UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event): October 12, 2006
INTER-TEL (DELAWARE),
INCORPORATED
(Exact Name of Registrant as Specified in Charter)
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| Delaware
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0-10211
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86-0220994 |
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| (State or Other Jurisdiction
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(Commission File Number)
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(IRS Employer |
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Identification No.) |
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| 1615 S. 52nd Street, Tempe, Arizona
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85281 |
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| (Address of Principal Executive Offices)
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(Zip Code) |
Registrant’s
telephone number, including area code: (480) 449-8900
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to satisfy the filing obligation
of the registrant under any of the following provisions (see General Instruction A.2 below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c)) |
TABLE OF CONTENTS
Item 1.01. Entry into a Material Definitive Agreement.
On February 22, 2006, Mr. Norman Stout replaced Mr. Steven Mihaylo as Inter-Tel (Delaware),
Incorporated’s (the “Company’s”) Chief Executive Officer, with the understanding that Mr. Stout
would be offered a written employment agreement with the Company. The Board delegated to the
Compensation Committee the responsibility to develop the terms and conditions of the employment
agreement, in consultation with the Compensation Committee’s compensation consultant. After
discussing various terms and approaches with its compensation consultant and the Company’s legal
advisors, the Compensation Committee members discussed and unanimously approved the material terms
of a proposed employment agreement for Mr. Stout at a meeting of the Compensation Committee held on
July 27, 2006. The proposed terms were then presented to the entire Board of Directors at its
regular meeting on July 28, 2006. The Board met in executive session (without Mr. Stout) to
consider the proposed terms of the employment agreement. Thereafter, the Board approved the terms
of the employment agreement. The Board then delegated to Mr. Robert Anderson, in his capacity as
Chairman of the Compensation Committee, the authority to negotiate and finalize an employment
agreement with Mr. Stout. Mr. Anderson and Mr. Stout finalized and executed the employment
agreement on October 12, 2006.
Pursuant to the employment agreement, Mr. Stout is employed by the Company as Chief Executive
Officer until August 1, 2009, unless the agreement is earlier terminated. During the term of the
agreement, Mr. Stout is employed at his current annual salary of $400,000 per year (“Base Salary”)
and is entitled to participate in any bonus or incentive plans made available by the Board to
senior management and any benefit plans applicable to senior executives. If Mr. Stout terminates
his employment for good reason or Mr. Stout is terminated by the Company without cause, Mr. Stout
will receive a severance payment equal to his Base Salary (at the date of termination) for a period
of 12 months or the remainder of the term of the agreement, whichever is longer. Alternately, if
Mr. Stout is terminated without cause or Mr. Stout terminates his employment for good reason,
within 90 days prior to a change of control or within 24 months following a change of control, then
Mr. Stout will receive, among other things, (i) a lump-sum payment equal to his Base Salary (at
termination or immediately prior to the change of control, whichever is greater) multiplied by 2.99
and (ii) a lump sum payment equal to the average annual bonus earned by him for the preceding five
fiscal years, multiplied by 2.99. The terms “good reason”, “cause”, and “change of control” are
defined in the agreement. Mr. Stout is subject to restrictive covenants in the agreement,
including an 18-month non-competition and non-solicitation period following termination of his
employment for any reason, and a perpetual confidentiality agreement.
The employment agreement also supersedes Mr. Stout’s previous Tier 1 Key Employee Change of
Control Severance Agreement. Under that agreement, if Mr. Stout’s employment terminated in
connection with a change of control, Mr. Stout was entitled to receive a lump sum severance payment
equal to twenty four (24) months of his annual base salary and one hundred percent (100%) of his
earned and unpaid bonus as of the date of termination.
The preceding summary of Mr. Stout’s employment agreement is qualified in its entirety by
reference to the full text of the agreement, a copy of which is filed as Exhibit 10.1. and
incorporated herein by reference.