VIDAMED INC
AMENDED AND RESTATED 1995 DIRECTOR OPTION PLAN
<DOCUMENT>
<TYPE>EX-10.27
<SEQUENCE>3
<FILENAME>0003.txt
<DESCRIPTION>AMENDED AND RESTATED 1995 DIRECTOR OPTION PLAN
<TEXT>

<PAGE>

                                                                   EXHIBIT 10.27
                                 VIDAMED, INC.

                             AMENDED AND RESTATED
                           1995 DIRECTOR OPTION PLAN
                       (As amended through June 1, 2000)


1    Purposes of the Plan. The purposes of this 1995 Director Option Plan are to
     --------------------
     attract and retain the best available personnel for service as Outside
     Directors (as defined herein) of the Company, to provide additional
     incentive to the Outside Directors of the Company to serve as Directors,
     and to encourage their continued service on the Board.

All options granted hereunder shall be nonstatutory stock options.

                                      28
<PAGE>

2    Definitions.  As used herein, the following definitions shall apply:
     -----------

     a   "Board" means the Board of Directors of the Company.
          -----

     b   "Code" means the Internal Revenue Code of 1986, as amended.
          ----

     c   "Common Stock" means the Common Stock of the Company.
          ------------

     d   "Company" means VidaMed, Inc., a Delaware corporation.
          -------

     e   "Continuous Status as a Director" means the absence of any interruption
          -------------------------------
         or termination of service as a Director.

     f   "Director" means a member of the Board.
          --------

     g   "Employee" means any person, including officers and Directors, employed
          --------
         by the Company or any Parent or Subsidiary of the Company. The payment
         of a Director's fee by the Company shall not be sufficient in and of
         itself to constitute "employment" by the Company.

     h   "Exchange Act" means the Securities Exchange Act of 1934, as amended.
          ------------

     i   "Fair Market Value" means, as of any date, the value of Common Stock
          -----------------
         determined as follows:

         i)     If the Common Stock is listed on any established stock exchange
                or a national market system, including without limitation the
                Nasdaq National Market of the National Association of Securities
                Dealers, Inc. Automated Quotation ("NASDAQ") System, the Fair
                Market Value of a Share of Common Stock shall be the closing
                sales price for such stock (or the closing bid, if no sales were
                reported) as quoted on such system or exchange (or the exchange
                with the greatest volume of trading in Common Stock) on the day
                of determination, as reported in The Wall Street Journal or such
                other source as the Board deems reliable;

         ii)    If the Common Stock is quoted on the NASDAQ System (but not on
                the National Market thereof) or regularly quoted by a recognized
                securities dealer but selling prices are not reported, the Fair
                Market Value of a Share of Common Stock shall be the mean
                between the high bid and low asked prices for the Common Stock
                on the day of determination, as reported in The Wall Street
                Journal or such other source as the Board deems reliable, or;

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

     j   "New Outside Director" means an Outside Director who becomes a Director
          --------------------
         after the effective date of this Plan.

     k   "Option" means a stock option granted pursuant to the Plan.
          ------

     l   "Optioned Stock" means the Common Stock subject to an Option.
          --------------

                                      29
<PAGE>

     m   "Optionee" means an Outside Director who receives an Option.
          --------

     n   "Outside Director" means a Director who is not an Employee.
          ----------------

     o   "Parent" means a "parent corporation," whether now or hereafter
          ------
         existing, as defined in Section 424(e) of the Code.

     p   "Plan" means this VidaMed, Inc. 1995 Director Option Plan.
          ----

     q   "Share" means a share of the Common Stock, as adjusted in accordance
          -----
         with Section 10 of the Plan.

     r   "Subsidiary" means a "subsidiary corporation," whether now or hereafter
          ----------
         existing, as defined in Section 424(f) of the Internal Revenue Code of
         1986.

3    Stock Subject to the Plan. Subject to the provisions of Section 10 of the
     -------------------------
     Plan, the maximum aggregate number of Shares which may be optioned and sold
     under the Plan is three hundred thousand (300,000) Shares (the "Pool") of
     Common Stock. The Shares may be authorized but unissued. or reacquired
     Common Stock.

     If an Option should expire or become unexercisable for any reason without
having been exercised in full, the unpurchased Shares which were subject thereto
shall, unless the Plan shall have been terminated, become available for fixture
grant under the Plan; provided, however, that Shares that have actually been
issued under the Plan shall not be returned to the Plan and shall not become
available for future distribution under the Plan.

4    Administration and Grants of Options under the Plan.
     ---------------------------------------------------

     a   Procedure for Grants. The provisions set forth in this Section 4(a)
         --------------------
         shall not be amended more than once every six months, other than to
         comport with changes in the Code, the Employee Retirement Income
         Security Act of 1974, as amended, or the rules thereunder. All grants
         of Options to Outside Directors under this Plan shall be automatic and
         nondiscretionary and shall be made strictly in accordance with the
         following provisions:

         i)     No person shall have any discretion to select which Outside
                Directors shall be granted Options or to determine the number of
                Shares to be covered by Options granted to Outside Directors.

         ii)    Each New Outside Director shall be automatically granted an
                Option to purchase thirteen thousand three hundred thirty four
                (13.334) Shares (a "First Option') on the date on which such
                person first becomes a Director, whether through election by the
                stockholders of the Company or appointment by the Board to fill
                a vacancy. Each Outside Director shall be automatically granted
                an Option to purchase thirteen thousand three hundred thirty
                four (13,334) Shares (a "First Option') on the effective date of
                this Plan, as determined in accordance with Section 6 hereof.

         iii)   After a First Option has been granted to a New Outside Director
                or Outside Director, such individual shall thereafter be
                automatically granted an Option to purchase three thousand three
                hundred thirty four (3,334) Shares (a "Subsequent Option") on
                the first business day of

                                      30
<PAGE>

                each calendar year, if on such date,
                he shall have served on the Board for at least six (6) months.

         iv)    Notwithstanding the provisions of subsections (ii) and (iii)
                hereof, any exercise of an Option made before the Company has
                obtained stockholder approval of the Plan in accordance with
                Section 16 hereof shall be conditioned upon obtaining such
                stockholder approval of the Plan in accordance with Section 16
                hereof

         v)     The terms of a First Option granted hereunder shall be as
                follows:

                (A)  the term of the First Option shall be ten (10) years.

                (B)  the First Option shall be exercisable only while the
                     Outside Director remains a Director of the Company, except
                     as set forth in Section 8 hereof

                (C)  the exercise price per Share shall be 100% of the fair
                     market value per Share on the date of grant of the First
                     Option. In the event that the date of grant of the First
                     Option is not a trading day, the exercise price per Share
                     shall be the Fair Market Value on the next trading day
                     immediately following the date of grant of the First
                     Option.

                (D)  the First Option shall become exercisable as to all of the
                     shares subject to the First Option on the date of grant.

         vi)    The terms of a Subsequent Option granted hereunder shall be as
                follows:

                (A)  the term of the Subsequent Option shall be ten (10) years.

                (B)  the Subsequent Option shall be exercisable only while the
                     Outside Director remains a Director of the Company, except
                     as set forth in Section 8 hereof

                (C)  the exercise price per Share shall be 100% of the fair
                     market value per Share on the date of grant of the
                     Subsequent Option. In the event that the date of grant of
                     the First Option is not a trading day, the exercise price
                     per Share shall be the Fair Market Value on the next
                     trading day immediately following the date of grant of the
                     First Option.

                (D)  the Subsequent Option shall become exercisable as to all of
                     the shares subject to the Subsequent Option on the date of
                     grant.

         vii)   In the event that any Option granted under the Plan would cause
                the number of Shares subject to outstanding Options plus the
                number of Shares previously purchased under Options to exceed
                the Pool, then the remaining Shares available for Option grant
                shall be granted under Options to the Outside Directors on a pro
                rata basis. No further grants shall be made until such time, if
                any, as additional Shares become available for grant under the
                Plan through action of the stockholders to increase the number
                of Shares which may be issued under the Plan or through
                cancellation or expiration of Options previously granted
                hereunder.

                                      31
<PAGE>

5    Eligibility. Options may be granted only to Outside Directors. All Options
     -----------
     shall be automatically granted in accordance with the terms set forth in
     Section 4 hereof An Outside Director who has been granted an Option may, if
     he is otherwise eligible, be granted an additional Option or Options in
     accordance with such provisions.

     The Plan shall not confer upon any Optionee any right with respect to
     continuation of service as a Director or nomination to serve as a Director,
     nor shall it interfere in any way with any rights which the Director or the
     Company may have to terminate his or her directorship at any time.

6    Term of Plan. The Plan shall become effective upon the earlier to occur of
     ------------
     its adoption by the Board or its approval by the stockholders of the
     Company as described in Section 16 of the Plan. It shall continue in effect
     for a term often (10) years unless sooner terminated under Section 11 of
     the Plan.

7    Form of Consideration. The consideration to be paid for the Shares to be
     ---------------------
     issued upon exercise of an Option, including the method of payment. shall
     consist of (i) cash, (ii) check, (iii) other shares which (x) in the case
     of Shares acquired upon exercise of an Option, have been owned by the
     Optionee for more than six (6) months on the date of surrender, and (y)
     have a Fair Market Value on the date of surrender equal to the aggregate
     exercise price of the Shares as to which said Option shall be exercised,
     (iv) delivery of a properly executed exercise notice together with such
     other documentation as the Company and the broker, if applicable, shall
     require to effect an exercise of the Option and delivery to the Company of
     the sale or loan proceeds required to pay the exercise price, or (v) any
     combination of the foregoing methods of payment.

8    Exercise of Option.
     ------------------

     a   Procedure for Exercise; Rights as a Stockholder. Any Option granted
         -----------------------------------------------
         hereunder shall be exercisable at such times as are set forth in
         Section 4 hereof: provided, however, that no Options shall be
         exercisable until stockholder approval of the Plan in accordance with
         Section 16 hereof has been obtained.

     An Option may not be exercised for a fraction of a Share.
     An Option shall be deemed to be exercised when written notice of such
     exercise has been given to the Company in accordance with the terms of the
     Option by the person entitled to exercise the Option and full payment for
     the Shares with respect to which the Option is exercised has been received
     by the Company. Full payment may consist of any consideration and method of
     payment allowable under Section 7 of the Plan. Until the issuance (as
     evidenced by the appropriate entry on the books of the Company or of a duly
     authorized transfer agent of the Company) of the stock certificate
     evidencing such Shares, no right to vote or receive dividends or any other
     rights as a stockholder shall exist with respect to the Optioned Stock,
     notwithstanding the exercise of the Option. A share certificate for the
     number of Shares so acquired shall be issued to the Optionee as soon as
     practicable after exercise of the Option. No adjustment shall be made for a
     dividend or other right for which the record date is prior to the date the
     stock certificate is issued, except as provided in Section 10 of the Plan.

     Exercise of an Option in any manner shall result in a decrease in the
     number of Shares which thereafter may be available, both for purposes of
     the Plan and for sale under the Option, by the number of Shares as to which
     the Option is exercised.

                                      32
<PAGE>

     b   Rule 16b-3. Options granted to Outside Directors must comply with the
         ----------
         applicable provisions of Rule 16b-3 promulgated under the Exchange Act
         or any successor thereto and shall contain such additional conditions
         or restrictions as may be required thereunder to qualify Plan
         transactions, arid other transactions by Outside Directors that
         otherwise could be matched with Plan transactions, for the maximum
         exemption from Section 16 of the Exchange Act.

     c   Termination of Continuous Status as a Director. In the event an
         ----------------------------------------------
         Optionee's Continuous Status as a Director terminates (other than upon
         the Optionee's death or total and permanent disability (as defined in
         Section 22(e)(3) of the Code)), the Optionee may exercise his or her
         Option, but only within three (3) months from the date of such
         termination, and only to the extent that the Optionee was entitled to
         exercise it on the date of such termination (but in no event later than
         the expiration of its ten (10) year term). To the extent that the
         Optionee was not entitled to exercise an Option on the date of such
         termination, and to the extent that the Optionee does not exercise such
         Option (to the extent otherwise so entitled) within the time specified
         herein, the Option shall terminate.

     d   Disability of Optionee. In the event Optionee's Continuous Status as a
         ----------------------
         Director terminates as a result of total and permanent disability (as
         defined in Section 22(e)(3) of the Code), the Optionee may exercise his
         or her Option, but only within twelve (12) months from the date of such
         termination, and only to the extent that the Optionee was entitled to
         exercise it on the date of such termination (but in no event later than
         the expiration of its ten (10) year term). To the extent that the
         Optionee was not entitled to exercise an Option on the date of
         termination, or if he or she does not exercise such Option (to the
         extent otherwise so entitled) within the time specified herein, the
         Option shall terminate.

     e   Death of Optionee. In the event of an Optionees death, the Optionee's
         -----------------
         estate or a person who acquired the right to exercise the Option by
         bequest or inheritance may exercise the Option, but only within twelve
         (12) months following the date of death, and only to the extent that
         the Optionee was entitled to exercise it on the date of death (but in
         no event later than the expiration of its ten (10) year term). To the
         extent that the Optionee was not entitled to exercise an Option on the
         date of death, and to the extent that the Optionee's estate or a person
         who acquired the right to exercise such Option does not exercise such
         Option (to the extent otherwise so entitled) within the time specified
         herein, the Option shall terminate.

9    Non-Transferability of Options. The Option may not be sold, pledged,
     ------------------------------
     assigned, hypothecated, transferred, or disposed of in any manner other
     than by will or by the laws of descent or distribution and may be
     exercised, during the lifetime of the Optionee. only by the Optionee.

10   Adjustments Upon Changes in Capitalization. Dissolution. Merger. Asset Sale
     ---------------------------------------------------------------------------
     or Change of Control.
     --------------------

     a   Changes in Capitalization. Subject to any required action by the
         -------------------------
         stockholders of the Company, the number of Shares covered by each
         outstanding Option, the number of Shares which have been authorized for
         issuance under the Plan but as to which no Options have yet been
         granted or which have been returned to the Plan upon cancellation or
         expiration of an Option, as well as the price per Share covered by each
         such outstanding Option, and the number of Shares issuable pursuant to
         the automatic grant provisions of Section 4 hereof shall be
         proportionately adjusted for any increase or decrease in the number of
         issued Shares resulting from a stock split, reverse stock split, stock
         dividend, combination or reclassification of the Common Stock, or any
         other increase or decrease in the number of issued Shares effected
         without receipt of consideration by

                                      33
<PAGE>

         the Company; provided, however, that conversion of any convertible
         securities of the Company shall not be deemed to have been "effected
         without receipt of consideration." Except as expressly provided herein,
         no issuance by the Company of shares of stock of any class, or
         securities convertible into shares of stock of any class, shall affect,
         and no adjustment by reason thereof shall be made with respect to, the
         number or price of Shares subject to an Option.

     b   Dissolution or Liquidation. In the event of the proposed dissolution or
         --------------------------
         liquidation of the Company, to the extent that an Option has not been
         previously exercised, it will terminate immediately prior to the
         consummation of such proposed action.

     c   Merger or Asset Sale. In the event of a merger of the Company with or
         --------------------
         into another corporation, or the sale of substantially all of the
         assets of the Company, each outstanding Option shall be assumed or an
         equivalent option shall be substituted by the successor corporation or
         a Parent or Subsidiary of the successor corporation. In the event that
         the successor corporation does not agree to assume the Option or to
         substitute an equivalent option. each outstanding Option shall become
         fully vested and exercisable, including as to Shares as to which it
         would not otherwise be exercisable. If an Option becomes fully vested
         and exercisable in the event of a merger or sale of assets, the Board
         shall notify the Optionee that the Option shall be fully exercisable
         for a period of thirty (30) days from the date of such notice, and the
         Option shall terminate upon the expiration of such period. For the
         purposes of this paragraph. the Option shall be considered assumed if,
         following the merger or sale of assets, the option or right confers the
         right to purchase, for each Share of Optioned Stock subject to the
         Option immediately prior to the merger or sale of assets, the
         consideration (whether stock, cash, or other securities or property)
         received in the merger or sale of assets by holders of Common Stock for
         each Share held on the effective date of the transaction (and if
         holders were offered a choice of consideration, the type of
         consideration chosen by the holders of a majority of the outstanding
         Shares).

11   Amendment and Termination of the Plan.
     -------------------------------------

     a   Amendment and Termination. Except as set forth in Section 4, the Board
         -------------------------
         may at any time amend, alter, suspend, or discontinue the Plan, but no
         amendment, alteration, suspension, or discontinuation shall be made
         which would impair the rights of any Optionee under any grant
         theretofore made, without his or her consent. In addition, to the
         extent necessary and desirable to comply with Rule 16b-3 under the
         Exchange Act (or any other applicable law or regulation), the Company
         shall obtain stockholder approval of any Plan amendment in such a
         manner and to such a degree as required.

     b   Effect of Amendment or Termination. Any such amendment or termination
         ----------------------------------
         of the Plan shall not affect Options already granted and such Options
         shall remain in full force and effect as if this Plan had not been
         amended or terminated.

12   Time of Granting Options. The date of grant of an Option shall, for all
     ------------------------
     purposes, be the date determined in accordance with Section 4 hereof.

13   Conditions Upon Issuance of Shares. Shares shall not be issued pursuant to
     ----------------------------------
     the exercise of an Option unless the exercise of such Option and the
     issuance and delivery of such Shares pursuant thereto shall comply with all
     relevant provisions of law, including, without limitation, the Securities
     Act of 1933, as amended, the Exchange Act, the rules and regulations
     promulgated thereunder, state securities laws, and the requirements of any
     stock exchange upon which the Shares may then be

                                      34
<PAGE>

     listed, and shall be further subject to the approval of counsel for the
     Company with respect to such compliance.

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

     Inability of the Company to obtain authority from any regulatory body
     having jurisdiction, which authority is deemed by the Company's counsel to
     be necessary to the lawful issuance and sale of any Shares hereunder, shall
     relieve the Company of any liability in respect of the failure to issue or
     sell such Shares as to which such requisite authority shall not have been
     obtained.

14   Reservation of Shares. The Company, during the term of this Plan, will at
     ---------------------
     all times reserve and keep available such number of Shares as shall be
     sufficient to satisfy the requirements of the Plan.

15   Option Agreement.  Options shall be evidenced by written option agreements
     ----------------
     in such form as the Board shall approve.

16   Stockholder Approval.  Continuance of the Plan shall be subject to approval
     --------------------
     by the stockholders of the Company at or prior to the first annual meeting
     of stockholders held subsequent to the granting of an Option hereunder.
     Such stockholder approval shall be obtained in the degree and manner
     required under applicable state and federal law.

                                      35
</TEXT>
</DOCUMENT>
