**EXHIBIT 10.1**

 

**Form of Stock Option Grant Letter**

 

[Date of Grant]

 

[Name]

[Address]

[City, State Zip]

 

Dear [Optionee],

 

I am pleased to advise you that PLC Systems Inc. (the “Company”) has,on this date, pursuant to its [1995 Stock Option Plan/1997 Executive StockOption Plan/2000 Equity Incentive Plan/2000 Non-Qualified Performance andRetention Equity Plan] (the “Plan”), awarded you [an incentive stock option/anon-qualified stock option] to purchase               sharesof the Common Stock, no par value per share, of the Company, at a price of $        pershare.

 

In addition to the terms of the Plan, the following terms andconditions are applicable with respect to this option, and your signature belowshall constitute your acknowledgement and acceptance of same:

 

1.                                       Thisoption shall not be transferable under any circumstances except by operation oflaw.

 

2.                                       Theprice at which this option may be exercised shall be $        per share.

 

3.                                       Thisoption is subject to the following terms:

 

(a)                                  Shouldyour employment with the Company (or a parent or subsidiary of the Company) beterminated for any reason other than death or disability (as defined in theInternal Revenue Code of 1986, as amended (the “Code”)) or for “Cause” (asdefined below), all unexercised options shall terminate 90 days after the dateof your termination (but in no event after 10 years from the date of grant), providedthat this option shall be exercisable only to the extent that you wereentitled to exercise this option on the date of such cessation of employment.

 

(b)                                 Inthe event of termination of your employment as a result of your death, theoutstanding options exercisable by you at the date of your death may beexercised by your estate until one year from the date of your death (but in noevent after 10 years from the date of grant), providedthat thisoption shall be exercisable only to the extent that this option was exercisableby you on the date of your death.

 

(c)                                  In the event oftermination of your employment as a result of your disability (as defined inthe Code), all outstanding options exercisable by you at the date of suchtermination shall terminate one year from the date your employment terminates(but in no event after 10 years from the date of grant), providedthatthis option shall be exercisable only to the extentthat this option was exercisable by you on the date of your disability.

 

----

 

(d)                                 If you are dischargedby the Company for “Cause” (as defined below), the right to exercise thisoption shall terminate immediately upon the effective date of suchdischarge.  “Cause” shall mean yourwillful misconduct or willful failure to perform your responsibilities to theCompany (including, without limitation, your breach of any provision of anyemployment, consulting, advisory, nondisclosure, non-competition or othersimilar agreement between you and the Company), as determined by the Company,which determination shall be conclusive.

 

(e)                                  If you violate thenon-competition or confidentiality provisions of any employment contract, confidentialityand nondisclosure 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.

 

4.                                       Thisoption may be exercised in whole or in part from time to time, provided,however, that an option may not be exercised as to less than 100 sharesat any one time unless it is being exercised in full and the balance of theshares subject to the option is less than 100. Each election to exercise this option shall be in writing, signed byyou, and received by the Company at its principal office, accompanied by thisletter, and payment in full in the manner provided in the Plan.

 

5.                                       Theshares of Common Stock underlying this option and the exercise price thereforshall be appropriately adjusted from time to time for stock splits, reversesplits, stock dividends and reclassifications of shares.

 

6.                                       Inthe event of an Acquisition Event (as defined in the Plan), the Company shallgive prior notice of such an event to you, and you may exercise up to 100% ofthis option as of a time 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.                                       Notwithstanding anything contained herein to the contrary(except paragraph 6 hereof), the maximum number of shares of options that maybe exercised is as follows:

 
| **Period**                   | ** ** | **Number of****Options Exercisable** | ** ** |
|------------------------------|------------|--------------------------------------|------------|
|                         |       |                                 |       |
| One year after grant date    |       | 1/3 of total grant                   |       |
| Two years after grant date   |       | 2/3 of total grant                   |       |
| Three years after grant date |       | fully exercisable                    |       |

 

8.                                       Noshares will be issued pursuant to the exercise of this option unless and untilyou pay to the Company, or make provision satisfactory to the Company forpayment of, any federal, state or local withholding taxes required by law to bewithheld in respect of this option.

 

9.                                       Thisoption may not be sold, assigned, transferred, pledged or otherwise encumberedby you, either voluntarily or by operation of law, except by will or the lawsof descent and distribution, and, during your lifetime, this option shall beexercisable only by you.

 

2

----

 

10.                                 Unlessearlier 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 MichelleCannata within 30 days of your receipt of this grant.

 

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

 

3

----