (6) months
            following termination to sell and distribute such stocks of the
            Products as it may at the time of termination of this Agreement have
            in its possession or under its control. At the end of such period,
            Distributor shall give VidaMed the right to repurchase Distributor's
            remaining inventory of Products that have not expired, are in their
            original packaging and are in marketable condition (if any) at the
            prices Distributor paid for such Products less any shipping and
            packaging charges and taxes and less a 25% restocking fee, FCA
            (Incoterms 1990) VidaMed's facility. VidaMed may deduct any amounts
            owed to it by Distributor, whether for payment of Products or
            otherwise, from the amount due Distributor for the repurchase by
            VidaMed of such inventory of Products.

      (b)   Termination shall not, under any circumstances, relieve the
            Distributor of its obligation to pay any sums owed to VidaMed under
            the terms of this Agreement, including without limitation the
            minimum annual purchase commitment set forth in Exhibit B-2.

                                                                         Page 20
<PAGE>

      (c)   Upon expiration or termination of this Agreement, VidaMed may cancel
            any or all unfilled orders.

      (d)   Within 15 days of the effective date of termination of this
            Agreement, Distributor shall furnish VidaMed a list of names of
            customers who have purchased Products within the last 36 months and
            information on the status of all sales efforts related to the
            Products at the time of such termination. The information required
            to be furnished under this Section 14.8(d) shall not be deemed
            proprietary information of Distributor.

      (e)   Within thirty (30) days after expiration or the termination of this
            Agreement, Distributor shall return all samples, instruction books,
            technical pamphlets, catalogues, advertising materials,
            specifications and other materials, documents or papers whatsoever
            sent to Distributor and relating to VidaMed's business at VidaMed's
            expense. Distributor shall not make, use, dispose of or retain any
            copies of any confidential items or information which may have been
            entrusted to Distributor.

      (f)   Upon expiration or termination of this Agreement, Distributor shall
            immediately cease to use the VidaMed Trademarks and any other
            intellectual property rights of VidaMed and the license granted
            pursuant to Section 10.1 shall immediately terminate.

      (g)   Sections 9, 10, 11, 12, 13, 14 and 15 shall survive expiration or
            termination of this Agreement for any reason.

15.   GENERAL PROVISIONS

15.1  Choice of Language. The original of this Agreement has been written in
      ------------------
      English. Distributor hereby waives any right it may have under the law of
      Distributor's country to have this Agreement written in the language of
      Distributor's country.

15.2  Waiver. Any delay or omission by either party to exercise any right or
      ------
      remedy under this Agreement shall not be construed to be a waiver of any
      such right or remedy or any other right or remedy hereunder. All of the
      rights of either party under this Agreement shall be cumulative and may be
      exercised separately or concurrently.

15.3  Force Majeure. Neither party shall be liable to the other for its failure
      -------------
      to perform any of its obligations hereunder during any period in which
      such performance is delayed by circumstances beyond its reasonable control
      including, but not limited to, fire, flood, earthquake, war, embargo,
      strike, riot, inability to secure materials and transportation facilities,
      failure of suppliers, or the intervention of any governmental authority
      ("Force

                                                                         Page 21
<PAGE>

      Majeure"). If either party is affected by Force Majeure, it shall
      forthwith notify the other of the nature and extent thereof. If such Force
      Majeure shall continue for more than ninety (90) consecutive days, the
      party injured by the inability of the other to perform shall have the
      right upon written notice to either (1) terminate the Agreement, or (2)
      treat this Agreement as suspended during the delay and reduce any
      commitment in proportion to the duration of the delay.

15.4  Publicity. Neither party shall issue press release or similar public
      ---------
      disclosure of any nature regarding this Agreement without the other
      party's prior written approval, which approval shall not be unreasonably
      withheld. However, such approval shall be deemed to have been given to the
      extent such disclosure is required by professional business advisors and
      financing sources of VidaMed, Distributor, or to comply with governmental
      requirements.

15.5  Headings. The headings used in this Agreement are inserted for convenience
      --------
      only and shall not affect the construction or interpretation of any
      provision.

15.6  Notices. Any notice required or permitted by to this Agreement shall be
      -------
      made in writing. All notices shall be sent by registered or certified
      mail, return receipt requested, or by commercial carrier, in each case
      postage prepaid. All such notices shall be deemed to have been given three
      (3) days after dispatch in such manner, addressed as shown below or to
      such other address as a party may indicate by notice:

      To VidaMed:                           To Distributor:

      46107 Landing Parkway                 [NAME OF DISTRIBUTOR]
      Fremont, CA 94538 USA                 [ADDRESS]
      Tel: (510) 492-4900                   [ADDRESS]
      Fax: (510) 492-4999                   Tel:  [TELEPHONE #]
      Attn: President and CEO               Fax: [FAX #]
                                            Attention: [NAME OF CONTACT]

15.7  Severability. If any provision of this Agreement is held invalid by any
      ------------
      law, rule, order or regulation of any government, or by the final
      determination of any court of competent jurisdiction, such invalidity
      shall not affect the enforceability of any other provisions not held to be
      invalid.

15.8  Non-Assignability and Binding Effect. A mutually agreed consideration for
      ------------------------------------
      VidaMed's entering this Agreement is the reputation, business standing,
      and goodwill already honored and enjoyed by Distributor under
      Distributor's present ownership, and, accordingly,

                                                                          Page22
<PAGE>

      Distributor agrees that Distributor's rights and obligations under this
      Agreement may not be transferred or assigned directly or indirectly
      without the prior written consent of VidaMed. VidaMed may assign this
      Agreement in connection with the sale of all or substantially all of its
      business assets relating to this Agreement, whether by merger, sale or
      otherwise. Subject to the foregoing sentence, this Agreement shall be
      binding upon and inure to the benefit of the parties hereto and their
      successors and assigns.

15.9  Relationship. This Agreement does not make either party the employee,
      ------------
      agent or legal representative of the other for any purpose whatsoever. In
      fulfilling its obligations pursuant to this Agreement each party will be
      acting as an independent contractor. This Agreement will not be construed
      in any way to deem Distributor an agent or franchisee of VidaMed for any
      purpose whatsoever. Distributor acknowledges that it has paid no fee or
      other consideration for any right under this Agreement. It is the express
      intent of the parties, pursuant to their right to freedom of contract,
      that this Agreement will govern the obligations of each to the other and
      the right of each resulting from such relationship and that no federal or
      state franchise law or any other law purporting to alter the relationship
      between VidaMed and Distributor, presently in force or hereafter enacted,
      may apply to the rights and obligations of and between the parties under
      this Agreement.

15.10 Entire Agreement. This Agreement with its Exhibits, sets forth the entire
      ----------------
      agreement and understanding of the parties relating to the subject matter
      herein and supersedes all prior discussions and negotiations, whether oral
      or written, between them. No modification of or amendment to this
      Agreement, nor any waiver of any rights under this Agreement, shall be
      effective unless in writing signed by the party to be charged.

15.11 Counterparts. This Agreement may be executed in two or more counterparts,
      ------------
      each of which shall be deemed an original and all of which together shall
      constitute one instrument.

16.   GOVERNING LAW AND ARBITRATION.

16.1  Governing Law. This Agreement shall be governed by, construed and
      -------------
      interpreted in accordance with the law of the State of California, without
      regard to its choice of law rules.

16.2  Arbitration. Any dispute, controversy or claim arising out of or relating
      -----------
      to this Agreement, or the breach, termination or invalidity thereof, shall
      be finally settled by arbitration in accordance with the commercial
      arbitration rules of the International Chamber of Commerce in effect on
      the date of this Agreement by a single arbitrator who shall be experienced
      in the medical device industry and who shall be appointed in accordance
      with such rules. The place of arbitration shall be San Francisco,
      California. The arbitration shall be conducted in the English language. No
      provision hereof will prevent VidaMed at any time from bringing emergency
      or temporary actions or obtaining court or administrative orders or
      injunctions to protect its rights to its Products, its intellectual
      property, product certifications, and

                                                                         Page 23
<PAGE>

      Distributor will be responsible for all costs and expenses incurred by
      VidaMed in connection with such proceedings if VidaMed is successful in
      obtaining any such protective action.

                                                                         Page 24
<PAGE>

IN WITNESS WHEREOF, THE PARTIES HERETO HAVE DULY EXECUTED THIS AGREEMENT
EFFECTIVE AS OF THE DATE FIRST SET FORTH ABOVE.

for and on behalf of             )
VIDAMED, INC.                    )  By
                                 )        ------------------------
                                          ------------------------
                                          Authorised Signatory

                                    Title:
                                          ------------------------

for and on behalf of             )
[NAME OF DISTRIBUTOR]            )  By
                                 )        ------------------------
                                 )
                                          ------------------------
                                          Authorised Signatory

                                    Title:
                                          ------------------------

                                                                         Page 25

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