Document:

exv10w77

 

	 	 	 
	EXHIBIT 10.77

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SEPARATION AGREEMENT

THIS SEPARATION AGREEMENT (“Agreement”) is made and entered into this 22nd day
of October 2003, by and between Pac-West Telecomm, Inc., a California
corporation (the “Company”), and Wallace W. Griffin (“Executive”).

WHEREAS, pursuant to a mutually approved 2001 plan for the orderly transition
of executive leadership, it was contemplated that Executive would remain as CEO
of the Company through November of 2003, while transitioning responsibilities
to his successor; and

WHEREAS, the transition of responsibilities having been successfully completed
earlier than planned, the board of Company and Executive agreed that it would
be in the best interests of the Company to replace Executive as CEO of the
Company effective July 1, 2003; and

NOW, THEREFORE, in consideration of the mutual agreements contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and Executive do hereby agree as follows:

1. Termination. As of the Effective Date (as that term is defined in Section
11) Executive shall terminate all employment with the Company and hereby
resigns effective as of that date from any and all other positions with the
Company or any affiliate thereof (it being understood that Executive shall
continue to serve out his term as a director of the Company). As of the
Effective Date, the Executive Agreement, dated as of December 1, 2001, by and
between the Company and Executive shall be terminated and deemed to be null and
void, except that Sections 6, 7, 8, 9 and 10 of that Executive Agreement are
hereby incorporated herein and shall remain in full force and effect.

2. Separation Payment. The Company shall pay to Executive a severance payment
totaling $467,667, less applicable withholding and payroll taxes. This payment
is subject to Executive’s continued compliance with Sections 6, 7, 8, 9 and 10
of the Executive Agreement as incorporated herein and Section 9 b. of this
Agreement. Executive acknowledges that all the payments under this Agreement do
not constitute pensionable compensation. Subject to all of the same conditions
and deductions noted above and in the next sentence, the Company shall make a
second severance payment to Executive on or before December 31, 2006 in the
amount of $210,000; provided that the obligation of Company to make such
payment shall be reduced on a dollar for dollar basis by amounts received by
Executive pursuant to Section 6 of this Agreement. In no event shall the second
severance payment be owing to Executive should he be unable to serve as a
director of the company at any time prior to September 30, 2006 due to death,
disability or his own actions.

3. Options. The Company shall take all action necessary to cause all
outstanding unvested options previously granted to Executive to vest as of the
Effective Date and to extend the post termination of employment period to
exercise such options to be extended to the expiration date of the grant of
such options.

4. Other Benefits. All other Company benefits of Executive shall be determined
as if Executive voluntarily resigned as of the Effective Date. The policy of
life insurance presently maintained by the
Company on the life of Executive shall be transferred to Executive who shall be
responsible for paying future premiums falling due with respect to such policy.

5. Reimbursement of Expenses. The Company shall reimburse Executive for all
unreimbursed expenses properly incurred by Executive in the course of the
performance of his duties on or prior to the Effective

 

 

	 	 	 
	EXHIBIT 10.77

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Date provided that such
expenses are reasonably documented and submitted to the Company.

6. Compensation as Director and Board Chairman. For so long as he is a member
of the Board of Directors of Company, Executive shall receive the sum of
$20,000.00 per year payable in quarterly installments of $5000.00 as
compensation for board service together with stock option grants on the same
terms extended to outside directors. For so long as Executive serves as
Chairman of the Board of Directors he shall receive $50,000.00 per year payable
in quarterly installments of $12,500.00 for performing the duties of Board
Chairman and making himself available to assist the CEO of the corporation on
special projects as reasonably requested by the CEO. Such payments shall
commence with respect to the fourth calendar quarter of 2003.

7. Business Expenses and Support. During the term of his service as Board
Chairman at the Company’s expense:

	 		 	(a) Executive will have full use of his former Company office in
Stockton, California (including a part-time administrative
assistant);
	 
	 		 	(b) Executive will be provided with a home computer and a laptop and
e-mail service;
	 
	 		 	(c) Company will continue to provide existing telephone service,
including home and wireless services currently provided to Executive
on the same terms such service is provided to the CEO;
	 
	 		 	(d) Executive will be provided continued use, at Company expense, of
the Lexus owned by the Company that he presently uses. At the earlier
of conclusion of his board service or three years from the Effective
Date, title to the vehicle shall be transferred to Executive and
upkeep, maintenance and insurance shall become the responsibility of
Executive.
	 
	 		 	(e) Reimbursement of expenses reasonably incurred on behalf of the
corporation as approved by the audit committee of the board of
directors.

8. Mutual General Release. The parties hereto hereby release each other as
follows:

	 		 	(a) Subject to the condition that the Effective Date shall have
occurred, the Company and its affiliates hereby release and forever
discharge Executive of and from any and all claims, demands, actions,
causes of action, charges, suits, debts, liabilities, covenants,
contracts, agreements and promises, of any kind or nature whatsoever,
which the Company and its affiliates may have or assert against
Executive arising out of or relating to any event or action which
occurred prior to the date hereof, provided, however, that the
Company and its affiliates do not hereby release, and instead
expressly reserve, (i) any claims which they may have against
Executive pursuant to the terms hereof, and (ii) any claims or rights
which the Company may have against Executive arising out of
Executive’s gross negligence or intentional misconduct, and (iii)
any claims or rights which the Company and its affiliates may have as
a result of any guarantee which the Company and its affiliates have
given to any third party for the benefit of Executive prior to the
date hereof, including without limitation any mortgages or security
interests associated therewith.
	 
	 		 	(b) Executive hereby releases and forever discharges the Company and
its respective affiliates, and all of the current and former
shareholders, members, directors, officers, managers, employees,
independent contractors, trustees, beneficiaries, attorneys,

 

 

	 	 	 
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	 		 	representatives and agents of each of the foregoing from any and all
claims, demands, actions, causes of actions, charges, suits, debts,
liabilities, covenants, contracts, agreements and promises, of any
kind or nature whatsoever, which Executive may have or assert against
any of them, arising out of or relating to (i) any event or action
which occurred prior to the date hereof, and (ii) Executive’s
employment or termination of employment with the Company, including
without limitation any and all claims under the Age Discrimination in
Employment Act (29 U.S.C. 621 et seq.), Title VII of the Civil Rights
Act of 1964, as amended (42 U.S.C. 2000e et seq.), Sections 1981
through 1988 of Title 42 of the United States Code (42 U.S.C.
1981-88), the Americans with Disabilities Act (42 U.S.C. 12101 et
seq.), the Fair Labor Standards Act (29 U.S.C. 201 et seq.), the
California Fair Employment and Housing Act, or any other federal,
state or local law, ordinance, statute or regulation dealing with
employment; any and all claims for compensation of any type
(including but not limited to wages, salary, bonuses, commissions),
vacation pay or benefits; and any and all claims based on any
contract (express or implied), tort, wrongful discharge or
retaliatory discharge theory, defamation, intentional infliction of
emotional distress or any other common law claims.
	 
	 		 	(c) The parties expressly waive and relinquish all rights and
benefits afforded by Section 1542 of the Civil Code of the State of
California with respect to the releases provided herein, and do so
understanding and acknowledging the significance of such specific
waiver of Section 1542. Section 1542 of the Civil Code of the State
of California states as follows:

	 	 	 	“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT
THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM
MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR.”

	 	 	 	Thus, notwithstanding the provisions of Section 1542, and for the
purpose of implementing the releases provided herein, the parties
expressly acknowledge that this Agreement is intended to include in
its effect, without limitation other than the express limitations set
forth herein, all claims which either party does not know or suspect
to exist in such party’s favor at the time of execution hereof, and
that this Agreement contemplates the extinguishment of any such
claims. The parties acknowledge and agree that the foregoing waiver
of the provisions of Section 1542 has been expressly bargained for by
each of the parties in the negotiation of this Agreement.

9. Certain Covenants.

	 		 	(a) The terms of Sections 6, 7, 8, 9, and 10 of the Executive
Agreement and Section 8 and 9 (b) of this Agreement shall survive
this Agreement and remain fully enforceable in the manner set forth
in Section 11 of the Executive Agreement, which is hereby
incorporated herein.
	 
	 		 	(b) Unless specifically approved in writing by the Board of Directors
or its’ Audit Committee, the Executive shall not, for a period of
three years from the date of this Agreement (the “Non-Compete
Period”), for himself or on behalf of any other persons, firm,
partnership, corporation, or other entity, engage, directly or
indirectly, either as an officer, director, employee, partner,
consultant, individual proprietor, agent, or otherwise (including,
but not limited to, as an owner or shareholder), in any business
which (A) provides telecommunication services of the type provided
any time prior to the end of the

 

 

	 	 	 
	EXHIBIT 10.77

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	 	 	 	Non-Compete Period by the Company
and any of its affiliates (including, without limitation, (i)
switched local service, (ii) switched long-distance service, (iii)
dedicated transport services, (iv) collocate and interconnect
services and (v) date switched services and including, without
limitation, telecommunication services of the type provided by the
Company and any of its affiliates to information service providers)
or (B) provides services of the type which the Company and any of its
affiliates have taken significant actions prior to the end of the
Non-Compete Period to begin providing or of the type the Company or
any of its affiliates have indicated that they plan to begin
providing in any business plan or similar document delivered to
Executive at any time prior to the end of the Non-Compete Period, in
each case within any of the Restricted Territories (as defined
below); provided that the restrictions set forth in this Section 9(b)
shall not prohibit Executive from being a passive owner of not more
than 5% of the outstanding stock of any class of a corporation which
is publicly traded; and provided further that the restrictions set
forth in this paragraph shall not restrict the activities of
Executive to the extent Executive has received the consent of the
Board of Directors of the Company to such activities.
	 
	 		 	(c) In consideration of the performance by Executive of the
obligations set forth in the covenants set forth and referred to in
this Section 9, Executive shall be paid $65,000.00 annually payable
in quarterly installments of $16,250.00 in arrears commencing on
December 31, 2003, and on the last day of March, June, September and
December thereafter through and including September 30, 2006.

For purposes of this Agreement, “Restricted Territories” shall mean any states
or comparable jurisdictions in which the Company or its Subsidiaries are
engaged in business prior to the end of the Non-Compete Period or have taken
significant actions to begin engaging in business during that period,
including, but not limited to, such states or comparable jurisdictions located
within the United States of America, Canada and Mexico. Executive acknowledges
that the geographic restrictions set forth above are reasonable and necessary
to protect the good will of the Company’s business.

10. Non-Disparagement. Except as may be required by law, Executive shall not
engage or cause others to engage in any act detrimental to the Company or any
of its respective affiliates, or to any of their respective current or former
shareholders, members, directors, officers, managers, employees, independent
contractors, trustees, beneficiaries, attorneys, representatives or agents, and
he shall not make or cause others to make any written or oral statement which
disparages any of such parties. Except as may be required by law, and subject
to the occurrence of the Effective Date, the
Company shall not engage or cause others to engage in any act detrimental to
Executive and shall not make or cause others to make any written or oral
statement which disparages Executive.

11. Knowing and Voluntary Release. Executive acknowledges that he has had the
opportunity to be represented by legal counsel with respect to this Agreement
and that he has taken all steps he deems necessary to assure that his waiver of
rights under this Agreement is knowing and voluntary in accordance with the
provisions of the Older Workers Benefits Protection Act of 1990 (“OWBPA”).
Executive further acknowledges that he has read and understands all the terms
and conditions of this Agreement and that he has had an opportunity to consider
this Agreement for up to twenty-one (21) days before signing it. Executive
shall have the right, throughout the seven (7) days after signing and
delivering this Agreement, to revoke his signature and his agreement to be
bound by the terms of this Agreement. This Agreement shall become effective, if
not sooner revoked by Executive by sending written notice to the Company at the
address set forth in Section 15 below, on the later of the eighth (8th) day
after Executive signs and delivers this Agreement to the Company or October 25,
2003 (the “Effective Date”).

 

 

	 	 	 
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12. Indemnification. The Company agrees that as of the Effective Date, it shall
indemnify, defend and hold Executive harmless from and against any and all
loss, cost, damage, liability and expense (including without limitation
reasonable attorneys’ fees) suffered, sustained or incurred by Executive in
connection with third party claims arising out of Executive’s good faith
actions or omissions as the Chief Executive Officer of the Company. Executive
agrees that he shall indemnify, defend and hold the Company and its affiliates,
and their respective current or former shareholders, members, directors,
officers, managers, employees, independent contractors, trustees,
beneficiaries, attorneys, representatives and agents, harmless from and against
any and all loss, cost, damage, liability and expense (including without
limitation reasonable attorneys’ fees) suffered, sustained or incurred by any
such party in connection with third party claims arising out of Executive’s
gross negligence or intentional misconduct as the Chief Executive Officer of
the Company.

13. Waiver. Failure to insist upon strict compliance with any of the terms or
provisions hereof shall not be deemed a waiver of such term or provision, and
any waiver or relinquishment of any right or remedy hereunder at any one or
more times shall not be deemed a waiver or relinquishment of such right or
remedy at any other time or times.

14. Benefit. The rights and obligations of Executive hereunder are personal to
him, and are not subject to voluntary or involuntary alienation, transfer or
assignment. The rights and obligations of the Company hereunder shall inure to
the benefit of and be binding upon the Company and its successors and assigns.
The parties acknowledge that each of the Company, the respective affiliates of
the Company, and each of the current and former shareholders, members,
directors, officers, managers, trustees, beneficiaries, attorneys, employees,
independent contractors, representatives and agents of the Company and its
affiliates is intended to be a third party beneficiary hereof, and each shall
have the right to enforce the terms hereof.

15. Notices. All notices necessary or desirable to be served hereunder shall be
in writing and shall be: (i) personally delivered, or (ii) sent by certified
mail, return receipt requested, postage prepaid, to the address for the
intended recipient set forth below, or (iii) sent by facsimile telecopier to
the facsimile telecopy number for the intended recipient set forth below, as
follows:

	 	 	(a) If to the Company:
	 
	 	 	Pac-West Telecomm, Inc.

1776 W. March Lane #250

Stockton, CA 95207

Attn: General Counsel

Telecopier: (209) 926-4444
	 
		 	(b) If to Executive:
	 
	 	 	Mr. Wallace W. Griffin

3672 Arrowhead Ct.

Stockton, CA 95219
	 
	 	 	Telecopier: [209-870-8010 ]

or to such other address or facsimile telecopy number as either party hereto
may designate for itself or himself from time to time in a written notice
served upon the other party hereto as provided herein. Any notice sent by mail
as provided above shall be deemed delivered on the second (2nd) business day
next

 

 

	 	 	 
	EXHIBIT 10.77

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following the postmark date which it bears. Any notice sent by facsimile
telecopier as provided above shall be deemed delivered when sent.

16. Confidentiality. Executive acknowledges that he has had access to
confidential information of the Company and its respective affiliates, and of
their respective current and former shareholders, members, directors, officers,
managers, independent contractors, trustees, beneficiaries, representatives,
employees and agents, as a result of his employment by the Company. Executive
hereby agrees not to use such confidential information personally or for the
benefit of others. Executive further agrees not to disclose to anyone any such
confidential information at any time in the future so long as such information
remains confidential.

17. Entire Agreement. This Agreement contains the entire agreement between the
Company and Executive with respect to the subject matter hereof, and may not be
modified or rescinded except pursuant to a written instrument signed by the
party against whom enforcement is sought.

18. Governing Law. This Agreement and the rights and obligations of the parties
hereunder shall be governed by and construed in accordance with the laws of the
State of California, without regard to the laws of the any other jurisdiction.
Any suit, claim or other legal proceeding arising out of or relating to
Executive’s engagement hereunder, the termination of Executive’s engagement
hereunder, or this Agreement shall be brought exclusively in the federal or
state courts located in San Joaquin County, California and for such purpose
Executive and the Company hereby submit to personal jurisdiction in the State
of California and to venue in such courts.

* * * *

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.

	 	 	 	 	 
	 	PAC-WEST TELECOMM, INC.

a California corporation

 	 
	 	By:  	/s/ Sam Plum
 	 
	 	 	Sam Plum 	 
	 	 	Chairman, Compensation Committee
	 
	 	

 	 
	 		/s/ Wallace W. Griffin
 	 
	 	 	Wallace W. Griffinexv10w78

 

	 	 	 
	Exhibit 10.78

	 	Page 1 of 10

Exhibit 10.78

PAC-WEST TELECOMM, INC. 1999 STOCK INCENTIVE PLAN

NOTICE OF PERFORMANCE UNIT AWARD

Grantee’s Name and Address: Henry Carabelli

3361 Willowbrook Circle

Stockton, CA 95219

You (the “Grantee”) have been granted a performance unit award (the “Award”),
subject to the terms and conditions of this Notice of Performance Unit Award
(the “Notice”), the Pac-West Telecomm, Inc. 1999 Stock Incentive Plan, as
amended from time to time (the “Plan”) and the Performance Unit Award Agreement
(the “Agreement”) attached hereto, as follows. Unless otherwise defined herein,
the terms defined in the Plan shall have the same defined meanings in this
Notice.

Award Number 99-1220

Date of Award December 29, 2003

Total Number of Performance

Units Awarded (the “Units”) 400,000

Vesting Schedule:

Subject to the Grantee’s Continuous Service and other limitations set forth in
this Notice, the Agreement and the Plan, the Units shall vest in accordance
with the following schedule:

200,000 Units shall vest on June 30, 2007.

200,000 Units shall vest on June 30, 2008. Notwithstanding the foregoing, in
the event the “Monthly Average Fair Market Value” (as defined below) of the
Company’s Common Stock is greater than or equal to $3.00 per Share for a period
of six consecutive calendar months commencing on or after January 1, 2004, the
200,000 Units scheduled to vest on June 30, 2008 shall vest on the last day of
such six consecutive calendar month period, regardless of whether such date is
a date on which Shares are traded. If the Monthly Average Fair Market Value of
the Company’s Common Stock is less than $3.00 per Share for any single calendar
month before attaining a period of six consecutive calendar months where the
Monthly Average Fair Market Value of the Company’s Common Stock is greater than
or equal to $3.00 per Share, then the measurement of a new six-month period
shall start with the next calendar month.

“Monthly Average Fair Market Value” is defined as the sum of the Fair Market
Value of the Company’s Common Stock for each trading day during a calendar
month divided by the total number of trading days in such calendar month.

“Fair Market Value” is defined, as of any date, the value of Company’s Common
Stock determined as follows:

(i) If the Common Stock is listed on one or more established stock exchanges or
national market systems, including without limitation The Nasdaq National
Market or The Nasdaq SmallCap Market of

 

 

	 	 	 
	Exhibit 10.78

	 	Page 2 of 10

The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price
for such stock (or the closing bid, if no sales were reported) as quoted on the
principal exchange or system on which the Common Stock is listed (as determined
by the Administrator) on the date of determination, as reported in The Wall
Street Journal or such other source as the Administrator deems reliable;

(ii) If the Common Stock is regularly quoted on an automated quotation system
(including the OTC Bulletin Board) or by a recognized securities dealer, its
Fair Market Value shall be the closing sales price for such stock as quoted on
such system or by such securities dealer on the date of determination, but if
selling prices are not reported, the Fair Market Value of a share of Common
Stock shall be the mean between the high bid and low asked prices for the
Common Stock on the date of determination, as reported in The Wall Street
Journal or such other source as the Administrator deems reliable; or

(iii) In the absence of an established market for the Common Stock of the type
described in (i) and (ii), above, the Fair Market Value thereof shall be
determined by the Administrator in good faith.

For example, assume the Monthly Average Fair Market Value is greater than or
equal to $3.00 per Share for January and February of 2004 but for March 2004
the Monthly Average Fair Market Value falls below $3.00 per Share. The
measurement period which began on January 1, 2004 would stop on March 31, 2004
and the performance measure would not be satisfied. Assume the Monthly Average
Fair Market Value is again greater than or equal to $3.00 per Share for April
2004. If the Monthly Average Fair Market Value is greater than or equal to
$3.00 per Share for six consecutive calendar months beginning with April 2004
and ending with September 2004, the 200,000 Units scheduled to vest on June 30,
2008 would instead vest on September 30, 2004.

In the event of the Grantee’s change in status from Employee to Consultant or
from an Employee whose customary employment is 20 hours or more per week to an
Employee whose customary employment is fewer than 20 hours per week, vesting of
the Units shall continue only to the extent determined by the Administrator.

For purposes of this Notice and the Agreement, the term “vest” shall mean, with
respect to any Units, that such Units are no longer subject to forfeiture to
the Company. If the Grantee would become vested in a fraction of a Unit, such
Unit shall not vest until the Grantee becomes vested in the entire Unit. In the
event of a Corporate Transaction, all Units subject to the Award shall
automatically become fully vested, immediately prior to the specified effective
date of such Corporate Transaction.

Vesting shall cease upon the date of termination of the Grantee’s Continuous
Service for any reason, including death or Disability. In the event the
Grantee’s Continuous Service is terminated for any reason, including death or
Disability, any unvested Units held by the Grantee immediately following such
termination of Continuous Service shall be deemed reconveyed to the Company and
the Company shall thereafter be the legal and beneficial owner of such Units
and shall have all rights and interest in or related thereto without further
action by the Grantee.

IN WITNESS WHEREOF, the Company and the Grantee have executed this Notice and
agree that the Award is to be governed by the terms and conditions of this
Notice, the Plan, and the Agreement.

Pac-West Telecomm, Inc.,

a California corporation

By: /s/ Samuel A. Plum

 

 

	 	 	 
	Exhibit 10.78

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Title: Chairman of the Compensation

Committee

THE GRANTEE ACKNOWLEDGES AND AGREES THAT THE UNITS SHALL VEST, IF AT ALL, ONLY
DURING THE PERIOD OF THE GRANTEE’S CONTINUOUS SERVICE (NOT THROUGH THE ACT OF
BEING HIRED, BEING GRANTED THIS AWARD OR ACQUIRING SHARES HEREUNDER). THE
GRANTEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS NOTICE, THE
AGREEMENT, NOR IN THE PLAN, SHALL CONFER UPON THE GRANTEE ANY RIGHT WITH
RESPECT TO CONTINUATION OF THE GRANTEE’S CONTINUOUS SERVICE, NOR SHALL IT
INTERFERE IN ANY WAY WITH THE GRANTEE’S RIGHT OR THE COMPANY’S RIGHT TO
TERMINATE THE GRANTEE’S CONTINUOUS SERVICE AT ANY TIME, WITH OR WITHOUT CAUSE,
AND WITH OR WITHOUT NOTICE. THE GRANTEE ACKNOWLEDGES THAT UNLESS THE GRANTEE
HAS A WRITTEN EMPLOYMENT AGREEMENT WITH THE COMPANY TO THE CONTRARY, THE
GRANTEE’S STATUS IS AT WILL.

The Grantee acknowledges receipt of a copy of the Plan and the Agreement and
represents that he or she is familiar with the terms and provisions thereof,
and hereby accepts the Award subject to all of the terms and provisions hereof
and thereof. The Grantee has reviewed this Notice, the Agreement and the Plan
in their entirety, has had an opportunity to obtain the advice of counsel prior
to executing this Notice and fully understands all provisions of this Notice,
the Agreement and the Plan. The Grantee hereby agrees that all disputes arising
out of or relating to this Notice, the Plan and the Agreement shall be resolved
in accordance with Section 9 of the Agreement. The Grantee further agrees to
notify the Company upon any change in the residence address indicated in this
Notice.

The Grantee acknowledges that, to the extent the vesting of any Units occurs
during a “blackout period” of the Company wherein certain Employees are
precluded from selling Shares, the receipt of the corresponding Shares issuable
pursuant to this Notice and the Agreement may be automatically deferred in
accordance with Section 4(a) of the Agreement. The Grantee further acknowledges
that the Grantee may voluntarily elect to defer the receipt of Shares issuable
pursuant to this Notice and Agreement in accordance with Section 4(b) of the
Agreement.

Dated: January 14, 2004              Signed: /s/ Henry R. Carabelli

Award Number: 99-1220

PAC-WEST TELECOMM, INC. 1999 STOCK INCENTIVE PLAN

PERFORMANCE UNIT AWARD AGREEMENT

	 	1.	 	Issuance of Units. Pac-West Telecomm, Inc., a California
corporation (the “Company”), hereby issues to the Grantee (the
“Grantee”) named in the Notice of Performance Unit Award (the
“Notice”), the Total Number of Performance Units Awarded set forth
in the Notice (the “Units”), subject to the Notice, this
Performance Unit Award Agreement (the “Agreement”) and the terms
and provisions of the Company’s 1999 Stock Incentive Plan, as
amended from time to time (the “Plan”), which is incorporated
herein by reference. Unless otherwise defined herein, the terms
defined in the Plan shall have the same defined meanings in this
Agreement.
	 
	 	2.	 	Transfer Restrictions. The Units may not be transferred
in any manner other than by will or by the laws of descent and
distribution. Notwithstanding the foregoing, the Grantee may

 

 

	 	 	 
	Exhibit 10.78

	 	Page 4 of 10

	 	 	 	designate a member of the Grantee’s Immediate Family as a
beneficiary of the Units in the event of the Grantee’s death on
the beneficiary designation form attached hereto as Exhibit A. The
terms of this Agreement shall be binding upon the executors, administrators,
heirs, successors and transferees of the Grantee.
	 
	 	3.	 	Conversion of Units and Issuance of Shares. Subject to
any deferral under Section 4 of this Agreement, upon each vesting
date, one share of Common Stock shall be issuable for each Unit
that vests on such date (the “Shares”), subject to the terms and
provisions of the Plan and this Agreement. Thereafter, the Company
will transfer such Shares to the Grantee upon satisfaction of any
required tax or other withholding obligations. Any fractional Unit
remaining after the Award is fully vested shall be discarded and
shall not be converted into a fractional Share.
	 
	 	4.	 	Deferral of Receipt of Shares.

	 	a.	 	Automatic Deferral Due to Blackout Period.
Subject to Section 6 of this Agreement, to the extent the
vesting of any Units occurs during a “blackout period” of the
Company wherein certain Employees are precluded from selling
Shares, the receipt of the corresponding Shares issuable
pursuant to this Agreement shall be deferred, provided,
however, that the receipt of such Shares shall not be
deferred if such Shares are specifically covered by a Rule
10b5-1 trading plan of the Grantee which causes such Shares
to be exempt from any applicable blackout period then in
effect. In the event the receipt of any Shares is deferred
due to the existence of a regularly scheduled blackout
period, such Shares shall be issued to the Grantee on the
first day following the termination of such regularly
scheduled blackout period. In the event the receipt of any
Shares is deferred due to the existence of a special blackout
period, such Shares shall be issued to the Grantee on the
first day following the termination of such special blackout
period as determined by the Board. Notwithstanding the
foregoing, deferred Shares shall be issued promptly to the
Grantee prior to the termination of the blackout period in
the event the Grantee ceases to be subject to the blackout
period. The Grantee hereby represents that he or she
understands the effect of any such deferral under relevant
federal, state and local tax laws.
	 
	 	b.	 	Voluntary Deferral by the Grantee. Subject to
Section 6 of this Agreement, the Grantee may elect to defer
the receipt of any Shares issuable pursuant to this Agreement
by submitting to the Company an election to defer such
receipt. In the event the Grantee intends to defer the
receipt of any Shares, the Grantee shall submit to the
Administrator a proposed deferral election form at least two
weeks in advance of the date of the proposed election to
defer. The Administrator shall determine whether the proposed
election to defer will be effective for tax purposes and
under Applicable Law. In the event the Administrator
determines that the proposed election to defer will be
effective for tax purposes and under Applicable Law, the
proposed election will become effective upon the
Administrator’s acceptance of the election with such changes
to the election as the Administrator deems necessary or
appropriate.

	 	5.	 	Right to Shares. The Grantee shall not have any right in,
to or with respect to any of the Shares (including any voting
rights or rights with respect to dividends paid on the Common
Stock) issuable under the Award until the Award is settled by the
issuance of such Shares to the Grantee.
	 
	 	6.	 	Taxes.

	 	a.	 	Generally. The Grantee is ultimately liable and
responsible for all taxes owed by the Grantee in connection
with the Award, regardless of any action the Company or any
Related Entity takes with respect to any tax withholding
obligations that arise in connection with the Award. Neither
the Company nor any Related Entity makes any representation
or undertaking regarding the treatment of any tax withholding
in

 

 

	 	 	 
	Exhibit 10.78

	 	Page 5 of 10

	 	 	 	connection with the grant or vesting of the Award or the
subsequent sale of Shares issuable pursuant to the Award. The
Company and its Related Entities do not commit and are under
no obligation to structure the Award to reduce or eliminate
the Grantee’s tax liability. As a condition and term of this
Award, no election under Section 83(b) of the
Code may be made by the Grantee or any other person with
respect to all or any portion of the Award.
	 
	 	b.	 	Payment of Withholding Taxes. Prior to any
event in connection with the Award (e.g., vesting) that the
Company determines may result in any tax withholding
obligation, whether federal, state or local, including any
employment tax obligation (the “Tax Withholding Obligation”),
the Grantee must arrange for the satisfaction of the minimum
amount of such Tax Withholding Obligation in a manner
acceptable to the Company. In addition, the Grantee must
arrange for the satisfaction of the minimum amount of any
applicable Tax Withholding Obligations that arise in
connection with the Award regardless of any deferral pursuant
to Section 4 of this Agreement.

	 	i.	 	By Sale of Shares. Unless the Grantee
determines (or is required) to satisfy the Tax
Withholding Obligation by some other means in accordance
with clause (ii) below, the Grantee’s acceptance of this
Award constitutes the Grantee’s instruction and
authorization to the Company and any brokerage firm
determined acceptable to the Company for such purpose to
sell on the Grantee’s behalf a whole number of Shares
from those Shares issuable to the Grantee as the Company
determines to be appropriate to generate cash proceeds
sufficient to satisfy the minimum applicable Tax
Withholding Obligation. Such Shares will be sold on the
day such Tax Withholding Obligation arises (e.g., a
vesting date) or as soon thereafter as practicable. The
Grantee will be responsible for all broker’s fees and
other costs of sale, and the Grantee agrees to indemnify
and hold the Company harmless from any losses, costs,
damages, or expenses relating to any such sale. To the
extent the proceeds of such sale exceed the Grantee’s
minimum Tax Withholding Obligation, the Company agrees
to pay such excess in cash to the Grantee. The Grantee
acknowledges that the Company or its designee is under
no obligation to arrange for such sale at any particular
price, and that the proceeds of any such sale may not be
sufficient to satisfy the Grantee’s minimum Tax
Withholding Obligation. Accordingly, the Grantee agrees
to pay to the Company or any Related Entity as soon as
practicable, including through additional payroll
withholding, any amount of the Tax Withholding
Obligation that is not satisfied by the sale of Shares
described above.

	 	ii.	 	By Check, Wire Transfer or Other Means. At any time not less than five (5) business days
before any Tax Withholding Obligation arises (e.g., a
vesting date), the Grantee may elect to satisfy the
Grantee’s Tax Withholding Obligation by delivering to
the Company an amount that the Company determines is
sufficient to satisfy the Tax Withholding Obligation by
(x) wire transfer to such account as the Company may
direct, (y) delivery of a certified check payable to the
Company, or (z) such other means as specified from time
to time by the Administrator. In addition, in the event
of a deferral pursuant to Section 4 of this Agreement,
the Grantee must arrange for the satisfaction of the
minimum amount of any applicable Tax Withholding
Obligations in accordance with this Section 6(b)(ii).

	 	c.	 	Right to Retain Shares. The Company may refuse
to issue any Shares to the Grantee until the Grantee
satisfies the Tax Withholding Obligation. To the maximum
extent permitted by law, the Company has the right to retain
without notice from Shares

 

 

	 	 	 
	Exhibit 10.78

	 	Page 6 of 10

	 	 	 	issuable under the Award or from
salary or other amounts payable to the Grantee, Shares or
cash having a value sufficient to satisfy the Tax Withholding
Obligation.

	 	7.	 	Entire Agreement: Governing Law. The Notice, the Plan and
this Agreement constitute the entire agreement of the parties with
respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and
the Grantee with respect to the subject matter hereof, and may not
be modified adversely to the Grantee’s interest except by means of
a writing signed by the Company and the Grantee. These agreements
are to be construed in accordance with and governed by the internal laws of the
State of California without giving effect to any choice of law rule
that would cause the application of the laws of any jurisdiction
other than the internal laws of the State of California to the rights
and duties of the parties; provided, however, that the arbitration
provisions of Section 9 of this Agreement shall be governed by the
Federal Arbitration Act. Should any provision of the Notice or this
Agreement be determined to be illegal or unenforceable, the other
provisions shall nevertheless remain effective and shall remain
enforceable.
	 
	 	8.	 	Headings. The captions used in this Agreement are
inserted for convenience and shall not be deemed a part of this
Agreement for construction or interpretation.
	 
	 	9.	 	Dispute Resolution. The provisions of this Section 9
shall be the exclusive means of resolving disputes arising out of
or relating to the Notice, the Plan and this Agreement. The
Company, the Grantee, and the Grantee’s assignees (the “parties”)
shall attempt in good faith to resolve any disputes arising out of
or relating to the Notice, the Plan and this Agreement by
negotiation between individuals who have authority to settle the
controversy. Negotiations shall be commenced by either party by
notice of a written statement of the party’s position and the name
and title of the individual who will represent the party. Within
thirty (30) days of the written notification, the parties shall
meet at a mutually acceptable time and place, and thereafter as
often as they reasonably deem necessary, to resolve the dispute.
If the dispute has not been resolved by negotiation, the parties
agree that, to the fullest extent permitted by law, any claim,
controversy or dispute arising out of or relating to the Notice,
the Plan or this Agreement shall be resolved by final and binding
arbitration. Except as specifically provided herein, any
arbitration proceeding shall be conducted in accordance with the
National Rules for the Resolution of Employment Disputes of the
American Arbitration Association (“the AAA Rules”). A neutral and
impartial arbitrator shall be chosen by mutual agreement of the
parties; however, if the parties are unable to agree upon an
arbitrator within a reasonable period of time, then a neutral and
impartial arbitrator shall be appointed in accordance with the
arbitrator nomination and selection procedure set forth in the AAA
Rules. The arbitrator shall prepare a written decision containing
the essential findings and conclusions on which the award is
based, unless waived by mutual agreement of the parties. The
arbitrator shall apply the same substantive law, with the same
statutes of limitations and same remedies, that would apply if the
claim were brought in a court of law. Any party may bring an
action in court to compel arbitration under this Agreement and to
enforce an arbitration award. Otherwise, no party shall initiate
or prosecute any lawsuit of a claim in any way related to any
arbitrable claim. THE PARTIES UNDERSTAND AND AGREE THAT THIS
AGREEMENT CONSTITUTES A WAIVER OF THEIR RIGHT TO A TRIAL BY JURY
OF ANY CLAIMS OR CONTROVERSIES COVERED BY THIS AGREEMENT. THE
PARTIES AGREE THAT NONE OF THOSE CLAIMS OR CONTROVERSIES SHALL BE
RESOLVED BY A JURY TRIAL. All arbitration hearings under this
Agreement shall be conducted in Stockton, California, unless
otherwise agreed by the parties. The parties’ obligations under
this Agreement shall survive the termination of the Grantee’s
Continuous Service and the expiration of this Agreement.
	 
	 	10.	 	Notices. Any notice required or permitted hereunder shall
be given in writing and shall be

 

 

	 	 	 
	Exhibit 10.78

	 	Page 7 of 10

	 	 	 	deemed effectively given upon
personal delivery, upon deposit for delivery by an internationally
recognized express mail courier service or upon deposit in the
United States mail by certified mail (if the parties are within
the United States), with postage and fees prepaid, addressed to
the other party at its address as shown in these instruments, or
to such other address as such party may designate in writing from
time to time to the other party.
	 
	 	11.	 	Adjustment upon Changes in Capitalization. The number of
Units subject to this Agreement shall be proportionately adjusted
for certain changes in the capitalization of the Company in
accordance with Section 11(a) of the Plan.
	 
	 	12.	 	Registration of Shares Issued upon the Conversion of
Units. The Company shall use commercially reasonable efforts to
ensure that the shares of Common Stock issuable upon the conversion of Units subject to this Agreement have been registered
pursuant to an effective Registration Statement on Form S-8.

END OF AGREEMENT

EXHIBIT A

PAC-WEST TELECOMM, INC.

Performance Unit Beneficiary Designation

In the event of my death prior to the settlement of my currently outstanding or
subsequently issued performance units (the “Units”) under any existing or
subsequently adopted stock incentive plan of Pac-West Telecomm, Inc. or its
successor in interest (the “Company”) (whether adopted by the Company or
assumed by the Company in connection with a merger, acquisition or other
similar transaction) or issued to me by the Company outside of any such stock
plan, and in lieu of disposing of my interest, if any, in the Units at the time
of my death by my will or the laws of intestate succession, I hereby designate
the following persons as Primary Beneficiary(ies) and Contingent
Beneficiary(ies) of my interest in the Units:

     Primary Beneficiary(ies) (Select only one of the three alternatives)

	 	 	 
	      (a) Individuals and/or Charities
	 	% Share
	 
	 	 
	Name ____________________________________________________________
	 	_____________
	 
	 	 
	Address
	 	 
	 
	 	 
	Name ____________________________________________________________
	 	_____________
	 
	 	 
	Address
	 	 
	 
	 	 
	Name ____________________________________________________________
	 	_____________
	 
	 	 
	Address
	 	 
	 
	 	 
	Name ____________________________________________________________
	 	_____________
	 
	 	 
	Address
	 	 
	 
	 	 
	     (b) Residuary Testamentary Trust
	 	 

 

 

	 	 	 
	Exhibit 10.78

	 	Page 8 of 10

In trust, to the trustee of the trust named as the beneficiary of the
residue of my probate estate.

     (c) Living Trust

________________________________________________________________ (or any successor), as Trustee of the

(print name of present trustee)

 

________________________________________________________________ Trust, dated ________________________

(print name of trust) (fill in date trust was established)

Contingent Beneficiary(ies) (Select only one of the three alternatives)

	 	 	 
	      (a) Individuals and/or Charities
	 	% Share
	 
	 	 
	Name ____________________________________________________________
	 	_____________
	 
	 	 
	Address
	 	 
	 
	 	 
	Name ____________________________________________________________
	 	_____________
	 
	 	 
	Address
	 	 
	 
	 	 
	Name ____________________________________________________________
	 	_____________
	 
	 	 
	Address
	 	 
	 
	 	 
	Name ____________________________________________________________
	 	_____________
	 
	 	 
	Address
	 	 
	 
	 	 
	     (b) Residuary Testamentary Trust
	 	 

In trust, to the trustee of the trust named as the beneficiary of the residue of my probate estate.

     (c) Living Trust

In trust, to the trustee of the trust named as the beneficiary of the
residue of my probate estate.

________________________________________________________________ (or any successor), as Trustee of the

(print name of present trustee)

 

________________________________________________________________ Trust, dated ________________________

(print name of trust) (fill in date trust was established)

 

	 	 	 
	Exhibit 10.78

	 	Page 9 of 10

Should all the individual Primary Beneficiary(ies) fail to survive me or if the
trust named as the Primary Beneficiary does not exist at my death (or no will
of mine containing a residuary trust is admitted to probate within six months
of my death), the Contingent Beneficiary(ies) shall be entitled to my interest
in the Units for the shares indicated. Should any individual beneficiary fail
to survive me or a charity named as a beneficiary no longer exist at my death,
such beneficiary’s share shall be divided among the remaining named Primary or
Contingent Beneficiaries, as appropriate, in proportion to the percentage
shares I have allocated to them. In the event that no Individual Primary
Beneficiary(ies) or Contingent Beneficiary(ies) survives me, no trust
(excluding a residuary testamentary trust) or charity named as a Primary
Beneficiary or Contingent Beneficiary exists at my death, and no will of mine
containing a residuary trust is admitted to probate within six months of my
death, then my interest in the Units shall be disposed of by my will or the
laws of intestate succession, as applicable.

This Beneficiary Designation is effective regardless of whether I have deferred
receipt of any or all of the Units. This Beneficiary Designation is effective
until I file another such designation with Pac-West Telecomm, Inc. Any previous
Beneficiary Designations are hereby revoked.

	 	 	 
	Submitted by:
	 	Accepted by:
	 
	 	 
	Grantee Grantee’s Spouse
	 	Pac-West Telecomm, Inc.
	 
	 	 
	(Signature)
	 	By:
	 
	 	 
	 
	 	Its:
	 
	 	 
	Date:
	 	Date:

Spousal Consent for Units that are Community Property (necessary if separate beneficiary designation is not filed by Spouse):

I hereby consent to this Beneficiary Designation and agree that this
designation of beneficiaries provided herein shall apply to my community
property interest in the Units. This consent does not apply to any subsequent
Beneficiary Designation which may be filed by my spouse. This consent may be
revoked by me at any time, whether by filing a Beneficiary Designation
disposing of my interest in the Units or by filing a written notice of
revocation with the Company.

 

__________________________________________________________

(Signature of Spouse)

 

Date: __________________________

 

Spousal Consent for Units that are not Community Property (necessary if beneficiary is other than Spouse):

 

 

	 	 	 
	Exhibit 10.78

	 	Page 10 of 10

I hereby consent to this Beneficiary Designation. This consent does not apply
to any subsequent Beneficiary Designation which may be filed by my spouse.

__________________________________________________________

(Signature of Spouse)

 

Date: __________________________

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