Exhibit
10.1


 


March 15, 2005


 


By Hand Delivery


 


Dr. Robert I. Rudko


PLC Medical Systems, Inc.


10 Forge Park


Franklin, MA 
20238


 


Dear Bob:


 


You and PLC Medical Systems, Inc., a subsidiary of PLC
Systems Inc. (the “Company”), are parties to a letter agreement dated October 28,
2003 (the “Letter Agreement”) that sets forth certain terms of your employment
with the Company.  In light of recent tax
legislation, we have agreed to amend the Letter Agreement as set forth below:


 


1.  Amendment
and Restatement of Section 7(d). 
Section 7(d) of the Letter Agreement shall be replaced in its
entirety with the following:


 


(d)                                 Any
severance pay described in this paragraph 7 shall be subject to all applicable
taxes and withholdings, and shall never exceed $385,000 gross plus the
applicable amount contemplated by paragraph 7(c) hereof.  Any severance pay that you may receive shall
be paid in equal monthly installments over the twenty-four month period
following the termination of your employment. 
The Company shall have the right to set off against any severance pay
that you may become eligible to receive under this paragraph 7 any amounts you
borrowed from or may otherwise owe to the Company.  Neither you nor the Company shall have the
right to accelerate or to defer the delivery of the payments to be made under
this Section 7; provided, however, that if you are a “specified
employee” as defined in Section 409A(a)(2)(B)(i) of the Internal Revenue
Code of 1986, as amended (the “Code”) and any of the payments to be made to you
under this Section 7 constitute “nonqualified deferred compensation”
within the meaning of Section 409A of the Code, then the commencement of
the delivery of any such payments will be delayed to the date that is 6 months
after your date of termination.


 


2.  Amendment
and Restatement of Section 11.  Section 11
of the Letter Agreement shall be replaced in its entirety with the following:


 


11.  Entire
Agreement, Acknowledgements and Governing Law.  This letter agreement, as amended, together
with the Noncompetition Agreement, constitutes the entire agreement regarding
the terms and conditions of your continued employment with the Company.  You acknowledge that this letter agreement,
as amended, together with the Noncompetition Agreement, supersedes any and all prior
understandings, whether written or oral, relating to the terms of your
employment, including without limitation the Amended Key Employee Agreement
between you and PLC Systems Inc. dated as of September 8, 1994 and amended
as of August 1, 1996 (the “Amended Key Employee Agreement”), which the
Company and you acknowledge is hereby terminated by mutual agreement.  You further acknowledge that no “Change in
Control,” as that term is defined in Exhibit A to the Amended Key Employee
Agreement, occurred at any


 





















 


time, and that you are not entitled to receive any
payment or benefit under the Amended Key Employee Agreement.  Notwithstanding any of the foregoing,
however, you acknowledge and represent that nothing in this letter agreement,
as amended, is to be construed as releasing you from your obligation to repay,
or modifying in any respect any term of, the Loan.  You represent and further acknowledge that,
as of the date you execute this letter agreement, or any amendment thereof, you
have no claims of any kind or nature against the Company and/or any of its
current or former officers, directors and/or employees arising out of or
relating to your employment with the Company. 
You further agree that any action, demand, claim or counterclaim
concerning any aspect of your employment with or separation from the Company
shall be governed by the laws of the Commonwealth of Massachusetts, without
regard to conflicts of law principles. 
This letter agreement, as amended, shall be binding upon the parties and
may not be abandoned, supplemented, changed or modified in any manner, orally
or otherwise, except by an instrument in writing of concurrent or subsequent
date signed by a duly authorized representative of the parties hereto.


 


Except as specifically provided herein, all other
terms of the Letter Agreement shall remain in full force and effect.  If the terms of this amendment are acceptable
to you, please sign and return the copy of this amendment enclosed for that
purpose no later than March 15, 2005.


 


Sincerely,


 


	
  PLC Medical Systems, Inc. 

  
	
   

  
	
  By:

  	
  /s/ James G. Thomasch

  	
   

  
	
   

  
	
  Title: CFO

  



 


The
foregoing correctly sets forth the terms of my continued employment with PLC
Medical Systems, Inc.  I am not relying
on any representations other than as set out in the Letter Agreement and the
amendment thereto set forth above.  I
have been given a reasonable amount of time to consider this amendment and to
consult an attorney and/or advisor of my choosing.  I have carefully read this amendment,
understand the contents herein, freely and voluntarily assent to all of the
terms and conditions hereof, and sign my name of my own free act.


 


	
   

  	
  /s/ Robert I. Rudko

  	
   

  	
  Date:  March 15,
  2005

  
	
   

  	
  Dr. Robert I. Rudko