Document:

Prepared by MERRILL CORPORATION www.edgaradvantage.com

QuickLinks
 -- Click here to rapidly navigate through this document
 

  WATERS INSTRUMENTS, INC.
       1995 STOCK OPTION PLAN
       AMENDMENT NO. 1
  DATED OCTOBER 28, 1999         

    
On October 28, 1999, the Board of Directors of Waters Instruments, Inc. approved the following amendment to the Company's 1995 Stock Option Plan to increase the shares available pursuant
to Section 5 of the Plan from 150,00 to 375,000, which amendment was approved by the shareholders on March 15, 2000: 

    NOW,
THEREFORE, RESOLVED, that the number of shares of Common Stock of the Company reserved for issuance in connection with grants of options under the Stock Option Plan shall be
increased to a total of 375,000 shares. 

	 	 	
 John A. Grimstad, Secretary

Waters Instruments, Inc.

QuickLinks

WATERS INSTRUMENTS, INC. 1995 STOCK OPTION PLAN AMENDMENT NO. 1 DATED OCTOBER 28, 1999EXHIBIT 4.1

                               FREESHOP.COM, INC.
                        2000 EMPLOYEE STOCK PURCHASE PLAN

                             ARTICLE I. INTRODUCTION

     Section 1.01 Purpose.  The purpose of the FreeShop.com,  Inc. 2000 Employee
Stock Purchase Plan (the "Plan") is to provide employees of FreeShop.com,  Inc.,
a Washington corporation (the "Company"),  and its subsidiary  corporations,  if
any, with an  opportunity  to share in the ownership of the Company by providing
them with a  convenient  means  for  regular  and  systematic  purchases  of the
Company's Common Stock, no par value per share, and, thus, to develop a stronger
incentive to work for the continued success of the Company.

     Section 1.02 Rules of  Interpretation.  It is intended  that the Plan be an
"employee  stock  purchase  plan" as defined in Section  423(b) of the  Internal
Revenue  Code of  1986,  as  amended  (the  "Code"),  and  Treasury  Regulations
promulgated  thereunder.   Accordingly,   the  Plan  shall  be  interpreted  and
administered in a manner consistent  therewith if so approved.  All Participants
in the Plan  will  have the  same  rights  and  privileges  consistent  with the
provisions of the Plan.

     Section 1.03  Definitions.  For purposes of the Plan,  the following  terms
will have the meanings set forth below:

     (a) "Acceleration Date" means the later of the date of stockholder approval
or approval by the  Company's  Board of  Directors of (i) any  consolidation  or
merger of the Company in which the Company is not the  continuing  or  surviving
corporation  or  pursuant  to which  shares of  Company  Common  Stock  would be
converted into cash,  securities or other  property,  other than a merger of the
Company in which  stockholders  of the Company  immediately  prior to the merger
have the same  proportionate  ownership  of stock in the  surviving  corporation
immediately after the merger;  (ii) any sale, exchange or other transfer (in one
transaction or a series of related  transactions) of all or substantially all of
the assets of the Company;  or (iii) any plan of  liquidation  or dissolution of
the Company.

     (b) "Affiliate" means any subsidiary corporation of the Company, as defined
in Section 424(f) of the Code, whether now or hereafter acquired or established.

     (c) "Committee" means the committee described in Section 10.01.

     (d) "Common Stock" means the Company's  Common Stock, no par value, as such
stock may be adjusted for changes in the stock or the Company as contemplated by
Article XI herein.

     (e) "Company" means FreeShop.com,  Inc., a Washington corporation,  and its
successors by merger or consolidation as contemplated by Article XI herein.

     (f) "Current  Compensation"  means all regular wage,  salary and commission
payments  paid by the Company to a Participant  in accordance  with the terms of
his or her employment,  and including  annual bonus payments and all other forms
of special compensation.

<PAGE>

     (g) "Fair  Market  Value" as of a given date means such value of the Common
Stock as reasonably determined by the Committee,  but shall not be less than the
last sale price of the Common Stock as then quoted on the NASDAQ National Market
System on the date as of which the fair market value is being determined.  If on
a given date the Common Stock is not traded on an established securities market,
the  Committee  shall make a good faith attempt to satisfy the  requirements  of
this Section 1.03 and in connection therewith shall take such action as it deems
necessary or advisable.

     (h) "Participant"  means a Permanent  Full-Time Employee who is eligible to
participate in the Plan under Section 2.01 and who has elected to participate in
the Plan.

     (i) "Participating  Affiliate" means an Affiliate which has been designated
by the Committee in advance of the Purchase  Period in question as a corporation
whose eligible Permanent Full-Time Employees may participate in the Plan.

     (j) "Permanent  Full-Time  Employee"  means an employee of the Company or a
Participating  Affiliate as of the first day of a Purchase Period,  including an
officer or director who is also an  employee,  but  excluding an employee  whose
customary employment is less than 20 hours per week.

     (k) "Plan" means the FreeShop.com,  Inc. 2000 Employee Stock Purchase Plan,
as amended, the provisions of which are set forth herein.

     "Purchase  Period" means the  approximate  6-month period  beginning on the
sixteenth calendar day of September and March,  respectively,  and ending on the
fifteenth calendar day of March and September, respectively;  provided, however,
that the initial  Purchase  Period will commence on the earliest of (i) the date
of adoption of this Plan, (ii) the date of shareholder  approval of this Plan or
(iii) the effective date set forth in Section 9.01; and provided,  further, that
the then current Purchase Period will end upon the occurrence of an Acceleration
Date.

     (m) "Stock Purchase Account" means the account  maintained on the books and
records of the  Company  recording  the amount  received  from each  Participant
through  payroll  deductions  made under the Plan and from the  Company  through
matching contributions.

                    ARTICLE II. ELIGIBILITY AND PARTICIPATION

     Section 2.01 Eligible Employees. All Permanent Full-Time Employees shall be
eligible  to  participate  in the Plan  beginning  on the first day of the first
Purchase  Period to  commence  after such person  becomes a Permanent  Full-Time
Employee.  Subject to the  provisions  of Article  VI, each such  employee  will
continue to be eligible to  participate in the Plan so long as he or she remains
a Permanent Full-Time Employee.

     Section  2.02  Election to  Participate.  An eligible  Permanent  Full-Time
Employee may elect to  participate  in the Plan for a given  Purchase  Period by
filing with the Company,  in advance of that  Purchase  Period and in accordance
with such terms and  conditions  as the  Committee  in its sole

<PAGE>

discretion  may impose,  a form provided by the Company for such purpose  (which
authorizes regular payroll deductions from Current  Compensation  beginning with
the first  payday in that  Purchase  Period and  continuing  until the  employee
withdraws  from the Plan or ceases to be eligible to  participate  in the Plan).
Notwithstanding  the foregoing,  an eligible Permanent  Full-Time Employee shall
have two pay periods  from the  Effective  Date to elect to  participate  in the
Plan.

     Section  2.03 Limits on Stock  Purchase.  No employee  shall be granted any
right to purchase  Common Stock  hereunder if such employee,  immediately  after
such a right to purchase is granted,  would own, directly or indirectly,  within
the meaning of Section  423(b)(3) and Section  424(d) of the Code,  Common Stock
possessing  5% or more of the total  combined  voting  power or value of all the
classes of the capital stock of the Company or of all Affiliates.

     Section 2.04 Voluntary Participation. Participation in the Plan on the part
of a  Participant  is  voluntary  and such  participation  is not a condition of
employment  nor does  participation  in the Plan  entitle  a  Participant  to be
retained as an employee.

                    ARTICLE III. PAYROLL DEDUCTIONS, COMPANY
                    CONTRIBUTIONS AND STOCK PURCHASE ACCOUNT

     Section 3.01  Deduction  from Pay. The form  described in Section 2.02 will
permit  a  Participant  to  elect  payroll  deductions  of up  to  50%  of  such
Participant's  Current  Compensation for each pay period,  subject to such other
limitations as the Committee in its sole  discretion  may impose.  A Participant
may cease  making  payroll  deductions  at any time and may elect to retain  the
funds  then  deposited  in such  Participant's  Stock  Purchase  Account in such
Account for the  duration of the then current  Purchase  Period and purchase the
Company's  Common  Stock in  accordance  with  Article  IV hereof and such other
relevant  provisions  of the Plan,  or to have the funds then  deposited  in the
Participant's Stock Purchase Account promptly disbursed to the Participant,  all
as subject to such  limitations  as the  Committee  in its sole  discretion  may
impose.

     Section 3.02 Company Contributions. The Company may, in the sole discretion
of the  Committee,  from time to time  contribute  to each  Participant's  Stock
Purchase Account an amount equal to up to 50% of each payroll deduction credited
to such  Account.  No  Company  contributions  shall be deemed to have been made
until such  contributions  are  credited  to the  Participant's  Stock  Purchase
Account as provided in Section 3.03.

     Section 3.03 Credit to Account.  Payroll deductions will be credited to the
Participant's  Stock Purchase Account on each payday, and Company  contributions
will be  credited  to the  Participant's  Stock  Purchase  Account  on the  last
business day of the Purchase  Period at the time of and in  connection  with the
purchase of shares of Common Stock in accordance with Articles IV and V hereof.

     Section 3.04  Interest.  No interest will be paid upon payroll  deductions,
Company  contributions  or on any  amount  credited  to,  or on  deposit  in,  a
Participant's Stock Purchase Account.

<PAGE>

     Section 3.05 Nature of Account.  The Stock Purchase  Account is established
solely for accounting  purposes,  and all amounts credited to the Stock Purchase
Account  will  remain  part  of  the  general  assets  of  the  Company  or  the
Participating Affiliate (as the case may be).

     Section 3.06 No Additional  Contributions.  A Participant  may not make any
payment into the Stock Purchase  Account other than the payroll  deductions made
pursuant to the Plan.

                      ARTICLE IV. RIGHT TO PURCHASE SHARES

     Section  4.01  Number of Shares.  Each  Participant  will have the right to
purchase on the last business day of the Purchase  Period all, but not less than
all, of the largest number of whole shares of Common Stock that can be purchased
at the price  specified  in Section 4.02 with the entire  credit  balance in the
Participant's  Stock Purchase  Account,  subject to the limitations  that (a) no
more than 1,800 shares of Common  Stock may be  purchased  under the Plan by any
one Participant for a given Purchase Period,

     (b) in accordance with Section  423(b)(8) of the Code, no more than $25,000
in Fair Market Value  (determined  at the beginning of each Purchase  Period) of
Common  Stock and  other  stock  may be  purchased  under the Plan and all other
employee  stock purchase plans (if any) of the Company and the Affiliates by any
one  Participant  for  any  calendar  year  and  (c) if the  purchases  for  all
Participants  in any  Purchase  Period  would  result  in the sale of more  than
330,000 shares of Common Stock in the aggregate under the Plan for such Purchase
Period,  each  Participant  shall be allocated a pro rata portion of the 330,000
shares of Common Stock to be sold for that Purchase Period. If the purchases for
all Participants  would otherwise cause the aggregate number of shares of Common
Stock to be sold under the Plan to exceed the number specified in Section 10.03,
each Participant shall be allocated a pro rata portion of the Common Stock to be
sold.

     Section 4.02 Purchase  Price.  The purchase  price for any Purchase  Period
shall be the lesser of (a) 85% of the Fair Market  Value of the Common  Stock on
the first  business  day of that  Purchase  Period or (b) 85% of the Fair Market
Value of the Common Stock on the last business day of that Purchase  Period,  in
each case rounded up to the next higher full cent.

                          ARTICLE V. EXERCISE OF RIGHT

     Section  5.01  Purchase of Stock.  On the last  business  day of a Purchase
Period, the entire credit balance in each  Participant's  Stock Purchase Account
will be used to purchase  the  largest  number of whole  shares of Common  Stock
purchasable  with such amount  (subject  to the  limitations  of Section  4.01),
unless the Participant  has filed with the Company,  in advance of that date and
subject to such terms and conditions as the Committee in its sole discretion may
impose,  a form provided by the Company which requests the  distribution  of the
entire credit balance in cash.

     Section 5.02 Cash  Distributions.  Any amount  remaining in a Participant's
Stock Purchase  Account after the last business day of a Purchase Period will be
rolled over to the next following  Purchase  Period unless the  Participant  has
elected not to participate in such Purchase  Period,  in which event such amount
will be paid to the  Participant  in cash  within 30 days  after the end of that
Purchase Period.

<PAGE>

     Section 5.03 Notice of  Acceleration  Date.  The Company shall use its best
efforts  to notify  each  Participant  in writing at least ten days prior to any
Acceleration  Date  that  the  then  current  Purchase  Period  will end on such
Acceleration Date.

                 ARTICLE VI. WITHDRAWAL FROM PLAN; SALE OF STOCK

     Section 6.01 Voluntary  Withdrawal.  A Participant  may, in accordance with
such terms and  conditions as the Committee in its sole  discretion  may impose,
withdraw  from the Plan and cease making  payroll  deductions by filing with the
Company a form  provided  for this  purpose.  In such event,  the entire  credit
balance  in the  Participant's  Stock  Purchase  Account  will  be  paid  to the
Participant  in cash  within  30  days,  provided  that in no  event  shall  any
Participant be entitled to withdraw from such Account any Company  contributions
credited to such Account at the end of the Purchase  Period  pursuant to Section
3.03. A Participant  who withdraws from the Plan will not be eligible to reenter
the Plan until the beginning of the next Purchase  Period  following the date of
such withdrawal.

     Section 6.02 Death.  Subject to such terms and  conditions as the Committee
in its sole discretion may impose,  upon the death of a Participant,  no further
amounts  shall  be  credited  to  the  Participant's   Stock  Purchase  Account.
Thereafter,  on the last  business day of the Purchase  Period during which such
Participant's  death  occurred and in accordance  with Section 5.01,  the entire
credit  balance in such  Participant's  Stock  Purchase  Account will be used to
purchase Common Stock, unless such

     Participant's estate has filed with the Company, in advance of that day and
subject to such terms and conditions as the Committee in its sole discretion may
impose,  a form  provided by the Company  which elects to have the entire credit
balance in such Participant's  Stock Account  distributed in cash within 30 days
after the end of that  Purchase  Period or at such earlier time as the Committee
in its  sole  discretion  may  decide,  provided  that  in no  event  shall  any
Participant's  estate be  entitled  to receive  from such  Account  any  Company
contributions  credited  to  such  Account  at the  end of the  Purchase  Period
pursuant to Section 3.03. Each Participant,  however,  may designate one or more
beneficiaries  who,  upon death,  are to receive the Common  Stock or the amount
that otherwise would have been distributed or paid to the  Participant's  estate
and may  change  or  revoke  any such  designation  from  time to time.  No such
designation,  change  or  revocation  will  be  effective  unless  made  by  the
Participant  in writing  and filed  with the  Company  during the  Participant's
lifetime.  Unless  the  Participant  has  otherwise  specified  the  beneficiary
designation, the beneficiary or beneficiaries so designated will become fixed as
of the date of the death of the  Participant so that, if a beneficiary  survives
the Participant but dies before the receipt of the payment due such beneficiary,
the payment will be made to such beneficiary's estate.

     Section  6.03  Termination  of  Employment.   Subject  to  such  terms  and
conditions  as  the  Committee  in  its  sole  discretion  may  impose,  upon  a
Participant's  normal or early  retirement with the consent of the Company under
any pension or retirement  plan of the Company or  Participating  Affiliate,  no
further amounts shall be credited to the  Participant's  Stock Purchase Account.
Thereafter,  on the last  business day of the Purchase  Period during which such
Participant's  approved retirement occurred and in accordance with Section 5.01,
the entire credit balance in such

<PAGE>

Participant's  Stock  Purchase  Account will be used to purchase  Common  Stock,
unless such  Participant has filed with the Company,  in advance of that day and
subject to such terms and conditions as the Committee in its sole discretion may
impose, a form provided by the Company which elects to receive the entire credit
balance in such  Participant's  Stock  Purchase  Account in cash  within 30 days
after the end of that Purchase  Period,  provided that (i) in no event shall any
Participant  be entitled to receive from such Account any Company  contributions
credited to such Account at the end of the Purchase  Period  pursuant to Section
3.03, and (ii) such Participant  shall have no right to purchase Common Stock in
the  event  that the last day of such a  Purchase  Period  occurs  more than six
months  following the  termination  of such  Participant's  employment  with the
Company  by reason  of such an  approved  retirement.  In the event of any other
termination of employment (other than death) with the Company or a Participating
Affiliate,  participation  in the Plan  will  cease on the date the  Participant
ceases to be a Permanent  Full-Time  Employee for any reason. In such event, the
entire credit balance in such Participant's  Stock Purchase Account will be paid
to the  Participant in cash within 30 days,  provided that in no event shall any
Participant  be entitled to receive from such Account any Company  contributions
credited to such Account at the end of the Purchase  Period  pursuant to Section
3.03.  For  purposes  of this  Section  6.03,  a transfer of  employment  to any
Affiliate,  or a leave of absence that has been approved by the Committee,  will
not be deemed a termination of employment as a Permanent Full-Time Employee.

                         ARTICLE VII. NONTRANSFERABILITY

     Section  7.01  Nontransferable  Right to  Purchase.  The right to  purchase
Common Stock hereunder may not be assigned, transferred, pledged or hypothecated
(whether by operation of law or otherwise),  except as provided in Section 6.02,
and will not be  subject  to  execution,  attachment  or  similar  process.  Any
attempted assignment,  transfer,  pledge,  hypothecation or other disposition or
levy of  attachment  or similar  process upon the right to purchase will be null
and void and without effect.

     Section 7.02 Nontransferable  Account.  Except as provided in Section 6.02,
the  amounts  credited  to  a  Stock  Purchase  Account  may  not  be  assigned,
transferred,  pledged or hypothecated in any way, and any attempted  assignment,
transfer,  pledge,  hypothecation  or other  disposition of such amounts will be
null and void and without effect.

                        ARTICLE VIII. STOCK CERTIFICATES

     Section 8.01 Delivery.  Promptly after the last day of each Purchase Period
and subject to such terms and conditions as the Committee in its sole discretion
may impose,  the Company will cause to be delivered to or for the benefit of the
Participant  a  certificate,  or in lieu thereof,  an  electronic  confirmation,
representing  the  Common  Stock  purchased  on the  last  business  day of such
Purchase Period.

     Section 8.02 Securities Laws. The Company shall not be required to issue or
deliver any certificate  representing  Common Stock prior to registration  under
the Securities Act of 1933, as amended,  or registration or qualification  under
any state law if such  registration is required.  The Company shall use its best
efforts to  accomplish  such  registration  (if and to the extent  required) not

<PAGE>

later than a reasonable  time  following  the Purchase  Period,  and delivery of
certificates may be deferred until such registration is accomplished.

     Section 8.03 Completion of Purchase.  A Participant  shall have no interest
in the Common  Stock  purchased  until a  certificate  representing  the same is
issued to or for the benefit of the Participant.

     Section 8.04 Form of Ownership. The certificates  representing Common Stock
issued  under  the Plan will be  registered  in the name of the  Participant  or
jointly in the name of the Participant  and another  person,  as the Participant
may direct on a form provided by the Company.

                    ARTICLE IX. EFFECTIVE DATE, AMENDMENT AND
                               TERMINATION OF PLAN

     Section  9.01  Effective  Date.  The  Plan  was  approved  by the  Board of
Directors  on April 17, 2000 and shall be approved  by the  stockholders  of the
Company within twelve (12) months thereof.

     Section 9.02 Plan Commencement.  The initial Purchase Period under the Plan
will commence on the date prescribed by Section 1.03(l).

     Section  9.03  Powers  of  Board.  The  Board  of  Directors  may  amend or
discontinue the Plan at any time. No amendment or  discontinuation  of the Plan,
however,  shall  without  stockholder  approval  be made that:  (i) absent  such
stockholder  approval,  would cause Rule 16b-3 under the Securities Exchange Act
of 1934, as amended (the "Act") to become  unavailable with respect to the Plan,
(ii)  requires  stockholder  approval  under  any  rules or  regulations  of the
National Association of Securities Dealers, Inc. or any securities exchange that
are  applicable  to the  Company,  or (iii)  permit the issuance of Common Stock
before payment therefor in full

     Section 9.04 Automatic Termination.  The Plan shall automatically terminate
when all of the shares of Common Stock  provided for in Section  10.03 have been
sold.

                            ARTICLE X. ADMINISTRATION

     Section 10.01 The Committee.  The Plan shall be administered by a committee
(the "Committee") of two or more directors of the Company, none of whom shall be
officers or  employees  of the  Company  and all of whom shall be  "non-employee
directors"  with  respect to the Plan within the meaning of Rule 16b-3 under the
Act.  The  members  of the  Committee  shall be  appointed  by and  serve at the
pleasure of the Board of Directors.

     Section 10.02 Powers of Committee.  Subject to the  provisions of the Plan,
the  Committee  shall have full  authority  to  administer  the Plan,  including
authority to interpret  and  construe  any  provision of the Plan,  to establish
deadlines by which the various administrative forms must be received in order to
be effective,  and to adopt such other rules and regulations  for  administering
the Plan as it may deem appropriate.  The Committee shall have full and complete
authority  to  determine  whether all or any part of the Common  Stock  acquired
pursuant  to the Plan shall be subject to  restrictions  on the  transferability
thereof or any other restrictions affecting in any manner a Participant's rights

<PAGE>

with respect thereto but any such restrictions shall be contained in the form by
which a Participant  elects to participate in the Plan pursuant to Section 2.02.
Decisions of the Committee  will be final and binding on all parties who have an
interest in the Plan.

     Section  10.03  Stock to be Sold.  The  Common  Stock to be issued and sold
under the Plan may be treasury shares or authorized but unissued shares,  or the
Company may purchase Common Stock in the market for sale under the Plan.  Except
as provided in Section 11.01,  the aggregate number of shares of Common Stock to
be sold under the Plan will not exceed 2,000,000 shares.

     Section  10.04  Notices.  Notices to the  Committee  should be addressed as
follow:

                  FreeShop.com, Inc.
                  95 South Jackson Street, Suite 300
                  Seattle, Washington 98104
                  Attn: John Wade, CFO

                                   ARTICLE XI.
                   ADJUSTMENT FOR CHANGES IN STOCK OR COMPANY

     Section 11.01 Stock Dividend or Reclassification. If the outstanding shares
of Common  Stock are  increased,  decreased,  changed  into or  exchanged  for a
different number or kind of securities of the Company,  or shares of a different
par  value or  without  par  value,  through  reorganization,  recapitalization,
reclassification,  stock  dividend,  stock  split,  amendment  to the  Company's
Certificate of Incorporation,  reverse stock split or otherwise,  an appropriate
adjustment  shall be made in the maximum  numbers and kind of  securities  to be
purchased under the Plan with a  corresponding  adjustment in the purchase price
to be paid therefor.

     Section  11.02  Merger or  Consolidation.  If the Company is merged into or
consolidated  with  one or  more  corporations  during  the  term  of the  Plan,
appropriate  adjustments  will be made to give  effect  thereto on an  equitable
basis in terms of issuance of shares of the corporation  surviving the merger or
of the consolidated corporation, as the case may be.

                           ARTICLE XII. APPLICABLE LAW

     Rights to purchase  Common Stock  granted under the Plan shall be construed
and shall take effect in accordance with the laws of the State of Washington.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00015-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00015-of-00352.parquet"}]]