Exhibit 4.1
FOCAL COMMUNICATIONS CORPORATION
Restricted Shares Agreement
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WHEREAS, Xxxxxxx X. Xxxx (the "Grantee") is an employee of Focal
Communications Corporation, a Delaware corporation (the "Company"); and
WHEREAS, the execution of an agreement in the form hereof (this
"Agreement") has been authorized by a resolution of the Board of Directors of
the Company (the "Board") that was duly adopted on February 18, 2000;
NOW, THEREFORE, pursuant to the Company's 1998 Equity and Performance
Incentive Plan (the "Plan"), the Company hereby grants to the Grantee 150,000
Restricted Shares (as defined in the Plan)(such 150,000 Restricted Shares being
hereinafter referred to as the "Restricted Shares"), effective as of January 31,
2000, and subject to the terms and conditions of the Plan and the terms and
conditions of this Agreement.
1. Definitions. All capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned to them in the Plan.
2. Issuance of Shares. The Restricted Shares shall be issued to the
Grantee effective upon the Date of Grant, shall be fully paid and nonassessable
and shall be represented by a certificate or certificates issued in the name of
the Grantee and endorsed with an appropriate legend referring to the
restrictions hereinafter set forth.
3. Restrictions on Transfer of Shares. The Restricted Shares may not be
sold, assigned, transferred, conveyed, pledged, exchanged or otherwise
encumbered or disposed of by the Grantee, except to the Company, until they have
become nonforfeitable as provided in Section 4; provided, however, that the
Grantee's rights with respect to the Restricted Shares may be transferred by
will or pursuant to the laws of descent and distribution. Any purported
encumbrance or disposition in violation of the provisions of this Section 3
shall be void ab initio, and the other party to any such purported transaction
shall not obtain any rights to or interest in the Restricted Shares. As and when
permitted by the Plan, the Company may in its sole discretion waive the
restrictions on transferability with respect to all or a portion of the
Restricted Shares.
4. Vesting of Shares. (a) One-third of the Restricted Shares shall
become nonforfeitable on each of the first three anniversaries of the Date of
Grant for so long as the Optionee remains in the continuous employ of the
Company or a Subsidiary.
(b) Notwithstanding the provisions of Section 4(a), all of the Restricted
Shares shall immediately become nonforfeitable upon the termination of the
Grantee's employment with the Company (or a successor to the Company following a
Change in Control) or a Subsidiary (i) by the Grantee for Good Reason (as
defined in Section 1(i) of the Executive Employment Agreement between the
Company and the Grantee dated as of January 8, 2000 (the
"Employment Agreement")), (ii) by the Company (or any such successor to the
Company) or a Subsidiary for any reason other than Cause (as defined in Section
1(h) of the Employment Agreement) or (iii) by reason of the death or Disability
of the Grantee. For the purposes of this Agreement, "Disability" means the
inability of the Optionee to perform his position with the Company by reason of
a medically determined physical or mental impairment that has existed for a
continuous period of at least 26 weeks and which, in the judgment of a physician
who certifies thereto, is expected to be of indefinite duration or result in
imminent death.
5. Forfeiture of Shares. Except as and to the extent otherwise provided
in Section 4, the Restricted Shares shall be forfeited by the Grantee, if the
Grantee ceases to be employed by the Company or a Subsidiary prior to the third
anniversary of the Date of Grant, and the certificate(s) representing Restricted
Shares so forfeited shall be canceled.
6. Dividend, Voting and Other Rights. (a) Except as otherwise provided
in this Agreement, from and after the Date of Grant, the Grantee shall have all
of the rights of a stockholder with respect to the Restricted Shares, including
the right to vote the Restricted Shares and receive any dividends that may be
paid thereon; provided, however, that any additional Common Shares or other
securities that the Grantee may become entitled to receive pursuant to a stock
dividend, stock split, recapitalization, combination of shares, merger,
consolidation, separation or reorganization or any other change in the capital
structure of the Company shall be subject to the same risk of forfeiture and
restrictions on transfer as the forfeitable Restricted Shares in respect of
which they are issued or transferred and shall become Restricted Shares for the
purposes of this Agreement.
(b) Cash dividends on the Restricted Shares shall be sequestered by the
Company from and after the Date of Grant until such time as any of such
Restricted Shares become nonforfeitable in accordance with Section 4, whereupon
such dividends shall be paid to the Grantee in cash to the extent such dividends
are attributable to Restricted Shares that have become nonforfeitable. To the
extent that Restricted Shares are forfeited pursuant to Section 5, and all
dividends sequestered with respect to such Restricted Shares shall also be
forfeited. No interest shall be payable with respect to any such dividends.
7. Retention of Stock Certificate(s) by the Company. The certificate(s)
representing the Restricted Shares shall be held in custody by the Company,
together with a stock power endorsed in blank by the Grantee with respect
thereto, until such shares have become nonforfeitable in accordance with Section
4.
8. Compliance with Law. The Company shall make reasonable efforts to
comply with all applicable federal and state securities laws; provided, however,
notwithstanding any other provision of this Agreement, the Company shall not be
obligated to issue or release from restrictions on transfer any Common Shares
pursuant to this Agreement if such issuance or release would result in a
violation of any such law.
9. Withholding Taxes. If the Company or any Subsidiary shall be required
to withhold any federal, state, local or foreign tax in connection with any
issuance or vesting of Common Shares or other securities pursuant to this
Agreement, and the amounts available to the Company or such Subsidiary for such
withholding are insufficient, the Grantee shall pay the tax or make provisions
that are satisfactory to the Company or such Subsidiary for the payment
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thereof. The Grantee may elect to satisfy all or any part of any such
withholding obligation by surrendering to the Company or such Subsidiary a
portion of the Restricted Shares that become nonforfeitable hereunder, and the
Common Shares so surrendered by the Grantee shall be credited against any such
withholding obligation at the Market Value per Share of such Common Shares on
the date of such surrender.
10. Continuous Employment. For the purposes of this Agreement, the
continuous employment of the Grantee with the Company or a Subsidiary shall not
be deemed to have been interrupted, and the Grantee shall not be deemed to have
ceased to be an employee of the Company or a Subsidiary, by reason of the
transfer of his employment among the Company and its Subsidiaries or a leave of
absence approved by the Board.
11. No Employment Contract. Nothing contained in this Agreement shall
confer upon the Grantee any right with respect to continuance of employment by
the Company or a Subsidiary or limit or affect in any manner the right of the
Company or a Subsidiary to terminate the employment or adjust the compensation
of the Grantee.
12. Relation to Other Benefits. Any economic or other benefit to the
Grantee under this Agreement or the Plan shall not be taken into account in
determining any benefits to which the Grantee may be entitled under any profit-
sharing, retirement or other benefit or compensation plan maintained by the
Company or a Subsidiary and shall not affect the amount of any life insurance
coverage available to any beneficiary under any life insurance plan covering
employees of the Company or a Subsidiary.
13. Amendments. Any amendment to the Plan shall be deemed to be an
amendment to this Agreement to the extent that the amendment is applicable
hereto; provided, however, that no amendment shall adversely affect the rights
of the Grantee under this Agreement without the Grantee's consent.
14. Severability. In the event that one or more of the provisions of this
Agreement shall be invalidated for any reason by a court of competent
jurisdiction, any provision so invalidated shall be deemed to be separable from
the other provisions hereof, and the remaining provisions hereof shall continue
to be valid and fully enforceable.
15. Relation to Plan. This Agreement is subject to the terms and
conditions of the Plan. In the event of any inconsistent provisions between this
Agreement and the Plan, the Plan shall govern. The Board acting pursuant to the
Plan, as constituted from time to time, shall except as otherwise expressly
provided herein have the right to determine any questions that arise under this
Agreement.
16. Successors and Assigns. The provisions of this Agreement shall inure
to the benefit of, and be binding upon, the successors, administrators, heirs,
legal representatives and assigns of the Grantee and the successors and assigns
of the Company.
17. Notices. Any notice to the Company provided for herein shall be in
writing to the attention of the Corporate Secretary at Focal Communications
Corporation, 000 Xxxxx XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, and any notice
to the Grantee shall be addressed to
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the Grantee at his address currently on file with the Company. Except as
otherwise provided herein, any written notice shall be deemed to be duly given
if and when hand delivered, or five (5) business days after having been mailed
by United States registered or certified mail, return receipt requested, postage
prepaid, or three (3) business days after having been sent by a nationally
recognized overnight courier service, addressed as aforesaid. Any party may
change the address to which notices are to be given hereunder by written notice
to the other party as herein specified, except that notices of changes of
address shall be effective only upon receipt.
18. Governing Law. The laws of the State of Delaware, without giving
effect to the principles of conflict of laws thereof, shall govern the
interpretation, performance and enforcement of this Agreement.
This Agreement is executed by the Company as of the 4th day of
February 2000.
FOCAL COMMUNICATIONS CORPORATION
/s/ Xxxxxx X. Xxxxxx, Xx.
By:____________________________________
Name: Xxxxxx X. Xxxxxx, Xx.
Title: President and Chief Executive Officer
The undersigned hereby acknowledges receipt of an executed original of
this Agreement and accepts the award of Restricted Shares granted hereunder on
the terms and conditions set forth herein and in the Plan.
/s/ Xxxxxxx X. Xxxx
Date: 2/4/2000 _________________________________________
Xxxxxxx X. Xxxx
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