EXHIBIT 4.7
__________, 1998
[Name of Executive Investor]
[Address]
Dear ___________________:
Focal Communications Corporation, a Delaware corporation (the
"Company"), hereby issues to you, in consideration for the conversion of 500
shares of Class C Common Stock, par value $.01 per share, of the Company (the
"Class C Common") held by you pursuant to those certain amendments (the
"Amendments") to the three separate Vesting Agreements dated as of November 27,
1996 by and among the Company, Madison Dearborn Capital Partners, L.P.,
Frontenac VI, L.P. and Battery Ventures III, L.P. (collectively, the
Institutional Investors), Xxxxx X. Xxxx, Xxxx X. Xxxxxxxx, Xxxxxx Xxxxxx, Xxxxxx
X. Xxxxxx, Xx. [REMOVE NAME OF APPLICABLE EXECUTIVE INVESTOR] and you
(collectively, the "Executive Investors"), as of the Effective Time (as defined
below) and subject to the terms and conditions hereinafter set forth, a number
of shares of Common Stock, par value $.01 per share, of the Company (the "Common
Stock") equivalent to 500 shares of the Class C Common held by you subject to
the above-referenced Vesting Agreements (the "Restricted Stock"). This letter
agreement (the "Restricted Stock Agreement") shall evidence such issuance.
1. DEFINITIONS:
(a) "Change in Control" shall mean the occurrence of any of the
following events:
(i) The Company is merged or consolidated or reorganized
with or into another corporation or other legal
person, and as a result of such merger, consolidation
or reorganization less than a majority of the combined
voting power of the then-outstanding securities of
such corporation or person immediately after such
transaction are held in the aggregate by the holders
of securities entitled to vote generally in the
election of Directors immediately prior to such
transaction;
(ii) or transfer; The Company sells or otherwise transfers
all or substantially all of its assets to any other
corporation or other legal person, and less than a
majority of the combined voting power of the then-
outstanding securities of such corporation or person
immediately
after such sale or transfer is held in the aggregate
by the holders of Common Stock immediately prior to
such sale
(iii) There is a report filed on Schedule 13D or Schedule
14D-1 (or any successor schedule, form or report), as
promulgated in each case pursuant to the Exchange Act,
disclosing that any person (as the term "person" is
used in Section 13(d)(3) or Section 14(d)(2) of the
Exchange Act) has become the beneficial owner (as the
term "beneficial owner" is defined in Rule 13d-3
promulgated under the Exchange Act or any successor
rule or regulation promulgated thereunder) of
securities representing 50% or more of the Voting
Power; or
(iv) If during any period of two consecutive years,
individuals who at the beginning of any such period
constitute the Directors and any new Directors whose
election by the Board of Directors of the Company or
nomination for election by the Company's stockholders
was approved by a vote of at least two-thirds of the
Directors then still in office who either were
Directors at the beginning of the period or whose
election was previously so approved cease for any
reason to constitute a majority of the Directors.
Notwithstanding the provisions of subparagraph (iii) above,
a "Change in Control" shall not be deemed to have occurred
for the purposes of this Agreement (i) solely because MDCP
either files or becomes obligated to file a report on
Schedule 13D (or any successor schedule or report), as
promulgated pursuant to the Exchange Act, disclosing
beneficial ownership by it of securities representing 50% or
more of the Voting Power, (ii) solely because the Company or
any Company-sponsored employee stock ownership plan or other
employee benefit plan of the Company either files or becomes
obligated to file a report or proxy statement under or in
response to Schedule 13D, Schedule 14D-1, Form 8-K or
Schedule 14A (or any successor schedule, form or report or
item therein), as promulgated in each case pursuant to the
Exchange Act, disclosing beneficial ownership by it of
securities representing 50% or more of the Voting Power or
otherwise, or because the Company reports that a change in
control of the Company has or may have occurred or will or
may occur in the future by reason of such beneficial
ownership or (iii) solely because of a change in control of
any subsidiary (as the term "subsidiary" is defined in
Section 424(f) of the Code) of the Company.
(b) "Code" shall mean the Internal Revenue Code of 1986, as
amended, and any successor statute.
(c) "Director" shall mean a member of the Board of Directors of
the Company.
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(d) "Disability" shall mean your inability, due to illness,
accident, injury, physical or mental incapacity or other
disability, to carry out effectively your duties and
obligations to the Company or to participate effectively and
actively in the management of the Company for a period
anticipated to last at least 6 months, as determined by the
Board of Directors of the Company in its good faith
discretion.
(e) "Effective Time" shall mean the earlier to occur of (i) the
date immediately prior to the consummation by the Company of
an Initial Public Offering, (ii) September 30, 1998, or
(iii) the date upon which a Qualified Sale of the Company is
consummated.
(f) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, and any successor statute.
(g) "Initial Public Offering" shall mean the initial
underwritten offering of equity securities of the Company to
the general public pursuant to a registration statement
filed with, and declared effective by, the Securities and
Exchange Commission pursuant to the Securities Act, provided
that neither of the following shall constitute an Initial
Public Offering: (i) any issuance of Common Stock as
consideration or financing for a merger or acquisition or
(ii) any issuance of Common Stock, or rights to acquire
Common Stock, to employees of the Company as part of an
incentive or compensation plan.
(h) "MDCP" shall mean Madison Dearborn Capital Partners, L.P.,
a Delaware limited partnership.
(i) "Qualified Sale of the Company" shall mean a sale or
transfer of all or substantially all of the outstanding
stock or assets of the Company and its subsidiaries,
including by way of merger or consolidation, where more than
50% of the consideration for such stock or assets in such
sale or transfer consists of cash and/or publicly traded
securities; provided, that a Qualified Sale of the Company
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shall not include a recapitalization, merger or other
reorganization in which the persons holding a majority of
the Company's outstanding equity (by vote or value) prior to
such transaction hold a majority of the equity (by vote or
value) immediately after such transaction.
(j) "Securities Act" shall mean the Securities Act of 1933, as
amended, and any successor statute.
(k) "Successor Entity" shall mean a successor to the Company by
merger, consolidation or other business combination or a
purchaser of all or substantially all of the Company's
assets or a majority of the Company's outstanding voting
securities, as the case may be.
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(l) "Voting Power" shall mean, at any time, the votes relating
to the then-outstanding securities entitled to vote
generally in the election of Directors.
2. Effective Time: This Agreement shall take effect as of the
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Effective Time.
3. Cost of Restricted Stock. This grant of Restricted Stock is made
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in consideration of your execution of the Amendments and forfeiture and
conversion of the shares of Class C Common previously held by you pursuant to
Section 6A of the Amendments.
4. Delivery of Restricted Stock: The Restricted Stock shall be
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issued to you as a matter of record as of the Effective Time but shall not be
delivered to you until certain specified conditions, set forth below, are met.
5. Dividend Rights: You shall have full dividend rights with
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respect to each share of Restricted Stock, beginning with the Effective Time,
and shall retain such rights so long as such shares of Restricted Stock are not
forfeited by you prior to vesting or disposed of by you after vesting.
6. Voting Rights: You shall have full voting rights with respect
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to each share of Restricted Stock, beginning with the Effective Time, and shall
retain such rights so long as such shares of Restricted Stock are not forfeited
by you prior to vesting or disposed of by you after vesting.
7. Vesting: Twenty percent (20%) of the shares of Restricted Stock
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shall be deemed earned as of the Effective Time and shall vest and be delivered
to you free of any restriction imposed hereunder as of the Effective Time, and
on the date of each subsequent anniversary of the Effective Time (each a
"Vesting Date"), the remaining percentages of the shares of Restricted Stock set
forth below shall vest and be delivered to you free of any restriction imposed
hereunder:
First anniversary of the Effective Time: 10%
Second anniversary of the Effective Time: 15%
Third anniversary of the Effective Time: 20%
Fourth anniversary of the Effective Time: 35%
Notwithstanding the foregoing and except as provided in Section 9 below, such
shares shall vest and be delivered only if you have remained an employee of the
Company for the entire period from the Effective Time to the relevant Vesting
Date. If you cease to be an employee of the Company at any time, then at such
time all shares of Restricted Stock not yet vested shall be forfeited (except as
provided in Section 9 below).
8. Non-transferability: No share of Restricted Stock shall be sold,
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exchanged, assigned, transferred, pledged, encumbered or otherwise disposed of
by you prior to vesting. Any purported transfer or encumbrance in violation of
the provisions of this Section 8 shall be void, and
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the other party to any such purported transfer shall not obtain any rights to or
interest in such Restricted Stock.
9. Accelerated Vesting:
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(a) Death or Disability: On the date of your death or Disability
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while serving as an employee of the Company, all shares of Restricted Stock not
yet vested due to the restrictions set forth above shall become immediately
vested and, if not already delivered, shall be delivered to you or your estate.
(b) Change in Control: On the date of a Change in Control occurring
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during your service as an employee of the Company, all shares of Restricted
Stock not yet vested due to the restrictions set forth above shall become
immediately vested and, if not already delivered, shall be delivered to you.
10. Adjustment Upon Changes in Capitalization: If, by reason of a
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stock dividend, stock split, combination of shares, recapitalization, spinoff,
split-up, merger, consolidation or otherwise, the outstanding shares of Common
Stock shall be changed into or exchangeable for a different number or class of
shares of common stock or other securities of the Company or securities of
another corporation, then there shall be substituted for each share of
Restricted Stock the number and type of securities into which each outstanding
share of Common Stock shall be changed or for which each such share of Common
Stock shall be exchanged.
11. Right to Continued Service: Nothing in this agreement shall
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confer upon you any right to continue in the service of the Company as an
employee or interfere with the right of the Company to terminate your services
as an employee at any time.
12. Relation to Other Benefits: Any economic or other benefit to you
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under this Restricted Stock Agreement shall not be taken into account in
determining any benefits to which you may be entitled under any profit-sharing,
retirement or other benefit or compensation plan maintained by the Company and
shall not affect the amount of any life insurance coverage available to any
beneficiary under any life insurance plan covering directors of the Company.
13. Notices: Any notice to the Company provided for herein shall be
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in writing to the Company, marked Attention: Secretary at Focal Communications
Corporation, 000 Xxxxx XxXxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxx 00000, and
any notice to any of the Institutional Investors or to you shall be addressed to
the Institutional Investors or to you at the 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 such as Federal Express or
UPS, 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.
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14. Amendments: Any amendment to this Agreement must be in a writing
signed by the parties hereto .
15. Successors and Assigns: Without limiting Section 8 hereof, the
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provisions of this Restricted Stock Agreement shall inure to the benefit of, and
be binding upon, your successors, administrators, heirs, legal representatives
and assigns, and the successors and assigns of the Company.
16. Severability: In the event that one or more of the provisions of
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this Restricted Stock 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.
17. Governing Law: The interpretation, performance, and enforcement
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of this Restricted Stock Agreement shall be governed by the laws of the State of
Delaware, without giving effect to the principles of conflict of laws thereof.
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Very truly yours,
FOCAL COMMUNICATIONS CORPORATION
By: ________________________________________
Name:_______________________________________
Title:______________________________________
Agreed to and accepted:
____________________________________________
(Name of Executive Investor)
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