As filed with the Securities and Exchange Commission on November 26, 1997
Registration No. 33-__________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
INTER-TEL, INCORPORATED
(Exact name of registrant as specified in its charter)
ARIZONA 86-0220994
----------------- -------------------
(State or other jurisdiction (IRS Employer
of incorporation) Identification No.)
120 North 44th Street, Suite 200
Phoenix, Arizona 85304-1822
(Address of principal executive offices)
Inter-Tel, Incorporated 1997 Long-Term Incentive Plan
Inter-Tel, Incorporated 1997 Employee Stock Purchase Plan
(Full Title of the Plans)
STEVEN G. MIHAYLO
Chairman of the Board of Directors and Chief Executive Officer
INTER-TEL, INCORPORATED
120 North 44th Street, Suite 200
Phoenix, Arizona 85304-1822
(Name and address of agent for service)
(602) 302-8900
(Telephone number, including area code, of agent for service)
Copies to:
PATRICK J. SCHULTHEIS, ESQ.
WILSON, SONSINI, GOODRICH & ROSATI
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304-1050
<PAGE>
<TABLE>
<CAPTION>
=======================================================================================================================
Title of Amount Proposed Proposed Amount of
Securities to to be Maximum Offering Maximum Aggregate Registration
be Registered Registered Price Per Share Offering Price Fee
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Common Stock, no par value per share:
Inter-Tel, Incorporated 1997 Long-Term 1,308,000 $7.40109(1) $ 9,680,625(1) $2,933.52(1)
Incentive Plan
Inter-Tel, Incorporated 1997 Long-Term 1,092,000 $21.12500(2) $23,068,500(2) $6,990.45(2)
Incentive Plan
Inter-Tel, Incorporated 1997 Employee 500,000 $17.95625(3) $ 8,978,125(3) $2,720.64(3)
Stock Purchase Plan
TOTALS 2,900,000 $12,644.61
=======================================================================================================================
</TABLE>
(1) Estimated pursuant to Rule 457 of Regulation C solely for the purpose
of calculating the registration fee. The proposed maximum offering
price per share with respect to the 2,400,000 shares reserved for
issuance upon exercises of outstanding stock options granted under the
Inter-Tel, Incorporated 1997 Long-Term Incentive Plan has been
estimated pursuant to Rule 457(h) under which Rule the per share price
of options to purchase stock under an employee stock option plan may be
estimated by reference to the exercise price of such options. The
weighted average price of the 1,308,000 shares subject to outstanding
options under the Inter-Tel, Incorporated 1997 Long-Term Incentive Plan
is $7.40109.
(2) Estimated pursuant to Rule 457 of Regulation C solely for the purpose
of calculating the registration fee. The proposed maximum offering
price per share with respect to the 1,092,000 shares reserved for
issuance under the Inter-Tel, Incorporated 1997 Long-Term Incentive
Plan has been estimated to be the average of the high and low price
reported in the Nasdaq National Market on November 25, 1997.
(3) Estimated pursuant to Rule 457 of Regulation C solely for the purpose
of calculating the registration fee. The proposed maximum offering
price per share with respect to the 500,000 shares reserved for
issuance under the Inter-Tel, Incorporated 1997 Employee Stock Purchase
Plan has been estimated to be 85% of the average of the high and low
price reported in the Nasdaq National Market on November 25, 1997.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Information Incorporated by Reference.
-------------------------------------
There are hereby incorporated by reference in this Registration Statement
the following documents and information heretofore filed with the Securities
and Exchange Commission:
(a) The Registrant's Registration Statement on Form S-3 (File No.
333-39221) (the "Registration Statement"), filed pursuant to the Securities
Act of 1933, as amended (the "Securities Act"), including the Amended
Prospectus dated November 20, 1997 included therein, relating to the
Registrant's public offering of its Common Stock.
(b) The description of the Registrant's Common Stock contained in the
Registrant's Registration Statement on Form 8-A dated February 26, 1982,
filed pursuant to Section 12 of the Securities Exchange Act of 1934, as
amended, including any amendment or report filed for the purpose of updating
such description. All documents filed by the Registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act after the date of this
registration statement and prior to the filing of a post-effective amendment
which indicates that all securities offered have been sold or which
deregisters all securities then remaining
2
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unsold, shall be deemed to be incorporated by reference in this registration
statement and to be part hereof from the date of filing such documents.
Item 4. Description of Securities.
-------------------------
Not applicable.
Item 5. Interests of Named Experts and Counsel.
--------------------------------------
Not applicable.
Item 6. Indemnification of Directors and Officers.
-----------------------------------------
The Company's Restated Articles of Incorporation limit, to the maximum
extent permitted by Arizona law, the personal liability of directors for
monetary damages for breach of their fiduciary duties as a director. The
Company's Restated Articles of Incorporation provide that the Company shall
indemnify its officers and directors to the fullest extent permitted by law,
subject to certain exceptions. The Company has entered into indemnification
agreements with its officers and directors containing provisions which are in
some respects broader than the specific indemnification provisions contained in
the Arizona Revised Statutes. The indemnification agreements may require the
Company, among other things, to indemnify such officers and directors against
certain liabilities that may arise by reason of their status or service as
directors or officers (other than liabilities arising from willful misconduct of
a culpable nature), to advance their expenses incurred as a result of any
proceeding against them as to which they could be indemnified, and to obtain
directors' and officers' insurance, if available on reasonable terms. The
Company believes that these agreements are necessary to attract and retain
qualified persons as directors and officers.
At present, there is no pending litigation or proceeding involving any
director, officer, employee or agent of the Company where indemnification will
be required or permitted. The Company is not aware of any threatened litigation
or proceeding which may result in a claim or such indemnification.
The Company currently maintains directors' and officers' liability
insurance.
Reference is also made to Section 11 of the Underwriting Agreement
contained in Exhibit 1.1 to the amendment to the Company's S-3 filed on November
20, 1997, indemnifying officers and directors of the Registrant against certain
liabilities.
Item 7. Exemption from Registration Claimed.
-----------------------------------
Not applicable.
3
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Item 8. Exhibits.
--------
Exhibit
Number
-------
5.1 Opinion of John L. Gardner, General Counsel, as to
the legality of securities being registered.
10.1 Inter-Tel, Incorporated 1997 Long-Term Incentive
Plan.
10.2 Inter-Tel, Incorporated 1997 Employee Stock
Purchase Plan.
23.1 Consent of Independent Auditors.
23.2 Consent of Counsel (included in Exhibit 5.1).
24.1 Power of Attorney.
------------------------------
Item 9. Undertakings.
------------
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement to include any
material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the Registrant's Bylaws,
indemnification agreements, or otherwise, the Registrant has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification
4
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is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in
the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
5
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Inter-Tel, Incorporated, an Arizona corporation, certifies that
it has reasonable grounds to believe that it meets all of the requirements
for filing on Form S-8 and has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Phoenix, State of Arizona, on November 26, 1997 .
INTER-TEL, INCORPORATED
By: /s/ Kurt R. Kneip
-----------------
Kurt R. Kneip, Chief Financial Officer
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Steven G. Mihaylo and Kurt R. Kneip,
jointly and severally, his attorneys-in-fact, each with the power of
substitution, for him in any and all capacities, to sign any amendments to
this Registration Statement on Form S-8, and to file the same, with exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that each of said
attorneys-in-fact, or his substitute or substitutes, may do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/Steven G. Mihaylo Chairman of the Board and Chief Executive October 25, 1997
- -------------------- Officer (Principal Executive Officer)
(Steven G. Mihaylo)
/s/Kurt R. Kneip Chief Financial Officer (Principal October 25, 1997
- ---------------- Financial and Accounting Officer)
(Kurt R. Kneip)
/s/Gary D. Edens Director October 25, 1997
- ----------------
(Gary D. Edens)
/s/Maurice H. Esperseth Director October 25, 1997
- -----------------------
(Maurice H. Esperseth)
/s/C. Roland Haden Director October 25, 1997
- ------------------
(C. Roland Haden)
/s/Norman Stout Director October 25, 1997
- ---------------
(Norman Stout)
/s/J. Robert Anderson Director October 25, 1997
- ---------------------
(J. Robert Anderson)
</TABLE>
6
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
EXHIBITS
Registration Statement on Form S-8
Inter-Tel, Incorporated
November 26, 1997
INDEX TO EXHIBITS
Exhibit
Numbered
Number Description Page
- ------ ---------------------------------------------------------- ----
5.1 Opinion of John L. Gardner, General Counsel 8
10.1 Inter-Tel, Incorporated 1997 Long-Term Incentive Plan. 9
10.2 Inter-Tel, Incorporated 1997 Employee Stock Purchase Plan. 24
23.1 Consent of Ernst & Young LLP, Independent Auditors. 37
23.2 Consent of John L. Gardner, General Counsel
(Contained in Exhibit 5.1). 8
24.1 Power of Attorney. 6
- ------------------------------
7
EXHIBIT 5.1
-----------
Opinion of John L. Gardner, General Counsel
November 26, 1997
Inter-Tel, Incorporated
120 North 44th Street, Suite 200
Phoenix, Arizona 85304-1822
Re: Registration Statement on Form S-8
----------------------------------
Ladies and Gentlemen:
In connection with the registration under the Securities Act of 1933 (the
"Securities Act") pursuant to a Registration Statement of Form S-8 (the
"Registration Statement") of 2,900,000 shares (the "Shares") of Common Stock, no
par value, of Inter-Tel, Incorporated, an Arizona corporation (the "Company"),
under the Company's Inter-Tel, Incorporated 1997 Long-Term Incentive Plan and
Inter-Tel, Incorporated 1997 Employee Stock Purchase Plan (the "Plans"), I, as
General Counsel of the Company, have examined the Registration Statement, such
corporate records, certificates and other documents, and such questions of law,
as I have considered necessary or appropriate for the purposes of this opinion.
Upon the basis of such examination, I advise you that, in my opinion, when
issued and sold in the manner described in the Plans and pursuant to the
agreements which accompany each grant under the Plans, the Shares will be
legally and validly issued, fully paid and assessable.
The foregoing opinion is limited to the laws of the state of Arizona, and I am
expressing no opinion as to the effect of the laws of any other jurisdiction.
I do hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and any amendments thereto.
Very truly yours,
/s/ John L. Gardner
--------------------
John L. Gardner, General Counsel
INTER-TEL, INCORPORATED
8
INTER-TEL, INCORPORATED
1997 LONG-TERM INCENTIVE PLAN
ARTICLE 1 PURPOSE
1.1. GENERAL. The purpose of the Inter-Tel, Incorporated
Long-Term Incentive Plan (the "Plan") is to promote the success, and enhance
the value, of Inter-Tel, Incorporated, (the "Company") by linking the personal
interests of its key employees to those of Company shareholders and by
providing its key employees with an incentive for outstanding performance. The
Plan is further intended to provide flexibility to the Company in its ability
to motivate, attract, and retain the services of employees upon whose
judgment, interest, and special effort the successful conduct of the Company's
operation is largely dependent. Accordingly, the Plan permits the grant of
incentive awards from time to time to selected officers and key employees of
the Company and its Subsidiaries.
ARTICLE 2 EFFECTIVE DATE
2.1. EFFECTIVE DATE. The Plan is effective as of February 24,
1997 (the "Effective Date"). Within one year after the Effective Date, the
Plan shall be submitted to the shareholders of the Company for their approval.
The Plan will be deemed to be approved by the shareholders if it receives the
affirmative vote of the holders of a majority of the shares of stock of the
Company present, or represented, and entitled to vote at a meeting duly held
(or by the written consent of the holders of a majority of the shares of stock
of the Company entitled to vote) in accordance with the applicable provisions
of the Arizona Corporation Law and the Company's Bylaws and Articles of
Incorporation. Any Awards granted under the Plan prior to shareholder approval
are effective when made (unless the Committee specifies otherwise at the time
of grant), but no Award may be exercised or settled and no restrictions
relating to any Award may lapse before shareholder approval. If the
shareholders fail to approve the Plan, any Award previously made shall be
automatically canceled without any further act.
ARTICLE 3 DEFINITIONS AND CONSTRUCTION
3.1. DEFINITIONS. When a word or phrase appears in this Plan
with the initial letter capitalized, and the word or phrase does not commence a
sentence, the word or phrase shall generally be given the meaning ascribed to it
in this Section or in Sections 1.1 or 2.1 unless a clearly different meaning is
required by the context. The following words and phrases shall have the
following meanings:
(a) "Award" means any Option, Stock Appreciation
Right, Restricted Stock Award, Performance Share Award,
Dividend Equivalent Award, or Other Stock-Based Award, or any
other right or interest relating to Stock or cash, granted to
a Participant under the Plan.
9
<PAGE>
(b) "Award Agreement" means any written agreement,
contract, or other instrument or document evidencing an Award.
(c) "Board" means the Board of Directors of the
Company.
(d) "Change of Control" means and includes each of
the following:
(1) A change of control of the Company of a
nature that would be required to be reported in response to
Item 6(e) of Schedule 14A of the 1934 Act regardless of
whether the Company is subject to such reporting requirement;
(2) A change of control of the Company
through a transaction or series of transactions, such that any
person (as that term is used in Section 13 and 14(d)(2) of the
1934 Act), excluding affiliates of the Company as of the
Effective Date, is or becomes the beneficial owner (as that
term is used in Section 13(d) of the 1934 Act) directly or
indirectly, of securities of the Company representing 20% or
more of the combined voting power of the Company's then
outstanding securities;
(3) Any merger, consolidation, dissolution
or liquidation of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which
Shares would be converted into cash, securities or other
property, other than a merger of the Company in which the
holders of the Shares immediately before the merger have the
same proportionate ownership of common stock of the surviving
corporation immediately after the merger;
(4) The shareholders of the Company approve
any plan or proposal for the liquidation or dissolution of the
Company; or
(5) Substantially all of the assets of the
Company are sold or otherwise transferred to parties that are
not within a "controlled group of corporations" (as defined in
Section 1563 of the Code) in which the Company is a member;
(6) A majority of the Board in office at the
beginning of any thirty-six (36) month period is replaced
during the course of such thirty-six (36) month period (other
than by voluntary resignation of individual directors in the
ordinary course of business) and such replacement was not
initiated by the Board as constituted at the beginning of such
thirty-six (36) month period.
The foregoing events shall not be deemed to be a Change in Control if the
transaction or transactions causing such change shall have been approved by the
affirmative vote of at least a majority of the members of the Board in office as
of the Effective Date ("Incumbents"), those
10
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serving on the Board pursuant to nomination or appointment thereto by a majority
of Incumbents ("Successors"), and those serving on the Board pursuant to
nomination or appointment thereto by a majority of a Board composed of
Incumbents and/or Successors.
(e) "Code" means the Internal Revenue Code of 1986,
as amended from time to time.
(f) "Committee" means the committee of the Board
described in Article 4.
(g) "Disability" shall mean a total and permanent
disability as defined in Section 22(e)(3) of the Code.
(h) "Dividend Equivalent" means a right granted to a
Participant under Article 11.
(i) "Fair Market Value" means with respect to Stock
or any other property, the fair market value of such Stock or
other property as determined by the Committee in its
discretion, under one of the following methods: (1) the
average of the closing bid and asked prices for the Stock as
reported on the NASDAQ National Market System (or any other
national securities exchange on which the Stock is then
listed) for that date or, if no prices are so reported for
that date, such prices on the next preceding date for which
closing bid and asked prices were reported; or (2) the price
as determined by such methods or procedures as may be
established from time to time by the Committee.
(j) "Incentive Stock Option" means an Option that is
intended to meet the requirements of Section 422 of the Code
or any successor provision thereto.
(k) "Non-Qualified Stock Option" means an Option that
is not intended to be an Incentive Stock Option.
(l) "Option" means a right granted to a Participant
under Article 7 of the Plan to purchase Stock at a specified
price during specified time periods. An Option may be either
an Incentive Stock Option or a Non-Qualified Stock Option.
(m) "Other Stock-Based Award" means a right, granted
to a Participant under Article 12, that relates to or is
valued by reference to Stock or other Awards relating to
Stock.
(n) "Participant" means a person who, as an officer
or key employee of the Company or any Subsidiary, has been
granted an Award under the Plan.
11
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(o) "Performance Share" means a right granted to a
Participant under Article 9, to receive cash, Stock, or other
Awards, the payment of which is contingent upon achieving
certain performance goals established by the Committee.
(p) "Plan" means the Inter-Tel, Incorporated 1997
Long-Term Incentive Plan, as amended from time to time.
(q) "Restricted Stock Award" means Stock granted to a
participant under Article 10 that is subject to certain
restrictions and to risk of forfeiture.
(r) "Stock" means the common stock of the Company and
such other securities of the Company that may be substituted
for Stock pursuant to Article 13.
(s) "Stock Appreciation Right" or "SAR" means a right
granted to a Participant under Article 8 to receive a payment
equal to the difference between the Fair Market Value of a
share of Stock as of the date of exercise of the SAR over the
grant price of the SAR, all as determined pursuant to Article
8.
(t) "Subsidiary" means any corporation, domestic or
foreign, of which a majority of the outstanding voting stock
or voting power is beneficially owned directly or indirectly
by the Company.
ARTICLE 4 ADMINISTRATION
4.l. COMMITTEE. The Plan shall be administered by the Board or
one or more Committees appointed by, and serving at the discretion of the Board
(referred herein collectively as the "Administrator").
(a) Multiple Administrative Bodies. The Plan may be
administered by different Committees with respect to different
groups of employees.
(b) Section 162(m). To the extent that the Board
determines it to be desirable to qualify Options granted
hereunder as "performance-based compensation" within the
meaning of Section 162(m) of the Code, the Plan shall be
administered by a Committee of two or more "outside directors"
within the meaning of Section 162(m) of the Code.
(c) RULE 16b-3. To the extent desirable to qualify
transactions hereunder as exempt under Rule 16b-3 promulgated
under Section 16 of the Securities Exchange Act of 1934 ("Rule
16b-3"), the transactions contemplated hereunder shall be
structured to satisfy the requirements for exemption under
Rule 16b-3.
12
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(d) Other Administration. Other than as provided
above, the Plan shall be administered by the Board or a
Committee serving at the discretion of the Board, which
committee shall be constituted to satisfy all applicable laws.
4.2. ACTION BY COMM1TTEE. A majority of a Committee shall
constitute a quorum. The acts of a majority of the members present at any
meeting at which a quorum is present and acts approved in writing by a majority
of a Committee in lieu of a meeting shall be deemed the acts of such Committee.
Each member of a Committee is entitled to, in good faith, rely or act upon any
report or other information furnished to that member by any officer or other
employee of the Company or any Subsidiary, the Company's independent certified
public accountants, or any executive compensation consultant or other
professional retained by the Company to assist in the administration of the
Plan.
4.3. AUTHORITY OF ADMINISTRATOR. The Administrator has the
exclusive power, authority and discretion to:
(a) Designate Participants;
(b) Determine the type or types of Awards to be
granted to each Participant;
(c) Determine the number of Awards to be granted and
thenumber of shares of Stock to which an Award will relate;
(d) Determine the terms and conditions of any Award
granted under the Plan including but not limited to, the
exercise price, grant price, or purchase price, any
restrictions or limitations on the Award, any schedule for
lapse of forfeiture restrictions or restrictions on the
exercisability of an Award, and accelerations or waivers
thereof, based in each case on such considerations as the
Administrator in its sole discretion determines;
(e) Determine whether, to what extent, and under what
circumstances an Award may be settled in, or the exercise
price of an Award may be paid in, cash, Stock, other Awards,
or other property, or an Award may be canceled, forfeited, or
surrendered;
(f) Prescribe the form of each Award Agreement, which
need not be identical for each Participant;
(g) Decide all other matters that must be determined
in connection with an Award;
(h) Establish, adopt or revise any rules and
regulations as it may deem necessary or advisable to
administer the Plan; and
13
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(i) Make all other decisions and determinations that
may be required under the Plan or as the Administrator deems
necessary or advisable to administer the Plan.
4.4. DECISIONS BINDING. The Administrator's interpretation of
the Plan, any Awards granted under the Plan, any Award Agreement and all
decisions and determinations by the Administrator with respect to the Plan are
final, binding, and conclusive on all parties.
ARTICLE 5 SHARES SUBJECT TO THE PLAN
5.1. NUMBER OF SHARES. Subject to adjustment provided in
Section 1 5.1, the aggregate number of shares of Stock reserved and available
for Awards or which may be used to provide a basis of measurement for or to
determine the value of an Award (such as with a Stock Appreciation Right or
Performance Share Award) shall be one million two hundred thousand (1,200,000).
5.2. LAPSED AWARDS. To the extent that an Award terminates,
expires or lapses for any reason, any shares of Stock subject to the Award will
again be available for the grant of an Award under the Plan and shares subject
to SARs or other Awards settled in cash will be available for the grant of an
Award under the Plan.
5.3. STOCK DISTRIBUTED. Any Stock distributed pursuant to an
Award may consist, in whole or in part, of authorized and unissued Stock,
treasury Stock or Stock purchased on the open market.
5.4. LIMITATION ON NUMBER OF SHARES SUBJECT TO AWARDS.
Notwithstanding any provision in the Plan to the contrary, the maximum number of
shares of Stock with respect to one or more Awards that may be granted to any
one Participant over the term of the Plan shall be five hundred thousand
(500,000).
ARTICLE 6 ELIGIBILITY
6.1. GENERAL. Awards may be granted only to individuals who
are officers or other key employees (including employees who also are directors
or officers) of the Company or a Subsidiary, as determined by the Administrator.
ARTICLE 7 STOCK OPTIONS
7.1. GENERAL. The Administrator is authorized to grant Options
to Participants on the following terms and conditions:
(a) Exercise Price. The exercise price per share of
Stock under an Option shall be determined by the
Administrator.
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(b) Time and Conditions of Exercise. The
Administrator shall determine the time or times at which an
Option may be exercised in whole or in part, provided that no
Option may be exercisable prior to six (6) months following
the date of the grant of such Option. The Administrator also
shall determine the performance or other conditions, if any,
that must be satisfied before all or part of an Option may be
exercised.
(c) Payment. The Administrator shall determine the
methods by which the exercise price of an Option may be paid,
the form of payment, including, without limitation, cash,
shares of Stock, or other property (including net issuance or
other "cashless" exercise arrangements), and the methods by
which shares of Stock shall be delivered or deemed to be
delivered to Participants. Without limiting the power and
discretion conferred on the Administrator pursuant to the
preceding sentence, the Administrator may, in the exercise of
its discretion, but need not, allow a Participant to pay the
Option price by directing the Company to withhold from the
shares of Stock that would otherwise be issued upon exercise
of the Option that number of shares having a Fair Market Value
on the exercise date equal to the Option price, all as
determined pursuant to rules and procedures established by the
Administrator.
(d) Evidence of Grant. All Options shall be evidenced
by a written Award Agreement between the Company and the
Participant. The Award Agreement shall include such provisions
as may be specified by the Administrator.
7.2. INCENTIVE STOCK OPTIONS. The terms of any Incentive Stock
Options granted under the Plan must comply with the following additional rules:
(a) Exercise Price. The exercise price per share of
Stock shall be set by the Administrator, provided that the
exercise price for any Incentive Stock Option may not be less
than the Fair Market Value as of the date of the grant.
(b) Exercise. In no event, may any Incentive Stock
Option be exercisable for more than ten (10) years from the
date of its grant.
(c) Lapse of Option. An Incentive Stock Option shall
lapse under the following circumstances:
(1) The Incentive Stock Option shall lapse
ten (10) years after it is granted, unless an earlier time is
set in the Award Agreement.
(2) The Incentive Stock Option shall lapse
upon termination of employment for any reason, except that the
Administrator may in its discretion permit a Participant to
exercise all or any portion of the Incentive
15
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Stock Option for a period of up to ninety (90) days after the
Participant's termination of employment, except in the case of
the Participant's termination of employment due to Disability,
in which case the Incentive Stock Option shall lapse twelve
(12) months after the date the Participant terminates
employment.
(3) If the Participant dies before the
Option lapses pursuant to paragraph (1) or (2), above, the
Incentive Stock Option shall lapse, unless it is previously
exercised, on the earlier of (i) the date on which the Option
would have lapsed had the Participant lived and had his
employment status (i.e., whether the Participant was employed
by the Company on the date of his death or had previously
terminated employment) remained unchanged; or (ii) fifteen
(15) months after the date of the Participant's death. Upon
the Participant's death, any vested and otherwise exercisable
Incentive Stock Options may be exercised by the Participant's
legal representative or representatives, by the person or
persons entitled to do so under the Participant's last will
and testament, or, if the Participant shall fail to make
testamentary disposition of such Incentive Stock Option or
shall die intestate, by the person or persons entitled to
receive said Incentive Stock Option under the applicable laws
of descent and distribution.
(d) Incentive Stock Option Limitation.
Notwithstanding the designation of an Option as an Incentive
Stock Option, to the extent that the aggregate Fair Market
Value of the shares of Stock with respect to which Incentive
Stock Options are exercisable for the first time by the
Optionee during any calendar year (under all plans of the
Company and any Subsidiary) exceeds $100,000.00, such Options
shall be treated as Non-Qualified Stock Options. For purposes
of this Section 7.2(d), Incentive Stock Options shall be taken
into account in the order in which they were granted. The Fair
Market Value of the shares of Stock shall be determined as of
the time the Option with respect to such shares of Stock is
granted.
(e) Ten Percent Owners. An Incentive Stock Option
shall not be granted to any individual who, at the date of
grant, owns stock possessing more than ten percent (10%) of
the total combined voting power of all classes of Stock of the
Company.
(f) Expiration of Incentive Stock Options. No Award
of an Incentive Stock Option may be made pursuant to this Plan
after April 23, 2007.
(g) Right To Exercise. During a Participant's
lifetime, an Incentive Stock Option may be exercised only by
the Participant.
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ARTICLE 8 STOCK APPRECIATION RIGHTS
8.1. GRANT OF SARs. The Administrator is authorized to grant
SARs to Participants on the following terms and conditions:
(a) Right to Payment. Upon the exercise of a Stock
Appreciation Right, the Participant to whom it is granted has
the right to receive the excess, if any, of:
(1) The Fair Market Value of one share of
Stock on the date of exercise; over
(2) The grant price of the Stock
Appreciation Right as determined by the Administrator, which
shall not be less than the Fair Market Value of one share of
Stock on the date of grant in the case of any SAR related to
any Incentive Stock Option.
(b) Other Terms. All awards of Stock Appreciation
Rights shall be evidenced by an Award Agreement. The terms,
methods of exercise, methods of settlement, form of
consideration payable in settlement, and any other terms and
conditions of any Stock Appreciation Right shall be determined
by the Administrator at the time of the grant of the Award and
shall be reflected in the Award Agreement.
ARTICLE 9 PERFORMANCE SHARES
9.1. GRANT OF PERFORMANCE SHARES. The Administrator is
authorized to grant Performance Shares to Participants on such terms and
conditions as may be selected by the Administrator. The Administrator shall have
the complete discretion to determine the number of Performance Shares granted to
each Participant. All Awards of Performance Shares shall be evidenced by an
Award Agreement.
9.2. RIGHT TO PAYMENT. A grant of Performance Shares gives the
Participant rights, valued as determined by the Administrator, and payable to,
or exercisable by, the Participant to whom the Performance Shares are granted,
in whole or in part, as the Administrator shall establish at grant or
thereafter. The Administrator shall set performance goals and other terms or
conditions to payment of the Performance Shares in its discretion which,
depending on the extent to which they are met, will determine the number and
value of Performance Shares that will be paid to the Participant.
9.3. OTHER TERMS. Performance Shares may be payable in cash,
Stock, or other property, and have such other terms and conditions as determined
by the Administrator and reflected in the Award Agreement.
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ARTICLE 10 RESTRICTED STOCK AWARDS
10.1. GRANT OF RESTRICTED STOCK. The Administrator is
authorized to make Awards of Restricted Stock to Participants in such amounts
and subject to such terms and conditions as may be selected by the
Administrator. All Awards of Restricted Stock shall be evidenced by a Restricted
Stock Award Agreement.
10.2. ISSUANCE AND RESTRICTIONS. Restricted Stock shall be
subject to such restrictions on transferability and other restrictions as the
Administrator may impose (including, without limitation, limitations on the
right to vote Restricted Stock or the right to receive dividends on the
Restricted stock). These restrictions may lapse separately or in combination at
such times, under such circumstances, in such installments, or otherwise, as the
Administrator determines at the time of the grant of the Award or thereafter.
10.3. FORFEITURE. Except as otherwise determined by the
Administrator at the time of the grant of the Award or thereafter, upon
termination of employment during the applicable restriction period, Restricted
Stock that is at that time subject to restrictions shall be forfeited and
reacquired by the Company, provided, however, that the Administrator may provide
in any Award Agreement that restrictions or forfeiture conditions relating to
Restricted Stock will be waived in whole or in part in the event of terminations
resulting from specified causes, and the Administrator may in other cases waive
in whole or in part restrictions or forfeiture conditions relating to Restricted
Stock.
10.4. CERTIFICATES FOR RESTRICTED STOCK. Restricted Stock
granted under the Plan may be evidenced in such manner as the Administrator
shall determine. If certificates representing shares of Restricted Stock are
registered in the name of the Participant, certificates must bear an appropriate
legend referring to the terms, conditions, and restrictions applicable to such
Restricted Stock, and the Company shall retain physical possession of the
certificate until such time as all applicable restrictions lapse.
ARTICLE 11 DIVIDEND EQUIVALENTS
11.1. GRANT OF DIVIDEND EQUIVALENTS. The Administrator is
authorized to grant Dividend Equivalents to Participants subject to such terms
and conditions as may be selected by the Administrator. Dividend Equivalents
shall entitle the Participant to receive payments equal to dividends with
respect to all or a portion of the number of shares of Stock subject to an
Option Award or SAR Award, as determined by the Administrator. The Administrator
may provide that Dividend Equivalents be paid or distributed when accrued or be
deemed to have been reinvested in additional shares of Stock, or otherwise
reinvested.
ARTICLE 12 OTHER STOCK-BASED AWARDS
12.1. GRANT OF OTHER STOCK-BASED AWARDS. The Administrator is
authorized, subject to limitations under applicable law, to grant to
Participants such other Awards that are payable in, valued in whole or in part
by reference to, or otherwise based on or
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related to shares of Stock, as deemed by the Administrator to be consistent with
the purposes of the Plan, including without limitation shares of Stock awarded
purely as a "bonus" and not subject to any restrictions or conditions,
convertible or exchangeable debt securities, other rights convertible or
exchangeable into shares of Stock, and Awards valued by reference to book value
of shares of Stock or the value of securities of or the performance of specified
Subsidiaries. The Administrator shall determine the terms and conditions of such
Awards.
ARTICLE 13 PROVISIONS APPLICABLE TO AWARDS
13.1. STAND-ALONE, TANDEM, AND SUBSTITUTE AWARDS. Awards
granted under the Plan may, in the discretion of the Administrator, be granted
either alone or in addition to, in tandem with, or in substitution for, any
other Award granted under the Plan. If an Award is granted in substitution for
another Award, the Administrator may require the surrender of such other Award
in consideration of the grant of the new Award. Awards granted in addition to or
in tandem with other Awards may be granted either at the same time as or at a
different time from the grant of such other Awards.
13.2. EXCHANGE PROVISIONS. The Administrator may at any time
offer to exchange or buy out any previously granted Award for a payment in cash,
Stock, or another Award (subject to Section 13.1), based on the terms and
conditions the Administrator determines and communicates to the Participant at
the time the offer is made.
13.3. TERM OF AWARD. The term of each Award shall be for the
period as determined by the Administrator, provided that in no event shall the
term of any Incentive Stock Option or a Stock Appreciation Right granted in
tandem with the Incentive Stock Option exceed a period of ten (10) years from
the date of its grant.
13.4. FORM OF PAYMENT FOR AWARDS. Subject to the terms of the
Plan and any applicable law or Award Agreement, payments or transfers to be made
by the Company or a Subsidiary on the grant or exercise of an Award may be made
in such forms as the Administrator determines at or after the time of grant,
including without limitation, cash, Stock, other Awards, or other property, or
any combination, and may be made in a single payment or transfer, in
installments, or on a deferred basis, in each case determined in accordance with
rules adopted by, and at the discretion of, the Administrator. The Administrator
may also authorize payment in the exercise of an Option by net issuance or other
cashless exercise methods.
13.5. LIMITS ON TRANSFER. No right or interest of a
Participant in any Award may be pledged, encumbered, or hypothecated to or in
favor of any party other than the Company or a Subsidiary, or shall be subject
to any lien, obligation, or liability of such Participant to any other party
other than the Company or a Subsidiary. Except as otherwise provided below, no
Award shall be assignable or transferable by a Participant other than by will or
the laws of descent and distribution. In the Award Agreement for any Award other
than an Award that includes an Incentive Stock Option, the Administrator may
allow a Participant to assign or otherwise transfer all or a portion of the
rights represented by the Award to specified
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individuals or classes of individuals, or to a trust benefiting such
individuals, subject to such restrictions, limitations, or conditions as the
Administrator deems to be appropriate.
13.6 BENEFICIARIES. Notwithstanding Section 13.5, a
Participant may, in the manner determined by the Administrator, designate a
beneficiary to exercise the rights of the Participant and to receive any
distribution with respect to any Award upon the Participant's death. A
beneficiary, legal guardian, legal representative, or other person claiming any
rights under the Plan is subject to all terms and conditions of the Plan and any
Award Agreement applicable to the Participant, except to the extent the Plan and
Award Agreement otherwise provide, and to any additional restrictions deemed
necessary or appropriate by the Administrator. If the Participant is married and
resides in a jurisdiction in which community property laws apply, a designation
of a person other than the Participant's spouse as his beneficiary with respect
to more than fifty percent (50%) of the Participant's interest in the Award
shall not be effective without the written consent of the Participant's spouse.
If no beneficiary has been designated or survives the Participant, payment shall
be made to the person entitled thereto under the Participant's will or the laws
of descent and distribution. Subject to the foregoing, a beneficiary designation
may be changed or revoked by a Participant at any time provided the change or
revocation is filed with the Administrator.
13.7. STOCK CERTIFICATES. All Stock certificates delivered
under the Plan are subject to any stop-transfer orders and other restrictions as
the Administrator deems necessary or advisable to comply with federal or state
securities laws, rules and regulations and the rules of any national securities
exchange or automated quotation system on which the Stock is listed, quoted, or
traded. The Administrator may place legends on any Stock certificate to
reference restrictions applicable to the Stock.
13.8. TENDER OFFERS. In the event of a public tender for all
or any portion of the Stock, or in the event that a proposal to merge,
consolidate, or otherwise combine with another company is submitted for
shareholder approval, the Administrator may in its sole discretion declare
previously granted Options to be immediately exercisable. To the extent that
this provision causes Incentive Stock Options to exceed the dollar limitation
set forth in Section 7.2(d), the excess Options shall be deemed to be
Non-Qualified Stock Options.
13.9. ACCELERATION UPON DEATH OR DISABILITY. Notwithstanding
any other provision in the Plan or any Participant's Award Agreement to the
contrary, upon the Participant's death or Disability, all outstanding Options,
Stock Appreciation Rights, and other Awards in the nature of rights that may be
exercised shall become fully exercisable and all restrictions on outstanding
Awards shall lapse. Any Option or Stock Appreciation Rights Awards shall then
lapse in accordance with the other provisions of this Plan and the Award
Agreement.
13.10. ACCELERATION UPON A CHANGE OF CONTROL. If a Change of
Control occurs, all outstanding Options, Stock Appreciation Rights, and other
Awards in the nature of rights that may be exercised shall become fully vested,
exercisable and all restrictions on outstanding Awards shall lapse; provided,
however, that with respect to any
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Change of Control in which the outstanding Options, Stock Appreciation Rights,
and other Awards in the nature of rights that may be exercised shall terminate
upon the occurrence of the Change of Control, each Participant shall fully vest
and have exercisable such Awards prior to the occurrence of such Change of
Control.
ARTICLE 14 CHANGES IN CAPITAL STRUCTURE
14.1. GENERAL. In the event a stock dividend is declared upon
the Stock, the shares of Stock then subject to each Award (and the number of
shares subject thereto) shall be increased proportionately without any change in
the aggregate purchase price therefor. In the event the Stock shall be changed
into or exchanged for a different number or class of shares of Stock or of
another corporation, whether through reorganization, recapitalization, stock
split-up, combination of shares, merger or consolidation, there shall be
substituted for each such share of Stock then subject to each Award (and for
each share of Stock then subject thereto) the number and class of shares of
Stock into which each outstanding share of Stock shall be so exchanged, all
without any change in the aggregate purchase price for the shares then subject
to each Award.
ARTICLE 15 AMENDMENT, MODIFICATION AND TERMINATION
15.1. AMENDMENT, MODIFICATION AND TERMINATION. With the
approval of the Board, at any time and from time to time, the Administrator
may terminate, amend or modify the Plan. However, without approval of the
shareholders of the Company (as may be required by the Code, a national
securities exchange or quotation system on which the stock can be listed or
reported or any other applicable law or regulation), no such termination,
amendment, or modification may:
(a) Materially increase the total number of shares of
Stock that may be issued under the Plan, except as provided in
Section 14.1;
(b) Materially modify the eligibility requirements
for participation in the Plan; or
15.2. AWARDS PREVIOUSLY GRANTED. No termination, amendment, or
modification of the Plan shall adversely affect in any material way any Award
previously granted under the Plan, without the written consent of the
Participant.
ARTICLE 16 GENERAL PROVISIONS
16.1. NO RIGHTS TO AWARDS. No Participant or employee shall
have any claim to be granted any Award under the Plan, and neither the Company
nor the Administrator is obligated to treat Participants and employees
uniformly.
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16.2. NO STOCKHOLDERS RIGHTS. No Award gives the Participant
any of the rights of a shareholder of the Company unless and until shares of
Stock are in fact issued to such person in connection with such Award.
16.3. WITHHOLDING. The Company or any Subsidiary shall have
the authority and the right to deduct or withhold, or require a Participant to
remit to the Company, an amount sufficient to satisfy United States Federal,
state, and local taxes (including the Participant's FICA obligation and any
withholding obligation imposed by any country other than the United States in
which the Participant resides) required by law to be withheld with respect to
any taxable event arising as a result of this Plan. With respect to withholding
required upon any taxable event under the Plan, the Administrator may, in its
sole and absolute discretion, permit a Participant to satisfy the withholding
requirement, in whole or in part, by having the Company or any Subsidiary
withhold shares of Stock having a Fair Market Value on the date of withholding
equal to the amount to be withheld for tax purposes in accordance with such
procedures as the Administrator establishes. The Administrator may, at the time
any Award is granted, require that any and all applicable tax withholding
requirements be satisfied by the withholding of shares of Stock as set forth
above.
16.4. NO RIGHT TO EMPLOYMENT. Nothing in the Plan or any Award
Agreement shall interfere with or limit in any way the right of the Company or
any Subsidiary to terminate any Participant's employment at any time, nor confer
upon any Participant any right to continue in the employ of the Company or any
Subsidiary.
16.5. UNFUNDED STATUS OF AWARDS. The Plan is intended to be an
"unfunded" plan for incentive and deferred compensation. With respect to any
payments not yet made to a Participant pursuant to an Award, nothing contained
in the Plan or any Award Agreement shall give the Participant any rights that
are greater than those of a general creditor of the Company or any Subsidiary.
16.6. INDEMNIFICATION. To the extent allowable under
applicable law, each member of the Administrator or of the Board shall be
indemnified and held harmless by the Company from any loss, cost, liability, or
expense that may be imposed upon or reasonably incurred by such member in
connection with or resulting from any claim, action, suit, or proceeding to
which he or she may be a party or in which he or she may be involved by reason
of any action or failure to act under the Plan and against and from any and all
amounts paid by him or her in satisfaction of judgment in such action, suit, or
proceeding against him or her provided he or she gives the Company an
opportunity, at its own expense, to handle and defend the same before he or she
undertakes to handle and defend it on his or her own behalf. The foregoing right
of indemnification shall not be exclusive of any other rights of indemnification
to which such persons may be entitled under the Company's Articles of
Incorporation or By-Laws, as a matter of law, or otherwise, or any power that
the Company may have to indemnify them or hold them harmless.
16.7. RELATIONSHIP TO OTHER BENEFITS. No payment under the
Plan shall be taken into account in determining any benefits under any pension,
retirement, savings,
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profit sharing, group insurance, welfare or other benefit plan of the Company or
any Subsidiary.
16.8. EXPENSES. The expenses of administering the Plan shall
be borne by the Company and its Subsidiaries.
16.9. TITLES AND HEADINGS. The titles and headings of the
Sections in the Plan are for convenience of reference only, and in the event of
any conflict, the text of the Plan, rather than such titles or headings, shall
control.
16.10. FRACTIONAL SHARES. No fractional shares of stock shall
be issued and the Administrator shall determine, in its discretion, whether cash
shall be given in lieu of fractional shares or whether such fractional shares
shall be eliminated by rounding up.
16.11. SECURITIES LAW COMPLIANCE. With respect to any person
who is, on the relevant date, obligated to file reports under Section 16 of the
1934 Act, transactions under this Plan are intended to comply with all
applicable conditions of Rule 16b-3 or its successors under the 1934 Act. To the
extent any provision of the Plan or action by the Administrator fails to so
comply, it shall be void to the extent permitted by law and voidable as deemed
advisable by the Administrator.
16.12. GOVERNMENT AND OTHER REGULATIONS. The obligation of the
Company to make payment of awards in Stock or otherwise shall be subject to all
applicable laws, rules, and regulations, and to such approvals by government
agencies as may be required. The Company shall be under no obligation to
register under the Securities Act of 1933, as amended (the "1933 Act"), any of
the shares of Stock paid under the Plan. If the shares paid under the Plan may
in certain circumstances be exempt from registration under the 1933 Act, the
Company may restrict the transfer of such shares in such manner as it deems
advisable to ensure the availability of any such exemption.
16.13. GOVERNING LAW. The Plan and all Award Agreements shall
be construed in accordance with and governed by the laws of the State of
Arizona.
23
INTER-TEL, INCORPORATED
1997 EMPLOYEE STOCK PURCHASE PLAN
1. Purpose. The purpose of the Plan is to provide employees of the
Company and its Designated Subsidiaries with an opportunity to purchase Common
Stock of the Company through accumulated payroll deductions. It is the intention
of the Company to have the Plan qualify as an "Employee Stock Purchase Plan"
under Section 423 of the Internal Revenue Code of 1986, as amended. The
provisions of the Plan, accordingly, shall be construed so as to extend and
limit participation in a manner consistent with the requirements of that section
of the Code.
2. Definitions.
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(c) "Common Stock" shall mean the Common Stock of the Company.
(d) "Company" shall mean Inter-Tel, Inc., an Arizona
corporation, and any Designated Subsidiary of the Company.
(e) "Compensation" shall mean all base straight time gross
earnings and commissions, exclusive of payments for overtime, shift premium,
incentive compensation, incentive payments, bonuses and other compensation.
(f) "Designated Subsidiary" shall mean any Subsidiary which
has been designated by the Board from time to time in its sole discretion as
eligible to participate in the Plan.
(g) "Employee" shall mean any individual who is an Employee of
the Company for tax purposes whose customary employment with the Company is at
least twenty (20) hours per week and more than five (5) months in any calendar
year. For purposes of the Plan, the employment relationship shall be treated as
continuing intact while the individual is on sick leave or other leave of
absence approved by the Company. Where the period of leave exceeds ninety (90)
days and the individual's right to reemployment is not guaranteed either by
statute or by contract, the employment relationship shall be deemed to have
terminated on the 91st day of such leave.
(h) "Enrollment Date" shall mean the first day of each
Offering Period.
(i) "Exercise Date" shall mean the last day of each Offering
Period.
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(j) "Fair Market Value" shall mean, as of any date, the value
of Common Stock determined as follows:
(1) If the Common Stock is listed on any established
stock exchange or a national market system, including without limitation the
Nasdaq National Market or The Nasdaq Market of The Nasdaq Stock Market, its Fair
Market Value shall be the closing sales price for such stock (or the closing
bid, if no sales were reported) as quoted on such exchange or system for the
last market trading day on the date of such determination, as reported in The
Wall Street Journal or such other source as the Administrator deems reliable,
or;
(2) If the Common Stock is regularly quoted by a
recognized securities dealer but selling prices are not reported, its Fair
Market Value shall be the mean of the closing bid and asked prices for the
Common Stock on the date of such determination, as reported in The Wall Street
Journal or such other source as the Board deems reliable, or;
(3) In the absence of an established market for the
Common Stock, the Fair Market Value thereof shall be determined in good faith by
the Board.
(k) "Holding Period" shall mean a period of twelve (12)
calendar months beginning on the Exercise Date during which (i) shares purchased
by the Participant under the Plan may not be sold, traded, transferred, pledged
or otherwise hypothecated and (ii) these shares are held by the Company in the
Participant's account.
(l) "Offering Period" shall mean a period of approximately six
(6) months during which an option granted pursuant to the Plan may be exercised,
commencing on the first Trading Day on or after June 1, 1997 and terminating on
the last Trading Day in the period ending the following November 30, 1997, or
commencing on the first Trading Day on or after December 1, 1997 and terminating
on the last Trading Day in the period ending the following May 30, 1997. The
duration of Offering Periods may be changed pursuant to Section 4 of this Plan.
(m) "Plan" shall mean this Employee Stock Purchase Plan.
(n) "Purchase Price" shall mean an amount equal to eighty-five
percent (85%) of the Fair Market Value of a share of Common Stock on the
Enrollment Date or on the Exercise Date, whichever is lower.
(o) "Reserves" shall mean the number of shares of Common Stock
covered by each option under the Plan which have not yet been exercised and the
number of shares of Common Stock which have been authorized for issuance under
the Plan but not yet placed under option.
(p) "Subsidiary" shall mean a corporation, domestic or
foreign, of which not less than fifty percent (50%) of the voting shares are
held by the Company or a Subsidiary,
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whether or not such corporation now exists or is hereafter organized or acquired
by the Company or a Subsidiary.
(q) "Trading Day" shall mean a day on which national stock
exchanges and the Nasdaq System are open for trading.
3. Eligibility.
(a) Any Employee who shall be employed by the Company on a
given Enrollment Date shall be eligible to participate in the Plan.
(b) Any provisions of the Plan to the contrary
notwithstanding, no Employee shall be granted an option under the Plan (i) to
the extent that, immediately after the grant, such Employee (or any other person
whose stock would be attributed to such Employee pursuant to Section 424(d) of
the Code) would own capital stock of the Company and/or hold outstanding options
to purchase such stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of the capital stock of the
Company or of any Subsidiary, or (ii) to the extent that his or her rights to
purchase stock under all employee stock purchase plans of the Company and its
subsidiaries accrues at a rate which exceeds twenty-five thousand dollars
($25,000) worth of stock (determined at the fair market value of the shares at
the time such option is granted) for each calendar year in which such option is
outstanding at any time.
4. Offering Periods. The Plan shall be implemented by consecutive
Offering Periods with a new Offering Period commencing on the first Trading Day
on or after June 1 and May 1 each year, or on such other date as the Board shall
determine, and continuing thereafter until terminated in accordance with Section
21 hereof. The Board shall have the power to change the duration of Offering
Periods (including the commencement dates thereof) with respect to future
offerings without stockholder approval if such change is announced at least five
(5) days prior to the scheduled beginning of the first Offering Period to be
affected thereafter.
5. Participation.
(a) An eligible Employee may become a participant in the Plan
by completing a subscription agreement authorizing payroll deductions in the
form of Exhibit 1 to this Plan and filing it with the Company's payroll office
prior to the applicable Enrollment Date.
(b) Payroll deductions for a participant shall commence on the
first payroll following the Enrollment Date and shall end on the last payroll in
the Offering Period to which such authorization is applicable, unless sooner
terminated by the participant as provided in Section 10 hereof.
6. Payroll Deductions.
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(a) At the time a participant files his or her subscription
agreement, he or she shall elect to have payroll deductions made on each pay day
during the Offering Period in an amount not exceeding ten percent (10%) of the
Compensation which he or she receives on each pay day during the Offering
Period.
(b) All payroll deductions made for a participant shall be
credited to his or her account under the Plan and shall be withheld in whole
percentages only. A participant may not make any additional payments into such
account.
(c) A participant may discontinue his or her participation in
the Plan as provided in Section 11 hereof, or may increase or decrease the rate
of his or her payroll deductions during the Offering Period by completing or
filing with the Company a new subscription agreement authorizing a change in
payroll deduction rate. The Board may, in its discretion, limit the number of
participation rate changes during any Offering Period. The change in rate shall
be effective with the first full payroll period following five (5) business days
after the Company's receipt of the new subscription agreement unless the Company
elects to process a given change in participation more quickly. A participant's
subscription agreement shall remain in effect for successive Offering Periods
unless terminated as provided in Section 11 hereof.
(d) Notwithstanding the foregoing, to the extent necessary to
comply with Section 423(b)(8) of the Code and Section 3(b) hereof, a
participant's payroll deductions may be decreased to zero percent (0%) at any
time during an Offering Period. Payroll deductions shall recommence at the rate
provided in such participant's subscription agreement at the beginning of the
first Offering Period which is scheduled to end in the following calendar year,
unless terminated by the participant as provided in Section 11 hereof.
(e) At the time the option is exercised, in whole or in part,
or at the time some or all of the Company's Common Stock issued under the Plan
is disposed of, the participant must make adequate provision for the Company's
federal, state, or other tax withholding obligations, if any, which arise upon
the exercise of the option or the disposition of the Common Stock. At any time,
the Company may, but shall not be obligated to, withhold from the participant's
compensation the amount necessary for the Company to meet applicable withholding
obligations, including any withholding required to make available to the Company
any tax deductions or benefits attributable to sale or early disposition of
Common Stock by the Employee.
7. Grant of Option. On the Enrollment Date of each Offering Period,
each eligible Employee participating in such Offering Period shall be granted an
option to purchase on the Exercise Date of such Offering Period (at the
applicable Purchase Price) up to a number of shares of the Company's Common
Stock determined by dividing such Employee's payroll deductions accumulated
prior to such Exercise Date and retained in the Participant's account as of the
Exercise Date by the applicable Purchase Price; provided that in no event shall
an Employee be permitted to purchase during each Offering Period more than two
thousand (2000) shares (subject to any adjustment pursuant to Section 20), and
provided further that such
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purchase shall be subject to the limitations set forth in Sections 3(b) and 13
hereof. Exercise of the option shall occur as provided in Section 8 hereof,
unless the participant has withdrawn pursuant to Section 11 hereof. The Option
shall expire on the last day of the Offering Period.
8. Exercise of Option. Unless a participant withdraws from the Plan as
provided in Section 11 hereof, his or her option for the purchase of shares
shall be exercised automatically on the Exercise Date, and the maximum number of
full shares subject to option shall be purchased for such participant at the
applicable Purchase Price with the accumulated payroll deductions in his or her
account. No fractional shares shall be purchased; any payroll deductions
accumulated in a participant's account which are not sufficient to purchase a
full share shall be retained in the participant's account for the subsequent
Offering Period, subject to earlier withdrawal by the participant as provided in
Section 11 hereof. Any other monies left over in a participant's account after
the Exercise Date shall be returned to the participant. During a participant's
lifetime, a participant's option to purchase shares hereunder is exercisable
only by him or her. Shares purchased shall be issued subject to the Holding
Period, as described in Section 9.
9. Holding Period
Shares purchased by the participant will be held in the
participant's account pursuant to the Plan for the duration of a twelve (12)
month Holding Period.
The Holding Period will commence on the first day following
the Exercise Date and end after twelve (12) calendar months after the Exercise
Date. Upon completion of the Holding Period, the relevant shares will be
transferred to the participant.
Notwithstanding the foregoing, the Holding Period shall lapse
in the event of a sale of all or substantially all of the Company's assets or a
merger with or into another corporation.
10. Delivery. As promptly as practicable after each Exercise Date on
which a purchase of shares occurs, the Company shall arrange the delivery to
each participant, as appropriate, of a certificate representing the shares
purchased upon exercise of his or her option.
11. Withdrawal.
(a) A participant may withdraw all but not less than all the
payroll deductions credited to his or her account and not yet used to exercise
his or her option under the Plan at any time by giving written notice to the
Company in the form of Exhibit 2 to this Plan. All of the participant's payroll
deductions credited to his or her account shall be paid to such participant
promptly after receipt of notice of withdrawal and such participant's option for
the Offering Period shall be automatically terminated, and no further payroll
deductions for the purchase of shares shall be made for such Offering Period. If
a participant withdraws from an
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Offering Period, payroll deductions shall not resume at the beginning of the
succeeding Offering Period unless the participant delivers to the Company a new
subscription agreement.
(b) A participant's withdrawal from an Offering Period shall
not have any effect upon his or her eligibility to participate in any similar
plan which may hereafter be adopted by the Company or in succeeding Offering
Periods which commence after the termination of the Offering Period from which
the participant withdraws.
12. Termination of Employment. Upon a participant's ceasing to be an
Employee for any reason, he or she shall be deemed to have elected to withdraw
from the Plan and the payroll deductions credited to such participant's account
during the Offering Period but not yet used to exercise the option shall be
returned to such participant or, in the case of his or her death, to the person
or persons entitled thereto under Section 16 hereof, and such participant's
option shall be automatically terminated. The preceding sentence
notwithstanding, a participant who receives payment in lieu of notice of
termination of employment shall be treated as continuing to be an Employee for
the participant's customary number of hours per week of employment during the
period in which the participant is subject to such payment in lieu of notice.
13. Interest. No interest shall accrue on the payroll deductions of a
participant in the Plan.
14. Stock.
(a) The maximum number of shares of the Company's Common Stock
which shall be made available for sale under the Plan shall be two hundred and
fifty thousand (250,000) shares, subject to adjustment upon changes in
capitalization of the Company as provided in Section 20 hereof. If, on a given
Exercise Date, the number of shares with respect to which options are to be
exercised exceeds the number of shares then available under the Plan, the
Company shall make a pro rata allocation of the shares remaining available for
purchase in as uniform a manner as shall be practicable and as it shall
determine to be equitable.
(b) The participant shall have no interest or voting right in
shares covered by his option until such option has been exercised.
(c) Shares to be delivered to a participant under the Plan
shall be registered in the name of the participant or in the name of the
participant and his or her spouse.
15. Administration. The Plan shall be administered by the Board or a
committee of members of the Board appointed by the Board. The Board or its
committee shall have full and exclusive discretionary authority to construe,
interpret and apply the terms of the Plan, to determine eligibility and to
adjudicate all disputed claims filed under the Plan. Every finding, decision and
determination made by the Board or its committee shall, to the full extent
permitted by law, be final and binding upon all parties.
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16. Designation of Beneficiary.
(a) A participant may file a written designation of a
beneficiary who is to receive any shares and cash, if any, from the
participant's account under the Plan in the event of such participant's death
subsequent to an Exercise Date on which the option is exercised but prior to
delivery to such participant of such shares and cash. In addition, a participant
may file a written designation of a beneficiary who is to receive any cash from
the participant's account under the Plan in the event of such participant's
death prior to exercise of the option. If a participant is married and the
designated beneficiary is not the spouse, spousal consent shall be required for
such designation to be effective.
(b) Such designation of beneficiary may be changed by the
participant at any time by written notice. In the event of the death of a
participant and in the absence of a beneficiary validly designated under the
Plan who is living at the time of such participant's death, the Company shall
deliver such shares and/or cash to the executor or administrator of the estate
of the participant, or if no such executor or administrator has been appointed
(to the knowledge of the Company), the Company, in its discretion, may deliver
such shares and/or cash to the spouse or to any one or more dependents or
relatives of the participant, or if no spouse, dependent or relative is known to
the Company, then to such other person as the Company may designate.
17. Transferability. Neither payroll deductions credited to a
participant's account nor any rights with regard to the exercise of an option or
to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 16 hereof) by the participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect, except that the Company may treat such act as an election to withdraw
funds from an Offering Period in accordance with Section 11 hereof.
18. Use of Funds. All payroll deductions received or held by the
Company under the Plan may be used by the Company for any corporate purpose, and
the Company shall not be obligated to segregate such payroll deductions.
19. Reports. Individual accounts shall be maintained for each
participant in the Plan. Statements of account shall be given to participating
Employees at least annually, which statements shall set forth the amounts of
payroll deductions, the Purchase Price, the number of shares purchased and the
remaining cash balance, if any.
20. Adjustments Upon Changes in Capitalization, Dissolution,
Liquidation, Merger or Asset Sale.
(a) Changes in Capitalization. Subject to any required action
by the stockholders of the Company, the Reserves, the maximum number of shares
each participant may purchase per Offering Period (pursuant to Section 7), as
well as the price per share and the
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number of shares of Common Stock covered by each option under the Plan which has
not yet been exercised shall be proportionately adjusted for any increase or
decrease in the number of issued shares of Common Stock resulting from a stock
split, reverse stock split, stock dividend, combination or reclassification of
the Common Stock, or any other increase or decrease in the number of shares of
Common Stock effected without receipt of consideration by the Company; provided,
however, that conversion of any convertible securities of the Company shall not
be deemed to have been "effected without receipt of consideration". Such
adjustment shall be made by the Board, whose determination in that respect shall
be final, binding and conclusive. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares
of Common Stock subject to an option.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Offering Period shall terminate
immediately prior to the consummation of such proposed action, unless otherwise
provided by the Board.
(c) Merger or Asset Sale. In the event of a proposed sale of
all or substantially all of the assets of the Company, or the merger of the
Company with or into another corporation, the Offering Period then in progress
shall be shortened by setting a new Exercise Date (the "New Exercise Date"). The
New Exercise Date shall be before the date of the Company's proposed sale or
merger. The Board shall notify each participant in writing, at least ten (10)
business days prior to the New Exercise Date, that the Exercise Date for the
participant's option has been changed to the New Exercise Date and that the
participant's option shall be exercised automatically on the New Exercise Date,
unless prior to such date the participant has withdrawn from the Offering Period
as provided in Section 11 hereof.
21. Amendment or Termination.
(a) The Board of Directors of the Company may at any time and
for any reason terminate or amend the Plan. Except as provided in Section 20
hereof, no such termination can affect options previously granted, provided that
an Offering Period may be terminated by the Board of Directors on any Exercise
Date if the Board determines that the termination of the Plan is in the best
interests of the Company and its stockholders. Except as provided in Section 20
hereof, no amendment may make any change in any option theretofore granted which
adversely affects the rights of any participant. To the extent necessary to
comply with Section 423 of the Code (or any other applicable law, regulation or
stock exchange rule), the Company shall obtain shareholder approval in such a
manner and to such a degree as required.
(b) Without stockholder consent and without regard to whether
any participant rights may be considered to have been "adversely affected," the
Board (or its committee) shall be entitled to change the Offering Periods, limit
the frequency and/or number of changes in the amount withheld during an Offering
Period, establish the exchange ratio applicable to amounts withheld in a
currency other than U.S. dollars, permit payroll
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<PAGE>
withholding in excess of the amount designated by a participant in order to
adjust for delays or mistakes in the Company's processing of properly completed
withholding elections, establish reasonable waiting and adjustment periods
and/or accounting and crediting procedures to ensure that amounts applied toward
the purchase of Common Stock for each participant properly correspond with
amounts withheld from the participant's Compensation, and establish such other
limitations or procedures as the Board (or its committee) determines in its sole
discretion advisable which are consistent with the Plan.
22. Notices. All notices or other communications by a participant to
the Company under or in connection with the Plan shall be deemed to have been
duly given when received in the form specified by the Company at the location,
or by the person, designated by the Company for the receipt thereof.
23. Conditions Upon Issuance of Shares. Shares shall not be issued with
respect to an option unless the exercise of such option and the issuance and
delivery of such shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, the rules and regulations promulgated thereunder, and the requirements
of any stock exchange upon which the shares may then be listed, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.
As a condition to the exercise of an option, the Company may require
the person exercising such option to represent and warrant at the time of any
such exercise that the shares are being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned applicable provisions of law.
24. Term of Plan. The Plan shall become effective upon the earlier to
occur of its adoption by the Board of Directors or its approval by the
stockholders of the Company. It shall continue in effect for a term of ten (10)
years unless sooner terminated under Section 21 hereof.
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EXHIBIT 1
INTER-TEL, INCORPORATED
1997 EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
_____ Original Application Enrollment Date: __________
_____ Change in Payroll Deduction Rate
_____ Change of Beneficiary(ies)
1. _____________________________________ hereby elects to participate in
the Inter-Tel, Incorporated 1997 Employee Stock Purchase Plan (the
"Employee Stock Purchase Plan") and subscribes to purchase shares of
the Company's Common Stock in accordance with this Subscription
Agreement and the Employee Stock Purchase Plan.
2. I hereby authorize payroll deductions from each paycheck in the amount
of ____% of my Compensation on each payday (from 1 to _____%) during
the Offering Period in accordance with the Employee Stock Purchase
Plan. (Please note that no fractional percentages are permitted.)
3. I understand that said payroll deductions shall be accumulated for the
purchase of shares of Common Stock at the applicable Purchase Price
determined in accordance with the Employee Stock Purchase Plan. I
understand that if I do not withdraw from an Offering Period, any
accumulated payroll deductions will be used to automatically exercise
my option.
4. I understand that any shares of the Company's Common Stock I purchase
shall be held by the Company for twelve (12) months after the date of
purchase. I understand that the Company will deliver to me the shares I
have purchased as soon as possible after the twelve (12) month Holding
Period.
5. I have received a copy of the complete Employee Stock Purchase Plan. I
understand that my participation in the Employee Stock Purchase Plan is
in all respects subject to the terms of the Plan. I understand that my
ability to exercise the option under this Subscription Agreement is
subject to stockholder approval of the Employee Stock Purchase Plan.
6. Shares purchased for me under the Employee Stock Purchase Plan should
be issued in the name(s) of _____________________________________
(Employee or Employee and Spouse only).
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7. I understand that if I dispose of any shares received by me pursuant to
the Plan within 2 years after the Enrollment Date (the first day of the
Offering Period during which I purchased such shares), I will be
treated for federal income tax purposes as having received ordinary
income at the time of such disposition in an amount equal to the excess
of the fair market value of the shares at the time such shares were
purchased by me over the price which I paid for the shares. I hereby
agree to notify the Company in writing within thirty (30) days after
the date of any disposition of shares and I will make adequate
provision for Federal, state or other tax withholding obligations, if
any, which arise upon the disposition of the Common Stock. The Company
may, but will not be obligated to, withhold from my compensation the
amount necessary to meet any applicable withholding obligation
including any withholding necessary to make available to the Company
any tax deductions or benefits attributable to sale or early
disposition of Common Stock by me. If I dispose of such shares at any
time after the expiration of the 2-year holding period, I understand
that I will be treated for federal income tax purposes as having
received income only at the time of such disposition, and that such
income will be taxed as ordinary income only to the extent of an amount
equal to the lesser of (1) the excess of the fair market value of the
shares at the time of such disposition over the purchase price which I
paid for the shares, or (2) fifteen percent (15%) of the fair market
value of the shares on the first day of the Offering Period. The
remainder of the gain, if any, recognized on such disposition will be
taxed as capital gain.
8. I hereby agree to be bound by the terms of the Employee Stock Purchase
Plan. The effectiveness of this Subscription Agreement is dependent
upon my eligibility to participate in the Employee Stock Purchase Plan.
9. In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and shares due me under the
Employee Stock Purchase Plan:
NAME: (Please print) ____________________________________________
(First) (Middle) (Last)
____________________________________________
(Relationship)
____________________________________________
____________________________________________
(Address)
Employee's Social
Security Number: ____________________________________________
Employee's Address: ____________________________________________
____________________________________________
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I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN EFFECT THROUGHOUT
SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME.
Dated: ___________________
___________________________________________
Signature of Employee
___________________________________________
Spouse's Signature (If beneficiary other than Spouse)
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<PAGE>
EXHIBIT 2
---------
INTER-TEL, INCORPORATED
1997 EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
The undersigned participant in the Offering Period of the Inter-Tel,
Incorporated 1997 Employee Stock Purchase Plan which began on ___________ 19____
(the "Enrollment Date") hereby notifies the Company that he or she hereby
withdraws from the Offering Period. He or she hereby directs the Company to pay
to the undersigned as promptly as practicable all the payroll deductions
credited to his or her account with respect to such Offering Period. The
undersigned understands and agrees that his or her option for such Offering
Period will be automatically terminated. The undersigned understands further
that no further payroll deductions will be made for the purchase of shares in
the current Offering Period and the undersigned shall be eligible to participate
in succeeding Offering Periods only by delivering to the Company a new
Subscription Agreement.
Name and Address of Participant:
____________________________________
____________________________________
____________________________________
Signature:
____________________________________
Date: ______________________________
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EXHIBIT 23.1
------------
Consent of Independent Auditors
We consent to the incorporation by reference in the registration
statement (Form S-8) pertaining to the Inter-Tel, Incorporated 1997 Long Term
Incentive Plan and to the Inter-Tel, Incorporated 1997 Employee Stock Purchase
Plan of our report dated February 28, 1997 with respect to the consolidated
financial statements and schedule of Inter-Tel, Incorporated included in its
Annual Report (Form 10-K) for the year ended December 31, 1996, filed with the
Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Phoenix, Arizona
November 26, 1997
37
