As filed with the Securities and Exchange Commission on November 13, 1998
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)
----------
ACQUISITION STOCK OPTION PLAN
-----------------------------
(Full Title of the Plan)
----------
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
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<PAGE>
<TABLE>
<CAPTION>
========================================================================================
<S> <C> <C> <C> <C>
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
- ----------------------------------------------------------------------------------------
Common Stock, no par
value per share, to
be issued upon exercise
of options granted 82,428 $ 9.85(1) $811,916 $240.00
under the Acquisition
Stock Option Plan
- ----------------------------------------------------------------------------------------
TOTALS 82,428 $811,916 $240.00
========================================================================================
</TABLE>
(1) Under the Acquisition Stock Option Plan (the "Plan"), 82,428 shares are
subject to outstanding options to purchase the Company's Common Stock. The
Proposed Maximum Offering Price Per Share with respect to such 82,428
shares was calculated pursuant to Rule 457(h) of the Securities Act of
1933, as amended (the "Securities Act") by reference to the exercise price
of such options. The weighted average exercise price of such 82,428 shares
subject to outstanding options under the Plan is $9.85.
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 Annual Report on Form 10-K filed pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), on 3/30/98.
(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 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.
(c) All reports and other documents filed by Registrant pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act after the date hereof,
and prior to the filing of a post-effective amendment which indicates that all
securities offered hereunder have been sold or which de-registers all securities
then remaining unsold under this registration statement, shall be deemed to be
incorporated by reference herein and to be part hereof from the date of filing
of such reports and documents.
<PAGE>
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.
ITEM 8. EXHIBITS.
Exhibit
Number
------
*4.1 Certificate of Incorporation of the Registrant
*4.2 Bylaws of the Registrant
5.1 Opinion of John L. Gardner, General Counsel, as to the legality
of securities being registered
10.1 Acquisition Stock Option Plan and Form of Stock Option Agreement
thereunder
II-2
<PAGE>
23.1 Consent of Independent Auditors
23.2 Consent of Counsel (included in Exhibit 5.1)
24.1 Power of Attorney (see page II-4)
- ----------
* Incorporated by reference to 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.
All other exhibits for which provision is made in Item 601 of Regulation S-K of
the Securities Act are either not required under the instructions related
thereto or are inapplicable, and therefore have been omitted.
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 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.
II-3
<PAGE>
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 12, 1998.
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Steven G. Mihaylo Chairman of the Board and November 12, 1998
- --------------------------- Chief Executive Officer
(Steven G. Mihaylo) (Principal Executive Officer)
/s/ Kurt R. Kneip Chief Financial Officer November 12, 1998
- --------------------------- (Principal Financial and
(Kurt R. Kneip) Accounting Officer)
/s/ Gary D. Edens Director November 12, 1998
- ---------------------------
(Gary D. Edens)
/s/ Maurice H. Esperseth Director November 12, 1998
- ---------------------------
(Maurice H. Esperseth)
/s/ C. Roland Haden Director November 12, 1998
- ---------------------------
(C. Roland Haden)
/s/ J. Robert Anderson Director November 12, 1998
- ---------------------------
(J. Robert Anderson)
II-4
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
EXHIBITS
--------------------
REGISTRATION STATEMENT ON FORM S-8
INTER-TEL, INCORPORATED
NOVEMBER 13, 1998
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description
------ -----------
5.1 Opinion of John L. Gardner, General Counsel
10.1 Acquisition Stock Option Plan and Form of Stock Option Agreement
thereunder
23.1 Consent of Independent Auditors
23.2 Consent of John L. Gardner, General Counsel (Contained in
Exhibit 5.1)
24.1 Power of Attorney (See page II-4)
EXHIBIT 5.1
OPINION OF JOHN L. GARDNER, GENERAL COUNSEL
November 6, 1998
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 82,428 shares (the "Shares") of Common Stock, no
par value, of Inter-Tel, Incorporated, an Arizona corporation (the "Company"),
under the Company's Acquisition Stock Option 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, General Counsel
EXHIBIT 10.1
INTER-TEL, INCORPORATED
ACQUISITION STOCK OPTION PLAN
ARTICLE 1. PURPOSE
1.1 GENERAL. The purpose of the Inter-Tel, Incorporated Acquisition Stock
Option 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 key employees and consultants of the Company and any
Subsidiary.
ARTICLE 2. EFFECTIVE DATE
2.1 EFFECTIVE DATE. The Plan shall become effective upon its adoption by
the Board (the "Effective Date"). It shall continue in effect for ten (10) years
unless terminated sooner under Article 15.
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.
(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
<PAGE>
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 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.
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 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. The Committee may require such medical
or other evidence as it deems necessary to judge the nature and permanency of
the Participant's condition.
(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: (i) the
closing price 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
(ii) the price as determined by such methods or procedures as may be established
from time to time by the Committee.
(j) "Non-Qualified Stock Option" means an Option that is not intended
to be an incentive stock option qualified under Section 422 of the Code.
2
<PAGE>
(k) "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 shall be a Non-Qualified Stock Option.
(l) "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.
(m) "Participant" means a person who, as a key employee or consultant
of the Company or any Subsidiary, has been granted an Award under the Plan.
(n) "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.
(o) "Plan" means the Inter-Tel, Incorporated Acquisition Stock Option
Plan, as amended from time to time.
(p) "Restricted Stock Award" means Stock granted to a Participant
under Article 10 that is subject to certain restrictions and to risk of
forfeiture.
(q) "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.
(r) "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.
(s) "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
4.1 COMMITTEE. The Plan shall be administered by a Committee that is
appointed by, and shall serve at the discretion of, the Board. The Committee
shall consist of at least two individuals who are members of the Board.
4.2 ACTION BY THE COMMITTEE. A majority of the 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 the Committee in
lieu of a meeting shall be deemed the acts of the Committee. Each member of the
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.
3
<PAGE>
4.3 AUTHORITY OF COMMITTEE. The Committee 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 the number 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 Committee 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
(i) Make all other decisions and determinations that may be required
under the Plan or as the Committee deems necessary or advisable to administer
the Plan.
4.4 DECISIONS BINDING. The Committee's interpretation of the Plan, any
Awards granted under the Plan, any Award Agreement and all decisions and
determinations by the Committee 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 Article 14, 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 82,428.
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
4
<PAGE>
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.
ARTICLE 6. ELIGIBILITY
6.1 GENERAL. Awards may be granted only to individuals who are employees or
consultants of the Company or a Subsidiary, as determined by the Committee;
provided, however, that officers and directors of the Company may not receive
Awards under the Plan.
ARTICLE 7. STOCK OPTIONS
7.1 GENERAL. The Committee 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 Committee.
(b) TIME AND CONDITIONS OF EXERCISE. The Committee shall determine the
time or times at which an Option may be exercised in whole or in part. The
Committee 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. Committee 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 Committee pursuant to the
preceding sentence, the Committee 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 Committee.
(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 Committee.
ARTICLE 8. STOCK APPRECIATION RIGHTS
8.1 GRANT OF SARS. The Committee is authorized to grant SARs to
Participants on the following terms and conditions:
5
<PAGE>
(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 Committee.
(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 Committee
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 Committee is authorized to grant
Performance Shares to Participants on such terms and conditions as may be
selected by the Committee. The Committee 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 Committee, and payable to, or exercisable
by, the Participant to whom the Performance Shares are granted, in whole or in
part, as the Committee shall establish at grant or thereafter. The Committee
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, provided that the time period during which the
performance goals must be met shall, in all cases, exceed six months.
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
Committee and reflected in the Award Agreement.
ARTICLE 10. RESTRICTED STOCK AWARDS
10.1 GRANT OF RESTRICTED STOCK. The Committee 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 Committee. 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 Committee may
impose (including, without limitation, limitations on the right to vote
Restricted Stock or the right to receive dividends on the Restricted Stock).
6
<PAGE>
These restrictions may lapse separately or in combination at such times, under
such circumstances, in such installments, or otherwise, as the Committee
determines at the time of the grant of the Award or thereafter.
10.3 FORFEITURE. Except as otherwise determined by the Committee 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 Committee 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 Committee 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 a manner as the Committee 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 Committee is authorized to grant
Dividend Equivalents to Participants subject to such terms and conditions as may
be selected by the Committee. 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 Committee. The Committee 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 Committee 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 related to shares of Stock, as deemed by the Committee 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 Committee 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 Committee, 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
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Committee 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 Committee 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 Committee
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 Committee.
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 Committee 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 Committee. The Committee 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.
13.6 BENEFICIARIES. Notwithstanding Section 13.5, a participant may, in the
manner determined by the Committee, 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 Committee. 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 50 percent 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 Committee.
13.7 STOCK CERTIFICATES. All Stock certificates delivered under the Plan
are subject to any stop transfer orders and other restrictions as the Committee
deems necessary or advisable to comply with federal or state securities laws,
rules and regulations and the rules of any national securities exchange or
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automated quotation system on which the Stock is listed, quoted, or traded. The
Committee may place legends on any Stock certificate 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 Committee may in its sole discretion declare previously granted Options to
be immediately exercisable.
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 remain
exercisable 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 exercisable and all
restrictions on outstanding Awards shall lapse.
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.
14.2 MERGERS, ETC. Subject to the Change of Control provisions in Section
13.10. a dissolution or liquidation of the Company or a merger or consolidation
in which the Company is not the surviving or resulting corporation, the
Committee shall, in its sole discretion:
(a) Cause every Award outstanding hereunder to terminate, except that
the surviving or resulting corporation in its absolute and uncontrolled
discretion, may tender an option or options to purchase its shares or exercise
such rights on terms and conditions, as to the number of shares and rights and
otherwise, which shall substantially preserve the rights and benefits of any
Award then outstanding thereunder; or
(b) Give each participant the right to exercise Awards prior to the
occurrence of the event otherwise terminating the Awards over such period as the
Committee, in its sole and absolute discretion, shall determine. In addition, in
the event of a Change of Control, the Committee may in its discretion provide
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that 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.
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 Committee may terminate, amend or
modify the Plan.
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
Committee is obligated to treat Participants and employees uniformly.
16.2 NO SHAREHOLDERS 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 Committee 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 Committee establishes. The Committee 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.
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16.6 INDEMNIFICATION. To the extent allowable under applicable law, each
member of the Committee 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, 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 Committee 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 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.
16.12 GOVERNING LAW. The Plan and all Award Agreements shall be construed
in accordance with and governed by the internal substantive laws, but not the
choice of law rules, of the State of Arizona.
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SAMPLE FORM OF STOCK OPTION AGREEMENT
OPTION GRANT DATED ___________ UNDER THE
INTER-TEL, INCORPORATED ACQUISITION STOCK OPTION PLAN
TO: EMPLOYEE NAME
Pursuant to action taken by the Compensation Committee of the Board of
Directors and approved by the Board of Directors of Inter-Tel, Incorporated (the
"Company") under the Inter-Tel, Incorporated Long-Term Incentive Plan (the
"Plan"), you are hereby granted the option to purchase a total of ______ shares
of common stock of the Company (the "Common Stock"), at the price of $_____ per
share, subject to the provisions and conditions set forth below. The option
granted hereby is not intended to be an incentive stock option within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended.
1. You may purchase all or any of the shares of Common Stock included in
any installment under this option, on or after the date the installment vests.
One-fifth (1/5) of the shares shall vest on each annual anniversary of the date
of the grant of this option.
2. Notwithstanding the above, you may not exercise the option at any time
after the expiration date hereinafter set forth. The installment may be
exercised by making payment in full to the Chief Financial Officer of the
Company, 120 North 44th Street, Suite 200, Phoenix, AZ 85034-1822, for the
shares which you so elect to purchase, at the price per share herein prescribed,
whereupon you will receive a stock certificate representing the shares for which
you have made payment. The Company, however, shall not be obligated to deliver
any stock unless and until:
(i) there has been compliance with any federal or state laws or
regulations or national securities exchange requirements which the Company may
deem applicable; and
3. Upon the exercise of an option, the purchase price shall be paid in
cash, check, or, in the sole discretion of the Committee, in Common Stock, or a
combination thereof. Each share of Common Stock received by the Company in
payment of all or a portion of the purchase price specified in this option shall
be valued at its fair market value on the date of payment.
4. The Committee may require, in its sole discretion, that you satisfy the
payment of any federal, state or local tax withholding amount due as a result of
your exercise of an option by:
(i) by requiring you to deliver to the Company that number of shares
of Common Stock then owned by you, duly endorsed for transfer to the Company and
free and clear of any liens, claims, security interests or encumbrances
whatsoever (based on the fair market value of the Common Stock on the date such
option is exercised), which are required to satisfy the payment of such tax
withholding amount; or
(ii) by requiring you to deliver to the Company a bank cashier's
check, made payable to the order of the Company, in the aggregate amount
required to satisfy the payment of such tax withholding amount; or
<PAGE>
(iii) through payroll withholdings
The right described in (i) and (ii) above shall be exercised and delivered to
you as soon as practicable after receipt of your written exercise of any option
hereunder.
5. The Committee may suspend or postpone the receipt of shares in payment
of the purchase price specified in this stock option if at any time;
(i) it has knowledge of information concerning the Company which upon
disclosure to the public might, in its opinion, materially affect the market
price of the Common Stock;
(ii) non-Company events of an extraordinary nature occur which, in its
opinion, may not have been effectively reflected in the market; or
(iii) such suspension or postponement for any other reason would, in
its opinion, be in the best interests of the Company.
6. The Committee hereby reserves and shall have the right, by written
notice to you, to change the provisions of this option in any manner that it may
deem necessary or advisable to carry out the purpose of this grant, including
any change designed to comply with any change in applicable regulations,
interpretations or statutory enactment, provided that any such change shall be
applicable only to shares for which payment shall not then have been made as
herein provided.
7. This option shall terminate upon the earlier to occur of:
(i) the expiration date hereof; or
(ii) the date you cease to be employed by the Company or any of its
subsidiaries for any reason other than your death or permanent disability (as
defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended);
except that you shall have up to thirty (30) days after the date you cease to be
an employee to exercise your option only to the extent that you were entitled to
exercise it at the date of termination. To the extent that you were not entitled
to exercise the Option at the date of such termination, or if you do not
exercise an Option (which you were entitled to exercise) within the time
specified herein, or if any other provision of this paragraph applies, the
Option shall terminate.
(iii) six (6) months after the date you cease to be employed by the
Company or any of its subsidiaries by reason of your permanent disability; or
(iv) six (6) months after the date you cease to be employed by the
Company or any of its subsidiaries by reason of your death, but only to the
extent of the right to exercise that would have accrued had you continued living
six (6) months after the date of your death; or
(v) any act or omission set forth in Paragraph 8 (i).
<PAGE>
8. Anything herein to the contrary notwithstanding, the following
provisions shall apply:
(i) if, at any time within the term of this option or within one (1)
year after termination of employment or within one (1) year after you exercise
any portion of this option, whichever is the latest, you engage in any activity
in competition with any activity of the Company, or inimical, contrary, or
harmful to the interests of the Company, including, but not limited to: (a)
conduct related to your employment for which either civil or criminal penalties
against you may be sought, (b) violation of Company policies, including, without
limitation, the Company's insider trading policy, (c) accepting employment with
or serving as a consultant, advisor, or in any other capacity to an employer
that is in competition with or acting against the interests of the Company,
including employing or recruiting any present, former, or future employee of the
Company, (d) disclosing or misusing any confidential information or material
concerning the Company, or (e) participating in a hostile takeover attempt, then
this option shall terminate effective the date upon which you enter into such
activity, unless terminated sooner by operation of another term or condition of
this option or the Plan, and any gain represented by the closing market price
per share of Common Stock on the date of such exercise over the exercise price
per share (set forth above), multiplied by the number of shares of Common Stock
you purchased, for all options exercised by you within a period of one (1) year
prior to or after the date of termination of this option award, without regard
to any subsequent market price decrease or increase, shall be paid by you to the
Company;
(ii) by accepting this option, you consent to a deduction from any
amounts the Company owes you from time to time (including amounts owed to you as
wages or other compensation, fringe benefits, or vacation pay, as well as any
other amounts owed to you by the Company), to the extent of any amount/s you owe
the Company under (i) above. Whether or not the Company elects to make any
set-off in whole or in part, if the Company does not recover by means of set-off
the full amounts you owe it, calculated as set forth above, you agree to pay
immediately the unpaid balance to the Company; and
(iii) you may be released from your obligations under (i) above only
if the Committee determines, in its sole discretion, that such action is in the
best interests of the Company.
9. In the event of a stock dividend, stock split, combination or other
reduction in the number of issued shares of Common Stock, the Committee may make
such adjustments in the number of unpurchased shares subject to this option and
in the exercise price per share as it may determine to be appropriate and
equitable to preserve your proportionate interest in this option and to prevent
dilution or enlargement of rights.
10. In the event of a merger, consolidation, reorganization, dissolution,
or other sale or transfer of fifty percent (50%) or more of the ownership
interest of the Company (other than by a reorganization or other mere change in
the corporate form or a sale or exchange of substantially all assets), your
rights under this option shall terminate as to shares not theretofore purchased
except to the extent and subject to such adjustments as may be provided by the
Committee or in the terms of the merger, consolidation, reorganization, or plan
of dissolution or sale of the assets, subject to approval of the Committee, to
preserve your proportionate interest in this option and to prevent dilution or
enlargement of rights.
11. This option shall be exercisable during your lifetime only by you and
shall not be transferable by you, expressly or by operation of law, other than
by will and the laws of descent and distribution. Any other attempted transfer
or other disposition of this option by you shall be void and shall constitute
valid grounds for cancellation of this option by the Company.
<PAGE>
12. The term "fair market value" with respect to the Common Stock shall
have the meaning herein as defined in the Plan.
13. This option and all your rights hereunder shall, unless sooner
terminated in accordance with the provisions hereof, cease and terminate ten
(10) years from the date of the grant of this option (the "expiration date"), at
5:00 P.M. Phoenix, AZ time.
Please acknowledge receipt of this option and insert your social security number
at the bottom of the duplicate copy herewith enclosed and return the same within
thirty (30) days from the date hereof to Inter-Tel, Incorporated, Attn: Barbara
McFarlane, 120 North 44th Street, Suite 200, Phoenix, Arizona 85034-1822.
INTER-TEL, INCORPORATED,
an Arizona Corporation
By:
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Chairman of the Board and
Chief Executive Officer
I hereby accept this option. Optionee acknowledges receipt of a copy of the
Plan, a copy of which is attached hereto as Exhibit "A," and represents that he
is familiar with the terms and provisions thereof, and hereby accepts this
option subject to all of the terms and provisions thereof. Optionee hereby
agrees to accept as binding, conclusive and final all decisions or
interpretations of the Board or of the Committee upon any questions arising
under the Plan.
Signature:
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Social Security No:
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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 Acquisition Stock Option Plan of Inter-Tel,
Incorporated of our report dated February 20, 1998 with respect to the
consolidated financial statements and schedule of Inter-Tel, Incorporated, which
is included in the Company's Annual Report (Form 10-K) for the year ended
December 31, 1997, filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Phoenix, Arizona
November 10, 1998
