Inter Tel (INTL) 8-K Inter-tel and Steven G. Mihaylo Reach Agreement to Settle Potential Proxy Contest

     EXHIBIT 10.3

DIRECTOR COMPENSATION

On May 4, 2006, Inter-Tel, Incorporated revised its director compensation to add compensation policies for the advisory committee to the Board of Directors. Inter-Tel’s complete director compensation schedule is set forth below as so revised:

Description	Before 5/4/06	From 5/4/06
Each regularly scheduled Board of Directors meeting attended	$2,000	$2,000
Quarterly stipend for non-chairman committee members	6,000	6,000
Quarterly stipend for compensation committee chairman	6,500	6,500
Quarterly stipend for governance and nominating committee chairman	6,500	6,500
Quarterly stipend for non-employee chairman of the board of directors	10,500	10,500
Quarterly stipend for audit committee chairman	10,500	10,500
Each regularly scheduled compensation committee meeting attended	1,500	1,500
Each regularly scheduled governance and nominating committee meeting attended or any meeting of a subcommittee thereof	1,500	1,500
Each regularly scheduled audit committee meeting attended	2,000	2,000
Each regularly scheduled or special advisory committee meeting, or a subcommittee thereof, attended	1,500	1,500
Attendance at a regularly scheduled or special meeting of the advisory committee, or a subcommittee thereof, by non-member directors	—	1,500
Each regularly scheduled or special meeting of a special committee of the Board or a subcommittee thereof attended	1,500	1,500
Each special meeting of the Board or committee of the Board, including unanimous written consents in lieu of board meetings	2,000	2,000
Expenses of attending Board and Committee meetings	As incurred	As incurred
The Company also allows each director to elect to participate in the health benefit plans each year.	Participation	Participation
Directors are offered participation in the same plans offered to employees, subject to payment by	offered in Company	offered in Company
each electing director at employee participant rates, plus all applicable co-pays and/or deductibles.	plans	plans
	50% of eligible	50% of eligible
	tuition plus	tuition plus
Director continuing education expenses.	expenses	expenses
Annual stock option grants to purchase shares of Common Stock, pursuant to the Company’s Director Stock Option Plan (as amended), at the market price five (5) business days after the date of the annual Board meeting	7,500	7,500