THE CORPORATE LIBRARY

Related Party Transactions and Outside Related Director Information

Inter-Tel, Incorporated (INTL)

5/10/2006 Proxy Information

Inter-Tel Integrated Systems, Inc., a wholly-owned subsidiary of the Company, employs Carter Chapman as one of its Directors of Channel Sales. Carter Chapman is the son of Jerry Chapman, one of the Company’s directors. In fiscal 2005, Carter Chapman’s base salary and incentive-based sales commissions paid by the Company totaled $95,899, and he was granted a stock option to acquire 1,250 shares of Inter-Tel Common Stock at the fair market value on the date of grant in May 2005.

Mr. Mihaylo, the founder of Inter-Tel, Incorporated, served as Chief Executive Officer from July 1969 until mid-February 2006. He was Chairman from September 1983 to July 2005 and from July 1969 to October 1982. Mr. Mihaylo was also President from 1969 to 1983, from 1984 to December 1994 and from May 1998 to February 2005.

3/21/2005 Proxy Information

Inter-Tel Integrated Systems, Inc., a wholly-owned subsidiary of the Company, employs Carter Chapman as one of its Directors of Channel Sales. Carter Chapman is the son of Jerry Chapman, one of the Company’s directors. In fiscal 2004, Carter Chapman’s base salary and incentive-based sales commissions paid by the Company totaled $101,784 and he was granted a stock option to acquire 1,500 shares of Inter-Tel Common Stock at the fair market value on the date of grant in October 2004.

3/18/2004 Proxy Information

In February 2004, our Board of Directors approved two forms of Key Employee Change in Control Severance Agreements (“Change of Control Agreements”), entered into between the Company and each of our executive officers and one other key employee, as set forth in the table below. Under these agreements, in the event that within 90 days prior to a change of control or within 24 months following a change of control of Inter-Tel, Inter-Tel or its successor terminates the employment of such an executive without cause or an event constituting good reason occurs and the executive resigns upon such an event, the executive will be entitled to: (i) up to two times the sum of such executive’s base salary, (ii) up to 100% of any earned but unpaid bonus, (iii) continued employee benefits for up to 12 months, and (iv) full vesting of all outstanding options and restricted stock awards. To the extent that the payment of these benefits triggers the excise tax under Section 4999 of the Code or any comparable federal, state, local or foreign excise tax, the Executive’s severance benefits for base salary and earned but unpaid bonuses pursuant to section 4(a)(i) shall be either (a) delivered in full, or (b) delivered as to such lesser extent which would result in no portion of such severance benefits being subject to excise tax under Section 4999 of the Code, whichever of the foregoing (a) or (b) amounts, taking into account the applicable federal, state and local income taxes and the excise tax imposed by Section 4999, results in the receipt by Executive on an after-tax basis, of the greatest amount of severance benefits, notwithstanding that all or some portion of such severance benefits may be taxable under Section 4999 of the Code.

3/20/2003 Proxy Information

In February 2002, Inter-Tel received a gross cash award of $20 million as a result of an arbitration settlement in connection with a lawsuit filed by Inter-Tel in 1996. As a result of this settlement, the board of directors approved payments of $250,000, $225,000, $225,000 and $40,000 to Steven G. Mihaylo, Norman Stout, Craig Rauchle and Jeff Ford, respectively. These one-time special payments were approved by the Compensation Committee after the settlement was awarded, based in part on the significant amounts of time and energy expended over several years by these executives related to the lawsuit.

During 1999, each of the Named Executive Officers and other officers and selected employees of the Company were offered loans to acquire the Company's Common Stock. Promissory Notes were established to cover the cost of exercise of stock options, including applicable taxes, or the cost of the Company's Common Stock purchased in the open market during May and June of 1999. The loans are interest-only notes with balloon payments due or before March 15, 2004. The loans bear interest at the mid-term applicable federal interest rate, compounded annually. Interest payments are due on or before March 15 of each anniversary beginning on March 15, 2000. The notes are full recourse loans and the Company retains the Common Stock certificates as collateral. Messrs. Mihaylo and Kneip each paid off their respective loans in full during 1999 and Mr. Ford paid off his loan in full in 2002. On March 3, 2003, Mr. Stout paid $26,026 for principal and $10,214 for accrued interest on his loan. Mr. Rauchle continues to participate in the loan program.