-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, A8xb+w+km/btkMPTS870lkAH6qLnn4eDzdLBExPNNDK1bSA+KosxBp75eFlQ/FsO b72OGS+A91tp7hYaqYzsSA== 0000950123-02-010771.txt : 20021113 0000950123-02-010771.hdr.sgml : 20021113 20021113171537 ACCESSION NUMBER: 0000950123-02-010771 CONFORMED SUBMISSION TYPE: SC 14D9 PUBLIC DOCUMENT COUNT: 8 FILED AS OF DATE: 20021113 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: SYNTELLECT INC CENTRAL INDEX KEY: 0000758830 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE & TELEGRAPH APPARATUS [3661] IRS NUMBER: 860486871 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D9 SEC ACT: 1934 Act SEC FILE NUMBER: 005-41290 FILM NUMBER: 02820902 BUSINESS ADDRESS: STREET 1: 16610 N. BLACK CANYON HIGHWAY STREET 2: SUITE 100 CITY: PHOENIX STATE: AZ ZIP: 85053 BUSINESS PHONE: 602-789-2800 MAIL ADDRESS: STREET 1: 16610 N. BLACK CANYON HIGHWAY STREET 2: SUITE 100 CITY: PHOENIX STATE: AZ ZIP: 85053 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: SYNTELLECT INC CENTRAL INDEX KEY: 0000758830 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE & TELEGRAPH APPARATUS [3661] IRS NUMBER: 860486871 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D9 BUSINESS ADDRESS: STREET 1: 16610 N. BLACK CANYON HIGHWAY STREET 2: SUITE 100 CITY: PHOENIX STATE: AZ ZIP: 85053 BUSINESS PHONE: 602-789-2800 MAIL ADDRESS: STREET 1: 16610 N. BLACK CANYON HIGHWAY STREET 2: SUITE 100 CITY: PHOENIX STATE: AZ ZIP: 85053 SC 14D9 1 t08210sc14d9.txt SCHEDULE 14D-9 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------- SCHEDULE 14D-9 (RULE 14D-101) --------------------- SOLICITATION/RECOMMENDATION STATEMENT UNDER SECTION 14(D)(4) OF THE SECURITIES EXCHANGE ACT OF 1934 --------------------- SYNTELLECT INC. (Name of Subject Company) --------------------- SYNTELLECT INC. (Name of Person Filing Statement) --------------------- COMMON STOCK, $0.01 PAR VALUE (Title of Class of Securities) --------------------- 87161-L-10-5 (CUSIP Number of Class of Securities) --------------------- Timothy P. Vatuone Vice President and Chief Financial Officer SYNTELLECT INC. Suite 100 16610 North Black Canyon Highway Phoenix, Arizona 85053 (602) 789-2800 (Name, Address, and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of Person Filing Statement) With Copies to: Robert K. Rogers, Esq. Rogers & Theobald LLP Suite 850 2425 East Camelback Road Phoenix, Arizona 85016 (602) 852-5550 [ ] Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ITEM 1. SUBJECT COMPANY INFORMATION Syntellect Inc., a Delaware corporation ("Syntellect"), is the subject company to which this Solicitation/ Recommendation Statement on Schedule 14D-9 (this "Schedule 14D-9") relates. Syntellect's principal executive offices are located at Suite 100, 16610 North Black Canyon Highway, Phoenix, Arizona 85053, and the telephone number is (602) 789-2800. This Schedule 14D-9 relates to Syntellect's common stock, par value $0.01 per share (the "Shares"). As of November 5, 2002, 11,369,152 Shares were outstanding. ITEM 2. IDENTITY AND BACKGROUND OF FILING PERSON Syntellect is the person filing this Schedule 14D-9. Its name, business address and telephone number are set forth in Item 1 above. This Schedule 14D-9 relates to the tender offer by Arizona Acquisition Corp., a Delaware corporation (the "Purchaser") and a wholly-owned subsidiary of Enghouse Systems Limited, an Ontario corporation ("Enghouse"), disclosed in a Tender Offer Statement on Schedule TO (the "Schedule TO"), dated November 13, 2002, to purchase all outstanding Shares at a purchase price of $0.72 per Share, net to the seller in cash (the "Offer Price"), upon the terms and subject to the conditions set forth in the Offer to Purchase, dated November 13, 2002 (the "Offer to Purchase"), and the related Letter of Transmittal (which, together with the Offer to Purchase and any amendments or supplements thereto, constitute the "Offer"). Copies of the Offer to Purchase and the Letter of Transmittal are being furnished to Syntellect's stockholders concurrently with this Schedule 14D-9. The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of November 5, 2002 (the "Merger Agreement"), among Enghouse, the Purchaser and Syntellect. Among other things, the Merger Agreement provides that as promptly as practicable after the purchase of Shares pursuant to the Offer and the satisfaction of the conditions set forth in the Merger Agreement and in accordance with the relevant provisions of Delaware General Corporation Law (the "DGCL"), the Purchaser shall be merged with and into Syntellect (the "Merger") and each then-outstanding Share (other than Shares held by Enghouse or any subsidiary or by any holder properly exercising appraisal rights under Delaware law) will be converted into the right to receive the Offer Price. Following consummation of the Merger, Syntellect will continue as the surviving corporation, and will be a wholly-owned subsidiary of Enghouse. As set forth in the Schedule TO, the address of the principal executive offices of Enghouse and the Purchaser is 80 Tiverton Court, Suite 800, Markham, Ontario, Canada L3R 0G4. The telephone number of the principal executive offices of Enghouse and the Purchaser is (905) 946-3200. ITEM 3. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS AGREEMENTS AND CONFLICTS OF INTEREST. The information regarding the executive officers and directors of Syntellect contained in the Information Statement which is attached hereto as Schedule I is incorporated herein by reference. Except as described or referred to in this Schedule 14D-9 or incorporated herein by reference, to the knowledge of Syntellect, as of the date hereof, there are no material agreements, arrangements or understandings or any actual or potential conflicts of interest between Syntellect or its affiliates and (1) Syntellect's executive officers, directors or affiliates, or (2) Enghouse or the Purchaser, or their respective executive officers, directors or affiliates. CHANGE OF CONTROL AGREEMENTS. Five officers, Anthony V. Carollo, Jr., Steven W. Dodenhoff, Charles F. Sonneborn III, Peter Trompetter and Timothy P. Vatuone, entered into Change of Control Agreements with Syntellect. Mr. Carollo is a director of Syntellect. These provide that after a change in control of Syntellect (including the Offer and the Merger) and a Constructive Termination (as defined therein) of the officer, these officers will receive the benefits described under the caption "Change of Control Agreements" in the Information Statement attached as Schedule I hereto and incorporated herein by reference. 2 The summary of the terms of the Change of Control Agreements is qualified in its entirety by reference to the complete text of the Change of Control Agreements, which have been filed as Exhibits (e)(4) through (e)(8) hereto, and are incorporated herein by reference. STOCK OPTIONS. The Merger Agreement provides that all outstanding options to purchase Shares under Syntellect's stock option plans will be canceled in exchange for a cash payment (less applicable withholding tax) equal to the amount, if any, by which the Offer Price exceeds the per share exercise price of such option to purchase Shares, multiplied by the number of Shares then subject to such option. As of November 5, 2002, executive officers and directors held options to purchase a total of 824,720 Shares, of which options to purchase 45,000 Shares had exercise prices less than the Offer Price. INDEMNIFICATION AGREEMENTS. Syntellect has entered into agreements to provide indemnification for its directors and certain executive officers in addition to the indemnification provided for in Syntellect's Certificate of Incorporation and By-laws. The summary of the terms of the indemnification agreements set forth in Schedule I hereto is incorporated herein by reference. Such summary is qualified in its entirety by reference to the complete text of the Form of Indemnification Agreement, dated as of August 29, 2002, which has been filed as Exhibit (e)(9) hereto. THE MERGER AGREEMENT; TENDER AND VOTING AGREEMENT AND STOCK OPTION AGREEMENT. Syntellect incorporates by reference the summaries of the Merger Agreement, Tender and Voting Agreement and Stock Option Agreement and the description of the conditions of the Offer contained in Sections 11 and 15, respectively, of the Offer to Purchase. Such summaries and description are qualified in their entirety by reference to the full text of the Merger Agreement, Tender and Voting Agreement and Stock Option Agreement, which are filed as Exhibits (e)(1), (e)(2) and (e)(3) hereto, respectively. ITEM 4. THE SOLICITATION OR RECOMMENDATION RECOMMENDATION OF THE BOARD OF DIRECTORS OF SYNTELLECT. The Board of Directors of Syntellect (the "Board") has by unanimous vote: (i) approved the Merger Agreement, (ii) approved the Offer, the Merger and certain other actions described in the Merger Agreement, (iii) determined that the Merger Agreement and the transactions contemplated thereby, including the Offer and the Merger, are fair to, and in the best interests of, Syntellect and its stockholders, (iv) recommended that Syntellect's stockholders accept the Offer, tender their Shares pursuant to the Offer and approve the Merger Agreement (if required), and (v) approved the acquisition of Shares by Enghouse and the Purchaser pursuant to the Offer, the Tender and Voting Agreement, the Stock Option Agreement and the other transactions contemplated by the Merger Agreement, the Tender and Voting Agreement and the Stock Option Agreement. THE BOARD HAS UNANIMOUSLY APPROVED AND ADOPTED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, AND UNANIMOUSLY RECOMMENDS THAT THE HOLDERS OF SHARES ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. A press release announcing the execution of the Merger Agreement and a letter to Syntellect's stockholders communicating the Board's recommendation are filed as Exhibits (a)(3) and (a)(4) hereto and are incorporated herein by reference. BACKGROUND. Beginning in the first quarter of 2001, Syntellect experienced a substantial decline in license revenues, which management attributed to the general economic slowdown. Syntellect reacted by taking actions to reduce administrative expenses and improve the efficiency of service delivery. These steps resulted in improvements to Syntellect's financial results during the later portions of the 2001 fiscal year. Syntellect experienced another sharp decline in revenues during the second quarter of 2002. This decline, combined with an uncertain economic environment, an opinion issued by Syntellect's independent auditor which stated that certain facts "raise substantial doubts about Syntellect's ability to continue as a going concern," and notification from NASDAQ that Syntellect no longer complied with certain requirements for continued listing, led the Board to determine that Syntellect should begin looking for strategic partners, business combinations, or investors, or opportunities for the sale of all or part of Syntellect's assets or business. 3 At its meeting on May 20, 2002, the Board encouraged management to seek informally a strategic partner, strategic investment or other opportunities for Syntellect. Syntellect had received several inquiries by this time from possible opportunities, and the Board discussed the possibility of engaging a financial advisor. Between May 20, 2002 and the end of June, management pursued inquiries it had received and developed other opportunities. These inquiries failed to lead to any expressions of serious interest in negotiations. At a meeting on July 15, 2002, the Board considered Syntellect's second quarter performance, which was substantially lower than its performance for the same period in the prior fiscal year, and evaluated the contacts management had made to locate possible strategic opportunities for Syntellect. The Board instructed management to engage an investment banker to assist Syntellect in finding a strategic partner or investor. Following discussions with a number of investment banks, and with the approval of the Board, on August 6, 2002, Syntellect engaged Alliant Partners, a Silicon Valley Bancshares Company ("Alliant"), to be Syntellect's financial advisor. Alliant then began contacting prospective strategic partners for Syntellect. Over the course of its efforts, Alliant presented Syntellect to a total of 43 prospects and meetings were held with ten, including Enghouse. Management, together with Alliant, held its first meeting with Stephen J. Sadler, Chairman and CEO of Enghouse, on August 20, 2002, at which time the Company provided general industry and company information. Enghouse indicated its interest in pursuing further discussions regarding Syntellect in a letter to Alliant dated August 29, 2002. Following the initial meeting, throughout September and October, the parties held a number of discussions regarding a possible strategic transaction and conducted due diligence with respect to one another. During the course of these ongoing discussions, Alliant continued to present Syntellect to prospects and to revisit prospects that had been previously contacted in an effort to encourage them to submit other indications of interest in Syntellect. Neither Syntellect nor Alliant received any additional, firm indications of interest. On September 20, 2002 a special meeting of the Board was convened for the purpose of receiving a report from Alliant regarding its work in finding and evaluating strategic alternatives for Syntellect. Management and representatives of Alliant summarized efforts to find a strategic partner and the discussions with Enghouse, including the terms of a possible Enghouse proposal to Syntellect. Alliant also summarized its preliminary financial analysis of Syntellect for the Board's review. The Board directed management to continue discussions with Enghouse. On October 8, 2002, the Board held a special meeting. Management and Alliant reported on the status of efforts to identify and evaluate strategic alternatives for Syntellect and on the status of discussions with Enghouse, including their expectation of a formal offer from Enghouse with a proposed structure and schedule for due diligence, definitive agreements and closing. The Board concluded that Syntellect should publicly announce its engagement of Alliant and its exploration of strategic alternatives to support Syntellect's current business strategy and that Syntellect was exploring alternative operational and financial strategies to increase opportunities for Syntellect. Syntellect issued such a press release on October 9, 2002. The Board directed management to move forward with Enghouse. In mid-October, Enghouse delivered a summary of proposed transaction terms to Syntellect for its evaluation, and on October 22, 2002 the Board convened another special meeting to discuss the possible transaction with Enghouse and other alternatives that might be available. The Board directed management to continue negotiations and due diligence with Enghouse, with a view to being in a position to consider approval of a definitive agreement with Enghouse at a board meeting in early November. In late October, Enghouse provided Syntellect with drafts of a merger agreement, a tender and voting agreement, and a stock option agreement. The parties began to negotiate the terms of those agreements. On November 5, 2002, the Board met to consider the proposed transaction. Management and representatives from Alliant reviewed Syntellect's business and prospects and the efforts to identity strategic alternatives for Syntellect, including negotiations with Enghouse. Management reported that since negotiating 4 the terms of the proposed transaction, it had again reviewed Syntellect's prospects with Alliant and had confirmed that they were unable to identify any prospects superior to the proposed transaction with Enghouse. A representative of Alliant discussed Alliant's financial analysis of Syntellect and the proposed transaction. The representative of Alliant officially stated that it was Alliant's opinion, as of November 5, that the Offer Price was fair to Syntellect stockholders from a financial point of view. Alliant subsequently delivered its written opinion to that effect. At the meeting, Syntellect's legal counsel reviewed the Board's fiduciary duties under the circumstances and the terms of the proposed Merger Agreement, Tender and Voting Agreement and Stock Option Agreement, and the transactions contemplated thereby. The Board discussed the alternatives available to Syntellect, the structure and terms of the proposed transaction, the risk of not consummating the transaction with Enghouse and the potential impact on the value of Syntellect. The Board also discussed the likelihood of receiving additional proposals following the execution of an agreement with Enghouse, and the Board's ability to consider such proposals in light of the terms of the proposed agreements. Thereafter, the Board by unanimous vote (i) approved the Merger Agreement, (ii) approved the Offer and the Merger and certain other actions described in the Merger Agreement, (iii) determined that the Merger Agreement and the transactions contemplated thereby, including the Offer and the Merger are fair to, and in the best interests of, Syntellect and its stockholders, (iv) recommended that Syntellect's stockholders accept the Offer, tender their shares pursuant to the Offer and approve the Merger Agreement (if required), and (v) approved the acquisition of Shares by Enghouse and the Purchaser pursuant to the Offer, the Tender and Voting Agreement, the Stock Option Agreement and the other transactions contemplated by the Merger Agreement, the Tender and Voting Agreement and the Stock Option Agreement. Following the meeting, the Merger Agreement between Enghouse, the Purchaser and Syntellect, the Tender and Voting Agreement between Enghouse, Syntellect and certain stockholders of Syntellect, and the Stock Option Agreement between Enghouse and Syntellect were executed and delivered. Shortly thereafter, Enghouse and Syntellect issued a joint press release and filed it in accordance with applicable securities law. FACTORS CONSIDERED IN THE RECOMMENDATION OF THE BOARD OF DIRECTORS. In making its recommendation described above, the Board considered a number of factors, including the following material factors, in addition to the factors mentioned in "Background" above in this Item 4: (1) Syntellect's current and historical financial condition and results of operations, its prospects and strategic objectives as well as the risks involved in achieving those prospects and objectives, the current and expected conditions in the industries in which Syntellect's businesses operate and the current regional, national and international economic climate (including the recent decline of stock prices on the global markets); (2) The potential strategic alternatives available to Syntellect and the benefits and risks associated with each alternative, including the prospects for Syntellect on a stand-alone basis and the risks associated therewith. The Board also considered its belief that, based on a review of such strategic alternatives and the process described in "Background," it was unlikely any party would propose an alternative transaction that would be more favorable to Syntellect and its stockholders than the transactions contemplated by the Merger Agreement, but that delay in approving a transaction could cause harm to Syntellect and its stockholders; (3) The financial and other terms of the Offer, the Merger Agreement and the related transaction agreements, including (a) the price to be paid in the Offer and the Merger, (b) that the Offer and the Merger provide for a prompt cash tender offer for all Shares to be followed by a merger for the same consideration, thereby enabling Syntellect's stockholders, at the earliest possible time, to obtain the benefits of the transaction in exchange for their Shares, (c) that the obligations of Enghouse to consummate the transaction are not conditioned upon the results of a due diligence review or upon Enghouse or the Purchaser obtaining financing, (d) the limited ability of Enghouse or the Purchaser to terminate the Offer or the Merger Agreement, and (e) Syntellect's ability, under specified circumstances, to provide information to and negotiate with third parties and to terminate the Merger Agreement (subject to the payment of specified amounts and the terms of the Stock Option Agreement); 5 (4) That the $0.72 Offer Price was for cash and represented a significant premium over the average closing price of Syntellect's stock over the following periods prior to November 5, 2002: 20 days ($0.21 average), three months ($0.29 average), and six months ($0.50 average); (5) The presentations by Alliant and the opinion of Alliant as to the fairness, from a financial point of view and as of the date of such opinion, of the Offer Price. The full text of Alliant's written opinion, dated November 5, 2002, which sets forth the assumptions made, matters considered and limitations on the review undertaken, is attached hereto as Schedule II and is incorporated herein by reference. The opinion is addressed to the Board, relates only to the fairness, from a financial point of view, of the Offer Price, and does not constitute a recommendation to any stockholder as to whether or not such stockholder should tender Shares in the Offer or as to any other matters relating to the Offer or the Merger. Holders of Shares are urged to read such opinion carefully in its entirety; and (6) That certain significant stockholders of Syntellect were willing to enter into the Tender and Voting Agreement obligating them to tender all of their Shares in the Offer and that all executive officers had indicated that they intended to tender all of their Shares in the Offer. The foregoing includes the material factors considered by the Board. In view of the many considerations, the Board did not find it practical to, and did not, quantify or otherwise assign relative weights to the specific factors considered. In addition, individual members of the Board may have given different weights to the various factors considered. After weighing all of these considerations, the Board determined to approve the Merger Agreement and recommend that the holders of Shares tender their Shares in the Offer. INTENT TO TENDER. To the best knowledge of Syntellect, all the executive officers, directors, affiliates and subsidiaries of Syntellect who own Shares presently intend to tender in response to the Offer all the Shares that they own of record or beneficially, other than Shares, if any, that they may have the right to purchase by exercising stock options and Shares, if any, that if tendered (instead of being converted into cash in the Merger) would cause them to incur liability under the short-swing profits provisions of the Securities Exchange Act. ITEM 5. PERSON/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED Syntellect has retained Alliant to act as its exclusive financial advisor in connection with the Offer and the Merger. Under the terms of the engagement letter dated July 23, 2002, Syntellect agreed to pay Alliant $40,000 for financial advisory services, plus a success fee of $500,000. In addition, Syntellect agreed to pay Alliant a fee of $100,000 for rendering any written opinion regarding the fairness of any transaction from a financial point of view. Syntellect also has agreed to pay Alliant's reasonable out-of-pocket expenses, and to indemnify Alliant against liabilities incurred, including liabilities under the federal securities laws, in connection with its engagement by the Board. Neither Syntellect nor any person acting on its behalf currently intends to employ, retain or compensate any other person or make solicitations or recommendations to stockholders on its behalf concerning the Offer. ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY No transactions in Shares have been effected during the past 60 days by Syntellect or any subsidiary of Syntellect or, to the best of Syntellect's knowledge, by any executive officer, director or affiliate of Syntellect. ITEM 7. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS Except as set forth in this Schedule 14D-9, Syntellect is not currently undertaking or engaged in any negotiations in response to the Offer that relate to (1) a tender offer or other acquisition of Syntellect's securities by Syntellect, any subsidiary of Syntellect or any other person; (2) an extraordinary transaction, such as a merger, reorganization or liquidation, involving Syntellect or any subsidiary of Syntellect; (3) a purchase, sale or transfer of a material amount of assets of Syntellect or any subsidiary of Syntellect; or (4) any material change in the present dividend rate or policy, or indebtedness or capitalization of Syntellect. 6 Except as set forth in this Schedule 14D-9, there are no transactions, resolutions of the Board of Directors, agreements in principle, or signed contracts in response to the Offer that relate to one or more of the events referred to in the preceding paragraph. ITEM 8. ADDITIONAL INFORMATION The Board has approved the Merger Agreement, the Tender and Voting Agreement, the Stock Option Agreement and the transactions contemplated thereby, including the Offer and the Merger, for purposes of Section 203 of the Delaware General Corporation Law and provisions of Syntellect's Certificate of Incorporation which might have restricted such agreements and transactions. Accordingly, Section 203 and such provisions are inapplicable to such agreements and transactions. Under Delaware law, if the Purchaser becomes the owner of 90% of the outstanding Shares (pursuant to the Offer, an option granted in the Merger Agreement or otherwise), the Purchaser will be able to effect the Merger without approval of other holders of Shares. If the Purchaser does not become the owner of 90% of the outstanding Shares, a meeting of stockholders will be required to approve the Merger. Assuming the Minimum Condition (as defined in the Merger Agreement) is satisfied, the Purchaser will be able to approve the Merger without prior notice to or the vote of any other stockholder. A number of other states have adopted laws and regulations applicable to attempts to acquire securities of corporations which are incorporated, or have substantial assets, stockholders, principal executive offices or principal places of business, or whose business operations otherwise have substantial economic effects, in such states. In Edgar v. MITE Corp., the Supreme Court of the United States invalidated on constitutional grounds the Illinois Business Takeover Statute, which, as a matter of state securities law, made takeovers of corporations meeting certain requirements more difficult. However, in 1987, in CTS Corp. v. Dynamics Corp. of America, the Supreme Court held that the State of Indiana may, as a matter of corporate law and, in particular, with respect to those aspects of corporate law concerning corporate governance, constitutionally disqualify a potential acquiror from voting on the affairs of a target corporation without the prior approval of the remaining stockholders. The state law before the Supreme Court was by its terms applicable only to corporations that had a substantial number of stockholders in the state and were incorporated there. Syntellect, directly or through its subsidiaries, conducts business in a number of states throughout the United States, some of which have enacted takeover laws. Syntellect does not know whether any of these laws will, by their terms, apply to the Offer or the Merger and has not complied with any such laws. Should any person seek to apply any state takeover law, Syntellect will take such action as then appears desirable, which may include challenging the validity or applicability of any such statute in appropriate court proceedings. In the event it is asserted that one or more state takeover laws is applicable to the Offer or the Merger, and an appropriate court does not determine that it is inapplicable or invalid as applied to the Offer, Syntellect might be required to file certain information with, or receive approvals from, the relevant state authorities. In addition, as a result thereof, the Offer or the Merger may be delayed. All information contained in this Schedule 14D-9 or incorporated herein by reference concerning Purchaser, Enghouse or their affiliates, and any actions or events relating to any of them, was provided to Syntellect by Purchaser or Enghouse, and Syntellect takes no responsibility for the accuracy or completeness of such information or for any failure by such entities to disclose events or circumstances that may have occurred and may affect the significance, completeness or accuracy of any such information. 7 ITEM 9. EXHIBITS
EXHIBIT NO. DESCRIPTION - ----------- ----------- (a)(1) Offer to Purchase, dated November 13, 2002, incorporated by reference to the Schedule TO filed by Enghouse Systems Limited on November 13, 2002 (the "Schedule TO"). (a)(2) Letter of Transmittal, incorporated by reference to the Schedule TO. (a)(3) Press release of Enghouse and Syntellect issued on November 6, 2002 incorporated by reference to Schedule 14D-9C filed by Syntellect with the Securities and Exchange Commission on November 6, 2002. (a)(4) Letter to Stockholders of Syntellect dated November 13, 2002* (e)(1) Agreement and Plan of Merger, dated as of November 5, 2002, incorporated by reference to the Schedule TO. (e)(2) Tender and Voting Agreement, dated as of November 5, 2002, incorporated by reference to the Schedule TO. (e)(3) Stock Option Agreement, dated as of November 5, 2002, incorporated by reference to the Schedule TO. (e)(4) Change of Control Agreement, dated as of August 16, 2002, with Anthony V. Carollo, Jr. (e)(5) Change of Control Agreement, dated as of August 16, 2002, with Timothy P. Vatuone. (e)(6) Change of Control Agreement, dated as of August 16, 2002, with Peter Trompetter. (e)(7) Change of Control Agreement, dated as of August 16, 2002, with Charles F. Sonneborn III. (e)(8) Change of Control Agreement, dated as of August 16, 2002, with Steven W. Dodenhoff. (e)(9) Form of Indemnification Agreement, dated as of August 29, 2002. (e)(10) Opinion of Alliant Partners, dated November 5, 2002, included as Schedule II to this Schedule 14D-9 and incorporated herein by reference*.
- --------------- * Included in copies mailed to stockholders of Syntellect. 8 After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. SYNTELLECT INC. TIMOTHY VATUONE SIGNATURE Name: Timothy P. Vatuone Title: Chief Financial Officer Dated: November 13, 2002 9 SCHEDULE I SYNTELLECT INC. SUITE 100 16610 NORTH BLACK CANYON HIGHWAY PHOENIX, ARIZONA 85053 602-789-2800 INFORMATION STATEMENT PURSUANT TO SECTION 14(F) OF THE SECURITIES EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER GENERAL This Information Statement is being mailed on or about November 13, 2002 as part of the Solicitation/ Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9") of Syntellect Inc. ("Syntellect"). You are receiving this Information Statement in connection with the possible election of persons designated by Enghouse Systems Limited ("Enghouse") to a majority of seats on the Board of Directors of Syntellect (the "Board"). Syntellect has entered into an Agreement and Plan of Merger (the "Merger Agreement"), dated as of November 5, 2002, with Enghouse and Arizona Acquisition Corp., a Delaware corporation and wholly-owned subsidiary of Enghouse (the "Purchaser"), pursuant to which the Purchaser has commenced a tender offer to purchase all of the outstanding shares of common stock, par value $0.01 per share (the "Common Stock", or the "Shares"), of Syntellect at a price of US$0.72 per Share, net to the Seller in cash, upon the terms and subject to the conditions set forth in the Purchaser's Offer to Purchase, dated November 13, 2002 (as amended or supplemented from time to time, the "Offer to Purchase") and in the related Letter of Transmittal (the "Letter of Transmittal," which, together with the Offer to Purchase, as each may be amended or supplemented from time to time, collectively constitute the "Offer"). Copies of the Offer to Purchase and the Letter of Transmittal have been mailed to stockholders of Syntellect and are filed as Exhibits (a)(1) and (a)(2), respectively, to the Tender Offer Statement on Schedule TO (as amended or supplemented from time to time, the "Schedule TO") filed by the Purchaser with the Securities and Exchange Commission (the "Commission") on November 13, 2002. The Merger Agreement provides that, among other things, as soon as practicable following the satisfaction or waiver of the conditions set forth in the Merger Agreement, the Purchaser will be merged with and into Syntellect (the "Merger"). At the effective time of the Merger, each Share outstanding immediately prior to the effective time of the Merger (other than Shares held by Enghouse, any subsidiary of Enghouse or by any stockholder who properly exercises appraisal rights under Delaware law) will be converted into the right to receive $0.72 per Share, or such higher price as may be paid in the Offer. If the Offer and the Merger are consummated, Syntellect will become a wholly-owned subsidiary of Enghouse. This Information Statement is being mailed to you in accordance with Section 14(f) of the Securities Exchange Act of 1934 and Rule 14f-1 promulgated thereunder. Information set forth herein related to Enghouse, the Purchaser or Enghouse Designees (as defined below) has been provided by Enghouse. You are urged to read this Information Statement carefully. You are not, however, required to take any action in connection with the matters set forth herein. The Purchaser commenced the Offer on November 13, 2002. The Offer is currently scheduled to expire at 12:00 midnight, New York City time, on December 11, 2002, unless the Purchaser extends it. ENGHOUSE DESIGNEES The Merger Agreement provides that promptly upon the acceptance for purchase of any Shares pursuant to the Offer, Enghouse will be entitled to designate such number of directors (the "Enghouse Designees"), I-1 rounded up to the next whole number, on the Board that equals the product of (1) the total number of directors on the Board (giving effect to the directors designated by Enghouse pursuant to the Merger Agreement) and (2) a fraction whose numerator is the aggregate number of Shares then beneficially owned by Enghouse (including Shares accepted for payment pursuant to the Offer), and whose denominator is the total number of Shares then outstanding. Syntellect has agreed to take all action necessary, including seeking and accepting resignations from directors and causing any required increase of the number of directors comprising the Board as is necessary to enable the Enghouse Designees to be so elected to the Board and, subject to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, to cause the Enghouse Designees to be so elected. The directors of the Purchaser at the Effective Time shall be the directors of Syntellect following the Merger, until the earlier of their resignation or removal or until their successors are duly elected and qualified. Enghouse has informed Syntellect that it will choose Enghouse Designees to the Board from the directors and executive officers of Enghouse listed in Schedule I to the Offer to Purchase, a copy of which is being mailed to Syntellect's stockholders together with the Schedule 14D-9. The information on such Schedule I is incorporated herein by reference. The name, address, principal occupation or employment and five-year employment history for each such person is set forth in such Schedule I. It is expected that Enghouse Designees may assume office following the acceptance for payment by the Purchaser of the specified minimum number of Shares pursuant to the Offer. INFORMATION CONCERNING SHARES As of November 5, 2002, Syntellect had 11,369,152 Shares issued and outstanding with the Shares being Syntellect's only class of voting securities that would be entitled to vote for directors at a stockholder meeting if one were to be held, each Share being entitled to one vote. INFORMATION CONCERNING DIRECTORS AND OFFICERS OF SYNTELLECT Our Board of Directors (the "Board") is made up of six directors, divided into three classes of two directors each. The Stockholders elect the directors in each class for terms of three years. The terms of each class are staggered so that the Stockholders elect only one class of directors annually. Information regarding the directors is set forth below: Anthony V. Carollo, Jr. (61) became our Chairman and Chief Executive Officer ("CEO") on November 4, 1999 after serving as Chairman and interim CEO since May 14, 1999. He was elected Chairman, CEO and President on June 1, 2000. He has been a director since August 1998. Until February 15, 2000, Mr. Carollo was also a member of the Audit Committee. Mr. Carollo served as President of Xantel Corporation from April 1998 to November 1999. Previously, Mr. Carollo was President and Chief Operating Officer of Fujitsu Business Communication Systems and a former Vice President and General Manager of ROLM Corporation. Mr. Carollo currently serves as a director of Marshall & Ilsley Trust Company of Arizona and Spectralink Corporation. Mr. Carollo holds a BS degree from the University of Santa Clara and a MBA degree from UCLA. The business address for Mr. Carollo and the Company is 16610 N. Black Canyon Highway, Suite 100, Phoenix, AZ 85053. Term expires 2003. Michael R. Bruce (54) has served as a director since December 1997. Since 1999, Mr. Bruce has been the Managing Member of CAT Partners, LLC, general partner of Catalyst Associates, L.P., an investment partnership specializing in small and micro-capitalization companies, a capacity in which he serves today. Prior to founding Catalyst Associates, Mr. Bruce was the chief investment officer of American Asset Management in New York. Before joining American Asset Management in 1993, Mr. Bruce founded Johnston Bruce Asset Management in 1989, where he was a managing director. He was also a general partner of Adler & Shaykin, an investment banking firm, from 1983 to 1989. Mr. Bruce holds a Bachelor's degree from Hamilton College. In addition, he earned a CFA designation in 1976 and is a member of the New York Society of Security Analysts and the Financial Analysts Federation. The business address for Mr. Bruce and I-2 CAT Partners, LLC is 411 West Putnam Ave., Suite 420, Greenwich, CT 06830. Term expires 2004. Member of Audit Committee. Roy A. Herberger, Jr. (59) has served as a director since September 2001. Dr. Herberger holds the position of President of the Thunderbird American Graduate School of International Management and has since 1989. Dr. Herberger is the author of numerous articles on the subject of marketing and business management, which have been published in periodicals such as Harvard Business Journal, Japan Economic Journal, Economic World, Business Guide USA. In addition to his position of President of Thunderbird, Dr. Herberger serves on the Board of Directors of Pinnacle West Capital Corporation, Metris Corporation, International Crossings, AON Risk Services, and Intercard Wireless, Ltd. Furthermore, he has participated on the State of Arizona's Governor's Task Forces for Work Force Development and e-learning and the New Economy. Dr. Herberger holds a doctorate in business from the University of Colorado. The business address for Dr. Herberger and Thunderbird is 15249 N. 59th Ave., Glendale, AZ 85306. Term expires 2004. Member of Audit Committee. Michael D. Kaufman (61) has served as a director since November 1998. Mr. Kaufman has served as the managing general partner of MK Global Ventures since 1987. Prior to that, Mr. Kaufman was a general partner of Oak Investment Partners where he was involved in the formation of numerous technology companies. He is currently a director of and serves on the Compensation Committee of Davox Corporation. He also serves on the Board of Directors for Asante Technologies, Inc., Disc Inc., Human Pheromone Sciences, Inc., and HyperMedia Communications, Inc. Mr. Kaufman holds a BS degree in mechanical engineering and an MS degree in industrial management and finance from the Polytechnic University in New York. The business address for Mr. Kaufman and MK Global Ventures is 2471 E. Bayshore Bl., Suite 520, Palo Alto, CA 94303. Term expires 2003. Member of Compensation Committee. Kent C. Mueller (61) has served as a director since September 2001. Mr. Mueller is the President and CEO of Kent Mueller Ventures, a high technology oriented investment fund. Currently, Mr. Mueller serves on the Board of Directors for Sailnet.com and on the Board of Trustees for Westminster College. He previously founded and served as President and CEO of Mastersoft, Inc., a computer software developer acquired by Adobe Systems, Inc. in 1995. Mr. Mueller was Chairman of the Board of Microtest, Inc., a leading provider of network test and connectivity products, for the three-year period just prior to an acquisition by Danaher Corporation in August 2001. Mr. Mueller has held senior executive positions with Capex/Computer Associates, Intel Corporation, Ampex Corporation, and IBM Corporation. Furthermore, he co-founded the Arizona Software Association. Mr. Mueller holds a BA in mathematics from Westminster College in Fulton, Missouri. The business address for Mr. Mueller and Kent Mueller Ventures is 6400 N. 61st Place, Paradise Valley, AZ 85253. Term expires 2005. Member of Compensation Committee. Camille Jayne (49). In February 1998, Ms. Jayne joined Universal Electronics Inc. ("Universal") as its President and Chief Operating Officer. Universal develops software and builds and markets pre-programmed wireless control devices and chips principally for home entertainment equipment and the subscription broadcasting market. In August 1998, Ms. Jayne was promoted to Chief Executive Officer and in December 1998, to Chairman. In August 2001, Ms. Jayne resigned the offices of Chief Executive Officer and Chairman to pursue her consulting career but still holds a seat on Universal's board of directors. Prior to her career at Universal, from July 1997 to March 1998, Ms. Jayne was President and CEO of The Jayne Group (a consulting firm specializing in the development, introduction and operation of digital cable TV products and services) and a Senior Partner at BHC Consulting (a business management and market research firm). From November 1995 to July 1997, Ms. Jayne served as Senior Vice President in charge of the digital television business unit at Tele-Communications, Inc. Ms. Jayne is a graduate of Stanford University and holds an MBA in marketing from the University of Michigan. The business address of Ms. Jayne is 5 New Dawn, Irvine, CA 92620. Ms. Jayne is a citizen of the United States. Term expires 2005. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth the number and percentage of outstanding shares of Common Stock beneficially owned by (a) each of our directors, (b) our Chief Executive Officer and each of our four other most highly compensated officers (collectively, the "Named Executive Officers"), (c) each person known by I-3 us to beneficially own more than 5% of our Common Stock; and (d) all of our directors and Named Executive Officers collectively as a group.
SHARES BENEFICIALLY NAME AND ADDRESS OF BENEFICIAL OWNER OWNED(1) PERCENT OWNED - ------------------------------------ ------------ ------------- Enghouse Systems Limited(2) 15,585,818 62.3% Nixon Group(3) 1,107,920 8.6% Dimensional Fund Advisors Inc.(4) 887,500 6.8% T. Rowe Price Group(5) 700,000 5.5% Ralph A. Cusick, Jr.(6) 650,000 5.1% Noro-Moseley Partners II., L. P.(7) 634,500 4.9% Wynnefield Group(8) 600,800 4.7% Anthony V. Carollo, Jr.(9) 371,701 2.9% Michael D. Kaufman(10) 221,114 1.7% Carol E. Reid(11) 158,886 1.2% Timothy P. Vatuone(12) 56,112 * Kent C. Mueller 52,000 * Michael R. Bruce(13) 49,280 * James J. Scharpf(14) 21,400 * Peter Trompetter(15) 18,913 * Roy A. Herberger, Jr. 2,000 * Camille Jayne 0 * All directors and Named Executive Officers as a group (10 persons)(16) 951,406 7.8%
- --------------- * Represents less than 1% of the outstanding Common Stock. (1) As used in this Statement, the date of March 21, 2002 has been determined to be the most recent practicable date for which information as to beneficial ownership was available (the "Information Date") except as follows: the information regarding the entities listed in footnote (3) (the "Nixon Group") is derived from a Schedule 13D filed by the Nixon Group with the Securities and Exchange Commission ("SEC") on April 5, 2002 and pursuant to the Tender and Voting Agreement as of November 5, 2002; the information regarding Dimensional Fund Advisors Inc. is derived from a Schedule 13G filed by Dimensional Fund Advisors Inc. with the SEC on February 12, 2002; the information regarding the entities listed in footnote (5) (the "T. Rowe Price Group") is derived from a Schedule 13G filed by the T. Rowe Price Group with the SEC on February 14, 2002; the information regarding Ralph A. Cusick, Jr. is derived from a Schedule 13D filed by Ralph A. Cusick, Jr. with the SEC on March 11, 2002; the information regarding the Wynnefield Group was determined pursuant to the Tender and Voting Agreement as of November 5, 2002; and the information regarding Enghouse and Camille Jayne was determined as of November 5, 2002. The percent owned calculations for all entities are based on the number of Shares outstanding on November 5, 2002, less treasury stock held, plus shares subject to unexercised options which were capable of being exercised within 60 days following the date of this Statement. (2) Enghouse presently owns 246,250 Shares and has sole voting and dispositive power over such shares. Enghouse may be deemed to share voting and dispositive power with respect to 1,708,720 Shares as a result of the execution of the Tender and Voting Agreement, dated as of November 5, 2002, among Enghouse, Syntellect and certain shareholders of Syntellect. Enghouse may be deemed to beneficially own 2,262,461 Shares as a result of the execution of the Stock Option Agreement and would have sole voting and dispositive power over such Shares if it exercises the Option and such Shares are issued. Enghouse may be deemed to beneficially own 13,630,848 Shares (the maximum number of Shares issuable under the option granted in Section 1.4 of the Merger Agreement (the "Purchaser Option"), assuming that no additional Shares are issued pursuant to the exercise of employee stock options or otherwise) as a result of the Purchaser Option and would have sole voting and dispositive power over such Shares if it exercised such option with respect to the maximum amount issuable thereunder and such shares were issued, however, the shares issuable on exercise of the Option under the Stock Option Agreement are mutually exclusive with the Shares issuable on exercise of the Purchaser Option. The Purchaser may be deemed to beneficially own the Shares beneficially owned by Enghouse. Enghouse and the Purchaser disclaim beneficial ownership of the Shares covered by the Tender and Voting Agreement, the Stock Option Agreement and the Purchaser Option. The aggregate number of Shares described in this Note (2) is 15,585,818, constituting 62.3% of the outstanding Shares. (3) The total number of Shares shown for the Nixon Group is distributed among the following individuals and entities, who collectively comprise the Nixon Group: 1,020 shares owned by Geoffrey Nixon ("Mr. Nixon"); 559,600 shares owned by Mission Partners, LP, a Delaware limited partnership ("Mission"); 115,400 shares owned by Liberty Nominees Limited, a private New Zealand company ("Liberty"); 44,400 shares owned by Horizon Offshore, Ltd., a private Cayman Islands investment corporation ("Horizon"); 367,500 shares owned by Mayfair Capital Fund, LP, a Delaware limited partnership ("Mayfair"); 10,000 shares owned by MCM Associates, Ltd., a Delaware corporation ("MCM"); 10,000 shares owned by MCM Profit Sharing Plan -- DLJSC -- Custodian FBO Geoffrey Nixon, Trustee, a New York profit sharing plan ("PSP"). The address for Mr. Nixon and for each entity in the Nixon Group is: Mr. Geoffrey Nixon, c/o MCM Associates, Ltd., 11 West 42nd Street, 19th Floor, New York, NY 10036. I-4 Each member of the Nixon Group is the sole beneficial owner of the shares of Common Stock attributed to such entity, except as set forth herein. Mr. Nixon owns the 1,020 shares of Common Stock jointly with his wife. Mr. Nixon is the sole officer, director and shareholder of MCM. MCM, as the sole general partner of Mission, has sole voting and dispositive power over the shares of Common Stock owned by Mission. MCM, as the sole investment manager of an account established by Liberty, Horizon, and Equity, has sole voting and dispositive power over the shares of Common Stock owned by Liberty, Horizon, and Equity. Mr. Nixon is the sole management and principal member of MCM Capital Management, LLC (the "LLC"). The other member of the LLC is Mr. Nixon's wife. LLC, as the sole general partner of Mayfair, has sole voting and dispositive power over the shares of Common Stock owned by Mayfair. Mr. Nixon, as the sole trustee and beneficiary of PSP, has the sole voting and dispositive power over the shares of Common Stock owned by PSP. Mr. Nixon is a citizen of the country of New Zealand. (4) Dimensional Fund Advisors Inc., a Delaware corporation ("Dimensional"), is a registered investment advisor. Dimensional is deemed to have beneficial ownership of 887,500 shares of Common Stock, all of which are held in portfolios for which Dimensional serves as investment manager. Dimensional disclaims beneficial ownership of all such shares of Common Stock. The address of Dimensional Fund Advisors Inc. is 1299 Ocean Avenue, 11th Floor, Santa Monica, California 90401. (5) The T-Rowe Price Group is comprised of T-Rowe Price Associates, Inc., an investment advisor organized under the laws of Maryland, and T. Rowe Price Small-Cap Value Fund, Inc., an investment company organized under the laws of Maryland. T-Rowe Price Associates, Inc. has sole dispositive power over the shares of Common Stock, and T-Rowe Price Small-Cap Value Fund, Inc. has sole voting power of the shares of Common Stock. The address of the T-Rowe Price Group is 100 E. Pratt Street, Baltimore, Maryland 21202. (6) Ralph A. Cusick, Jr. is an individual acquiring shares for investment purposes only. He has sole voting and dispositive powers over 580,000 shares and shared voting and dispositive powers over 70,000 shares held jointly with his wife, Jacquelin A. Cusick. Their address is 4815 Sumner Drive, Bethesda, MD 20816. (7) Noro-Moseley Partners II, LP is an Atlanta-based venture capital firm. The address of Noro-Moseley Partners II, LP is c/o Noro-Moseley Partners, 4200 Northside Parkway N.W., Building 9, Atlanta, Georgia 30327. We obtained this information via telephone interview of Noro-Moseley Partners II, LP. (8) Wynnefield Group is comprised of Wynnefield Partners Small Cap Value, LP, Wynnefield Small Cap Value Offshore Fund, Ltd., and Wynnefield Partners Small Cap Value, LP I ("Wynnefield Group"). Wynnefield Capital Management, LLC, a New York limited liability company, is the general partner of Wynnefield Partners Small Cap Value, LP and Wynnefield Partners Small Cap Value, LP I. Both limited partnerships are private investment companies organized under laws of the state Delaware. Nelson Obus and Joshua Landes are the managing members of Wynnefield Capital Management, LLC ("WCM") and the principal executive officers of Wynnefield Captial, Inc., the investment manager of Wynnefield Small Cap Value Offshore Fund, Ltd., a private investment company organized under the laws of the Cayman Islands. Mr. Obus and Mr. Landes are citizens of the United States. Pursuant to Rule 13d-4 of the Exchange Act, Mr. Obus and Mr. Landes disclaim beneficial ownership of any shares owned by the three entities comprising the Wynnefield Group and disclaim membership in the Wynnefield Group with respect to such shares for purposes of Sections 13(d) and 13(g). Mr. Obus and Mr. Landes by virtue of their status as the managing members of Wynnefield Capital Management, LLC and as the officers of Wynnefield Capital, Inc. have the power to vote and dispose of or to direct the vote and disposition of the shares owned by the Wynnefield Group. The business address of Mr. Obus, Mr. Landes, WCM, and each of the entities in the Wynnefield Group is 450 Seventh Avenue, Suite 509, New York, 10123. (9) The total number of shares of Common Stock shown for Mr. Carollo includes 222,800 shares subject to unexercised options, which were capable of exercise within 60 days following the Information Date. (10) The total number of shares of Common Stock shown for Mr. Kaufman includes 6,314 shares held by MK GVD Fund. Mr. Kaufman is a general partner of MK GVD Management, the general partner of MK GVD Fund. The total also includes 10,000 shares held by Mr. Kaufman's spouse, and 9,520 shares subject to unexercised options, which were capable of exercise within 60 days following the Information Date. Mr. Kaufman's address is c/o MK GVD Fund, 2471 E. Bayshore Road, Suite 520, Palo Alto, California 94303. (11) The total number of shares of Common Stock shown for Ms. Reid includes 33,800 shares subject to unexercised options, which were capable of exercise within 60 days following the Information Date. (12) The total number of shares of Common Stock shown for Mr. Vatuone includes 37,000 shares subject to unexercised options, which were capable of exercise within 60 days following the Information Date. (13) The total number of shares of Common Stock shown for Mr. Bruce includes 5,000 shares which are held by his wife. The total number of shares also reflects 18,280 shares subject to unexercised options, which were capable of exercise within 60 days following the Information Date. (14) The total number of shares of Common Stock shown for Mr. Scharpf includes 14,400 shares subject to unexercised options, which were capable of exercise within 60 days following the Information Date. (15) The total number of shares of Common Stock shown for Mr. Trompetter includes 15,100 shares subject to unexercised options, which were capable of exercise within 60 days following the Information Date. (16) The total number of shares of Common Stock shown for all directors and Named Executive Officers as a group includes an aggregate of 350,900 shares subject to unexercised options, which were capable of exercise within 60 days following the Information Date. The address for Messrs. Carollo, Vatuone, Bruce, Scharpf and Trompetter, Ms. Reid and Ms. Jayne is c/o Syntellect Inc., 16610 N. Black Canyon Highway, Suite 100, Phoenix, Arizona 85053. I-5 SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act"), requires our officers and directors and those persons who own more than 10% of our Common Stock to file reports of beneficial ownership and changes in such ownership with the SEC. Based solely upon a review of the copies of such forms furnished to us, or written representations from certain reporting persons that no Form 5 was required for such person, we believe that, during calendar year 2001, all officers and directors, and all persons who own more than 10% of our Common Stock complied with the applicable Section 16(a) filing requirements, except for transactions by the following persons which were reported in Forms 5 filed April 2, 2002, and which should have been reported before that date: Carol Reid (2 transactions), Timothy P. Vatuone (1 transaction) and Peter K. Trompetter (1 transaction). EXECUTIVE COMPENSATION The table below sets forth information concerning the annual and long-term compensation for services rendered in all capacities to us during the fiscal years ended December 31, 2001, 2000, and 1999, by the Named Executive Officers. SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM COMPENSATION ----------------------------------------- ------------------------- AWARDS OF OTHER SECURITIES ANNUAL UNDERLYING ALL OTHER SALARY COMPENSATION OPTIONS COMPENSATION NAME AND PRINCIPAL POSITION YEAR ($) BONUS(1) ($) (#)(2) ($)(3) - --------------------------- ---- -------- -------- ------------ ---------- ------------ Anthony V. Carollo, Jr.(4) 2001 $240,000 $27,740 0 50,000 $16,663 Chairman of the Board, Chief 2000 240,000 87,810 0 30,000 6,860 Executive Officer and President 1999 26,461 0 0 350,000 46 Carol E. Reid(5) 2001 160,000 19,535 0 20,000 13,497 Vice President of Marketing 2000 83,558 31,448 0 80,000 30 1999 0 0 0 0 0 James J. Scharpf(6) 2001 117,340 0 13,608 100,000 60 Vice President of Sales, Americas 2000 0 0 0 0 0 1999 0 0 0 0 0 Peter K. Trompetter(7) 2001 132,000 11,228 0 25,000 11,098 Vice President of 2000 80,048 23,588 0 35,000 35 Globalization and Education 1999 0 0 0 0 0 Timothy P. Vatuone(8) 2001 152,000 16,486 0 40,000 12,739 Vice President, Chief Financial 2000 126,269 61,833 0 80,000 55 Officer, Secretary and Treasurer 1999 0 0 0 0 0
- --------------- (1) We calculate the bonus amount on an accrual basis. We made bonus payments to the individuals listed, which were earned in the fourth quarter of a year and paid in the first quarter of the subsequent year. In accordance with this method, we have restated the previously reported 2000 accrued and unpaid bonus earned by Mr. Vatuone to include it entirely in the year 2000. (2) The amounts shown in this column represent numbers of shares of Common Stock underlying stock options granted pursuant to our Long-Term Incentive Plan. I-6 (3) The amounts shown in this column for calendar year 2001 include the following:
COMPANY PAYMENT OF COMPANY LONG-TERM COMPANY CONTRIBUTION TO DISABILITY AND OR CONTRIBUTION TO 401(K) EXECUTIVE LIFE INSURANCE 401(K) PROFIT DEFERRED PREMIUMS SHARING PLAN COMPENSATION PLAN TOTAL NAME ($) ($) ($) ($) ---- ------------------ ---------------- ----------------- --------- Mr. Carollo $ 60 $6,800 $9,803 $16,663 Ms. Reid 108 6,800 6,589 13,497 Mr. Scharpf 60 0 0 60 Mr. Trompetter 60 5,877 5,151 11,098 Mr. Vatuone 60 6,565 6,114 12,739
(4) Mr. Carollo joined us as Chairman of the Board, Chief Executive Officer and President on November 22, 1999. (5) Ms. Reid joined us as Vice President of Marketing on June 12, 2000. She served as interim Vice President of Sales from February 2001 through April 2001. (6) Mr. Scharpf joined us as Vice President of Sales, Americas on April 30, 2001. (7) Mr. Trompetter joined us as Vice President of Globalization and Education on May 11, 2000. (8) Mr. Vatuone joined us as Chief Financial Officer, Vice President, Secretary, and Treasurer on February 14, 2000. OPTION GRANTS IN LAST FISCAL YEAR The following table sets forth information concerning the grants of stock options to the Named Executive Officers in connection with our Long-Term Incentive Plan during the fiscal year ended December 31, 2001. We did not grant any Stock Appreciation Rights ("SARs") during calendar year 2001.
INDIVIDUAL GRANTS(1) -------------------------------------------------------- POTENTIAL REALIZABLE NUMBER OF VALUE AT ASSUMED SECURITIES PERCENT OF ANNUAL RATES OF STOCK UNDERLYING TOTAL OPTIONS PRICE APPRECIATION FOR OPTIONS GRANTED TO EXERCISE PRICE OPTION TERM(3) GRANTED EMPLOYEES IN PER SHARE EXPIRATION ---------------------- NAME (#)(2) FISCAL YEAR ($/SHARE) DATE 5% ($) 10% ($) - ---- ---------- ------------- -------------- ---------- --------- ---------- Anthony V. Carollo, Jr. 50,000 8.2% $1.57 11/13/11 $43,279 $106,599 Carol E. Reid 15,000 2.5% 1.57 11/13/11 12,984 31,980 5,000 0.8% 2.73 06/14/11 7,526 18,536 20,000 3.3% 20,509 50,516 James J. Scharpf 40,000 6.6% 1.57 11/13/11 34,623 85,279 60,000 9.8% 2.03 04/30/11 67,152 165,398 100,000 16.4% 101,775 250,677 Peter K. Trompetter 20,000 3.3% 1.57 11/13/11 17,312 42,640 5,000 0.8% 2.73 06/14/11 7,526 18,536 25,000 4.1% 24,837 61,176 Timothy P. Vatuone 35,000 5.8% 1.57 11/13/11 30,295 74,619 5,000 0.8% 2.73 06/14/11 7,526 18,536 40,000 6.6% 37,821 93,155
- --------------- (1) We granted all options with an exercise price equal to the fair market value of the Common Stock (the closing price on The Nasdaq Stock Market, as reported in The Wall Street Journal) on the date of grant. The exercise price and tax withholding obligations related to exercise can be paid by delivery of already owned shares or by offset of the underlying shares, subject to certain conditions. (2) Options granted in calendar year 2001 are exercisable commencing one year from the date of grant, at which time 24% of the shares of Common Stock, subject to the options, vests and may be acquired upon exercise. Thereafter, an additional 2% of the shares of Common Stock, subject to the options, vests per month until the options are fully vested. (3) The potential realizable value is reported net of the option exercise price, but before taxes associated with exercise. We base these values upon certain assumed rates of appreciation of the market price of our Common Stock. Actual realizable value, if any, on the exercise of the stock option is dependent on the future performance of our Common Stock, as well as on the option holder's continued employment with us throughout the vesting period. The amounts reflected in this table will not necessarily be achieved. I-7 AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES The following table sets forth information concerning the fiscal year end value of unexercised options held by the Named Executive Officers.
NUMBER OF SECURITIES VALUE OF UNEXERCISED UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT OPTIONS AT FISCAL YEAR END # FISCAL YEAR END ($)(1) SHARES ACQUIRED VALUE ----------------------------- --------------------------- ON EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE ---------------- ------------ ------------ -------------- ----------- ------------- Anthony V. Carollo, Jr. 0 0 $183,800 $237,200 $332,672 $468,984 Carol E. Reid 0 0 25,800 74,200 142,922 330,996 James J. Scharpf 0 0 0 100,000 0 184,600 Peter K. Trompetter 0 0 11,600 48,400 59,641 164,315 Timothy P. Vatuone 0 0 29,000 91,000 138,572 312,996
- --------------- (1) We consider options "in-the-money" if the fair market value of the underlying securities exceeds the exercise price of the options on the specified date. The amounts shown in these columns represent the difference between the closing price of our Common Stock on December 31, 2001 of $1.90 and the exercise price of the options. In those instances where the exercise price of the options exceeds the fair market value, no value has been reported. STOCK PRICE PERFORMANCE GRAPH The graph below compares the cumulative total return on our Common Stock with The Nasdaq Stock Market Index (comprised solely of U.S. companies) and an index consisting of Nasdaq Telecommunications Stocks (comprised of U.S. and foreign companies) for the period from December 31, 1996 to December 31, 2001. The comparison assumes that $100 was invested on December 31, 1996 in our Common Stock and in each of the comparison indices and assumes reinvestment of dividends. LOGO
12/31/96 12/31/97 12/31/98 12/31/99 12/29/00 12/31/01 -------- -------- -------- -------- -------- -------- Syntellect Inc. $100 $ 44 $ 61 $ 73 $ 88 $ 46 NASDAQ Composite $100 $122 $170 $315 $191 $151 NASDAQ Telecommunications Stocks $100 $142 $232 $470 $215 $ 63
I-8 BOARD OF DIRECTORS MEETINGS, COMPENSATION AND AUDIT COMMITTEES During the fiscal year ended December 31, 2001, our Board of Directors met on six occasions. Each of our directors attended more that 75% of the meetings of the Board of Directors and the meetings held by committees of the Board of Directors on which they served. We pay our directors, who are not officers or employees, $1,500 for attendance at regular meetings of the Board of Directors, $200 for participation in telephonic meetings of the Board of Directors, and $200 for attendance at or participation by telephone meetings of committees of the Board of Directors of which they are members. In addition, non-employee directors also receive an annual retainer of $5,000 for their service. We reimburse non-employee directors for reasonable out-of-pocket expenses incurred in connection with their attendance at each meeting of the Board of Directors and committee meetings of the Board of Directors. Pursuant to our Nonemployee Director Stock Plan, non-employee directors receive (i) a one-time grant of options to purchase 10,000 shares of Common Stock on the third business day after the non-employee director is first elected or appointed to the Board of Directors and (ii) an annual grant of options to purchase 5,000 shares of Common Stock on each June 1 thereafter. A non-employee director must be a member of the Board of Directors on the relevant June 1 in order to receive the annual grant of options for that year. The Board of Directors maintains a standing Compensation Committee and a standing Audit Committee. The Compensation Committee, which met once during calendar year 2001, reviews all aspects of compensation of our executive officers and approves or makes recommendations on such matters to the Board of Directors. The primary duties of the Audit Committee, which met four times during calendar year 2001, are to serve as an independent and objective party to monitor our financial reporting process and internal control system; review and assess the audit efforts of our independent auditors and determine the need for an internal auditing department; and to act as a liaison to, and foster open communications among, the independent auditors, financial and senior management, and the Board of Directors. The Board of Directors has adopted a written charter for the Audit Committee. We do not maintain a standing nominating committee or other committee performing similar functions. I-9 BOARD OF DIRECTORS COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION Our executive compensation program was administered in calendar year 2001 by a two-member Compensation Committee of the Board of Directors (the "Compensation Committee"). The members of the Compensation Committee as of March 20, 2002, neither of whom are Syntellect employees, have furnished the following report on executive compensation: To: The Board of Directors of Syntellect Inc. Date: March 20, 2002 EXECUTIVE COMPENSATION POLICIES OVERVIEW. The Company compensates its executives through a combination of short-term and long-term compensation programs. The principal components of executive compensation are base salary, an annual bonus program, and stock-based compensation incentives. In the case of sales personnel, the annual bonus program is replaced with a sales commission plan. The Compensation Committee believes that this balanced approach to compensation helps the Company attract and retain senior executives and rewards executives for their collective and individual contribution to the leadership and the short-term and long-term growth and profitability of the Company. BASE SALARY. The foundation of the Company's executive compensation package is base salary. Each executive receives a base salary, which when aggregated with the executive's maximum bonus amount or potential sales commissions is intended to be commensurate with his or her responsibilities and level of performance and to be competitive with similarly situated executives in the telecommunications industry. Among the elements that the Compensation Committee considers in setting an executive's base annual salary are: (i) the executive's position relative to other executives in the Company, (ii) any promotions achieved or changes in responsibility, (iii) the achievement of performance objectives set by the Compensation Committee, and (iv) compensation information provided by independent surveys and outside consultants relating to the compensation of similarly situated executives in the telecommunications industry. ANNUAL BONUS PROGRAM. The second aspect of the Company's executive compensation package is the annual bonus. Over the past several years, the Company has established an annual bonus program for its executive officers at the beginning of each fiscal year. Under this program, the Compensation Committee sets a target bonus amount for each executive, which is tied to achievement of certain financial performance objectives that relate directly to the Company's operating plan for the year. The Board of Directors also approves this program. The amount of the annual bonus varies with the position and the role of the executive within the Company. In addition, special bonuses may be awarded to an executive for any reason that the Board of Directors or the Committee deems appropriate. STOCK-BASED COMPENSATION INCENTIVES. The third aspect of the Company's executive compensation package is stock-based compensation incentives or stock options. The Committee believes that executives with an equity stake in the Company will have interests that are more closely aligned with the interests of the Company's stockholders and that these interests will encourage them to remain with the Company. Toward this end, the Committee grants options to Company executives from time to time. Historically, all options granted have had exercise prices set at the fair market value of the Company's Common Stock on the date of grant, as determined by the closing price of the Common Stock on The Nasdaq Stock Market. In selecting recipients and the number of options granted in 2001, the Committee looked to several criteria, including (i) options granted to executives at other technology companies, (ii) options granted to other executives within the Company, (iii) the individual executive's specific role and performance with the Company, and (iv) the Company's overall performance. CEO COMPENSATION. Anthony V. Carollo, Jr. is President, CEO and Chairman of the Board of Directors. The Compensation Committee reviews Mr. Carollo's compensation annually using the same criteria and policies applied to other executive officers. During 2001, Mr. Carollo received $240,000 in base salary, a bonus of $40,095 and an award of options to acquire 50,000 shares of Common Stock. The Compensation I-10 Committee based Mr. Carollo's total compensation on a variety of factors, including his leadership skills, the increasing scope and responsibility of the CEO office, and comparisons of CEO compensation levels for companies of similar size and maturity. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. The Committee is comprised of outside directors, none of whom have any interlocking relationships with the Company. COMPLIANCE WITH SECTION 162(M) OF THE INTERNAL REVENUE CODE. Section 162(m) of the Internal Revenue Code, as amended, generally limits to $1 million the deduction that can be claimed by any publicly held corporation for compensation paid to any "covered employee" in any taxable year beginning after December 31, 1993. The term "covered employee" for this purpose is defined generally as the Chief Executive Officer and the four highest-paid employees of the corporation. Performance-based compensation is outside the scope of the $1 million limitation and, hence, generally can be deducted by a publicly held corporation without regard to amount; provided that, among other requirements, such compensation is approved by stockholders. The Committee currently does not anticipate that any executive will exceed the $1 million limit. It is the policy of the Company to comply with Section 162(m), and the Company will continue to do so to the extent such compliance is consistent with the best interests of the Company's stockholders. The Committee will continue to review the impact of this tax code section and make appropriate recommendations to the Company's stockholders in the future. EMPLOYMENT AGREEMENTS. Pursuant to a Separation Agreement and General Release between Mr. Coleman and the Company dated October 31, 2001, the Company terminated Mr. Coleman's executive employment. Under that agreement, the Company agreed to pay Mr. Coleman the following: (1) a semi-monthly payment, which declines in amount, on each regularly-scheduled Company payday, totaling $88,000, less applicable withholding taxes and deductions, through September 30, 2002; (2) the balance of his accrued, unused paid time off as of October 31, 2001; and (3) all current benefit programs through September 30, 2002. Mr. Coleman's stock options will continue to vest until September 30, 2002, at which time he is entitled to 90 days to exercise his vested options. Mr. Coleman released all claims he might have against the Company. The Company has no employment agreements or change-in-control arrangements with any executive officers. This report is respectfully submitted by Michael R. Bruce and William P. Conlin, the Board of Directors Compensation Committee members during calendar year 2001. COMPENSATION COMMITTEE, Michael R. Bruce William P. Conlin I-11 BOARD OF DIRECTORS AUDIT COMMITTEE REPORT The three-member Audit Committee of the Company's Board of Directors (the "Audit Committee"), comprised as of March 20, 2002, of Michael D. Kaufman, Michael R. Bruce and William P. Conlin, has furnished the following report: To: The Board of Directors of Syntellect Inc. Date: March 20, 2002 The Audit Committee has reviewed and discussed the audited financial statements with the Company's management and the independent auditors. The Audit Committee discussed with the independent auditors the matters required to be discussed by Statement of Auditing Standards No. 61, as in effect on the date the audit was completed. In addition, the Audit Committee has discussed with the independent auditors the independent auditors' independence from the Company and its management, including the matters in the written disclosures required by the Independence Standards Board Standard No. 1, as in effect on the date the audit was completed. The Audit Committee has received the written disclosures and a letter from the independent auditors required by Independence Standards Board Standard No. 1, as in effect on the date the audit was completed. Based on the review and discussions referenced above, the Audit Committee determined that the non-audit services provided by KPMG LLP are compatible with maintaining auditor's independence. It appears that none of the time devoted by KPMG LLP on its engagement to audit the Company's financial statements for the year ended December 31, 2001 is attributable to work performed by persons other than KPMG LLP employees. The Audit Committee further determined that the independent accountants are independent from the Company, and its management and recommends to the Board of Directors that the inclusion of the audited financial statements in the Company's Annual Report on Form 10-K for the last fiscal year as filed with the Securities and Exchange Commission be ratified by the Board. Each of the undersigned members of the Audit Committee is an independent director within the meaning of Rule 4200(a)(14) of the NASDAQ Marketplace Rules. RESPECTFULLY SUBMITTED, Michael D. Kaufman Michael R. Bruce William P. Conlin CHANGE OF CONTROL AGREEMENTS. As of August 16, 2002, Syntellect entered into certain agreements with Anthony V. Carollo, Jr., Timothy P. Vatuone, Peter Trompetter, Charles F. Sonneborn III, and Steven W. Dodenhoff (the "Change of Control Agreements"). All of the Change of Control Agreements provide that if the employee is terminated or experiences a Constructive Termination (defined to include a nonconsensual assignment to employee of a status, title, position, duties, geographic location, compensation, or responsibilities (including reporting responsibilities) that are materially different from the employee's status, title, position, duties, geographic location, compensation, or responsibilities (including reporting responsibilities) immediately prior to the time of any Change of Control (as defined in the agreements) or which constitute a diminishment in the employee's status, title, position, duties, compensation or responsibilities from those in effect prior to the effective date of a Change of Control) within 12 months after the effective date of a Change of Control, the employee is entitled to (a) receive an amount equal to the Severance Amount within 10 business days after the termination of employment, (b) medical and other insurance coverage at a level and to the extent required by the Consolidated Omnibus Budget Reconciliation Act of 1986 at the employee's cost, and (c) full and immediate vesting of any outstanding unvested options held by such employee as of the date of termination. I-12 For purposes of the Change of Control Agreements, Change of Control is defined to mean each of the following: (i) any consolidation or merger in which Syntellect is not the continuing or surviving entity, or pursuant to which Syntellect's capital stock would be converted into cash, securities or other property, other than a merger in which the holders of Syntellect's capital stock immediately prior to the merger have the same proportionate ownership of beneficial interest of common stock or other voting securities of the surviving entity immediately after the merger; (ii) the consummation of any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of assets or earning power aggregating more than 40% of the assets or earning power of Syntellect and its subsidiaries (taken as a whole); (iii) any approval by Syntellect's stockholders of any plan or proposal for the liquidation or dissolution of Syntellect; (iv) any event or circumstance in which any person shall become the beneficial owner of 20% or more of Syntellect's outstanding capital stock, unless such person is an employee benefit plan of Syntellect or any subsidiary of Syntellect, or any entity holding shares of capital stock of Syntellect for or pursuant to the terms of any such employee benefit plan in its role as an agent or trustee for such plan; or (v) if, during any period of two consecutive years, individuals who at the beginning of such period constitute Syntellect's board of directors shall fail to constitute a majority thereof, unless the election, or the nomination for election by Syntellect's stockholders, of each new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period. The Merger will constitute a Change of Control for purposes of the Change of Control Agreements. The term Severance Amount is defined with respect to each individual employee, and differs as among the employees. The Severance Amount for each of Messrs. Carollo, Vatuone and Sonneborn, is defined as an amount equal to (i) 50% of the greater of (a) his gross annual salary prior to any salary reductions adopted during 2002, and (b) his current gross annual salary as of the date of termination or Constructive Termination, plus (ii) 50% of his targeted annual bonus amount for the year in which his employment is terminated, plus (iii) any unpaid fringe benefits, deferred amounts, and bonus sums that he may have earned on or prior to the date of termination or Constructive Termination, plus (iv) an amount equal to the total of the current medical and dental insurance premiums which would be paid on his behalf for the six (6) month period following termination or Constructive Termination, or in lieu of such amount, agreement to maintain his current medical and dental insurance policies or medical and dental insurance policies substantially similar to such policies for a period of six (6) months following termination or Constructive Termination. Mr. Trompetter's Severance Amount is defined as an amount equal to (i) 25% of the greater of (a) his gross annual salary prior to any salary reductions adopted during 2002, and (b) his current gross annual salary as of the date of termination or Constructive Termination, plus (ii) 25% of his targeted annual bonus amount for the year in which his employment is terminated, plus (iii) any unpaid fringe benefits, deferred amounts, and bonus sums that he may have earned on or prior to the date of termination or Constructive Termination, plus (iv) an amount equal to the total of the current medical and dental insurance premiums which would be paid on his behalf for the six (6) month period following termination or Constructive Termination, or in lieu of such amount, agreement to maintain his current medical and dental insurance policies or medical and dental insurance policies substantially similar to such policies for a period of six (6) months following termination or Constructive Termination. Mr. Dodenhoff's Severance Amount is defined as an amount equal to (i) 75% of the greater of (a) his gross annual salary prior to any salary reductions adopted during 2002, and (b) his current gross annual salary as of the date of termination or Constructive Termination, plus (ii) 75% of his targeted annual bonus amount for the year in which his employment is terminated, plus (iii) any unpaid fringe benefits, deferred amounts, and bonus sums that he may have earned on or prior to the date of termination or Constructive Termination, plus (iv) an amount equal to the total of the current medical and dental insurance premiums which would be paid on his behalf for the six (6) month period following termination or Constructive Termination, or in lieu of such amount, agreement to maintain his current medical and dental insurance policies or medical and dental insurance policies substantially similar to such policies for a period of six (6) months following termination or Constructive Termination. INDEMNITY AGREEMENTS. As of August 6, 2002, Syntellect entered into certain Indemnification Agreements with each of its directors, in which Syntellect agrees to indemnify the directors if any of them was or is a I-13 party or is threatened to be made a party to any proceeding (other than an action by or in the right of Syntellect) relating to his service in any capacity with respect to Syntellect, against all expenses and liabilities actually and reasonably incurred in connection with such proceeding, if he acted (i) in good faith and (ii) in a manner reasonably believed to be in or not opposed to the best interests of Syntellect and, with respect to any criminal action or proceeding, he had no reasonable cause to believe that his conduct was unlawful. With respect to proceedings by or in the right of Syntellect, indemnity is provided against expenses and liabilities actually and reasonably incurred by him or on his behalf in connection with such proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of Syntellect, except that if applicable law so provides, no indemnification against such expenses shall be made in respect of any claim, issue or matter in such proceeding as to which he shall have been adjudged to be liable to Syntellect unless and to the extent that the court in which such proceeding shall have been brought or is pending shall determine that such indemnification may be made. No director shall be entitled to indemnification with respect to any proceeding brought by him against Syntellect unless Syntellect has consented to the initiation of such proceeding, except counterclaims or affirmative defenses asserted by an indemnitee in an action brought against him. In addition, Syntellect shall not be obligated to indemnify or hold harmless any indemnitee if and to the extent that: (i) such indemnification shall be prohibited by applicable law; (ii) payment in connection with a proceeding is actually and unqualifiedly made to such indemnitee under an insurance policy or otherwise; (iii) a claim in a proceeding is decided adversely to the indemnitee based upon or attributable to such indemnitee gaining in fact any personal profit or advantage to which he was not legally entitled; or (iv) the indemnifiable event constituted or arose out of the indemnitee's knowingly fraudulent or dishonest or willful misconduct or gross negligence. I-14 SCHEDULE II ALLIANT PARTNERS A SILICON VALLEY BANCSHARES CO. 435 TASSO STREET, THIRD FLOOR PALO ALTO, CALIFORNIA 94301 Telephone 650 325 1541 Facsimile 650 325 7692 www.alliant.com PERSONAL & CONFIDENTIAL November 5, 2002 Board of Directors Syntellect Inc. 16610 N. Black Canyon Hwy., Suite 100 Phoenix, AZ 85053 Ladies and Gentlemen: You have requested our opinion as to the fairness, from a financial point of view, of the Consideration to be received in the Offer and the Merger (each as defined below) by the common stockholders of Syntellect Inc. ("Syntellect" or the "Company"). As contemplated by the Agreement and Plan of Merger (the "Agreement") dated as of November 5, 2002, (1) a subsidiary of Enghouse Systems Limited ("Enghouse") will commence a tender offer (the "Offer") to purchase all outstanding shares of common stock, $0.01 par value (the "Shares"), of the Company for $0.72 per Share in cash (the "Consideration") and (2) following the Offer, such subsidiary will merge with the Company (the "Merger") and each Share (other than Shares owned by Enghouse or any subsidiary and Shares held by any holders properly exercising appraisal rights under Delaware law) will be converted into the right to receive the Consideration, all upon the terms and subject to the conditions of the Agreement. For purposes of the opinion set forth herein, we have: (a) Discussed the past and current operations, financial condition and prospects for Syntellect with senior executives of Syntellect and Enghouse; (b) Discussed with the senior executives of Syntellect and Enghouse the objectives of the Merger; (c) Reviewed certain internal financial statements and other financial and operating data concerning Syntellect prepared by Syntellect management; (d) Reviewed public financial statements and other information concerning Syntellect; (e) Analyzed certain financial projections for Syntellect prepared by Syntellect management; (f) Compared the financial performance of Syntellect with that of certain other comparable publicly-traded companies and the prices paid for securities of those publicly-traded companies; (g) Reviewed the financial terms, to the extent publicly available, of certain acquisition transactions of companies comparable to Syntellect; (h) Assessed Syntellect's value using a discounted cash flow analysis of projected future cash flows; (i) Reviewed the Agreement and certain related documents and discussed the proposed terms of the Merger with senior executives of Syntellect and Enghouse; and (j) Performed such other analyses and considered such other factors as we have deemed appropriate. For the purposes of this opinion, we have assumed and relied upon, without independent verification, the accuracy and completeness of the information reviewed by us or discussed with us and have further relied II-1 upon the assurances of the management of Syntellect that they are not aware of any facts that would make any of such information inaccurate or misleading. With respect to the financial projections of Syntellect, we have assumed that they have been reasonably prepared on bases reflecting the best currently available estimates and judgments of the future financial performance of the Company. The financial and other information regarding Syntellect reviewed by or discussed with Alliant Partners in connection with the rendering of this opinion was limited to information provided by Syntellect management and certain discussions with both Syntellect and Enghouse regarding the Company's financial condition and future prospects as well as the strategic objectives of the Merger. In addition, we have assumed that the Merger will be consummated in a timely fashion in accordance with the terms set forth in the Agreement. We have not made any independent valuation or appraisal of the assets or liabilities of Syntellect, nor have we been furnished with any such appraisals. Our opinion is necessarily based on the economic, market and other conditions in effect on, and the information made available to us as of, the date hereof. Our opinion addresses only the fairness of the consideration to be received by the common stockholders, from a financial point of view, and we do not express any views on any other terms of the proposed Merger or the business or economic bases underlying the Agreement. Our opinion does not address the relative merits of the Merger as compared to other business strategies that might be available to the Company or the allocation, nor does it address the underlying business decision of the Company to proceed with the Merger. Alliant Partners' advisory services and this opinion are provided for the information and assistance of the Board of Directors of the Company in connection with its consideration of the transaction contemplated by the Agreement. This opinion does not constitute a recommendation as to how any holder of Company shares should vote with respect to such transaction. Alliant Partners has acted as financial advisor to the Board of Directors of the Company and will receive a fee in connection with this transaction as well as for the delivery of this opinion. Based upon and subject to the foregoing, it is our opinion that, as of the date hereof, the consideration to be received in the Offer and the Merger by Syntellect's stockholders is fair to Syntellect's stockholders from a financial point of view. Very truly yours, /s/ Alliant Partners - ------------------------------------------ Alliant Partners II-2 EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION - ----------- ----------- (a)(1) Offer to Purchase, dated November 13, 2002, incorporated by reference to the Schedule TO filed by Enghouse Systems Limited on November 13, 2002 (the "Schedule TO"). (a)(2) Letter of Transmittal, incorporated by reference to the Schedule TO. (a)(3) Press release of Enghouse and Syntellect issued on November 6, 2002 incorporated by reference to Schedule 14D-9C filed by Syntellect with the Securities and Exchange Commission on November 6, 2002. (a)(4) Letter to Stockholders of Syntellect dated November 13, 2002* (e)(1) Agreement and Plan of Merger, dated as of November 5, 2002, incorporated by reference to the Schedule TO. (e)(2) Tender and Voting Agreement, dated as of November 5, 2002, incorporated by reference to the Schedule TO. (e)(3) Stock Option Agreement, dated as of November 5, 2002, incorporated by reference to the Schedule TO. (e)(4) Change of Control Agreement, dated as of August 16, 2002, with Anthony V. Carollo, Jr. (e)(5) Change of Control Agreement, dated as of August 16, 2002, with Timothy P. Vatuone. (e)(6) Change of Control Agreement, dated as of August 16, 2002, with Peter Trompetter. (e)(7) Change of Control Agreement, dated as of August 16, 2002, with Charles F. Sonneborn III. (e)(8) Change of Control Agreement, dated as of August 16, 2002, with Steven W. Dodenhoff. (e)(9) Form of Indemnification Agreement, dated as of August 29, 2002. (e)(10) Opinion of Alliant Partners, dated November 5, 2002, included as Schedule II to this Schedule 14D-9 and incorporated herein by reference*.
- --------------- * Included in copies mailed to stockholders of Syntellect. EX-99.A.4 3 t08210exv99waw4.txt LETTER TO STOCKHOLDERS EXHIBIT (a)(4) (SYNTELLECT LOGO) November 13, 2002 Dear Stockholder: We are pleased to inform you that Syntellect has signed a merger agreement with Enghouse Systems Limited pursuant to which a subsidiary of Enghouse has commenced a tender offer to purchase all of the outstanding shares of Syntellect common stock for $0.72 per share in cash. The offer is subject to, among other things, the tender of a majority of the outstanding shares, determined on a fully diluted basis. Following the completion of the offer, a subsidiary of Enghouse will be merged with Syntellect and each remaining Syntellect share will be converted into the same cash price as was paid in the offer. After careful consideration, your board of directors has approved the merger agreement, the offer and the merger and determined that the offer and the merger are fair to and in the best interests of Syntellect and its stockholders. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU ACCEPT THE OFFER AND TENDER YOUR SHARES PURSUANT TO THE OFFER. In arriving at its determination and recommendation, the board of directors took into account the factors described in the attached Solicitation/ Recommendation Statement on Schedule 14D-9, including the opinion of Syntellect's financial advisor, Alliant Partners, that, as of the date of the opinion, and based upon and subject to the matters set forth therein, the consideration to be received in the offer and the merger by the holders of shares is fair to Syntellect's stockholders, from a financial point of view. A copy of Alliant Partners' opinion can be found in Schedule II to the Schedule 14D-9 and should be read carefully and in its entirety. Enclosed is Enghouse's Offer to Purchase, together with related materials, including the Letter of Transmittal to be used for tendering shares. These documents set forth the terms and conditions of the offer. We urge you to read the attached Schedule 14D-9 and the enclosed materials carefully. If you need assistance tendering your shares, please contact MacKenzie Partners, the information agent for the offer, at (800) 322-2885. Very truly yours, ANTHONY CAROLLO SIGNATURE Anthony V. Carollo, Jr. Chairman of the Board of Directors, Chief Executive Officer and President EX-99.E.4 4 t08210exv99wew4.txt CHANGE OF CONTROL AGREEMENT - ANTHONY CAROLLO Exhibit (e)(4) AGREEMENT THIS AGREEMENT ("Agreement") is made and entered into as of August 16, 2002, by and between Syntellect Inc., a Delaware corporation ("Employer"), and Anthony V. Carollo, Jr. ("Employee"). WHEREAS, Employee currently serves as an employee and senior management of Employer; and WHEREAS, Employer currently is exploring various opportunities, including one or more transactions that might result in a "Change of Control" (as defined below), that are intended to enhance Employer's long-term growth and to increase its stockholders' return on investment; and WHEREAS, Employer has determined that it is in Employer's best interest to encourage Employee to (a) remain employed with Employer and (b) use Employee's best efforts to assist Employer in achieving its long-term goals; and WHEREAS, Employer and Employee desire to enter into this Agreement to set forth the parties' respective rights and obligations in the event of a Change of Control. NOW, THEREFORE, in consideration of the premises and of the mutual covenants set forth in this Agreement, the parties hereto agree as follows: 1. DEFINITIONS. For purposes of this Agreement, the following capitalized terms shall have the meanings set forth beside such terms: (a) "Change of Control" means and includes each of the following: (i) there shall be consummated any consolidation or merger of Employer in which Employer is not the continuing or surviving entity, or pursuant to which Employer's capital stock would be converted into cash, securities or other property, other than a merger of Employer in which the holders of Employer's capital stock immediately prior to the merger have the same proportionate ownership of beneficial interest of common stock or other voting securities of the surviving entity immediately after the merger; (ii) there shall be consummated any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of assets or earning power aggregating more than 40% of the assets or earning power of Employer and its subsidiaries (taken as a whole); (iii) the stockholders of Employer shall approve any plan or proposal for liquidation or dissolution of Employer; (iv) any person (as such term is used in Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934), other than any employee benefit plan of Employer or any subsidiary of Employer or any entity holding shares of capital stock of Employer for or pursuant to the terms of any such employee benefit plan in its role as an agent or trustee for such plan, shall become the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of 20% or more of Employer's outstanding capital stock; or (v) during any period of two consecutive years, individuals who at the beginning of such period constitute Employer's board of directors shall fail to constitute a majority thereof, unless the election, or the nomination for election by Employer's stockholders, of each new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period. (b) "COBRA" shall mean the Consolidated Omnibus Budget Reconciliation Act of 1986. (c) "Constructive Termination" shall occur if, within twelve (12) months after the effective date of a Change of Control and without the consent of Employee, a successor or assign, as described in Section 3(h) hereof ("Successor") assigns Employee status, title, position, duties, geographic location, compensation, or responsibilities (including reporting responsibilities) that are materially different from Employee's status, title, position, duties, geographic location, compensation, or responsibilities (including reporting responsibilities) immediately prior to the time of the Change of Control or which constitute a diminishment in Employee's status, title, position, duties, compensation or responsibilities from those in effect prior to the effective date of a Change in Control. (d) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. (e) "Excess Parachute Payment" shall have the meaning set forth in Section 2. (f) "Severance Amount" shall mean an amount equal to (i) fifty percent (50%) of the greater of (a) Employee's current gross annual salary prior to the voluntary 10% reduction in salary effected on or about July 15, 2002 and any subsequent reduction(s) and (b) Employee's current gross annual salary as of the date of termination or Constructive Termination of Employee's employment, plus (ii) fifty percent (50%) of Employee's targeted annual bonus amount for the year in which Employee's employment is terminated plus (iii) any unpaid fringe benefits, deferred amounts, bonus sums that Employee may have earned on or prior to the date of termination or Constructive Termination of Employee's employment, plus (iv) an amount equal to the total of the current medical and dental insurance premiums which would be paid on Employee's behalf for the six (6) month period following termination or Constructive Termination of Employee's employment or, in lieu of such amount, agreement to maintain Employee's coverage under Employee's current medical and dental insurance policies or medical and dental insurance policies substantially similar to such policies for a period of six (6) months following termination or Constructive Termination of Employee's employment. 2. TERMINATION FOLLOWING CHANGE IN CONTROL. In the event of the occurrence of Constructive Termination within twelve (12) months after the effective date of a Change in Control, Employee may, at Employee's option, terminate Employee's employment due to Constructive Termination unless Employee has entered into an employment agreement with Successor. Such termination shall be effective upon Employee giving notice to Successor. In the event of termination of Employee's employment (1) by Successor within twelve (12) months after the effective date of a Change of Control, or (2) by Employee within twelve (12) months after the effective date of a Change of Control as a result of a Constructive Termination, then (a) Successor shall pay Employee a lump sum cash payment equal to the Severance Amount within 10 business days after the termination of employment; (b) Successor shall make available to Employee, at Employee's cost and 2 expense, medical and other insurance coverage at a level and to the extent required by COBRA; and (c) any outstanding options held by Employee that remain unvested as of the date of termination shall become fully vested and exercisable as of the date of termination of Employee's employment with Successor and prior to the occurrence of an event otherwise terminating the options. Notwithstanding the foregoing, in the event that any payments under this Section 2 will be deemed to constitute an "excess parachute payment" as defined in Section 280G(b)(i) of the Internal Revenue Code of 1986, as amended (an "Excess Parachute Payment"), then the payments to Employee under this Section 2 shall be limited to an amount equal to the maximum amount that could be paid to Employee so that no such amount, along with all other payments to Employee by Successor, will be deemed to constitute an Excess Parachute Payment. Subject to the terms of this Section 2, Employee shall not be entitled to receive any other compensation or benefits under this Agreement as a result of the termination of Employee's employment following a Change of Control or Constructive Termination. 3. MISCELLANEOUS. (a) NOTICES. All notices, requests, demands, and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given, made, and received (i) if personally delivered, on the date of delivery, (ii) if by facsimile transmission, upon receipt, (iii) if mailed, three days after deposit in the United States mail, registered or certified, return receipt requested, postage prepaid, or (iv) if by a courier delivery service providing overnight or "next-day" delivery, on the next business day after deposit with such service, in each case addressed as follows: (1) If to Employer and/or Successor: (2) If to Employee: Syntellect Inc. Anthony V. Carollo, Jr. Suite 100 Syntellect Inc. 16610 North Black Canyon Highway Suite 100 Phoenix, Arizona 85053 16610 North Black Canyon Highway Attention: President Phoenix, Arizona 85053 Tel: (602) 789-2800 Tel: (602) 789-2770 Fax: (602) 789-2768 Fax: (602) 789-2768 e-mail: tcarollo@syntellect.com with a copy given in the manner with a copy given in the manner prescribed above to Successor at its prescribed above, to: principal place of business, to the attention of Successor's Chief Executive Officer with a copy to Successor's General Counsel, and to: Rogers & Theobald LLP ------------------------------------ Suite 850 ------------------------------------ 2425 East Camelback Road ------------------------------------ Phoenix, Arizona 85016 ------------------------------------ Attention: Robert K. Rogers, Esq. Attention: ------------------------- Tel: (602) 852-5550 Tel: ------------------------------- Fax: (602) 852-5570 Fax: ------------------------------- e-mail: rkr@rogerstheobald.com e-mail: -----------------------------
3 Either party may alter the address to which communications or copies are to be sent by giving notice of such change of address in conformity with the provisions of this Section 3(a) for the giving of notice. (b) INDULGENCES; WAIVERS. Neither any failure nor any delay on the part of either party to exercise any right, remedy, power, or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power, or privilege preclude any other or further exercise of the same or of any other right, remedy, power, or privilege, nor shall any waiver of any right, remedy, power, or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power, or privilege with respect to any other occurrence. No waiver shall be binding unless executed in writing by the party making the waiver. (c) CONTROLLING LAW. This Agreement and all questions relating to its validity, interpretation, performance and enforcement, shall be governed by and construed in accordance with the laws of the State of Arizona, notwithstanding any Arizona conflict-of-interest or choice of law provisions to the contrary. (d) EXECUTION IN COUNTERPART. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument. This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of the parties reflected hereon as the signatories. Signatures may be given by facsimile or other electronic transmission, and such signatures shall be fully binding on the party sending the same. (e) PROVISIONS SEPARABLE. The provisions of this Agreement are independent of and separable from each other, and no provision shall be affected or rendered invalid or unenforceable by virtue of the fact that for any reason any other or others of them may be invalid or unenforceable in whole or in part. (f) ENTIRE AGREEMENT. This Agreement contains the entire understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements and understandings, inducements and conditions, express or implied, oral or written, except as herein contained. The express terms hereof control and supersede any course of performance and/or usage of the trade inconsistent with any of the terms hereof. This Agreement may not be modified or amended other than by an agreement in writing. (g) SECTION HEADINGS. The section headings in this Agreement are for convenience only. They form no part of this Agreement and shall not affect its interpretation. (h) BINDING NATURE OF AGREEMENT; SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors, and assigns; provided that because the obligations of Employee to provide services to Employer involve the performance of personal services, such obligations shall not be delegated by Employee. For purposes of this Agreement, successors and assigns shall include, but not be limited to, any individual, corporation, trust, partnership, limited liability company, or other entity to whom control is passed in the event of a Change in Control or whom otherwise assumes such control. Employer shall require any successor or assign (whether direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of the business and/or assets of Employer to expressly assume and agree to perform this Agreement so as to provide 4 Employee with all of the rights and benefits intended by the parties in entering into this Agreement. Without limiting the foregoing, unless the context otherwise requires, the term "Employer" includes all subsidiaries of Employer. (i) CONSTRUCTION. The parties hereto acknowledge that each party was represented by legal counsel (or had the opportunity to be represented by legal counsel) in connection with this Agreement and that each of them and his or its counsel have reviewed and revised this Agreement, or have had an opportunity to do so, and that any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any amendments or any exhibits or schedules hereto or thereto. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. Employer: SYNTELLECT INC. By /s/ Timothy P. Vatuone ---------------------------------------- Timothy P. Vatuone Its Vice President, Chief Financial Officer ---------------------------------------- Employee: /S/ Anthony V. Carollo, Jr. --------------------------- Anthony V. Carollo, Jr. 5 EX-99.E.5 5 t08210exv99wew5.txt CHANGE OF CONTROL AGREEMENT - TIMOTHY VATUONE Exhibit (e)(5) AGREEMENT THIS AGREEMENT ("Agreement") is made and entered into as of August 16, 2002, by and between Syntellect Inc., a Delaware corporation ("Employer"), and Timothy P. Vatuone ("Employee"). WHEREAS, Employee currently serves as an employee and senior management of Employer; and WHEREAS, Employer currently is exploring various opportunities, including one or more transactions that might result in a "Change of Control" (as defined below), that are intended to enhance Employer's long-term growth and to increase its stockholders' return on investment; and WHEREAS, Employer has determined that it is in Employer's best interest to encourage Employee to (a) remain employed with Employer and (b) use Employee's best efforts to assist Employer in achieving its long-term goals; and WHEREAS, Employer and Employee desire to enter into this Agreement to set forth the parties' respective rights and obligations in the event of a Change of Control. NOW, THEREFORE, in consideration of the premises and of the mutual covenants set forth in this Agreement, the parties hereto agree as follows: 1. DEFINITIONS. For purposes of this Agreement, the following capitalized terms shall have the meanings set forth beside such terms: (a) "Change of Control" means and includes each of the following: (i) there shall be consummated any consolidation or merger of Employer in which Employer is not the continuing or surviving entity, or pursuant to which Employer's capital stock would be converted into cash, securities or other property, other than a merger of Employer in which the holders of Employer's capital stock immediately prior to the merger have the same proportionate ownership of beneficial interest of common stock or other voting securities of the surviving entity immediately after the merger; (ii) there shall be consummated any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of assets or earning power aggregating more than 40% of the assets or earning power of Employer and its subsidiaries (taken as a whole); (iii) the stockholders of Employer shall approve any plan or proposal for liquidation or dissolution of Employer; (iv) any person (as such term is used in Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934), other than any employee benefit plan of Employer or any subsidiary of Employer or any entity holding shares of capital stock of Employer for or pursuant to the terms of any such employee benefit plan in its role as an agent or trustee for such plan, shall become the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of 20% or more of Employer's outstanding capital stock; or (v) during any period of two consecutive years, individuals who at the beginning of such period constitute Employer's board of directors shall fail to constitute a majority thereof, unless the election, or the nomination for election by Employer's stockholders, of each new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period. (b) "COBRA" shall mean the Consolidated Omnibus Budget Reconciliation Act of 1986. (c) "Constructive Termination" shall occur if, within twelve (12) months after the effective date of a Change of Control and without the consent of Employee, a successor or assign, as described in Section 3(h) hereof ("Successor") assigns Employee status, title, position, duties, geographic location, compensation, or responsibilities (including reporting responsibilities) that are materially different from Employee's status, title, position, duties, geographic location, compensation, or responsibilities (including reporting responsibilities) immediately prior to the time of the Change of Control or which constitute a diminishment in Employee's status, title, position, duties, compensation or responsibilities from those in effect prior to the effective date of a Change in Control. (d) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. (e) "Excess Parachute Payment" shall have the meaning set forth in Section 2. (f) "Severance Amount" shall mean an amount equal to (i) fifty percent (50%) of the greater of (a) Employee's current gross annual salary prior to the voluntary 10% reduction in salary effected on or about July 15, 2002 and any subsequent reduction(s) and (b) Employee's current gross annual salary as of the date of termination or Constructive Termination of Employee's employment, plus (ii) fifty percent (50%) of Employee's targeted annual bonus amount for the year in which Employee's employment is terminated plus (iii) any unpaid fringe benefits, deferred amounts, bonus sums that Employee may have earned on or prior to the date of termination or Constructive Termination of Employee's employment, plus (iv) an amount equal to the total of the current medical and dental insurance premiums which would be paid on Employee's behalf for the six (6) month period following termination or Constructive Termination of Employee's employment or, in lieu of such amount, agreement to maintain Employee's coverage under Employee's current medical and dental insurance policies or medical and dental insurance policies substantially similar to such policies for a period of six (6) months following termination or Constructive Termination of Employee's employment. 2. TERMINATION FOLLOWING CHANGE IN CONTROL. In the event of the occurrence of Constructive Termination within twelve (12) months after the effective date of a Change in Control, Employee may, at Employee's option, terminate Employee's employment due to Constructive Termination unless Employee has entered into an employment agreement with Successor. Such termination shall be effective upon Employee giving notice to Successor. In the event of termination of Employee's employment (1) by Successor within twelve (12) months after the effective date of a Change of Control, or (2) by Employee within twelve (12) months after the effective date of a Change of Control as a result of a Constructive Termination, then (a) Successor shall pay Employee a lump sum cash payment equal to the Severance Amount within 10 business days after the termination of employment; (b) Successor shall make available to Employee, at Employee's cost and 2 expense, medical and other insurance coverage at a level and to the extent required by COBRA; and (c) any outstanding options held by Employee that remain unvested as of the date of termination shall become fully vested and exercisable as of the date of termination of Employee's employment with Successor and prior to the occurrence of an event otherwise terminating the options. Notwithstanding the foregoing, in the event that any payments under this Section 2 will be deemed to constitute an "excess parachute payment" as defined in Section 280G(b)(i) of the Internal Revenue Code of 1986, as amended (an "Excess Parachute Payment"), then the payments to Employee under this Section 2 shall be limited to an amount equal to the maximum amount that could be paid to Employee so that no such amount, along with all other payments to Employee by Successor, will be deemed to constitute an Excess Parachute Payment. Subject to the terms of this Section 2, Employee shall not be entitled to receive any other compensation or benefits under this Agreement as a result of the termination of Employee's employment following a Change of Control or Constructive Termination. 3. MISCELLANEOUS. (a) NOTICES. All notices, requests, demands, and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given, made, and received (i) if personally delivered, on the date of delivery, (ii) if by facsimile transmission, upon receipt, (iii) if mailed, three days after deposit in the United States mail, registered or certified, return receipt requested, postage prepaid, or (iv) if by a courier delivery service providing overnight or "next-day" delivery, on the next business day after deposit with such service, in each case addressed as follows: (1) If to Employer and/or Successor: (2) If to Employee: Syntellect Inc. Timothy P. Vatuone Suite 100 Syntellect Inc. 16610 North Black Canyon Highway Suite 100 Phoenix, Arizona 85053 16610 North Black Canyon Highway Attention: President Phoenix, Arizona 85053 Tel: (602) 789-2800 Tel: (602) 789-2954 Fax: (602) 789-2768 Fax: (602) 789-2768 e-mail: tvatuone@syntellect.com with a copy given in the manner with a copy given in the manner prescribed above to Successor at its prescribed above, to: principal place of business, to the attention of Successor's Chief Executive Officer with a copy to Successor's General Counsel, and to: Rogers & Theobald LLP -------------------------------------------- Suite 850 -------------------------------------------- 2425 East Camelback Road -------------------------------------------- Phoenix, Arizona 85016 -------------------------------------------- Attention: Robert K. Rogers, Esq. Attention: --------------------------------- Tel: (602) 852-5550 Tel: --------------------------------------- Fax: (602) 852-5570 Fax: --------------------------------------- e-mail: rkr@rogerstheobald.com e-mail: -------------------------------------
3 Either party may alter the address to which communications or copies are to be sent by giving notice of such change of address in conformity with the provisions of this Section 3(a) for the giving of notice. (b) INDULGENCES; WAIVERS. Neither any failure nor any delay on the part of either party to exercise any right, remedy, power, or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power, or privilege preclude any other or further exercise of the same or of any other right, remedy, power, or privilege, nor shall any waiver of any right, remedy, power, or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power, or privilege with respect to any other occurrence. No waiver shall be binding unless executed in writing by the party making the waiver. (c) CONTROLLING LAW. This Agreement and all questions relating to its validity, interpretation, performance and enforcement, shall be governed by and construed in accordance with the laws of the State of Arizona, notwithstanding any Arizona conflict-of-interest or choice of law provisions to the contrary. (d) EXECUTION IN COUNTERPART. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument. This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of the parties reflected hereon as the signatories. Signatures may be given by facsimile or other electronic transmission, and such signatures shall be fully binding on the party sending the same. (e) PROVISIONS SEPARABLE. The provisions of this Agreement are independent of and separable from each other, and no provision shall be affected or rendered invalid or unenforceable by virtue of the fact that for any reason any other or others of them may be invalid or unenforceable in whole or in part. (f) ENTIRE AGREEMENT. This Agreement contains the entire understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements and understandings, inducements and conditions, express or implied, oral or written, except as herein contained. The express terms hereof control and supersede any course of performance and/or usage of the trade inconsistent with any of the terms hereof. This Agreement may not be modified or amended other than by an agreement in writing. (g) SECTION HEADINGS. The section headings in this Agreement are for convenience only. They form no part of this Agreement and shall not affect its interpretation. (h) BINDING NATURE OF AGREEMENT; SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors, and assigns; provided that because the obligations of Employee to provide services to Employer involve the performance of personal services, such obligations shall not be delegated by Employee. For purposes of this Agreement, successors and assigns shall include, but not be limited to, any individual, corporation, trust, partnership, limited liability company, or other entity to whom control is passed in the event of a Change in Control or whom otherwise assumes such control. Employer shall require any successor or assign (whether direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of the business and/or assets of Employer to expressly assume and agree to perform this Agreement so as to provide 4 Employee with all of the rights and benefits intended by the parties in entering into this Agreement. Without limiting the foregoing, unless the context otherwise requires, the term "Employer" includes all subsidiaries of Employer. (i) CONSTRUCTION. The parties hereto acknowledge that each party was represented by legal counsel (or had the opportunity to be represented by legal counsel) in connection with this Agreement and that each of them and his or its counsel have reviewed and revised this Agreement, or have had an opportunity to do so, and that any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any amendments or any exhibits or schedules hereto or thereto. 5 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. Employer: SYNTELLECT INC. By /s/ Anthony V. Carollo, Jr. ----------------------------------------- Anthony V. Carollo, Jr. Its Chief Executive Officer and President ----------------------------------------- Employee: /s/ Timothy P. Vatuone --------------------------- Timothy P. Vatuone EX-99.E.6 6 t08210exv99wew6.txt CHAGE OF CONTROL AGREEMENT - PETER TROMPETTER Exhibit (e)(6) AGREEMENT THIS AGREEMENT ("Agreement") is made and entered into as of August 16, 2002, by and between Syntellect Inc., a Delaware corporation ("Employer"), and Peter Trompetter ("Employee"). WHEREAS, Employee currently serves as an employee and senior management of Employer; and WHEREAS, Employer currently is exploring various opportunities, including one or more transactions that might result in a "Change of Control" (as defined below), that are intended to enhance Employer's long-term growth and to increase its stockholders' return on investment; and WHEREAS, Employer has determined that it is in Employer's best interest to encourage Employee to (a) remain employed with Employer and (b) use Employee's best efforts to assist Employer in achieving its long-term goals; and WHEREAS, Employer and Employee desire to enter into this Agreement to set forth the parties' respective rights and obligations in the event of a Change of Control. NOW, THEREFORE, in consideration of the premises and of the mutual covenants set forth in this Agreement, the parties hereto agree as follows: 1. DEFINITIONS. For purposes of this Agreement, the following capitalized terms shall have the meanings set forth beside such terms: (a) "Change of Control" means and includes each of the following: (i) there shall be consummated any consolidation or merger of Employer in which Employer is not the continuing or surviving entity, or pursuant to which Employer's capital stock would be converted into cash, securities or other property, other than a merger of Employer in which the holders of Employer's capital stock immediately prior to the merger have the same proportionate ownership of beneficial interest of common stock or other voting securities of the surviving entity immediately after the merger; (ii) there shall be consummated any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of assets or earning power aggregating more than 40% of the assets or earning power of Employer and its subsidiaries (taken as a whole); (iii) the stockholders of Employer shall approve any plan or proposal for liquidation or dissolution of Employer; (iv) any person (as such term is used in Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934), other than any employee benefit plan of Employer or any subsidiary of Employer or any entity holding shares of capital stock of Employer for or pursuant to the terms of any such employee benefit plan in its role as an agent or trustee for such plan, shall become the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of 20% or more of Employer's outstanding capital stock; or (v) during any period of two consecutive years, individuals who at the beginning of such period constitute Employer's board of directors shall fail to constitute a majority thereof, unless the election, or the nomination for election by Employer's stockholders, of each new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period. (b) "COBRA" shall mean the Consolidated Omnibus Budget Reconciliation Act of 1986. (c) "Constructive Termination" shall occur if, within twelve (12) months after the effective date of a Change of Control and without the consent of Employee, a successor or assign, as described in Section 3(h) hereof ("Successor") assigns Employee status, title, position, duties, geographic location, compensation, or responsibilities (including reporting responsibilities) that are materially different from Employee's status, title, position, duties, geographic location, compensation, or responsibilities (including reporting responsibilities) immediately prior to the time of the Change of Control or which constitute a diminishment in Employee's status, title, position, duties, compensation or responsibilities from those in effect prior to the effective date of a Change in Control. (d) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. (e) "Excess Parachute Payment" shall have the meaning set forth in Section 2. (f) "Severance Amount" shall mean an amount equal to (i) twenty-five percent (25%) of the greater of (a) Employee's current gross annual salary prior to the voluntary 10% reduction in salary effected on or about July 15, 2002 and any subsequent reduction(s) and (b) Employee's current gross annual salary as of the date of termination or Constructive Termination of Employee's employment, plus (ii) twenty-five percent (25%) of Employee's targeted annual bonus amount for the year in which Employee's employment is terminated plus (iii) any unpaid fringe benefits, deferred amounts, bonus sums that Employee may have earned on or prior to the date of termination or Constructive Termination of Employee's employment, plus (iv) an amount equal to the total of the current medical and dental insurance premiums which would be paid on Employee's behalf for the six (6) month period following termination or Constructive Termination of Employee's employment or, in lieu of such amount, agreement to maintain Employee's coverage under Employee's current medical and dental insurance policies or medical and dental insurance policies substantially similar to such policies for a period of six (6) months following termination or Constructive Termination of Employee's employment. 2. TERMINATION FOLLOWING CHANGE IN CONTROL. In the event of the occurrence of Constructive Termination within twelve (12) months after the effective date of a Change in Control, Employee may, at Employee's option, terminate Employee's employment due to Constructive Termination unless Employee has entered into an employment agreement with Successor. Such termination shall be effective upon Employee giving notice to Successor. In the event of termination of Employee's employment (1) by Successor within twelve (12) months after the effective date of a Change of Control, or (2) by Employee within twelve (12) months after the effective date of a Change of Control as a result of a Constructive Termination, then (a) Successor shall pay Employee a lump sum cash payment equal to the Severance Amount within 10 business days after the termination of employment; (b) Successor shall make available to Employee, at Employee's cost and 2 expense, medical and other insurance coverage at a level and to the extent required by COBRA; and (c) any outstanding options held by Employee that remain unvested as of the date of termination shall become fully vested and exercisable as of the date of termination of Employee's employment with Successor and prior to the occurrence of an event otherwise terminating the options. Notwithstanding the foregoing, in the event that any payments under this Section 2 will be deemed to constitute an "excess parachute payment" as defined in Section 280G(b)(i) of the Internal Revenue Code of 1986, as amended (an "Excess Parachute Payment"), then the payments to Employee under this Section 2 shall be limited to an amount equal to the maximum amount that could be paid to Employee so that no such amount, along with all other payments to Employee by Successor, will be deemed to constitute an Excess Parachute Payment. Subject to the terms of this Section 2, Employee shall not be entitled to receive any other compensation or benefits under this Agreement as a result of the termination of Employee's employment following a Change of Control or Constructive Termination. 3. MISCELLANEOUS. (a) NOTICES. All notices, requests, demands, and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given, made, and received (i) if personally delivered, on the date of delivery, (ii) if by facsimile transmission, upon receipt, (iii) if mailed, three days after deposit in the United States mail, registered or certified, return receipt requested, postage prepaid, or (iv) if by a courier delivery service providing overnight or "next-day" delivery, on the next business day after deposit with such service, in each case addressed as follows: (1) If to Employer and/or Successor: (2) If to Employee: Syntellect Inc. Peter Trompetter Suite 100 Syntellect Inc. 16610 North Black Canyon Highway Suite 100 Phoenix, Arizona 85053 16610 North Black Canyon Highway Attention: President Phoenix, Arizona 85053 Tel: (602) 789-2800 Tel: (602) 789-2767 Fax: (602) 789-2768 Fax: (602) 789-2768 e-mail: ptrompetter@syntellect.com with a copy given in the manner with a copy given in the manner prescribed above to Successor at its prescribed above, to: principal place of business, to the attention of Successor's Chief Executive Officer with a copy to Successor's General Counsel, and to: Rogers & Theobald LLP -------------------------------------------- Suite 850 -------------------------------------------- 2425 East Camelback Road -------------------------------------------- Phoenix, Arizona 85016 -------------------------------------------- Attention: Robert K. Rogers, Esq. Attention: --------------------------------- Tel: (602) 852-5550 Tel: --------------------------------------- Fax: (602) 852-5570 Fax: --------------------------------------- e-mail: rkr@rogerstheobald.com e-mail: -------------------------------------
3 Either party may alter the address to which communications or copies are to be sent by giving notice of such change of address in conformity with the provisions of this Section 3(a) for the giving of notice. (b) INDULGENCES; WAIVERS. Neither any failure nor any delay on the part of either party to exercise any right, remedy, power, or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power, or privilege preclude any other or further exercise of the same or of any other right, remedy, power, or privilege, nor shall any waiver of any right, remedy, power, or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power, or privilege with respect to any other occurrence. No waiver shall be binding unless executed in writing by the party making the waiver. (c) CONTROLLING LAW. This Agreement and all questions relating to its validity, interpretation, performance and enforcement, shall be governed by and construed in accordance with the laws of the State of Arizona, notwithstanding any Arizona conflict-of-interest or choice of law provisions to the contrary. (d) EXECUTION IN COUNTERPART. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument. This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of the parties reflected hereon as the signatories. Signatures may be given by facsimile or other electronic transmission, and such signatures shall be fully binding on the party sending the same. (e) PROVISIONS SEPARABLE. The provisions of this Agreement are independent of and separable from each other, and no provision shall be affected or rendered invalid or unenforceable by virtue of the fact that for any reason any other or others of them may be invalid or unenforceable in whole or in part. (f) ENTIRE AGREEMENT. This Agreement contains the entire understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements and understandings, inducements and conditions, express or implied, oral or written, except as herein contained. The express terms hereof control and supersede any course of performance and/or usage of the trade inconsistent with any of the terms hereof. This Agreement may not be modified or amended other than by an agreement in writing. (g) SECTION HEADINGS. The section headings in this Agreement are for convenience only. They form no part of this Agreement and shall not affect its interpretation. (h) BINDING NATURE OF AGREEMENT; SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors, and assigns; provided that because the obligations of Employee to provide services to Employer involve the performance of personal services, such obligations shall not be delegated by Employee. For purposes of this Agreement, successors and assigns shall include, but not be limited to, any individual, corporation, trust, partnership, limited liability company, or other entity to whom control is passed in the event of a Change in Control or whom otherwise assumes such control. Employer shall require any successor or assign (whether direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of the business and/or assets of Employer to expressly assume and agree to perform this Agreement so as to provide 4 Employee with all of the rights and benefits intended by the parties in entering into this Agreement. Without limiting the foregoing, unless the context otherwise requires, the term "Employer" includes all subsidiaries of Employer. (i) CONSTRUCTION. The parties hereto acknowledge that each party was represented by legal counsel (or had the opportunity to be represented by legal counsel) in connection with this Agreement and that each of them and his or its counsel have reviewed and revised this Agreement, or have had an opportunity to do so, and that any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any amendments or any exhibits or schedules hereto or thereto. 5 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. Employer: SYNTELLECT INC. By /s/ Anthony V. Carollo, Jr. -------------------------------------- Anthony V. Carollo, Jr. Its Chief Executive Officer and President -------------------------------------- Employee: /S/ Peter Trompetter --------------------------- Peter Trompetter 6 EX-99.E.7 7 t08210exv99wew7.txt CHANGE OF CONTROL AGREEMENT - CHARLES SONNEBORN Exhibit (e)(7) AGREEMENT THIS AGREEMENT ("Agreement") is made and entered into as of August 16, 2002, by and between Syntellect Inc., a Delaware corporation ("Employer"), and Charles F. Sonneborn, III ("Employee"). WHEREAS, Employee currently serves as an employee and senior management of Employer; and WHEREAS, Employer currently is exploring various opportunities, including one or more transactions that might result in a "Change of Control" (as defined below), that are intended to enhance Employer's long-term growth and to increase its stockholders' return on investment; and WHEREAS, Employer has determined that it is in Employer's best interest to encourage Employee to (a) remain employed with Employer and (b) use Employee's best efforts to assist Employer in achieving its long-term goals; and WHEREAS, Employer and Employee desire to enter into this Agreement to set forth the parties' respective rights and obligations in the event of a Change of Control. NOW, THEREFORE, in consideration of the premises and of the mutual covenants set forth in this Agreement, the parties hereto agree as follows: 1. DEFINITIONS. For purposes of this Agreement, the following capitalized terms shall have the meanings set forth beside such terms: (a) "Change of Control" means and includes each of the following: (i) there shall be consummated any consolidation or merger of Employer in which Employer is not the continuing or surviving entity, or pursuant to which Employer's capital stock would be converted into cash, securities or other property, other than a merger of Employer in which the holders of Employer's capital stock immediately prior to the merger have the same proportionate ownership of beneficial interest of common stock or other voting securities of the surviving entity immediately after the merger; (ii) there shall be consummated any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of assets or earning power aggregating more than 40% of the assets or earning power of Employer and its subsidiaries (taken as a whole); (iii) the stockholders of Employer shall approve any plan or proposal for liquidation or dissolution of Employer; (iv) any person (as such term is used in Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934), other than any employee benefit plan of Employer or any subsidiary of Employer or any entity holding shares of capital stock of Employer for or pursuant to the terms of any such employee benefit plan in its role as an agent or trustee for such plan, shall become the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of 20% or more of Employer's outstanding capital stock; or (v) during any period of two consecutive years, individuals who at the beginning of such period constitute Employer's board of directors shall fail to constitute a majority thereof, unless the election, or the nomination for election by Employer's stockholders, of each new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period. (b) "COBRA" shall mean the Consolidated Omnibus Budget Reconciliation Act of 1986. (c) "Constructive Termination" shall occur if, within twelve (12) months after the effective date of a Change of Control and without the consent of Employee, a successor or assign, as described in Section 3(h) hereof ("Successor") assigns Employee status, title, position, duties, geographic location, compensation, or responsibilities (including reporting responsibilities) that are materially different from Employee's status, title, position, duties, geographic location, compensation, or responsibilities (including reporting responsibilities) immediately prior to the time of the Change of Control or which constitute a diminishment in Employee's status, title, position, duties, compensation or responsibilities from those in effect prior to the effective date of a Change in Control. (d) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. (e) "Excess Parachute Payment" shall have the meaning set forth in Section 2. (f) "Severance Amount" shall mean an amount equal to (i) fifty percent (50%) of the greater of (a) Employee's current gross annual salary prior to the voluntary 10% reduction in salary effected on or about July 15, 2002 and any subsequent reduction(s) and (b) Employee's current gross annual salary as of the date of termination or Constructive Termination of Employee's employment, plus (ii) fifty percent (50%) of Employee's targeted annual bonus amount for the year in which Employee's employment is terminated plus (iii) any unpaid fringe benefits, deferred amounts, bonus sums that Employee may have earned on or prior to the date of termination or Constructive Termination of Employee's employment, plus (iv) an amount equal to the total of the current medical and dental insurance premiums which would be paid on Employee's behalf for the six (6) month period following termination or Constructive Termination of Employee's employment or, in lieu of such amount, agreement to maintain Employee's coverage under Employee's current medical and dental insurance policies or medical and dental insurance policies substantially similar to such policies for a period of six (6) months following termination or Constructive Termination of Employee's employment. 2. TERMINATION FOLLOWING CHANGE IN CONTROL. In the event of the occurrence of Constructive Termination within twelve (12) months after the effective date of a Change in Control, Employee may, at Employee's option, terminate Employee's employment due to Constructive Termination unless Employee has entered into an employment agreement with Successor. Such termination shall be effective upon Employee giving notice to Successor. In the event of termination of Employee's employment (1) by Successor within twelve (12) months after the effective date of a Change of Control, or (2) by Employee within twelve (12) months after the effective date of a Change of Control as a result of a Constructive Termination, then (a) Successor shall pay Employee a lump sum cash payment equal to the Severance Amount within 10 business days after the termination of employment; (b) Successor shall make available to Employee, at Employee's cost and 2 expense, medical and other insurance coverage at a level and to the extent required by COBRA; and (c) any outstanding options held by Employee that remain unvested as of the date of termination shall become fully vested and exercisable as of the date of termination of Employee's employment with Successor and prior to the occurrence of an event otherwise terminating the options. Notwithstanding the foregoing, in the event that any payments under this Section 2 will be deemed to constitute an "excess parachute payment" as defined in Section 280G(b)(i) of the Internal Revenue Code of 1986, as amended (an "Excess Parachute Payment"), then the payments to Employee under this Section 2 shall be limited to an amount equal to the maximum amount that could be paid to Employee so that no such amount, along with all other payments to Employee by Successor, will be deemed to constitute an Excess Parachute Payment. Subject to the terms of this Section 2, Employee shall not be entitled to receive any other compensation or benefits under this Agreement as a result of the termination of Employee's employment following a Change of Control or Constructive Termination. 3. MISCELLANEOUS. (a) NOTICES. All notices, requests, demands, and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given, made, and received (i) if personally delivered, on the date of delivery, (ii) if by facsimile transmission, upon receipt, (iii) if mailed, three days after deposit in the United States mail, registered or certified, return receipt requested, postage prepaid, or (iv) if by a courier delivery service providing overnight or "next-day" delivery, on the next business day after deposit with such service, in each case addressed as follows: (1) If to Employer and/or Successor: (2) If to Employee: Syntellect Inc. Charles F. Sonneborn III Suite 100 Syntellect Inc. 16610 North Black Canyon Highway Suite 100 Phoenix, Arizona 85053 16610 North Black Canyon Highway Attention: President Phoenix, Arizona 85053 Tel: (602) 789-2800 Tel: (602) 789-2823 Fax: (602) 789-2768 Fax: (602) 789-2842 e-mail: csonneborn@syntellect.com with a copy given in the manner with a copy given in the manner prescribed above to Successor at its prescribed above, to: principal place of business, to the attention of Successor's Chief Executive Officer with a copy to Successor's General Counsel, and to: Rogers & Theobald LLP -------------------------------------------- Suite 850 -------------------------------------------- 2425 East Camelback Road -------------------------------------------- Phoenix, Arizona 85016 -------------------------------------------- Attention: Robert K. Rogers, Esq. Attention: --------------------------------- Tel: (602) 852-5550 Tel: --------------------------------------- Fax: (602) 852-5570 Fax: --------------------------------------- e-mail: rkr@rogerstheobald.com e-mail: -------------------------------------
3 Either party may alter the address to which communications or copies are to be sent by giving notice of such change of address in conformity with the provisions of this Section 3(a) for the giving of notice. (b) INDULGENCES; WAIVERS. Neither any failure nor any delay on the part of either party to exercise any right, remedy, power, or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power, or privilege preclude any other or further exercise of the same or of any other right, remedy, power, or privilege, nor shall any waiver of any right, remedy, power, or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power, or privilege with respect to any other occurrence. No waiver shall be binding unless executed in writing by the party making the waiver. (c) CONTROLLING LAW. This Agreement and all questions relating to its validity, interpretation, performance and enforcement, shall be governed by and construed in accordance with the laws of the State of Arizona, notwithstanding any Arizona conflict-of-interest or choice of law provisions to the contrary. (d) EXECUTION IN COUNTERPART. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument. This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of the parties reflected hereon as the signatories. Signatures may be given by facsimile or other electronic transmission, and such signatures shall be fully binding on the party sending the same. (e) PROVISIONS SEPARABLE. The provisions of this Agreement are independent of and separable from each other, and no provision shall be affected or rendered invalid or unenforceable by virtue of the fact that for any reason any other or others of them may be invalid or unenforceable in whole or in part. (f) ENTIRE AGREEMENT. This Agreement contains the entire understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements and understandings, inducements and conditions, express or implied, oral or written, except as herein contained. The express terms hereof control and supersede any course of performance and/or usage of the trade inconsistent with any of the terms hereof. This Agreement may not be modified or amended other than by an agreement in writing. (g) SECTION HEADINGS. The section headings in this Agreement are for convenience only. They form no part of this Agreement and shall not affect its interpretation. (h) BINDING NATURE OF AGREEMENT; SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors, and assigns; provided that because the obligations of Employee to provide services to Employer involve the performance of personal services, such obligations shall not be delegated by Employee. For purposes of this Agreement, successors and assigns shall include, but not be limited to, any individual, corporation, trust, partnership, limited liability company, or other entity to whom control is passed in the event of a Change in Control or whom otherwise assumes such control. Employer shall require any successor or assign (whether direct or 4 indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of the business and/or assets of Employer to expressly assume and agree to perform this Agreement so as to provide Employee with all of the rights and benefits intended by the parties in entering into this Agreement. Without limiting the foregoing, unless the context otherwise requires, the term "Employer" includes all subsidiaries of Employer. (i) CONSTRUCTION. The parties hereto acknowledge that each party was represented by legal counsel (or had the opportunity to be represented by legal counsel) in connection with this Agreement and that each of them and his or its counsel have reviewed and revised this Agreement, or have had an opportunity to do so, and that any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any amendments or any exhibits or schedules hereto or thereto. 5 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. Employer: SYNTELLECT INC. By /s/ Anthony V. Carollo, Jr. -------------------------------------- Anthony V. Carollo, Jr. Its Chief Executive Officer and President -------------------------------------- Employee: /S/ Charles F. Sonneborn, III ----------------------------- Charles F. Sonneborn, III 6 EX-99.E.8 8 t08210exv99wew8.txt CHANGE OF CONTROL AGREEMENT - STEVEN DODENHOFF Exhibit (e)(8) AGREEMENT THIS AGREEMENT ("Agreement") is made and entered into as of August 16, 2002, by and between Syntellect Inc., a Delaware corporation ("Employer"), and Steven W. Dodenhoff ("Employee"). WHEREAS, Employee currently serves as an employee and senior management of Employer; and WHEREAS, Employer currently is exploring various opportunities, including one or more transactions that might result in a "Change of Control" (as defined below), that are intended to enhance Employer's long-term growth and to increase its stockholders' return on investment; and WHEREAS, Employer has determined that it is in Employer's best interest to encourage Employee to (a) remain employed with Employer and (b) use Employee's best efforts to assist Employer in achieving its long-term goals; and WHEREAS, Employer and Employee desire to enter into this Agreement to set forth the parties' respective rights and obligations in the event of a Change of Control. NOW, THEREFORE, in consideration of the premises and of the mutual covenants set forth in this Agreement, the parties hereto agree as follows: 1. DEFINITIONS. For purposes of this Agreement, the following capitalized terms shall have the meanings set forth beside such terms: (a) "Change of Control" means and includes each of the following: (i) there shall be consummated any consolidation or merger of Employer in which Employer is not the continuing or surviving entity, or pursuant to which Employer's capital stock would be converted into cash, securities or other property, other than a merger of Employer in which the holders of Employer's capital stock immediately prior to the merger have the same proportionate ownership of beneficial interest of common stock or other voting securities of the surviving entity immediately after the merger; (ii) there shall be consummated any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of assets or earning power aggregating more than 40% of the assets or earning power of Employer and its subsidiaries (taken as a whole); (iii) the stockholders of Employer shall approve any plan or proposal for liquidation or dissolution of Employer; (iv) any person (as such term is used in Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934), other than any employee benefit plan of Employer or any subsidiary of Employer or any entity holding shares of capital stock of Employer for or pursuant to the terms of any such employee benefit plan in its role as an agent or trustee for such plan, shall become the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of 20% or more of Employer's outstanding capital stock; or (v) during any period of two consecutive years, individuals who at the beginning of such period constitute Employer's board of directors shall fail to constitute a majority thereof, unless the election, or the nomination for election by Employer's stockholders, of each new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period. (b) "COBRA" shall mean the Consolidated Omnibus Budget Reconciliation Act of 1986. (c) "Constructive Termination" shall occur if, within twelve (12) months after the effective date of a Change of Control and without the consent of Employee, a successor or assign, as described in Section 3(h) hereof ("Successor") assigns Employee status, title, position, duties, geographic location, compensation, or responsibilities (including reporting responsibilities) that are materially different from Employee's status, title, position, duties, geographic location, compensation, or responsibilities (including reporting responsibilities) immediately prior to the time of the Change of Control or which constitute a diminishment in Employee's status, title, position, duties, compensation or responsibilities from those in effect prior to the effective date of a Change in Control. (d) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. (e) "Excess Parachute Payment" shall have the meaning set forth in Section 2. (f) "Severance Amount" shall mean an amount equal to (i) seventy-five percent (75%) of the greater of (a) Employee's current gross annual salary prior to the voluntary 10% reduction in salary effected on or about July 15, 2002 and any subsequent reduction(s) and (b) Employee's current gross annual salary as of the date of termination or Constructive Termination of Employee's employment, plus (ii) seventy-five percent (75%) of Employee's targeted annual bonus amount for the year in which Employee's employment is terminated plus (iii) any unpaid fringe benefits, deferred amounts, bonus sums that Employee may have earned on or prior to the date of termination or Constructive Termination of Employee's employment, plus (iv) an amount equal to the total of the current medical and dental insurance premiums which would be paid on Employee's behalf for the six (6) month period following termination or Constructive Termination of Employee's employment or, in lieu of such amount, agreement to maintain Employee's coverage under Employee's current medical and dental insurance policies or medical and dental insurance policies substantially similar to such policies for a period of six (6) months following termination or Constructive Termination of Employee's employment. 2. TERMINATION FOLLOWING CHANGE IN CONTROL. In the event of the occurrence of Constructive Termination within twelve (12) months after the effective date of a Change in Control, Employee may, at Employee's option, terminate Employee's employment due to Constructive Termination unless Employee has entered into an employment agreement with Successor. Such termination shall be effective upon Employee giving notice to Successor. In the event of termination of Employee's employment (1) by Successor within twelve (12) months after the effective date of a Change of Control, or (2) by Employee within twelve (12) months after the effective date of a Change of Control as a result of a Constructive Termination, then (a) Successor shall pay Employee a lump sum cash payment equal to the Severance Amount within 10 business days after the termination of employment; (b) Successor shall make available to Employee, at Employee's cost and 2 expense, medical and other insurance coverage at a level and to the extent required by COBRA; and (c) any outstanding options held by Employee that remain unvested as of the date of termination shall become fully vested and exercisable as of the date of termination of Employee's employment with Successor and prior to the occurrence of an event otherwise terminating the options. Notwithstanding the foregoing, in the event that any payments under this Section 2 will be deemed to constitute an "excess parachute payment" as defined in Section 280G(b)(i) of the Internal Revenue Code of 1986, as amended (an "Excess Parachute Payment"), then the payments to Employee under this Section 2 shall be limited to an amount equal to the maximum amount that could be paid to Employee so that no such amount, along with all other payments to Employee by Successor, will be deemed to constitute an Excess Parachute Payment. Subject to the terms of this Section 2, Employee shall not be entitled to receive any other compensation or benefits under this Agreement as a result of the termination of Employee's employment following a Change of Control or Constructive Termination. 3. MISCELLANEOUS. (a) NOTICES. All notices, requests, demands, and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given, made, and received (i) if personally delivered, on the date of delivery, (ii) if by facsimile transmission, upon receipt, (iii) if mailed, three days after deposit in the United States mail, registered or certified, return receipt requested, postage prepaid, or (iv) if by a courier delivery service providing overnight or "next-day" delivery, on the next business day after deposit with such service, in each case addressed as follows: (1) If to Employer and/or Successor: (2) If to Employee: Syntellect Inc. Steven W. Dodenhoff Suite 100 Syntellect Inc. 16610 North Black Canyon Highway Suite 100 Phoenix, Arizona 85053 16610 North Black Canyon Highway Attention: President Phoenix, Arizona 85053 Tel: (602) 789-2800 Tel: (602) 789-2932 Fax: (602) 789-2768 Fax: (602) 789-2768 e-mail: sdodenhoff@syntellect.com with a copy given in the manner with a copy given in the manner prescribed above to Successor at its prescribed above, to: principal place of business, to the attention of Successor's Chief Executive Officer with a copy to Successor's General Counsel, and to: Rogers & Theobald LLP -------------------------------------------- Suite 850 -------------------------------------------- 2425 East Camelback Road -------------------------------------------- Phoenix, Arizona 85016 -------------------------------------------- Attention: Robert K. Rogers, Esq. Attention: --------------------------------- Tel: (602) 852-5550 Tel: --------------------------------------- Fax: (602) 852-5570 Fax: --------------------------------------- e-mail: rkr@rogerstheobald.com e-mail: -------------------------------------
3 Either party may alter the address to which communications or copies are to be sent by giving notice of such change of address in conformity with the provisions of this Section 3(a) for the giving of notice. (b) INDULGENCES; WAIVERS. Neither any failure nor any delay on the part of either party to exercise any right, remedy, power, or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power, or privilege preclude any other or further exercise of the same or of any other right, remedy, power, or privilege, nor shall any waiver of any right, remedy, power, or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power, or privilege with respect to any other occurrence. No waiver shall be binding unless executed in writing by the party making the waiver. (c) CONTROLLING LAW. This Agreement and all questions relating to its validity, interpretation, performance and enforcement, shall be governed by and construed in accordance with the laws of the State of Arizona, notwithstanding any Arizona conflict-of-interest or choice of law provisions to the contrary. (d) EXECUTION IN COUNTERPART. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument. This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of the parties reflected hereon as the signatories. Signatures may be given by facsimile or other electronic transmission, and such signatures shall be fully binding on the party sending the same. (e) PROVISIONS SEPARABLE. The provisions of this Agreement are independent of and separable from each other, and no provision shall be affected or rendered invalid or unenforceable by virtue of the fact that for any reason any other or others of them may be invalid or unenforceable in whole or in part. (f) ENTIRE AGREEMENT. This Agreement contains the entire understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements and understandings, inducements and conditions, express or implied, oral or written, except as herein contained. The express terms hereof control and supersede any course of performance and/or usage of the trade inconsistent with any of the terms hereof. This Agreement may not be modified or amended other than by an agreement in writing. (g) SECTION HEADINGS. The section headings in this Agreement are for convenience only. They form no part of this Agreement and shall not affect its interpretation. (h) BINDING NATURE OF AGREEMENT; SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors, and assigns; provided that because the obligations of Employee to provide services to Employer involve the performance of personal services, such obligations shall not be delegated by Employee. For purposes of this Agreement, successors and assigns shall include, but not be limited to, any individual, corporation, trust, partnership, limited liability company, or other entity to whom control is passed in the event of a Change in Control or whom otherwise assumes such control. Employer shall require any successor or assign (whether direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of the business and/or assets of Employer to expressly assume and agree to perform this Agreement so as to provide 4 Employee with all of the rights and benefits intended by the parties in entering into this Agreement. Without limiting the foregoing, unless the context otherwise requires, the term "Employer" includes all subsidiaries of Employer. (i) CONSTRUCTION. The parties hereto acknowledge that each party was represented by legal counsel (or had the opportunity to be represented by legal counsel) in connection with this Agreement and that each of them and his or its counsel have reviewed and revised this Agreement, or have had an opportunity to do so, and that any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any amendments or any exhibits or schedules hereto or thereto. 5 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. Employer: SYNTELLECT INC. By /s/ Anthony V. Carollo, Jr. ----------------------------------------- Anthony V. Carollo, Jr. Its Chief Executive Officer and President ----------------------------------------- Employee: /s/ Steven W. Dodenhoff --------------------------- Steven W. Dodenhoff 6 EX-99.E.9 9 t08210exv99wew9.txt INDEMNIFICATION AGREEMENT DATED AUG. 29, 2002 Exhibit (e)(9) INDEMNIFICATION AGREEMENT (form) This Indemnification Agreement ("Agreement") is made and entered into as of August 6, 2002 (the "Effective Date"), by Syntellect Inc., a Delaware corporation (the "Company") and [_________]. (the "Indemnitee"). RECITALS WHEREAS, highly competent persons are becoming more reluctant to serve publicly-held corporations as officers and directors unless they are provided with adequate protection through insurance or adequate indemnification against inordinate risks of claims and actions against them arising out of their service to and activities on behalf of such corporations; WHEREAS, the Board of Directors of the Company (the "Board") has determined that the inability to attract and retain such persons is detrimental to the best interests of the Company's stockholders and that the Company should act to assure such persons that there will be increased certainty of such protection in the future; WHEREAS, the Board deems it to be reasonable, prudent and necessary for the Company contractually to indemnify its officers and directors to the fullest extent permitted by applicable law so that they will serve or continue to serve the Company free from undue concern that they will not be so indemnified. AGREEMENT NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows: 1. DEFINITIONS. For purposes of this Agreement, the following terms shall have the following meanings: (a) "Change of Control" shall have the meaning set forth in Section 5(d). (b) "Corporate Status" describes the status of a person who is serving or has served (i) as an officer or director of the Company, including as a member of any committee of the directors, (ii) in any capacity with respect to any employee benefit plan of the Company, or (iii) as a director, partner, trustee, officer, employee, or agent of any other Entity at the request of the Company. For purposes of subsection (iii) above, an officer or director of the Company who is serving or has served as a director, partner, trustee, officer, employee or agent of a Subsidiary shall be deemed to be serving at the request of the Company. (c) "Entity" shall mean any corporation, partnership, limited liability company, joint venture, trust, foundation, association, organization or other legal entity. (d) "Expenses" shall mean all reasonable fees, costs and expenses incurred in connection with any Proceeding, including, without limitation, reasonable attorneys' fees, disbursements and retainers, fees and disbursements of expert witnesses, private investigators and professional advisors, court costs, transcript costs, travel expenses, duplicating, printing and binding costs, telephone and fax transmission charges, postage, delivery services and other disbursements and expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, or being or preparing to be a witness in a Proceeding. (e) "Indemnifiable Expenses," "Indemnifiable Liabilities" and "Indemnifiable Amounts" shall have the meanings ascribed to those terms in Section 3(a) below. (f) "Independent Counsel" means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent (i) the Company or Indemnitee in any matter material to either such party, or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term "Independent Counsel" shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee's rights under this Agreement. (g) "Liabilities" shall mean judgments, damages, liabilities, losses, penalties, excise taxes, fines, and amounts paid in settlement. (h) "Proceeding" shall mean any threatened, pending or completed claim, action, suit, arbitration, alternate dispute resolution process, investigation, administrative hearing, appeal, or any other proceeding, whether civil, criminal, administrative, arbitrative or investigative, whether formal or informal, including a proceeding initiated by Indemnitee pursuant to Section 10 of this Agreement to enforce Indemnitee's rights hereunder, but excluding a proceeding pending on or prior to the Effective Date. (i) "Subsidiary" shall mean any Entity of which the Company owns (either directly or through another Subsidiary) either (i) a general partner, managing member or other similar interest or (ii) 50% or more of the voting power of the voting capital stock or other voting equity interests of such Entity. 2. SERVICES OF INDEMNITEE. In consideration of the Company's covenants and commitments hereunder, Indemnitee agrees to serve or continue to serve as a director and officer of the Company. However, this Agreement shall not impose any obligation on Indemnitee or the Company to continue Indemnitee's service to the Company beyond any period otherwise required by law or by other agreements or commitments of the parties, if any. 3. AGREEMENT TO INDEMNIFY. The Company agrees to indemnify Indemnitee as follows: (a) PROCEEDINGS OTHER THAN PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY. Subject to the exceptions set forth in Section 4 below, if Indemnitee was or is a party or is threatened to be made a party to any Proceeding (other than an action by or in the right of the Company) by reason of Indemnitee's Corporate Status, Indemnitee shall be indemnified by the Company against all Expenses and Liabilities actually and reasonably incurred by Indemnitee in connection with such Proceeding (referred to herein as "Indemnifiable Expenses" and "Indemnifiable Liabilities," respectively, and collectively, as "Indemnifiable Amounts"), if Indemnitee acted (i) in good faith and (ii) in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company and, with respect to any criminal action or proceeding, Indemnitee had no reasonable cause to believe that Indemnitee's conduct was unlawful. 2 (b) PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY. To the extent permitted by applicable law and subject to the exceptions set forth in Section 4 below, if Indemnitee was or is a party or is threatened to be made a party to any threatened, pending or completed Proceeding by or in the right of the Company to procure a judgment in its favor by reason of Indemnitee's Corporate Status, Indemnitee shall be indemnified by the Company against all Indemnifiable Expenses actually and reasonably incurred by Indemnitee or on Indemnitee's behalf in connection with such Proceeding if Indemnitee acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company; provided, however, that, if applicable law so provides, no indemnification against such expenses shall be made in respect of any claim, issue or matter in such Proceeding as to which Indemnitee shall have been adjudged to be liable to the Company unless and to the extent that the court in which such Proceeding shall have been brought or is pending shall determine that such indemnification may be made. (c) INDEMNIFICATION FOR EXPENSES AS A WITNESS. Subject to the exceptions set forth in Section 4 below, to the extent that Indemnitee is, by reason of Indemnitee's Corporate Status, a witness in any Proceeding to which Indemnitee is not a party, the Company shall indemnify against all expenses actually and reasonably incurred by Indemnitee in connection therewith. 4. EXCEPTIONS TO INDEMNIFICATION. (a) INDEMNITEE AS PLAINTIFF. Except as provided in Section 9(b) of this Agreement and in the next sentence, Indemnitee shall not be entitled to payment of Indemnifiable Amounts or advancement of Indemnifiable Expenses with respect to any Proceeding brought by Indemnitee against the Company, any Entity that it controls, any director or officer thereof, or any third party, unless the Company has consented to the initiation of such Proceeding. This Section 4(a) shall not apply to counterclaims or affirmative defenses asserted by Indemnitee in an action brought against Indemnitee. (b) OTHER LIMITATIONS TO INDEMNIFICATION. Notwithstanding anything contained in this Agreement or in the Company's certificate of incorporation or by-laws (as either or both may be amended from time to time) to the contrary, the Company shall not be obligated to indemnify or hold harmless Indemnitee: (i) if and to the extent that such indemnification shall be prohibited by applicable law; (ii) if and to the extent that payment in connection with a Proceeding is actually and unqualifiedly made to Indemnitee under an insurance policy or otherwise; (iii) if and to the extent that a claim in a Proceeding is decided adversely to Indemnitee based upon or attributable to Indemnitee gaining in fact any personal profit or advantage to which Indemnitee was not legally entitled; or (iv) if and to the extent that the indemnifiable event constituted or arose out of Indemnitee's knowingly fraudulent or dishonest or willful misconduct or gross negligence. 5. PROCEDURE FOR PAYMENT OF INDEMNIFIABLE AMOUNTS. (a) WRITTEN REQUEST FOR INDEMNIFICATION. To obtain indemnification under this 3 Agreement, Indemnitee shall submit to the Company a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification. The Company shall, promptly upon receipt of such a request for indemnification, advise the Board in writing that Indemnitee has requested indemnification. (b) DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION. Upon written request by Indemnitee for indemnification pursuant to the first sentence of Section 5(a) hereof, a determination, if required by applicable law, with respect to Indemnitee's entitlement thereto shall be made in the specific case: (i) if a Change in Control shall have occurred, by Independent Counsel in a written opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee; or (ii) if a Change of Control shall not have occurred, (A) by the Board of Directors by a majority vote of the directors who are not parties to such Proceeding, even though less than a quorum of the Board, or (B) by a committee of such directors designated by a majority vote of such directors, even though less than a quorum of the Board, or (C) if there are no such directors, or if such directors so direct, by Independent Counsel in a written opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee, or (D) if so directed by the Board, by the stockholders of the Company. If it is so determined that Indemnitee is entitled to indemnification, payment to Indemnitee (or on behalf of Indemnitee) shall be made within fifteen (15) days after such determination. Indemnitee shall cooperate with the person, persons or entity making such determination with respect to Indemnitee's entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information that is not privileged or otherwise protected from disclosure and that is reasonably available to Indemnitee and reasonably necessary to such determination. Any costs or expenses (including attorneys' fees and disbursements) incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee's entitlement to indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom. (c) SELECTION OF INDEPENDENT COUNSEL. In the event the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 5(b) hereof, the Independent Counsel shall be selected as provided to this Section 5(c). If a Change of Control shall not have occurred, the Board shall select the Independent Counsel and the Company shall give written notice to Indemnitee advising Indemnitee of the identity of the Independent Counsel so selected. If a Change of Control shall have occurred, Indemnitee shall select the Independent Counsel and shall give written notice to the Company advising it of the identity of the Independent Counsel so selected. In either event, Indemnitee or the Company, as the case may be, may, within 10 days after such written notice of selection shall have been given, deliver to the Company or to Indemnitee, as the case may be, a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of "Independent Counsel" as defined in Section 1 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion. If such written objection is so made and substantiated, the Independent Counsel so selected may not 4 serve as Independent Counsel unless and until such objection is withdrawn or a court has determined that such objection is without merit. If, within twenty (20) days after submission by Indemnitee of a written request for indemnification pursuant to Section 5(a) hereof, no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee may petition a court of the State of Arizona or other court of competent jurisdiction for resolution of any objection which shall have been made by the Company or Indemnitee to the other's selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by the court or by such other person as the court shall designate, and the person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel under Section 5(b) hereof. The Company shall pay any and all reasonable fees and expenses of Independent Counsel incurred by such Independent Counsel in connection with acting pursuant to Section 5(b) hereof, and the Company shall pay all reasonable fees and expenses incident to the procedures of this Section 9(a), regardless of the manner in which such Independent Counsel was selected or appointed. Upon the due commencement of any judicial proceeding pursuant to Section 9(a) of this Agreement, Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing). (d) CHANGE OF CONTROL. For purposes of this Section 5, a "Change in Control" shall be deemed to have occurred if and when (i) any person (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), together with all "affiliates" and "associates" (as defined under Rule 12b-2 promulgated under the Exchange Act) of such person, but excluding (1) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any subsidiary of the Company, (2) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of the Company, (3) the Company or any Subsidiary, or (4) Indemnitee, together with all affiliates and associates of Indemnitee, becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) directly or indirectly of equity securities of the Company representing 50 percent or more of the combined voting power of the Company's then-outstanding equity securities without the prior approval of at least a majority of the members of the Board in office immediately prior to such person(s) attaining such percentage interest and who are not affiliates or associates of such person(s); (ii) there occurs a proxy contest, or the Company is a party to a merger, consolidation, sale of assets, plan of liquidation or other reorganization (in a single transaction or a series of transactions) not approved by at least two-thirds of the members of the Board then in office, as a consequence of which members of the Board in office immediately prior to such transaction or event constitute less than a majority of the Board thereafter; or (iii) during any period of two consecutive years, other than as a result of an event described in Section 5(d)(ii), individuals who at the beginning of such period constituted the Board (including for this purpose any new director whose election or nomination for election by the Company's stockholders was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such period) cease for any reason to constitute at least a majority of the Board. 6. INDEMNIFICATION FOR EXPENSES OF A PARTY WHO IS PARTLY SUCCESSFUL. Notwithstanding any other provision of this Agreement, and without limiting any such provision, to the extent that Indemnitee is, by reason of Indemnitee's Corporate Status, a party to a Proceeding 5 and is not wholly successful in such Proceeding, but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee's behalf in connection with each successfully resolved claim, issue or matter. For purposes of this Agreement, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter. 7. EFFECT OF CERTAIN RESOLUTIONS. Neither the settlement or termination of any Proceeding nor the failure of the Company to award indemnification or to determine that indemnification is payable shall create an adverse presumption that Indemnitee is not entitled to indemnification hereunder. In addition, the termination of any proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent shall not create a presumption that Indemnitee did not act in good faith and in a manner which Indemnitee reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal action or proceeding, had reasonable cause to believe that Indemnitee's action was unlawful. 8. ADVANCEMENT OF EXPENSES. (a) CONDITIONS. Subject to Section 8(b), the Company shall pay to Indemnitee all Indemnifiable Expenses incurred by Indemnitee in connection with any Proceeding, including a Proceeding by or in the right of the Company, in advance of the final disposition of such Proceeding, as the same are incurred. To the extent required by Delaware law, Indemnitee hereby undertakes to repay the amount of Indemnifiable Expenses paid to Indemnitee if it is ultimately determined by a court of competent jurisdiction that Indemnitee is not entitled under this Agreement to indemnification with respect to such Expenses. This undertaking is an unlimited general obligation of Indemnitee. (b) PROCEDURE FOR ADVANCE PAYMENT OF EXPENSES. Indemnitee shall submit to the Company a written request specifying the Indemnifiable Expenses for which Indemnitee seeks an advancement under Section 8(a) of this Agreement, together with documentation evidencing that Indemnitee has incurred such Indemnifiable Expenses. Payment of Indemnifiable Expenses under Section 8(a) shall be made no later than 15 calendar days after the Company's receipt of such request. 9. REMEDIES OF INDEMNITEE. (a) RIGHT TO PETITION COURT. In the event that Indemnitee makes a request for payment of Indemnifiable Amounts under Sections 3 and 5 above or a request for an advancement of Indemnifiable Expenses under Section 8 above, and the Company fails to make such payment or advancement in a timely manner pursuant to the terms of this Agreement, Indemnitee may petition a court of law to enforce the Company's obligations under this Agreement. (b) EXPENSES. If Indemnitee is successful under any claim or action brought under Section 10(a), the Company agrees to reimburse Indemnitee in full for any Expenses incurred by Indemnitee in connection with investigating, preparing for, litigating, defending or settling any action brought by Indemnitee under Section 9(a) above, or in connection with any claim or counterclaim brought by the Company in connection therewith. 6 (c) VALIDITY OF AGREEMENT. The Company shall be precluded from asserting in any Proceeding, including, without limitation, an action under Section 9(a) above, that the provisions of this Agreement are not valid, binding, and enforceable or that there is insufficient consideration for this Agreement and shall stipulate in court that the Company is bound by all the provisions of this Agreement. (d) FAILURE TO ACT NOT A DEFENSE. The failure of the Company (including its Board or any committee thereof) to make a determination concerning the permissibility of the payment of Indemnifiable Amounts or the advancement of Indemnifiable Expenses under this Agreement shall not be a defense in any action brought under Section 9(a) above, and shall not create a presumption that such payment or advancement is not permissible. 10. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby represents and warrants to Indemnitee as follows: (a) AUTHORITY. The Company has all necessary power and authority to enter into, and be bound by the terms of, this Agreement, and the execution, delivery, and performance of the undertakings contemplated by this Agreement have been duly authorized by the Company. (b) ENFORCEABILITY. This Agreement, when executed and delivered by the Company in accordance with the provisions hereof, shall be a legal, valid, and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or similar laws affecting the enforcement of creditors' rights generally. 11. INSURANCE. To the extent that the Company maintains an insurance policy or policies providing officers' and directors' liability insurance, Indemnitee shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage available for any officer or director of the Company. 12. CONTRACT RIGHTS NOT EXCLUSIVE. The rights to payment of Indemnifiable Amounts and advancement of Indemnifiable Expenses provided by this Agreement shall be in addition to, but not exclusive of, any other rights which Indemnitee may have at any time under applicable law, the Company's by-laws or certificate of incorporation, or any other agreement, vote of stockholders or directors (or a committee of directors), or otherwise, both as to action in Indemnitee's official capacity and as to action in any other capacity as a result of Indemnitee's Corporate Status. 13. BINDING NATURE OF AGREEMENT; SUCCESSORS. This Agreement shall be (a) binding upon all successors and assigns of the Company (including any transferee of all or a substantial portion of the business, stock and/or assets of the Company and any direct or indirect successor by merger or consolidation or otherwise by operation of law) and (b) binding on and shall inure to the benefit of the heirs, personal representatives, executors, and administrators of Indemnitee. This Agreement shall continue for the benefit of Indemnitee and such heirs, personal representatives, executors, and administrators after Indemnitee has ceased to have Corporate Status. 14. SUBROGATION. In the event of any payment of Indemnifiable Amounts under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of contribution or recovery of Indemnitee against other persons, and Indemnitee shall take, at the request of the Company, all reasonable action necessary to secure such rights, including the 7 execution of such documents as are necessary to enable the Company to bring suit to enforce such rights. 15. NOTICE BY INDEMNITEE. Indemnitee agrees promptly to notify the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification or advancement of expenses covered under this Agreement. 16. MISCELLANEOUS. (a) NOTICES. All notices, requests, demands, and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given, made, and received (i) if personally delivered, on the date of delivery, (ii) if by facsimile transmission, upon receipt, (iii) if mailed, three days after deposit in the United States mail, registered or certified, return receipt requested, postage prepaid or (iv) if by a courier delivery service providing overnight or "next-day" delivery, on the next business day after deposit with such service, in each case addressed as follows: (1) If to the Company: Syntellect Inc. Suite 100 16610 North Black Canyon Highway Phoenix, Arizona 85053 Attention: Anthony V. Carollo Jr., President Tel: (602) 789-2770 Fax: (602) 789-2768 e-mail: tcarollo@syntellect.com with a copy given in the manner prescribed, to: Rogers & Theobald LLP 2425 E. Camelback Road, Suite 300 Phoenix, Arizona 85016 Attention: Robert K. Rogers, Esq. Tel: (602) 852-5540 Fax: (602) 852-5570 e-mail: rkr@rogerstheobald.com (2) If to Indemnitee, at the address set forth below Indemnittee's name on the signature page of this Agreement. Either party may alter the address to which communications or copies are to be sent by giving notice of such change of address in conformity with the provisions of this Section 16(a) for the giving of notice. (b) ENTIRE AGREEMENT; AMENDMENTS. This Agreement contains the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings, inducements, and conditions, express or implied, oral or written, of any nature whatsoever with respect to the subject matter hereof. The express terms hereof control and supersede any course of performance and/or usage of 8 the trade inconsistent with any of the terms hereof. This Agreement may not be modified or amended other than by an agreement in writing signed by the party or parties to be bound. (c) CONTROLLING LAW; JURISDICTION AND VENUE. This Agreement and all questions relating to its validity, interpretation, performance, and enforcement shall be governed by and construed, interpreted, and enforced in accordance with the laws of the State of Delaware, notwithstanding any Delaware, or other conflict-of-law provisions to the contrary. The Company and Indemnitee irrevocably submit, consent, and require that the state and federal courts located in Maricopa County, Arizona, and the appellate forums for these courts, shall have sole jurisdiction over any dispute arising under this Agreement, and the parties hereby consent to the personal jurisdiction of such courts and to extra-territorial service of process. (d) INDULGENCES, NOT WAIVERS. Neither the failure nor any delay on the part of either party to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any other right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence. No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver. (e) SECTION HEADINGS. The titles of sections and subsections contained in this Agreement are for convenience only. They form no part of this Agreement and they are not to be used in the construction or interpretation of this Agreement. (f) EXECUTION IN COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument. This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of the parties reflected hereon as the signatories. Any photographic or xerographic copy of this Agreement, with all signatures reproduced on one or more sets of signature pages, shall be considered for all purposes as if it were an executed counterpart of this Agreement. Signatures may be given by facsimile or other electronic transmission, and such signatures shall be fully binding on the party sending the same. (g) PROVISIONS SEVERABLE. The provisions of this Agreement are independent of and severable from each other, and no provision shall be affected or rendered invalid or unenforceable by virtue of the fact that for any reason any other or others of them may be invalid or unenforceable in whole or in part. Further, if a court of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable as written, such court may interpret, construe, rewrite or revise such provision, to the fullest extent allowed by law, so as to make it valid and enforceable consistent with the intent of the parties. 9 (h) CONSTRUCTION. Each party hereto acknowledges that it was represented by legal counsel (or had the opportunity to be represented by legal counsel) in connection with this Agreement and that such party and his, her or its counsel have reviewed and revised this Agreement, or have had an opportunity to do so, and that any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any amendments or any Exhibits or Schedules hereto or thereto. [THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK] 10 IN WITNESS WHEREOF, the parties hereto have executed this Indemnification Agreement as of the Effective Date. COMPANY: SYNTELLECT INC. By: ----------------------------------------- Name: Title: INDEMNITEE: -------------------------------------------- Address: Facsimile No.: 11 -----END PRIVACY-ENHANCED MESSAGE-----