UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 3)
Inter-Tel, Incorporated
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(Name of Issuer)
Common Stock
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(Title of Class of Securities)
458372109
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(CUSIP Number)
Steven G. Mihaylo
P.O. Box 19790
Reno, Nevada 89511
(775) 338-4699
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(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
Copies to:
Brian J. McCarthy, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue
Los Angeles, California 90071
(213) 687-5000
May 5, 2006
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(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box
[ ].
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See ss.240.13d-7 for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
CUSIP No. 458372 109
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1. Names of Reporting Persons. Steven G. Mihaylo
I.R.S. Identification Nos. of above persons (entities only).
Not applicable.
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2. Check the Appropriate Box if a Member of a Group (see Instructions)
(A) [___]
(B) [___]
Not applicable.
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3. SEC Use Only
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4. Source of Funds (see Instructions)
Not applicable.
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5. Check if Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e) [__]
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6. Citizenship or Place of Organization
United States of America
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Number of Shares 7. Sole Voting Power
Beneficially
Owned by Each 5,179,498
Reporting Person -------- ---------------------------------------------
With 8. Shared Voting Power
None
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9. Sole Dispositive Power
5,179,498
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10. Shared Dispositive Power
None
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11. Aggregate Amount Beneficially Owned by Each Reporting Person
5,179,498
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12. Check if the Aggregate Amount In Row (11) Excludes Certain Shares
(See Instructions) [__]
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13. Percent of Class Represented by Amount in Row 11
19.6%
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14. Type Of Reporting Person (See Instructions)
IN
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This Amendment No. 3 amends and supplements the Schedule 13D, dated March 3,
2006 (the "Original Schedule 13D"), and filed by Steven G. Mihaylo ("Mr.
Mihaylo") with the Securities and Exchange Commission (the "SEC") on March 6,
2006, as amended by Amendment No. 1 thereto, dated April 10, 2006 and filed by
Mr. Mihaylo with the SEC on April 10, 2006 ("Amendment No. 1"), and Amendment
No. 2 thereto, dated April 21, 2006 and filed by Mr. Mihaylo with the SEC on
April 21, 2006 ("Amendment No. 2" and, collectively with the Original Schedule
13D and Amendment No. 1, the "Schedule 13D"), with respect to the common stock,
no par value per share ("Common Stock"), of Inter-Tel, Incorporated, an Arizona
corporation ("Inter-Tel"). Capitalized terms used but not defined herein shall
have the respective meanings set forth in the Schedule 13D.
Item 4. Purpose of Transaction.
The response to Item 4 of the Schedule 13D is hereby amended and supplemented by
deleting the last paragraph thereof, and adding the following paragraph at the
end of such Item 4:
On May 5, 2006, Mr. Mihaylo, Summit and the Company entered into a
Settlement Agreement (the "Settlement Agreement") that will settle a potential
proxy contest in connection with the Annual Meeting.
In addition to other related issues, the Settlement Agreement
specifically stipulates that:
o Inter-Tel will immediately appoint Mr. Mihaylo, Dr. Anil K. Puri and
Kenneth L. Urish to the Company's Board of Directors, and the Board will
be increased from 8 to 11 directors
o Inter-Tel will nominate and recommend these 11 directors for re-election
to the Board of Directors at the 2006 Annual Meeting
o Mr. Mihaylo will withdraw his proxy solicitation for the 2006 Annual
Meeting, including his shareholder proposals, and vote in favor of the
slate of 11 directors nominated by Inter-Tel and the other proposals
presented by the Company
o With respect to his interest in considering whether to make an
acquisition proposal, Inter-Tel will provide Mr. Mihaylo with access to
due diligence subject to a non-disclosure agreement and if such a
proposal is made, a Special Committee of the Inter-Tel Board that
excludes Mr. Mihaylo, Dr. Puri and Mr. Urish agrees to review it in a
timely manner. Mr. Mihaylo agrees to a "stand-still" provision under the
terms described in the agreement, subject to his right to a call a
special meeting of stockholders if any acquisition proposal submitted by
him meeting certain criteria is rejected by the Board or not acted upon
in a timely manner.
A copy of the Settlement Agreement is filed as Exhibit 4 hereto and is
incorporated herein by this reference.
Concurrently with the execution of the Settlement Agreement, the Company and Mr.
Mihaylo entered into a confidentiality agreement (the "Confidentiality
Agreement"). A copy of the Confidentiality Agreement is filed as Exhibit 5
hereto and is incorporated herein by this reference.
Also on May 5, 2006, Mr. Mihaylo and the Company announced that they
have entered into the Settlement Agreement. A copy of the press release is filed
as Exhibit 6 hereto and is incorporated herein by this reference.
Item 6. Contracts, Arrangements, Understanding or Relationships with
Respect to Securities of the Issuer.
The response to Item 6 of the Schedule 13D is hereby amended and supplemented by
deleting the last paragraph thereof, and adding the following paragraph at the
end of such Item 6:
The information set forth in Item 4 with respect to the Settlement
Agreement and the Confidentiality Agreement is hereby incorporated by reference
herein.
Item 7. Material to be Filed as Exhibits.
The response to Item 7 of the Schedule 13D is hereby amended and supplemented
by adding the following at the end of such Item 7:
Exhibit 4: Settlement Agreement among Inter-Tel, Incorporated, Steven G. Mihaylo
and Summit Growth Management LLC, dated May 5, 2006.
Exhibit 5: Confidentiality Agreement between Inter-Tel, Incorporated and Steven
G. Mihaylo, dated May 5, 2006.
Exhibit 6: Press release, dated May 5, 2006, issued by Inter-Tel, Incorporated,
Steven G. Mihaylo and Summit
Growth Management LLC.
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: May 8, 2006
/s/ Steven G. Mihaylo
---------------------
Steven G. Mihaylo
Exhibit 4
SETTLEMENT AGREEMENT
This Settlement Agreement (this "Agreement"), dated as of May 5, 2006
(the "Effective Date"), is entered into 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"). Each
of the Company, Mr. Mihaylo and Summit are referred to individually as a "Party"
and collectively as the "Parties".
WHEREAS, on March 6, 2006, Mr. Mihaylo filed a Schedule 13D with the
Securities and Exchange Commission (the "SEC"), which has been amended twice,
most recently on April 21, 2006 (collectively the "Schedule 13D"). In the
Schedule 13D, Mr. Mihaylo states that he is the beneficial owner of 5,179,498
shares of Company common stock, or approximately 19.6% of the outstanding shares
and that he has been discussing a possible arrangement with Vector Capital
Corporation ("Vector") to purse an acquisition of the Company.
WHEREAS, on April 7, 2006, in accordance with the Company's recently
adopted advance notice bylaw provisions, Mr. Mihaylo notified the Company of his
intent to nominate three persons for election to the Company's board of
directors (the "Board") at the Annual Meeting (as defined below) and to make six
proposals for approval at the Annual Meeting (the "Mihaylo Resolutions").
WHEREAS, on April 10, 2006, Mr. Mihaylo made a filing with the SEC
under Schedule 14A which (a) contained, among other things, the text of a press
release issued by Mr. Mihaylo announcing that he had requested that the Board
meet with him to discuss a possible all-cash acquisition of the Company led by
Mr. Mihaylo and the text of April 3, 2006 and April 10, 2006 letters from Mr.
Mihaylo to the Board regarding such a possible acquisition and (b) disclosed
that he had delivered to the Board the advance notices of director nominations
and shareholder business.
WHEREAS, on April 10, 2006, the Company filed a preliminary proxy
statement under Schedule 14A for the annual meeting of stockholders to be held
on May 31, 2006 (including any adjournment or postponement thereof, the "Annual
Meeting"), as amended on April 28, 2006, in which the Company proposed the
election of eight nominees as directors, submitted two proposals for shareholder
approval (the "Company Proposals"), and requested that the shareholders ratify
the selection of accountants.
WHEREAS, on April 21, 2006, Mr. Mihaylo and Summit filed preliminary
proxy materials under Schedule 14A for the Annual Meeting in which they proposed
the election of three nominees for directors, submitted the Mihaylo Resolutions,
and recommended that shareholders vote for the election of the three nominees,
for the Mihaylo Resolutions and the ratification of auditors and against the two
proposals submitted by the Company.
WHEREAS, the advisors of the Company and Mr. Mihaylo have met to
discuss a potential resolution of the proxy solicitation.
WHEREAS, in order to facilitate such discussions and to resolve the
proxy solicitation, the parties have agreed to enter into this 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. With respect to the election of directors:
(a) The Board agrees to nominate and recommend the election of
Mr. Mihaylo, Anil K. Puri and Kenneth L. Urish (the "Mihaylo Nominees") as part
of the Company's slate of eleven (11) directors to be elected at the Annual
Meeting. The Board's proxies and Mr. Mihaylo will vote equally all of the shares
they are entitled to vote at the Annual Meeting for Company's eight nominees and
the Mihaylo Nominees (or their replacements chosen pursuant to Section 1(b)
below). Mr. Mihaylo agrees that he will not give notice of his intention to
cumulate his votes at the Annual Meeting.
(b) The Board agrees that if a Mihaylo Nominee shall be unable
or unwilling to serve as a nominee or a director for any reason prior to his
election as a director in accordance with this Agreement, then Mr. Mihaylo shall
be entitled to designate another person reasonably acceptable to the Corporate
Governance and Nominating Committee and a majority of the members of the entire
Board, and any such person shall become a "Mihaylo Nominee" for all purposes
under this Agreement, and the Board shall nominate for election or appoint to
the Board such person, as the case shall be.
(c) The Board will use its reasonable best efforts to cause the
Annual Meeting to be held on May 31, 2006.
(d) The Board agrees to elect the Mihaylo Nominees to the Board
effective the day after the Effective Date to serve until the Annual Meeting and
until their successors are duly elected and qualified or until their earlier
resignation, death, or removal. For purposes of disclosure only, the Board
hereby notifies Mr. Mihaylo and Summit that, until Mr. Mihaylo files a Schedule
13D disclosing that he no longer has an intent to increase his shareholdings or
otherwise acquire the Company, the Board presently intends to exclude, and it is
agreed by Mr. Mihaylo and Summit that, subject to such agreement not causing the
Mihaylo Nominees to breach their fiduciary duties as directors of the Company,
the Board may exclude, the Mihaylo Nominees from any discussions concerning, and
from receipt of any materials regarding, the Company's value and the strategic
plan upon which such value would in part be based, the Company's relationship
with Mr. Mihaylo, and the consideration of any proposal to acquire the Company
from Mr. Mihaylo or any other person.
2. With respect to the other business to be considered at the
Annual Meeting:
(a) The Company will not make, or otherwise consider for
business, any proposals at the Annual Meeting other than the election of
directors, the Company Proposals, and the ratification of auditors. The Company
agrees that it will not make any references to Mr. Mihaylo or Summit in any of
the Company's soliciting materials in connection with the Annual Meeting without
Mr. Mihaylo's prior consent, which consent shall not be unreasonably withheld or
delayed.
(b) Mr. Mihaylo hereby withdraws and rescinds his request that
the Company shareholders consider and vote upon the Mihaylo Resolutions at the
Annual Meeting. Mr. Mihaylo will terminate his proxy solicitation, and make all
appropriate filings with the SEC with respect thereto. Mr. Mihaylo agrees to
vote all shares he is entitled to vote in favor of the Company Proposals and the
ratification of auditors.
(c) Upon the execution of this Agreement, the Parties will
issue the press release attached hereto as Exhibit A. The Parties agree that
this press release will be the only
press release on the subject matter of this Agreement and the Parties
agree not to grant or participate in media interviews regarding the subject
matter of this Agreement, other than to recite that the Settlement Agreement
has been filed with the SEC.
3. Prior to December 31, 2006, Mr. Mihaylo and Summit agree that,
other than by evaluating and making a Mihaylo Proposal (as defined below), they
will not acquire, offer or propose to acquire, or agree to acquire (except by
way of stock dividends, stock splits, reverse stock splits or other
distributions or offerings made available to holders of any common stock
generally), directly or indirectly, whether by purchase, tender or exchange
offer, through the acquisition of control of another person, by joining a
partnership, limited partnership, syndicate or other "group" (within the meaning
of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) or
otherwise, any common stock of the Company, provided, however, that activities
other than share acquisitions in connection with evaluating and making a Mihaylo
Proposal, including, without limitation, discussions and/or arrangements with
equity and debt financing sources (other than the acquisition of beneficial
ownership of shares owned as of such date as a result of formation of a "group")
in connection therewith, are not subject to this paragraph. Notwithstanding the
forgoing, the Company acknowledges that, Mr. Mihaylo and Summit may form a
partnership, limited partnership, "group", or other arrangement with Vector in
connection with a Mihaylo Proposal. Prior to the earlier of (a) December 31,
2006, (b) the entry by the Company into a definitive agreement with respect to a
Third Party Proposal (as defined below), (c) the public announcement of an
extraordinary corporate transaction (for example, a material acquisition, a
reorganization, an extraordinary dividend, or a sale of significant number of
shares), and (d) the submission of a Mihaylo Request (as defined below), Mr.
Mihaylo and Summit agree (i) not to publicly make any adverse statement
regarding the Company, its directors, management, or employee personnel, its
business, or the Annual Meeting, (ii) not to visit any Company facility (other
than in connection with Board, committee or shareholder meetings scheduled to be
held at a Company facility), and (iii) to notify the Company at least five (5)
business days in advance of submitting a Mihaylo Proposal of his non-binding
intent to do so and to attempt to coordinate with the Company public disclosure
thereof and the Company agrees not to publicly make any adverse statement
regarding Mr. Mihaylo and Summit. For these purposes, the statements of
Company's board of directors and executive officers will be deemed to be
statements of the Company whereas the statements of other persons will not be
considered statements of the Company.
4. Concurrently with the execution of this Agreement, the Company
and Mr. Mihaylo are entering into the confidentiality agreement in the form
attached hereto as Exhibit B. Upon reasonable notice given to John Gardner, Kurt
Kneip, or Norman Stout, the Company agrees to provide promptly Mr. Mihaylo and
his advisors and financing sources access to the reasonable due diligence
information requested in good faith, in order to facilitate the making of an all
cash acquisition proposal for all outstanding Company shares by Mr. Mihaylo
(other than shares beneficially owned by him) accompanied by commitment letters
(subject only to customary conditions) of financial institutions of national
reputation (including Vector and RBC) demonstrating a reasonable certainty of
his ability to finance the transaction in its entirety ("Mihaylo Proposal")
prior to June 15, 2006, provided, that the term "Mihaylo Proposal" shall include
acquisition proposals, and any amendments or revisions thereto, made by Mr.
Mihaylo, whether prior to or after June 15, 2006 so long as they continue to
meet the criteria for a Mihaylo Proposal as set forth in this sentence before
this proviso.
5. If the Board determines that the initially-submitted Mihaylo
Proposal is not in the best interests of the Company's shareholders (or fails
to make such determination within ten (10) business days of submission of the
Mihaylo Proposal), then, upon the request of Mr. Mihaylo (a) in the event the
Board fails to make such determination within such ten (10) business day
period, made within twenty (20) business days after submission of the Mihaylo
Proposal) or (b) in the event the Board determines that the Mihaylo Proposal is
not in the best interests of the Company's shareholders, made within ten (10)
business days after receipt by Mr. Mihaylo of written notice of such
determination or public announcement thereof (the "Mihaylo Request"), the
Company will promptly call a special meeting of shareholders (the "Special
Meeting") to vote on the proposals set forth in the Mihaylo Request, including,
without limitation, any proposal urging the Board to arrange for the prompt sale
of the Company to the highest bidder (the "Sell the Company Request"). The
Company will set the record date for the Special Meeting for a date within ten
(10) days of receipt of the Mihaylo Request and the date of the Special Meeting
shall be on a date chosen by the Company within sixty (60) days after receipt of
the Mihaylo Request. The Company will not contest the calling of the Special
Meeting as to the Sell the Company Request but, notwithstanding any other
provision of this Section 5, may contest the calling of the meeting for other
purposes and the submission of proposals other than the Sell the Company Request
at the Special Meeting, and the Company may oppose the Sell the Company Request
and any other proposals that are included in the Mihaylo Request.
Notwithstanding the foregoing, if, prior to the date of the Special Meeting, the
Company enters into a definitive agreement to be acquired by a third party (a
"Third Party Proposal"), then Mr. Mihaylo will agree to withdraw the Mihaylo
Request.
6. Nothing in this Agreement shall prevent the Company from having
discussions, or entering into a definitive agreement, with respect to a Third
Party Proposal.
7. Prior to the earlier of (a) the execution of a definitive
acquisition agreement with respect to the Mihaylo Proposal, (b) the execution of
a definitive agreement with respect to a Third Party Proposal that provides for
per share consideration higher than the consideration provided in the final
Mihaylo Proposal presented to the Company, (c) the Special Meeting, (d) August
31, 2006, (e) June 15, 2006, if the Mihaylo Proposal has not been made, or (f)
the expiration of the period in which Mr. Mihaylo is entitled to submit a
Mihaylo Request, if Mr. Mihaylo does not submit a Mihaylo Request within such
period, except as required by applicable law, the Company will not adopt a bylaw
or amend its articles or certificate of incorporation to prevent Mr. Mihaylo
from calling a Special Meeting so long as he and Summit have not sold any of
their Company shares of stock such that they then no longer own at least ten
percent (10%) of the Company's outstanding stock.
8. If, prior to August 31, 2006, the Board enters into a
definitive acquisition agreement with respect to a Third Party Proposal that
provides for per share cash consideration higher than the cash consideration
provided in the final Mihaylo Proposal presented to the Company and Mr. Mihaylo
has determined not to make a competing proposal, then Mr. Mihaylo agrees to vote
(or, if requested, to execute proxies), or execute a written consent or consents
if shareholders of the Company are requested to vote their shares through the
execution of an action by written consent in lieu of any such annual or special
meeting of shareholders of the Company, in either case with respect to all of
the shares of common stock of the Company beneficially owned by him on the
record date of any such vote or written consent, in favor of approval of such
Third Party Proposal, provided that (a) the Board shall have recommended that
shareholders approve such proposal and not changed such recommendation (or been
precluded by the terms of such proposal from changing such recommendation) or
(b) no third party shall have publicly announced an acquisition proposal that
would provide for per share consideration higher than the consideration provided
in the Third Party Proposal.
9. Mr. Mihaylo and Summit each represent and warrant to the
Company as follows:
(a) Each has the power and authority to execute, deliver and
carry out the terms and provisions of this Agreement.
(b) This Agreement has been duly and validly authorized,
executed, and delivered by each, constitutes a valid and binding obligation and
agreement of each, and is enforceable against each in accordance with its terms.
10. The Company represents and warrants to each of Mr. Mihaylo
and Summit as follows:
(a) The Company has the corporate power and authority to
execute, deliver and carry out the terms and provisions of this Agreement.
(b) This Agreement has been duly and validly authorized,
executed and delivered by the Company, constitutes a valid and binding
obligation and agreement of the Company, and is enforceable against the Company
in accordance with its terms.
11. The Parties acknowledge that remedies at law may be
inadequate to protect a Party 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 favor of the non-breaching Party without proof of irreparable harm or
damages.
12. 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). The state and federal courts
located within the State of California have exclusive jurisdiction over any
dispute arising out of or relating to this Agreement and the Parties hereby
submit and consent to the exercise of personal jurisdiction over each of them by
these courts. .
13. The benefits of this Agreement shall inure to the respective
successors and assigns of the Parties, and the obligations and liabilities
assumed in this Agreement by the Parties shall be binding upon their respective
successors and assigns; provided, however, that neither Mr. Mihaylo nor Summit
may assign his or its rights and obligations under this Agreement to any person
other than an affiliate without the prior written consent of the Company.
14 . 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 provisions 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.
15. This Agreement, including the Exhibits hereto, embodies 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 Party, and may be modified or
waived only by a separate letter executed by the parties expressly so modifying
or waiving such Agreement.
16. 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.
17. Each Party shall bear its own expenses in connection with this
Agreement.
18. Any waiver by any party of a breach of any provision of this
Agreement shall not operate as or be construed to be a waiver of any other
breach of such provision or of any breach of any other provision of this
Agreement. The failure of any Party to insist upon strict adherence to any term
of this Agreement on one or more occasions shall not be considered a waiver or
deprive that Party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement.
19. All notices, demands and other communications to be given or
delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given (a) one (1) business day after
being sent by a nationally recognized overnight carrier to the addresses set
forth below (or to such other mailing addresses as a Party may designate by
notice to the other Parties in accordance with this section) or (b) when
actually delivered if sent by any other method that results in delivery (with
written confirmation of receipt):
If to the Company:
1615 South 52nd Street
Tempe, Arizona 85281
Attention: Norman Stout, CEO
with a copy to (which shall not constitute notice):
Pillsbury Winthrop Shaw Pittman LLP
2475 Hanover Street
Palo Alto, California 94304
Attention: Stephen Wurzburg, Esq.
and
If to Mr. Mihaylo or Summit:
P.O. Box 19790
Reno, Nevada 89511
with a copy to (which shall not constitute notice):
Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue, Suite 3400
Los Angeles, California 90071
Attention: Brian J. McCarthy, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
20. Any headings contained in this Agreement are for reference
purposes only and shall not effect in any way the meaning or interpretation of
this Agreement.
21. In the event a Party shall bring any action to enforce or
protect any of its rights under this Agreement, the prevailing Party shall be
entitled to recover, in addition to its damages, its reasonable attorneys' fees
and costs.
22. Upon and subject to the terms of this Agreement, each of the
Parties hereto agrees to use its or his commercially reasonable efforts to
cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other party in doing, all things necessary, proper or
advisable to consummate or make effective, in the most expeditious manner
practicable, the matters contemplated by this Agreement.
[signature page follows]
IN WITNESS WHEREOF, each of the undersigned parties has executed or
caused this Agreement to be executed on the date first above written.
INTER-TEL, INCORPORATED
By: /s/ Norman Stout
------------------
Name: Normal Stout
Title: Chief Executive Officer
/s/ Steven G. Mihaylo
---------------------
STEVEN G. MIHAYLO
SUMMIT GROWTH
MANAGEMENT LLC
By: /s/ Steven G. Mihaylo
---------------------
Name: Steven G. Mihaylo
Title: Managing Member
Exhibit 5
CONFIDENTIALITY AGREEMENT
May 5, 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/ Norman Stout
----------------------
Norman Stout
Chief Executive Officer
Confirmed and Agreed to
this 5 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 5, 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:
Exhibit 6
INTER-TEL AND STEVEN G. MIHAYLO
REACH AGREEMENT TO SETTLE POTENTIAL PROXY CONTEST
TEMPE, AZ, May 5, 2006 - Inter-Tel, Incorporated (Nasdaq: INTL and "the
Company") and Steven G. Mihaylo, Inter-Tel's founder, former Chairman and Chief
Executive Officer and largest shareholder, announced today that they have
entered into an agreement that will settle a potential proxy contest in
connection with the Inter-Tel 2006 Annual Meeting of Shareholders. A copy of
this agreement will be filed with the Securities and Exchange Commission (SEC)
and will be available from Inter-Tel as set forth below under "Additional
Information."
In addition to other related issues, the agreement specifically stipulates that:
o Inter-Tel will immediately appoint Mr. Mihaylo, Dr. Anil K. Puri and
Kenneth L. Urish to the Company's Board of Directors, and the Board
will be increased from 8 to 11 directors
o Inter-Tel will nominate and recommend these 11 directors for
re-election to the Board of Directors at the 2006 Annual Meeting
o Mr. Mihaylo will withdraw his proxy solicitation for the 2006 Annual
Meeting, including his shareholder proposals, and vote in favor of
the slate of 11 directors nominated by Inter-Tel and the other
proposals presented by the Company
o With respect to his interest in considering whether to make an
acquisition proposal, Inter-Tel will provide Mr. Mihaylo with access
to due diligence subject to a non-disclosure agreement and if such a
proposal is made, a Special Committee of the Inter-Tel Board that
excludes Mr. Mihaylo, Dr. Puri and Mr. Urish agrees to review it in a
timely manner. Mr. Mihaylo agrees to a "stand-still" provision under
the terms described in the agreement, subject to his right to a call
a special meeting of stockholders if any acquisition proposal
submitted by him meeting certain criteria is rejected by the Board or
not acted upon in a timely manner.
As previously announced, the Inter-Tel 2006 Annual Meeting of Shareholders will
be held on May 31, 2006. Based on the agreement, Inter-Tel will re-file an
amended proxy statement with the SEC.
About Inter-Tel, Incorporated
Inter-Tel offers value-driven communications products; applications utilizing
networks and server-based communications software; and a wide range of managed
services that include voice and data network design and traffic provisioning,
custom application development, and financial solutions packages. An
industry-leading provider focused on the communication needs of business
enterprises, Inter-Tel employs nearly 2,000 communications professionals, and
services business customers through a network of 60 company-owned, direct sales
offices and over 350 authorized providers in North America, Europe, Australia
and South Africa. More information is available at www.inter-tel.com.
Additional Information
In connection with its 2006 annual meeting of stockholders, Inter-Tel
Incorporated filed a notice of annual meeting and preliminary proxy statement
with the Securities and Exchange Commission ("SEC"), as amended on April 28,
2006. STOCKHOLDERS OF INTER-TEL ARE URGED TO READ THE NOTICE OF ANNUAL MEETING
AND DEFINITIVE PROXY STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE
SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
Investors and stockholders can obtain free copies of the notice of annual
meeting and definitive proxy statement and other documents when they become
available by contacting investor relations at investorrelations@inter-tel.com,
or by mail at Inter-Tel Incorporated Investor Relations, 1615 South 52nd
Street, Tempe, Arizona 85281, or by telephone at 1-480-449-8900. In addition,
documents filed with the SEC by Inter-Tel are available free of charge at the
SEC's website at www.sec.gov.
Inter-Tel and its directors and executive officers may be deemed to be
participants in the solicitation of proxies from the stockholders of Inter-Tel
in connection with the 2006 annual meeting of stockholders. Information
regarding the special interests of these directors and executive officers in
the proposed election of directors is included in Inter-Tel's notice of annual
meeting and preliminary proxy statement for its 2006 annual meeting as
described above. This document will be available free of charge at the SEC's
website at www.sec.gov and from Investor Relations at Inter-Tel as described
above.
Safe Harbor
This news release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Any statements that are not statements of historical fact
(including statements containing the words "believes," "plans," "anticipates,"
"expects," "estimates" and similar expressions) should also be considered to be
forward-looking statements. Such statements are based on current assumptions
that involve risks and uncertainties that could cause actual outcomes and
results to differ materially from our current expectations. These risks and
uncertainties include, but are not necessarily limited to, the risks and
uncertainties, please see the Company's previously filed SEC reports, including
the Company's Annual Report on Form 10-K filed March 16, 2006, Form 10-Q filed
on November 9, 2005 and Current Reports on Form 8-K. Inter-Tel disclaims any
intention or obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise.
Contacts:
Inter-Tel: Kurt Kneip, CFO, and Norman Stout, CEO, 480-449-8900