FORM OF AMENDED AND
RESTATED
INDEMNIFICATION AGREEMENT
This Amended and
Restated Indemnification Agreement (“Agreement”) is
made as of the 2nd day of November 2006 by and between
Pac-West Telecomm, Inc., a California corporation (the
“Company”), and
_________(“Indemnitee”).
WHEREAS,
heretofore the Company and Indemnitee recognized the difficulty and
expense to the Company in obtaining directors’ and
officers’ liability insurance with limits that fully and
adequately protects directors and officers against exposure that
may arise from acts and omissions associated with providing service
to the Company as an officer and\or director; and
WHEREAS,
heretofore the Company and Indemnitee further recognized the
substantial increase in public awareness and concern with regard to
corporate governance and decision making and the increase in
corporate litigation in general, subjecting officers and directors
to heightened and potentially expensive litigation risks;
and
WHEREAS,
heretofore Indemnitee did not regard annually renewable insurance
protection as adequate under all circumstances, and Indemnitee and
other officers and directors of the Company were not willing to
continue to serve as officers and directors without additional
protection; and
WHEREAS,
heretofore the board of directors of the Company determined that it
was in the best interests of the Company that it be able to attract
and retain the services of highly qualified individuals, such as
Indemnitee, to serve as officers and directors of the Company and
to indemnify its officers and directors so as to provide them with
the maximum protection permitted by law; and
WHEREAS,
heretofore the Company and Indemnitee entered into an
Indemnification Agreement in contemplation of the matters set forth
in the preceding recitals and other considerations; and
WHEREAS, the board
of directors of the Company has determined, on the advice of its
insurance representatives and legal counsel, that it remains in the
best interests of the Company and its shareholders to indemnify its
directors and officers on the terms and conditions set forth in
this Amended and Restated Indemnification Agreement;
NOW, THEREFORE,
the Company and Indemnitee hereby agree as follows to amend and
restate the previously existing indemnification agreement between
them to read as follows:
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1.
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INDEMNIFICATION .
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(a)
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THIRD PARTY
PROCEEDINGS . The Company
shall indemnify Indemnitee if Indemnitee is, was, or becomes a
party to, witness, or other participant (in each capacity,
“Participant”) or is threatened to be made a
Participant to any threatened, pending or completed action or
proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the
Company) by reason of the fact that Indemnitee is or was a
director, officer, employee or agent of the Company or of a
Subsidiary, by reason of any action or inaction on the part of
Indemnitee while a director, officer, employee or agent of Company
or of such Subsidiary. Such indemnification shall extend to,
include and cover any and all expenses (including attorneys fees),
judgments, fines and amounts paid in settlement (provided such
settlement is approved in advance by the Company, which approval
shall not be unreasonably withheld) actually and reasonably
incurred by Indemnitee in connection with such action or proceeding
unless the company shall establish, in accordance with the
procedures described in subsection 2(c) of this Agreement, that
Indemnitee did not act in good faith and in a manner Indemnitee
reasonably believed to be in the best interests of the Company, and
with respect to any criminal action or proceeding, had no
reasonable cause to believe Indemnitee’s conduct was
unlawful. The termination of any action or proceeding by judgment,
order, settlement, conviction, or upon a plea of NOLO CONTENDRE or
its equivalent, shall not, of itself, create a presumption
(i) that Indemnitee did not act in good faith and in a manner
which Indemnitee reasonably believed to be in the best interests of
the Company, or (ii) with respect to any criminal action or
proceeding, that Indemnitee had reasonable cause to believe that
Indemnitee’s conduct was unlawful. In the event of a Change
in Control (other than a Change in Control approved by a majority
of the directors on the board of Company who were members of such
board immediately prior to such Change in Control) the settlement
approval referred to above shall be made by independent legal
counsel selected by Indemnitee and approved by the Company which
approval shall not be unreasonably withheld.
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(b)
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PROCEEDINGS
BY OR IN RIGHT OF THE COMPANY . The Company shall indemnify Indemnitee if
Indemnitee is, was or becomes a Participant or is threatened to be
made a Participant to any threatened, pending or completed action
or proceeding by or in the right of the Company or any Subsidiary
of the Company to procure a judgment in its favor by reason of the
fact that Indemnitee is or was a director, officer, employee or
agent of the
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Company, or of
any Subsidiary of the Company by reason of any action or inaction
on the part of Indemnitee while serving as a director, officer,
employee or agent or by reason of the fact that Indemnitee is or
was serving at the request of the Company as a director, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including
attorney’s fees) and, to the fullest extent permitted by law,
amounts paid in settlement, in each case to the extent actually and
reasonably incurred by Indemnitee in connection with the defense or
settlement of such action or proceeding unless the Company shall
establish, in accordance with the procedures described in
subsection 2(c) of this Agreement, that Indemnitee did not act in
good faith and in a manner Indemnitee reasonably believed to be in
the best interests of the Company and its shareholders.
Notwithstanding the forgoing no indemnification shall be made in
respect of any claim, issue or matter as to which Indemnitee shall
have been finally judicially determined (and all rights to appeal
such judicial determination have lapsed or been exhausted) to be
liable to the Company in the performance of Indemnitee’s duty
to the Company or any Subsidiary of the Company unless and only to
the extent that the court in which such action or proceeding is or
was pending shall determine upon application that, in view of all
the circumstances of the case, Indemnitee is fairly and reasonably
entitled to indemnity for expenses or such amounts paid in
settlement and then only to the extent the court shall
determine.
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2.
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EXPENSES AND
INDEMNIFICATION PROCEDURE.
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(a)
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ADVANCEMENT
OF EXPENSES. The Company
shall advance all reasonable expenses incurred by Indemnitee in
connection with the investigation, defense, settlement or appeal of
any civil or criminal action or proceeding referenced in
subsections 1(a) or 1(b) of this Agreement. Indemnitee hereby
undertakes to repay such amounts advanced only if, and to the
extent that, it is finally judicially determined (as to which
judicial determination all rights to appeal have been exhausted or
lapsed) that Indemnitee is not entitled to be indemnified by the
Company as authorized hereby. The advances to be made hereunder
shall be paid by the Company to Indemnitee within ten
(10) days following delivery of a written request therefore by
Indemnitee to the Company.
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(b)
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NOTICE/COOPERATION BY INDEMNITEE.
Indemnitee shall, give the Company
notice in writing as soon as practicable of any claim made against
Indemnitee for which indemnification will or
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could be sought
under this Agreement. Notice to the Company shall be directed to
the Chief Executive Officer of the Company at the address shown on
the signature page of this Agreement (or such other address as the
Company shall designate in writing to Indemnitee). In addition,
Indemnitee shall give the Company such information and cooperation
as it may reasonably require and as shall be within
Indemnitee’s power.
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(c)
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PROCEDURE. Any indemnification provided for in
Section 1 of this Agreement shall be made no later than
thirty-five (35) days after the resolution (by judgment,
settlement, dismissal or otherwise) of the claim for which
indemnification is sought. If a claim under this Agreement, under
any statute, or under any provision of the Company’s Articles
of Incorporation or By-laws providing for indemnification is not
paid in full by the Company within such period, Indemnitee may, but
need not, at any time thereafter bring an action against the
Company to recover the unpaid amount of the claim and, subject to
Section 14 of this Agreement, Indemnitee shall also be
entitled to be paid for the expenses (including attorneys’
fees) of bringing such action and or expenses related to enforcing
rights of the Company or of the Indemnitee against any directors
and officers or other insurance policy underwriting such risk. It
shall be a defense to any such action (other than an action brought
to enforce a claim for expenses incurred in connection with any
action or proceeding in advance of its final disposition) that
Indemnitee has not met the standards of conduct which make it
permissible under applicable law for the Company to indemnify
Indemnitee for the amount claimed, but the burden of proving such
defense shall be on the Company, and Indemnitee shall be entitled
to receive interim payments of expenses pursuant to subsection 2
(a) of this Agreement unless and until such defense may be
finally adjudicated by court order or judgment from which no
further right of appeal exists. It is the parties’ intention
that if the Company contests Indemnitee’s right to
indemnification, the question of Indemnitee’s right to
indemnification shall be for the court to decide, and neither the
failure of the Company (including its Board of Directors, any
committee or subgroup of the Board of Directors, independent legal
counsel, or its shareholders) to have made a determination that
indemnification of Indemnitee is proper in the circumstances
because Indemnitee has met the applicable standard of conduct
required by applicable law, nor an actual determination by the
Company (including its Board of Directors, any committee or
subgroup of the Board of Directors, independent legal counsel, or
it shareholders) that Indemnitee has not met such
applicable
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standard of
conduct, shall create a presumption that Indemnitee has or has not
met the applicable standard of conduct.
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(d)
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NOTICE TO
INSURERS. If, at the time
of the receipt of a notice of a claim pursuant to subsection 2(b)
of this Agreement, the Company has director and officer liability
insurance in effect, the Company shall give prompt notice of the
commencement of such proceeding to the insurers in accordance with
the procedures set forth in the respective policies. The Company
shall thereafter take all necessary or desirable action to cause
such insurers to pay, on behalf of the Indemnitee, all amounts
payable as a result of such proceeding in accordance with the terms
of such policies.
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(e)
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RELATIONSHIP
TO OTHER SOURCES .
Indemnitee shall not be required to exercise any rights against any
other parties (for example, under any insurance policy purchased by
the Company, Indemnitee or any other person or entity) before
Indemnitee enforces this agreement. However, to the extent the
Company actually indemnifies Indemnitee or advances expenses, the
Company shall be entitled to enforce any such rights which
Indemnitee may have against third parties. Indemnitee shall assist
the Company in enforcing those rights if the Company pays
Indemnitee’s reasonable costs and expenses of doing
so.
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(f)
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SELECTION OF
COUNSEL. In the event the
Company shall be obligated under subsection 2(a) of this
Agree
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