-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, P0BLKeWLa9h5TNjg23BkFn0R4t7QGlkW8Wcgd0wjWbA4WBGd2CtEM7U6NyQmyGxG /PZz7CbzaW5KVChE68YSLQ== 0000929624-00-000705.txt : 20000516 0000929624-00-000705.hdr.sgml : 20000516 ACCESSION NUMBER: 0000929624-00-000705 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VIDAMED INC CENTRAL INDEX KEY: 0000929900 STANDARD INDUSTRIAL CLASSIFICATION: SURGICAL & MEDICAL INSTRUMENTS & APPARATUS [3841] IRS NUMBER: 770314454 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-26082 FILM NUMBER: 634083 BUSINESS ADDRESS: STREET 1: 46107 LANDING PARKWAY STREET 2: SUITE 101 CITY: FREMONT STATE: CA ZIP: 94538 BUSINESS PHONE: 5104924900 MAIL ADDRESS: STREET 1: 46107 LANDING PARKWAY STREET 2: STE 101 CITY: FREMONT STATE: CA ZIP: 94538 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2000 or [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to _________ Commission File Number: 0-26082 VIDAMED, INC. (exact name of registrant as specified in its charter) Delaware 77-0314454 (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 46107 Landing Parkway Fremont, CA 94538 (Address of principal executive offices) (510) 492-4900 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [_] No The number of outstanding shares of the registrant's Common Stock, $.001 par value, was 30,090,833 as of March 31, 2000. VIDAMED, INC. INDEX
Page PART I. FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements - unaudited Condensed consolidated balance sheets - March 31, 2000 and December 31, 1999 3 Condensed consolidated statements of operations - three months ended March 31, 2000 and 1999. 4 Condensed consolidated statements of cash flows - three months ended March 31, 2000 and 1999 5 Notes to condensed consolidated financial statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 Item 3 Quantitative and Qualitative Disclosure About Market Risk 12 PART II. OTHER INFORMATION Item 5. Other Information 13 Item 6. Exhibits and reports on Form 8-K 13 Signatures 14 Financial Data Schedule 15 Exhibit Index 16
PART I: FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS VidaMed, Inc. Condensed Consolidated Balance Sheets (In thousands)
March 31, 2000 December 31,1999 ------------------- ---------------------- (Unaudited) (*) Assets Current Assets: Cash and cash equivalents $ 12,173 $ 2,748 Accounts receivable 1,753 1,443 Inventories 349 415 Other current assets 390 531 --------------- --------------- Total current assets $ 14,665 $ 5,137 Property and equipment, net 2,426 2,017 Other assets, net 101 166 --------------- --------------- Total assets $ 17,192 $ 7,320 =============== =============== Liabilities and stockholders' equity Current liabilities: Accounts payable $ 568 $ 461 Accrued liabilities 1,973 2,558 Deferred revenue 339 272 Notes payable, current portion 1,390 1,394 --------------- --------------- Total current liabilities $ 4,270 $ 4,685 Notes payable, long-term portion 829 1,030 Stockholders' equity: Capital stock 114,351 101,725 Accumulated deficit (102,258) (100,120) --------------- --------------- Total stockholders' equity 12,093 1,605 --------------- --------------- Total liabilities and stockholder's equity $ 17,192 $ 7,320 =============== ===============
*The Balance Sheet at December 31, 1999 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. See accompanying notes. Page 3 of 16 VidaMed, Inc Condensed Consolidated Statement of Operations (In thousands, except share and per share amounts) (Unaudited)
Three Months Ended March 31 2000 1999 ---------------- ---------------- Revenues $ 2,524 $ 1,037 Cost of Product Sold 767 833 ---------------- ---------------- Gross Profit 1,757 204 Operating Expenses: Research and Development 783 814 Selling, General and Administrative 3,265 2,504 ---------------- ---------------- Total Operating Expenses 4,048 3,318 ---------------- ---------------- Loss from Operations (2,291) (3,114) Other income (expense), net 153 (42) ---------------- ---------------- Net loss $ (2,138) $ (3,156) ================ ================ Basic and diluted net loss per share $ (0.07) $ (0.16) ================ ================ Shares used in computing basic and diluted net loss per share 28,936,000 20,313,000 ================ ================
See accompanying notes Page 4 of 16 VidaMed, Inc. Condensed Consolidated Statement of Cash Flows (In thousands) (Unaudited)
Three Months Ended March 31 2000 1999 ------------------- -------------------- Cash flows from operating activities: Net loss $ (2,138) $ (3,156) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization Changes in current assets and liabilities: 380 313 Accounts receivable (310) (271) Inventory 66 208 Other current assets 141 66 Other assets 65 (2) Accounts payable 107 (83) Accrued liabilities (379) 77 Deferred revenue 67 2 -------------- --------------- Net cash used in operating activities (2,001) (2,846) -------------- --------------- Cash flows from investing activities: Expenditures for property and equipment (789) (58) -------------- --------------- Net cash used in investing activities (789) (58) -------------- --------------- Cash flows from financing activities: Principal payments under capital leases - (22) Principal payments of notes payable (205) (30) Net cash proceeds from issuance of common stock 12,420 1,388 -------------- --------------- Net cash provided by financing activities 12,215 1,336 -------------- --------------- Net increase (decrease) in cash and cash equivalents 9,425 (1,568) Cash and equivalents at the beginning of the period 2,748 9,384 -------------- --------------- Cash and equivalents at the end of the period $ 12,173 $ 7,816 ============== =============== Supplemental disclosure of cash flows information: Cash paid for interest $ 153 $ 95 ============== ===============
See accompanying notes. Page 5 of 16 VIDAMED, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2000 (Unaudited) 1. Basis of presentation The accompanying unaudited condensed consolidated financial statements of VidaMed, Inc. (the "Company" or "VidaMed") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. The balance sheet as of March 31, 2000, the statements of operations for the three months ended March 31, 2000 and 1999, and the statements of cash flows for the three months ended March 31, 2000 and 1999, are unaudited but include all adjustments (consisting of normal recurring adjustments) that the Company considers necessary for a fair presentation of the financial position at such date and the operating results and cash flows for those periods. Certain information normally included in financial statements and related footnotes prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. The accompanying financial statements should be read in conjunction with the financial statements and notes included in the Company's annual report on Form 10-K for the year ended December 31, 1999, filed with the Securities and Exchange Commission. Results for any interim period shown in this report are not necessarily indicative of results to be expected for any other interim period or for the entire year. 2. Net Loss Per Share Basic net loss per share is computed using the weighted-average number of shares of common stock issued and outstanding during the periods presented. Diluted net loss per share is computed based on the weighted average number of shares of our common stock and common equivalent shares (stock options and warrants to purchase common stock) if dilutive. Because the Company has incurred losses from operations in each of the periods presented, there is no difference between basic and diluted net loss per share amounts. As of March 31, 2000, we had 30,090,833 issued and outstanding shares of common stock , with an additional 3,291,554 options outstanding under employee and director stock option plans, and an additional 3,945,563 warrants outstanding to purchase common stock. The options and warrants will be included in the calculation of net loss per share at such time as their effect is no longer anti-dilutive, as calculated using the treasury stock method. 3. Inventories Inventories are stated at the lower of cost (determined using the first-in, first-out method) or market value. Inventories at March 31, 2000 and December 31, 1999 consist of the following (in thousands): March 31, December 31, 2000 1999 --------- ------------ Raw materials $ 129 $ 147 Work in process 16 39 Finished goods 204 229 --------- ---------- $ 349 $ 415 ========= ========== Page 6 of 16 4. Notes Payable In October 1998, we finalized a $5.5 million debt facility with Transamerica Technology Finance, a division of Transamerica Corporation. The facility is secured by our assets and consists of a revolving accounts receivable-based credit line of up to $3 million and a $2.5 million equipment term loan. The term loan was funded in full as of December 31, 1998, at an interest rate of 12% per year. Repayment of that loan is amortized over a three-year period, with the first monthly payment having been made in December 1998 and continuing monthly thereafter. As of March 31, 2000, we had borrowed approximately $505,000 against the revolving accounts receivable-based line at a rate of 10.5% per year. In January 2000, we renewed our debt facility arrangement with Transamerica and in consideration of this renewal paid a fee of $15,000 and issued a warrant to Transamerica to acquire an additional 77,320 shares of common stock for a purchase price of $1.94 per share. The warrant has a term of five years. 5. Reporting Comprehensive Income (Loss) We follow the Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income" (Statement 130). Statement 130 establishes new rules for the reporting and display of comprehensive income and its components. Statement 130 requires unrealized gains or losses on our available-for-sale securities and foreign currency translation adjustments, to be included in other comprehensive income (loss). During the three months ended March 31, 2000 and 1999, the total comprehensive loss was not materially different from the net loss. 6. Common Stock The increase in capital stock for the three months ended March 31, 2000, is due to the issuance of 7,129,221 additional shares. In January, we sold 5,300,000 shares of common stock to Medtronic and 1,160,000 to existing shareholders. The purchase price per share of common stock was $1.73, which represented a premium to the average closing price for the five days preceding the sale. The investors, including Medtronic, received warrants to purchase 1,938,000 shares of common stock at an exercise price of $1.80 per share. The warrants have a term of five years. In February 2000,we sold 106,648 shares of common stock to MC Medical, Inc. at a per share price of $2.81, which was the average purchase price five days preceding the sale. We issued 78,272 shares of common stock on the exercise of outstanding warrants, 42,334 shares of common stock in employment-related settlements and 441,967 shares of common stock under employee stock option and purchase plans. Page 7 of 16 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION The following is a discussion and analysis of VidaMed's consolidated financial condition and results of operations for the three months ended March 31, 2000 and 1999. We also discuss certain factors that may affect our prospective financial condition and results of operations. This section should be read in conjunction with the Condensed Consolidated Financial Statements and related Notes in Item 1 of this report and the Company's Annual Report on Form 10-K for the year ended December 31, 1999, which has been filed with the Securities and Exchange Commission and is available from the Company at no charge. "Safe Harbor" Statement Under the Private Securities Litigation Reform Act of 1995 This report contains, in addition to historical information, forward-looking statements that are based on current expectations and beliefs but involve a number of risks and uncertainties that could cause actual results to differ materially form those anticipated in the forward-looking statements. Some of the factors that could cause actual results to differ are discussed below in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" and in the "Risk Factors" discussion that follows. You should also refer to the risk factors described in our annual report on Form 10-K for the year ended December 31, 1999, which has been filed with the Securities and Exchange Commission and is available from VidaMed at no charge. The forward-looking statements included in this report are made only as of the date hereof, and we undertake no obligation to publicly revise or update them to reflect subsequent events or circumstances. Overview Since its founding in 1992, VidaMed has been engaged in the design, development and marketing of urological systems, primarily focused on the treatment of the enlarged prostate or benign prostatic hyperplasia, commonly known as BPH. International sales of the patented TUNA System commenced in late 1993, and commercial sales began in the United States in late 1996, after we received FDA clearance. In 1997 the TUNA System was sold to office-based urology practices in the U.S., assuming that after receiving FDA clearance, third-party reimbursement, including Medicare, would be approved for those locations. In mid-1998, Medicare announced that approval of any new office-based or ambulatory surgery center procedures, would be delayed until at least mid-2000 due to Y2K compliance issues. As a result, Medicare reimbursement for the TUNA procedure was made available only for procedures performed in hospital-based settings, and required individual state-by-state approval. Starting in late 1998 and throughout 1999, we focused our sales and marketing efforts on obtaining the required individual state Medicare reimbursement approvals and implementing of a new U.S. hospital-based "fee-per- use" sales and marketing model. Under this model, an entire TUNA System is placed in a hospital at no charge to the hospital. Revenue is generated by selling a single-use component needed for each TUNA Procedure performed. Once the procedure is performed the single-use component is discarded and a new component must be purchased for the next procedure. As of March 31, 2000, 47 states have approved hospital-based Medicare reimbursement coverage for the TUNA procedure. Recently, the Health Care Finance Administration, which administers Medicare, proposed a new fixed rate or "prospective payment system" for hospital-based procedures, to Page 8 of 16 be implemented on July 1, 2000, that may cause a reduction in our current fee- per-use pricing. The prospective payment system is expected to be easier to administer than the current "reasonable cost basis" Medicare reimbursement system. Although the full effect of the prospective payment system on our current pricing structure is unknown at this time, we believe that the simplified administration of Medicare reimbursement could accelerate our sales. We cannot predict, however, whether an accelerated sales cycle and any related increased revenues will offset any required price reductions. To achieve widespread acceptance of the TUNA Procedure, we believe that Medicare reimbursement will need to be available for in physician offices and in ambulatory surgery centers. If Medicare reimbursement coverage becomes available in those settings, we expect the number of procedures performed will increase. We do not, however, expect that Medicare reimbursement in those alternative sites will be approved until at least mid to late 2000, if at all. The failure to receive Medicare reimbursement coverage at adequate reimbursement rates for procedures performed in physician offices and ambulatory surgery centers, or a failure to continue to receive adequate Medicare reimbursement for procedures performed in hospitals, could have a material adverse effect on our future revenues and results of operations. Results of Operations Net revenue for the three months ended March 31, 2000 was $2,524,000, an increase of $1,487,000 or 143% from $1,037,000 in the same period in 1999. Net revenue in the first quarter of 2000 increased 17% from $2,156,000 in the three months ended December 31, 1999. The difference is due primarily to increasing acceptance of our fee-per-use program. Cost of product sold for the three months ended March 31, 2000 was $767,000, a decrease of 8% or $66,000 from $833,000 for the three months ended March 31, 1999. Despite lower product sales in the first quarter of 1999 as compared to 2000, overall cost of product sold were higher in the first quarter of 1999 due to manufacturing expenditures incurred in transferring the manufacturing of our single-use catheters from our Fremont facility to Zeiss Humphrey Systems, our contract manufacturer. Gross margin expressed as a percentage of sales in the three months ended March 31, 2000 was 70%, up from 20% for the three months ended March 31, 1999. This improvement in gross margin is primarily attributed to the introduction and acceptance of the fee-per-use program in early 1999. Gross margin for the three months ended March 31, 2000 and December 31,1999 were $1,757,000 and $1,391,000, respectively. This increase of $366,000 is primarily attributed to the increased volume in our U.S. based fee-per-use program. Research and development (R & D) expenses included expenditures for regulatory compliance and clinical trials. Clinical trial costs consist largely of payments to clinical investigators, product for clinical trials, and costs associated with initiating and monitoring clinical trials. R&D expenses decreased 4% to $783,000 in the three months ended March 31, 2000, from $814,000 in the three months ended March 31, 1999. The decrease was primarily due to reduced clinical activity in 2000. R&D expenses for the first quarter of 2000 decreased $13,000 from $798,000 in the three months ended December 31,1999. Selling, general and administrative (SG&A) expenses for the three months ended March 31, 2000 was $3,265,000, an increase of $761,000 or 30%, compared to expenditures of $2,504,000 in the in the same period in 1999. The difference is do to expansion of the sales and marketing departments to increase revenues from the fee-per-use program. SG&A expenses for the first quarter of 2000 increased $330,000 from $2,935,000 in the three months ended December 31, 1999. This is attributed to higher sales Page 9 of 16 commissions, higher effective employer payroll tax rates and one-time charges to SG&A for outside consultants. Other income/expense for the three months ended March 31, 2000, increased to $153,000 in net income compared to an expense for the comparable period in 1999 of $42,000. Other income is primarily composed of interest income and expense. Other income/expense in the three months ended December 31, 1999 was a net expense of $150,000. This change is a result of additional interest income realized in the first quarter of 2000. History of Operating Losses We have incurred significant operating losses since our inception in 1992 and, as of March 31,2000, had an accumulated deficit of approximately $102.2 million. We expect to continue to incur operating losses through the end of the year 2000 as we expend funds on sales and marketing activities, clinical trials in support of reimbursement approvals and research and development. Our future profitability depends on numerous factors, including: . our success in promoting the fee-per-use program; . our success in achieving market acceptance of the TUNA Procedure; . our success in obtaining and maintaining necessary regulatory clearances; . the extent to which Medicare and other healthcare payors approve reimbursement of the costs of TUNA Procedures performed in hospitals, doctors' offices and ambulatory surgery centers; and . the amount of reimbursement provided and the effects of the proposed "prospective payment system" on our future revenues Liquidity and Capital Resources For the quarter ended March 31, 2000, our cash and cash equivalents increased by $9.4 million to $12.2 million, compared to $2.7 million at December 31, 1999. The increase is due primarily to $11.2 million received from the private placement of our common stock and warrants during the quarter, offset by operating expenses incurred in the normal course of business. While management believes that the proceeds of the equity financing in the first quarter, plus revenues from the fee-per-use program will be sufficient to fund operations at current levels through the end of fiscal 2000, additional financing may be required to fund operations at current levels in 2001. If required, management will pursue, and believes it can obtain, financing to fund operations at current levels in 2001. Additional financing may not be available, or if available, may not be on favorable terms. If additional financing is unavailable, management believes that it would be able to fund operations into fiscal 2001 by scaling back research and development, clinical trials, expansion into the office-based market and other areas of discretionary spending. Reductions in those areas could have a Page 10 of 16 material adverse effect on our long-term opportunities to develop new and competitive products, obtain necessary governmental approvals of those products and develop additional markets for our products. We have a line of credit with Transamerica Technology Finance, a division of Transamerica Corporation. The facility is secured by our assets and consists of a revolving accounts receivable-based credit line of up to $3 million and a $2.5 million equipment term loan. The term loan was funded in full as of December 31, 1998, at an interest rate of 12% per year. Repayment of that loan is amortized over a three-year period, with the first monthly payment having been made in December 1998 and continuing monthly thereafter. We may be able to obtain additional debt financing from Transamerica, but we cannot give any assurance that we will be able to do so or that the terms of the financing would be favorable. Collaborative arrangements, if necessary to raise additional funds, may require us to relinquish rights to certain of our technologies or products. Our failure to raise capital when needed could have a material adverse effect on our business, financial condition and results of operation. As of March 31, 2000, we had borrowed approximately $505,0000 against the Transamerica revolving accounts receivable-based line at a rate of 10.5% per year. Recent Accounting Pronouncements In June 1998, the Financial Accounting Standards Board issued Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities" (Statement 133), which is required to be adopted in the first quarter of the year ending December 31, 2001. Management does not anticipate that the adoption of Statement 133 will have a significant effect on our results of operations or our financial position. In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin No.101 (SAB 101). SAB 101 summarizes certain areas of the views of the SEC staff in applying generally accepted accounting principles to revenue recognition in financial statements. We believe that our current revenue recognition principles comply with SAB 101. RISK FACTORS Our business, results of operations and financial condition are subject to the following risk factors in addition to those described above under "Results of Operations" and "Liquidity and Capital Resources" and in our annual report on Form 10-K for the year ended December 31, 1999. Our Future Revenues Are Subject to Uncertainties Regarding Healthcare Reimbursement and Reform The continuing efforts of government and insurance companies, health maintenance organizations and other payors of healthcare costs to contain or reduce costs of health care may affect our future revenues and profitability. In the United States, given recent federal and state government initiatives directed at lowering the total cost of health care, the U.S. Congress and state legislatures will likely continue to focus on healthcare reform including the reform of Medicare and Medicaid systems, and on the cost of medical products and services. Our ability to commercialize the TUNA Procedure successfully will depend in part on the extent to which the users of our products obtain appropriate reimbursement for the cost of the TUNA Procedure. Third-party payors are increasingly challenging the prices charged for medical products and services. Also, legislative proposals to reform health care or reduce government insurance programs, coupled with the trend toward managed health care in the United States and the concurrent growth of organizations Page 11 of 16 such as HMOs, which organizations could control or significantly influence the purchase of healthcare services and products, may all result in lower prices for or rejection of our products. The cost containment measures that healthcare payors and providers are instituting and the effect of health care reform could cause reductions in the amount of reimbursement available to users of our products, and could materially adversely affect our ability to operate profitably. If Coverage Is Not Approved for Procedures Performed Outside of Hospitals, or if the Amount of Coverage Is Inadequate, We Will Not Be Able to Achieve Widespread Acceptance of the Tuna Procedure To achieve widespread acceptance of the TUNA Therapy, we believe that reimbursement will need to be available for procedures performed outside of the hospital setting, in physician offices and ambulatory surgery centers. In addition, the amount of reimbursement for TUNA Procedures performed in those locations must be adequate. Medicare has not yet approved reimbursement for the costs of supplies, equipment and overhead outside of hospital settings. In 1998, Medicare announced that it would delay consideration of coverage in physician offices and ambulatory surgery centers while it reviewed its Y2K compliance issues. Medicare is now behind schedule in many areas, and we do not expect that coverage for procedures performed at these alternative sites will be approved until at least mid to late 2000. When and if reimbursement is approved, it most likely will be subject to a prospective payment system. Under this system, ambulatory surgery centers and physician offices will be allowed a flat rate of reimbursement for each TUNA Procedure performed, and will need to manage their costs of supplies, equipment and overhead to fit within the approved payment. The amount of reimbursement allowed for a TUNA Procedure under a prospective payment system has not been determined. As a result of these factors, we can give no assurance that procedures performed in physician offices and ambulatory surgery centers will generate significant revenue for us in the United States. If coverage becomes available for procedures performed in physician offices and ambulatory surgery centers, we expect that the number of procedures performed will increase. The amount of reimbursement could decrease, however, and is likely to decrease under the "prospective payment system" and the decrease could be substantial. We cannot predict whether the amount of reimbursement, when and if it is approved, will be deemed adequate by physicians and patients or whether our revenues from procedures performed outside of hospitals will be sufficient to cover our operating expenses. We Offer One Product Line The VidaMed TUNA System consists of a radio frequency generator, a reusable handle, a disposable cartridge and an optical telescope. If a material problem develops with any one or more of those components, our revenues would likely suffer because we do not have other products to rely on. Possible problems include, but are not necessarily limited to, malfunctions, failure to comply with or changes in governmental regulations, product recalls, product obsolescence, injunctions resulting from litigation, inability to protect our intellectual property, invalidity of our patents or shortages of one or more of the components of the system. We Rely on Contract Manufacturers for the Majority of Our Manufacturing Needs We outsource the manufacture of the disposable cartridge and most other components of the TUNA System, and we rely on contract manufacturers to supply our components in sufficient quantities, in compliance with regulatory requirements and at an acceptable cost. Manufacturers often encounter difficulties in scaling up production of new products, including problems involving production yields, product recalls, quality control and assurance, component supply and lack of qualified personnel. If any Page 12 of 16 of our manufacturers experience production problems, we may not be able to locate an alternate manufacturer promptly. Delays in production could adversely affect the success of our fee-per-use program and our future revenues. Impact of Year 2000 In prior years, we discussed the nature and progress of our plans to become Y2K ready. In late 1999, we completed our remediation and testing of systems. We experienced no significant disruption in mission critical information technology and non-information technology systems. We will continue to monitor our mission critical computer applications and those of our customers, suppliers and vendors throughout the year 2000 to ensure that any latent Y2K matters that may arise are addressed promptly. ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK We are exposed to interest rate risk on the investments of our excess cash. The primary objective of our investment activities is to preserve principal while at the same time maximize yields without significantly increasing risk. To achieve this objective, we invest in highly liquid and high quality debt securities. To minimize the exposure due to adverse shifts in interest rates, we invest in short-term securities with maturities of less than one year. Due to the nature of our short-term investments, we have concluded that we doe not have a material market risk exposure. PART II: OTHER INFORMATION ITEM 5. OTHER INFORMATION Management Changes On March 20, 2000, in connection with a January 2000 equity investment in the Company by Medtronic Asset Management, Inc., a subsidiary of Medtronic, Inc., Michael Ellwein was appointed to the Board of Directors. Mr. Ellwein currently is Vice President and Chief Development Officer of Medtronic, Inc. (NYSE:MDT), where he is responsible for mergers, acquisitions, divestitures, joint ventures, strategic alliances and licensing opportunities. On April 6, 2000, Steve Williams, formerly Vice President of Operations for Zeiss Humphrey Systems, was appointed Chief Operating Officer. We have a manufacturing agreement with Zeiss Humphrey Systems, which runs through 2001, to produce the VidaMed PROVu disposable cartridge. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 10.24 [Form of] Severance Agreement (Change in Control) between VidaMed and Randy D. Lindholm and VidaMed and John F. Howe and VidaMed and Steve J. Williams 10.25 Amendment Agreement renewing debt financing agreement between the Company and Transamerica Business Credit Corporation, dated January 7, 2000 27.1 Financial Data Schedule Page 13 of 16 (b) Reports on Form 8-K. No reports on Form 8-K were filed during the quarter ended March 31, 2000. Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. VIDAMED, INC. Date: May 12, 2000 By: /s/ Randy D. Lindholm ---------------------- -------------------------------- Randy D. Lindholm President, Chief Executive Officer Date: May 12, 2000 By: /s/ John F. Howe ----------------------- -------------------------------- John F. Howe VP Finance, Chief Financial Officer (Principal Financial and Accounting Officer) Page 14 of 16 EXHIBIT INDEX Exhibit Number Description - -------------- ----------- 10.24 [Form of] Severance Agreement (Change in Control) between VidaMed and Randy D. Lindholm, VidaMed and John F. Howe, and VidaMed and Steve Williams 10.25 Amendment Agreement renewing debt financing agreement between the Company and Transamerica Business Credit Corporation, dated January 7, 2000 Page 16 of 16 EX-10.24 2 SEVERANCE AGREEMENT EXHIBIT 10.24 SEVERANCE AGREEMENT This Severance Agreement dated as of December 21, 1999 (the "Agreement"), is entered into between VidaMed, Inc., a corporation organized under the laws of the State of Delaware (the "Company") and _________ (the "Executive"). WHEREAS, the Board of Directors of the Company (the "Board") recognizes that the possibility of a Change in Control (as hereinafter defined) exists and that the threat or the occurrence of a Change in Control can result in significant distractions to its key management personnel because of the uncertainties inherent in such a situation;. WHEREAS, the Board has determined that it is essential and in the best interest of the Company and its stockholders to retain the services of the Executive in the event of a threat or occurrence of a Change in Control and to ensure the Executive's continued dedication and efforts in such event without undue concern for the Executive's personal, financial and employment security; and WHEREAS, in order to induce the Executive to remain in the employ of the Company, particularly in the event of a threat or the occurrence of a Change in Control, the Company desires to enter into this Agreement with the Executive to provide the Executive with certain benefits in the event that the Executive's employment is terminated as a result of, or in connection with, a Change of Control. NOW, THEREFORE, in consideration of the respective agreements of the parties contained herein, it is agreed as follows: 1. Term of Agreement. This Agreement shall commence as of December 21, ----------------- 1999 and shall continue in effect unless and until terminated in accordance with Section 3 below. 2. Definitions ----------- 2.1 Accrued Compensation. For purposes of this Agreement, "Accrued -------------------- Compensation" shall mean an amount which shall include all amounts earned or accrued through the "Termination Date" (as hereinafter defined) but not paid as of the Termination Date, including (i) base salary (ii) reimbursement for reasonable and necessary expenses incurred by the Executive on behalf of the Company during the period ending on the Termination Date, and (iii) vacation pay. 2.2 Base Amount. For purposes of this Agreement, "Base Amount" ----------- shall mean the greater of the Executive's annual base salary (a) at the rate in effect on the Termination Date or (b) at the highest rate in effect at any time during the ninety (90) day period prior to the Change in Control, and shall include all amounts of base salary that are deferred under the employee benefit plans of the Company or any other agreement or arrangement. 2.3 Bonus Amount. For purposes of this Agreement, "Bonus ------------ Amount" shall mean the greatest of: (a) 100% of the annual bonus payable to the Executive under the Company's cash bonus incentive plan for the fiscal year in which the Termination Date occurs; (b) the annual bonus paid or payable to the Executive under the Company's cash bonus incentive plan for the full fiscal year ended prior to the fiscal year during which the Termination Date occurred; (c) the annual bonus paid or payable to the Executive under the Company's cash bonus incentive plan for the full fiscal year ended prior to the fiscal year during which a Change in Control occurred; (d) the average of the annual bonuses paid or payable to the Executive under the Company's cash bonus incentive plan during the three full fiscal years ended prior to the fiscal year during which the Termination Date occurred; or (e) the average of the annual bonuses paid or payable to the Executive under the Company's cash bonus incentive plan during the three full fiscal years ended prior to the fiscal year during which the Change in Control occurred. 2.4 Executive Indebtedness. For purposes hereof, "Executive ---------------------- Indebtedness" shall mean the balance, including principal and all accrued interest, of the Company's loan(s) to the Executive, if any, as set forth on Exhibit A attached hereto, together with a copy of the documentation of each such loan, all of which shall be incorporated into this Agreement by this reference. 2.5 Cause. For purposes of this Agreement, a termination of ----- employment is for "Cause" if the basis of the termination is fraud, misappropriation, embezzlement or willful engagement by the Executive in misconduct which is demonstrably and materially injurious to the Company and its subsidiaries taken as a whole (no act, or failure to act, on the part of the Executive shall be considered "willful" unless done, or omitted to be done, by the Executive not in good faith and without a reasonable belief that the action or omission was in the best interests of the Company and its subsidiaries); provided however that -------- ------- the Executive shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to the Executive a written notice from the Company and a copy of a resolution duly adopted by the affirmative vote of all of those members of the Company's Board of Directors who are not then employees of the Company at a meeting of the Board called and held for the purpose (after reasonable notice to the Executive and an opportunity for the Executive, together with the Executive's counsel, to be heard before the Board), finding that, in the good faith opinion of the Board, the Executive was guilty of the conduct set forth in the first sentence of this Section 2.5 and specifying the particulars thereof in detail. 2.6 Change in Control. For purposes of this Agreement, a ----------------- "Change in Control" shall mean any of the following events: (a) An acquisition (other than directly from the Company) of any voting securities of the Company (the "Voting Securities") by any "Person" (as the term is used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act 1934, as amended (the "1934 Act")) immediately after which such Person has "Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of twenty-five percent (25%) or more of the combined voting power of the Company's then outstanding Voting Securities; provided, -------- however, that in determining whether a Change in Control ------- has occurred, Voting Securities which are acquired in an "Non-Control Acquisition" (as hereinafter defined) shall not constitute an acquisition which would cause a Change in Control. A "Non-Control Acquisition" shall mean an acquisition by (1) an employee benefit plan (or a trust forming a part thereof) maintained by (A) the Company or (B) any corporation or other Person of which a majority of its voting power or its equity securities or equity interest is owned directly or indirectly by the Company (a "Subsidiary"), (2) the Company or any Subsidiary, or (3) any Person in connection with a "Non-Control Transaction" (as hereinafter defined); (b) The individuals who are members of the Board as of the date this Agreement is approved by the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that if -------- ------- the appointment, election or nomination for election by the Company's stockholders, of any new director is approved by a vote of a least two-thirds of the Incumbent Board, such new director shall, for purposes of this Agreement, be considered a member of the Incumbent Board; provided, -------- further, however, that no individual shall be considered a ------- ------- member of the Incumbent Board if such individual initially assumed office as a result of either an actual or threatened "Election Contest" (as described in Rule 14a-11 promulgated under the 1934 Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board (a "Proxy Contest") including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest; or (c) Completion by the Company, following approval by stockholders of the Company, of: (1) A merger, consolidation or reorganization involving the Company, unless such merger, consolidation or reorganization satisfies the conditions set forth below: (i) the stockholders of the Company immediately before such merger, consolidation or reorganization, own immediately following such merger, consolidation or reorganization, directly or indirectly, at least fifty-one percent (51%) of the combined voting power of the outstanding voting securities of the corporation resulting from such merger or consolidation of reorganization (the "Surviving Corporation") in substantially the same proportion as their ownership of the Voting Securities immediately before such merger, consolidation or reorganization; (ii) the individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for such merger, consolidation or reorganization constitute at least a majority of the members of the board of directors of the Surviving Corporation; and (iii) no Person (other than the Company, any Subsidiary, any employee benefit plan (or any trust forming a part thereof) maintained by the Company, the Surviving Corporation or any Subsidiary, or any Person who, immediately prior to such merger, consolidation or reorganization, had Beneficial Ownership of twenty-five percent (25%) or more of the then outstanding voting Securities) has Beneficial Ownership of twenty- five percent (25%) or more of the combined voting power of the Surviving Corporation's then outstanding voting securities; A transaction described in subsections (i), (ii) and (iii) above shall herein be referred to as a "Non-Control Transaction"; (2) A complete liquidation or dissolution of the Company; or (3) An agreement for the sale or other disposition of all or substantially all of the assets of the Company to any Person (other than a transfer to Subsidiary). Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because any Person (the "Subject Person") acquired Beneficial Ownership of more than the permitted amount of the outstanding Voting Securities as a result of the acquisition of Voting Securities by the Company which, by reducing the number of Voting Securities outstanding, increases the proportional number of shares Beneficially Owned by the Subject Person, provided, however, that, if -------- ------- a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of Voting Securities by the Company, and after such share acquisition by the Company, the Subject Person becomes the Beneficial Owner of any additional voting Securities which increases the percentage of the then outstanding Voting Securities Beneficially Owned by the Subject Person, than a Change in Control shall occur. 2.7 Company. For purposes of this Agreement, the "Company" shall ------- mean VidaMed, Inc., and its subsidiaries and shall include VidaMed's "Successors and Assigns" (as hereinafter defined). 2.8 Disability; Disabled. For purposes of this Agreement, -------------------- "Disability" or "Disabled" shall mean a physical or mental infirmity which impairs the Executive's ability to substantially perform the Executive's duties with the Company for a period of one hundred eighty (180) consecutive days and the Executive has not returned to full time employment prior to the Termination Date. 2.9 Termination Date. For purposes of this Agreement, the ---------------- Executive's " Termination" date shall mean the date of occurrence of the Change in Control or such other date upon which the Company and the Executive may mutually agree in writing. 2.10 Pro Rata Bonus: For purposes of this Agreement, "Pro Rata Bonus" -------------- shall mean the amount equal to the bonus amount multiplied by a fraction, the numerator of which is the number of days in the calendar year through the termination date, and the denominator of which is 365. 2.11 Successors and Assigns. For purposes of this Agreement, ---------------------- "Successors and Assigns" shall mean any Person or other entity acquiring all or substantially all of the assets and business of the Company (including this Agreement) whether by operation of law or otherwise. 3. Occurrence of a Change in Control --------------------------------- 3.1 Change in Control. If, during the term of this Agreement, the Company ----------------- undergoes a Change in Control, then assuming that, but for such Change in Control, the Executive would remain in the employ of the Company, the Executive shall be entitled to the following compensation and benefits: (a) Upon the occurrence of the Change in Control, if the Executive elects to terminate his or her position with the Company, the Executive shall be entitled to the following: (i) the Company shall pay the Executive all Accrued Compensation and a pro rata bonus; (ii) the Company shall pay the Executive as severance pay and in lieu of any further compensation for periods subsequent to the Termination Date, in a single payment, an amount in cash equal to the Base Amount plus the bonus amount; (iii) for twelve (12) months after the Termination Date (the "Continuation Period"), the Company shall, at its expense, continue on behalf of the Executive and the Executive's dependents and beneficiaries the life insurance, disability, medical, dental and hospitalization benefits provided (A) to the Executive at any time during the 90-day period prior to the Change in Control or at any time thereafter or (B) to other similarly situated executives who continue in the employ of the Company during the Continuation Period. The coverage and benefits (including deductibles and costs) provided in this Section 3.1(a)(iii) during the Continuation Period shall be no less favorable to the Executive and the Executive's dependents and beneficiaries than the most favorable of such coverages and benefits during any of the periods referred to in clauses (A) and (B) above. The Company's obligation hereunder with respect to the foregoing benefits shall be limited to the extent that the Executive obtains any such benefits pursuant to a subsequent employer's benefit plans, in which case the Company may reduce the coverage of any benefits it is required to provide the Executive hereunder as long as the aggregate coverages and benefits of the combined benefit plans are no less favorable to the Executive than the coverages and benefits required to be provided hereunder. This subsection (iii) shall not be interpreted so as to limit any benefits to which the Executive or the Executive's dependents or beneficiaries may be entitled under any of the Company's employee benefit plans, programs or practices following the Executive's termination of employment, including without limitation, retiree medical and life insurance benefits; (iv) the restrictions on any outstanding equity incentive awards, including stock options and restricted stock, granted to the Executive under the Company's 1992 Stock Option Plan or under any other incentive plan or arrangement shall lapse and the Executive shall be 100% vested in all such incentive award(s) and, in the case of stock options, such stock options shall be immediately exercisable; (v) the Company will forgive the Executive Indebtedness. (vi) In the event of Involuntary Termination, the Company will provide outplacement services to the Executive in an amount not to exceed $15,000. (b) The amounts provided for in Section 3.1(a)(i) and (ii) shall be paid in a single lump sum cash payment within forty-five (45) days after the Termination Date (or earlier, if required by applicable law). (c) The Executive shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise, and no such payment shall be offset or reduced by the amount of any compensation or benefits provided to the Executive in any subsequent employment except as provided in Section 3.1(a)(iii) and 3.2(b). 3.2 General ------- (a) The severance pay and benefits provided for in this Section 3 shall be in lieu of any other severance or termination pay to which the Executive may be otherwise entitled under any Company severance or termination plan, program, practice or arrangement. (b) The Executive's entitlement to any compensation or benefits (other than severance or termination pay) shall be determined in accordance with the Company's employee benefit plans (including the plans listed on Appendix A) and other applicable programs, policies and practices then in effect. 3.3 Termination for Cause. In the event that the Company terminates --------------------- Executive's employment for Cause, Executive will not be entitled to any severance payments, Change in Control payments or other payments or benefits pursuant to this Agreement. 3.4 Termination for Reasons Other than Cause. This Agreement shall be ---------------------------------------- terminated under any of the following circumstances: (a) In the event that the Executive is Disabled and has not returned to full-time employment with the Company and is not substantially performing his or her duties for the Company prior to a Change in Control; or, (b) In the event that the Board and the Executive mutually determine that it is in the best interests of both parties to terminate this Agreement and execute a document terminating this Agreement by mutual written consent. 4. Excise Tax Limitation --------------------- (a) Notwithstanding anything contained in this Agreement, in the event that any payment or benefit (within the meaning of Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended (the "Code")), to the Executive or for the Executive's benefit paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise in connection with, or arising out of, the Executive's employment with the Company or a Change in Control (a "Payment" or "Payments") would be subject to the excise tax imposed by Section 4999 of the Code (the "Excise Tax"), the Payments shall be reduced (but not below zero) if and to the extent necessary so that no Payment to be made or benefit to be provided to the Executive shall be subject to the Excise Tax (such reduced Payments being hereinafter referred to as the "Limited Payment Amount"). Unless the Executive shall have given prior written notice specifying a different order to the Company to effectuate the Limited Payment Amount, the Company shall reduce or eliminate the Payments by first reducing or eliminating cash payments and then by reducing those payments or benefits which are not payable in cash, in each case in reverse order beginning with payments or benefits which are to be paid the farthest in time from the Determination (as hereinafter defined). Any notice given by the Executive pursuant to the preceding sentence shall take precedence over the provisions of any other plan, arrangement or agreement governing the Executive's rights and entitlements to any benefits or compensation. (b) An initial determination as to whether the Payments shall be reduced to the Limited Payment Amount and the amount of such Limited Payment Amount shall be made, at the Company's expense, by the accounting firm that is the Company's independent accounting firm as of the date of the Change in Control (the "Accounting Firm"). The Accounting Firm shall provide its determination (the "Determination"), together with detailed supporting calculations and documentation, to the Company and the Executive within twenty (20) days of the Termination Date if applicable, or such other time as requested by the Company or by the Executive (provided the Executive reasonably believes that any of the Payments may be subject to the Excise Tax), and if the Accounting Firm determines that there is substantial authority (within the meaning of Section 6662 of the Code) that no Excise Tax is payable by the Executive with respect to a Payment or Payments, it shall furnish the Executive with an opinion reasonably acceptable to the Executive that no Excise Tax will be imposed with respect to any such Payment or Payments. Within ten (10) days of the delivery of the Determination to the Executive, the Executive shall have the right to dispute the Determination (the "Dispute"). If there is no Dispute, the Determination shall be binding, final and conclusive upon the Company and the Executive subject to the application of Section 4(c) below. (c) As a result of the uncertainty in the application of Sections 4999 and 280G of the Code, it is possible that the Payments to be made to, or provided for the benefit of, the Executive either will be greater (an "Excess Payment") or less (an "Underpayment") than the amounts provided for by the limitations contained in Section 4(a). If it is established pursuant to a final determination of a court or an Internal Revenue Service ("IRS") proceeding which has been finally and conclusively resolved that an Excess Payment has been made, such Excess Payment shall be deemed for all purposes to be a loan to the Executive made on the date the Executive received the Excess Payment and the Executive shall repay the Excess Payment to the Company on demand (but not less than ten (10) days after written notice is received by the Executive) together with interest on the Excess Payment at the "Applicable Federal Rate" (as defined in Section 1274(d) of the Code) from the date of the Executive's receipt of such Excess Payment until the date of such repayment. In the event that it is determined by (i) the Accounting Firm, the Company (which shall include the position taken by the Company, or together with its consolidated group, on its federal income tax) or the IRS, (ii) pursuant to a determination by a court, or (iii) upon the resolution to the Executive's satisfaction of the Dispute that an Underpayment has occurred, the Company shall pay an amount equal to the Underpayment to the Executive within ten (10) days of such determination or resolution, together with interest on such amount at the Applicable Federal Rate from the date such amount would have been paid to the Executive until the date of payment. 5. Successors: Binding Agreement ----------------------------- (a) This Agreement shall be binding upon and shall inure to the benefit of the Company, its Successors and Assigns and the Company shall require any Successors and Assigns to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession or assignment had taken place. (b) Neither this Agreement nor any right or interest hereunder shall be assignable or transferable by the Executive or the Executive's beneficiaries or legal representatives, except by will or by the laws of descent and distribution. This Agreement shall inure to the benefit of, and be enforceable by, the Executive's legal personal representative. 6. Fees and Expenses. The Company shall pay all legal fees and related ----------------- expenses (including the costs of experts, evidence and counsel) incurred by the Executive as they become due as a result of (a) the Executive's termination of employment (including all such fees and expenses, if any, incurred in contesting or disputing any such termination of employment), (b) the Executive seeking to obtain or enforce any right or benefit provided by this Agreement (including, but not limited to, any such fees and expenses incurred in connection with the Dispute whether as a result of any applicable government taxing authority proceeding, audit or otherwise) or by any other plan or arrangement maintained by the Company under which the Executive is or may be entitled to receive benefits, and (c) the Executive's hearing before the Board as contemplated in Section 2.4 of this Agreement; provided, however, that the circumstances set -------- ------- forth in clauses (a) and (b) occurred on or after a Change in Control. 7. Notice. For the purposes of this Agreement, notices and all other ------ communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or sent by certified mail, return receipt requested, postage prepaid, addressed to the respective addresses last given by each party to the other, provided that all notices to the Company shall be directed to the attention of the Board with a copy to the Secretary of the Company. All notices and communications shall be deemed to have been received on the date of delivery thereof or on the third business day after the mailing thereof, except that notice of change of address shall be effective only upon receipt. 8. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or ------------------------- limit the Executive's continuing or further participation in any benefit, bonus, incentive or other plan or program provided by the Company (except for any severance or termination policies, plans, programs or practices) and for which the Executive may qualify, nor shall anything herein limit or reduce such rights as the Executive may have under any other agreements with the Company (except for any severance or termination agreement). Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan or program of the Company shall be payable in accordance with such plan or program, except as explicitly modified by this Agreement. 9. Settlement of Claims. The Company's obligation to make the payments -------------------- provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right which the Company may have against an Executive or others. 10. Miscellaneous. No provision of this Agreement may be modified, waived ------------- or discharged, unless such waiver, modification or discharge is agreed to in writing and signed by the Executive and the Company. No waiver by either party hereto at any time of any breach by the other party hereto, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. 11. Governing Law. This Agreement shall be governed by, and construed and ------------- enforced in accordance with, the laws of the State of California without giving effect to the conflicts of law principles thereof. Any action brought by any party to this Agreement shall be brought and maintained in a court of competent jurisdiction in Alameda County in the State of California. 12. Severability. The provisions of this Agreement shall be deemed ------------ severable and the invalidity or unenforceablity or any provision shall not affect the validity or enforceability of the other provisions hereof. 13. Entire Agreement. This Agreement constitutes the entire agreement ---------------- between the parties hereto and supersedes all prior agreements, if any, understanding and arrangements, oral or written, between the parties hereto with respect to the subject matter hereof. 14. Counterparts. This Agreement may be executed in two counterparts, each ------------ of which will be deemed an original, but both of which taken together will constitute one and the same instrument. 15. Legal Counsel. Each party to this Agreement acknowledges that such ------------- party has had the opportunity to review this Agreement and to consult legal counsel before entering into this Agreement, and agrees that he/she has either sought such legal counsel or has intentionally declined to do so. I. II. III. IV. SIGNATURE PAGE TO FOLLOW SIGNATURE PAGE IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer and the Executive has executed this Agreement as of the date and year first above written. VIDAMED, INC. EXECUTIVE By:_____________________________ __________________________ Name Its: ___________________________ EX-10.25 3 AMENDMENT AGREEMENT EXHIBIT 10.25 TBCC Amendment Agreement Borrower: VidaMed, Inc., a Delaware corporation Address: 46107 Landing Parkway Fremont, CA 94538 Date: January 7, 2000 THIS AMENDMENT AGREEMENT (this "Amendment") is entered into as of the above date, between the above borrower (the "Borrower"), having its chief executive office and principal place of business at the address shown above, and TRANSAMERICA BUSINESS CREDIT CORPORATION, a Delaware corporation ("TBCC"), having its principal office at 9399 West Higgins Road, Suite 600, Rosemont, Illinois 60018 and having an office at 15260 Ventura Blvd., Suite 1240, Sherman Oaks, California 91403. TBCC and Borrower agree to amend and supplement the Loan and Security Agreement between them, dated October 20, 1998, as amended (as amended, the "Loan Agreement"), as follows. (This Amendment, the Loan Agreement, any prior written amendments to the Loan Agreement signed by TBCC and Borrower, and all other written documents and agreements between TBCC and Borrower, are referred to herein collectively as the "Loan Documents." Capitalized terms used but not defined in this Amendment shall have the meanings set forth in the Loan Agreement.) 1. Amendments. Effective the Closing Date (as defined below), the Maturity Date set forth at Section 4 of the Schedule to the Loan Agreement shall be amended as follows: the date "January 31, 2000" shall be deleted and the date "December 31, 2000" shall be inserted in its place. V. Conditions Precedent. The effectiveness of the foregoing amendment shall be subject to the conditions precedent that TBCC shall have received (i) a non-refundable amendment fee of $15,000, which shall be payable on the execution hereof by Borrower, and (ii) warrants to purchase $150,000 in shares of common stock of the Borrower exercisable for five years at an exercise price per share equal to the lower of $1.94 and the price per share of the Borrower's common stock on the date hereof, and otherwise in form and substance reasonably satisfactory to TBCC. The date of satisfaction of the foregoing conditions precedent is the "Closing Date." VI. Representations True. To induce TBCC to enter into this Amendment, Borrower hereby confirms and restates, as of the date hereof, the representations and warranties made by it in Section 4 of the Loan Agreement. For the purposes of this Section 4 each reference in Section 4 of the Loan Agreement to "this Agreement," and the words "hereof," "herein," "hereunder," or words of like import in such Section, shall mean and be a reference to the Loan Agreement as amended by this Amendment. VII. GOVERNING LAW. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND ANY DISPUTE ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, WHETHER SOUNDING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE GOVERNED BY THE INTERNAL LAWS AND DECISIONS OF THE STATE OF ILLINOIS. VIII. General Provisions. TBCC's execution and delivery of, or acceptance of, this Amendment and any other documents and instruments in connection herewith shall not be deemed to create a course of dealing or otherwise create any express or implied duty by it to provide any other or further amendments, consents or waivers in the future. This Amendment, the Loan Agreement, and the other Loan Documents set forth in full all of the representations and agreements of the parties with respect to the subject matter hereof and supersede all prior discussions, representations, agreements and understandings between the parties with respect to the subject hereof. Except as herein expressly amended and supplemented, all of the terms and provisions of the Loan Agreement and the other Loan Documents shall continue in full force and effect and the same are hereby ratified and confirmed. This Amendment forms part of the Loan Agreement and the terms of the Loan Agreement are incorporated herein by reference. Borrower: TBCC: VIDAMED, INC. TRANSAMERICA BUSINESS CREDIT CORPORATION By_______________________________ By_____________________________________ Title____________________________ Title__________________________________ EX-27.1 4 FINANCIAL DATA SCHEDULE
5 3-MOS DEC-31-2000 JAN-01-2000 MAR-31-2000 12,173 0 2,880 1,127 349 14,665 8,980 6,554 17,192 4,270 829 0 0 29 12,064 17,192 2,524 2,524 767 4,048 0 12 94 (2,138) 0 (2,138) 0 0 0 (2,138) (0.07) (0.07)
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