EXHIBIT 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.
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(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
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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.
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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.
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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
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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
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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
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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.
