X0202 4 2006-06-14 0 0000350066 INTER TEL INC INTL 0000902111 MIHAYLO STEVEN G P.O. BOX 19790 RENO NV 89511 1 0 1 0 Profit Sharing Agreement 2006-06-14 4 J 0 1 D Common Stock 5179498 0 D Profit Sharing Agreement 2006-06-14 4 J 0 1 D Common Stock 5179498 0 D On March 3, 2006, a wholly owned affiliate of the reporting person entered into a letter agreement (the "RBC Letter Agreement") with RBC Capital Markets Corporation ("RBC"), pursuant to which the reporting person agreed to pay RBC an agreed upon topping fee in the event that (a) a third party transaction in which a majority of the capital stock or assets of the issuer is transferred for consideration to a person not affiliated with the reporting person or the issuer (a "Third Party Transaction") is consummated during the term of the RBC Letter Agreement or during the twelve months following the term, and (b) such Third Party Transaction is subsequent to any offer (whether written or oral) made by the reporting person to the issuer relating to a transaction whereby a majority of the capital stock or assets of the issuer is transferred for consideration to the reporting person or otherwise becomes beneficially owned by the reporting person. One profit sharing agreement with respect to 5,179,498 shares of common stock of the issuer. See Note 1 above. The topping fee, if any, is payable in cash to RBC within 5 business days of the closing of such Third Party Transaction. On June 14, 2006, INTL Acquisition Corp. ("IAC"), an entity jointly formed by Vector (as defined below) and an affiliate of the reporting person, made an offer to acquire for cash all of the outstanding shares of common stock of the issuer, other than shares beneficially owned by IAC. Twelve months following the expiration or termination of the RBC Letter Agreement. On May 18, 2006, the reporting person and a wholly owned affiliate of the reporting person entered in a memorandum of understanding (the "MOU") with Vector Capital Corporation ("Vector"), pursuant to which, if, after the reporting person (or such wholly owned affiliate) and Vector extend a proposal to jointly acquire the issuer, the reporting person chooses to sell or vote his shares within twelve months of the termination of the MOU in favor of another change of control transaction (the "Other Transaction"), the reporting person (or such wholly owned affiliate) shall pay to Vector, either in cash or in the form of consideration received by the reporting person for his shares of the issuer's common stock in such Other Transaction, a specified amount as "overbid protection" in accordance with the formula set forth in the MOU. One profit sharing agreement with respect to 5,179,498 shares of common stock. See Note 5 above. The amount of "overbid protection" (if any) is payable to Vector upon the receipt by Mr. Mihaylo of consideration in such Other Transaction. On June 14, 2006, IAC made an offer to acquire for cash all of the outstanding shares of common stock of the issuer, other than shares beneficially owned by IAC. Twelve months following the termination of the MOU. Steven G. Mihaylo 2006-06-16