Document:

exv10w65

 

Exhibit 10.65

INTER-TEL, INCORPORATED

NON-EMPLOYEE DIRECTOR NON-QUALIFED DEFERRED COMPENSATION PLAN

 

 

PREAMBLE

     This Inter-Tel, Incorporated Non-Employee Director Non-Qualified Deferred Compensation Plan is
adopted by Inter-Tel, Incorporated for the benefit of non-employee members of its Board of
Directors, effective as of October 14, 2005 (the “Effective Date”). The purpose of the Plan is to
provide supplemental retirement income and to permit eligible Participants the option to defer
receipt of Compensation, pursuant to the terms of the Plan. The Plan is intended to be an unfunded
deferred compensation plan maintained for the benefit of a select group of management under
sections 201(2), 301(a)(3) and 401(a)(1) of ERISA and is intended to comply with Section 409A of
the Internal Revenue Code. Participants shall have the status of unsecured creditors of Inter-Tel,
Incorporated with respect to the payment of Plan benefits.

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	ARTICLE I Definitions
	 	 	1	 
	1.1 Definitions
	 	 	1	 
	 
	 	 	 	 
	ARTICLE II Participation
	 	 	3	 
	 
	 	 	 	 
	2.1 Date of Participation
	 	 	3	 
	2.2 Resumption of Participation Following Return to Service.
	 	 	3	 
	2.3 Change in Non-Employee Director Status
	 	 	3	 
	 
	 	 	 	 
	ARTICLE III Contributions
	 	 	3	 
	 
	 	 	 	 
	3.1 Deferral Contributions
	 	 	3	 
	3.2 Accounts
	 	 	4	 
	3.3 Cancellation of Elections Due to Unforeseeable Emergency Distribution
	 	 	4	 
	 
	 	 	 	 
	ARTICLE IV Participants’ Accounts
	 	 	4	 
	 
	 	 	 	 
	4.1 Individual Accounts
	 	 	4	 
	4.2 Accounting for Distributions
	 	 	4	 
	4.3 Separate Accounts
	 	 	4	 
	 
	 	 	 	 
	ARTICLE V Non-Investment of Contributions
	 	 	4	 
	 
	 	 	 	 
	ARTICLE VI Distributions
	 	 	5	 
	 
	 	 	 	 
	6.1 Distributions to Participants and Beneficiaries
	 	 	5	 
	6.2 Unforeseeable Emergency Distributions
	 	 	6	 
	6.3 Scheduled In-Service Distribution
	 	 	6	 
	6.4 Death
	 	 	6	 
	6.5 Time of Distribution
	 	 	6	 
	6.6 Limitation on Distributions to Covered Employees Prior to a Change of Control
	 	 	6	 
	6.7 Domestic Relations Order Distributions
	 	 	7	 
	6.8 Tax Withholding
	 	 	7	 
	 
	 	 	 	 
	ARTICLE VII Special Change of Control Provisions
	 	 	7	 
	 
	 	 	 	 
	7.1 No New Participants Following Change of Control
	 	 	7	 
	7.2 No Deferrals Following a Change of Control
	 	 	7	 
	 
	 	 	 	 
	ARTICLE VIII Amendment and Termination
	 	 	7	 
	 
	 	 	 	 
	8.1 Amendment by Company
	 	 	7	 
	8.2 Retroactive Amendments
	 	 	7	 
	8.3 Plan Deferral Termination
	 	 	8	 
	8.4 Distribution upon Termination of the Plan
	 	 	8	 

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TABLE OF
CONTENTS

	 	 	 	 	 
	 	 	Page	 
	ARTICLE IX Miscellaneous
	 	 	8	 
	 
	 	 	 	 
	9.1 Limitation of Rights
	 	 	8	 
	9.2 Nontransferability; Domestic Relations Orders
	 	 	8	 
	9.3 Facility of Payment
	 	 	8	 
	9.4 Governing Law
	 	 	8	 
	 
	 	 	 	 
	ARTICLE X Plan Administration
	 	 	9	 
	 
	 	 	 	 
	10.1 Powers and responsibilities of the Administrator
	 	 	9	 
	10.2 Nondiscriminatory Exercise of Authority
	 	 	9	 
	10.3 Claims and Review Procedures
	 	 	9	 
	10.4 Exhaustion of Claims Procedure and Right to Bring Legal Claim
	 	 	13	 
	10.5 Plan’s Administrative Costs
	 	 	13	 

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ARTICLE I

Definitions

     1.1 Definitions. Wherever used herein, the following terms have the meanings set
forth below, unless a different meaning is clearly required by the context:

          (a) “Account” means an account established on the books of the Company for the purpose
of recording amounts credited or debited on behalf of a Participant.

          (b) “Administrator” means the Company, or the Committee, if one has been designated by
such Company.

          (c) “Beneficiary” means the person or persons entitled under Section 6.4 to receive
benefits under the Plan upon the death of a Participant.

          (d) “Change of Control” means a change in ownership or effective control of the
Company or in the ownership of a substantial portion of the Company’s assets, as defined in the
most recent version of proposed or final Treasury regulations promulgated under Code Section 409A.

          (e) “Code” means the Internal Revenue Code of 1986, as amended from time to time.

          (f) “Committee” means the Compensation Committee of the Board of Directors. The
Compensation Committee shall interpret and administer this Plan and take such other actions as may
be specified herein.

          (g) “Company” means Inter-Tel, Incorporated and any successors and assigns unless
otherwise provided herein.

          (h) “Compensation” means all cash retainers and stipends and cash Board or committee
meeting fees, excluding expense reimbursements.

          (i) “Deferral Contributions” means, for each Participant, the amount deferred pursuant
to Section 3.1 hereof.

          (j) “Disability” means the Participant is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a continuous period of not less than
twelve (12) months.

          (k) “Domestic Relations Order” means a court order that qualifies as a domestic
relations order under Code Section 414(p)(1)(B).

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          (l) “Eligible Participant” means any Non-Employee Director.

          (m) “Entry Date” means January 1 or, for new Non-Employee Directors who are Eligible
Participants for the first time, the first day of the next Company fiscal quarter following their
becoming a Non-Employee Director; provided, however, that such new Non-Employee Director’s deferral
election must be submitted no later than 30 days following their becoming a newly eligible
Non-Employee Director.

          (n) “ERISA” means the Employee Retirement Income Security Act of 1974, as from time to
time amended.

          (o) “Non-Employee Director” means a member of the Board whom is not an Employee.

          (p) “Participant” means any Director or beneficiary thereof who participates in the
Plan in accordance with Article 2 hereof.

          (q) “Plan” means this Inter-Tel, Incorporated Non-Employee Director Non-Qualified
Deferred Compensation Plan.

          (r) “Plan Year” means the 12-consecutive month period beginning January 1 and ending
December 31.

          (s) “Separation from Service” means a separation from service as defined in the most
recent version of proposed or final Treasury regulations promulgated under Code Section 409A.

          (t) “Specified Employee” means a “key employee” as such term is defined in Code
Section 416(i) without regard to paragraph five (5) thereof. As of the Plan effective date, this
generally includes (i) the top fifty (50) Company officers making more than $130,000 per year, (ii)
a 5% owner of the Company, or (iii) a 1% owner of the Company making more than $150,000 per year.
The determination of whom is a Specified Employee shall be made on December 31 of each year and
shall be effective on the following April 1.

          (u) “Trading Day” means a day upon which the major U.S. national stock exchanges are
open for trading.

          (v) “Unforeseeable Emergency” means a severe financial hardship to Participant
resulting from an illness or accident of Participant, the Participant’s spouse or a dependent of
Participant (as defined in Section 152(a) of the Code), loss of Participant’s property due to
casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of Participant.

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ARTICLE II

Participation

     2.1 Date of Participation. Each Eligible Participant shall be become a Participant as
of the Entry Date next following their timely filing of an election to defer Compensation in
accordance with Sectio0n 3.1.

     2.2 Resumption of Participation Following Return to Service. If an Eligible
Participant ceases to be such by virtue of ceasing to be a Non-Employee Director and thereafter
returns as a Non-Employee Director he or she will again become an Eligible Participant as of the
Entry Date following the date on which he or she re-commences service with the Company, provided he
or she is an Eligible Participant and has timely filed an election to defer Compensation pursuant
to Section 3.1.

     2.3 Change in Non-Employee Director Status. If any Participant becomes employed by
the Company, then he or she shall continue to be a Participant until the entire amount of his or
her benefit is distributed; provided, however, that the individual shall not be entitled to make
Deferral Contributions during the period that he or she is not an Eligible Participant. In the
event that the individual subsequently again becomes an Eligible Participant, the individual shall
resume full participation in accordance with Section 3.1.

ARTICLE III

Contributions

3.1 Deferral Contributions.

          (a) Annual Open Enrollment. Prior to the beginning of each Plan Year, each Eligible
Participant may elect to execute a compensation reduction agreement with the Company to reduce his
Compensation by a specified percentage not exceeding 100% of their Compensation. Such agreement
shall become irrevocable as of the last day of the calendar year in which it is made and shall be
effective on the first day of service in the following Plan Year. Except with respect to Board
Compensation payout periods that cross over from one calendar year to the next, the election shall
not be effective with respect to Compensation relating to services already performed. An election
once made will remain in effect for Board paydays falling in the duration of the Plan Year.
Amounts credited to a Participant’s Account prior to the effective date of any new election will
not be affected and will be paid in accordance with that prior election.

          (b) Newly Eligible Participants. The same rules as in Section 3.1(a) above shall also
apply to individuals who become Eligible Participants for the first time, except (i) such new
Eligible Participants shall have no more than thirty (30) days following their becoming eligible in
which to elect to have their Compensation reduced, and (ii) the agreement shall become effective

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with the first day of service following the receipt of their election by the Company. Non-Employee
Directors may not, however, defer quarterly fees payable on account of the Company’s fiscal quarter
in which the election is made.

          (c) Year-End Cross-Over Payroll Periods. Board Compensation paydays relating to
periods of service that cross-over the calendar year end shall be covered by the Participant’s
deferral election in effect for the later year, consistently with the default rules under Proposed
Treasury Regulation §1.409A-2(a)(11) or subsequent IRS guidance.

     3.2 Accounts. The Company shall credit an amount to the Account maintained on behalf
of the Participant corresponding to the amount of said reduction. Under no circumstances may an
election to defer Compensation be adopted retroactively. A Participant may not revoke an election
to defer Compensation for a Plan Year during that year.

     3.3 Cancellation of Elections Due to Unforeseeable Emergency Distribution. A
Participant’s deferral election shall be automatically cancelled in the event the Participant
obtains an unforeseeable emergency distribution from the Plan pursuant to Section 6.2 hereof. The
Participant, if still an Eligible Participant, may re-enroll in the Plan in the next open
enrollment period.

ARTICLE IV

Participants’ Accounts

     4.1 Individual Accounts. The Administrator will establish and maintain an Account for
each Participant which will reflect Deferral Contributions credited to the Account on behalf of the
Participant.

     4.2 Accounting for Distributions. As of any date of a distribution to a Participant
or a Beneficiary hereunder, the distribution to the Participant or to the Participant’s
Beneficiary(ies) shall be charged to the Participant’s Account.

     4.3 Separate Accounts. A separate account under the Plan shall established and maintained to reflect the Account
for each Participant.

ARTICLE V

Non-Investment of Contributions

     All amounts credited to the Accounts of Participants shall reflect the amount of deferred
Compensation only. Participants shall not be permitted to invest their accounts in any real or
phantom investments. Accordingly, Participant’s accounts will only be adjusted to reflect
Compensation deferrals and distributions.

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ARTICLE VI

Distributions

     6.1 Distributions to Participants and Beneficiaries.

          (a) Earliest Distributions

               (i) Regular Participants. In no event may a Participant’s account be distributed
earlier than (i) the Participant’s Separation From Service, (ii) the Participant’s Disability,
(iii) the Participant’s death, (iv) a specified time under Section 6.3 hereunder, (v) a Change in
Control, (vi) the occurrence of an Unforeseeable Emergency, or (vii) to a former spouse of a
Participant pursuant to a Domestic Relations Order.

               (ii) Specified Employee Participants. In no event may a Specified Employee’s account
be distributed earlier than (i) six (6) months following the Specified Employee’s Separation From
Service (or if earlier, the Specified Employee’s death), (ii) the Specified Employee’s Disability,
(iii) the Specified Employee’s death, (iv) a specified time under Section 6.3 hereunder, (v) a
Change in Control, or (vi) the occurrence of an Unforeseeable Emergency. In the event a Specified
Employee’s Plan distributions are delayed due to the six-month delay requirement, the amounts
otherwise payable to the Specified Employee during such period of delay shall be paid on the date
that is six months and one day following Separation From Service (or, if earlier, upon the death of
the Specified Employee). The Participant’s other scheduled distributions, if any, shall not be
affected by the period of delay.

          (b) Lump-Sum Payments. All distributions from the Plan shall be in the form of a lump
sum cash payment.

          (c) Subsequent Election to Delay or Change Form of Payment. A Participant’s initial
election to receive a distribution may be delayed by filing an election, in the form required by
the Administrator, at least one year in advance of the date upon which any distribution would
otherwise have been made pursuant to the prior election. Such election shall not be effective for
a period of one (1) year, and must delay the initial payment by a period of at least five (5)
years, but may not result in the initial payment occurring more than then ten (10) years following
Separation From Service. In the absence of such timely filed election, the value of such
Participant’s Account shall be distributed in accordance with their previously timely filed Account
election.

          (d) Lump-Sum Distribution Timing. For Participants receiving a lump-sum distribution,
the value of their Account (or portion thereof specified in the Participant’s election) shall be
paid in a lump-sum cash payment in the same calendar year as their triggering distribution event,
or, for Specified Employees (or their estates or beneficiaries), if later, six months and one day
after the date upon which they incur a Separation From Service or, if earlier, upon their death.

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     6.2 Unforeseeable Emergency Distributions. With the consent of the Administrator, a
Participant may withdraw up to one hundred percent (100%) of his or her Account as may be required
to meet a sudden Unforeseeable Emergency of the Participant. Such distribution may only be made if
the amounts distributed with respect to an Unforeseeable Emergency may not exceed the amounts
necessary to satisfy such emergency plus amounts necessary to pay taxes reasonably anticipated as a
result of the distribution, after taking into account the extent to which such hardship is or may
be relieved through reimbursement or compensation by insurance or otherwise or by liquidation of
the Participant’s assets (to the extent the liquidation of such assets would not itself cause
severe financial hardship).

     6.3 Scheduled In-Service Distribution. A Participant may elect, as provided in his or
her Participant deferral election, to receive one or more scheduled in-service (i.e., commencing
while serving as a Board member) distributions from their Account balance. Such in-service
distributions may only be for years following the end of the calendar year to which the deferrals
relate. Each scheduled in-service distribution may only be changed or postponed in accordance with
Section 6.1(c) hereof. In the event a Participant incurs a Separation From Service prior to
receiving a scheduled in-service payment, then the scheduled in-service distribution election shall
remain in full force and effect.

     6.4 Death. Except with respect to certain in-service distributions as provided below,
if a Participant dies, his or her designated Beneficiary or Beneficiaries will receive the balance
of his or her Account in a lump-sum. Distribution to the Beneficiary or Beneficiaries will be made
as soon as administratively practical in the month following the Administrator’s receipt of
satisfactory proof of the Participant’s death.

     A Participant may designate a Beneficiary or Beneficiaries, or change any prior designation of
Beneficiary or Beneficiaries by giving notice to the Administrator on a form designated by the
Administrator (spousal consent to such change may be required on the form designated by the
Administrator). If more than one person is designated as the Beneficiary, their respective
interests shall be as indicated on the designation form.

     If upon the death of the Participant there is, in the opinion of the Administrator, no
designated Beneficiary for part or all of the Participant’s Account, the amount as to which there
is no designated Beneficiary will be paid to his or her surviving spouse or, if none, to his or her
estate (such spouse or estate shall be deemed to be the Beneficiary for purposes of the Plan) as
soon as is practicable.

     6.5 Time of Distribution. In no event will distribution to a Participant be made
later than the date specified by the Participant in his or her election to defer Compensation;
provided, however, that if a Participant becomes a Specified Employee, his or her election shall be
subject to the six (6) month distribution delay requirements of the Plan and Code Section 409A.

     6.6 Limitation on Distributions to Covered Employees Prior to a Change of Control.
Notwithstanding any other provision of this Article VI, in the event that, prior to a Change of
Control, the Participant is a “covered employee” as that term is defined in Section 162(m)(3) of
the

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Code, or would be a covered employee if his or her Account were distributed in accordance with
his or her election, and the Administrator reasonably anticipates that Participant’s scheduled Plan
distributions would cause the Company to forego an income tax deduction with respect to such
distribution by virtue of Code Section 162(m), then such Participant’s distributions shall be
delayed until the earlier of (i) the earliest date at which the Administrator reasonably
anticipates that the Company’s deduction related to the distribution will not be limited by virtue
of Code Section 162(m), or (ii) the calendar year in which the Participant undergoes a Separation
From Service, subject to complying with any six (6) month distribution delay requirements of this
Plan and Code Section 409A.

     6.7 Domestic Relations Order Distributions. A payment to the former spouse of a
Participant may be accelerated as necessary to comply with the terms of a Domestic Relations Order.

     6.8 Tax Withholding. Payments under this Article VI shall be subject to all
applicable withholding requirements for state and federal income taxes and to any other federal,
state or local taxes that may be applicable to such payments.

ARTICLE VII

Special Change of Control Provisions

     7.1 No New Participants Following Change of Control. No individual may commence
participation in the Plan following a Change of Control.

     7.2 No Deferrals Following a Change of Control. Deferrals shall cease as of the date
of a Change of Control.

ARTICLE VIII

Amendment and Termination

     8.1 Amendment by Company. The Company reserves the authority to amend the Plan. Any
such change notwithstanding, no Participant’s Account shall be reduced by such change below the
amount to which the Participant would have been entitled if he had voluntarily left the employ of
the Company immediately prior to the date of the change. The Company may from time to time make
any amendment to the Plan that may be necessary to satisfy Code Section 409A or ERISA.

     8.2 Retroactive Amendments. An amendment made by the Company in accordance with
Section 8.1 may be made effective on a date prior to the first day of the Plan Year in which it is
adopted if such amendment is necessary or approprite to enable the
Plan to satisfy the
applicable requirements of Code Section 409A or ERISA or to conform the Plan to any change in
federal law or to any regulations or rulings thereunder.

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     8.3 Plan Deferral Termination. The Company has adopted the Plan with the intention
and expectation that deferrals will be permitted indefinitely. However, the Company has no
obligation to maintain the Plan for any length of time and may discontinue future Compensation
deferrals under the Plan in advance of any Plan Year by written notice delivered to Eligible
Participants without any liability for any such discontinuance.

     8.4 Distribution upon Termination of the Plan. Upon termination of the Plan, no
further Deferral Contributions or Company Contributions shall be made under the Plan, but Accounts
of Participants maintained under the Plan at the time of
termination shall continue to be governed by the terms of the Plan until paid out in
accordance with the terms of the Plan, Participants’ deferral elections and the requirements of
Code Section 409A.

ARTICLE IX

Miscellaneous

     9.1 Limitation of Rights. Neither the establishment of the Plan, nor any amendment
thereof, nor the creation of any fund or account, nor the payment of any benefits, will be
construed as giving to any Participant or other person any legal or equitable right against the
Company, Administrator, except as provided herein; and in no event will the terms of employment or
service of any Participant be modified or in any way affected hereby

     9.2 Nontransferability; Domestic Relations Orders. The right of any Participant, any
Beneficiary, or any other person to the payment of any benefits under this Plan shall not be
assigned, transferred, pledged or encumbered; provided, however, that a Deferral Account hereunder
may be transferred to a Participant’s former spouse pursuant to a Domestic Relations Order.

     9.3 Facility of Payment. In the event the Administrator determines, on the basis
of medical reports or other evidence satisfactory to the Administrator, that the recipient of any
benefit payments under the Plan is incapable of handling his affairs by reason of minority,
illness, infirmity or other incapacity, the Administrator may disburse such payments to a person or
institution designated by a court which has jurisdiction over such recipient or a person or
institution otherwise having the legal authority under State law for the care and control of such
recipient. The receipt by such person or institution of any such payments therefore, and any such
payment to the extent thereof, shall discharge the liability of the Company for the payment of
benefits hereunder to such recipient.

     9.4 Governing Law. The Plan will be construed, administered and enforced according to
ERISA, and to the extent not preempted thereby, the laws of the state of California.

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ARTICLE X

Plan Administration

     10.1 Powers and responsibilities of the Administrator. The Administrator has the full power and the full responsibility to administer the Plan in
all of its details, subject, however, to the applicable requirements of ERISA. The Administrator’s
powers and responsibilities include, but are not limited to, the following:

          (a) To make and enforce such rules and regulations as it deems necessary or proper for the
efficient administration of the Plan;

          (b) The discretionary authority to construe and interpret the Plan, its interpretation thereof
in good faith to be final and conclusive on all persons claiming benefits under the Plan;

          (c) To decide all questions concerning the Plan and the eligibility of any person to
participate in the Plan;

          (d) To administer the claims and review procedures specified in Section 10.3;

          (e) To compute the amount of benefits which will be payable to any Participant, former
Participant or Beneficiary in accordance with the provisions of the Plan;

          (f) To determine the person or persons to whom such benefits will be paid;

          (g) To authorize the payment of benefits;

          (h) To appoint such agents, counsel, accountants, and consultants as may be required to assist
in administering the Plan;

          (i) By written instrument, to allocate and delegate its responsibilities.

     10.2 Nondiscriminatory Exercise of Authority. Whenever, in the administration of the
Plan, any discretionary action by the Administrator is required, the Administrator shall exercise
its authority in a nondiscriminatory manner so that all persons similarly situated will receive
substantially the same treatment.

     10.3 Claims and Review Procedures.

          (a) Purpose. Every Participant or Beneficiary (or his or her representative who is
authorized in writing by the Claimant to act on his or her behalf) (hereinafter collectively,
“Claimant”) shall be entitled to file with the Administrator (and subsequently with the
individual(s) designated to review claims appealed after being initially denied by the
Administrator (the “Review Panel”)) a written claim for benefits under the Plan. The Administrator
and Review Panel shall each be able to establish such rules, policies and procedures, consistent
with ERISA and the Plan, as it

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may deem necessary or appropriate in carrying out its duties and
responsibilities under this Section 10.3. In the case of a denial of the claim, the Administrator
or Review Panel, as applicable, shall
provide the Claimant with a written or electronic notification that complies with Department
of Labor Regulation Section 2520.104b-1(c)(1).

          (b) Denial of Claim. If a claim is denied by the Administrator (or its authorized
representative), in whole or in part, then the Claimant shall be furnished with a denial notice
that shall contain the following:

               (i) specific reason(s) for the denial;

               (ii) reference to the specific Plan provision(s) on which the denial is based;

               (iii) a description of any additional material or information necessary for the Claimant to
perfect the claim, and an explanation of why the material or information is necessary; and

               (iv) an explanation of the Plan’s claims review procedure and the time limits applicable to
such procedures, including a statement of the Claimant’s right to bring a civil action under ERISA
Section 502(a) following a denial on review (as set forth in Section 10.4 below).

The denial notice shall be furnished to the Claimant no later than ninety (90)-days after receipt
of the claim by the Administrator, unless the Administrator determines that special circumstances
require an extension of time for processing the claim. If the Administrator determines that an
extension of time for processing is required, then notice of the extension shall be furnished to
the Claimant prior to the termination of the initial ninety (90)-day period. In no event shall
such extension exceed a period of ninety (90)-days from the end of such initial period. The
extension notice shall indicate the special circumstances requiring an extension of time and the
date by which the Plan expects to render the benefits determination.

          (c) Claim Review Procedure. The Claimant may request review of the denial at any time
within sixty (60) days following the date the Claimant received notice of the denial of his or her
claim. The Administrator shall afford the Claimant a full and fair review of the decision denying
the claim and, if so requested, shall:

               (i) provide the Claimant with the opportunity to submit written comments, documents, records
and other information relating to the claim for benefits;

               (ii) provide that the Claimant shall be provided, upon request and free of charge, reasonable
access to, and copies of, all documents, records and other information (other than documents,
records and other information that is legally-privileged) relevant to the Claimant’s claim for
benefits; and

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               (iii) provide for a review that takes into account all comments, documents, records and other
information submitted by the Claimant relating to the claim, without regard to whether such
information was submitted or considered in the initial benefit determination.

               (iv) If the claim is subsequently also denied by the Review Panel, in whole or in part, then
the Claimant shall be furnished with a denial notice that shall contain the following:

               1) specific reason(s) for the denial;

               2) reference to the specific Plan provision(s) on which the denial is based; and

               3) an explanation of the Plan’s claims review procedure and the time limits
applicable to such procedures, including a statement of the Claimant’s right to bring a
civil action under ERISA Section 502(a) following the denial on review.

               (v) The decision on review shall be issued within sixty (60) days following receipt of the
request for review. The period for decision may, however, be extended up to one hundred twenty
(120) days after such receipt if the Review Panel determines that special circumstances require
extension. In the case of an extension, notice of the extension shall be furnished to the Claimant
prior to the expiration of the initial sixty (60)-day period. In no event shall such extension
exceed a period of sixty (60) days from the end of such initial period. The extension notice shall
indicate the special circumstances requiring an extension of time and the date by which the Plan
expects to render the benefits determination.

          (d) Special Procedure for Claims Due to Disability. To the extent an application for
distribution as a result of a Disability requires the Administrator or the Review Panel, as
applicable, to make a determination of Disability under the terms of the Plan, then such
determination shall be subject to all of the general rules described in this Article, except as
they are expressly modified by this Section.

               (i) The initial decision on the claim for a Disability distribution will be made within
forty-five (45) days after the Plan receives the Claimant’s claim, unless special circumstances
require additional time, in which case the Administrator will notify the Claimant before the end of
the initial forty-five (45)-day period of an extension of up to thirty (30) days. If necessary,
the Administrator may notify the Claimant, prior to the end of the initial thirty (30)-day
extension period, of a second extension of up to thirty (30) days. If an extension is due to the
Claimant’s failure to supply the necessary information, then the notice of extension will describe
the additional information and the Claimant will have forty-five (45) days to provide the
additional information. Moreover, the period for making the determination will be delayed from the
date the notification of extension was sent out until the Claimant responds to the request for
additional information. No additional extensions may be made, except with the Claimant’s voluntary
consent. The contents of the notice shall be the same as described in Section 10.3(b) above. If a
disability distribution claim is denied in whole or in part, then the Claimant will receive
notification, as described in Section 10.3(b).

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               (ii) If an internal rule, guideline, protocol or similar criterion is relied upon in making
the adverse determination, then the denial notice to the Claimant will either set forth the
internal rule, guideline, protocol or similar criterion, or will state that such was relied upon
and will
be provided free of charge to the Claimant upon request (to the extent not legally-privileged)
and if the Claimant’s claim was denied based on a medical necessity or experimental treatment or
similar exclusion or limit, then the Claimant will be provided a statement either explaining the
decision or indicating that an explanation will be provided to the Claimant free of charge upon
request.

               (iii) Any Claimant whose application for a Disability distribution is denied in whole or in
part, may appeal the denial by submitting to the Review Panel a request for a review of the
application within one hundred and eighty (180) days after receiving notice of the denial. The
request for review shall be in the form and manner prescribed by the Review Panel. In the event of
such an appeal for review, the provisions of Section 10.3(c) regarding the Claimant’s rights and
responsibilities shall apply. Upon request, the Review Panel will identify any medical or
vocational expert whose advice was obtained on behalf of the Review Panel in connection with the
denial, without regard to whether the advice was relied upon in making the determination. The
entity or individual appointed by the Review Panel to review the claim will consider the appeal
de novo, without any deference to the initial denial. The review will not include any
person who participated in the initial denial or who is the subordinate of a person who
participated in the initial denial.

               (iv) If the initial Disability distribution denial was based in whole or in part on a medical
judgment, then the Review Panel will consult with a health care professional who has appropriate
training and experience in the field of medicine involved in the medical judgment, and who was
neither consulted in connection with the initial determination nor is the subordinate of any person
who was consulted in connection with that determination; and upon notifying the Claimant of an
adverse determination on review, include in the notice either an explanation of the clinical basis
for the determination, applying the terms of the Plan to the Claimant’s medical circumstances, or a
statement that such explanation will be provided free of charge upon request.

               (v) A decision on review shall be made promptly, but not later than forty-five (45) days after
receipt of a request for review, unless special circumstances require an extension of time for
processing. If an extension is required, the Claimant will be notified before the end of the
initial forty-five (45)-day period that an extension of time is required and the anticipated date
that the review will be completed. A decision will be given as soon as possible, but not later
than ninety (90) days after receipt of a request for review. The Review Panel shall give notice of
its decision to the Claimant; such notice shall comply with the requirements set forth in paragraph
(h) above. In addition, if the Claimant’s claim was denied based on a medical necessity or
experimental treatment or similar exclusion, then the Claimant will be provided a statement
explaining the decision, or a statement providing that such explanation will be furnished to the
Claimant free of charge upon request. The notice shall also contain the following statement: “You
and your Plan may have other voluntary alternative dispute resolution options, such as mediation.
One way to find out what may be available is to contact your local U.S. Department of Labor Office
and your State insurance regulatory agency.”

- 12 -

 

     10.4 Exhaustion of Claims Procedure and Right to Bring Legal Claim. No action in law
or equity shall be brought more than one (1) year after the Review Panel’s affirmation of a denial
of the claim, or, if earlier, more than four (4) years after the facts or events giving rise to the
Claimant’s allegation(s) or claim(s) first occurred.

     10.5 Plan’s Administrative Costs. The Company shall pay all reasonable costs and
expenses (including legal, accounting, and Participant communication fees) incurred by the
Administrator administering the Plan.

- 13 -

 

     IN WITNESS WHEREOF, the Company by its duly authorized officer(s), has caused this Plan to be
adopted effective October 14, 2005.

	 	 	 	 	 	 	 
	 	 	INTER-TEL, INCORPORATED	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 

- 14 -exv10w12

 

EXHIBIT 10.12

SECOND
AMENDMENT TO CREDIT AGREEMENT

     THIS
AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is entered
into as of March 15, 2006, by and between HYPERCOM CORPORATION, a
Delaware corporation (“Borrower”), and WELLS FARGO BANK,
NATIONAL ASSOCIATION (“Bank”).

RECITALS

     WHEREAS,
Borrower is currently indebted to Bank pursuant to the terms and
conditions of that certain Credit Agreement between Borrower and Bank
dated as of January 31, 2005, as amended from time to time
(“Credit Agreement”).

     WHEREAS,
Bank and Borrower have agreed to certain changes in the terms and
conditions set forth in the Credit Agreement and have agreed to amend
the Credit Agreement to reflect said changes.

     NOW,
THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree that the
Credit Agreement shall be amended as follows:

     1.  Section
1.1. (a) is hereby amended (a) by deleting “July 31,
2006” as the last day on which Bank will make advances under the
Line of Credit, and by substituting for said date
“March 31, 2008,” and (b) by deleting “Ten Million
Dollars ($10,000,000.00)” as the maximum principal amount
available under the Line of Credit, and by substituting for said
amount “Five Million Dollars ($5,000,000.00),” with such
changes to be effective upon the execution and delivery to Bank of a
promissory note dated as of March 1, 2006 (which promissory note
shall replace and be deemed the Line of Credit Note defined in and
made pursuant to the Credit Agreement) and all other contracts,
instruments and documents required by Bank to evidence such change.

     2.  Section
1.1. (b) is hereby deleted in its entirety, and the following
substituted therefor:

“(b)   Letter of Credit Subfeature.  As a subfeature under the Line
of Credit, Bank agrees from time to time during the term thereof to
issue or cause an affiliate to issue commercial and/or standby
letters of credit for the account of Borrower (each, a “Letter
of Credit” and collectively, “Letters of Credit”);
provided however, that the aggregate undrawn amount of all
outstanding Letters of Credit shall not at any time exceed Four
Million Dollars ($4,000,000.00). The form and substance of each
Letter of Credit shall be subject to approval by Bank, in its sole
discretion. No Letter of Credit shall have an expiration date
subsequent to the maturity date of the Line of Credit. The undrawn
amount of all Letters of Credit shall be reserved under the Line of
Credit and shall not be available for borrowings thereunder. Each
Letter of Credit shall be subject to the additional terms and
conditions of the Letter of Credit agreements, applications and any
related documents required by Bank in connection with the issuance
thereof. Each drawing paid under a Letter of Credit shall be deemed
an advance under the Line of Credit and shall be repaid

-1-

 

by Borrower
in accordance with the terms and conditions of this Agreement
applicable to such advances; provided however, that if advances
under the Line of Credit are not available, for any reason, at the
time any drawing is paid, then Borrower shall immediately pay to Bank
the full amount drawn, together with interest thereon from the date
such drawing is paid to the date such amount is fully repaid by
Borrower, at the rate of interest applicable to advances under the
Line of Credit. In such event Borrower agrees that Bank, in its sole
discretion, may debit any account maintained by Borrower with Bank
for the amount of any such drawing.”

     3.  The following is hereby added to the Credit Agreement as Section 3.2.
(c):

“(a)   Additional Letter of Credit Documentation. Prior to the
issuance of each Letter of Credit, Bank shall have received a Letter
of Credit Agreement, properly completed and duly executed by
Borrower.”

     4.  Section 4.9.
(a) is hereby deleted in its entirety, and the
following substituted therefor:

“(a)   Tangible Net Worth not less than $150,000,000.00 at any time, with
“Tangible Net Worth” defined as the aggregate of total
stockholders’ equity plus subordinated debt less any intangible
assets.”

     5.  Except as specifically provided herein, all terms and conditions of
the Credit Agreement remain in full force and effect, without waiver
or modification. All terms defined in the Credit Agreement shall have
the same meaning when used in this Amendment. This Amendment and the
Credit Agreement shall be read together, as one document.

     6.  Borrower hereby remakes all representations and warranties contained
in the Credit Agreement and reaffirms all covenants set forth
therein. Borrower further certifies that as of the date of this
Amendment there exists no Event of Default as defined in the Credit
Agreement, nor any condition, act or event which with the giving of
notice or the passage of time or both would constitute any such Event
of Default.

     IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the day and year first written above.

	 	 	 	 	 
	HYPERCOM CORPORATION	 	WELLS FARGO BANK, NATIONAL ASSOCIATION
	 	 	 	 	 
	By:	/s/ Scott Tsujita	 	By:	/s/ Jon Kenney
	 	 
Scott
Tsujita,
SVP-Finance, Treasury & Investor Relations	 	 	 
Jon
Kenney,
Vice President

-2-

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