Document:

exv10w2

 

Exhibit
10.2

CONFIDENTIALITY AGREEMENT

May __, 2006     

Steven G. Mihaylo

P.O. Box 19790

Reno, NV 89511

     In connection with your consideration of a possible acquisition of or business combination
with (the “Transaction”) Inter-Tel, Incorporated (the “Company”), we have agreed to provide to
each other and our respective Representatives (as defined below) certain non-public information
regarding the Company and you. In consideration of, and as a condition to, such information and
any other information (whether in oral or written form, electronically stored or otherwise) being
furnished to each of us or any of our affiliates, directors, officers, employees, advisors
(including, without limitation, financial advisors, financing sources, attorneys and accountants),
agents, representatives or “controlling persons” (within the meaning of the Securities Exchange
Act of 1934, as amended (the “1934 Act”)) who are actively and directly participating in the
evaluation of the proposed Transaction and the exchange of information (such persons for either
you or the Company being herein referred to collectively as “Representatives”) about either of us
or about any third party (which information was provided subject to an applicable confidentiality
obligation to such third party) in connection with the consideration of a Transaction (such
information, along with any such information previously provided, being herein referred to as
“Evaluation Material”), each of us agrees as follows:

	 	1.	 	Each of us and our respective Representatives (i) will use the Evaluation
Material solely for the purpose of evaluating a possible Transaction with the Company
involving you or your affiliates and (ii) will keep the Evaluation Material strictly
confidential and will not (except as required by applicable law, regulation or legal
process, and only after compliance with paragraph 3 below, or as otherwise provided in
this letter agreement), without the other’s prior written consent, disclose or reveal
any information in the Evaluation Material, except that the Evaluation Material (or
portions thereof) may be disclosed to those of our respective Representatives
(including our respective officers, directors, partners, employees, agents, related
investment funds, potential financing sources and advisors) who require access to such
information for the purpose of evaluating a possible Transaction with the Company (it
being understood that prior to such disclosure each of our Representatives will be
informed of the confidential nature of the Evaluation Material and each of our
Representatives (other than attorneys and members of the Company’s Board of Directors)
shall agree to be bound by this Agreement by signing an undertaking to the effect of
Annex A). Each of us agrees to be responsible for any breach of this Agreement
by our respective Representatives.

 

 

	 	2.	 	The term “Evaluation Material” does not include any information that (i) at
the time of disclosure or thereafter is generally known by the public (other than as a
result of its disclosure by the receiving party or its Representatives in breach of
this Agreement), (ii) was or becomes available to the receiving party on a
non-confidential basis from a person not known by the receiving party after reasonable
inquiry to be otherwise bound by a confidentiality agreement with the other party or
its Representatives or otherwise prohibited from transmitting the information to the
receiving party or (iii) was independently derived by the receiving party without aid,
application or use of any of the Evaluation Material. As used in this Agreement, the
term “person” shall be broadly interpreted to include, without limitation, any
corporation, company, joint venture, partnership or individual.
	 
	 	3.	 	In the event that either of us and/or any of our respective Representatives are
requested pursuant to, or required by, applicable law or regulation (including, without
limitation, any rule, regulation or policy statement of any national securities
exchange, market or automated quotation system) or by legal process to disclose any
Evaluation Material or any other information concerning the other or a possible
Transaction, the party receiving such request or legal process will provide the other
party with prompt written notice of such request or requirement in order to enable the
other party (i) to seek an appropriate protective order or other remedy with respect
thereto, (ii) to consult with the party receiving such request or legal process with
respect to taking steps to resist or narrow the scope of such request or legal process
or (iii) to waive compliance, in whole or in part, with the terms of this letter
agreement. In the event that such protective order or other remedy is not obtained, or
the other party waives compliance, in whole or in part, with the terms of this letter
agreement, the party receiving such request or legal process and its Representatives
shall use their respective reasonable best efforts (A) to disclose only that portion of
the Evaluation Material which is legally required to be disclosed and (B) to provide
that all Evaluation Material that is so disclosed will be accorded confidential
treatment to fullest extent available under applicable laws and regulations. In the
event that the party receiving such request or legal process and/or its Representatives
shall have complied fully with the provisions of this paragraph, then such party and
its Representatives shall have no liability hereunder for the disclosure of that
Evaluation Material which they are legally required to disclose.
	 
	 	4.	 	To the extent that any Evaluation Material may include material subject to the
attorney-client privilege, work product doctrine or any other applicable privilege
concerning pending or threatened legal proceedings or governmental investigations, the
parties understand and agree that they have a commonality of interest with respect to
such matters and it is their desire, intention and mutual understanding that the
sharing of such material is not intended to, and shall not, waive or diminish in any
way the confidentiality of such material or its continued protection under the
attorney-client privilege, work product doctrine or other applicable privilege. All
Evaluation Material provided by a party that is entitled to protection under the
attorney-client privilege, work product doctrine or other applicable privilege shall
remain entitled to such protection under these privileges, this agreement, and under
the joint defense doctrine. Nothing in this letter agreement obligates any party to
reveal material subject to the attorney-client privilege, work product doctrine or any
other applicable privilege.

 

 

	 	5.	 	Until the earlier of the consummation by you of a Transaction and one year from
the date of this Agreement, each of us agrees not to, directly or indirectly, solicit
for purposes of employment, offer to hire, entice away, or offer into any contract with
any senior or key employee of the other, or otherwise solicit, induce or otherwise
encourage any such person to discontinue, cancel or refrain from entering into any
relationship (contractual or otherwise) with the other (other than through: (a) a
general advertisement or other general solicitation not targeted to the Company’s
employees; or (b) through the unsolicited initiative of such employee) without the
other’s prior written consent.
	 
	 	6.	 	Unless otherwise agreed to by the other party in writing or as provided in
Section 4 of the Settlement Agreement (as defined below), all (i) communications
regarding any possible Transaction, (ii) requests for additional information, (iii)
requests for facility tours or management meetings, and (iv) discussions or questions
regarding procedures, will be submitted or directed to our respective financial
advisors, to be named in connection with a possible Transaction.
	 
	 	7.	 	In addition, each party hereby acknowledges that it is aware, and that it will
advise its respective Representatives who receive the Evaluation Material, that the
United States securities laws generally prohibit any person who has material,
non-public information concerning the matters which are the subject of this Agreement
from purchasing or selling securities of the Company (and options, warrants and rights
relating thereto) from communicating such information to any other person under
circumstances in which it is reasonably foreseeable that such person including, without
limitation any of our respective Representatives, is likely to purchase or sell such
securities.
	 
	 	8.	 	This Agreement does not constitute or create any obligation of either of us to
provide any Evaluation Material or other information to the other party, but merely
defines the duties and obligations of each of us and our respective Representatives
with respect to the Evaluation Material to the extent it may be disclosed or made
available. Notwithstanding the foregoing, the Company agrees to provide promptly to
you and your Representatives access to the information requested in good faith, in
order to facilitate the making of an acquisition proposal by you prior to June 15, 2006
as contemplated by Section 4 of the Settlement Agreement. Each of us understands and
acknowledges that neither of us nor any of our respective Representatives is making any
representation or warranty, express or implied, as to the accuracy or completeness of
the Evaluation Material or any other information provided by either of us to the other
or the other’s Representatives. Neither of us nor our respective affiliates or
Representatives, nor any of our respective officers, directors, employees, agents or
controlling persons (within the meaning of the 1934 Act) shall have any liability to
the other or any other person (including, without limitation, any of the other’s
Representatives) resulting from the use of the Evaluation Material. Each party agrees
that it is not entitled to rely on the accuracy or completeness of the Evaluation
Material and only those representations and warranties that may be made by either of us
or any of our respective affiliates in a definitive written agreement regarding a
Transaction, when, as and if executed and subject to the limitations and restrictions
as may be specified therein, shall have any legal effect, and each of us agrees that
any determination to engage in a Transaction will be based solely on the terms of such
written agreement and on our own respective investigation, analysis and assessment of
the other.
	 
	 	9.	 	Each of us agrees that unless and until a definitive agreement between the
Company

 

 

	 	 	 	and you with respect to any Transaction has been executed and delivered, neither party
hereto will be under any legal obligation of any kind whatsoever with respect to such
a Transaction by virtue of (i) this Agreement or (ii) any written or oral expression
with respect to such a Transaction by any of the other party’s directors, officers,
employees, agents, advisors or Representatives except, in the case of this letter, for
the matters specifically agreed to herein.
	 
	 	10.	 	You agree that the Company has not granted you any license, copyright, or
similar right with respect to any of the Evaluation Material or any other information
provided to you by the Company or any of its Representatives.
	 
	 	11.	 	If either party determines that it does not wish to proceed with the
Transaction, then such party will promptly advise the other party and its financial
advisors in writing of that decision (electronic mail shall suffice). In that case, or
in the event that (i) a Transaction is not consummated by you or (ii) at any time the
Company or you requests, the other party will promptly (a) return all of the Evaluation
Material, including all copies, reproductions, summaries, analyses or extracts thereof
or based thereon in such party’s possession or in the possession of any of its
Representatives or (b) destroy all Evaluation Material in such party’s possession or
in the possession of any of its Representatives (such destruction to be certified by
such party or its Representatives). Notwithstanding the return or destruction of
Evaluation Material, each party will continue to be bound by its obligations of
confidentiality and other obligations hereunder.
	 
	 	12.	 	Both parties acknowledge that remedies at law may be inadequate to protect
either party hereto against any actual or threatened breach of this Agreement and,
without prejudice to the rights and remedies otherwise available to the non-breaching
party, each party agrees to the granting of injunctive relief in the favor of the
non-breaching party without proof of irreparable harm or damages.
	 
	 	13.	 	The validity and interpretation of this Agreement 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
conflicts of laws rules).
	 
	 	14.	 	The benefits of this Agreement shall inure to the respective successors and
assigns of the parties hereto and of the indemnified parties hereunder and their
successors and assigns and Representatives, and the obligations and liabilities assumed
in this Agreement by the parties hereto shall be binding upon their respective
successors and assigns.
	 
	 	15.	 	If it is found in a final judgment by a court of competent jurisdiction (not
subject to further appeal) that any term or provision hereof is invalid or
unenforceable, (i) the remaining terms and provision hereof shall be unimpaired and
shall remain in full force and effect and (ii) the invalid or unenforceable provision
or term shall be replaced by a term or provision that is valid and enforceable and that
comes closest to expressing the intention of such invalid or unenforceable term or
provision.
	 
	 	16.	 	This Agreement and the Settlement Agreement among the Company, Summit Growth
Management LLC and you dated the date hereof (the “Settlement Agreement”) embody the
entire agreement and understanding of the parties hereto, and supersedes any and all
prior agreements, arrangements and understandings, relating to the matters provided for
herein. No alteration, waiver, amendment, change or supplement hereto shall be binding
or effective unless the same is set forth

 

 

	 	 	 	in writing signed by a duly authorized representative of each part and may be modified
or waived only by a separate letter executed by the Company and you expressly so
modifying or waiving such Agreement.
	 
	 	17.	 	For the convenience of the parties, any number of counterparts of this
Agreement may be executed by the parties hereto. 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 Agreement.
	 
	 	18.	 	All obligations under this Agreement shall terminate except to the extent
otherwise provided in this Agreement, the first anniversary of the date of this
Agreement.
	 
	 	19.	 	Notwithstanding any other provision of this Agreement, if the Company is or
hereafter becomes bound by a confidentiality or similar agreement with any other person
relating to a possible transaction that contains terms that are more favorable to such
other person than the terms of this Agreement are to you, then the Company shall
promptly notify you of such terms and this Agreement shall be deemed modified to
incorporate all such terms.

[signature page follows]

 

 

     This Agreement is being delivered to you in duplicate. Kindly execute and return one copy of
this letter which will constitute our Agreement with respect to the subject matter of this letter.

	 	 	 	 	 
	 	 	Very truly yours,
	 
	 	 	 	 
	 	 	INTER-TEL, INCORPORATED
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Alexander Cappello
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	Alexander Cappello,
	 	 	Chairman of the Board of Directors

Confirmed and Agreed to

this
5th day of May, 2006.

	 	 	 	 	 
	By:

	 	/s/ Steven G. Mihaylo
 

STEVEN G. MIHAYLO
	 	 

 

 

ANNEX A

          [date]

[PARTY]

Ladies and Gentlemen:

          Reference is made to the letter agreement, dated May ___, 2006 (the “Agreement”),
between Inter-Tel, Incorporated and Steven G. Mihaylo, a copy of which is attached hereto.

          The undersigned hereby acknowledges and agrees that it may come into possession of “Evaluation
Material” (as such term is defined in the Agreement) and, in consideration therefor, the
undersigned, in its capacity as a “Representative” (as such term is defined in the Agreement) of
[Inter-Tel, Incorporated/Steven G. Mihaylo], agrees to be bound by the Agreement in accordance with
its terms as though the undersigned were a party thereto. For the avoidance of doubt, references
to “you” or “your” in the Agreement will be deemed to be references to the undersigned.

	 	 	 	 	 
	 	 	Very truly yours,
	 
	 	 	 	 
	 	 	[REPRESENTATIVE]
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 	 	Title:exv10w3

 

     EXHIBIT
10.3

DIRECTOR COMPENSATION

On May 4, 2006, Inter-Tel, Incorporated revised its director compensation to add compensation
policies for the advisory committee to the Board of Directors. Inter-Tel’s complete director
compensation schedule is set forth below as so revised:

	 	 	 	 	 
	Description	 	Before 5/4/06	 	From 5/4/06
	Each regularly scheduled Board of Directors
meeting attended
	 	$2,000	 	$2,000
	 
	 	 
	Quarterly stipend for non-chairman committee
members
	 	6,000	 	6,000
	 
	 	 
	Quarterly stipend for compensation committee
chairman
	 	6,500	 	6,500
	 
	 	 
	Quarterly stipend for governance and
nominating committee chairman
	 	6,500	 	6,500
	 
	 	 
	Quarterly stipend for non-employee chairman
of the board of directors
	 	10,500	 	10,500
	 
	 	 
	Quarterly stipend for audit committee chairman
	 	10,500	 	10,500
	 
	 	 
	Each regularly scheduled compensation
committee meeting attended
	 	1,500	 	1,500
	 
	 	 
	Each regularly scheduled governance and
nominating committee meeting attended or any meeting of a subcommittee thereof
	 	1,500	 	1,500
	 
	 	 
	Each regularly scheduled audit committee
meeting attended
	 	2,000	 	2,000
	 
	 	 
	Each regularly scheduled or special advisory committee
meeting, or a subcommittee thereof, attended
	 	1,500	 	1,500
	 
	 	 
	Attendance at a regularly scheduled
 or special meeting of the advisory committee, or a
subcommittee thereof, by
non-member directors
	 	—	 	1,500
	 
	 	 
	Each regularly scheduled or special  meeting of a
special committee of the Board or a
subcommittee thereof attended
	 	1,500	 	1,500
	 
	 	 
	Each special meeting of the Board or
committee of the Board, including unanimous
written consents in lieu of board meetings
	 	2,000	 	2,000
	 
	 	 
	Expenses of attending Board and Committee
meetings
	 	As incurred	 	As incurred
	 
	 	 
	The Company
also allows each director to elect to participate in the health
benefit plans each year.
	 	Participation	 	Participation
	Directors
are offered participation in the same plans offered to
employees, subject to payment by
	 	offered in Company	 	offered in Company
	each
electing director at employee participant
rates, plus all applicable co-pays and/or
deductibles.
	 	plans	 	plans
	 
	 	 
	 
	 	50% of eligible	 	50% of eligible
	 
	 	tuition plus	 	tuition plus
	Director continuing education expenses.
	 	expenses	 	expenses
	 
	 	 
	Annual stock option grants to purchase shares
of Common Stock, pursuant to the Company’s
Director Stock Option Plan (as amended), at
the market price five (5) business days after
the date of the annual Board meeting
	 	7,500	 	7,500

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