10-Q

FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2002

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from                to               

Commission File Number: 0 — 18323

SYNTELLECT INC.

(Exact name of registrant as specified in its charter)

Delaware	86-0486871
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

16610 N. Black Canyon Highway, Suite 100, Phoenix, Arizona 85053
(Address of principal executive offices)
(Zip Code)

(602) 789-2800
(Registrant’s telephone number, including area code)

         Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES   x   NO  o  

         Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

         11,369,152 shares of common stock, $.01 par value per share, were outstanding on November 13, 2002.

TABLE OF CONTENTS

Condensed Consolidated Balance Sheets
Condensed Consolidated Statements of Operations and Comprehensive Loss
Condensed Consolidated Statements of Cash Flows
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND                      RESULTS OF OPERATIONS
	ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
	ITEM 4. CONTROLS AND PROCEDURES
	PART II -—OTHER INFORMATION
	ITEM 5. OTHER INFORMATION
	ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
	SIGNATURES
EX-10.V
EX-10.VII.A
EX-10.VII.B
EX-10.VII.C
EX-10.VII.D
EX-10.VII.E
EX-10.VII.F
EX-10.VII.G
EX-10.VII.H
EX-10.VII.I
EX-10.X.B
EX-10.XII.A
EX-10.XII.B
EX-10.XII.C
EX-10.XII.D
EX-10.XII.E
EX-99.A
EX-99.B
EX-99.C
EX-99.D

SYNTELLECT INC. AND SUBSIDIARIES
INDEX

		Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
	Condensed Consolidated Balance Sheets — As of September 30, 2002 and December 31, 2001		3
	Condensed Consolidated Statements of Operations and Comprehensive Loss — Three Months and Nine Months Ended September 30, 2002 and September 30, 2001		4
	Condensed Consolidated Statements of Cash Flows — Nine Months Ended September 30, 2002 and September 30, 2001		5
	Notes to Condensed Consolidated Financial Statements		6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			10
Item 3. Quantitative and Qualitative Disclosure about Market Risk			17
Item 4. Controls and Procedures			18
PART II. OTHER INFORMATION
Item 5. Other Information			18
Item 6. Exhibits and Reports on Form 8-K			19
SIGNATURES			20
PART I — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

2

SYNTELLECT INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(in thousands, except share amounts)

					September 30,			December 31,
					2002			2001
					(unaudited)
				Assets
Current assets:
	Cash and cash equivalents				$	2,443		$	3,997
	Trade receivables, net of allowance for doubtful accounts of $199 and $416, respectively					5,290			7,617
	Note receivable					67			84
	Other receivables					19			5
	Inventories					533			634
	Prepaid expenses					1,031			1,072
		Total current assets				9,383			13,409
Property and equipment, net						3,017			3,772
Note receivable, non-current portion						146			202
Other assets						566			816
		Total assets			$	13,112		$	18,199
			Liabilities and Shareholders’ Equity (Deficit)
Current liabilities:
	Accounts payable				$	2,320		$	2,145
	Accrued liabilities					1,004			1,923
	Customer deposits					387			232
	Deferred revenue					7,252			8,129
	Note payable					1,715			1,449
	Capital lease obligations – current portion					243			249
		Total current liabilities				12,921			14,127
Deferred revenue – non-current portion						645			—
Capital lease obligations – non-current portion						351			537
		Total liabilities				13,917			14,664
Shareholders’ equity (deficit):
	Preferred stock, $.01 par value per share. Authorized 2,500,000 shares; no shares issued or outstanding					—			—
	Common stock, $.01 par value per share. Authorized 25,000,000 shares; issued, 14,691,584 and 14,660,485, respectively					147			147
	Additional paid-in capital					62,676			62,628
	Accumulated deficit					(51,839	)		(47,621	)
	Accumulated other comprehensive loss					(375	)		(205	)
						10,609			14,949
	Treasury stock, at cost, 3,322,432 shares					(11,414	)		(11,414	)
		Total shareholders’ equity (deficit)				(805	)		3,535
		Total liabilities and shareholders’ equity (deficit)			$	13,112		$	18,199

See accompanying notes to the condensed consolidated financial statements.

3

SYNTELLECT INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except per share amounts) (unaudited)

		Three Months Ended						Nine Months Ended
		September 30,						September 30,
		2002			2001			2002			2001
Net revenue:
	Licenses	$	1,561		$	2,316		$	6,833		$	8,202
	Services		5,017			5,020			14,191			15,603
	Hosted Services		768			1,131			2,705			3,497
	Total net revenue		7,346			8,467			23,729			27,302
Cost of revenue:
	Licenses		355			748			1,717			2,265
	Services		2,115			2,578			7,046			8,634
	Hosted Services		848			1,131			2,679			3,282
	Total cost of revenue		3,318			4,457			11,442			14,181
Gross profit			4,028			4,010			12,287			13,121
Operating expenses:
	Selling, marketing and administrative		3,716			5,285			12,784			16,815
	Research and development		1,010			952			3,529			3,251
	Total operating expenses		4,726			6,237			16,313			20,066
	Operating loss		(698	)		(2,227	)		(4,026	)		(6,945	)
Other income (expense), net:
	Interest expense, net		(96	)		(68	)		(173	)		(40	)
	Gain (loss) on disposal of assets		1			—			(1	)		—
	Other expense		(7	)		—			(18	)		—
	Total other expense		(102	)		(68	)		(192	)		(40	)
	Loss before income taxes		(800	)		(2,295	)		(4,218	)		(6,985	)
	Income tax benefit		—			(16	)		—			(16	)
	Net loss	$	(800	)	$	(2,279	)	$	(4,218	)	$	(6,969	)
Loss per common share — basic		$	(0.07	)	$	(0.20	)	$	(0.37	)	$	(0.62	)
Loss per common share — diluted		$	(0.07	)	$	(0.20	)	$	(0.37	)	$	(0.62	)
Weighted average common share — basic			11,369			11,294			11,350			11,236
Weighted average common share — diluted			11,369			11,294			11,350			11,236
	Net loss	$	(800	)	$	(2,279	)	$	(4,218	)	$	(6,969	)
Other comprehensive loss, net of tax:
	Foreign currency translation adjustment		(141	)		(8	)		(170	)		(48	)
	Total other comprehensive loss		(141	)		(8	)		(170	)		(48	)
	Comprehensive loss	$	(941	)	$	(2,287	)	$	(4,388	)	$	(7,017	)

See accompanying notes to the condensed consolidated financial statements.

4

SYNTELLECT INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(in thousands — unaudited)

			Nine Months Ended
			September 30,
			2002			2001
Cash flows from operating activities:
	Net loss		$	(4,218	)	$	(6,969	)
	Adjustments to reconcile net loss to net cash used in operating activities:
		Depreciation and amortization		1,157			1,302
		Loss on disposal of property, plant, and equipment		1			—
		Provision for doubtful accounts		325			232
		Stock option compensation expense		3			—
		Decrease in accounts receivable		2,002			4,644
		Decrease in inventories		101			706
		Increase (decrease) in accounts payable		175			(29	)
		Decrease in accrued liabilities		(919	)		(1,188	)
		Decrease in deferred revenue		(232	)		(141	)
		Increase (decrease) in customer deposits		155			(1,999	)
		Change in other assets and liabilities		304			(453	)
		Net cash used in operating activities		(1,146	)		(3,895	)
Cash flows from investing activities:
	Proceeds from short-term investment			—			75
	Proceeds from note receivable			73			—
	Proceeds from the sale of property and equipment			—			26
	Purchase of property and equipment			(403	)		(1,338	)
		Net cash used in investing activities		(330	)		(1,237	)
Cash flows from financing activities:
	Borrowings on line of credit			6,918			1,422
	Repayments on line of credit			(6,652	)		—
	Proceeds from issuance of common stock			18			246
	Payments on capital lease obligations			(192	)		(133	)
		Net cash provided by financing activities		92			1,535
Effect of exchange rates on cash				(170	)		(48	)
Net decrease in cash and cash equivalents				(1,554	)		(3,645	)
Cash and cash equivalents at beginning of year				3,997			7,334
Cash and cash equivalents at end of nine month period			$	2,443		$	3,689
Supplemental disclosure of cash flow information:
	Cash paid for interest		$	197		$	86
Significant non-cash transactions
	Property and equipment purchased under capital lease		$	—		$	446
	Warrants issued under credit facility		$	27		$	—

See accompanying notes to the condensed consolidated financial statements.

5

SYNTELLECT INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(1) Basis of Presentation

         The accompanying unaudited, condensed, consolidated financial statements include the accounts of Syntellect Inc. (together with its subsidiaries, collectively, the “Company,” which may also be referred to as the “registrant,” “we,” “us,” or “our”). All significant inter-company balances and transactions have been eliminated in consolidation.

         The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). In our opinion, the financial statements include all adjustments of a normal recurring nature, which are necessary for a fair presentation of the results for the interim periods presented. Certain information and footnote disclosures normally included in financial statements have been condensed or omitted pursuant to such rules and regulations. Although we believe that the disclosures are adequate to make the information presented not misleading, we suggest that these financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in our December 31, 2001 Annual Report on Form 10-K. The results of operations for the three and nine months ended September 30, 2002 are not necessarily indicative of the results to be expected for the full year.

(2) Revenue Recognition

         Our revenue is derived from three business segments: Licenses, Services and Hosted Services. Revenue derived from Licenses and from Services is recognized pursuant to Statement of Position 97-2, “Software Revenue Recognition” (“SOP 97-2”); Statement of Position 98-9, “Modification of SOP 97-2, Software Revenue Recognition, With Respect to Certain Transactions” (“SOP 98-9”); and Staff Accounting Bulletin No. 101, “Revenue Recognition in Financial Statements” (“SAB No. 101”). Revenue derived from Hosted Services is recognized pursuant to the provisions of SAB No. 101. We strictly adhere to the revenue recognition criteria under the guidance mentioned above. See Item 8 — Financial Statements and Supplementary Data, “Notes to Consolidated Financial Statements” in our December 31, 2001 Annual Report on Form 10-K for a detailed description of our revenue recognition policy.

(3) Inventories

         Inventories consist of the following:

	(in thousands)
	September 30,		December 31,
	2002		2001
Finished Goods	$	196	$	168
Purchased Components		122		236
Repair, warranty, and maintenance components		215		230
	$	533	$	634

6

SYNTELLECT INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

(4) Earnings (Loss) Per Share Computation

	(in thousands, except per share amounts)
	Three Months Ended						Nine Months Ended
	Sept. 30, 2002			Sept. 30, 2001			Sept. 30, 2002			Sept. 30, 2001
Net loss	$	(800	)	$	(2,279	)	$	(4,218	)	$	(6,969	)
Weighted average share outstanding — basic		11,369			11,294			11,350			11,236
Loss per share — basic	$	(0.07	)	$	(0.20	)	$	(0.37	)	$	(0.62	)
Weighted average shares outstanding — diluted		11,369			11,294			11,350			11,236
Effect of dilutive securities — stock options		0			0			0			0
Weighted average shares outstanding — diluted		11,369			11,294			11,350			11,236
Loss per share — diluted	$	(0.07	)	$	(0.20	)	$	(0.37	)	$	(0.62	)
Dilutive securities excluded from diluted loss per share due to anti-dilutive effect		1,957			2,145			1,957			2,145

         The computation of diluted loss per share for the three-month periods ended September 30, 2002 and 2001 and for the nine-month periods ended September 30, 2002 and 2001 excluded the effect of certain incremental common shares attributable to the assumed exercise of common stock options because their effect would be anti-dilutive.

(5) Credit Facilities

         On April 30, 2002, we elected an early termination of our $2.5 million, asset-based, operating line of credit with a commercial lending institution. The credit instrument accrued interest at prime plus 8.5% per annum with a $7,500 minimum monthly finance charge. We could borrow according to a formula on 65% of eligible domestic accounts receivable less than 90 days old, excluding maintenance receivables. In place of that line of credit, on May 14, 2002, we executed an Accounts Receivable Financing Agreement (the “Agreement”) for a one-year, $3.0 million, asset-based, operating line of credit with a commercial banking institution. Any outstanding balance on this line of credit incurs interest at a rate of prime plus 3.25% per annum plus a collateral handling fee of 0.25% with a minimum monthly finance charge of $5,000. The maximum cash available under the terms of this Agreement is 80% of the $3.0 million loan value, or $2.4 million. At September 30, 2002, the prime rate was 4.75% making the then applicable interest rate under the Agreement 8% per annum. We may borrow according to a formula based on 80% of eligible accounts receivable less than 90 days old, including certain maintenance receivables, selected foreign receivables, and excluding customer deposits. The commercial banking institution has a perfected first priority security interest in all our assets. In addition, all current depository accounts have been relocated to the new commercial bank.

7

SYNTELLECT INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

(5) Credit Facilities, continued

         Furthermore, we issued fully vested warrants to purchase 30,000 shares of our common stock to this commercial banking institution. These warrants expire on May 14, 2007. The exercise price is $1.17 per share, which approximated the market price of the underlying common stock on the date of grant. The value of the warrants issued in connection with this Agreement was determined using the Black-Scholes calculation to be $27,000 and has been capitalized as a deferred asset, which is amortized as interest expense over the one-year life of the Agreement.

         On July 22 2002, we entered into a Loan Modification and Forbearance Agreement (the “Modification”) to the Agreement in which the bank agrees to abstain from calling the Agreement into default due to violation of the covenants through October 30, 2002. The Modification also increased the loan amount to $3.75 million, extended the expiration date to July 14, 2003, and increased the collateral handling fee to 0.75% during a time of non-compliance with the covenants of the Agreement. The maximum cash available under the terms of the Modification is 80% of the $3.75 million loan value, or $3.0 million. We were required to pay $10,000 in bank fees in order to execute the Modification.

         At September 30, 2002, we were in compliance with all of the covenants in the Agreement and subsequent Modification. At September 30, 2002, our outstanding balance on this credit facility was $1.7 million. Also at September 30, 2002, there was an additional $1.3 million available to borrow.

         On November 7, 2002, we entered into an Accounts Receivable Financing Modification Agreement (the “Modification #2”) to the Agreement in which we amended an affirmative, financial covenant. Also, Modification #2 extended the increased collateral handling fee of 0.75% until the later of February 1, 2003 or one month following the quarter in which we are in compliance with affirmative covenants listed in the Agreement and no other event of default has occurred.

(6) Business Segments

         An operating segment is defined as a component of an enterprise that engages in business activities which may earn revenue and incur expenses, whose results are regularly reviewed by a chief operating decision maker, and for which discrete financial information is available. We have three operating segments, which are organized around differences in products and services: Licenses, Services, and Hosted Services.

         Licenses is our operating business segment that includes our contact center software platform, Vista IMR, speech-enabled licenses, and other third party licenses that we offer along with our Vista IMR software. Vista IMR consists of a broad suite of communications features. Some of the components of Vista IMR include Interactive Voice Response, Interactive Web Response, and Speed Enabled Directory. This business segment also includes all revenue and costs related to hardware sales.

         Services is our operating business segment that includes customer support and integration in the areas of consulting, project management, application development, installation, functional specifications, training and maintenance services. We generally sell these services as part of the initial sale or, in some cases, as post implementation services.

         Hosted Services is our operating business segment that provides Service Bureau IMR services offering campaign oriented initiatives such as Lead Capture, Site Locator, credit card processing, disaster recovery, and disaster mitigation or a combined on-site and hosted services with similar value-added options attached.

8

SYNTELLECT INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

         (6)  Business Segments, continued

	(in thousands)
	Licenses			Services			Hosted Services			Total
Three-months ended September 30, 2002
Revenue from customers	$	1,561		$	5,017		$	768		$	7,346
Depreciation and amortization		114			56			180			350
Segment income (loss) before income taxes		(1,841	)		1,227			(186	)		(800	)
Expenditures for segment assets		39			50			69			158
Three-months ended September 30, 2001
Revenue from customers	$	2,316		$	5,020		$	1,131		$	8,467
Depreciation and amortization		182			89			165			436
Segment loss before income taxes		(1,890	)		(184	)		(221	)		(2,295	)
Expenditures for segment assets		39			—			367			406

	(in thousands)
	Licenses			Services			Hosted Services			Total
Nine-months ended September 30, 2002
Revenue from customers	$	6,833		$	14,191		$	2,705		$	23,729
Depreciation and amortization		413			204			540			1,157
Segment income (loss) before income taxes		(5,191	)		1,436			(463	)		(4,218	)
Expenditures for segment assets		145			124			134			403
Nine-months ended September 30, 2001
Revenue from customers	$	8,202		$	15,603		$	3,497		$	27,302
Depreciation and amortization		542			265			495			1,302
Segment loss before income taxes		(5,060	)		(1,354	)		(571	)		(6,985	)
Expenditures for segment assets		560			257			521			1,338

9

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

SUMMARY OF OPERATIONS

         Many of our existing and potential customers delayed capital investments due to the weakened U.S. economy, particularly in the telecommunication technology sector. Additionally, recent corporate announcements of financial misstatements and misrepresentations have affected how companies evaluate potential new capital equipment and service providers, further elongating the sales cycle. Due to the decline in revenue and order bookings during the second and third quarters of 2002, we determined it necessary to further reduce our operating expenses to a level commensurate with our revenue. As a result, we took steps to decrease our estimated quarterly sales breakeven level to approximately $7.5 million for the fourth quarter of 2002.

         We have a proven technology platform, strong operational competency, and a loyal and supportive customer base. However, our success as a software, services, and integration company is based on its ability to generate new customers as well as develop and grow our installed base of clients. Effective October 1, 2002, we have implemented a new sales approach that has two distinct revenue generating strategies, one for new customers and one for existing customers, our installed base. Our business is most successful when we have a healthy combination of revenue from new customers and strong, recurring revenue from our installed base of clients. We believe this blended approach will facilitate the growth of our revenue stream.

CRITICAL ACCOUNTING POLICIES

         For a complete discussion of our critical accounting policies, see Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations in our December 31, 2001 Annual Report of Form 10-K.

RESULTS OF OPERATIONS

Net Revenue

         The following table summarizes our net revenue performance (in thousands) for the three and nine-month periods ended September 30, 2002 and 2001.

10

	Three-months ended										Nine-months ended
	Sept 30,		% of total			Sept 30,		% of total			Sept 30,		% of total			Sept 30,		% of total
Current results	2002		revenue			2001		revenue			2002		revenue			2001		revenue
Licenses	$	1,561		21	%	$	2,316		27	%	$	6,833		29	%	$	8,202		30	%
Services
Application development		1,380		19	%		1,649		19	%		4,003		17	%		4,885		18	%
Project management		245		3	%		295		3	%		718		3	%		1,025		4	%
Maintenance		2,498		34	%		2,336		28	%		7,238		31	%		7,136		26	%
Installation		249		3	%		269		3	%		584		2	%		827		3	%
Other services		645		9	%		471		6	%		1,648		7	%		1,730		6	%
Total services		5,017		68	%		5,020		59	%		14,191		60	%		15,603		57	%
Hosted Services		768		11	%		1,131		14	%		2,705		11	%		3,497		13	%
Total net revenue	$	7,346		100	%	$	8,467		100	%	$	23,729		100	%	$	27,302		100	%
Domestic	$	5,460		74	%	$	6,372		75	%	$	18,929		80	%	$	20,429		75	%
International		1,886		26	%		2,095		25	%		4,800		20	%		6,873		25	%
Total net revenue	$	7,346		100	%	$	8,467		100	%	$	23,729		100	%	$	27,302		100	%
Direct Licenses revenue	$	1,560		100	%	$	1,868		81	%	$	6,329		93	%	$	6,665		81	%
Indirect Licenses revenue		1		0	%		448		19	%		504		7	%		1,537		19	%
Total Licenses revenue	$	1,561		100	%	$	2,316		100	%	$	6,833		100	%	$	8,202		100	%
Speech Licenses	$	208		13	%	$	316		14	%	$	1,578		23	%	$	716		9	%

         Net revenue for the quarter ended September 30, 2002 was $7.3 million, a decrease of $1.2 million, or 13%, from the $8.5 million reported for the third quarter of 2001. Net revenue for the nine-month periods ended September 30, 2002 and 2001 was $23.7 million and $27.3 million, respectively, a decrease of $3.6 million, or 13%. Net revenue consists of Licenses, Services, and Hosted Services, which represented 21%, 68%, and 11% of net revenue, respectively, for the quarter ended September 30, 2002, and 27%, 59% and 14% of net revenue, respectively, for the comparable prior year period. Domestic and international revenue for the quarter ended September 30, 2002 was $5.4 million, or 74%, and $1.9 million, or 26%, of total revenue, respectively, compared to $6.4 million, or 75%, and $2.1 million, or 25%, of total revenue, respectively, for the same period in 2001. Domestic and international revenue for the nine months ended September 30, 2002 was $18.9 million, or 80%, and $4.8 million, or 20%, of total revenue, respectively, compared to $20.4 million, or 75%, and $6.9 million, or 25%, of total revenue, respectively, for the same period in 2001.

         Licenses revenue for the quarter ended September 30, 2002 was $1.6 million, a decrease of $0.7 million, or 33%, from the $2.3 million reported for the quarter ended September 30, 2001. Licenses revenue for the nine months ended September 30, 2002 was $6.8 million, a decrease of $1.4 million, or 17%, when compared to the nine months ended September 30, 2001. These decreases were due to our inability to book sufficient orders caused by our existing and potential customers’ capital purchase delays intensified by economic conditions. During this quarter, we reorganized our sales force to assist in the success of our sales team to identify new opportunities, book orders, and manage our existing customer base.

         Speech-enabled licenses represented $0.2 million, or 13%, of the Licenses revenue for the quarter ended September 30, 2002 compared to $0.3 million, or 14%, in the third quarter of the prior year. The amount of speech-enabled licenses sold is an important operating measure to us because we believe natural speech technology to be the biggest driver of growth in the IVR industry.

         Services revenue for the quarter ended September 30, 2002 remained steady at $5.0 million when compared to the same period in 2001. Services revenue for the nine months ended September 30, 2002 was $14.2 million, a decrease of $1.4 million, or 9%, when compared to the same prior year period. The change in Services revenue for the first nine months of 2002 compared to the first nine months of 2001 consisted of application services, $0.9 million decrease;

11

project management, $0.3 million decrease; maintenance, $0.1 million increase; installation, $0.2 million decrease; and other services, $0.1 million decrease. Services revenue from application services, installations, and project management is generally recognized within six months following the quarter in which our customer placed the order. During that time, the Services revenue is reported as backlog. We have experienced a decline in our trend of orders booked for the first, second, and third quarters of 2002. Although the revenue and orders booked in the Services segment have decreased, we have managed to improve the gross profit of the Services business segment by 5% as shown by the nine month periods ended September 30, 2002 and 2001.

         Hosted Services revenue for the quarter ended September 30, 2002 was $0.8 million compared to $1.1 million for the same period in 2001, a decrease of $0.3 million, or 32%. Hosted Services revenue was $2.7 million for the nine months ended September 30, 2002, a decrease of $0.8 million, or 23%, when compared to the same prior year period. Hosted Services consists of Home Ticket, voice services, Vista IMR hosted services, and other hosted services. Voice services provide media voice files for all of our application services, hosted and on-site systems. Vista IMR hosted services may include Lead Capture, Speech Enabled Directory, Site Locator, disaster mitigation, disaster recovery, electronic payment processing, broadcast faxing, and call center processing. The primary reason for the decrease in Hosted Services revenue is the declining demand for analog, pay-per-view services that our Home Ticket product offers.

Gross Margin

         The following table summarizes our gross margin performance (in thousands) for the three and nine-month periods ended September 30, 2002 and 2001.

		Three-months ended											Nine-months ended
					% of					% of					% of					% of
		Sept 30,			revenue			Sept 30,		revenue			Sept 30,		revenue			Sept 30,		revenue
Current results		2002			category			2001		category			2002		category			2001		category
	Licenses	$	1,206			77	%	$	1,568		68	%	$	5,116		75	%	$	5,937		72	%
	Services		2,902			58	%		2,442		49	%		7,145		50	%		6,969		45	%
	Hosted Services		(80	)		-10	%		—		0	%		26		1	%		215		6	%
Total gross profit		$	4,028			55	%	$	4,010		47	%	$	12,287		52	%	$	13,121		48	%

         The gross margin percentage for the quarter ended September 30, 2002 was 55% of net revenue, an increase of 7% when compared to the 47% achieved in the third quarter of the prior year. The gross margin for the nine-month periods ended September 30, 2002 and 2001 were 52% and 48% of net revenue, respectively. In dollar terms, the gross profit for the quarter and nine months ended September 30, 2002 increased $18,000 and decreased $0.8 million, or 6%, respectively, which can be accounted for by evaluating product mix, volume, and change in gross margin percentage. The decrease in net revenue for the quarter and nine-month period ended September 30, 2002 accounts for decreases of $0.5 million and $1.7 million, respectively, in the gross profit. Those decreases are offset by the improved gross margin percentages of 7% and 4%, respectively, which is a positive effect of $0.5 million and $0.8 million, respectively.

         Gross margin for Licenses increased to 77% of Licenses revenue in the third quarter of 2002 from 68% in the third quarter of 2001 due to the outsourcing of the hardware components associated with our IMR systems. Natural speech content declined to $0.2 million, or 13%, of Licenses revenue in the third quarter of 2002 compared to $0.3 million, or 14%, in the third quarter of 2001. The domestic gross margin realized for the nine-months ended September 30, 2002 was approximately 57% for speech-enabled licenses, 67% for other third-party licenses, and 80% for Vista licenses. Consequently, the product mix directly affects the gross margin realized for Licenses.

         Gross margin for Services increased to 58% for the quarter ended September 30, 2002 from 49% for the quarter ended September 30, 2001, an improvement of nine percentage points. Gross margin for Services was 50% for the nine-month period ended September 30, 2002, an increase of five percentage points over the 45% reported for the same period in 2001. During the third quarter of 2002, we implemented a 10% salary reduction. That salary reduction during the third quarter of 2002 was the contributing factor to the increase in the quarterly gross margin. The improvement in the year to date gross margin percentage resulted from continued cost controls, including the reduced

12

use of third party professional services. In addition, our natural speech and consulting services allow for an increased utilization of our current resources at higher billing rates.

         Hosted Services produced a gross margin of -10% for the quarter ended September 30, 2002, which is a 10-percentage point decrease from the 0% gross margin percentage for the quarter ended September 30, 2001. Gross margin for Hosted Services was 1% for the nine-month period ended September 30, 2002, a decrease from the 6% gross margin percentage recorded in the same period in 2001. Because our current Hosted Services center operates at significantly less than full capacity and Hosted Services overhead is fixed by nature, any decrease in Hosted Services revenue will significantly decrease the gross margin percentage as was evidenced during the quarter ended September 30, 2002.

         The mix of direct versus indirect Licenses revenue and domestic versus international net revenue affects the gross margin. Direct and indirect Licenses revenue for the quarter ended September 30, 2002 was $1.6 million and $1,000. Direct and indirect Licenses revenue for the quarter ended September 30, 2001 was $1.9 million and $0.4 million, or 81% and 19%, respectively. The change in direct and indirect Licenses revenue were decreases of $0.3 million and $0.4 million, respectively, or 22% and 100%, respectively, for the third quarter of 2002 compared to the third quarter of 2001. The change in direct and indirect Licenses revenue for the nine-months ended September 30, 2002 and 2001 were decreases of $0.4 million and $1.0 million, respectively, or 5% and 67%, respectively. Indirect Licenses revenue was low due to a poor sales performance in the reseller channel and a $0.1 million credit given to a certain reseller during the third quarter of 2002. We experience an approximate 86% gross margin on domestic indirect sales and an approximate 70% on domestic direct sales. The gross margin on direct sales is lower because these orders tend to be much larger and therefore carry larger discounts. Domestic and international gross margins on net revenue were 54% and 57%, respectively, for the quarter ended September 30, 2002 and 47% and 49%, respectively, for the quarter ended September 30, 2001. Licenses and Services gross margins were 75% and 55%, respectively for the nine months ended September 30, 2002. Accordingly, changes in the product mix among Licenses versus Services, domestic versus international, and direct versus indirect can and do have a dramatic impact on our reported gross margin.

         Our gross margin will fluctuate on a period-to-period basis as a result of changes in competitive pressures, sales volume, product mix, period cost policy, variations in the ratio of domestic versus international sales, or changes in the mix of direct and indirect sales activity. Accordingly, the gross margins we report for 2002 and 2001 are not necessarily indicative of the results you should expect for future periods.

Operating Expenses

         The following table summarizes our operating expense experience (in thousands) for the three and nine-month periods ended September 30, 2002 and 2001.

		Three-months ended										Nine-months ended
		Sept 30,		% of total			Sept 30,		% of total			Sept 30,		% of total			Sept 30,		% of total
		2002		revenue			2001		revenue			2002		revenue			2001		revenue
Current Results
Selling, marketing, and administrative		$	3,716		51	%	$	5,285		62	%	$	12,784		54	%	$	16,815		62	%
Research and development			1,010		14	%		952		11	%		3,529		15	%		3,251		12	%
	Total operating expenses	$	4,726		64	%	$	6,237		74	%	$	16,313		69	%	$	20,066		73	%

         Operating expenses for the third quarter of 2002 were $4.7 million, a decrease of $1.5 million, or 24%, from the third quarter of 2001 operating expenses of $6.2 million. Operating expenses for the nine months ended September 30, 2002 were $16.3 million, a decrease of $3.8 million, or 19%, when compared to the $20.1 million recorded in the same period in 2001. Furthermore, operating expenses decreased $1.2 million, or 20%, from the second quarter of 2002. In an overall cost cutting strategy, all areas of costs were evaluated and excess spending was eliminated.

         Selling, marketing and administrative expenses for the quarter and nine months ended September 30, 2002 decreased $1.6 million, or 30%, and $4.0 million, or 24%, when compared to the prior year periods. The reduced employee costs, including travel, relocation, and recruiting, accounted for approximately $1.3 million and $2.5 million of the decrease for the quarter and nine-month period ended September 30, 2002, respectively, when compared to the prior

13

year period. During the same periods, we experienced additional decreases of $0.5 million and $1.2 million in other general administrative expenses such as marketing, telephone, depreciation, shareholder costs, occupancy costs, bad debt reserves, and insurance expense. The effects of the costs savings experienced in employee related and general administrative expenses were offset by increases of $0.2 million and $0.3 million in professional fees for the three and nine months ended September 30, 2002, respectively, when compared to the same prior year periods. In the first quarter of 2001, we incurred a $0.6 million charge for a corporate restructuring and a $0.2 million marketing charge to enhance our corporate image.

         Research and development expenses for the quarter and nine-month period ended September 30, 2002 experienced an increase of $58,000 and $0.3 million, or 6% and 9%, respectively. These increases were primarily due to fees associated with certain partner alliances and a non-recurring, employee-related expense.

         During the quarter ended September 30, 2002, we eliminated 22 positions in sales, marketing, and administration and 13 positions in research and development. Those 35 positions approximated 31% of total sales, marketing, administration, and research and development positions. Additionally, on July 15, 2002, we announced a 10% salary cut for all employees. That 10% salary cut was reinstated as of November 1, 2002. These measures to reduce our overhead will help us to breakeven at approximately $7.5 million in revenue during the fourth quarter of 2002.

Backlog

         Our backlog represents the amounts of non-cancelable, unfilled orders received. We expect to recognize as revenue approximately half of the September 30, 2002 backlog during the fourth quarter of 2002. The following table summarizes our revenue backlog by business segment at September 30, 2002 and September 30, 2001.

	September 30,			% of total			September 30,			% of total
Current backlog	2002			backlog			2001			backlog
Licenses backlog		$	113		3	%		$	1,361		22	%
Services backlog			3,205		92	%			4,724		78	%
Hosted Services backlog			161		5	%			—		0	%
		$	3,479					$	6,085

         Our backlog was $3.5 million at September 30, 2002 and $6.1 million at September 30, 2001, a decline of $2.6 million, or 43%. This decline in our backlog was caused by the decline in orders booked during the third quarter of 2002 when compared with the third quarter of 2001. Our orders booked during the third quarter of 2002 totaled $2.8 million compared to $5.1 million for the third quarter of 2001, a $2.3 million, or 45%, decline year over year. Our orders booked for the first and second quarters of 2002 were $4.5 million and $3.7 million, a decline of $1.7 million and $0.9 million, or 38% and 24%, respectively, when compared to the current quarter.

         Our backlog of Licenses during the quarters ended September 30, 2002 and June 30, 2002 remained steady at $0.1 million. The Licenses backlog at the quarters ended September 30, 2002 and 2001 was $0.1 million and $1.4 million, respectively, a decrease of $1.3 million, or 92%. Licenses usually are delivered within a few days after receipt of an order. As a result, the Licenses backlog should be a relatively small amount. At September 30, 2001, we were unable to recognize revenue on several Licenses orders due to contractual obligations; therefore the revenue associated with those orders remained as Licenses backlog for future recognition.

         Our Services backlog was $3.2 million and $4.7 million at September 30, 2002 and 2001, respectively, a decrease of $1.5 million, or 32%. Services revenue from application services, installations, and project management generally is recognized within six months following the quarter in which an order has been booked. During that time period, the Services revenue is reported as backlog. The backlog decreases as we complete orders and recognize revenue on those orders. Currently, our Services backlog equates to an amount approximating two quarters of Services revenue at current capacity and is sufficient for us to attain our projected Services revenue for the remainder of 2002.

14

         Revenue generated from Hosted Services is generally transaction based. Although most of our contracts provide for guaranteed monthly transaction amounts, we do not include those guaranteed amounts in the backlog figure for Hosted Services. The $0.2 million noted above is related to the application development and set-up fees for our Service Bureau IMR services, which are included in other hosted services, as well as the backlog of voice services associated with the application development of our Vista IMR systems.

LIQUIDITY AND CAPITAL RESOURCES

         Cash and cash equivalents at September 30, 2002 were $2.4 million and at December 31, 2001 were $4.0 million, a decrease of $1.6 million. Our working capital deficit increased from $0.7 million at December 31, 2001 to a deficit of $3.5 million at September 30, 2002, a change of $2.8 million. Our year to date net loss of $4.2 million was the dominant factor affecting our negative change in working capital. However, because our deferred revenue is comprised mainly of prepaid, deferred maintenance revenue, our adjusted quick ratio (as used as a measurement of liquidity in the software industry), calculated by dividing the sum of cash and accounts receivable by current liabilities less deferred revenue, was 1.36 on September 30, 2002. That same measurement was 1.34 on June 30, 2002. At December 31, 2001, our adjusted quick ratio was 1.94. We believe our liquidity position is sufficient to meet our short-term cash obligations of accounts payable, accrued liabilities, note payable, and capital lease obligations for the fourth quarter of 2002 and through 2003.

         For the first nine months of 2002, we used cash in operating activities of $1.1 million compared to $3.9 million for the prior year, a positive change of $2.8 million. The primary factors affecting the difference between net loss and cash used in operating activities for the nine months ended September 30, 2002 was the positive effect of the decrease in accounts receivable of $2.0 million; the non-cash expenses, such as depreciation and provision for doubtful accounts, in the amount of $1.5 million; and the positive change to other balance sheet accounts, such as inventories, accounts payable, customer deposits, and other assets and liabilities, in the amount of $0.7 million. These positive effects were offset by a decrease in accrued liabilities of $0.9 million and a decrease in deferred revenue of $0.2 million. The decrease in accounts receivable resulted from increased collection efforts and decreased revenue. The decrease in accrued liabilities is evidence of our decreased spending. The decrease in deferred revenue was caused by the decrease in revenue and order bookings.

         Cash used in investing activities, namely the purchase of property and equipment, was $0.3 million during the nine-month period ended September 30, 2002 as compared to $1.2 million during the nine-month period ended September 30, 2001. During the first nine months of 2002, we purchased capital assets in the amount of $403,000 and collected $73,000 due on the note receivable. For the first nine months of 2001, we purchased capital assets in the amount of $1.3 million offset by cash received from the sale of a certain asset in the amount of $26,000 and received proceeds from the sale of a short-term investment in the amount of $75,000.

         Cash provided by financing activities was $0.1 million during the nine-month period ended September 30, 2002 compared to $1.5 million provided by financing activities during the nine-month period ended September 30, 2001. During the first nine months of 2002, the activity on our line of credit facility resulted in a net borrowing of $0.3 million. Also during 2002, we made payments on our capital lease obligations in the amount of $0.2 million and issued common stock in the amount of $18,000. For the first nine months of 2001, we issued common stock in the amount of $0.2 million and borrowed from our line of credit in the amount of $1.4 million. During that same time period, we made payments on our capital lease obligations in the amount of $0.1 million.

         The Board of Directors approved stock buy-back plans under which we are authorized to repurchase our shares of common stock. As of November 13, 2002, we had repurchased a total of 3,322,432 shares under these plans since November 13, 1998 at an average share price of $3.43 and are authorized to repurchase 365,000 additional shares. We have made no stock repurchases since the fourth quarter of 2000.

Internal Sources of Liquidity

         Due to the recent decline in revenue and order bookings, it was necessary to reduce our operating expenses to a level that can be supported by our company’s revenue. In the third quarter of 2002, we began several initiatives to address our sales efforts, our cost structures, and our cash management in light of the changing economic environment. We began to see the favorable results from these efforts as demonstrated by our lower selling, marketing, and administrative expenses, cost of revenue, and decreased accounts receivable balance. We have decreased the estimated

15

quarterly sales breakeven level to approximately $7.5 million for the fourth quarter of 2002 through staff reductions made during the third quarter of 2002 and further cost reduction strategies, including decreased travel and marketing programs.

         Additionally, we expect to reduce inventory and inventory purchases during the remainder of 2002 by outsourcing the inventory supply for our Vista product line and using current inventory to support our maintenance contracts. In doing so, we will moderately, but positively, affect gross margin and operating cash.

         We believe the continued benefits of these measures will allow us to generate sufficient operating funds from internal sources to successfully run our business in the year ahead. We expect our current cash and cash equivalents, combined with future cash flows from operating activities, to be sufficient to support our operations for the remainder of 2002 and through 2003. We will utilize our credit facility to supplement operational cash needs.

External Sources of Liquidity

         On April 30, 2002, we elected an early termination to our $2.5 million asset-based operating line of credit with a commercial lending institution. In place of that line of credit, on May 14, 2002, we executed an Accounts Receivable Financing Agreement (the “Agreement”) for a one-year, $3.0 million, asset-based, operating line of credit with a commercial banking institution. The maximum cash available under the terms of this Agreement is 80% of the $3.0 million loan value, or $2.4 million. The new line of credit has lower interest rates, lower minimum monthly interest payments, lower facility fee, less stringent covenants, and an increased borrowing base. On July 22, 2002, we entered into a Loan Modification and Forbearance Agreement in which the bank agreed to increase the loan amount to $3.75 million, extend the expiration date to July 14, 2003, and increase the collateral handling fee to 0.75% during a time of non-compliance with the covenants of the Agreement. The maximum cash available under the terms of this Modification is 80% of the $3.75 million loan value, or $3.0 million.

         At September 30, 2002, we were in compliance with all covenants under this Agreement and Modification. At September 30, 2002, our outstanding balance on this credit facility was $1.7 million with an additional $1.3 million available to borrow.

         On November 7, 2002, we entered into an Accounts Receivable Financing Modification Agreement (the “Modification #2”) to the Agreement in which the amended an affirmative, financial covenant. Also, Modification #2 extended the increase in the collateral handling fee until the later of February 1, 2003 or one month following the quarter in which we are in compliance with affirmative covenants listed in the Agreement and no other event of default has occurred.

         In the event that we are unable to continue to reduce costs and generate cash flow from operations and alternative financing arrangements are not available, our operations could be adversely affected.

         In an effort to explore strategic opportunities to support our current business strategies, we have retained the investment banking services of Alliant Partners, a Silicon Valley Bancshares company. See Part II – Item 5 Other Information in this Form 10-Q for additional information.

16

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

INTEREST RATE RISK

         Our exposure to market risk in connection with interest rate changes relates to our cash investment portfolio. Our general policy is to limit the risk of principal loss and to ensure the safety of invested funds by limiting market and interest rate risk. We place our investments in instruments with highly rated issuers. We classify all liquid investments with a maturity date of three months or less as cash equivalents. As of September 30, 2002, our earned interest rate on our cash equivalents was 0.24% compared to 1.61% at December 31, 2001. We do not expect any material loss with respect to our cash investment portfolio.

         Our asset-based operating line of credit bears interest at prime plus 3.25%. During the first three quarters of 2002, the prime rate has held steady at 4.75%. At November 13, 2002, we had an outstanding balance of $1.5 million under this line of credit. The full amount was classified as current and will be paid from receipts of customer receivables. Due to the current nature of the debt, the requirement to make payments on the outstanding balance as receivables are collected, and the currently low prime rate, we do not believe that market risk related to this line of credit is significant. We anticipate no material exposure to market risk in connection with interest rate changes, as they relate to our current liabilities.

         Our only long-term liabilities are capital lease obligations, which bear interest at a fixed rate. Therefore, we do not believe there is any material exposure to market risk changes in interest rates as it relates to our current or long-term liabilities.

FOREIGN CURRENCY EXCHANGE RATE RISK

         We invoice all international customers in U.S. dollars except for the customers of our United Kingdom (“U.K.”) subsidiary, which are invoiced in pounds sterling. Our U.K. subsidiary’s financials, including balance sheet, revenue, and operating expenses, are recorded in pounds sterling. Therefore, our exposure to foreign currency exchange rate risk occurs when we translate the financial position and operating results of that subsidiary into U.S. dollars in the course of consolidating our financial statements. At this time, we do not use instruments to hedge our foreign exchange exposure in the U.K. because the effects of foreign exchange rate fluctuations do not materially affect us.

ADDITIONAL CAUTIONARY FACTORS THAT MAY AFFECT FUTURE RESULTS

         Our disclosure and analysis in this Form 10-Q contain some forward-looking statements. Forward-looking statements give our current expectations or forecasts of future events. You can identify such statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate,” “expect,” “believe,” and other words and phrases of similar meaning in connection with any discussion of future operating or financial performance. In particular, these forward-looking statements include, for example, statements relating to future actions, future performance, results of current and anticipated products, sales efforts, and operating expenses. From time to time, we also may provide oral or written forward-looking statements in other materials we release to the public.

         We reasonably believe that any or all of our forward-looking statements in this Form 10-Q and in any other public statements we make are true at the time they are made. However, such statements may turn out to be wrong. They can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties. Consequently, no forward-looking statement can be guaranteed, and actual future results may vary materially. We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. We advise you, however, to review the Section entitled “Quantitative and Qualitative Disclosure About Market Risk” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2001 for a discussion of important cautionary factors that may affect future results. We also advise you to review any and all further disclosures we make on related subjects in our Form 10-Q and Form 8-K filings with the SEC and in other materials we publicly release.

17

ITEM 4. CONTROLS AND PROCEDURES

         Disclosure controls and procedures are designed to ensure that information required to be disclosed in Company reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commissions’ rules and forms. The controls and procedures also ensure that the required information is accumulated and communicated to management, including the Company’s Chief Executive Officer and Chief Financial Officer as appropriate, to allow timely decisions regarding required disclosure.

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

         Within the 90 days prior to the filing date of this report, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to the Exchange Act Rule 13a-14. This evaluation was done under the supervision and with the participation of the Company’s management, including our Chief Executive Officer and our Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective in gathering, analyzing, and disclosing information needed to satisfy our disclosure obligations under the Exchange Act.

CHANGES IN INTERNAL CONTROLS

         There were no significant changes in our internal controls or in other factors that could significantly affect those controls since the most recent evaluation of such controls.

PART II—OTHER INFORMATION

ITEM 5. OTHER INFORMATION

         We entered into an Agreement and Plan of Merger (the “Merger Agreement”) dated as of November 5, 2002, with Enghouse Systems Limited (“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 our outstanding shares of common stock, par value $0.01 per share (the “Shares”), at a price of $0.72 per Share, net to the seller in cash. This tender offer is 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 Syntellect stockholders 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 on November 13, 2002.

         Our board has unanimously approved and adopted the Merger Agreement and the transactions contemplated thereby, and has recommended that our stockholders accept the Offer and tender their Shares pursuant to the Offer. MCM Associates, Ltd., Wynnefield Capital Management, LLC and certain of their respective controlling persons and affiliated entities (the “Holders”), have agreed to tender all of their Shares to the Purchaser in the Offer, pursuant to a Tender and Voting Agreement, dated as of November 5, 2002, among Syntellect, Enghouse and the Holders. The Holders beneficially own an aggregate of approximately 15% of the outstanding Shares. The Company filed its Solicitation/Recommendation Statement on Schedule 14D-9 with the Securities and Exchange Commission on November 13, 2002, a copy of which is being mailed to stockholders with the Schedule TO.

18

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)	Exhibits
	(10)(v)	Syntellect Inc. Nonemployee Director Stock Plan (as amended through August 6, 2002)
	(10)(vii)(a)	Indemnification Agreement Between Syntellect Inc. and Michael R. Bruce as of August 6, 2002
	(10)(vii)(b)	Indemnification Agreement Between Syntellect Inc. and Anthony V. Carollo as of August 6, 2002
	(10)(vii)(c)	Indemnification Agreement Between Syntellect Inc. and Steven W. Dodenhoff as of August 6, 2002
	(10)(vii)(d)	Indemnification Agreement Between Syntellect Inc. and Dr. Roy A. Herberger as of August 6, 2002
	(10)(vii)(e)	Indemnification Agreement Between Syntellect Inc. and Camille Jayne as of August 6, 2002
	(10)(vii)(f)	Indemnification Agreement Between Syntellect Inc. and Michael D. Kaufman as of August 6, 2002
	(10)(vii)(g)	Indemnification Agreement Between Syntellect Inc. and Kent C. Mueller as of August 6, 2002
	(10)(vii)(h)	Indemnification Agreement Between Syntellect Inc. and Charles F. Sonneborn, III as of August 6, 2002
	(10)(vii)(i)	Indemnification Agreement Between Syntellect Inc. and Timothy P. Vatuone as of August 6, 2002
	(10)(x)(b)	Accounts Receivable Loan Modification Agreement between Syntellect Inc. and Silicon Valley Bank as of November 7, 2002
	(10)(xii)(a)	Change of Control between Syntellect Inc. and Anthony V. Carollo as of August 16, 2002
	(10)(xii)(b)	Change of Control between Syntellect Inc. and Steven W. Dodenhoff as of August 16, 2002
	(10)(xii)(c)	Change of Control between Syntellect Inc. and Charles F. Sonneborn, III as of August 16, 2002
	(10)(xii)(d)	Change of Control between Syntellect Inc. and Peter K. Trompetter as of August 16, 2002
	(10)(xii)(e)	Change of Control between Syntellect Inc. and Timothy P. Vatuone as of August 16, 2002
	(99)(a)	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
	(99)(b)	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

19

	(99)(c)	Certification of Chief Executive Officer
	(99)(d)	Certification of Chief Financial Officer
(b)	Reports on Form 8-K
	No reports on Form 8-K have been filed during the quarter ended September 30, 2002.

SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: November 13, 2002	SYNTELLECT INC.
	By: /s/ Timothy P. Vatuone
	Timothy P. Vatuone Vice President, Chief Financial Officer, Secretary and Treasurer (Principal financial officer and duly authorized officer of the registrant)

20 EX-10.V 3 p67203exv10wv.txt EX-10.V EXHIBIT (10)(V) SYNTELLECT INC. NONEMPLOYEE DIRECTOR STOCK PLAN (AS AMENDED THROUGH AUGUST 6, 2002) ARTICLE I ESTABLISHMENT, PURPOSE, AND DURATION 1.1. Establishment of the Plan. Syntellect Inc. a Delaware corporation, hereby establishes the Syntellect Inc. Nonemployee Director Stock Plan (the "Plan") for the benefit of its Nonemployee Directors. The Plan sets forth the terms of one-time and annual grants of Nonqualified Stock Options to Nonemployee Directors. All such grants are subject to the terms and provisions set forth in this Plan. 1.2. Purpose of the Plan. The purpose of the Plan is to encourage ownership in the Company by Nonemployee Directors, to strengthen the ability of the Company to attract and retain the services of experienced and knowledgeable individuals as Nonemployee Directors of the Company, and to provide Nonemployee Directors with a further incentive to work for the best interests of the Company and its shareholders. 1.3. Effective Date. The Plan is effective as of the date approved by the Company's shareholders (the "Effective Date"). The Plan will be deemed to be approved by the shareholders if it receives the affirmative vote of the holders of a majority of the shares of stock of the Company present, or represented, and entitled to vote at a meeting duly held in accordance with the applicable provisions of the Delaware General Corporation Law and the Company's By-Laws and Certificate of Incorporation. Any Awards granted under the Plan prior to shareholder approval are effective when made, but no Award may be exercised or settled before shareholder approval. If the shareholders fail to approve the Plan, any Award previously made shall be automatically cancelled without any further act. 1.4. Duration of the Plan. The Plan shall remain in effect until such time as the Plan is terminated by the Board of Directors pursuant to Article 7 or Section 8.4. ARTICLE 2 DEFINITIONS AND CONSTRUCTION 2.1. Definitions. For purposes of the Plan, the following terms will have the meanings set forth below: (a) "Award" means a grant of Nonqualified Stock Options under the Plan. (b) "Board" or "Board of Directors" means the Board of Directors of the Company, and includes any committee of the Board of Directors designated by the Board to administer this Plan. (c) "Change of Control" means and includes each of the following: (1) there shall be consummated any consolidation or merger of the Company in which the Company is not the continuing or surviving entity, or pursuant to which Stock would be converted into cash, securities or other property, other than a merger of the Company in which the holders of the Company's 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; (2) 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 the Company and its subsidiaries (taken as a whole); (3) the shareholders of the Company shall approve any plan or proposal for liquidation or dissolution of the Company; (4) any person (as such term is used in Section 13(d) and 14(d)(2) of the Exchange Act), other than any employee benefit plan of the Company or any subsidiary of the Company or any entity holding shares of capital stock of the Company 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 the Company's outstanding Stock; or (5) during any period of two consecutive years, individuals who at the beginning of such period shall fail to constitute a majority thereof, unless the election, or the nomination for election by the Company's shareholders, 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. (d) "Code" means the Internal Revenue Code of 1986, as amended from time to time. (e) "Committee" means the committee appointed by the Board to administer the Plan. (f) "Company" means Syntellect Inc., a Delaware corporation, or any successor as provided in Section 8.3. (g) "Disability" means a permanent and total disability, within the meaning of Section 22(e)(3) of the Code. To the extent permitted pursuant to Section 16 of the Exchange Act, Disability shall be determined by the Board in good faith, upon receipt of sufficient competent medical advice from one or more individuals, selected by the Board, who are qualified to give professional medical advice. (h) "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, or any successor provision. (i) "Fair Market Value" means the closing price for Shares on the relevant date, or (if there were no sales on such date) the closing price on the immediately preceding date on which such sales occurred, as reported in The Wall Street Journal or a similar publication selected by the Committee. (j) "Grant Date" means, for Options issued under Section 6.1, the third business day after the date the Nonemployee Director is elected or appointed to the Board of Directors, and for Options issued under Section 6.2, June 1, 1995 and each anniversary of that date. (k) "Nonemployee Director" means any individual who is a member of the Board of Directors of the Company, but who is not otherwise an employee of the Company. (l) "Nonqualified Stock Option" or "NQSO" means an option to purchase Shares, granted under Article 6, that is not intended to be an incentive stock option qualifying under Section 422 of the Code. (m) "Option" means a Nonqualified Stock Option granted under the Plan. (n) "Participant" means a Nonemployee Director of the Company who has been granted an Award under the Plan. (o) "Shares" means the shares of the Company's common stock described in the Company's Certificate of Incorporation. 2.2. Gender and Number. Except as indicated by the context, any masculine term also shall include the feminine, the plural shall include the singular, and the singular shall include the plural. 2.3. Severability of Provisions. With respect to persons subject to Section 16 of the Exchange Act, transactions under this Plan are intended to comply with all applicable conditions of Rule 16b-3 or its successors under the Exchange Act. To the extent any provision of the Plan or action by the Board fails to so comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable by the Board, and the remaining provisions of the Plan or actions by Board shall be construed and enforced as if the invalid provision or action had not been included or undertaken. 2.4. Incorporation by Reference. In the event this Plan does not include a provision required by Rule 16b-3 to be stated herein, such provision (other than one relating to eligibility requirements or the price and amount of Awards) shall be deemed automatically to be incorporated by reference herein, insofar as Participants subject to Section 16 of the Exchange Act are concerned. 2 ARTICLE 3 ADMINISTRATION 3.1. The Committee. The Plan will be administered by the Committee, subject to the restrictions set forth in the Plan. 3.2. Administration by the Committee. The Committee has the full power, discretion, and authority to interpret and administer the Plan in a manner that is consistent with the Plan's provisions. However, the Committee does not have the power to (i) determine Plan eligibility, or to determine the number, the price, the vesting period, or the timing of Awards to be made under the Plan to any individual Participant or (ii) take any action that would result in the Awards not being treated as "formula awards" within the meaning of Rule 16b3(c)(ii) or any successor provision, promulgated pursuant to the Exchange Act. 3.3. Decisions Binding. The Committee's determinations and decisions under the Plan, and all related orders or resolutions of the Board shall be final, conclusive, and binding on all persons, including the Company, its stockholders, employees, Participants, and their estates and beneficiaries. ARTICLE 4 SHARES SUBJECT TO THE PLAN 4.1. Number of Shares. The total number of Shares available for grant under the Plan may not exceed 150,000, subject to adjustment as provided in Section 4.3. The Shares issued pursuant to the exercise of Options granted under the Plan may be authorized and unissued Shares or Shares reacquired by the Company, as determined by the Committee. 4.2. Lapsed Awards. If any Option granted under the Plan terminates, expires, or lapses for any reason, any Shares subject to purchase pursuant to such Option again will be available for grant under the Plan. 4.3. Adjustments in Authorized Shares. In the event of any merger, reorganization, consolidation, recapitalization, separation, liquidation, stock dividend, split-up, Share combination, or other change in the corporate structure of the Company affecting the Shares, the number and/or type of Shares subject to any outstanding Award, and the Option exercise price per Share under any outstanding Option will be automatically adjusted so that the proportionate interests of the Participants will be maintained as before the occurrence of such event. ARTICLE 5 ELIGIBILITY AND PARTICIPATION 5.1. Eligibility. Eligibility to participate in the Plan is limited to Nonemployee Directors. 5.2. Actual Participation. All eligible Nonemployee Directors will receive a grant of Options pursuant to Article 6. ARTICLE 6 GRANT OF OPTIONS 6.1. One-Time Grant of Options. An Option to purchase 10,000 Shares shall be granted to each Nonemployee Director on the third business day after the date the Nonemployee Director is first elected or appointed to the Board of Directors. The specific terms of the Options are subject to the provisions of this Article 6 and the Award Agreement executed pursuant to Section 6.3. 6.2. Annual Grant of Options. Each individual who is a Nonemployee Director on the relevant Grant Date and who has not received an Option pursuant to Section 6.1 within ninety (90) days prior to the relevant Grant Date will be granted an Option to purchase 5,000 Shares, subject to the limitations on the number of Shares that may be awarded under the Plan. The specific terms of the Options are subject to the provisions of this Article 6 and the Award Agreement executed pursuant to Section 6.3. 6.3. Award Agreement. The grant of Options will be evidenced by an Award Agreement that will not include any terms or conditions that are inconsistent with the terms and conditions of this Plan. 6.4. Option Exercise Price Per Share. The Option exercise price per Share under any Option granted pursuant to this Article 6 shall be the Fair Market Value of such Share on the Grant Date (the "Exercise Price"). 3 6.5. Duration of Options. Each Option granted to a Participant under this Article 6 shall expire on the tenth (10th) anniversary date of the Grant Date, unless the Option is earlier terminated, forfeited, or surrendered pursuant to a provision of this Plan. 6.6. Vesting of Options Subject to Exercise. Subject to Section 1.3, the Options granted to the Participants under this Article 6 shall vest and become subject to exercise in accordance with the following schedule: No part of (i) an Option granted under Section 6.1, or (ii) each annual Option granted under Section 6.2 may be exercised until the first anniversary of the Grant Date of such Option, at which time 100% of the Shares subject to the Option shall vest and may be acquired upon exercise. 6.7. Exercise of Disposition of Options. Participants shall be entitled to exercise any Option that has vested at any time within the period beginning with the Grant Date and ending ten (10) years after the Grant Date; provided, however, that the disposition by a Participant of any Shares acquired pursuant to the exercise of an Option shall occur only after the end of the six (6) month period beginning on the date that Company's shareholders approve the Plan. 6.8. Payment. Options are exercised by delivering a written notice of exercise to the Secretary of the Company, setting forth the number of Options to be exercised and accompanied by a payment equivalent to the product of the number of Options exercised multiplied by the Exercise Price (the "Total Exercise Price"). The Total Exercise Price is payable: (a) in cash or its equivalent; (b) by tendering previously acquired Shares having a Fair Market Value at the time of exercise equal to the Total Exercise Price; (c) by a combination of (a) and (b). As soon as practicable after receipt of a written notification of exercise and full payment, the Company shall deliver to the Participant, in the Participant's name, Share certificates in an appropriate amount based upon the number of Shares purchased pursuant to the exercise of the Options. 6.9. Restrictions on Share Transferability. To the extent necessary to ensure that Options granted under this Article 6 comply with applicable law, the Board shall impose restrictions on the transferability of any Shares acquired pursuant to the exercise of an Option under this Article 6, including, without limitation, restrictions under applicable Federal securities laws, under the requirements of any Stock exchange or market upon which such Shares are then listed and/or traded, and under any blue sky or state securities laws applicable to such Shares. 6.10. Termination of Services on Board of Directors Due to Death or Disability. If a Participant's service on the Board is terminated by reason of death or Disability, any outstanding Options held by the Participant that are not fully vested are immediately forfeited and returned to the Company. Any outstanding options held by the Participant that are fully vested will remain fully vested and subject to exercise. To the extent an Option is fully vested and exercisable as of the date of death or Disability, it will remain exercisable for one year after the date of death or Disability by the Participant or such person or persons as shall have been named as the Participant's legal representative or beneficiary, or by such persons as shall have acquired the Participant's Options by will or by the laws of descent and distribution. Any Option that is fully vested but not exercised during this one-year period after death or Disability will be immediately forfeited to the Company. 6.11. Termination of Service on Board of Directors for Other Reasons. If the Participant's service on the Board is terminated for any reason other than for death or Disability, any outstanding Options held by the Participant that are not fully vested as of the date of termination are immediately forfeited to the Company. To the extent an Option is fully vested and exercisable as of such date, it will remain exercisable for ninety (90) days after the date the Participant's service on the Board terminates. Any Option that is fully vested but not exercised during this ninety (90) day period after termination of service will be immediately forfeited to the Company. 6.12. Limitations on the Transferability of Options. No Option granted under this Article 6 may be sold, transferred, pledged, assigned, or otherwise alienated, other than by will, the laws of descent and distribution, or under 4 any other circumstances allowed by the Committee that would not violate the transferability restrictions contained in Rule 16b-3(a)(2) or any successor provision. 6.13. Change of Control. A Change of Control shall cause every Option outstanding hereunder to become fully exercisable and allow each Participant the right to exercise an Option prior to the occurrence of the event otherwise terminating the Option. ARTICLE 7 AMENDMENT, MODIFICATION, AND TERMINATION 7.1. Amendment, Modification, and Termination. Subject to the terms set forth in this Section 7.1, the Committee may terminate, amend, or modify the Plan at any time; provided, however, that shareholder approval is required for any Plan amendment that would materially increase the benefits to Participants or the number of securities that may be issued, or materially modify the eligibility requirements in the Plan. Further, Plan provisions relating to the amount, price, and timing of securities to be awarded under the Plan may not be amended more than once every six (6) months, other than to comport with changes in the Code, the Employee Retirement Income Security Act, or the rules thereunder. 7.2. Awards Previously Granted. Unless required by law, no termination, amendment, or modification of the Plan shall in any manner adversely affect any Award previously granted under the Plan, without the written consent of the Participant holding the Award. ARTICLE 8 MISCELLANEOUS 8.1. Indemnification. Each individual who is or shall have been a member of the Board or the Committee shall be indemnified and held harmless by the Company against and from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under this Plan and against and from any and all amounts paid by him or her in settlement thereof, with the Company's approval, or paid by him or her in satisfaction of any judgment in any such action, suit, or proceeding against him or her, provided he or she shall give the Company an opportunity, at its own expense, to assume and defend the same before he or she undertakes to defend it on his or her own behalf. The foregoing right if indemnification shall not be exclusive of any other rights of indemnification to which such individuals may be entitled under the Company's Certificate of Incorporation or By-Laws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless. 8.2. Beneficiary Designation. Each Participant under the Plan may name any beneficiary or beneficiaries to whom any benefit under the Plan is to be paid in the event of his or her death. Each designation will revoke all prior designations by the same Participant, shall be in a form prescribed by the Committee, and will be effective only when filed by the Participant in writing with the Committee during his or her lifetime. In the absence of any such designation, benefits remaining unpaid at the Participant's death shall be paid to the Participant's estate. 8.3. Successors. All obligations of the Company under the Plan, with respect to Awards granted hereunder, shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company. 8.4. Requirements of Law. The granting of Awards under the Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required. Notwithstanding any other provision of the Plan, the Committee may, in its sole discretion, terminate, amend, or modify the Plan in any way necessary to comply with the applicable requirements of Rule 16b-3 promulgated by the Securities and Exchange Commission as interpreted pursuant to no-action letters and interpretive releases. 8.5. Governing Law. To the extent not preempted by Federal law, the Plan, and all agreements hereunder, shall be construed in accordance with and governed by the laws of the State of Arizona. 5 EX-10.VII.A 4 p67203exv10wviiwa.txt EX-10.VII.A EXHIBIT (10)(VII)(A) INDEMNIFICATION AGREEMENT 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 Michael R. Bruce (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 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. (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. 2 (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 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 3 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 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 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 4 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. (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. 5 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 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: with a copy given in the manner prescribed, to: Syntellect Inc. Suite 100 Rogers & Theobald LLP 16610 North Black Canyon Highway 2425 E. Camelback Road, Suite 300 Phoenix, Arizona 85053 Phoenix, Arizona 85016 Attention: Anthony V. Carollo Jr., Attention: Robert K. Rogers, Esq. President Tel: (602) 852-5540 Tel: (602) 789-2770 Fax: (602) 852-5570 Fax: (602) 789-2768 e-mail: rkr@rogerstheobald.com e-mail: tcarollo@syntellect.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 6 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 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. (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] 7 IN WITNESS WHEREOF, the parties hereto have executed this Indemnification Agreement as of the Effective Date. COMPANY: SYNTELLECT INC. By: /S/ Anthony V. Carollo -------------------------------------------- Name: Anthony V. Carollo ------------------------------------------ Title: President and Chief Executive Officer ----------------------------------------- INDEMNITEE: /S/ Michael R. Bruce -------------------- Michael R. Bruce Address: ----------------------------------------- ----------------------------------------- Facsimile No.: ----------------------------------- 8 EX-10.VII.B 5 p67203exv10wviiwb.txt EX-10.VII.B EXHIBIT (10)(VII)(B) INDEMNIFICATION AGREEMENT 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 Anthony V. Carollo, Jr. (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. (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. 2 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 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 3 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 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 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 4 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. (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. 5 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 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: with a copy given in the manner prescribed, to: Syntellect Inc. Suite 100 Rogers & Theobald LLP 16610 North Black Canyon Highway 2425 E. Camelback Road, Suite 300 Phoenix, Arizona 85053 Phoenix, Arizona 85016 Attention: Anthony V. Carollo Jr., Attention: Robert K. Rogers, Esq. President Tel: (602) 852-5540 Tel: (602) 789-2770 Fax: (602) 852-5570 Fax: (602) 789-2768 e-mail: rkr@rogerstheobald.com e-mail: tcarollo@syntellect.com (2) If to Indemnitee, at the address set forth below Indemnittee's name on the signature page of this Agreement. 6 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 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. (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] 7 IN WITNESS WHEREOF, the parties hereto have executed this Indemnification Agreement as of the Effective Date. COMPANY: SYNTELLECT INC. By: /S/ Timothy P. Vatuone ----------------------------------------------- Name: Timothy P. Vatuone --------------------------------------------- Title: Vice President and Chief Financial Officer -------------------------------------------- INDEMNITEE: /S/ Anthony V. Carollo, Jr. --------------------------- Anthony V. Carollo, Jr. Address: -------------------------------------------- -------------------------------------------- Facsimile No.: -------------------------------------- 8 EX-10.VII.C 6 p67203exv10wviiwc.txt EX-10.VII.C EXHIBIT (10)(VII)(C) INDEMNIFICATION AGREEMENT 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 Steven W. Dodenhoff (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 an 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. (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. 2 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 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 3 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 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 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 4 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. (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. 5 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 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: with a copy given in the manner prescribed, to: Syntellect Inc. Suite 100 Rogers & Theobald LLP 16610 North Black Canyon Highway 2425 E. Camelback Road, Suite 300 Phoenix, Arizona 85053 Phoenix, Arizona 85016 Attention: Anthony V. Carollo Jr., Attention: Robert K. Rogers, Esq. President Tel: (602) 852-5540 Tel: (602) 789-2770 Fax: (602) 852-5570 Fax: (602) 789-2768 e-mail: rkr@rogerstheobald.com e-mail: tcarollo@syntellect.com (2) If to Indemnitee, at the address set forth below Indemnittee's name on the signature page of this Agreement. 6 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 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. (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] 7 IN WITNESS WHEREOF, the parties hereto have executed this Indemnification Agreement as of the Effective Date. COMPANY: SYNTELLECT INC. By: /S/ Anthony V. Carollo ------------------------------------------ Name: Anthony V. Carollo ---------------------------------------- Title: President and Chief Executive Officer --------------------------------------- INDEMNITEE: /S/ Steven W. Dodenhoff ----------------------------------------------- Steven W. Dodenhoff Address: --------------------------------------- --------------------------------------- Facsimile No.: --------------------------------- 8 EX-10.VII.D 7 p67203exv10wviiwd.txt EX-10.VII.D EXHIBIT (10)(VII)(D) INDEMNIFICATION AGREEMENT 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 Roy A. Herberger, Jr. (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 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. (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. 2 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 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 3 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 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 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 4 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. (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. 5 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 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: with a copy given in the manner prescribed, to: Syntellect Inc. Suite 100 Rogers & Theobald LLP 16610 North Black Canyon Highway 2425 E. Camelback Road, Suite 300 Phoenix, Arizona 85053 Phoenix, Arizona 85016 Attention: Anthony V. Carollo Jr., Attention: Robert K. Rogers, Esq. President Tel: (602) 852-5540 Tel: (602) 789-2770 Fax: (602) 852-5570 Fax: (602) 789-2768 e-mail: rkr@rogerstheobald.com e-mail: tcarollo@syntellect.com (2) If to Indemnitee, at the address set forth below Indemnittee's name on the signature page of this Agreement. 6 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 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. (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] 7 IN WITNESS WHEREOF, the parties hereto have executed this Indemnification Agreement as of the Effective Date. COMPANY: SYNTELLECT INC. By: /S/ Anthony V. Carollo ------------------------------------------ Name: Anthony V. Carollo ---------------------------------------- Title: President and Chief Executive Officer --------------------------------------- INDEMNITEE: /S/ Roy A. Herberger, Jr. ------------------------- Roy A. Herberger, Jr. Address: --------------------------------------- ----------------------------------------------- Facsimile No.: -------------------------------- 8 EX-10.VII.E 8 p67203exv10wviiwe.txt EX-10.VII.E EXHIBIT (10)(VII)(E) INDEMNIFICATION AGREEMENT 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 Camille Jayne (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 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. (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. 2 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 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 3 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 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 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 4 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. (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. 5 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 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: with a copy given in the manner prescribed, to: Syntellect Inc. Suite 100 Rogers & Theobald LLP 16610 North Black Canyon Highway 2425 E. Camelback Road, Suite 300 Phoenix, Arizona 85053 Phoenix, Arizona 85016 Attention: Anthony V. Carollo Jr., Attention: Robert K. Rogers, Esq. President Tel: (602) 852-5540 Tel: (602) 789-2770 Fax: (602) 852-5570 Fax: (602) 789-2768 e-mail: rkr@rogerstheobald.com e-mail: tcarollo@syntellect.com (2) If to Indemnitee, at the address set forth below Indemnittee's name on the signature page of this Agreement. 6 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 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. (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] 7 IN WITNESS WHEREOF, the parties hereto have executed this Indemnification Agreement as of the Effective Date. COMPANY: SYNTELLECT INC. By: /S/ Anthony V. Carollo ---------------------------------------- Name: Anthony V. Carollo -------------------------------------- Title: President and Chief Executive Officer ------------------------------------- INDEMNITEE: /S/ Camille Jayne ----------------- Camille Jayne Address: ------------------------------------- --------------------------------------------- Facsimile No.: ------------------------------- 8 EX-10.VII.F 9 p67203exv10wviiwf.txt EX-10.VII.F EXHIBIT (10)(VII)(F) INDEMNIFICATION AGREEMENT 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 Michael D. Kaufman (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 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. (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. 2 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 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 3 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 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 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 4 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. (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. 5 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 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: with a copy given in the manner prescribed, to: Syntellect Inc. Suite 100 Rogers & Theobald LLP 16610 North Black Canyon Highway 2425 E. Camelback Road, Suite 300 Phoenix, Arizona 85053 Phoenix, Arizona 85016 Attention: Anthony V. Carollo Jr., Attention: Robert K. Rogers, Esq. President Tel: (602) 852-5540 Tel: (602) 789-2770 Fax: (602) 852-5570 Fax: (602) 789-2768 e-mail: rkr@rogerstheobald.com e-mail: tcarollo@syntellect.com (2) If to Indemnitee, at the address set forth below Indemnittee's name on the signature page of this Agreement. 6 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 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. (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] 7 IN WITNESS WHEREOF, the parties hereto have executed this Indemnification Agreement as of the Effective Date. COMPANY: SYNTELLECT INC. By: /S/ Anthony V. Carollo --------------------------------------- Name: Anthony V. Carollo ------------------------------------- Title: President and Chief Executive Officer ------------------------------------ INDEMNITEE: /S/ Michael D. Kaufman Michael D. Kaufman Address: ------------------------------------ -------------------------------------------- Facsimile No.: ------------------------------ 8 EX-10.VII.G 10 p67203exv10wviiwg.txt EX-10.VII.G EXHIBIT (10)(VII)(G) INDEMNIFICATION AGREEMENT 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 Kent C. Mueller (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 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. (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. 2 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 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 3 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 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 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 4 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. (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. 5 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 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: with a copy given in the manner prescribed, to: Syntellect Inc. Suite 100 Rogers & Theobald LLP 16610 North Black Canyon Highway 2425 E. Camelback Road, Suite 300 Phoenix, Arizona 85053 Phoenix, Arizona 85016 Attention: Anthony V. Carollo Jr., Attention: Robert K. Rogers, Esq. President Tel: (602) 852-5540 Tel: (602) 789-2770 Fax: (602) 852-5570 Fax: (602) 789-2768 e-mail: rkr@rogerstheobald.com e-mail: tcarollo@syntellect.com (2) If to Indemnitee, at the address set forth below Indemnittee's name on the signature page of this Agreement. 6 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 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. (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] 7 IN WITNESS WHEREOF, the parties hereto have executed this Indemnification Agreement as of the Effective Date. COMPANY: SYNTELLECT INC. By: /S/ Anthony V. Carollo ------------------------------------------ Name: Anthony V. Carollo ---------------------------------------- Title: President and Chief Executive Officer --------------------------------------- INDEMNITEE: /S/ Kent C. Mueller Kent C. Mueller Address: --------------------------------------- ----------------------------------------------- Facsimile No.: --------------------------------- 8 EX-10.VII.H 11 p67203exv10wviiwh.txt EX-10.VII.H EXHIBIT (10)(VII)(H) INDEMNIFICATION AGREEMENT 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 Charles F. Sonneborn, III (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 an 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. (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. 2 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 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 3 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 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 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 4 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. (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. 5 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 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: with a copy given in the manner prescribed, to: Syntellect Inc. Suite 100 Rogers & Theobald LLP 16610 North Black Canyon Highway 2425 E. Camelback Road, Suite 300 Phoenix, Arizona 85053 Phoenix, Arizona 85016 Attention: Anthony V. Carollo Jr., Attention: Robert K. Rogers, Esq. President Tel: (602) 852-5540 Tel: (602) 789-2770 Fax: (602) 852-5570 Fax: (602) 789-2768 e-mail: rkr@rogerstheobald.com e-mail: tcarollo@syntellect.com (2) If to Indemnitee, at the address set forth below Indemnittee's name on the signature page of this Agreement. 6 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 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. (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] 7 IN WITNESS WHEREOF, the parties hereto have executed this Indemnification Agreement as of the Effective Date. COMPANY: SYNTELLECT INC. By: /S/ Anthony V. Carollo ----------------------------------------- Name: Anthony V. Carollo --------------------------------------- Title: President and Chief Executive Officer -------------------------------------- INDEMNITEE: /S/ Charles F. Sonneborn, III ----------------------------- Charles F. Sonneborn, III Address: -------------------------------------- ---------------------------------------------- Facsimile No.: -------------------------------- 8 EX-10.VII.I 12 p67203exv10wviiwi.txt EX-10.VII.I EXHIBIT (10)(vii)(i) INDEMNIFICATION AGREEMENT 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 Timothy P. Vatuone (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 an 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. (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. 2 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 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 3 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 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 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 4 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. (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. 5 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 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: with a copy given in the manner prescribed, to: Syntellect Inc. Suite 100 Rogers & Theobald LLP 16610 North Black Canyon Highway 2425 E. Camelback Road, Suite 300 Phoenix, Arizona 85053 Phoenix, Arizona 85016 Attention: Anthony V. Carollo Jr., Attention: Robert K. Rogers, Esq. President Tel: (602) 852-5540 Tel: (602) 789-2770 Fax: (602) 852-5570 Fax: (602) 789-2768 e-mail: rkr@rogerstheobald.com e-mail: tcarollo@syntellect.com (2) If to Indemnitee, at the address set forth below Indemnittee's name on the signature page of this Agreement. 6 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 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. (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] 7 IN WITNESS WHEREOF, the parties hereto have executed this Indemnification Agreement as of the Effective Date. COMPANY: SYNTELLECT INC. By: /S/ Anthony V. Carollo ----------------------------------------- Name: Anthony V. Carollo --------------------------------------- Title: President and Chief Executive Officer --------------------------------------- INDEMNITEE: /S/ Timothy P. Vatuone ---------------------- Timothy P. Vatuone Address: -------------------------------------- ---------------------------------------------- Facsimile No.: -------------------------------- EX-10.X.B 13 p67203exv10wxwb.txt EX-10.X.B EXHIBIT (10)(x)(b) ACCOUNTS RECEIVABLE FINANCING MODIFICATION AGREEMENT This Accounts Receivable Financing Modification Agreement is entered into as of November 7, 2002, by and between Syntellect Inc. (the "Borrower") and Silicon Valley Bank ("Bank"). 1. DESCRIPTION OF EXISTING INDEBTEDNESS: Among other indebtedness which may be owing by Borrower to Bank, Borrower is indebted to Bank pursuant to, among other documents, an Accounts Receivable Financing Agreement, dated May 14, 2002 by and between Borrower and Bank, as may be amended from time to time (the "Accounts Receivable Financing Agreement"). Capitalized terms used without definition herein shall have the meanings assigned to them in the Accounts Receivable Financing Agreement. Hereinafter, all indebtedness owing by Borrower to Bank shall be referred to as the "Indebtedness" and the Accounts Receivable Financing Agreement and any and all other documents executed by Borrower in favor of Bank shall be referred to as the "Existing Documents." 2. DESCRIPTION OF CHANGE IN TERMS. A. Modification(s) to Accounts Receivable Financing Agreement: 1. Pursuant to Section 3.5 entitled "Collateral Handling Fee", the Collateral Handling Fee shall continue to be 0.75%. The Collateral Handling Fee shall revert to 0.25% upon the later of either (a) February 1, 2003 or (b) one month following the quarter ending in which Borrower is in compliance with Section 6.2(L) and no other Event of Default has occurred and is continuing. 2. Item "(L)" under Section 6.2 entitled "Affirmative Covenants" is hereby amended in part to require Borrower's consolidated earnings before interest expense, income taxes, depreciation, amortization of intangible assets and other non-cash charges made to Borrowers' income to not be less than $1 for the fiscal quarter ended September 30, 2002. B. Waiver of Financial Covenant Default: 1. Bank hereby waives Borrower's existing default under the Accounts Receivable Financing Agreement by virtue of Borrower's failure to comply with the financial covenant stated in Item "(L)" under Section 6.2 entitled "Affirmative Covenants" as of fiscal quarter ended June 30, 2002. Bank's waiver of Borrower's compliance of this covenant shall apply only to the foregoing period. Accordingly, for the quarter ended September 1, 2002, Borrower shall be in compliance with this covenant, as amended herein. Bank's agreement to waive the above-described default (1) in no way shall be deemed an agreement by the Bank to waive Borrower's compliance with the above-described covenant as of all other dates and (2) shall not limit or impair the Bank's right to demand strict performance of this covenant as of all other dates and (3) shall not limit or impair the Bank's right to demand strict performance of all other covenants as of any date. 3. CONSISTENT CHANGES. The Existing Documents are each hereby amended wherever necessary to reflect the changes described above. 4. NO DEFENSES OF BORROWER. Borrower agrees that, as of this date, it has no defenses against the obligations to pay any amounts under the Indebtedness. 1 5. CONTINUING VALIDITY. Borrower understands and agrees that in modifying the existing Indebtedness, Bank is relying upon Borrower's representations, warranties, and agreements, as set forth in the Existing Documents. Except as expressly modified pursuant to this Accounts Receivable Financing Modification Agreement, the terms of the Existing Documents remain unchanged and in full force and effect. Bank's agreement to modifications to the existing Indebtedness pursuant to this Accounts Receivable Financing Modification Agreement in no way shall obligate Bank to make any future modifications to the Indebtedness. Nothing in this Accounts Receivable Financing Modification Agreement shall constitute a satisfaction of the Indebtedness. It is the intention of Bank and Borrower to retain as liable parties all makers and endorsers of Existing Documents, unless the party is expressly released by Bank in writing. No maker, endorser, or guarantor will be released by virtue of this Accounts Receivable Financing Modification Agreement. The terms of this paragraph apply not only to this Accounts Receivable Financing Modification Agreement, but also to any subsequent Accounts Receivable Financing modification agreements. 6. COUNTERSIGNATURE. This Accounts Receivable Financing Modification Agreement shall become effective only when executed by Borrower and Bank. This Accounts Receivable Financing Modification Agreement is executed as of the date first written above. BORROWER: BANK: SYNTELLECT INC. SILICON VALLEY BANK By: /S/ Timothy P. Vatuone By: /S/ William D. Nay, Jr. ------------------------------------ ---------------------------- Name: Timothy P. Vatuone Name: William D. Nay, Jr. ----------------------------------- --------------------------- Title: V.P. and Chief Executive Officer Title: Vice President ---------------------------------- -------------------------- 2 EX-10.XII.A 14 p67203exv10wxiiwa.txt EX-10.XII.A EXHIBIT (10)(xii)(a) 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 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 2 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: _________________________ 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 3 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 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 -------------------------------------------- Its Vice President and Chief Financial Officer -------------------------------------------- Employee: /S/ Anthony V. Carollo, Jr. --------------------------- Anthony V. Carollo, Jr. 4 EX-10.XII.B 15 p67203exv10wxiiwb.txt EX-10.XII.B EXHIBIT (10)(xii)(b) 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 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 2 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 prescribed above, to: its 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: _________________________ 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 3 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 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/ Anthony V. Carollo ---------------------------------------- Its President and Chief Executive Officer ---------------------------------------- Employee: /S/ Steven W. Dodenhoff ----------------------- Steven W. Dodenhoff 4 EX-10.XII.C 16 p67203exv10wxiiwc.txt EX-10.XII.C EXHIBIT (10)(xii)(c) 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 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 2 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:__________________________ 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 3 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 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/ Anthony V. Carollo --------------------------------------- Its President and Chief Executive Officer -------------------------------------- Employee: /S/ Charles F. Sonneborn, III ----------------------------- Charles F. Sonneborn, III 4 EX-10.XII.D 17 p67203exv10wxiiwd.txt EX-10.XII.D EXHIBIT (10)(xii)(d) 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 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 2 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:__________________________ 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 3 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 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/ Anthony V. Carollo -------------------------------------- Its President and Chief Executive Officer ------------------------------------- Employee: /S/ Peter Trompetter -------------------- Peter Trompetter 4 EX-10.XII.E 18 p67203exv10wxiiwe.txt EX-10.XII.E EXHIBIT (10)(xii)(e) 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 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 2 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:__________________________ 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 3 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 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/ Anthony V. Carollo -------------------------------------- Its President and Chief Executive Officer ------------------------------------- Employee: /S/ Timothy P. Vatuone ---------------------- Timothy P. Vatuone 4 EX-99.A 19 p67203exv99wa.txt EX-99.A EXHIBIT (99)(a) CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Syntellect Inc. (the "Company") on Form 10-Q for the quarter ended September 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Anthony V. Carollo, Jr., Chief Executive Officer, certify, pursuant to 18 U.S.C.Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Anthony V. Carollo, Jr. - ------------------------------------ Chief Executive Officer Syntellect Inc. November 13, 2002 EX-99.B 20 p67203exv99wb.txt EX-99.B EXHIBIT (99)(b) CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Syntellect Inc. (the "Company") on Form 10-Q for the quarter ended September 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Timothy P. Vatuone, Chief Financial Officer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Timothy P. Vatuone - ------------------------------ Chief Financial Officer Syntellect Inc. November 13, 2002 EX-99.C 21 p67203exv99wc.txt EX-99.C EXHIBIT (99)(c) CERTIFICATION OF CHIEF EXECUTIVE OFFICER In connection with the Quarterly Report of Syntellect Inc. (the "Syntellect") on Form 10-Q for the quarter ended September 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Anthony V. Carollo, Jr., Chief Executive Officer, certify that: (1) I have reviewed this quarterly report on Form 10-Q of Syntellect; (2) Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; (3) Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations, and cash flows of Syntellect as of, and for, the periods presented in this quarterly report; (4) Syntellect's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in the Exchange Act Rules 13a-14 and 15d-14) for Syntellect and we have: i. designed such disclosure controls and procedures to ensure that material information relating to Syntellect, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; ii. evaluated the effectiveness of Syntellect's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and iii. presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; (5) Syntellect's other certifying officers and I have disclosed, based on our most recent evaluation, to Syntellect's auditors and the audit committee of the board of directors: i. All significant deficiencies in the design or operation of internal controls which could adversely affect Syntellect's ability to record, process, summarize and report financial data and have identified for Syntellect's auditors any material weaknesses in internal controls; and ii. Any fraud, whether or not material, that involves management or other employees who have a significant role in Syntellect's internal controls; and (6) Syntellect's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. /s/ Anthony V. Carollo, Jr. - ------------------------------------ Chief Executive Officer Syntellect Inc. November 13, 2002 EX-99.D 22 p67203exv99wd.txt EX-99.D EXHIBIT (99)(d) CERTIFICATION OF CHIEF FINANCIAL OFFICER In connection with the Quarterly Report of Syntellect Inc. (the "Syntellect") on Form 10-Q for the quarter ended September 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Timothy P. Vatuone, Chief Financial Officer, certify that: (1) I have reviewed this quarterly report on Form 10-Q of Syntellect; (2) Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; (3) Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations, and cash flows of Syntellect as of, and for, the periods presented in this quarterly report; (4) Syntellect's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in the Exchange Act Rules 13a-14 and 15d-14) for Syntellect and we have: i. designed such disclosure controls and procedures to ensure that material information relating to Syntellect, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; ii. evaluated the effectiveness of Syntellect's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and iii. presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; (5) Syntellect's other certifying officers and I have disclosed, based on our most recent evaluation, to Syntellect's auditors and the audit committee of the board of directors: i. All significant deficiencies in the design or operation of internal controls which could adversely affect Syntellect's ability to record, process, summarize and report financial data and have identified for Syntellect's auditors any material weaknesses in internal controls; and ii. Any fraud, whether or not material, that involves management or other employees who have a significant role in Syntellect's internal controls; and (6) Syntellect's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. /s/ Timothy P. Vatuone - ------------------------------ Chief Financial Officer Syntellect Inc. November 13, 2002 -----END PRIVACY-ENHANCED MESSAGE-----

EX-10.V

EXHIBIT (10)(V)

                                 SYNTELLECT INC.
                         NONEMPLOYEE DIRECTOR STOCK PLAN
                       (AS AMENDED THROUGH AUGUST 6, 2002)


                 ARTICLE I ESTABLISHMENT, PURPOSE, AND DURATION

         1.1.     Establishment of the Plan. Syntellect Inc. a Delaware
corporation, hereby establishes the Syntellect Inc. Nonemployee Director Stock
Plan (the "Plan") for the benefit of its Nonemployee Directors. The Plan sets
forth the terms of one-time and annual grants of Nonqualified Stock Options to
Nonemployee Directors. All such grants are subject to the terms and provisions
set forth in this Plan.

         1.2.     Purpose of the Plan. The purpose of the Plan is to encourage
ownership in the Company by Nonemployee Directors, to strengthen the ability of
the Company to attract and retain the services of experienced and knowledgeable
individuals as Nonemployee Directors of the Company, and to provide Nonemployee
Directors with a further incentive to work for the best interests of the Company
and its shareholders.

         1.3.     Effective Date. The Plan is effective as of the date approved
by the Company's shareholders (the "Effective Date"). The Plan will be deemed to
be approved by the shareholders if it receives the affirmative vote of the
holders of a majority of the shares of stock of the Company present, or
represented, and entitled to vote at a meeting duly held in accordance with the
applicable provisions of the Delaware General Corporation Law and the Company's
By-Laws and Certificate of Incorporation. Any Awards granted under the Plan
prior to shareholder approval are effective when made, but no Award may be
exercised or settled before shareholder approval. If the shareholders fail to
approve the Plan, any Award previously made shall be automatically cancelled
without any further act.

         1.4.     Duration of the Plan. The Plan shall remain in effect until
such time as the Plan is terminated by the Board of Directors pursuant to
Article 7 or Section 8.4.


                     ARTICLE 2 DEFINITIONS AND CONSTRUCTION

         2.1.     Definitions. For purposes of the Plan, the following terms
will have the meanings set forth below:

                  (a)      "Award" means a grant of Nonqualified Stock Options
                  under the Plan.

                  (b)      "Board" or "Board of Directors" means the Board of
                  Directors of the Company, and includes any committee of the
                  Board of Directors designated by the Board to administer this
                  Plan.

                  (c)      "Change of Control" means and includes each of the
                  following:

                           (1)      there shall be consummated any consolidation
                  or merger of the Company in which the Company is not the
                  continuing or surviving entity, or pursuant to which Stock
                  would be converted into cash, securities or other property,
                  other than a merger of the Company in which the holders of the
                  Company's 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;

                           (2)      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 the Company
                  and its subsidiaries (taken as a whole);

                           (3)      the shareholders of the Company shall
                  approve any plan or proposal for liquidation or dissolution of
                  the Company;

                           (4)      any person (as such term is used in Section
                  13(d) and 14(d)(2) of the Exchange Act), other than any
                  employee benefit plan of the Company or any subsidiary of the
                  Company or any entity holding shares of capital stock of the
                  Company 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 the Company's outstanding Stock; or

                           (5)      during any period of two consecutive years,
                  individuals who at the beginning of such period shall fail to
                  constitute a majority thereof, unless the election, or the
                  nomination for election by the Company's shareholders, 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.

                  (d)      "Code" means the Internal Revenue Code of 1986, as
         amended from time to time.

                  (e)      "Committee" means the committee appointed by the
         Board to administer the Plan.

                  (f)      "Company" means Syntellect Inc., a Delaware
         corporation, or any successor as provided in Section 8.3.

                  (g)      "Disability" means a permanent and total disability,
         within the meaning of Section 22(e)(3) of the Code. To the extent
         permitted pursuant to Section 16 of the Exchange Act, Disability shall
         be determined by the Board in good faith, upon receipt of sufficient
         competent medical advice from one or more individuals, selected by the
         Board, who are qualified to give professional medical advice.

                  (h)      "Exchange Act" means the Securities Exchange Act of
         1934, as amended from time to time, or any successor provision.

                  (i)      "Fair Market Value" means the closing price for
         Shares on the relevant date, or (if there were no sales on such date)
         the closing price on the immediately preceding date on which such sales
         occurred, as reported in The Wall Street Journal or a similar
         publication selected by the Committee.

                  (j)      "Grant Date" means, for Options issued under Section
         6.1, the third business day after the date the Nonemployee Director is
         elected or appointed to the Board of Directors, and for Options issued
         under Section 6.2, June 1, 1995 and each anniversary of that date.

                  (k)      "Nonemployee Director" means any individual who is a
         member of the Board of Directors of the Company, but who is not
         otherwise an employee of the Company.

                  (l)      "Nonqualified Stock Option" or "NQSO" means an option
         to purchase Shares, granted under Article 6, that is not intended to be
         an incentive stock option qualifying under Section 422 of the Code.

                  (m)      "Option" means a Nonqualified Stock Option granted
         under the Plan.

                  (n)      "Participant" means a Nonemployee Director of the
         Company who has been granted an Award under the Plan.

                  (o)      "Shares" means the shares of the Company's common
         stock described in the Company's Certificate of Incorporation.

         2.2.     Gender and Number. Except as indicated by the context, any
masculine term also shall include the feminine, the plural shall include the
singular, and the singular shall include the plural.

         2.3.     Severability of Provisions. With respect to persons subject to
Section 16 of the Exchange Act, transactions under this Plan are intended to
comply with all applicable conditions of Rule 16b-3 or its successors under the
Exchange Act. To the extent any provision of the Plan or action by the Board
fails to so comply, it shall be deemed null and void, to the extent permitted by
law and deemed advisable by the Board, and the remaining provisions of the Plan
or actions by Board shall be construed and enforced as if the invalid provision
or action had not been included or undertaken.

         2.4.     Incorporation by Reference. In the event this Plan does not
include a provision required by Rule 16b-3 to be stated herein, such provision
(other than one relating to eligibility requirements or the price and amount of
Awards) shall be deemed automatically to be incorporated by reference herein,
insofar as Participants subject to Section 16 of the Exchange Act are concerned.



                                       2

                            ARTICLE 3 ADMINISTRATION

         3.1.     The Committee. The Plan will be administered by the Committee,
subject to the restrictions set forth in the Plan.

         3.2.     Administration by the Committee. The Committee has the full
power, discretion, and authority to interpret and administer the Plan in a
manner that is consistent with the Plan's provisions. However, the Committee
does not have the power to (i) determine Plan eligibility, or to determine the
number, the price, the vesting period, or the timing of Awards to be made under
the Plan to any individual Participant or (ii) take any action that would result
in the Awards not being treated as "formula awards" within the meaning of Rule
16b3(c)(ii) or any successor provision, promulgated pursuant to the Exchange
Act.

         3.3.     Decisions Binding. The Committee's determinations and
decisions under the Plan, and all related orders or resolutions of the Board
shall be final, conclusive, and binding on all persons, including the Company,
its stockholders, employees, Participants, and their estates and beneficiaries.


                      ARTICLE 4 SHARES SUBJECT TO THE PLAN

         4.1.     Number of Shares. The total number of Shares available for
grant under the Plan may not exceed 150,000, subject to adjustment as provided
in Section 4.3. The Shares issued pursuant to the exercise of Options granted
under the Plan may be authorized and unissued Shares or Shares reacquired by the
Company, as determined by the Committee.

         4.2.     Lapsed Awards. If any Option granted under the Plan
terminates, expires, or lapses for any reason, any Shares subject to purchase
pursuant to such Option again will be available for grant under the Plan.

         4.3.     Adjustments in Authorized Shares. In the event of any merger,
reorganization, consolidation, recapitalization, separation, liquidation, stock
dividend, split-up, Share combination, or other change in the corporate
structure of the Company affecting the Shares, the number and/or type of Shares
subject to any outstanding Award, and the Option exercise price per Share under
any outstanding Option will be automatically adjusted so that the proportionate
interests of the Participants will be maintained as before the occurrence of
such event.

                     ARTICLE 5 ELIGIBILITY AND PARTICIPATION

         5.1.     Eligibility. Eligibility to participate in the Plan is limited
to Nonemployee Directors.

         5.2.     Actual Participation. All eligible Nonemployee Directors will
receive a grant of Options pursuant to Article 6.


                           ARTICLE 6 GRANT OF OPTIONS

         6.1.     One-Time Grant of Options. An Option to purchase 10,000 Shares
shall be granted to each Nonemployee Director on the third business day after
the date the Nonemployee Director is first elected or appointed to the Board of
Directors. The specific terms of the Options are subject to the provisions of
this Article 6 and the Award Agreement executed pursuant to Section 6.3.

         6.2.     Annual Grant of Options. Each individual who is a Nonemployee
Director on the relevant Grant Date and who has not received an Option pursuant
to Section 6.1 within ninety (90) days prior to the relevant Grant Date will be
granted an Option to purchase 5,000 Shares, subject to the limitations on the
number of Shares that may be awarded under the Plan. The specific terms of the
Options are subject to the provisions of this Article 6 and the Award Agreement
executed pursuant to Section 6.3.

         6.3.     Award Agreement. The grant of Options will be evidenced by an
Award Agreement that will not include any terms or conditions that are
inconsistent with the terms and conditions of this Plan.

         6.4.     Option Exercise Price Per Share. The Option exercise price per
Share under any Option granted pursuant to this Article 6 shall be the Fair
Market Value of such Share on the Grant Date (the "Exercise Price").



                                       3

         6.5.     Duration of Options. Each Option granted to a Participant
under this Article 6 shall expire on the tenth (10th) anniversary date of the
Grant Date, unless the Option is earlier terminated, forfeited, or surrendered
pursuant to a provision of this Plan.

         6.6.     Vesting of Options Subject to Exercise. Subject to Section
1.3, the Options granted to the Participants under this Article 6 shall vest and
become subject to exercise in accordance with the following schedule:

         No part of (i) an Option granted under Section 6.1, or (ii) each annual
         Option granted under Section 6.2 may be exercised until the first
         anniversary of the Grant Date of such Option, at which time 100% of the
         Shares subject to the Option shall vest and may be acquired upon
         exercise.

         6.7.     Exercise of Disposition of Options. Participants shall be
entitled to exercise any Option that has vested at any time within the period
beginning with the Grant Date and ending ten (10) years after the Grant Date;
provided, however, that the disposition by a Participant of any Shares acquired
pursuant to the exercise of an Option shall occur only after the end of the six
(6) month period beginning on the date that Company's shareholders approve the
Plan.

         6.8.     Payment. Options are exercised by delivering a written notice
of exercise to the Secretary of the Company, setting forth the number of Options
to be exercised and accompanied by a payment equivalent to the product of the
number of Options exercised multiplied by the Exercise Price (the "Total
Exercise Price"). The Total Exercise Price is payable:

                  (a)      in cash or its equivalent;

                  (b)      by tendering previously acquired Shares having a Fair
         Market Value at the time of exercise equal to the Total Exercise Price;

                  (c)      by a combination of (a) and (b).

         As soon as practicable after receipt of a written notification of
exercise and full payment, the Company shall deliver to the Participant, in the
Participant's name, Share certificates in an appropriate amount based upon the
number of Shares purchased pursuant to the exercise of the Options.

         6.9.     Restrictions on Share Transferability. To the extent necessary
to ensure that Options granted under this Article 6 comply with applicable law,
the Board shall impose restrictions on the transferability of any Shares
acquired pursuant to the exercise of an Option under this Article 6, including,
without limitation, restrictions under applicable Federal securities laws, under
the requirements of any Stock exchange or market upon which such Shares are then
listed and/or traded, and under any blue sky or state securities laws applicable
to such Shares.

         6.10.    Termination of Services on Board of Directors Due to Death or
Disability. If a Participant's service on the Board is terminated by reason of
death or Disability, any outstanding Options held by the Participant that are
not fully vested are immediately forfeited and returned to the Company. Any
outstanding options held by the Participant that are fully vested will remain
fully vested and subject to exercise.

         To the extent an Option is fully vested and exercisable as of the date
of death or Disability, it will remain exercisable for one year after the date
of death or Disability by the Participant or such person or persons as shall
have been named as the Participant's legal representative or beneficiary, or by
such persons as shall have acquired the Participant's Options by will or by the
laws of descent and distribution. Any Option that is fully vested but not
exercised during this one-year period after death or Disability will be
immediately forfeited to the Company.

         6.11.    Termination of Service on Board of Directors for Other
Reasons. If the Participant's service on the Board is terminated for any reason
other than for death or Disability, any outstanding Options held by the
Participant that are not fully vested as of the date of termination are
immediately forfeited to the Company. To the extent an Option is fully vested
and exercisable as of such date, it will remain exercisable for ninety (90) days
after the date the Participant's service on the Board terminates. Any Option
that is fully vested but not exercised during this ninety (90) day period after
termination of service will be immediately forfeited to the Company.

         6.12.    Limitations on the Transferability of Options. No Option
granted under this Article 6 may be sold, transferred, pledged, assigned, or
otherwise alienated, other than by will, the laws of descent and distribution,
or under



                                       4

any other circumstances allowed by the Committee that would not violate the
transferability restrictions contained in Rule 16b-3(a)(2) or any successor
provision.

         6.13.    Change of Control. A Change of Control shall cause every
Option outstanding hereunder to become fully exercisable and allow each
Participant the right to exercise an Option prior to the occurrence of the event
otherwise terminating the Option.

               ARTICLE 7 AMENDMENT, MODIFICATION, AND TERMINATION

         7.1.     Amendment, Modification, and Termination. Subject to the terms
set forth in this Section 7.1, the Committee may terminate, amend, or modify the
Plan at any time; provided, however, that shareholder approval is required for
any Plan amendment that would materially increase the benefits to Participants
or the number of securities that may be issued, or materially modify the
eligibility requirements in the Plan. Further, Plan provisions relating to the
amount, price, and timing of securities to be awarded under the Plan may not be
amended more than once every six (6) months, other than to comport with changes
in the Code, the Employee Retirement Income Security Act, or the rules
thereunder.

         7.2.     Awards Previously Granted. Unless required by law, no
termination, amendment, or modification of the Plan shall in any manner
adversely affect any Award previously granted under the Plan, without the
written consent of the Participant holding the Award.


                             ARTICLE 8 MISCELLANEOUS

         8.1.     Indemnification. Each individual who is or shall have been a
member of the Board or the Committee shall be indemnified and held harmless by
the Company against and from any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by him or her in connection with or
resulting from any claim, action, suit, or proceeding to which he or she may be
a party or in which he or she may be involved by reason of any action taken or
failure to act under this Plan and against and from any and all amounts paid by
him or her in settlement thereof, with the Company's approval, or paid by him or
her in satisfaction of any judgment in any such action, suit, or proceeding
against him or her, provided he or she shall give the Company an opportunity, at
its own expense, to assume and defend the same before he or she undertakes to
defend it on his or her own behalf.

         The foregoing right if indemnification shall not be exclusive of any
other rights of indemnification to which such individuals may be entitled under
the Company's Certificate of Incorporation or By-Laws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.

         8.2.     Beneficiary Designation. Each Participant under the Plan may
name any beneficiary or beneficiaries to whom any benefit under the Plan is to
be paid in the event of his or her death. Each designation will revoke all prior
designations by the same Participant, shall be in a form prescribed by the
Committee, and will be effective only when filed by the Participant in writing
with the Committee during his or her lifetime. In the absence of any such
designation, benefits remaining unpaid at the Participant's death shall be paid
to the Participant's estate.

         8.3.     Successors. All obligations of the Company under the Plan,
with respect to Awards granted hereunder, shall be binding on any successor to
the Company, whether the existence of such successor is the result of a direct
or indirect purchase, merger, consolidation, or otherwise, of all or
substantially all of the business and/or assets of the Company.

         8.4.     Requirements of Law. The granting of Awards under the Plan
shall be subject to all applicable laws, rules, and regulations, and to such
approvals by any governmental agencies or national securities exchanges as may
be required. Notwithstanding any other provision of the Plan, the Committee may,
in its sole discretion, terminate, amend, or modify the Plan in any way
necessary to comply with the applicable requirements of Rule 16b-3 promulgated
by the Securities and Exchange Commission as interpreted pursuant to no-action
letters and interpretive releases.

         8.5.     Governing Law. To the extent not preempted by Federal law, the
Plan, and all agreements hereunder, shall be construed in accordance with and
governed by the laws of the State of Arizona.


                                       5

EX-10.VII.A

EXHIBIT (10)(VII)(A)

                            INDEMNIFICATION AGREEMENT

         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 Michael R. Bruce (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 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.

                  (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.



                                       2

                  (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 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



                                       3

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 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 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



                                       4

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.

                  (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.



                                       5

         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 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:                            with a copy given in the manner
                                                       prescribed, to:
         Syntellect Inc.
         Suite 100                                     Rogers & Theobald LLP
         16610 North Black Canyon Highway              2425 E. Camelback Road, Suite 300
         Phoenix, Arizona  85053                       Phoenix, Arizona  85016
         Attention: Anthony V. Carollo Jr.,            Attention:  Robert K. Rogers, Esq.
           President                                   Tel: (602) 852-5540
         Tel: (602) 789-2770                           Fax: (602) 852-5570
         Fax: (602) 789-2768                           e-mail: rkr@rogerstheobald.com
         e-mail: tcarollo@syntellect.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



                                       6

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 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.

                  (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]








                                       7

         IN WITNESS WHEREOF, the parties hereto have executed this
Indemnification Agreement as of the Effective Date.

                               COMPANY:

                               SYNTELLECT INC.

                               By:  /S/ Anthony V. Carollo
                                    --------------------------------------------
                               Name:  Anthony V. Carollo
                                      ------------------------------------------
                               Title:  President and Chief Executive Officer
                                       -----------------------------------------

                               INDEMNITEE:

                               /S/ Michael R. Bruce
                               --------------------
                               Michael R. Bruce

                               Address:
                                       -----------------------------------------

                                       -----------------------------------------

                               Facsimile No.:
                                             -----------------------------------


                                       8

EX-10.VII.B

EXHIBIT (10)(VII)(B)

                            INDEMNIFICATION AGREEMENT

         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 Anthony V. Carollo, Jr. (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.

                  (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.



                                       2

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 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



                                       3

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 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 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



                                       4

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.

                  (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.



                                       5

         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 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:                          with a copy given in the manner
                                                     prescribed, to:
         Syntellect Inc.
         Suite 100                                   Rogers & Theobald LLP
         16610 North Black Canyon Highway            2425 E. Camelback Road, Suite 300
         Phoenix, Arizona  85053                     Phoenix, Arizona  85016
         Attention: Anthony V. Carollo Jr.,          Attention:  Robert K. Rogers, Esq.
           President                                 Tel: (602) 852-5540
         Tel: (602) 789-2770                         Fax: (602) 852-5570
         Fax: (602) 789-2768                         e-mail: rkr@rogerstheobald.com
         e-mail: tcarollo@syntellect.com




(2)      If to Indemnitee, at the address set forth below Indemnittee's name on
the signature page of this Agreement.



                                       6

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 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.

                  (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]








                                       7

IN WITNESS WHEREOF, the parties hereto have executed this Indemnification
Agreement as of the Effective Date.

                            COMPANY:

                            SYNTELLECT INC.

                            By:  /S/  Timothy P. Vatuone
                                 -----------------------------------------------
                            Name:  Timothy P. Vatuone
                                   ---------------------------------------------
                            Title:  Vice President and Chief Financial Officer
                                    --------------------------------------------


                            INDEMNITEE:

                            /S/ Anthony V. Carollo, Jr.
                            ---------------------------
                            Anthony V. Carollo, Jr.
                            Address:
                                    --------------------------------------------

                                    --------------------------------------------
                            Facsimile No.:
                                          --------------------------------------



                                       8

EX-10.VII.C

EXHIBIT (10)(VII)(C)

                            INDEMNIFICATION AGREEMENT

         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 Steven W. Dodenhoff (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 an 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.

                  (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.



                                       2


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 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



                                       3


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 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 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



                                       4


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.

                  (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.



                                       5


         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 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:                            with a copy given in the manner
                                                       prescribed, to:
         Syntellect Inc.
         Suite 100                                     Rogers & Theobald LLP
         16610 North Black Canyon Highway              2425 E. Camelback Road, Suite 300
         Phoenix, Arizona  85053                       Phoenix, Arizona  85016
         Attention: Anthony V. Carollo Jr.,            Attention:  Robert K. Rogers, Esq.
           President                                   Tel: (602) 852-5540
         Tel: (602) 789-2770                           Fax: (602) 852-5570
         Fax: (602) 789-2768                           e-mail: rkr@rogerstheobald.com
         e-mail: tcarollo@syntellect.com




(2)      If to Indemnitee, at the address set forth below Indemnittee's name on
the signature page of this Agreement.



                                       6


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 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.

                  (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]








                                       7



IN WITNESS WHEREOF, the parties hereto have executed this Indemnification
Agreement as of the Effective Date.

                                 COMPANY:

                                 SYNTELLECT INC.

                                 By:  /S/ Anthony V. Carollo
                                      ------------------------------------------
                                 Name:  Anthony V. Carollo
                                        ----------------------------------------
                                 Title:  President and Chief Executive Officer
                                         ---------------------------------------



                                 INDEMNITEE:

                                 /S/ Steven W. Dodenhoff
                                 -----------------------------------------------
                                 Steven W. Dodenhoff

                                 Address:
                                         ---------------------------------------

                                         ---------------------------------------
                                 Facsimile No.:
                                               ---------------------------------


                                       8

EX-10.VII.D

EXHIBIT (10)(VII)(D)

                            INDEMNIFICATION AGREEMENT

      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 Roy A. Herberger, Jr. (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 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.

            (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.


                                       2

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 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


                                       3

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 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 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


                                       4

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.

            (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.


                                       5

      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 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:                     with a copy given in the manner
                                              prescribed, to:
       Syntellect Inc.
       Suite 100                              Rogers & Theobald LLP
       16610 North Black Canyon Highway       2425 E. Camelback Road, Suite 300
       Phoenix, Arizona  85053                Phoenix, Arizona  85016
       Attention: Anthony V. Carollo Jr.,     Attention:  Robert K. Rogers, Esq.
         President                            Tel: (602) 852-5540
       Tel: (602) 789-2770                    Fax: (602) 852-5570
       Fax: (602) 789-2768                    e-mail: rkr@rogerstheobald.com
       e-mail: tcarollo@syntellect.com


(2) If to Indemnitee, at the address set forth below Indemnittee's name on the
signature page of this Agreement.


                                       6

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 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.

            (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]


                                       7

IN WITNESS WHEREOF, the parties hereto have executed this Indemnification
Agreement as of the Effective Date.

                                 COMPANY:

                                 SYNTELLECT INC.


                                 By:  /S/ Anthony V. Carollo
                                      ------------------------------------------
                                 Name:  Anthony V. Carollo
                                        ----------------------------------------
                                 Title:  President and Chief Executive Officer
                                         ---------------------------------------

                                 INDEMNITEE:


                                 /S/ Roy A. Herberger, Jr.
                                 -------------------------
                                 Roy A. Herberger, Jr.
                                 Address:
                                         ---------------------------------------

                                 -----------------------------------------------

                                 Facsimile No.: --------------------------------


                                       8

EX-10.VII.E

EXHIBIT (10)(VII)(E)

                            INDEMNIFICATION AGREEMENT

      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 Camille Jayne (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 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.

            (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.


                                       2

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 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


                                       3

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 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 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


                                       4

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.

            (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.


                                       5

      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 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:                      with a copy given in the manner
                                              prescribed, to:
      Syntellect Inc.
      Suite 100                               Rogers & Theobald LLP
      16610 North Black Canyon Highway        2425 E. Camelback Road, Suite 300
      Phoenix, Arizona  85053                 Phoenix, Arizona  85016
      Attention: Anthony V. Carollo Jr.,      Attention:  Robert K. Rogers, Esq.
        President                             Tel: (602) 852-5540
      Tel: (602) 789-2770                     Fax: (602) 852-5570
      Fax: (602) 789-2768                     e-mail: rkr@rogerstheobald.com
      e-mail: tcarollo@syntellect.com


(2) If to Indemnitee, at the address set forth below Indemnittee's name on the
signature page of this Agreement.


                                       6

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 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.

            (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]


                                       7

      IN WITNESS WHEREOF, the parties hereto have executed this Indemnification
Agreement as of the Effective Date.

                                   COMPANY:

                                   SYNTELLECT INC.



                                   By:  /S/ Anthony V. Carollo
                                        ----------------------------------------
                                   Name:  Anthony V. Carollo
                                          --------------------------------------
                                   Title:  President and Chief Executive Officer
                                           -------------------------------------

                                   INDEMNITEE:



                                   /S/ Camille Jayne
                                   -----------------
                                   Camille Jayne
                                   Address:
                                           -------------------------------------

                                   ---------------------------------------------
                                   Facsimile No.:
                                                 -------------------------------


                                       8

EX-10.VII.F

EXHIBIT (10)(VII)(F)

                            INDEMNIFICATION AGREEMENT

      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 Michael D. Kaufman (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 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.

            (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.


                                       2


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 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


                                       3


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 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 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


                                       4


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.

            (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.


                                       5


      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 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:                    with a copy given in the manner
                                             prescribed, to:
       Syntellect Inc.
       Suite 100                             Rogers & Theobald LLP
       16610 North Black Canyon Highway      2425 E. Camelback Road, Suite 300
       Phoenix, Arizona  85053               Phoenix, Arizona  85016
       Attention: Anthony V. Carollo Jr.,    Attention:  Robert K. Rogers, Esq.
       President                             Tel: (602) 852-5540
       Tel: (602) 789-2770                   Fax: (602) 852-5570
       Fax: (602) 789-2768                   e-mail: rkr@rogerstheobald.com
       e-mail: tcarollo@syntellect.com



(2)   If to Indemnitee, at the address set forth below Indemnittee's name on the
signature page of this Agreement.


                                       6


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 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.

            (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]


                                       7


      IN WITNESS WHEREOF, the parties hereto have executed this Indemnification
Agreement as of the Effective Date.

                                    COMPANY:

                                   SYNTELLECT INC.

                                   By:  /S/ Anthony V. Carollo
                                         ---------------------------------------
                                   Name:  Anthony V. Carollo
                                           -------------------------------------
                                   Title:  President and Chief Executive Officer
                                           ------------------------------------



                                   INDEMNITEE:

                                   /S/ Michael D. Kaufman

                                   Michael D. Kaufman

                                   Address:
                                           ------------------------------------

                                   --------------------------------------------
                                   Facsimile No.:
                                                 ------------------------------


                                       8

EX-10.VII.G

EXHIBIT (10)(VII)(G)

                            INDEMNIFICATION AGREEMENT

      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 Kent C. Mueller (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 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.

            (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.


                                       2

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 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


                                       3

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 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 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


                                       4

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.

            (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.


                                       5

      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 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:                      with a copy given in the manner
                                              prescribed, to:
      Syntellect Inc.
      Suite 100                               Rogers & Theobald LLP
      16610 North Black Canyon Highway        2425 E. Camelback Road, Suite 300
      Phoenix, Arizona  85053                 Phoenix, Arizona  85016
      Attention: Anthony V. Carollo Jr.,      Attention:  Robert K. Rogers, Esq.
      President                               Tel: (602) 852-5540
      Tel: (602) 789-2770                     Fax: (602) 852-5570
      Fax: (602) 789-2768                     e-mail: rkr@rogerstheobald.com
      e-mail: tcarollo@syntellect.com



(2)   If to Indemnitee, at the address set forth below Indemnittee's name on the
signature page of this Agreement.


                                       6

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 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.

            (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]


                                       7

IN WITNESS WHEREOF, the parties hereto have executed this Indemnification
Agreement as of the Effective Date.

                                 COMPANY:

                                 SYNTELLECT INC.

                                 By:  /S/ Anthony V. Carollo
                                      ------------------------------------------
                                 Name:  Anthony V. Carollo
                                        ----------------------------------------
                                 Title:  President and Chief Executive Officer
                                         ---------------------------------------



                                 INDEMNITEE:

                                 /S/ Kent C. Mueller

                                 Kent C. Mueller

                                 Address:
                                         ---------------------------------------

                                 -----------------------------------------------
                                 Facsimile No.:
                                               ---------------------------------


                                       8

EX-10.VII.H

EXHIBIT (10)(VII)(H)

                            INDEMNIFICATION AGREEMENT

      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 Charles F. Sonneborn, III (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 an
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.

            (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.


                                       2


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 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


                                       3


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 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 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


                                       4


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.

            (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.


                                       5


      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 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:                      with a copy given in the manner
                                              prescribed, to:
      Syntellect Inc.
      Suite 100                               Rogers & Theobald LLP
      16610 North Black Canyon Highway        2425 E. Camelback Road, Suite 300
      Phoenix, Arizona  85053                 Phoenix, Arizona  85016
      Attention: Anthony V. Carollo Jr.,      Attention:  Robert K. Rogers, Esq.
      President                               Tel: (602) 852-5540
      Tel: (602) 789-2770                     Fax: (602) 852-5570
      Fax: (602) 789-2768                     e-mail: rkr@rogerstheobald.com
      e-mail: tcarollo@syntellect.com



(2)   If to Indemnitee, at the address set forth below Indemnittee's name on the
signature page of this Agreement.


                                       6


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 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.

            (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]


                                       7



IN WITNESS WHEREOF, the parties hereto have executed this Indemnification
Agreement as of the Effective Date.

                                  COMPANY:

                                  SYNTELLECT INC.

                                  By:  /S/ Anthony V. Carollo
                                       -----------------------------------------
                                  Name:  Anthony V. Carollo
                                         ---------------------------------------
                                  Title:  President and Chief Executive Officer
                                          --------------------------------------



                                  INDEMNITEE:

                                  /S/ Charles F. Sonneborn, III
                                  -----------------------------
                                  Charles F. Sonneborn, III
                                  Address:
                                          --------------------------------------

                                  ----------------------------------------------
                                  Facsimile No.:
                                                --------------------------------


                                       8

EX-10.VII.I

EXHIBIT (10)(vii)(i)

                            INDEMNIFICATION AGREEMENT

      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 Timothy P. Vatuone (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 an
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.

            (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.


                                       2

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 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


                                       3

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 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 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


                                       4

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.

            (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.


                                       5

      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 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:                      with a copy given in the manner
                                              prescribed, to:
      Syntellect Inc.
      Suite 100                               Rogers & Theobald LLP
      16610 North Black Canyon Highway        2425 E. Camelback Road, Suite 300
      Phoenix, Arizona  85053                 Phoenix, Arizona  85016
      Attention: Anthony V. Carollo Jr.,      Attention:  Robert K. Rogers, Esq.
        President                             Tel: (602) 852-5540
      Tel: (602) 789-2770                     Fax: (602) 852-5570
      Fax: (602) 789-2768                     e-mail: rkr@rogerstheobald.com
      e-mail: tcarollo@syntellect.com

(2)   If to Indemnitee, at the address set forth below Indemnittee's name on the
      signature page of this Agreement.


                                       6

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 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.

            (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]


                                       7

      IN WITNESS WHEREOF, the parties hereto have executed this Indemnification
Agreement as of the Effective Date.

                                  COMPANY:

                                  SYNTELLECT INC.


                                  By:  /S/ Anthony V. Carollo
                                       -----------------------------------------
                                  Name:  Anthony V. Carollo
                                         ---------------------------------------
                                  Title: President and Chief Executive Officer
                                         ---------------------------------------



                                  INDEMNITEE:


                                  /S/ Timothy P. Vatuone
                                  ----------------------
                                  Timothy P. Vatuone

                                  Address:
                                          --------------------------------------

                                  ----------------------------------------------

                                  Facsimile No.:
                                                --------------------------------

EX-10.X.B

EXHIBIT (10)(x)(b)

              ACCOUNTS RECEIVABLE FINANCING MODIFICATION AGREEMENT

      This Accounts Receivable Financing Modification Agreement is entered into
as of November 7, 2002, by and between Syntellect Inc. (the "Borrower") and
Silicon Valley Bank ("Bank").

1.    DESCRIPTION OF EXISTING INDEBTEDNESS: Among other indebtedness which may
be owing by Borrower to Bank, Borrower is indebted to Bank pursuant to, among
other documents, an Accounts Receivable Financing Agreement, dated May 14, 2002
by and between Borrower and Bank, as may be amended from time to time (the
"Accounts Receivable Financing Agreement"). Capitalized terms used without
definition herein shall have the meanings assigned to them in the Accounts
Receivable Financing Agreement.

Hereinafter, all indebtedness owing by Borrower to Bank shall be referred to as
the "Indebtedness" and the Accounts Receivable Financing Agreement and any and
all other documents executed by Borrower in favor of Bank shall be referred to
as the "Existing Documents."

2.    DESCRIPTION OF CHANGE IN TERMS.

      A.    Modification(s) to Accounts Receivable Financing Agreement:

            1.    Pursuant to Section 3.5 entitled "Collateral Handling Fee",
                  the Collateral Handling Fee shall continue to be 0.75%. The
                  Collateral Handling Fee shall revert to 0.25% upon the later
                  of either (a) February 1, 2003 or (b) one month following the
                  quarter ending in which Borrower is in compliance with Section
                  6.2(L) and no other Event of Default has occurred and is
                  continuing.

            2.    Item "(L)" under Section 6.2 entitled "Affirmative Covenants"
                  is hereby amended in part to require Borrower's consolidated
                  earnings before interest expense, income taxes, depreciation,
                  amortization of intangible assets and other non-cash charges
                  made to Borrowers' income to not be less than $1 for the
                  fiscal quarter ended September 30, 2002.

      B.    Waiver of Financial Covenant Default:

            1.    Bank hereby waives Borrower's existing default under the
                  Accounts Receivable Financing Agreement by virtue of
                  Borrower's failure to comply with the financial covenant
                  stated in Item "(L)" under Section 6.2 entitled "Affirmative
                  Covenants" as of fiscal quarter ended June 30, 2002. Bank's
                  waiver of Borrower's compliance of this covenant shall apply
                  only to the foregoing period. Accordingly, for the quarter
                  ended September 1, 2002, Borrower shall be in compliance with
                  this covenant, as amended herein.

                  Bank's agreement to waive the above-described default (1) in
                  no way shall be deemed an agreement by the Bank to waive
                  Borrower's compliance with the above-described covenant as of
                  all other dates and (2) shall not limit or impair the Bank's
                  right to demand strict performance of this covenant as of all
                  other dates and (3) shall not limit or impair the Bank's right
                  to demand strict performance of all other covenants as of any
                  date.

3.    CONSISTENT CHANGES. The Existing Documents are each hereby amended
wherever necessary to reflect the changes described above.

4.    NO DEFENSES OF BORROWER. Borrower agrees that, as of this date, it has no
defenses against the obligations to pay any amounts under the Indebtedness.


                                       1

5.    CONTINUING VALIDITY. Borrower understands and agrees that in modifying the
existing Indebtedness, Bank is relying upon Borrower's representations,
warranties, and agreements, as set forth in the Existing Documents. Except as
expressly modified pursuant to this Accounts Receivable Financing Modification
Agreement, the terms of the Existing Documents remain unchanged and in full
force and effect. Bank's agreement to modifications to the existing Indebtedness
pursuant to this Accounts Receivable Financing Modification Agreement in no way
shall obligate Bank to make any future modifications to the Indebtedness.
Nothing in this Accounts Receivable Financing Modification Agreement shall
constitute a satisfaction of the Indebtedness. It is the intention of Bank and
Borrower to retain as liable parties all makers and endorsers of Existing
Documents, unless the party is expressly released by Bank in writing. No maker,
endorser, or guarantor will be released by virtue of this Accounts Receivable
Financing Modification Agreement. The terms of this paragraph apply not only to
this Accounts Receivable Financing Modification Agreement, but also to any
subsequent Accounts Receivable Financing modification agreements.

6.    COUNTERSIGNATURE. This Accounts Receivable Financing Modification
Agreement shall become effective only when executed by Borrower and Bank.

This Accounts Receivable Financing Modification Agreement is executed as of the
date first written above.



BORROWER:                                       BANK:

SYNTELLECT INC.                                 SILICON VALLEY BANK

By: /S/ Timothy P. Vatuone                      By: /S/ William D. Nay, Jr.
    ------------------------------------            ----------------------------
Name:   Timothy P. Vatuone                      Name:   William D. Nay, Jr.
     -----------------------------------             ---------------------------
Title:  V.P. and Chief Executive Officer        Title:  Vice President
      ----------------------------------              --------------------------


                                       2

EX-10.XII.A

EXHIBIT (10)(xii)(a)

                                    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 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


                                       2

      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: _________________________

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


                                       3

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 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
                                    --------------------------------------------
                                Its  Vice President and Chief Financial Officer
                                    --------------------------------------------



                                Employee:



                                /S/ Anthony V. Carollo, Jr.
                                ---------------------------
                                Anthony V. Carollo, Jr.


                                       4

EX-10.XII.B

EXHIBIT (10)(xii)(b)

                                    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 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


                                        2

      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         prescribed above, to:
      its 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: _________________________

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


                                       3

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 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/ Anthony V. Carollo
                                        ----------------------------------------
                                   Its  President and Chief Executive Officer
                                        ----------------------------------------

                                   Employee:



                                   /S/ Steven W. Dodenhoff
                                   -----------------------
                                   Steven W. Dodenhoff


                                       4

EX-10.XII.C

EXHIBIT (10)(xii)(c)

                                    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 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


                                       2

    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:__________________________

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


                                       3

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 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/ Anthony V. Carollo
                                        ---------------------------------------
                                     Its President and Chief Executive Officer
                                         --------------------------------------




                                     Employee:



                                     /S/ Charles F. Sonneborn, III
                                     -----------------------------
                                     Charles F. Sonneborn, III


                                       4

EX-10.XII.D

EXHIBIT (10)(xii)(d)


                                    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 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


                                       2

    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:__________________________

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


                                       3

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 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/ Anthony V. Carollo
                                         --------------------------------------
                                      Its President and Chief Executive Officer
                                          -------------------------------------




                                      Employee:




                                      /S/ Peter Trompetter
                                      --------------------
                                      Peter Trompetter


                                       4

EX-10.XII.E

EXHIBIT (10)(xii)(e)

                                    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 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


                                       2

    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:__________________________

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


                                       3

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 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/ Anthony V. Carollo
                                         --------------------------------------
                                      Its President and Chief Executive Officer
                                          -------------------------------------



                                      Employee:



                                        /S/ Timothy P. Vatuone
                                        ----------------------
                                        Timothy P. Vatuone



                                       4

EX-99.A

EXHIBIT (99)(a)

              CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Quarterly Report of Syntellect Inc. (the "Company")
on Form 10-Q for the quarter ended September 30, 2002 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, Anthony
V. Carollo, Jr., Chief Executive Officer, certify, pursuant to 18 U.S.C.Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
that:

          (1)  The Report fully complies with the requirements of section 13(a)
               or 15(d) of the Securities Exchange Act of 1934; and

          (2)  The information contained in the Report fairly presents, in all
               material respects, the financial condition and results of
               operations of the Company.


/s/  Anthony V. Carollo, Jr.
- ------------------------------------
Chief Executive Officer
Syntellect Inc.
November 13,  2002

EX-99.B

EXHIBIT (99)(b)

              CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Quarterly Report of Syntellect Inc. (the "Company")
on Form 10-Q for the quarter ended September 30, 2002 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, Timothy
P. Vatuone, Chief Financial Officer, certify, pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
that:

          (1)  The Report fully complies with the requirements of section 13(a)
               or 15(d) of the Securities Exchange Act of 1934; and

          (2)  The information contained in the Report fairly presents, in all
               material respects, the financial condition and results of
               operations of the Company.




/s/  Timothy P. Vatuone
- ------------------------------
Chief Financial Officer
Syntellect Inc.
November 13, 2002

EX-99.C

EXHIBIT (99)(c)

                    CERTIFICATION OF CHIEF EXECUTIVE OFFICER

     In connection with the Quarterly Report of Syntellect Inc. (the
"Syntellect") on Form 10-Q for the quarter ended September 30, 2002 as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
I, Anthony V. Carollo, Jr., Chief Executive Officer, certify that:

     (1)  I have reviewed this quarterly report on Form 10-Q of Syntellect;

     (2)  Based on my knowledge, this quarterly report does not contain any
          untrue statement of a material fact or omit to state a material fact
          necessary to make the statements made, in light of the circumstances
          under which such statements were made, not misleading with respect to
          the period covered by this quarterly report;

     (3)  Based on my knowledge, the financial statements, and other financial
          information included in this quarterly report, fairly present in all
          material respects the financial condition, results of operations, and
          cash flows of Syntellect as of, and for, the periods presented in this
          quarterly report;

     (4)  Syntellect's other certifying officers and I are responsible for
          establishing and maintaining disclosure controls and procedures (as
          defined in the Exchange Act Rules 13a-14 and 15d-14) for Syntellect
          and we have:

          i.   designed such disclosure controls and procedures to ensure that
               material information relating to Syntellect, including its
               consolidated subsidiaries, is made known to us by others within
               those entities, particularly during the period in which this
               quarterly report is being prepared;

          ii.  evaluated the effectiveness of Syntellect's disclosure controls
               and procedures as of a date within 90 days prior to the filing
               date of this quarterly report (the "Evaluation Date"); and

          iii. presented in this quarterly report our conclusions about the
               effectiveness of the disclosure controls and procedures based on
               our evaluation as of the Evaluation Date;

     (5)  Syntellect's other certifying officers and I have disclosed, based on
          our most recent evaluation, to Syntellect's auditors and the audit
          committee of the board of directors:

          i.   All significant deficiencies in the design or operation of
               internal controls which could adversely affect Syntellect's
               ability to record, process, summarize and report financial data
               and have identified for Syntellect's auditors any material
               weaknesses in internal controls; and

          ii.  Any fraud, whether or not material, that involves management or
               other employees who have a significant role in Syntellect's
               internal controls; and

     (6)  Syntellect's other certifying officers and I have indicated in this
          quarterly report whether or not there were significant changes in
          internal controls or in other factors that could significantly affect
          internal controls subsequent to the date of our most recent
          evaluation, including any corrective actions with regard to
          significant deficiencies and material weaknesses.



/s/  Anthony V. Carollo, Jr.
- ------------------------------------
Chief Executive Officer
Syntellect Inc.
November 13, 2002

EX-99.D

EXHIBIT (99)(d)


                    CERTIFICATION OF CHIEF FINANCIAL OFFICER

      In connection with the Quarterly Report of Syntellect Inc. (the
"Syntellect") on Form 10-Q for the quarter ended September 30, 2002 as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
I, Timothy P. Vatuone, Chief Financial Officer, certify that:

     (1)  I have reviewed this quarterly report on Form 10-Q of Syntellect;

     (2)  Based on my knowledge, this quarterly report does not contain any
          untrue statement of a material fact or omit to state a material fact
          necessary to make the statements made, in light of the circumstances
          under which such statements were made, not misleading with respect to
          the period covered by this quarterly report;

     (3)  Based on my knowledge, the financial statements, and other financial
          information included in this quarterly report, fairly present in all
          material respects the financial condition, results of operations, and
          cash flows of Syntellect as of, and for, the periods presented in this
          quarterly report;

     (4)  Syntellect's other certifying officers and I are responsible for
          establishing and maintaining disclosure controls and procedures (as
          defined in the Exchange Act Rules 13a-14 and 15d-14) for Syntellect
          and we have:

          i.   designed such disclosure controls and procedures to ensure that
               material information relating to Syntellect, including its
               consolidated subsidiaries, is made known to us by others within
               those entities, particularly during the period in which this
               quarterly report is being prepared;

          ii.  evaluated the effectiveness of Syntellect's disclosure controls
               and procedures as of a date within 90 days prior to the filing
               date of this quarterly report (the "Evaluation Date"); and

          iii. presented in this quarterly report our conclusions about the
               effectiveness of the disclosure controls and procedures based on
               our evaluation as of the Evaluation Date;

     (5)  Syntellect's other certifying officers and I have disclosed, based on
          our most recent evaluation, to Syntellect's auditors and the audit
          committee of the board of directors:

          i.   All significant deficiencies in the design or operation of
               internal controls which could adversely affect Syntellect's
               ability to record, process, summarize and report financial data
               and have identified for Syntellect's auditors any material
               weaknesses in internal controls; and

          ii.  Any fraud, whether or not material, that involves management or
               other employees who have a significant role in Syntellect's
               internal controls; and

     (6)  Syntellect's other certifying officers and I have indicated in this
          quarterly report whether or not there were significant changes in
          internal controls or in other factors that could significantly affect
          internal controls subsequent to the date of our most recent
          evaluation, including any corrective actions with regard to
          significant deficiencies and material weaknesses.



/s/  Timothy P. Vatuone
- ------------------------------
Chief Financial Officer
Syntellect Inc.
November 13, 2002