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As filed with the Securities and Exchange Commission on December _, 1999
Registration No. 333-80585
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
AMENDMENT NO. 2
FORM S-3/A
REGISTRATION STATEMENT
Under
The Securities Act of 1933
_____________________
VIDAMED, INC.
(Exact name of Registrant as specified in its charter)
_____________________
<TABLE>
<S> <C> <C>
Delaware 0000 77-0314454
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
46107 Landing Parkway
Fremont, California 94538
(510) 492-4900
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
_____________________
Randy D. Lindholm
President and Chief Executive Officer
VidaMed, Inc.
46107 Landing Parkway
Fremont, California 94538
(510) 492-4900
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
_____________________
Copies to:
Carolyn R. Klasco, Esq.
Steven O. Gasser, Esq.
Shartsis, Friese & Ginsburg LLP
One Maritime Plaza, 18th Floor
San Francisco, CA 94111
(415) 421-6500
--------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, check the following box.
[_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
-------------------------------
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<CAPTION>
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Proposed Proposed Amount of
Title of Each Class of Securities Amount to be Maximum Offering Price Maximum Aggregate Registration
to be Registered Registered Per Share (1) Offering Price (1) Fee (4)
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<S> <C> <C> <C> <C>
Common stock $0.001 par value 6,000,000 shares $1.8125 $10,875,000 $3,023.25
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Warrants to purchase shares of common stock (2) 1,500,000 0.00 N/A N/A
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Common stock to be issued when those Warrants are 1,500,000 shares $1.8125 $ 2,718,750 $ 755.81
exercised (3)
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</TABLE>
_____________________
(1) Estimated solely for the purpose of computing the amount of the
registration fee based on the average of the high and low prices of the
common stock as reported on the Nasdaq National Market on December 14, 1999
pursuant to Rule 457(c) under the Securities Act of 1933.
(2) Pursuant to Rule 457(g) under the Securities Act of 1933, no filing fee is
required.
(3) Pursuant to Rule 416 under the Securities Act of 1933, there are also being
registered an indeterminate number of additional shares as may become
issuable pursuant to the anti-dilution provisions of the Warrants.
(4) Registration Fee of $4,170 previously paid on initial filing of this
Registration Statement on June 14, 1999.
_____________________
The registrant hereby amends this registration statement on the date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective as provided by section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on the date as the Commission, acting pursuant to said section 8(a),
may determine.
================================================================================
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED DECEMBER _, 1999
PROSPECTUS
VIDAMED, INC.
6,000,000 Shares of Common Stock
1,500,000 Warrants to Purchase Common Stock
1,500,000 Shares of Common Stock to be Issued Upon
the Exercise of Warrants
The shares offered by this prospectus involve a high degree of risk. See
"Risk Factors" beginning on page 2 of this prospectus for information that you
should consider before purchasing these securities.
We may sell the shares and warrants in amounts, at prices and on terms
determined at the time of the sale. We will provide specific terms of these
securities in supplements to this prospectus. The shares and warrants may be
offered separately or together, in separate series, and in amounts, at prices
and on terms to be described in supplements to this prospectus.
You should read this prospectus and any supplement carefully before you
invest.
Our common shares are traded on the Nasdaq SmallCap Market under the symbol
"VIDA." On December 14, 1999, the average of the high and low prices of our
common stock on the Nasdaq was $1.8125 per share.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is December _, 1999
<PAGE>
No person is authorized to give any information or to make any
representations not contained in this prospectus. If other information is given
or representations are made, you may not rely on that information or those
representations as having been authorized by us. This prospectus is neither an
offer to sell nor a solicitation of an offer to buy any securities other than
those registered in this prospectus, nor is it an offer to sell or a
solicitation of an offer to buy securities where the offer or solicitation would
be unlawful. You may not infer from the delivery of this prospectus, nor from
any sale made under this prospectus, that our affairs are unchanged since the
date of this prospectus or that the information contained in this prospectus is
correct as of any time after the date of this prospectus.
Table Of Contents
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ABOUT VIDAMED........................................................................... 1
RISK FACTORS............................................................................ 2
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS CONTAINED IN THIS PROSPECTUS.. 7
USE OF PROCEEDS......................................................................... 7
PLAN OF DISTRIBUTION.................................................................... 7
DESCRIPTION OF SECURITIES............................................................... 8
LEGAL MATTERS........................................................................... 10
EXPERTS................................................................................. 10
WHERE YOU CAN FIND MORE INFORMATION..................................................... 10
INFORMATION INCORPORATED BY REFERENCE................................................... 11
</TABLE>
About VidaMed
VidaMed designs, develops and markets urological systems that are used for
urinary tract disorders. We primarily treat the enlarged prostrate or Benign
Prostatic Hyperplasia, a noncancerous condition of the prostrate gland affecting
urination. VidaMed's primary product, the patented VidaMed TUNA System, is a
reasonably priced alternative therapy that minimizes surgical invasion, side
effects and complications for this condition. On October 8, 1996, we received
510(k) clearance from the FDA to sell the TUNA System commercially in the United
States. At the beginning of fiscal 1999, we began restructuring our sales and
marketing model in the United States to shift the emphasis from selling the TUNA
System itself to generating revenues through a fee-per-use program. Under the
prior sales model, we focused on selling the TUNA System generator and related
equipment to hospitals. Under our current model (known as the `fee per use'
program), we place an entire TUNA System with 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 performed.
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Risk Factors
An investment in the securities being offered by this prospectus involves a
high degree of risk. VidaMed is in a negative cash flow position. You should
consider VidaMed's financial situation and the following risk factors in
addition to the other information discussed elsewhere in this prospectus and
incorporated by reference into this prospectus before purchasing our securities.
VidaMed's Current Cash Resources Are Limited.
As we began fiscal 1999, we believed that our then current cash balances,
projected cash flows from operations, including our newly introduced fee-per-use
program, and cash available under our financing facility would be sufficient to
meet our operating and capital requirements through the end of the year.
Although quarterly revenues generated by the fee-per-use program have been
increasing since its inception, experience has shown that the fee-per-use
program will take longer to implement than originally planned. The number of
hospitals equipped to perform TUNA Procedures has not increased as rapidly as
expected and the number of TUNA Procedures being performed at hospitals where
our equipment has been placed is lower than expected. Costs to promote the
program were higher than expected and we required additional funding to maintain
current operating levels through December 31, 1999. Because of the shortage of
operating funds, our independent auditors amended their opinion issued in
connection with the financial statements included in our amended annual report
on Form 10-K filed with the Securities and Exchange Commission for our 1998
fiscal year to include an explanatory fourth paragraph, expressing substantial
doubt regarding our ability to continue as a going concern.
On October 27, 1999, we sold 2.2 million shares of common stock in a
private placement for net proceeds of approximately $4,300,000. Management
believes that the proceeds of that equity financing together with revenues from
the fee-per-use program will be sufficient to fund operations at current levels
through the end of fiscal 1999. Additional financing may be required, however,
to fund operations through the end of fiscal 2000. Management is pursuing, and
believes it can obtain, financing to fund operations at current levels through
the end of fiscal 2000. We will likely retain the services of an investment
banker to help us raise additional capital. As of the date of this prospectus,
however, we have not retained an investment banker or raised any additional
equity financing.
Additional financing may not be available, or if available, the terms may
not be favorable. If additional financing is unavailable, management nonetheless
believes that it would be able to fund operations through the end of fiscal 2000
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 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.
Additional Debt Financing May Be Unavailable or Too Costly.
In October 1998, we finalized a commitment for $5.5 million in debt
financing 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. Management believes that additional debt financing may be
available, but that it would likely be limited in amount and costly because it
would be subordinate to the Transamerica financing. 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 such financing would be
favorable.
Since we became eligible to borrow under the accounts receivable-based
credit line, we have generally borrowed the full amount available to us. As of
October 1, 1999, we were eligible to borrow and had borrowed $511,000. The
equipment term loan was funded in full as of December 31, 1998, at an interest
rate of 12% per
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year. Repayment of that loan is amortized over a three year period, with monthly
payments that began in December 1998.
If Our Efforts to Raise Additional Equity Capital Are Successful, Existing
Stockholders Will Be Diluted.
If we are successful in raising equity financing, the equity investments of
our current stockholders will be diluted to the extent we issue shares of common
stock, and to the extent warrants to purchase common stock are exercised. We are
offering a total of 7.5 million shares of common stock by this prospectus, 1.5
million shares of which are issuable on exercise of 1.5 million warrants. As of
November 30, 1999, VidaMed had issued and outstanding 22.9 million shares of
common stock. In addition, it has 1.4 million shares of common stock available
to issue from a prospectus dated February 2, 1999 4.2 million shares of common
stock reserved under its various stock option and employee stock purchase plans,
and 2.1 million shares reserved for issuance under existing warrants.
VidaMed Has a History of Operating Losses and Expects Operating Losses to
Continue.
We expect our operating losses to continue through at least the end of
fiscal 2000 as we expend substantial funds on sales and marketing activities.
Although we have reduced spending on clinical trials and development, the
fee-per-use program is labor intensive and includes a sales and marketing team
of approximately 27 full-time professionals. Our future liquidity and capital
requirements will depend on numerous factors, including the extent to which the
TUNA System gains market acceptance, our success in securing additional
financing and actions relating to regulatory and Medicare reimbursement matters.
We incurred operating losses in 1998, 1997 and 1996 of $19,873,000, $16,470,000
and $13,543,000, respectively. Operating losses through the first three quarters
of fiscal 1999 total $9,411,000.
The Fee-Per-Use Sales Program is New and Untested.
The fee-per-use program has been in place only since the end of our fourth
quarter of 1998, and its success is uncertain. If revenues generated by the
program are insufficient to fund our operations, we will have to obtain
additional debt or equity financing to cover the shortfall, or develop another
sales model to replace or supplement the fee-per-use program. We currently do
not have any plans to replace the fee-per-use program, and are continually
working to develop and enhance the program.
During the first three quarters of fiscal 1999 since the fee-per-use
program was introduced, our revenues from the program totaled $211,000, $396,000
and $675,000 against overall revenues of $1,037,000, $1,225,000 and 1,486,000.
VidaMed Depends on Physician and Patient Acceptance.
The TUNA Procedure represents a new therapy for the treatment of men with
an enlarged prostrate, and there can be no assurance that physicians, patients
and health care payors will accept the TUNA System.
Physicians will not recommend the TUNA Procedure unless they conclude,
based on clinical data and other factors, that it is an effective alternative to
other methods of enlarged prostrate treatment, including more established
methods. In particular, physicians may elect not to recommend the TUNA Procedure
until the duration of the relief provided by the procedure has been established.
Broad use of the TUNA System will require the training of numerous physicians,
and the time required to complete that training could result in a delay or
dampening of market acceptance. Based on our experience, it initially takes
approximately 4 hours to train a physician to perform a TUNA procedure, though
additional training sessions are common after a physician first begins to
perform TUNA procedures. Even if the clinical efficacy of the TUNA Procedure is
established, physicians may elect not to recommend the procedure unless
acceptable reimbursement from health care payors is available. See "Risk
Factors - VidaMed Depends on Third Party Reimbursement from Health Care Payors."
Health care payor acceptance of the TUNA Procedure will require evidence of the
cost effectiveness of TUNA compared with other therapies for enlarged prostrate,
which will depend in large part on the duration of the relief provided by the
TUNA Procedure. A thorough analysis of multi-year patient follow-up data will be
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necessary to assess the durability of the relief provided by TUNA therapy.
Patient acceptance of the procedure will depend in part on physician
recommendations as well as other factors, including the degree of invasiveness
and rate and severity of complications associated with the procedure compared
with other therapies.
VidaMed Depends on Third-Party Reimbursement from Health Care Payors.
If physicians, hospitals and other users of our products fail to obtain
sufficient reimbursement from health care payors, including, in particular,
outpatient hospital Medicare reimbursement in the United States, our products
will not be accepted in the marketplace.
Third-party reimbursement is generally available for existing therapies
used to treat men with an enlarged prostrate. In the United States, third-party
reimbursement for the TUNA Procedure depends on decisions by the local Medicare
Medical Directors to provide coverage for the TUNA Procedure, as well as by
individual health maintenance organizations, private insurers and other payors.
Reimbursement systems in international markets vary significantly by country.
Many international markets have state managed health care systems that govern
reimbursement for new devices and procedures. In most markets, there are private
insurance systems as well as governmentally managed systems.
TUNA Procedures in the United States are currently being reimbursed by
certain private payors. Due to the age of the typical patient suffering from an
enlarged prostrate, however, Medicare reimbursement is particularly critical for
widespread market acceptance. Medicare CPT code number 53852, covering the
physician fee component of the TUNA Procedure, was included in the 1998 edition
of CPT codes, which became effective January 1, 1998. If adopted by local
Medicare Medical Directors, this code should enhance the reimbursement process
for physicians performing the TUNA Procedure in an outpatient hospital
environment. As of November 30, 1999, 41 states provided for reimbursement for
TUNA Procedures performed in a hospital setting. The remaining states are in the
process of reviewing the TUNA Procedure to determine whether Medicare
reimbursement will be authorized.
National Medicare reimbursement for cost of TUNA procedures performed
outside of a hospital setting, for example in an ambulatory surgery center or an
office, at an adequate level will require approval by the Health Care Financing
Administration after a review of the cost and efficacy of the TUNA Procedure.
Reimbursement in both the office-based and ambulatory surgery centers systems is
currently delayed while Medicare reviews its Year 2000 compliance issues. As a
result of this delay, we can give no assurance that procedures performed in
doctors' offices and ambulatory surgery centers will generate significant
revenue for us in the United States.
Transfer to Nasdaq SmallCap Market May Affect the Market for Our Common Stock.
Effective December 3, 1999, the Nasdaq-Amex Market Group notified us that
the listing of our common stock would be transferred from the National Market to
the SmallCap Market. While we do not believe that the transfer from the National
Market or the listing of our common stock on the SmallCap Market will adversely
affect our operations, business plans, ability to secure additional financing or
the liquidity of our common stock, there may be consequences that we cannot
presently predict. The transfer to the SmallCap Market follows a hearing
conducted on November 4, 1999, by Nasdaq initiated because of our inability to
satisfy the minimum net tangible asset listing requirement of the National
Market and the issuance of going concern uncertainty paragraph in the opinion
issued by our independent auditors in connection with our amended report on Form
10-K for the fiscal year ended December 31, 1998.
No Public Market Exists for VidaMed's Warrants.
We do not intend to apply to list the warrants offered by this prospectus
with the Nasdaq stock market or on any stock exchange. Accordingly, no public
market for the warrants will exist prior to the public offering of the warrants,
and there can be no assurance that an active trading market will develop in any
of the warrants
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afterwards. Although we have previously issued warrants, we have never attempted
to list those warrants with Nasdaq or any exchange.
The warrants will not be exercisable unless, at the time of exercise,
VidaMed has a current prospectus covering the shares of common stock to be
issued upon exercise of the warrants, or those shares have been registered or
qualified or are exempt from registration or qualification under the securities
laws of the state of residence of the exercising holder of the warrants.
We will use our best efforts to register and qualify under state law, or
satisfy exemptions from such registration and qualification requirements, the
shares of common stock to be issued upon the exercise of the warrants on or
before the exercise date and to maintain a current prospectus until the
expiration of the warrants. However, we cannot assure that we will be able to do
so. If a current prospectus covering the shares of common stock to be issued
upon exercise of the warrants is not available, the warrants will not be
exercisable and will have no value.
VidaMed Relies on One Product Line.
The VidaMed TUNA System consists of a radio frequency generator, a
reuseable 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 product.
Our Corporate Structure Inhibits Stockholder Control,
Making an Acquisition of the Company More Difficult.
Certain provisions of our Certificate of Incorporation and Bylaws inhibit
stockholder control of VidaMed by:
. Allowing the Company to issue preferred stock without any vote or further
action by the stockholders;
. Eliminating the right of stockholders to act by written consent without a
meeting; and
. Eliminating cumulative voting in the election of directors.
Because these provisions may make it more difficult for stockholders to
take certain corporate actions, they could have the effect of delaying or
preventing a change in control of VidaMed, or limiting the price that certain
investors might be willing to pay for shares of our common stock.
Competitors Have Greater Resources and May Develop Better Products.
Although there is a large market for the treatment of men suffering from
enlarged prostrate, there are a number of therapies competing for market share.
Competition in the market for minimally invasive devices to treat this condition
has increased significantly and is expected to continue to increase. The
relative speed with which we can develop products, complete clinical testing and
regulatory approval processes, secure third-party reimbursement and supply
commercial quantities of the product to the market are important competitive
factors. Many of our competitors have significantly greater financial resources
than ours which allows them to have larger technical, research, marketing, sales
and distribution programs. If competitors are able to develop superior products,
or are better able to market their products, we may not be successful in
developing our fee-per-use program as projected. See "Risk Factors - The
Fee-Per-Use Program is New and Untested."
The Volatility of Our Stock Price May Limit Our Ability to Obtain Additional
Financing.
The market price of our common stock has historically been highly volatile.
In addition, the stock market has from time to time experienced significant
price and volume fluctuations that are unrelated to our
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operating performance. The broad market fluctuations and the volatility of our
stock may adversely affect its market price and impair our ability to obtain
future funding from the sale of our common or preferred stock.
U.S. Governmental Regulation May Impair Our Ability to Compete.
Although our current product line has received approval from the FDA, the
manufacture, distribution and production of our products are subject to
continuous governmental review. In addition, before we can introduce new
products to the marketplace, those products must generally be approved by the
FDA. Noncompliance with applicable requirements can result in:
. Fines;
. Injunctions;
. Civil penalties;
. Recall or seizure of products;
. Total or partial suspension of production;
. Failure of the government to grant approval for devices; and/or
. Criminal prosecution.
Medical devices are classified into one of three classes, class I, II or
III, on the basis of the controls necessary to reasonably ensure their safety
and effectiveness. The safety and effectiveness can be assured for class I
devices through general controls (e.g., labeling, pre-market notification and
adherence to good manufacturing practices) and for class II devices through the
use of special controls (e.g., performance standards, post-market surveillance,
patient registries, and FDA guidelines). Generally, class III devices are those
which must receive pre-market approval by the FDA to ensure their safety and
effectiveness (e.g., life-sustaining, life-supporting and implantable devices,
or new devices that have not been found substantially equivalent to legally
marketed devices). The FDA has approved VidaMed's TUNA system as a class II
device.
Before a new device can be introduced into the market, the manufacturer
must generally obtain FDA clearance. Clearance through a premarket notification
will be granted if the submitted data establishes that the proposed device is
substantially equivalent to a legally marketed class I or II medical device, or
to a class III medical device for which the FDA has not called for a pre-market
approval.
The FDA may determine that a proposed device is not substantially
equivalent to a legally marketed device, or that additional data is needed
before a substantial equivalent determination can be made. A determination that
the proposed device is not substantially equivalent, or a request for additional
data, could delay the market introduction of new products that fall into this
category. If we are required to obtain clearance in the future, there can be no
assurance that we will obtain clearance within an acceptable time frame, if at
all.
Foreign Governmental Regulation May Impair Our Ability to Compete.
Foreign regulations governing the sale of medical devices outside the
United States vary widely from country to country. The time required to obtain
approval for sale in a foreign country may be longer or shorter than that
required for FDA approval and the requirements may differ. Although we have
received regulatory approvals where required for commercial sale of the TUNA
System in all major international markets, the requirements to maintain those
approvals could change, or new approvals could be necessary as we develop new
products or modify existing products.
We have received certifications that allow us to affix the "CE" mark to the
TUNA System, permitting us to commercially market and sell the TUNA System in
all countries of the European Economic Area. Additional product approvals from
foreign regulatory authorities may be required for international sale of our
general electro-surgical devices. Failure to comply with applicable regulatory
requirements can result in loss of previously received approvals and other
sanctions.
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Our distributor in Japan, Century Medical, Inc., is responsible for
managing clinical trials and obtaining regulatory and reimbursement approvals
for the TUNA System. Regulatory approval in Japan was received from the Japanese
Ministry of Health and Welfare in July 1997 for our previous generation product.
Approval by the Japanese Ministry of Health was granted for the new generator
and ProVu system in August 1999. Failure to obtain market acceptance for the
TUNA Procedure in Japan could preclude the commercial viability of our products
in Japan and could have a material adverse effect on our business, financial
condition and results of operations. We have agreed with Century Medical to
terminate our business relationship. All regulatory approvals and distribution
rights will be transferred upon our selection of a replacement distributor and
compliance with Japanese law. The relationship with Century Medical does not
terminate until all regulatory transfers are completed and effective.
We Do Not Control the Majority of Our Manufacturing.
We have outsourced the manufacture of the disposable cartridge and most
other components of the TUNA System. The success of our fee-per-use program will
depend in part on our ability to obtain products from our manufacturers.
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 of our manufacturers experience any production problems, we may not be
able to locate an alternate manufacturer on a timely basis. Delays in production
could negatively affect the success of our fee-per-use program. We have not
recently experienced any material delays from our manufacturers.
Cautionary Statement Regarding Forward-Looking Statements Contained in this
Prospectus
This prospectus and the documents incorporated by reference in this
prospectus contain forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934. Forward-looking statements are based on VidaMed's current expectations,
beliefs, intentions or strategies. The statements concern, among other things,
the availability of cash resources to fund continued operations, the success of
VidaMed's new marketing strategy, market acceptance of our products, the
likelihood of additional Medicare reimbursement approvals for the TUNA Procedure
and the market impact of the transfer of our stock to the Nasdaq Small Cap
Market. Reliance should not be placed on forward looking statements because they
involve known and unknown risks, uncertainties and other factors that could
cause actual results to differ materially from those suggested in the
forward-looking statements. Except as required by applicable rules and
regulations, we do not undertake to update the forward-looking statements.
Use of Proceeds
Unless otherwise specified in a supplement to this prospectus, VidaMed
intends to use the net proceeds from the sale of the securities offered by this
prospectus for general corporate purposes. Until VidaMed uses the proceeds in
its business, we will invest the proceeds in short-term investment grade
interest-bearing instruments.
Plan of Distribution
VidaMed may sell the securities offered by this prospectus to or through
one or more underwriters or dealers, directly to a limited number of purchasers
or to a single purchaser, or through agents. The securities may be distributed
in one or more transactions at a fixed price or prices, which may be changed, at
market prices prevailing at the time of sale, at prices related to the
prevailing market prices or at negotiated prices.
In connection with the sale of these securities, underwriters may receive
compensation from VidaMed or from purchasers of the securities, for whom they
may act as agents, in the form of discounts, concessions or
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commissions. Underwriters may sell these securities to or through dealers and
those dealers may receive compensation in the form of discounts, concessions or
commissions from the underwriters and/or commissions from the purchasers for
whom they may act as agents. Any underwriter or agent will be identified, and
any compensation received from VidaMed will be described, in one or more
supplements to this prospectus.
Shares sold under a prospectus supplement and any shares to be issued upon
the exercise of any of the warrants issued under a prospectus supplement are
expected to be listed on the Nasdaq SmallCap Market. Unless otherwise specified
in the related prospectus supplement, each series of warrants will be a new
issue with no established trading market. We may elect to list any series of
warrants on an exchange, but we are not obligated to do so.
It is possible that one or more underwriters may make a market in a series
of these warrants, but will not be obligated to do so and may discontinue any
market making at any time without notice. Therefore, no assurance can be given
as to the liquidity of the trading market of any the securities offered by this
prospectus.
Under agreements we may enter into, underwriters, dealers and agents who
participate in the distribution of these securities may be entitled to
indemnification by VidaMed against certain liabilities, including liabilities
under the Securities Act.
Underwriters, dealers and agents may engage in transactions with, or
perform services for, VidaMed in the ordinary course of business.
Description of Securities
Preferred Stock
VidaMed's restated certificate of incorporation filed with the Secretary of
State in Delaware authorizes 5,000,000 shares of preferred stock, $.001 par
value per share. As of September 3, 1999, no shares of preferred stock were
outstanding.
Common Stock
VidaMed's restated certificate of incorporation authorizes 60,000,000
shares of common stock, $.001 par value per share. As of November 30, 1999, 22.9
million shares of common stock were outstanding, held by more than 5,000
stockholders. Holders of shares of common stock are entitled to one vote per
share. VidaMed may, but is not required to, declare a dividend to holders of
common stock. However, VidaMed is restricted by the terms of its loan agreement
with Transamerica Business Credit Corporation from paying cash dividends without
Transamerica's consent. If preferred stock is issued in the future, any
distribution of VidaMed's assets to holders of common stock may be subordinate
to distribution to holders of preferred stock, depending on the terms of the
preferred stock.
Rights Plan
We have adopted a rights plan that may have the effect of delaying or
preventing a change in control of our company. This plan attaches to each common
share one right (a "Right") that, when exercisable, entitles the holder of the
Right to purchase one one-thousandth of a share of series A participating
preferred stock at a purchase price of $50, subject to adjustment. If a takeover
event occurs, exercise of the Rights would entitle the holders to receive common
stock of a surviving corporation, cash, property or other securities, with a
market value equal to twice the purchase price. The Right would not exist in
favor of holders attempting the takeover. The takeover events mentioned above
include a person or group becoming the owner of 20% or more of VidaMed's common
shares or the commencement of, or announcement of an intention to make, a tender
offer or exchange offer the consummation of which would result in the beneficial
ownership by a person or group of 20% or more of the outstanding common shares.
Accordingly, exercise of the Rights may cause substantial dilution to a person
who attempts to acquire our company.
8
<PAGE>
Once our board of directors determines that a takeover event has occurred,
the Rights automatically attach to each outstanding common share, including any
shares offered in the applicable prospectus supplement. There is no monetary
value presently assigned to the Rights, and they will not trade separately from
the common shares unless and until they become exercisable. The Rights, which
expire on December 19, 2006, may be redeemed, at the option of our board of
directors, at a price of $.01 per Right at any time prior to the 10th day
following the acquisition by a group or person of 20% or more of the outstanding
common shares or a later date as determined by the board of directors and
publicly announced by VidaMed. The rights plan may have certain anti-takeover
effects, although it is not intended to preclude any acquisition or business
combination that is at a fair price and otherwise in the best interests of
VidaMed and our stockholders as determined by our board of directors. A
stockholder could disagree, however, with the board of director's determination
of what constitutes a fair price or the best interests of VidaMed and our
stockholders.
A description of the terms and conditions of the Rights is contained in an
agreement entitled Preferred Shares Rights Agreement between us and American
Securities Transfer & Trust, Inc., as Rights Agent. We filed a copy of the
agreement as exhibit 4 to the registration statement filed on Form 8-A on
January 31, 1997, which registration statement and all of its exhibits are
incorporated by reference in this prospectus. See "Where You Can Find More
Information" on page 10 of this prospectus for information about how to obtain a
copy of the agreement. This description of the Rights is only a summary of the
material terms of the Rights. It does not purport to be complete and is
qualified in its entirety by reference to the actual agreement.
Warrants
The following is a summary of the material terms of the warrants.
Exercise Price and Terms. The exercise price will be negotiated with the
proposed purchaser of the warrant at the time of the sale of the warrant, and
may not relate to its value. You should not regard the exercise price as an
indication of any future market price of the common stock. When determined, the
exercise price of each warrant will be provided in a prospectus supplement. Each
warrant offered by this prospectus will entitle the registered holder to
purchase, for a fixed period beginning on the date of issuance, a fixed number
of shares of VidaMed common stock at a fixed price per share. The price may be
adjusted in the circumstances described below. The registered holder of a
warrant will be able to exercise it, in whole or in part, by surrendering the
certificate representing the warrant to the Company or as the Company otherwise
directs, completing the subscription form attached to the warrant and paying the
exercise price.
Expiration. Each warrant can be exercised by its registered holder at any
time during the three-year period after issuance, provided the warrant and the
common stock issuable on exercise of the warrant are registered or are exempt
from registration. At the end of the three-year period, the warrants expire. The
warrants may include a provision enabling VidaMed to call the warrants,
compelling a holder to exercise its warrant, in the event that the price per
share of VidaMed's stock exceeds the exercise price of the warrants for a
certain number of days.
Adjustments. The exercise price and the number of shares of common stock
that can be purchased on the exercise of the warrants will be adjusted when
certain events occur, including:
. Stock splits;
. Reverse stock splits; or
. Combinations of the common stock.
To enable warrant holders to acquire securities or property receivable by a
holder of common stock that might have been purchased upon exercise of the
warrant, the exercise price may be adjusted in the following cases:
. A reclassification or exchange of VidaMed's common stock;
9
<PAGE>
. VidaMed's consolidation or merger with or into another
corporation (other than a consolidation or merger in which
VidaMed is the surviving corporation); or
. The sale of all or substantially all of VidaMed's assets.
Transfer, Exchange and Exercise. If a market for the warrants develops, the
holder may sell the warrants instead of exercising them. There can be no
assurance, however, that a market for the warrants will develop or continue and
VidaMed does not intend to apply for the listing of the warrants on any
exchange.
Warrant Holder Not a Stockholder. The warrants will not confer upon holders
any voting, dividend or other rights as stockholders of VidaMed.
Limitation on Exercise of Warrant. The warrants will not be exercisable
unless, at the time of the exercise, VidaMed has a current prospectus covering
the shares of common stock to be issued upon the exercise of the warrants, and
those shares have been registered or qualified or are exempt from registration
or qualification under the securities laws of the state of residence of the
exercising holder of the warrants. Although we will use our best efforts to
register or qualify all of the shares of common stock to be issued upon the
exercise of the warrants, or to secure an exemption from such requirements, on
or before the exercise date and to maintain a current prospectus until the
expiration of the warrants, there can be no assurance that we will be able to do
so.
Legal Matters
The validity of the common stock offered by this prospectus will be passed
on for us by Shartsis, Friese & Ginsburg LLP, One Maritime Plaza, 18th Floor,
San Francisco California 94111.
Experts
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements and schedule included in our Annual Report on Form 10-K for
the year ended December 31, 1998, as described in their report (which contains
an explanatory paragraph describing conditions that raise substantial doubt
about our ability to continue as a going concern as described in Notes 1 and 13
to the consolidated financial statements). Their report is incorporated by
reference in this prospectus and elsewhere in the registration statement. Our
financial statements and schedule are incorporated by reference in reliance on
Ernst & Young LLP's report, given on their authority as experts in accounting
and auditing.
Where You Can Find More Information
We file proxy statements, reports and other information with the Securities
and Exchange Commission as required by the Securities Exchange Act of 1934. You
can inspect and copy this information at regional offices of the Commission
located at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511 and 7 World Trade Center, Suite 1300, New York, New York
10048, and at the Public Reference Office of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549.
You can also obtain copies of the documents we file with the SEC from the
Public Reference Section of the SEC, 450 Fifth Street, N.W., Washington, D.C.
20549, for a fee determined by the SEC. You may obtain information about the
operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The
SEC also maintains a World Wide Web site on the Internet at http://www.sec.gov
that contains reports, proxy and information statements and other information
regarding VidaMed and other companies that file electronically with the SEC.
Our common stock is traded on the Nasdaq SmallCap Market. Our reports and
other information may be inspected at the National Association of Securities
Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006.
10
<PAGE>
This prospectus is part of a registration statement that we filed with the
SEC under the Securities Act of 1933. This prospectus does not contain all the
information included in the registration statement. For further information
regarding VidaMed and its common stock, please refer to the registration
statement and its exhibits. You can receive copies of the registration statement
as discussed above. Statements contained in this prospectus or in any prospectus
supplement that describe the contents of any contract or other document are only
summaries of material terms and are not necessarily complete. You should refer
to the actual copy of the contract or document filed as an exhibit to the
registration statement for more complete information.
Information Incorporated by Reference
We incorporate by reference the following documents and all future
documents filed by VidaMed under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 until this offering is completed:
1. Our registration statements on Form 8-A filed with the Securities and
Exchange Commission on June 17, 1995 and January 31, 1997.
2. Our amended annual report on Form 10-K for the fiscal year ended December
31, 1998.
3. All other reports filed under section 13(a) or 15(d) since December 31,
1998, including (a) our amended quarterly reports on Form 10-Q for the quarters
ended March 31, 1999, June 30, 1999 and September 30, 1999; (b) our proxy
statement on Schedule 14A filed on April 27, 1999; and (c) our reports on
Form 8-K dated October 29, 1999 and December 8, 1999.
4. All other information we file with the SEC under Sections 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934 subsequent to the date of this
prospectus and prior to the termination of this offering.
You may receive free copies of these filings by writing or calling:
VidaMed, Inc.
46107 Landing Parkway
Fremont, California 94538
Telephone: (510) 492-4902
Attention: Investor Relations
11
<PAGE>
You should rely only on the information provided or incorporated by
reference in this prospectus or in a prospectus supplement or amendment. We have
not authorized anyone to provide you with different information. We are not
making an offer of these securities in any state where the offer is not
permitted. Also, this prospectus does not offer to sell any securities other
than the securities covered by this prospectus. You should not assume that the
information in this prospectus or a prospectus supplement or amendment is
accurate as of any date other than the date on the front of the document.
VIDAMED, INC.
6,000,000 Shares of Common Stock
1,500,000 Warrants to Purchase Common Stock
1,500,000 Shares of Common Stock to be Issued
Upon the Exercise of Warrants
__________________________
Prospectus
December _, 1999
__________________________
12
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth the various expenses in connection with the
sale and distribution of the securities being registered, other than
underwriting discounts and commissions. All of the amounts shown are estimates
except the Securities and Exchange Commission registration fee, the NASD filing
fee and the Nasdaq SmallCap Market listing fee.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee............................... $ 4,203
Nasdaq SmallCap Market listing fee................................................ 7,500
Printing and engraving expenses................................................... 6,000
Legal fees and expenses........................................................... 50,000
Accounting fees and expenses...................................................... 25,000
Transfer agent and registrar fees and expenses.................................... 1,500
Miscellaneous..................................................................... 2,500
--------
Total.......................................................................... $ 96,703
--------
</TABLE>
Item 15. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation Law permits a corporation
to include in its charter documents, and in agreements between the corporation
and its directors and officers, provisions expanding the scope of
indemnification beyond that specifically provided by the current law.
Article VIII of the Registrant's Certificate of Incorporation provides for
the indemnification of directors to the fullest extent permissible under
Delaware law.
Article VI of the Registrant's Bylaws provides for the indemnification of
officers, directors and third parties acting on behalf of the corporation if
that person acted in good faith and in a manner reasonably believed to be in and
not opposed to the best interest of the corporation, and, regarding any criminal
action or proceeding, if the indemnified party had no reason to believe his or
her conduct was unlawful.
The Registrant has entered into indemnification agreements with its
directors and executive officers, in addition to indemnification provided for in
the Registrant's Bylaws, and intends to enter into indemnification agreements
with any new directors and executive officers in the future.
Item 16. Exhibits
The Exhibit Index is included at page 16.
Item 17. Undertakings
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and persons controlling the
Registrant in accordance with the foregoing provisions, or otherwise, the
Registrant has been informed that in the opinion of the Securities and Exchange
Commission that indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.
In the event that a claim for indemnification against those liabilities
(other than the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by a director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question
13
<PAGE>
whether the indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of the issue.
The undersigned Registrant hereby undertakes:
1. To file, during any period in which offers or sales are being
made, a post-effective amendment to the registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs 1(i) and (ii) do not apply if
the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed with or
furnished to the Commission by the Registrant pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
2. That, for the purpose of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act of 1933 shall be deemed
to be part of this registration statement as of the time it was declared
effective.
3. That, for purposes of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
4. For purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
5. To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, VidaMed, Inc.
certifies that it has reasonable grounds to believe that it meets all
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Fremont, State of California, on December 16, 1999.
VIDAMED, INC.
By: /s/ Randy D. Lindholm
-------------------------------------
Randy D. Lindholm
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/Randy D. Lindholm President and Chief Executive December 16, 1999
- ---------------------------
(Randy D. Lindholm) Officer and Chairman of the Board
(Principal Executive Officer)
/s/ John Howe Vice President of Finance and December 16, 1999
- ---------------------------
(John Howe) Chief Financial Officer
(Principal Financial Officer
and Principal Accounting
Officer)
15
<PAGE>
<TABLE>
<CAPTION>
Exhibit Description Page
Number
<S> <C>
4.1+ Certificate of Incorporation of Registrant
4.2+ Restated Bylaws of Registrant
4.3++ Form of Common Stock Certificate
4.4+++ Preferred Shares Rights Agreement dated as of January 27, 1997,
between the Registrant and American Securities Transfer & Trust,
Inc., including the Certificate of Designations, the Form of
Rights Certificate and the Summary of Rights attached thereto as
Exhibits A, B and C, respectively
4.5 Form of Common Stock Purchase Warrant
5.1+++++ Opinion of Shartsis, Friese & Ginsburg LLP
23.1+++++ Consent of Ernst & Young LLP, Independent Auditors
23.2 Consent of Shartsis, Friese & Ginsburg LLP (included in Exhibit
5.1)
24.1++++ Power of Attorney
</TABLE>
______________
+ Filed as an exhibit to the Registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1995, and incorporated into this
prospectus by reference.
++ Filed as an exhibit to the Registrant's Registration Statement on
Form S-1 (File No. 33-90746) and incorporated into this prospectus by
reference.
+++ Filed as an Exhibit to the Registrant's Registration Statement on
Form 8-A filed with the Commission on January 31, 1997, and incorporated
into this prospectus by reference.
++++ Included on page II-4 of Registrant's Form S-3 (File No. 333-80585) filed
on June 14, 1999, and incorporated into this prospectus by reference.
+++++ To be filed in a subsequent amendment.
16
<PAGE>
Exhibit 4.5
STOCK PURCHASE WARRANT
To Purchase Shares of Common Stock of
VIDAMED, INC.
THIS CERTIFIES that, for value received, [Name] (the "Investor Holder"), is
entitled, upon the terms and subject to the conditions hereinafter set forth, at
any time on or prior to the close of business on the date three (3) years after
the date hereof, but not thereafter, to subscribe for and purchase, from
VIDAMED, INC. a Delaware corporation (the "Company"), [Shares] shares (the
"Warrant Shares") of Common Stock. The purchase price of one share of Common
Stock under this Warrant shall be $[price] (the "Exercise Price") per share.
The purchase price and the number of shares for which the Warrant is exercisable
shall be subject to adjustment as provided herein.
1. Transfer of Warrant. Prior to the expiration hereof and subject to
-------------------
compliance with applicable laws, this Warrant and all rights hereunder are
transferable, in whole or in part, at the office or agency of the Company,
referred to in Section 2 hereof, by the holder hereof in person or by duly
authorized attorney, upon surrender of this Warrant together with the Assignment
Form annexed hereto properly endorsed.
2. Exercise of Warrant.
-------------------
(a) The purchase rights represented by this Warrant are exercisable by the
registered holder hereof, in whole or in part, at any time before the close of
business on the date three (3) years after the date hereof, by delivery of the
Notice of Exercise form annexed hereto duly executed at the office of the
Company, in Fremont, California (or such other office or agency of the Company
as it may designate by notice in writing to the registered holder hereof at the
address of such holder appearing on the books of the Company), and upon payment
of the purchase price of the shares thereby purchased (by cash or by check or
bank draft payable to the order of the Company); whereupon the holder of this
Warrant shall be entitled to receive a certificate for the number of shares of
Common Stock so purchased. The Company agrees that if at the time of the
surrender of this Warrant and purchase of shares, the holder hereof shall be
entitled to exercise this Warrant, the shares so purchased shall be and be
deemed to be issued to such holder as the record owner of such shares as of the
close of business on the date on which this Warrant shall have been exercised as
aforesaid. If this Warrant should be exercised in part only, the Company shall,
upon surrender of this Warrant, execute and deliver a new Warrant evidencing the
rights of the holder hereof to purchase the balance of the Warrant Shares
purchasable hereunder.
(b) Certificates for shares purchased hereunder shall be delivered to the
holder hereof promptly after this Warrant shall have been exercised as
aforesaid. The Company covenants that all shares of Common Stock which may be
issued upon the exercise of rights represented by this Warrant will, upon
exercise of the rights represented by this Warrant, be fully
17
<PAGE>
paid and nonassessable and free from all taxes, liens and charges in respect of
the issue thereof (other than taxes in respect of any transfer occurring
contemporaneously with such issue).
3. No Fractional Shares or Scrip. No fractional shares or scrip
-----------------------------
representing fractional shares shall be issued upon the exercise of this
Warrant. With respect to any fraction of a share called for upon the exercise of
this Warrant, an amount equal to such fraction multiplied by the then fair
market value shall be paid in cash to the holder of this Warrant.
4. Charges, Taxes and Expenses. Issuance of certificates for shares of
---------------------------
Common Stock upon the exercise of this Warrant shall be made without charge to
the holder hereof for any issue or transfer tax or other incidental expense in
respect of the issuance of such certificate, all of which taxes and expenses
shall be paid by the Company, and such certificates shall be issued in the name
of the holder of this Warrant or in such name or names as may be directed by the
holder of this Warrant; provided, however, that in the event certificates for
shares of Common Stock are to be issued in a name other than the name of the
holder of this Warrant, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by the holder
hereof.
5. No Rights as Shareholders. This Warrant does not entitle the holder
-------------------------
hereof to any voting rights or other rights as a stockholder of the Company
prior to the exercise thereof.
6. Exchange and Registry of Warrant. This Warrant is exchangeable,
--------------------------------
without charge, upon the surrender hereof by the registered holder at the above-
mentioned office or agency of the Company, for a new Warrant of like tenor and
dated as of such exchange.
The Company shall maintain at the above-mentioned office or agency a
registry showing the name and address of the registered holder of this Warrant.
This Warrant may be surrendered for exchange, transfer or exercise, in
accordance with its terms, at such office or agency of the Company, and the
Company shall be entitled to rely in all respects, prior to written notice to
the contrary, upon such registry.
7. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by the
-------------------------------------------------
Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it, and
cancellation of this Warrant, if mutilated, the Company will make and deliver a
new Warrant of like tenor and dated as of such cancellation, in lieu of this
Warrant.
8. Saturdays, Sundays, Holidays, etc. If the last or appointed day for
---------------------------------
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday or a Sunday or shall be a legal holiday, then such
action may be taken or such right may be exercised on the next succeeding day
not a Saturday, Sunday or legal holiday.
9. Early Termination, Antidilution Adjustments and Registration Statement
----------------------------------------------------------------------
Adjustments.
- -----------
(a) Merger, Sale of Assets, etc. In case of any consolidation of the
---------------------------
Company with, or merger of the Company into, any other corporation (other than a
consolidation or merger in which the Company is the continuing corporation and
in which no change occurs in its
18
<PAGE>
outstanding Common Stock), or in case of any sale or transfer of all or
substantially all of the assets of the Company, or in the case of any statutory
exchange of securities with another corporation (including any exchange effected
in connection with a merger of a third corporation into the Company, except
where the Company is the surviving entity and no change occurs in its
outstanding Common Stock), the corporation formed by such consolidation or the
corporation resulting from or surviving such merger or the corporation which
shall have acquired such assets or securities of the Company, as the case may
be, shall execute and deliver to the Holder simultaneously therewith a new
Warrant, satisfactory in form and substance to the Holder, together with such
other documents as the Holder may reasonably request, entitling the Holder
thereof to receive upon exercise of such Warrant the kind and amount of shares
of stock and other securities and property receivable upon such consolidation,
merger, sale, transfer, or exchange of securities, or upon the dissolution
following such sale or other transfer, by a holder of the number of shares of
Common Stock purchasable upon exercise of this Warrant immediately prior to such
consolidation, merger, sale, transfer, or exchange. Such new Warrant shall
contain the same basic other terms and conditions as this Warrant and shall
provide for adjustments which, for events subsequent to the effective date of
such written instrument, shall be as nearly equivalent as may be practicable to
the adjustments provided for in this Section 9. The above provisions of this
Section 9(a) shall similarly apply to successive consolidations, mergers,
exchanges, sales or other transfers covered hereby. Notwithstanding the
foregoing, in the event the consideration to be paid to holders of Company
capital stock in any transaction of the nature referred to above in this Section
9(a) (a "Transaction") consists of cash or cash equivalents, then, provided that
the Company shall have given the holder hereof the notice required by Section
10, this Warrant shall, to the extent it has not been exercised by the effective
date of such Transaction, terminate upon the completion of such Transaction.
(b) Reclassification, etc. If the Company at any time shall, by
---------------------
subdivision, combination or reclassification of securities or otherwise, change
any of the securities to which purchase rights under this Warrant exist into the
same or a different number of securities of any class or classes, this Warrant
shall thereafter represent the right to acquire such number and kind of
securities as would have been issuable as the result of such change with respect
to the securities which were subject to the purchase rights under this Warrant
immediately prior to such subdivision, combination, reclassification or other
change. If shares of the Company's Common Stock are subdivided or combined into
a greater or smaller number of shares of Common Stock, the purchase price under
this Warrant shall be proportionately reduced in the case of a subdivision of
shares or proportionately increased in the case of a combination of shares, in
both cases by the ratio which the total number of shares of Common Stock to be
outstanding immediately after such event bears to the total number of shares of
Common Stock outstanding immediately prior to such event.
(c) Cash Distributions. Except as set forth herein, no adjustment on
------------------
account of cash dividends on the Company's Common Stock or other securities
purchasable hereunder will be made to the purchase price under this Warrant.
(d) Authorized Shares. The Company covenants that during the period the
-----------------
Warrant is outstanding, it will reserve from its authorized and unissued Common
Stock a sufficient number of shares to provide for the issuance of Common Stock
upon the exercise of any purchase rights under this Warrant. The Company further
covenants that its issuance of this
19
<PAGE>
Warrant shall constitute full authority to its officers who are charged with the
duty of executing stock certificates to execute and issue the necessary
certificates for shares of the Company's Common Stock upon the exercise of the
purchase rights under this Warrant. The Company further covenants and agrees (i)
that it will not, by amendment of its Certificate of Incorporation or through
reorganization, consolidation, merger, dissolution or sale of assets, or by any
other voluntary act, avoid or seek to avoid the observation or performance of
any of the covenants, stipulations or conditions to be observed or performed
hereunder by the Company, (ii) promptly to take such action as may be required
of the Company to permit the Holder to exercise this Warrant and the Company
duly and effectively to issue shares of its Common Stock or other securities as
provided herein upon the exercise hereof and (iii) promptly to take all action
required or provided herein to protect the rights of the Holder granted
hereunder against dilution.
(e) If the Company declares a dividend on Common Stock, or makes a
distribution to holders of Common Stock, and such dividend or distribution is
payable or made in Common Stock or securities convertible into or exchangeable
for Common Stock, or rights to purchase Common Stock or securities convertible
into or exchangeable for Common Stock, the number of shares of Common Stock for
which this Warrant may be exercised shall be increased, as of the record date
for determining which holders of Common Stock shall be entitled to receive such
dividend or distribution, in proportion to the increase in the number of
outstanding shares (and shares of Common Stock issuable upon conversion of all
such securities convertible into Common Stock) of Common Stock as a result of
such dividend or distribution, and the Exercise Price shall be adjusted so that
the aggregate amount payable for the purchase of all the Warrant Shares issuable
hereunder immediately after the record date for such dividend or distribution
shall equal the aggregate amount so payable immediately before such record date.
(f) If the Company declares a dividend on Common Stock (other than a
dividend covered by subsection (e) above) or distributes to holders of its
Common Stock, other than as part of its dissolution or liquidation or the
winding up of its affairs, any shares of its capital stock, any evidence of
indebtedness or any cash or other of its assets (other than Common Stock or
securities convertible into or exchangeable for Common Stock), the Holder shall
receive notice of such event as set forth in Section 10 below.
(g) If the Company shall, at any time before the expiration of this
Warrant, sell all or substantially all of its assets and distribute the proceeds
thereof to the Company's stockholders, the Holder shall, upon exercise of this
Warrant have the right to receive, in lieu of the shares of Common Stock of the
Company that the Holder otherwise would have been entitled to receive, the same
kind and amount of assets as would have been issued, distributed or paid to the
Holder upon any such distribution with respect to such shares of Common Stock of
the Company had the Holder been the holder of record of such shares of Common
Stock receivable upon exercise of this Warrant on the date for determining those
entitled to receive any such distribution. If any such distribution results in
any cash distribution in excess of the Exercise Price provided by this Warrant
for the shares of Common Stock receivable upon exercise of this Warrant, the
Holder may, at the Holder's option, exercise this Warrant without making payment
of the Exercise Price and, in such case, the Company shall, upon distribution to
the Holder, consider the Exercise Price to have been paid in full and, in making
settlement to the Holder, shall obtain receipt of the Exercise Price by
deducting an amount equal to the Exercise Price for the shares of Common Stock
receivable upon exercise of this Warrant from the amount payable
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<PAGE>
to the Holder. Notwithstanding the foregoing, in the event the consideration to
be paid to holders of Company capital stock in any transaction of the nature
referred to above in this Section 9(i) (an "Asset Sale Transaction") consists of
cash or cash equivalents and the consideration payable per share of Common Stock
of the Company is less than the Exercise Price hereunder, then, provided that
the Company shall have given the holder hereof the notice required by Section
10, this Warrant shall, to the extent it has not been exercised by the effective
date of such Transaction, terminate upon the completion of such Transaction.
(h) The term "Common Stock" shall mean the Common Stock of the Company as
the same exists at September ____, 1999 or as such stock may be constituted from
time to time, except that for the purpose of this Section 9, the term "Common
Stock" shall include any stock of any class of the Company which has no
preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the Company
and which is not subject to redemption by the Company.
(i) Whenever the number of Warrant Shares or the Exercise Price shall be
adjusted as required by the provisions of this Section 9, the Company forthwith
shall file in the custody of its secretary or an assistant secretary, at its
principal office, and furnish to each Holder hereof, a certificate prepared by
its Chief Financial Officer, showing the adjusted number of Warrant Shares and
the adjusted Exercise Price and setting forth in reasonable detail the
circumstances requiring the adjustments.
(j) No adjustment in the Exercise Price in accordance with the provisions
of this Section 9 need be made if such adjustment would amount to a change in
such Exercise Price of less than $.01; provided however, that the amount by
which any adjustment is not made by reason of the provisions of this Section
9(j) shall be carried forward and taken into account at the time of any
subsequent adjustment in the Exercise Price.
(k) If an adjustment is made under this Section 9 and the event to which
the adjustment relates does not occur, then any adjustments in accordance with
this Section 9 shall be readjusted to the Exercise Price and the number of
Warrant Shares which would be in effect had the earlier adjustment not been
made.
(l) If the Exercise Price exceeds $_____ for ten consecutive trading days,
the Company can require the holder of this Warrant to exercise this Warrant by
providing written notice to such holder. After delivery of such notice, the
holder of this Warrant shall have twenty days to exercise this Warrant.
Thereafter, this Warrant shall be terminated and shall no longer be exercisable.
10. Notice of Adjustment. So long as this Warrant shall be outstanding,
--------------------
(a) if the Company shall propose to pay any dividends or make any distribution
upon the Common Stock, or (b) if the Company shall offer generally to the
holders of Common Stock the right to subscribe to or purchase any shares of any
class of Common Stock or securities convertible into Common Stock or any other
similar rights, or (c) if there shall be any proposed capital reorganization of
the Company in which the Company is not the surviving entity, recapitalization
of the capital stock of the Company, consolidation or merger of the Company with
or into another corporation, sale, lease or other transfer of all or
substantially all of the property and assets of the Company,
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<PAGE>
or voluntary or involuntary dissolution, liquidation or winding up of the
Company, or (d) if the Company shall give to its stockholders any notice, report
or other communication respecting any significant or special action or event,
then in such event, the Company shall give to the Holder, at least ten (10) days
prior to the relevant date described below, a notice containing a description of
the proposed action or event and stating the date or expected date on which a
record of the Company's stockholders is to be taken for any of the foregoing
purposes, and the date or expected date on which any such dividend,
distribution, subscription, reclassification, reorganization, consolidation,
combination, merger, conveyance, sale, lease or transfer, dissolution,
liquidation or winding up is to take place and the date or expected date, if any
is to be fixed, as of which the holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such event.
11. Notice. Any notice to be given or to be served upon any party in
------
connection with the Warrant must be in writing and will be deemed to have been
given and received upon confirmed receipt, if sent by facsimile, or two (2) days
after it has been submitted for delivery by Federal Express or an equivalent
carrier, charges prepaid and addressed to the following addresses with a
confirmation of delivery:
If to the Company, to:
VidaMed, Inc.
46107 Landing Parkway
Fremont, California 94538
Attn.: Chief Financial Officer
Telephone: (510) 492-4900
Facsimile: (510) 492-4999
If to the Holder, to:
[Name/Address]
Any party may, at any time by giving written notice to the other party,
designate any other address in substitution of an address established pursuant
to the foregoing to which such notice will be given.
12. Miscellaneous.
-------------
(a) Issue Date. The provisions of this Warrant shall be construed and
----------
shall be given effect in all respect as if it had been issued and delivered by
the Company on the date hereof. This Warrant shall be binding upon any
successors or assigns of the Company.
(b) Restrictions. The holder hereof acknowledges that the Common
------------
Stock acquired upon the exercise of this Warrant may have restrictions upon its
resale imposed by state and federal securities laws.
(c) Governing Law. This Agreement shall be governed in all respects
-------------
by and construed in accordance with the laws of the State of Delaware without
regard to any conflicts of laws principles.
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(d) Successors and Assigns. Except as otherwise contemplated hereby,
----------------------
this Warrant shall be binding upon and inure to the benefit of any successors
and assigns of the Company.
IN WITNESS WHEREOF, VIDAMED, INC. has caused this Warrant to be executed by
its officers thereunto duly authorized.
Dated:_________, _____
VIDAMED, INC.
By:___________________________
Title:________________________
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<PAGE>
NOTICE OF EXERCISE
------------------
To: VIDAMED, INC.
(1) The undersigned hereby elects to purchase ____________ shares of
Common Stock of VIDAMED, INC. pursuant to the terms of the attached Warrant, and
tenders herewith payment of $__________ in full satisfaction of the purchase
price.
(2) Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned or in such other name as is
specified below:
_______________________________________________
(Name)
_______________________________________________
_______________________________________________
(Address)
(3) The undersigned represents that the aforesaid shares of Common Stock
are being acquired for the account of the undersigned for investment and not
with a view to, or for resale in connection with, the distribution thereof and
that the undersigned has no present intention of distributing or reselling such
shares; provided, that such representation shall not be required at such time as
the shares of Common Stock underlying this Warrant are registered under the
Securities Act of 1933.
_____________________________ ___________________________
(Date) (Signature)
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<PAGE>
ASSIGNMENT FORM
---------------
(To assign the foregoing Warrant, execute
this form and supply required information.
Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby
are hereby assigned to
______________________________________________________________________________
(Please Print)
whose address is _____________________________________________________________
(Please Print)
______________________________________________________________________________
Dated: _____________________, 19____.
Holder's Signature: _________________________________
Holder's Address: __________________________________
____________________________________________________
Signature Guaranteed:___________________________________________________________
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatever, and must be guaranteed by a bank or trust company. Officers of
corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.
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