**EXHIBIT10.1**

 

**Form ofStock Option Grant Letter for Employees**

 

[Date of Grant]

 

[Name]

[Address]

[City, State Zip]

 

Dear [Optionee],

 

I am pleased to adviseyou that PLC Systems Inc. (the “Company”) has, on this date, pursuant to its2005 Stock Incentive Plan (the “Plan”), awarded you [an incentive stockoption/a nonstatutory stock option] to purchase                    shares of the Common Stock, no par value per share, of the Company at a priceof $       pershare.

 

In addition to the termsof the Plan, the following terms and conditions are applicable with respect tothis option, and your signature below shall constitute your acknowledgement andacceptance of same:

 

1.                                       This option will become exercisable (“vest”)as to[                        ].  The right of exercise shall be cumulative sothat to the extent the option is not exercised in any period to the maximumextent permissible it shall continue to be exercisable, in whole or in part,with respect to all shares for which it is vested until the earlier of theexpiration date or the termination of this option under Section 2 hereofor the Plan.

 

2.                                       This option is subjectto the following exercise terms:

 

(a)                                  Should your employmentwith the Company (or a parent or subsidiary of the Company) be terminated forany reason other than death or disability (as defined in the Internal RevenueCode of 1986, as amended (the “Code”)) or for “Cause” (as defined below), allunexercised options shall terminate ninety (90) days after the date of yourtermination (but in no event after [five (5)/ten (10)] years from the date ofgrant); provided, however, that (i) if, as of the date ofsuch termination for any reason other than death, disability or for Cause, youare at least 59.5 years old and have been employed by the Company continuouslyfor at least the five (5) years prior to such date, then all of yourunexercised options shall instead terminate three (3) years after the dateof your termination (but in no event after [five (5)/ten (10)] years from thedate of grant), and (ii) this option shall be exercisable only to theextent that you were entitled to exercise this option on the date of suchcessation of employment.

 

(b)                                 In the event of termination of youremployment as a result of your death, the outstanding options exercisable byyou at the date of your death may be exercised by your estate until one (1) yearfrom the date of your death (but in no event after [five (5)/ten (10)] yearsfrom the date of grant), provided that this option shall be exercisableonly to the extent that this option was exercisable by you on the date of yourdeath.

 

(c)                                  In the event of termination of youremployment as a result of your disability (as defined in the Code), alloutstanding options exercisable by you at the date of such termination shallterminate one (1) year from the date your employment terminates (but in noevent after [five 

 

----

 

(5)/ten (10)] years fromthe date of grant), provided that this option shall be exercisable onlyto the extent that this option was exercisable by you on the date of yourdisability.

 

(d)                                 If you are discharged by the Company for “Cause”(as defined below), the right to exercise this option shall terminateimmediately upon the effective date of such discharge.  “Cause” shall mean your willful misconduct orwillful failure to perform your responsibilities to the Company (including,without limitation, your breach of any provision of any employment, consulting,advisory, nondisclosure, non-competition or other similar agreement between youand the Company), as determined by the Company, which determination shall beconclusive.

 

(e)                                  If you violate the non-competition orconfidentiality provisions of any employment contract, confidentiality andnondisclosure agreement or other agreement between you and the Company, theright to exercise this option shall terminate immediately upon written noticeto you from the Company describing such violation.

 

3.                                       This option may be exercised in whole orin part from time to time; provided, however, that an option maynot be exercised as to less than 100 shares at any one time unless it is beingexercised in full and the balance of the shares subject to the option is lessthan 100.  Each election to exercise thisoption shall be in writing, signed by you, and received by the Company at itsprincipal office, accompanied by this letter, and payment in full in the mannerprovided in the Plan.

 

4.                                       The shares of Common Stock underlyingthis option and the exercise price therefor shall be equitably adjusted fromtime to time for stock splits, reverse splits, stock dividends andreclassifications of shares in accordance with the Plan.

 

5.                                       [In the event of a ReorganizationEvent (as defined in the Plan), the Company shall give prior notice of such anevent to you, and you may exercise up to 100% of this option as of a timespecified in such notice.  If you do notexercise the option prior to the consummation of the Reorganization Event, allunexercised portions of this option shall terminate and be of no further forceor effect.]  *Note: This clause may be inserted at the discretionof the Company’s Board of Directors.*

 

6.                                       No shares will be issued pursuant to theexercise of this option unless and until you pay to the Company, or makeprovision satisfactory to the Company for payment of, any federal, state orlocal withholding taxes required by law to be withheld in respect of thisoption.

 

7.                                       This option may not be sold, assigned,transferred, pledged or otherwise encumbered by you, either voluntarily or byoperation of law, except by will or the laws of descent and distribution, and,during your lifetime, this option shall be exercisable only by you.

 

8.                                       Unless earlier terminated, this optionwill expire [five (5)/ten (10)] years from the date of grant.

 

9.                                       This option is subject to the provisionsof the Plan, a copy of which is furnished to you with this option.

 

When you wish to exercise this stock option, pleaserefer to the provisions of this letter and the Plan and then correspond inwriting with the Chief Financial Officer of the Company. Further, pleaseindicate your acknowledgment and acceptance of this option by signing theenclosed copy of this letter and returning it to the undersigned or                          within 30 days of your receipt of this grant.

 

----

 

|                          |   | Sincerely,                             |
|-------------------------------|--------|----------------------------------------|
|                          |   |                                   |
|                          |   |                                   |
|                          |   | Mark R. Tauscher,                      |
|                          |   | President and Chief  Executive Officer |
|                          |   |                                   |
|                          |   |                                   |
| ACKNOWLEDGEMENT AND  CONSENT: |   |                                   |
|                          |   |                                   |
|                          |   |                                   |
|                          |   |                                   |
| Optionee                      |   |                                   |

 

----