Document:

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EXHIBIT 10.3

                       AMENDMENT NO. 11 TO LEASE AGREEMENT

     THIS AMENDMENT NO. 11 TO LEASE AGREEMENT ("Amendment") is dated as of
September 1, 2006, by and between ST. PAUL PROPERTIES, INC., a Delaware
corporation ("Landlord") and ATS MEDICAL, INC., a Minnesota corporation
("Tenant").

                                   WITNESSETH

     WHEREAS, Crow Plymouth Land Limited Partnership ("Crow"), as landlord, and
Helix BioCore, Inc. ("Helix"), as tenant, entered into that certain Lease
Agreement dated December 22, 1987 (the "Original Lease"), which Original Lease
was amended by Amendment No. 1 to Lease Agreement dated January 5, 1989 (the
"First Amendment"); and

     WHEREAS, Plymouth Business Center I Partnership ("Business Center")
succeeded to Crow's interest in the Original Lease as amended by the First
Amendment; and

     WHEREAS, Business Center and Helix further amended the Original Lease by
Amendment No. 2 to Lease Agreement dated January 12, 1989 (the "Second
Amendment"), Amendment No. 3 to Lease dated June 14, 1989 (the "Third
Amendment") and Amendment No. 4 to Lease Agreement dated February 10, 1992 (the
"Fourth Amendment"); and

     WHEREAS, Landlord has succeeded to the interest of Business Center in the
Original Lease as amended by the First Amendment, the Second Amendment, the
Third Amendment and the Fourth Amendment; and

     WHEREAS, on May 10, 1992, Helix changed its name to ATS Medical, Inc.; and

     WHEREAS, Landlord and Tenant further amended the Original Lease by
Amendment No. 5 to Lease Agreement (the "Fifth Amendment"), by Amendment No. 6
to Lease Agreement dated November 25, 1997 (the "Sixth Amendment"), by Amendment
No. 7 to Lease Agreement dated May 10, 2000 (the "Seventh Amendment") by
Amendment No. 8 to Lease dated December 14, 2000 (the "Eighth Amendment"), by
Amendment No. 9 to Lease dated September 8, 2003 (the "Ninth Amendment") and by
Amendment No. 10 to Lease dated October 1, 2004 (the "Tenth Amendment"; the
Original Lease, as amended by the First Amendment, the Second Amendment, the
Third Amendment, the Fourth Amendment, the Fifth Amendment, the Sixth Amendment,
the Seventh Amendment, the Eighth Amendment, the Ninth Amendment and the Tenth
Amendment is hereinafter, the "Lease"); and

     WHEREAS, the Original Lease demised premises, as described therein (the
"Original Premises"), which Original Premises were expanded pursuant to the
First Amendment, which expansion space was surrendered pursuant to the Third
Amendment, expanded again pursuant to the Fifth Amendment, the Sixth Amendment,
the Seventh Amendment and the Eighth Amendment, reduced pursuant to the Ninth
Amendment and expanded pursuant to the Tenant Amendment (the Original Premises,
as so expanded and reduced are hereinafter, the "2006

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Existing Premises") such that, as of the date hereof, the 2006 Existing Premises
consist of 33,068 rentable square feet; and

     WHEREAS, Landlord and Tenant wish further to amend the Lease to once again
expand the Existing Premises and extend the term of the Lease,

     NOW THEREFORE, in consideration of the premises and for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:

     1. Defined Terms. Unless the context otherwise indicates, all capitalized
terms not otherwise defined herein shall have the meanings ascribed to them in
the Lease.

     2. Expansion of Premises; Change in Proportionate Share. Effective as of
November 1, 2006 (the "2006 Expansion Space Commencement Date"), the 2006
Existing Premises shall be expanded by 6,342 rentable square feet as generally
shown on Exhibit A attached hereto and made a part hereof (the "2006 Expansion
Space"; the 2006 Existing Premises, as so expanded shall be referred to herein
as the "Premises") such that, as of November 1, 2006, the Premises shall consist
of 39,410 rentable square feet. Effective as of the 2006 Expansion Space
Commencement Date, Paragraph 4.E. of the Lease shall be amended to increase
Tenant's "Proportionate Share" from 40.38% to 48.13% by dividing 39,410 by
81,885.

     3. 2006 Expansion Space Term. The term of the lease for the 2006 Expansion
Space shall commence on the 2006 Expansion Space Commencement Date and terminate
on July 31, 2010 (the "2006 Expansion Space Term").

     4. Extension of Term. The term of the Lease as to the 2006 Existing
Premises is hereby extended to July 31, 2010.

     5. Base Rent. From and after the 2006 Expansion Space Commencement Date,
Tenant shall pay base rent for the Premises in the amount of:

          (a) $363,092.88 per annum ($30,257.74 per month), consisting of
     $53,907.00 per annum ($4,492.25 per month) for the 2006 Expansion Space and
     $309,185.88 per annum ($25,765.49 per month) for the 2006 Existing Premises
     for the period from the Expansion Space Commencement Date through and
     including December 31, 2006;

          (b) $373,775.28 per annum ($31,147.94 per month), consisting of
     $53,907.00 per annum ($4,492.25 per month) for the 2006 Expansion Space and
     $319,868.28 per annum ($26,655.69 per month) for the 2006 Existing Premises
     for the period from January 1, 2007 through and including October 31, 2007;

          (c) $374,853.48 per annum ($31,237.75 per month), consisting of
     $54,985.20 per annum ($4,582.10 per month) for the 2006 Expansion Space and
     $319,868.28 per annum ($26,655.69 per month) for the 2006 Existing Premises
     for the period from November 1, 2007 through and including October 31,
     2008;

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          (d) $375,953.16 per annum ($31,329.43 per month), consisting of
     $56,084.88 per annum ($4,673.74 per month) for the 2006 Expansion Space and
     $319,868.28 per annum ($26,655.69 per month) for the 2006 Existing Premises
     for the period from November 1, 2008 through and including October 31,
     2009; and

          (e) $377,074.80 per annum ($31,422.90 per month), consisting of
     $57,206.52 per annum ($4,767.21 per month) for the 2006 Expansion Space and
     $319,868.28 per annum ($26,655.69 per month) for the 2006 Existing Premises
     for the period from November 1, 2009 through and including July 31, 2010,

all without deduction or setoff therefrom, payable at the time and in the manner
set forth in the Lease for the payment of base rent.

     5. Amendments.

          (a) Paragraph 4 of the Ninth Amendment is hereby deleted in its
     entirety.

          (b) Paragraph 7 of the Ninth Amendment is hereby deleted in its
     entirety, and Tenant acknowledges that Landlord has complied with
     Landlord's obligations thereunder.

          (c) Exhibits A and B to the Ninth Amendment are hereby deleted in
     their entirety.

          (d) Paragraph 6 of the Tenth Amendment is hereby deleted in its
     entirety.

          (e) Exhibit A to the Tenth Amendment is hereby deleted in its
     entirety.

          (f) Effective on the 2006 Expansion Space Commencement Date, Exhibit A
     to the Lease is deleted and Exhibit B to this Amendment substituted
     therefor.

     6. Improvements. After the execution of this Amendment, at such time as
Landlord and Tenant may mutually agree, Landlord shall cause to be performed by
the work in the Premises described on Exhibit C attached hereto and made a part
hereof (the "2006 Work"). The 2006 Work shall be performed at Landlord's cost
and expense, subject to reimbursement by Tenant of $20,000 of the cost of the
2006 Work as provided in Exhibit C.

     The parties understand and agree that Tenant is in possession of the 2006
Existing Premises on the date of this Amendment, and the parties further
understand and agree that Tenant understands and agrees that the 2006 Work will
be performed during normal working hours and shall otherwise be subject to the
terms and conditions set forth in Exhibit C.

     7. Condition of 2006 Existing Premises. The 2006 Existing Premises shall be
taken by Tenant, as of April 1, 2009, the first day of the extension term as to
the 2006 Existing Premises, in its then AS-IS, WHERE-IS, WITH ALL FAULTS
condition.

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     8. Additional Agreements.

          a. HVAC Units - 2006 Expansion Space. The parties agree that, on or
     before the 2006 Expansion Space Commencement Date, Landlord, at Landlord's
     sole cost and expense, shall replace all HVAC units serving the 2006
     Expansion Space that Landlord, in its sole discretion, determines need
     replacement. Subsequent to the 2006 Expansion Space Commencement Date, to
     the extent Landlord, in its sole discretion, determines that any or all of
     the HVAC units serving the 2006 Expansion Space need replacement, Landlord
     shall do so, and the cost thereof shall be amortized over a twelve year
     period from the date of installation thereof, which amortization shall be
     based upon equal payments of principal and interest over said twelve year
     period, and interest shall be at the rate of nine percent (9%) per annum.
     Throughout that portion of the Term during which such amortization occurs,
     Tenant shall pay, as a part of Operating Costs, all of such amortization,
     including interest as specified above.

          b. HVAC Units - 2006 Existing Premises. The parties agree that to the
     extent Landlord, in its sole discretion, determines that any or all of the
     HVAC units serving the 2006 Existing Premises need replacement at any time
     on or after April 1, 2009, Landlord shall do so, and the cost thereof shall
     be amortized over a twelve year period from the date of installation
     thereof, which amortization shall be based upon equal payments of principal
     and interest over said twelve year period, and interest shall be at the
     rate of nine percent (9%) per annum. Throughout that portion of the Term
     during which such amortization occurs, Tenant shall pay, as a part of
     Operating Costs, all of such amortization, including interest as specified
     above.

          c. Renewal of Lease. Landlord hereby grants to Tenant a one-time
     option to renew the Lease as to the Premises upon the terms and conditions
     of this Paragraph 8(c) if:

               (i) Tenant is not in default under this Lease, as the same may
          have been renewed beyond any time to cure at the time such option is
          exercised; and

               (ii) Tenant gives Landlord written notice of the exercise of the
          renewal of this Lease not later than nine months prior to the end of
          the term (as extended pursuant to this Amendment (the "2009 Renewal
          Notice of Exercise"), time being of the essence. Tenant's failure to
          notify Landlord of its intent to exercise its option to renew the Term
          granted herein on or before the dates specified in this subparagraph
          (ii) for such renewal shall be deemed a waiver of Tenant's right to
          exercise its option to renew.

          If Tenant elects to renew this Lease under this Paragraph 8(c) the
     following terms and conditions shall apply:

               (i) The renewal term in question shall commence on August 1, 2010
          continue thereafter for a period of three (3) years.

               (ii) Base Rent for the Premises for the renewal term shall be
          Market Rent (as defined in Paragraph 8(d) of this Amendment); and

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               (iii) All of the other terms and conditions contained in this
          Lease, as it may have been amended from time to time, shall be as set
          out in the Lease, it being understood that there shall be no rights of
          renewal or extension except as provided in this Paragraph 8(c), and,
          upon the exercise of the right of renewal granted by this Paragraph
          8(c), this Paragraph 8(c) shall be of no further force or effect and
          Tenant shall have no right to further renew or extend the term at the
          expiration of the renewal term.

          Within fifteen (15) business days after request thereof from Landlord,
     Tenant shall execute and deliver to Landlord those instruments which
     Landlord may request to evidence the renewal described in this Paragraph
     8(c). The rights of Tenant under this Paragraph 8(c) shall not be severed
     from the Lease or separately sold, assigned, or otherwise transferred, and
     shall expire on the expiration or earlier termination of the Lease.
     Notwithstanding the foregoing, the renewal option contemplated in this
     Paragraph 8(c) shall automatically terminate and become null and void and
     of no further force and effect upon the earlier to occur of (i) the
     expiration or termination of the Lease; (ii) the termination of the
     Tenant's right to possession of the Premises; or (iii) the failure of
     Tenant to timely or properly exercise the rights granted by this Paragraph
     8(c). The right contemplated by this Paragraph shall not survive the
     expiration or termination of this Lease, and shall not be available to any
     assignee, sublessee, or successor to Tenant's interests hereunder.

          d. Market Rent. "Market Rent' means the amount of base rent, which may
     or may not include concessions, improvements, and other matters (exclusive
     of Operating Costs) which Landlord would receive by then renting similar
     space (including similar square footage) for premises in the project in
     which the Building is located. Within 45 days after Tenant exercised its
     right to renew the Term pursuant to Paragraph 8(c), Landlord shall give
     Tenant notice of Market Rent for the renewal term (the "2009 Market Rent
     Notice"). If Tenant does not agree with Landlord's determination of Market
     Rent as set forth in the 2009 Market Rent Notice, Tenant shall so notify
     Landlord in writing within ten (10) days after Tenant's receipt of 2009
     Market Rent Notice ("2009 Tenant's Notice"). Landlord and Tenant shall, for
     ten (10) days after Landlord's receipt of the 2009 Tenant's Notice,
     negotiate in good faith to come to an agreement as to Market Rent for the
     renewal term. If Landlord and Tenant are unable to agree upon Market Rent
     within said ten day period, then, notwithstanding the provisions of
     Paragraph 8(c), Tenant shall have the right to rescind the 2009 Renewal
     Notice of Exercise by written notice (the "2009 Rescission Notice") to
     Landlord given not later than twenty (20) days after the date of the 2009
     Tenant's Notice, it being understood and agreed that if the 2009 Rescission
     Notice is not given within such time period, Tenant shall be deemed to have
     waived its right to rescind the 2009 Renewal Notice of Exercise. In such
     case, to the extent that the 2009 Renewal Notice of Exercise is effectively
     exercised, Landlord and Tenant shall execute and deliver and amendment to
     the Lease which amendment shall be executed and delivered within ten (10)
     days following the determination of Market Rent. Tenant's failure to give
     the 2009 Tenant's Notice within the time period provided above shall be
     deemed an acceptance of Landlord's determination of Market Rent as set
     forth in the 2009 Market Rent Notice, and the term shall be deemed renewed
     pursuant to the 2009 Renewal Notice of Exercise.

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          e. Cross Default. Any default by Tenant under that certain Lease dated
     April ___, 2000, for premises located at 3800 Annapolis Lane, Suite 175,
     Plymouth, Minnesota, shall be a default under the Lease, as amended by this
     Amendment.

     9. No Default. Tenant represents and warrants that after giving effect to
the amendment contained herein, no Event of Default shall have occurred or be
continuing under the Lease and no event shall have occurred which, with the
serving of notice or the passage of time, shall mature into such an Event of
Default.

     10. Reference to and Effect on the Lease.

          (a) Upon the effectiveness of this Amendment, each reference in the
     Lease to "this Lease", "hereunder", "hereof" or words of like import
     referring to the Lease shall be a reference to the Lease as amended hereby.

          (b) Except as specifically set forth above, the Lease remains in full
     force and effect and is hereby ratified and confirmed.

          (c) Whenever there exists a conflict between this Amendment and the
     Lease, the provisions of this Amendment shall control.

     9. Governing Law. This Amendment shall be governed by and construed in
accordance with the laws of the State of Minnesota.

     10. Headings. Section headings in this Amendment are included herein for
convenience of reference only and shall not constitute one and the same
original.

     11. Counterparts. This Amendment may be executed in counterparts, all of
which, when taken together, shall constitute one and the same original.

     12. Time of Essence. Time is of the essence as to each and every provision
of this Amendment and the Lease.

     IN WITNESS WHEREOF, this Amendment has been executed as of the date first
written above.

ST. PAUL PROPERTIES, INC.               ATS MEDICAL, INC.

By: /s/ Michael D. Elnicky              By: /s/ Michael D. Dale
    --------------------------------        ------------------------------------
Its: Asset Manager                      Its: President & CEO

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                                    EXHIBIT A

                                 EXPANSION SPACE

                                       A-1

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                                    EXHIBIT B

                                   WORK LETTER
                            [LANDLORD PERFORMS WORK]
                                   [TURN KEY]

     This Work Letter ("Work Letter") is dated August, ___, 2006, and forms a
part of that certain Amendment No. 11 to Lease between ATS MEDICAL, INC., a
Minnesota corporation, as tenant, and ST. PAUL PROPERTIES, INC., a Delaware
corporation, as landlord (the "Amendment"), which Amendment amends that certain
Lease dated December 22, 1987, as amended (the "Lease") relating to certain
demised premises ("Premises") at that certain building having a street address
of 3905 Annapolis Lane, Plymouth, Minnesota (the "Building"), which Premises are
more fully identified in the Lease and the Amendment. Capitalized terms used
herein, unless otherwise defined in this Work Letter, shall have the respective
meanings ascribed to them in the Lease and the Amendment.

     1. The Work. Tenant desires Landlord to perform certain leasehold
improvement work in the 2006 Expansion Space (as defined in the Amendment) in
substantial accordance with the plan or plans (collectively, the "Initial Plan")
prepared by ___________________________________________ dated June 19, 2006, and
last revised __________________________, a copy or copies of which is/are
attached hereto as Schedule 1. Such work, as shown in the Initial Plan and as
more fully detailed in the Working Drawings (as defined and described in
Paragraph 2 below), shall be hereinafter referred to as the "Work." Not later
than __________________________, Tenant shall furnish to Landlord such
additional plans, drawings, specifications and finish details as Landlord may
reasonably request to enable Landlord's architects and engineers to prepare
mechanical, electrical and plumbing plans and to prepare the Working Drawings,
including a final telephone layout and special electrical connection
requirements, if any. All plans, drawings, specifications and other details
describing the work which have been or are hereafter furnished by or on behalf
of Tenant shall be subject to Landlord's approval, which Landlord agrees shall
not be unreasonably withheld. Landlord shall not be deemed to have acted
unreasonably if it withholds its approval of any plans, specifications, drawings
or other details or of any Additional Work (as defined in Paragraph 7 below)
because, in Landlord's reasonable opinion, the work, as described in any such
item, or the Additional Work, as the case may be: (a) is likely to adversely
affect Building systems, the structure of the Building or the safety of the
Building and/or its occupants; (b) might impair Landlord's ability to furnish
services to Tenant or other tenants in the Building; (c) would increase the cost
of operating the Building; (d) would violate any governmental laws, rules or
ordinances (or interpretations thereof); (e) contains or uses hazardous or toxic
materials or substances; (f) would adversely affect the appearance of the
Building; (g) might adversely affect another tenant's premises; (h) might, in
Landlord's sole opinion, adversely affect Landlord's ability to re-lease the
2006 Expansion Space; (i) is prohibited by any ground lease affecting the
Building or any mortgage or other instrument encumbering the Building; or (j) is
likely to be substantially delayed because of unavailability or shortage of
labor or materials necessary to perform such work or the difficulties or unusual
nature of such work. The foregoing reasons, however, shall not be the only
reasons for which Landlord may withhold its approval, whether or not such other
reasons are similar or dissimilar to the foregoing. Neither the approval by
Landlord of the Work or the Initial Plan or any other plans, drawings,
specifications or other items associated with the Work nor Landlord's
performance, supervision or monitoring of the Work shall constitute any warranty
by Landlord to Tenant of the adequacy of the design for Tenant's intended use of
the 2006 Expansion Space.

                                       B-1

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     2. Working Drawings. If necessary for the performance of the Work and not
included as part of the Initial Plan, Landlord shall prepare or cause to be
prepared final working drawings and specifications for the Work (the "Working
Drawings") based on and consistent with the Initial Plan and the other plans,
drawings, specifications, finish details and other information furnished by
Tenant to Landlord and approved by Landlord pursuant to Paragraph 1 above. So
long as the Working Drawings are consistent with the Initial Plan, Tenant shall
approve the Working Drawings within three (3) days after receipt of same from
Landlord by initialing and returning to Landlord each sheet of the Working
Drawings or by executing Landlord's approval form then in use, whichever method
of approval Landlord may designate.

     3. Performance of the Work; Reimbursement by Tenant. Landlord, at its
expense, shall cause the Work to be performed using building standard materials,
quantities and procedures then in use by Landlord ("Building Standards"), except
as may be stated or shown otherwise in the Working Drawings. Notwithstanding the
foregoing, Landlord and Tenant agree that, within ten (10) days after the date
of Substantial Completion (as defined below) of the 2006 Expansion Space, but in
no event later than the 2006 Expansion Space Commencement Date, Tenant shall pay
to Landlord $20,000 as Tenant's share of the cost of the Work. Said amount shall
constitute Additional Rent under the Lease, and Tenant's failure to pay the same
shall constitute a default under the Lease.

     4. Authorization to Proceed. Landlord may proceed with the Work at any time
after the execution of this Work Letter and the completion of the Working
Drawings, if applicable; provided, however, that Landlord, at its option, may
request Tenant to execute and deliver to Landlord a separate written
authorization (in the form then in use by Landlord) to proceed with the Work, in
which event Tenant shall execute and deliver such written authorization within
three (3) days after Landlord's request therefor, and, at Landlord's option, no
Work shall be commenced until Tenant has executed and delivered to Landlord such
authorization.

     5. Substantial Completion. Landlord shall cause the Work to be
"substantially completed" on or before the scheduled date of commencement of the
Term subject to delays caused by strikes, lockouts, boycotts or other labor
problems, casualties, discontinuance of any utility or other service required
for performance of the Work, unavailability or shortages of materials or other
problems in obtaining materials necessary for performance of the Work or any
other matter beyond the control of Landlord (or beyond the control of Landlord's
contractors or subcontractors performing the Work) and also subject to "Tenant
Delays" (as defined and described in Paragraph 6 of this Work Letter). The Work
shall be deemed to be "substantially completed" for all purposes under this Work
Letter and the Lease if and when Landlord's general contractor issues a written
certificate to Landlord and Tenant certifying that the Work has been
substantially completed (i.e., completed except for "punchlist" items listed in
such architect's certificate) in substantial compliance with the Working
Drawings, or when Tenant first takes occupancy of the 2006 Expansion Space,
whichever first occurs. If the Work is not deemed to be substantially completed
on or before the scheduled date of the Commencement Date of the Term, (a)
Landlord agrees to use reasonable efforts to complete the Work as soon as
practicable thereafter, (b) the Lease shall remain in full force and effect, (c)
Landlord shall not be deemed to be in breach or default of the Lease or this
Work Letter as a result thereof and Landlord shall have no liability to Tenant
as a result of any delay in occupancy (whether for damages, abatement of Rent or
otherwise), and (d) except in the event of Tenant Delays, and notwithstanding
anything contained in the Lease to the contrary, the Commencement Date of the
Term shall be extended to the date on which the Work is deemed to be
substantially completed and the expiration date of the Term shall be extended by
the number of days by which the Commencement Date was extended together with the
number of days required to make the Term expire on the next occurring last day
of the month. At the request of either Landlord or Tenant in

                                       B-2

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the event of such extensions in the commencement and expiration dates of the
Term, Tenant and Landlord shall execute and deliver an amendment to the Lease
reflecting such extensions. Landlord agrees to use reasonable diligence to
complete all punchlist work listed in the aforesaid general contractor's
certificate promptly after substantial completion.

     6. Tenant Delays. There shall be no extension of the 2006 Expansion Space
Commencement Date (as otherwise permissibly extended under Paragraph 5 above) if
the Work has not been substantially completed on said 2006 Expansion Space
Commencement Date by reason of any delay attributable to Tenant ("Tenant
Delays"), including without limitation:

          (a) the failure of Tenant to furnish all or any plans, drawings,
     specifications, finish details or the other information required under
     Paragraph 1 above on or before the date stated in Paragraph 1;

          (b) the failure of Tenant to grant approval of the Working Drawings
     within the time required under Paragraph 2 above;

          (c) the failure of Tenant to comply with the requirements of Paragraph
     4 above;

          (d) Tenant's requirements for special work or materials, finishes, or
     installations other than the Building Standards or Tenant's requirement for
     special construction staging or phasing;

          (e) the performance of any Additional Work (as defined in Paragraph 7
     below) requested by Tenant or the performance of any work in the 2006
     Expansion Space by any person, firm or corporation employed by or on behalf
     of Tenant, or any failure to complete or delay in completion of such work;
     or

          (f) any other act or omission of Tenant.

     7. Additional Work. Upon Tenant's request and submission by Tenant (at
Tenant's sole cost and expense) of the necessary information and/or plans and
specifications for work other than the Work described in the Working Drawings
("Additional Work") and the approval by Landlord of such Additional Work, which
approval Landlord agrees shall not be unreasonably withheld, Landlord shall
perform such Additional Work, at Tenant's sole cost and expense, subject,
however, to the following provisions of this Paragraph 7. Prior to commencing
any Additional Work requested by Tenant, Landlord shall submit to Tenant a
written statement of the cost of such Additional Work, and, concurrently with
such statement of cost, Landlord shall also submit to Tenant a proposed tenant
extra order (the "TEO") for the Additional Work in the standard form then in use
by Landlord. Tenant shall execute and deliver to Landlord such TEO and shall pay
to Landlord the entire cost of the Additional Work within five (5) days after
Landlord's submission of such statement and TEO to Tenant. If Tenant fails to
execute or deliver such TEO or pay the entire cost of such Additional Work
within such 5-day period, then Landlord shall not be obligated to do any of the
Additional Work and may proceed to do only the Work, as specified in the Working
Drawings.

     8. Tenant Access. Landlord shall allow Tenant access to the 2006 Expansion
Space prior to the 2006 Expansion Space Commencement Date to allow Tenant to do
other work required by Tenant to make the 2006 Expansion Space ready for
Tenant's use and occupancy (the "Tenant's Pre-Occupancy Work"). It shall be a
condition to the grant by Landlord that:

                                       B-3

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          (a) Tenant shall give to Landlord a written request to have such
     access to the 2006 Expansion Space within a reasonable time prior to the
     date on which such access will commence, which written request shall
     contain or shall be accompanied by each of the following items, all in form
     and substance reasonably acceptable to Landlord: (i) copies of all plans
     and specifications pertaining to Tenant's Pre-Occupancy Work; (ii) copies
     of all licenses and permits required in connection with the performance of
     Tenant's Pre-Occupancy Work; (iii) certificates of insurance (in amounts
     satisfactory to Landlord and with the parties identified in, or required
     by, the Lease named as additional insureds) and instruments of
     indemnification against all claims, costs, expenses, damages and
     liabilities which may arise in connection with Tenant's Pre-Occupancy Work;
     and (vii) assurances of the ability of Tenant to pay for all of Tenant's
     Pre-Occupancy Work and/or a letter of credit or other security deemed
     appropriate by Landlord securing Tenant's lien-free completion of Tenant's
     Pre-Occupancy Work.

          (b) Such pre-Term access by Tenant and its representatives shall be
     subject to scheduling by Landlord.

          (c) Tenant's employees, agents, contractors, workers, mechanics,
     suppliers and invitees shall work in harmony and not interfere with
     Landlord or Landlord's agents in performing the Work and any Additional
     Work in the 2006 Expansion Space, Landlord's work in other premises and in
     common areas of the Building, or the general operation of the Building. If
     at any time any such person representing Tenant shall cause or threaten to
     cause such disharmony or interference, including labor disharmony,
     including, without limitation, a strike or other labor dispute, and Tenant
     fails to immediately institute and maintain such corrective actions as
     directed by Landlord, then Landlord may withdraw such license upon
     twenty-four (24) hours' prior written notice to Tenant.

          (d) Any such entry into and occupancy of the Expansion Space by Tenant
     or any person or entity working for or on behalf of Tenant shall be deemed
     to be subject to all of the terms, covenants, conditions and provisions of
     the Lease, (specifically including the provisions regarding Tenant's
     improvements and alterations to the Expansion Space), and excluding only
     the covenant to pay Rent. Landlord shall not be liable for any injury, loss
     or damage which may occur to any of Tenant's Pre-Occupancy Work made in or
     about the 2006 Expansion Space or to property placed therein prior to the
     2006 Expansion Space Commencement Date, the same being at Tenant's sole
     risk and liability. Tenant shall be liable to Landlord for any damage to
     the 2006 Expansion Space or to any portion of the Work or Additional Work
     to the extent caused by Tenant or any of Tenant's employees, agents,
     contractors, workmen or suppliers.

     9. Lease Provisions. The terms and provisions of the Lease are hereby
amended and supplemented. In the event of any conflict between the provisions of
the Lease or the Amendment and the provisions of this Work Letter, the
provisions of this Work Letter shall control. All amounts payable by Tenant to
Landlord under this Work Letter shall be deemed to be Additional Rent under the
Lease and, upon any default in the payment of same, Landlord shall have all of
the rights and remedies provided for in the Lease. The pursuit of any remedies
by Tenant in connection with any breach by Landlord of its obligations under
this Work Letter shall be subject to the limitations stated in the Lease.

     10. Miscellaneous.

          (a) This Work Letter shall be governed by the laws of the State of
     Minnesota.

                                       B-4

<PAGE>

          (b) Notices under this Work Letter Agreement shall be given in the
     same manner as under the Lease.

          (c) The headings in this Work Letter are for convenience only.

          (d) This Work Letter sets forth the entire agreement of Tenant and
     Landlord regarding the Work.

          (e) In the event that the final working drawings and specifications
     are included as part of the Initial Plan attached hereto, or in the event
     Landlord performs the Work without the necessity of preparing working
     drawings and specifications, then whenever the term "Working Drawings" is
     used in this Work Letter, such term shall be deemed to refer to the Initial
     Plan and all supplemental plans and specifications approved by Landlord.

     11. Limitation of Landlord's Liability. If Landlord is ever adjudged by any
court to be liable to Tenant, Tenant specifically agrees to look solely to
Landlord's interest in the Phase for the recovery of any judgment from Landlord,
it being agreed that none of Landlord, its directors, officers, shareholders,
managing agents, employees or agents shall be personally liable for any such
judgment. In no event shall Landlord ever be liable to Tenant, Tenant's agents,
servants or employees, or to any person or entity claiming by or through Tenant,
for any consequential, indirect, special or similar types of damages.

     12. Lease Provisions. The pursuit of any remedies by Tenant in connection
with any breach by Landlord of its obligations under this Work Letter shall be
subject to the provisions of Paragraph 11 hereof and subject to any other
limitations stated in the Lease.

                                       B-5

<PAGE>

                                    EXHIBIT C

                                  IMPROVEMENTS

                                       C-1exv10w1

 

Exhibit 10.1

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:

 

 

	 	 	 	 	 
	1.	 	INDEMNIFICATION.
	 
	 	 	 	 
	 

	 	(a)
	 	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.
	 
	 	 	 	 
	 

	 	(b)
	 	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

2

 

	 	 	 	 	 
	 

	 	 	 	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.
	 
	 	 	 	 
	2.	 	EXPENSES AND INDEMNIFICATION PROCEDURE.
	 
	 	 	 	 
	 

	 	(a)
	 	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.
	 
	 	 	 	 
	 

	 	(b)
	 	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

3

 

	 	 	 	 	 
	 

	 	 	 	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.
	 
	 	 	 	 
	 

	 	(c)
	 	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

4

 

	 	 	 	 	 
	 

	 	 	 	standard of conduct, shall
create a presumption that Indemnitee has or has not met the applicable
standard of conduct.
	 
	 	 	 	 
	 

	 	(d)
	 	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.
	 
	 	 	 	 
	 

	 	(e)
	 	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.
	 
	 	 	 	 
	 

	 	(f)
	 	SELECTION OF COUNSEL. In the event the Company shall be obligated
under subsection 2(a) of this Agreement to pay the expenses of any action or
proceeding against Indemnitee, the Company, if appropriate, shall be
entitled to assume the defense of such proceeding, with counsel approved
by Indemnitee, which approval shall not be unreasonably withheld, upon the
delivery to Indemnitee of written notice of its election so to do. After
delivery of such notice, approval of such counsel by Indemnitee and the
retention of such counsel by the Company, the Company will not be liable
to Indemnitee under this Agreement for any fees of counsel subsequently
incurred by Indemnitee with respect to the same proceeding, except that if
(A) Indemnitee shall have reasonably concluded that there may be a
conflict of interest between the Company and Indemnitee in the conduct of
any such defense or (B) the Company shall not, in fact, have employed
counsel to assume the defense of such proceeding, then the reasonable fees
and expenses of Indemnitee’s counsel shall be at the expense of the
Company.

5

 

	 	 	 	 	 
	 
	 	 	 	 
	3.	 	ADDITIONAL INDEMNIFICATION RIGHTS; NONEXCLUSIVITY.
	 
	 	 	 	 
	 

	 	(a)
	 	SCOPE. Notwithstanding any other provision of this
Agreement, the Company hereby agrees to and does indemnify the Indemnitee to
the fullest extent permitted by law, notwithstanding that such
indemnification is not specifically authorized by the other provisions of
this Agreement, the Company’s Articles of Incorporation, the Company’s
By-Laws or by statute. In the event of any change, after the date of this
Agreement, in any applicable law, statute or rule which expands the right
of a California corporation to indemnify a member of its or a Subsidiary’s
board of directors or an officer, such changes shall be, IPSO FACTO,
within the purview of Indemnitee’s rights and the Company’s obligations,
under this Agreement. In the event of any change in any applicable law,
statute or rule which narrows the right of a California corporation to
indemnify a member of its or a Subsidiary’s Board of Directors or an
Officer, such changes, to the extent not otherwise required by such law,
stature or rule to be applied to this Agreement shall have no effect on
this Agreement or the parties’ rights and obligations hereunder.
	 
	 	 	 	 
	 

	 	(b)
	 	NONEXCLUSIVITY. The indemnification provided by this
Agreement shall not be deemed exclusive of any rights to which Indemnitee
may be entitled under the Company’s Articles of Incorporation, its By-Laws,
any agreement, any vote of shareholders or disinterested directors, the
General Corporation Law of the State of California, or otherwise, both as to
action or inaction in Indemnitee’s official capacity and as to action or
inaction in another capacity while holding such office. The indemnification
provided under this Agreement shall continue as to Indemnitee for any action
taken or not taken while serving in an indemnified capacity even though he may
have ceased to serve in such capacity at the time of any legal action or other
covered proceeding is commenced.
	 
	 	 	 	 
	4.	 	PARTIAL INDEMNIFICATION. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some portion of the
expenses, judgments, fines or penalties actually or reasonably incurred in the
investigation, defense, appeal or settlement of any civil or criminal action or
proceeding, but not, however, for the total amount thereof, the Company shall
nevertheless indemnify Indemnitee for the portion of such expenses, judgments, fines
or penalties to which Indemnitee is entitled.

6

 

	 	 	 	 	 
	 
	 	 	 	 
	5.	 	MUTUAL ACKNOWLEDGEMENT. Both the Company and Indemnitee acknowledge that
in certain instances, Federal law or applicable public policy may prohibit the
Company from indemnifying its directors and officers under this Agreement of
otherwise. Indemnitee understands and acknowledges that the Company has undertaken
or may be required in the future to undertake with the Securities and Exchange
Commission to submit the question of indemnification to court in certain
circumstances for a determination of the Company’s right under public policy to
indemnify Indemnitee.
	 
	 	 	 	 
	6.	 	DIRECTORS’ AND
OFFICERS’ LIABILITY INSURANCE. The Company shall,
from time to time, make the good faith determination whether or not it is practicable
for the Company to obtain and maintain a policy or policies of insurance with
reputable insurance companies providing the officers and directors of the Company with
coverage for losses from wrongful acts, or to ensure the Company’s performance of its
indemnification obligations under this Agreement. Among other considerations the
Company will weigh the costs of obtaining such insurance coverage against the
protection afforded by such coverage. In all policies of directors’ and officers’
liability insurance, Indemnitee shall be named as an insured in such a manner as to
provide Indemnitee the same rights and benefits as are accorded to the most favorably
insured of the Company’s directors, if Indemnitee is a director; or of the Company’s
officers, if Indemnitee is not a director of the Company but is an officer.
Notwithstanding the foregoing, the Company shall have no obligation to obtain or
maintain such insurance if the Company determines in good faith that such insurance is
not reasonably available, if the premium costs for such insurance are disproportionate
to the amount of coverage provided, if the coverage provided by such insurance is
limited by exclusions so as to provide an insufficient benefit, or if Indemnitee is
covered by similar insurance maintained by a Subsidiary or parent of the Company.
	 
	 	 	 	 
	7.	 	SEVERABILITY. Nothing in this Agreement is intended to require or
shall be construed as requiring the Company to do or fail to do any act in violation
of applicable law. The Company’s inability, pursuant to court order, to perform its
obligations under this Agreement shall not constitute a breach of this Agreement. The
provisions of this Agreement shall be severable as provided in this Section 7. If
this Agreement or any portion hereof shall be invalidated on any ground by any court
of competent jurisdiction, then the Company shall nevertheless indemnify Indemnitee to
the full extent permitted by any applicable portion of this Agreement that shall not
have been invalidated, and the balance of this Agreement not so invalidated shall be
enforceable in accordance with its terms.

7

 

	 	 	 	 	 
	 
	 	 	 	 
	8.	 	EXCEPTIONS. Any other provision herein to the contrary
notwithstanding, the Company shall not be obligated pursuant to the terms of this
Agreement:
	 
	 	 	 	 
	 

	 	(a)
	 	 EXCLUDED ACTS. To indemnify Indemnitee for any acts
or omissions or transactions from which a director, officer, employee or agent
may not be relieved of liability under applicable law.
	 
	 	 	 	 
	 

	 	(b)
	 	 CLAIMS INITIATED BY INDEMNITEE. To indemnify or
advance expenses to Indemnitee with respect to proceedings or claims initiated
or brought voluntarily by Indemnitee and not by way of defense, except with
respect to proceedings brought to establish or enforce a right to
indemnification under this Agreement or any other statute or law or otherwise
as required under Section 317 of the California General Corporation Law, but
such indemnification or advancement of expenses may be provided by the Company
in specific cases if the Board of Directors has approved the initiation or
bringing of such suit. Notwithstanding the forgoing, in the event of a Change
in Control other than a Change in Control approved by a majority of the board
of directors of the Company who were directors immediately prior to such
Change in Control, the decision of the Company regarding approval shall be
made by independent counsel selected by Indemnitee and approved by the Company
which approval shall not be unreasonably withheld.
	 
	 	 	 	 
	 

	 	(c)
	 	 LACK OF GOOD FAITH. To indemnify Indemnitee for any
expenses incurred by the Indemnitee with respect to any proceeding instituted
by Indemnitee to enforce or interpret this Agreement, if a court of competent
jurisdiction determines (and all rights to appeal with respect to such
determination have lapsed or been fully exhausted) that the material
assertions made by the Indemnitee in such proceeding was not made in good
faith or was frivolous; or
	 
	 	 	 	 
	 

	 	(d)
	 	 INSURED CLAIMS. To indemnify Indemnitee for expenses
or liabilities of any type whatsoever (including, but not limited to,
judgments, fines, ERISA excise taxes or penalties, and amounts paid in
settlement) which have been paid directly to Indemnitee by an insurance
carrier under a policy of directors’ and officers’ liability insurance
maintained by the Company; or
	 
	 	 	 	 
	 

	 	(e)
	 	 CLAIMS UNDER SECTION 16 (b).  To indemnify
Indemnitee for expenses and the payment of profits arising from the purchase

8

 

	 	 	 	 	 
	 

	 	 	 	and sale by Indemnitee of securities in violation of Section 16 (b) of the
Securities Exchange Act of 1934,
	 
	 	 	 	 
	9.	 	EFFECTIVENESS OF AGREEMENT; TERM.
	 
	 	 	 	 
	 

	 	(a)
	 	 This Agreement shall be effective as of the date set forth on
the first page and shall apply to acts or omissions of Indemnitee which
occurred prior to such date if Indemnitee was an officer, director, employee
or other agent of the Company or any Subsidiary, or was serving at the request
of the Company or any Subsidiary as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise, at
the time such act or omission occurred.
	 
	 	 	 	 
	 

	 	(b)
	 	 The Company’s obligations under this Agreement shall
continuously, irrevocably and perpetually cover Indemnitee’s acts and
omissions that occur or are alleged to have occurred during the period in
which Indemnitee served as a director, officer, employee or agent of Company
or of a subsidiary of Company.
	 
	 	 	 	 
	 

	 	(c)
	 	 This Agreement shall be binding upon and inure to the benefit of and be
enforceable by the parties hereto and their respective successors (including
any direct or indirect successor by purchase, merger, consolidation, or
otherwise to all or substantially all of the business and/or assets of the
Company), assigns, spouses, heirs, and personal and legal representatives. The
Company shall require and cause any successor (whether direct or indirect by
purchase, merger, consolidation, or otherwise) to all, substantially all, or a
substantial part, of the business and/or assets of the Company, expressly to
assume by written agreement in form and substance satisfactory to Indemnitee,
and agree to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform if no such succession had taken
place.
	 
	 	 	 	 
	10.	 	CONSTRUCTION OF CERTAIN PHRASES.
	 
	 	 	 	 
	 

	 	(a)
	 	 For the purposes of this Agreement, the term “Company” shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power
and authority to indemnify its directors, officers, employees or agents, so
that if Indemnitee is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such
constituent

9

 

	 	 	 	 	 	 	 
	 

	 	 	 	corporation
as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, Indemnitee
shall stand in the same position under the provisions of this Agreement with
respect to the resulting or surviving
corporation as Indemnitee would have with respect to such constituent
corporation if its separate existence had continued.
	 
	 	 	 	 

	 	 	 	 	 	 	 
	 	 	(b)	 	For purposes of this Agreement, the term “Subsidiary” shall
include a corporation, company or other entity.
	 
	 	 	 	 	 	 
	 

	 	 	 	(i)
	 	50% or more of whose
outstanding shares or securities (representing the right to
vote for the election of directors or other managing
authority) are, or
	 
	 	 	 	 	 	 
	 

	 	 	 	(ii)
	 	which does not have outstanding shares or securities
(as may be the case in a partnership, joint venture or
unincorporated association), but 50% or more of whose
ownership interest representing the right to make decisions
for such other entity is,
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	now or hereafter, owned or controlled, directly or
indirectly, by the Company, or one or more Subsidiaries.
	 
	 	 	 	 	 	 
	 	 	(c)	 	For purposes of this Agreement, references to “other
enterprises” shall include employee benefit plans; references to “fines” shall
include any excise taxes assessed on Indemnitee with respect to an employee
benefit plan; and references to “serving at the request of the Company” shall
include any service as a director, officer, employee or agent of the Company
which imposes duties on, or involves services by, such director, officer,
employee or agent with respect to an employee benefit plan, its participants,
or beneficiaries.
	 
	 	 	 	 	 	 
	 	 	(d)	 	For purposes of this Agreement, “Change in Control” shall
mean (i) The consummation of a consolidation or merger of the Company in which
the Company is not the surviving entity, or pursuant to which the shares of
the Company’s common voting equity are to be converted to cash, securities or
other property, other than any such merger or consolidation in which the
shareholders of the Company prior to such merger or consolidation own at least
50% of the voting equity of the successor entity following such merger or
consolidation. A consolidation or merger with a corporation which was a
wholly-owned direct or indirect subsidiary of the Company immediately before
the consolidation or merger is not a Change in Control; or (ii) the sale,

10

 

	 	 	 	 	 	 	 
	 	 	 	 	lease, exchange or other transfer (in one transaction or a series of
transactions) of all or substantially all of the Company’s assets, other than
a sale or exchange in which the acquiring party is an affiliate of the Company
in which at least 51% of the voting equity
is held (directly or indirectly) by the shareholders of the Company; or
(iii) the complete liquidation or dissolution of the Company; or (iv) any
person, as that term is used in Sections 13(d) and 14(d) of the Exchange
Act (other than the Company, any trustee or other fiduciary holding
securities of the Company under an employee benefit plan of the Company, a
direct or indirect wholly owned Subsidiary of the Company or any other
company owned, directly or indirectly, by the shareholders of the Company
in substantially the same proportions as their ownership of the Company’s
common voting equity), is or becomes the beneficial owner (within the
meaning of Rule 13d-3 under the Exchange Act), directly or indirectly of
50% or more of the Company’s (or a successor’s) then outstanding common
voting equity.”
	 
	 	 	 	 	 	 
	11.	 	COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original.
	 
	 	 	 	 	 	 
	12.	 	SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
Company and its successors and assigns, and shall inure to the benefit of Indemnitee
and Indemnitee’s estate, heirs, legal representatives and assigns.
	 
	 	 	 	 	 	 
	13.	 	ATTORNEYS’ FEES. In the event that any action is instituted by
Indemnitee under this Agreement to enforce or interpret any of the terms hereof,
Indemnitee shall be entitled to be paid all court costs and expenses, including
reasonable attorneys’ fees, incurred by Indemnitee with respect to such action, unless
as a part of such action, the court of competent jurisdiction determines that the
material assertions made by Indemnitee as a basis for such action were not made in
good faith or were frivolous. In the event of an action instituted by or in the name
of the Company under this Agreement or to enforce or interpret any of the terms of
this Agreement, Indemnitee shall be entitled to be paid all court costs and expenses,
including reasonable attorneys’ fees, incurred by Indemnitee in defense of such action
(including with respect to Indemnitee’s counterclaims and cross-claims made in such
action), unless as a part of such action the court determines that Indemnitee’s
material defenses to such action were made in bad faith or were frivolous.
	 
	 	 	 	 	 	 
	14.	 	NOTICE. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed duly given (i) if
delivered by hand and receipted for by the party addressee, on the date of such
receipt, (ii) if mailed by domestic certified or registered mail with

11

 

	 	 	 	 	 	 	 
	 	 	 postage prepaid,
on the fifth business day after the date postmarked, or (iii) if sent by confirmed
telex or facsimile, on the date sent. Notices shall be addressed as follows;

	 
	 	 	 	 	 	 
	 	 	(a)	 	if to the Company:
	 
	 	 	 	 	 	 
	 	 	 	 	Pac-West Telecomm, Inc.
	 	 	 	 	1776 W. March Lane, Suite 250
	 	 	 	 	Stockton, California 95207
	 	 	 	 	Telephone:     (209) 926-3460
	 	 	 	 	Facsimile:     (209) 926.4444
	 	 	 	 	Attention:     CEO
	 
	 	 	 	 	 	 
	 	 	(b)	 	if to Indemnitee, to the address of Indemnitee set forth
under Indemnitee’s signature below;
	 
	 	 	 	 	 	 
	 	 	 	 	or to such other address or attention of such other person as any party shall
advise the other parties in writing.
	 
	 	 	 	 	 	 
	15.	 	CONSENT TO JURISDICTION; CHOICE OF VENUE. The Company and Indemnitee
each hereby irrevocably consents to the jurisdiction of the courts of the State of
California and the federal courts within the State for all purposes in connection with
any action or proceeding which arises out of or relates to this Agreement and agree
that any action instituted under this Agreement shall be brought only in the United
States District Court for the Northern District of California and any California State
court within that District.
	 
	 	 	 	 	 	 
	16.	 	CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND ITS
PROVISIONS CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA AS APPLIED
TO CONTRACTS BETWEEN CALIFORNIA RESIDENTS ENTERED INTO AND TO BE PERFORMED ENTIRELY
WITHIN CALIFORNIA.

     This Amended and Restated Indemnification Agreement is made and entered into as of November 2,
2006, and supercedes in their entirely all prior indemnification agreements between the parties
with respect to the subject matter hereof.

	 	 	 	 	 
	PAC-WEST TELECOMM, INC.

	 	INDEMNITEE
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 
	 	 
	 

	 	Henry Carabelli, CEO	 	 

12

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