**EXHIBIT10.1**

 

**Formof Stock Option Grant Letter for Non-Employee Directors**

 

[Date of Grant]

 

[Name]

[Address]

[City, State Zip]

 

Dear [Optionee]:

 

I am pleased to advise you that PLC SystemsInc. (the “Company”) has, on this date, pursuant to its [1995 Stock OptionPlan/1997 Executive Stock Option Plan/2000 Equity Incentive Plan] (the “Plan”),awarded you a non-qualified stock option to purchase                 shares of the Common Stock, no par value pershare, of the Company, at a price of $            per share.

 

In addition to the terms of the Plan, thefollowing terms and conditions are applicable with respect to this option, andyour signature below shall constitute your acknowledgement and acceptance ofsame:

 

(1)                                  This option shall notbe transferable under any circumstances except by operation of law.

 

(2)                                  The price at whichthis option may be exercised shall be $          per share.

 

(3)                                  This option issubject to the following terms:

 

(a)                                  Should your service as a Director of the Companyterminate for any reason other than death or disability (as defined in theInternal Revenue Code of 1986, as amended (the “Code”)), all of your unvestedoptions shall terminate immediately.

 

(b)                                 Inthe event your service as a Director of the Company terminates as a result ofyour death, the outstanding options exercisable by you at the date of yourdeath may be exercised by your estate until one year from the date of yourdeath (but in no event after 10 years from the date of grant), providedthatthis option shall be exercisable only to the extent that this option wasexercisable by you on the date of your death.

 

(c)                                  Inthe event your service as a Director of the Company terminates as a result ofyour disability (as defined in the Code), the outstanding options exercisableby you at the date of such termination may be exercised until one year from thedate of such termination (but in no event after 10 years from the date ofgrant), providedthat this option shall be exercisable only tothe extent that this option was exercisable by you on the date of yourdisability.

 

(4)                                  This option may beexercised in whole or in part from time to time; provided, however,that an option may not be exercised as to less than 100 shares at any one timeunless it is being exercised in full and the balance of the shares subject tothe option is less than 100.  Eachelection to exercise this option shall be in writing, signed by you, andreceived by the Company at its principal office, accompanied by this letter,and payment in full in the manner provided in the Plan.

 

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(5)                                  The shares of Common Stock underlying this optionand the exercise price therefor shall be appropriately adjusted from time totime for stock splits, reverse splits, stock dividends and reclassifications ofshares.

 

(6)                                  In the event of anAcquisition Event (as defined in the Plan), the Company shall give prior noticeof such an event to you, and you may exercise up to 100% of this option as of atime specified in such notice.  If you do not exercise the option prior tothe consummation of the Acquisition Event, all unexercised portions of thisoption shall terminate and be of no further force or effect.

 

(7)                                  Notwithstandinganything herein to the contrary (except paragraph 6 above), the maximum numberof options that may be exercised, subject to your continued service as aDirector of the Company, is as follows:

 
| **Period**                    | ** ** | **Number of  Options Exercisable** | ** ** |
|-------------------------------|------------|------------------------------------|------------|
|                          |       |                               |       |
| Grant date                    |       | 0                                  |       |
| Three months after grant date |       | 1/4 of total  grant                |       |
| Six months  after grant date  |       | 2/4 of total  grant                |       |
| Nine months  after grant date |       | 3/4 of total  grant                |       |
| One year after grant date     |       | fully  exercisable                 |       |

 

(8)                                  No shares will beissued pursuant to the exercise of this option unless and until you pay to theCompany, or make provision satisfactory to the Company for payment of, anyfederal, state or local withholding taxes required by law to be withheld inrespect of this option.

 

(9)                                  This option may notbe sold, assigned, transferred, pledged or otherwise encumbered by you, eithervoluntarily or by operation of law, except by will or the laws of descent anddistribution, and, during your lifetime, this option shall be exercisable onlyby you.

 

(10)                            Unless earlier terminated,this option will expire 10 years from the date of grant.

 

(11)                            Thisoption is subject to the provisions of the Plan, a copy of which is furnishedto you with this option.

 

When you wish to exercise this stock option,please refer to the provisions of this letter and the Plan and then correspondin writing 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 yourreceipt of this grant.

 
|   | Sincerely,                            |
|--------|---------------------------------------|
|   |                                  |
|   |                                  |
|   | Mark R. Tauscher,                     |
|   | President and Chief Executive Officer |

 

ACKNOWLEDGEMENT AND CONSENT:

 

 
|     |   |
|----------|--------|
| Optionee |   |

 

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