Amendment to Settlement Agreement

First Amendment, dated June 28, 2006 (the “Amendment”), to the Settlement
Agreement, dated as of May 5, 2006 (the “Settlement Agreement”), among
Inter-Tel, Incorporated (“Inter-Tel” or the “Company”), Steven G. Mihaylo (“Mr.
Mihaylo”) and Summit Growth Management LLC, a wholly owned affiliate of Mr.
Mihaylo (“Summit”).

WHEREAS, Mr. Mihaylo and certain affiliates on June 14, 2006 sent a letter (the
“June 14 Offer”) to the Company setting forth what they claimed to be a Mihaylo
Offer (as defined in the Settlement Agreement).

WHEREAS, the June 14 Offer contained financing commitments that were “subject to
confirmatory due diligence.”

WHEREAS, the Special Committee of the Board of Directors of Inter-Tel (the
“Special Committee”) has taken the position that the June 14 Offer is, because
of the “confirmatory due diligence” condition, not a Mihaylo Offer.

WHEREAS, Mr. Mihaylo has taken the position that the “confirmatory due
diligence” condition was necessitated by the Company’s noncompliance with its
obligation under Section 4 of the Settlement Agreement to provide Mr. Mihaylo
and his advisors and financing sources access to the reasonable due diligence
information requested in good faith in order to facilitate their making a
Mihaylo Proposal prior to June 15, 2006;

WHEREAS, the parties, without agreeing as to whether the June 14 Offer is or is
not a Mihaylo Offer or whether the Company did or did not comply with its
obligations under the Settlement Agreement, wish to resolve this dispute and
amend the Settlement Agreement.

NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties, intending to be legally bound hereby agree as follows:

1.            The Special Committee and Board will not respond to the June 14
Offer and the Mihaylo Parties will waive any right to claim that the failure to
respond triggers their right to make a Mihaylo Request to call a Special Meeting
pursuant to Section 5 of the Settlement Agreement.

2.            The Company will promptly provide Mr. Mihaylo, his advisors and
his financing sources in good faith such additional due diligence information
and access to information, facilities, persons and business records as is
customary and reasonably necessary to allow Mr. Mihaylo and his affiliates and
partners to make an offer (and his financing sources to provide commitment
letters) without the “subject to confirmatory due diligence” condition and
otherwise meeting all of the criteria for a Mihaylo Proposal set forth in the
Settlement Agreement; provided, that if the Company announces an extraordinary
transaction prior to the earlier of July 28, 2006 or the submission of a Mihaylo
Proposal, such offer may be conditioned on the

 

 

extraordinary transaction not being consummated or conditioned on due diligence
regarding the extraordinary transaction and, in that event, such conditions
shall not cause it to fail to constitute a Mihaylo Proposal if such offer
otherwise meets all of the criteria for a Mihaylo Proposal set forth in the
Settlement Agreement. The scope, nature and conditions to such additional due
diligence have been generally agreed to by the financial advisors to the
respective parties. Such additional due diligence information will be subject to
the terms and restrictions of the respective Confidentiality Agreements, each
dated May 5, 2006 (the “Confidentiality Agreements”) between the Company and
each of Mr. Mihaylo, RBC Capital Markets Corporation and Vector Capital
Corporation, and such additional appropriate provisions as reasonably necessary
or desirable to protect the Company or the confidential or proprietary
information of the Company.

3.            Sections 4 and 7 of the Settlement Agreement are amended by
deleting therefrom all references to June 15, 2006 and substituting in each
place thereof the date of July 28, 2006.

4.            Sections 7 and 8 of the Settlement Agreement are amended by
deleting therefrom all references to August 31, 2006 and substituting in each
place thereof the date of September 30, 2006.

5.            Except as expressly amended herein, the Settlement Agreement
continues and remains in full force and effect. Unless otherwise defined in this
Amendment, capitalized terms used in this Amendment have the same meaning as
those in the Settlement Agreement.

6.            All notices, demands and other communications to be given or
delivered to the Company in accordance with Section 19 of the Agreement shall be
copied to (which copy shall not constitute notice):

Bingham McCutchen LLP

355 South Grand Avenue, Suite 4400

Los Angeles, California 90071

Attention: Stephen D. Alexander

7.            This First Amendment may be executed by the parties in any number
of counterparts. Each such counterpart shall be, and shall be deemed to be, an
original instrument, but all such counterparts taken together shall constitute
one and the same Amendment.

8.            This Amendment shall be governed by, and construed and enforced in
accordance with, the laws of the State of California applicable to agreements
made and to be fully performed therein (excluding the conflict of laws rules).

[signature page follows]

 

 

 

 

                IN WITNESS WHEREOF, each of the undersigned parties has executed
or caused this Amendment to be executed on the date first above written.

 

INTER-TEL, INCORPORATED

 

By:

 

 

 

 

Name:

Title:

 

 

 

 

 

 

 

 

 

STEVEN G. MIHAYLO

 

 

 

 

 

 

SUMMIT GROWTH MANAGEMENT LLC

 

By:

 

 

 

 

Name: Steven G. Mihaylo

Title: Managing Member