SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934
(Amendment No. )
Filed by Registrant x
Filed by a Party other than the Registrant []
Check the appropriate box:
[x] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e) (2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
INTERPHASE CORPORATION
(Name of Registrant as Specified In Its Charter)
___________________________________________________________________________
(Name of Person(s) Filing Proxy Statement, If Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
______________________________________________________________
(2) Aggregate numer of securities to which transactions applies:
______________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
______________________________________________________________
(4) Proposed maximum aggregate value of transaction:
______________________________________________________________
(5) Total Fee Paid
______________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
______________________________________________________________
(2) Form, Schedule or Registration Statement No:
______________________________________________________________
(3) Filing Party:
(4) Date Filed:
______________________________________________________________
<PAGE>
[INTERPHASE COMPANY LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 3, 2000
To the Holders of Common Stock of
Interphase Corporation:
NOTICE IS HEREBY GIVEN that the annual meeting of shareholders of
Interphase Corporation, a Texas corporation (the "Company"), will be
held on May 3, 2000 at 10:00 a.m. local time at the Renaissance Hotel
at 4099 Valley View Lane, Dallas, Texas, for the following purposes:
(a) to elect six directors of the Company to serve until the next
annual meeting of shareholders or until their respective
successors shall be elected and qualified;
(b) to ratify and approve an amendment to the Company's Amended
and Restated Stock Option Plan to increase the aggregate
number of shares issuable upon exercise of options thereunder
from 2,350,000 to 3,500,000;
(c) to ratify and approve an amendment to the Company's
Amended and Restated Director Stock Option plan to increase
the aggregate number of shares issuable upon exercise of
options thereunder from 500,000 to 750,000, and to provide
that each annual grant is increased from 5,000 to 10,000, and
to provide that new director grants be increased from 10,000
to 20,000, and to provide that the option term is increased
from five to ten years.
(d) to ratify and approve an amendment to the Company's Articles
of Incorporation to change the par value of the company's
Common Stock from no par value to a par value of $.10 per
share; and
(e) to transact such other business as may properly come before
the meeting or any adjournment thereof.
It is desirable that as large a proportion as possible of the
shareholders' interests be represented at the meeting. Whether or not
you plan to be present at the meeting, you are requested to sign the
enclosed proxy and return it promptly in the enclosed envelope.
By order of the Board of Directors
S. Thomas Thawley
Secretary
Dallas, Texas
March 30, 2000
<PAGE>
Interphase Corporation
13800 Senlac
Dallas, Texas 75234
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
To be Held May 3, 2000
This Proxy Statement is furnished to shareholders of Interphase
Corporation, a Texas corporation (the "Company"), in connection with
the solicitation of proxies by the Board of Directors of the Company
for use at the annual meeting of shareholders to be held on May 3,
2000. Proxies in the form enclosed will be voted at the meeting, or if
properly executed, returned to the Company prior to the meeting and not
revoked. The proxy may be revoked at any time before it is voted by
giving written notice to the Secretary of the Company. This proxy
statement is first being mailed to shareholders on or about March 30,
2000.
PERSONS MAKING THE SOLICITATION
The accompanying proxy is being solicited by the Board of
Directors of the Company. The cost of soliciting the proxies and the
Annual Meeting will be borne entirely be the Company. In addition to
the use of the mails, proxies may be solicited by personal interview,
telephone and telegram by directors and officers and employees of the
Company. Arrangements may also be made with brokerage houses and other
custodians, nominees, and fiduciaries to forward solicitation material
to the beneficial owners of shares of Common Stock held of record by
such persons, and the Company may reimburse them for reasonable out-of
pocket expenses they incur in connection with forwarding the
solicitation material.
OUTSTANDING CAPITAL STOCK AND RECORD DATE
The record date for shareholders entitled to notice of and to vote
at the annual meeting is March 6, 2000. At the close of business on
that date, the Company had issued, outstanding and entitled to be voted
at the meeting 5,827,409 shares of Common Stock, no par value ("Common
Stock").
<PAGE>
ACTION TO BE TAKEN AT THE MEETING
The accompanying proxy, unless the shareholder otherwise specifies
in the proxy, will be voted for the election as directors of the
Company of the six persons named under the caption "Election of
Directors," ratify and approve an amendment to the Company's Amended
and Restated Stock Option Plan, ratify and approve an amendment to the
Company's Amended and Restated Director Stock Option Plan, to ratify
and approve an amendment to the Company's Articles of Incorporations,
and to transact such other business as may properly come before the
meeting.
Where shareholders have appropriately specified how their proxies
are to be voted, they will be voted accordingly. If any other matter
or business is brought before the meeting, the proxy holders may vote
the proxies at their discretion. The directors do not know of any such
other matter or business.
QUORUM AND VOTING
The presence, in person or by proxy, of the holders of a majority
of the outstanding shares of Common Stock is necessary to constitute a
quorum at the annual meeting. In deciding all questions, a holder of
Common Stock is entitled to one vote, in person or by proxy, for each
share held in his name on the record date. Abstentions will be
included in vote totals and, as such, will have the same effect on each
proposal other than the election of directors as a negative vote.
Broker non-votes, if any, will not be included in vote totals and, as
such, will have no effect on any proposal at this meeting.
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information as to the
number of shares of Common Stock of the Company beneficially owned as
of March 6, 2000 by (i) each person who is known to the Company to own
beneficially more than 5% of the outstanding Common Stock of the
Company, (ii) certain executive officers and each director of the
Company and (iii) all executive officers and directors as a group.
Each of the persons named below has sole voting and investment power
with respect to the shares of Common Stock beneficially owned by him or
it unless otherwise indicated.
<TABLE>
Name and address of Amount and Nature of Percent of
Beneficial Owner (1) Beneficial Ownership Class
-------------------- -------------------- -----
<S> <C> <C>
Gregory B. Kalush 443,665 (2) (3) 7.6%
S. Thomas Thawley 263,625 (2) 4.5%
R. Stephen Polley 40,000 (2) 0.7%
David H. Segrest 37,000 (2) 0.6%
Paul N. Hug 32,000 (2) 0.6%
James F. Halpin 32,000 (2) 0.6%
William Voss 21,000 (2) 0.4%
All executive officers and 869,290 (4) 15.0%
directors as a group (8 persons)
Motorola Inc. 406,665 (5) 7.0%
1303 E. Algonquin Road
Schaumburg, IL 60196
Wellington Management 360,500 6.2%
75 State Street
Boston, MA 02109
(1) The address for these people is Interphase Corporation, 13800
Senlac, Dallas, TX 75234.
(2) Includes options to purchase Common Stock with exercise prices
ranging from $4.38-$16.88 per share (fair market value on the
respective dates of grant) as follows: Mr. Polley, 40,000 shares;
Mr. Hug, 32,000 shares; Mr. Segrest, 32,000 shares; Mr. Halpin,
30,000 shares; Mr. Thawley, 37,000 shares; Mr. Voss, 20,000
shares and Mr. Kalush, 37,000 shares
(3) Includes beneficial ownership of shares due to voting rights on
shares held by Motorola (406,665 shares).
(4) Includes 228,000 shares that may be acquired upon exercise of
stock options.
(5) Pursuant to a stock repurchase agreement with Motorola, Inc. the
Company will purchase all the shares owned by Motorola ratably
from October 1998 to July 2002 at $6.25 per share.
</TABLE>
<PAGE>
ELECTION OF DIRECTORS
Six directors are to be elected at the meeting. To be elected a
director, each nominee must receive a plurality of all of the votes
cast at the meeting for the election of directors. Should any nominee
become unable or unwilling to accept nomination or election, the proxy
holders may vote the proxies for the election in his stead of any other
person the Board of Directors may recommend. Each nominee has
expressed his intention to serve the entire term for which election is
sought.
A brief description of each nominee for director of the Company is
provided below. Directors hold office until the next annual meeting of
the shareholders or until their successors are elected and qualified.
Gregory B. Kalush, 43, was appointed the Chief Executive Officer,
President and Director of the Company in March 1999, he joined the
Company in February 1998, as Chief Financial Officer, Vice President of
Finance and Treasurer. Mr. Kalush is also the sole member of the New
Employee Stock Option Committee of the Board of Directors. Prior to
joining Interphase Mr. Kalush was with DSC Communications Corporation
from 1995 to 1997. While at DSC he served as Vice President
Transmission Data Services, Vice President of Operations, International
Access Products and Group Vice President of Finance, Transport Systems
Group. Prior to DSC, Mr. Kalush was with IBM Corporation from 1978 to
1994, during that time his positions included Chief Financial Officer
and Operations Executive for the Skill Dynamics Business Unit, Director
of Finance, Planning and Administration for the southwest area, and
Division Director of Finance and Operations for the Data Systems
division.
James F. Halpin, 49, was elected a director in 1996. He is the
Chief Executive Officer of CompUSA Inc. Mr. Halpin has served as
President and a director of CompUSA since May 1993 and as Chief
Executive Officer since December 1993. Mr. Halpin also served as Chief
Operating Officer from May 1993 to January 1995. From 1990 to November
1992, Mr. Halpin was President of HomeBase, a home center warehouse
retailer. Mr. Halpin is a member of the Compensation Committee of the
Board of Directors.
Paul N. Hug, 56, was elected a director in 1983. He has been a
certified public accountant engaged in public accounting practice as
owner of Paul Hug & Co. CPA's since 1988. Mr. Hug is a member of the
Compensation Committee and the General Stock Option Committee, and is
Chairman of the Audit Committee of the Board of Directors.
David H. Segrest, 55, was elected a director in 1983. He has been
engaged in the practice of law since 1970 and has served as a partner
of Gardere & Wynne, L.L.P., and its predecessors since 1975. Gardere &
Wynne, L.L.P., has served as counsel to the Company since 1978. Mr.
Segrest is a member of the Audit Committee and the Compensation
Committee of the Board of Directors.
S. Thomas Thawley, 58, is a co-founder of the Company and has
served as Secretary and a director of the Company since its inception
in 1977.
<PAGE>
William R. Voss, 46, was appointed to the Board of Directors in
1997. Mr. Voss has served as Managing Partner of Lake Pacific Partner,
LLC since 1999. Voss served as Chief Executive Officer and President
for Natural Nutrition Group from 1995 to 1999. Previously, Mr. Voss
served as President and Chief Executive Officer of McCain Foods, Inc.,
from 1993 to 1995. Prior to 1993 he was President and Chief Operating
Officer of Pilgrim's Pride Corporation.
Committees and Meetings of the Board of Directors
The Board of Directors has established four committees, the Audit
Committee, the Compensation Committee, the General Stock Option
Committee, and the New Employee and Retention Stock Option Committee.
No nominating committee has been established. The current Audit
Committee is composed of Mr. Hug, Chairman, Mr. Segrest and Mr. Voss.
The Audit Committee met four times during (or with regard to) fiscal
1999. The Audit Committee's responsibilities are described below under
the caption "Audit Committee Chairman's Letter". The current
Compensation Committee is composed of Mr. Polley, Chairman, Mr. Hug,
Mr. Halpin and Mr. Segrest. The Compensation Committee met one time
during (or with regard to) fiscal 1999 and reviewed the executive
compensation plan of the Company in light of industry practices and
circumstances unique to the Company. The current General Stock Option
Committee is composed of Mr. Hug and Mr. Halpin. The General Stock
Option Committee has the authority, as does the full Board of
Directors, to grant stock options under the Amended and Restated Stock
Option Plan. In 1999, the New Employee and Retention Stock Option
Committee was composed of one member, Mr. Kalush. The New Employee
and Retention Stock Option Committee has the authority to grant stock
options under the Amended and Restated Stock Option Plan to newly hired
employees of the Company and, for retention purposes, to existing
employees of the Company. It is not intended that the New Employee and
Retention Stock Option Committee will grant options to officers or
directors of the Company.
The Board of Directors held six meetings during the fiscal year
ended December 31, 1999. None of the directors attended fewer than 75%
of the meetings of the Board of Directors and its committees on which
such director served.
Compensation of Directors
Cash Compensation
The Company compensates five of its independent directors, Mr.
Hug, Mr. Halpin, Mr. Segrest, Mr. Thawley and Mr. Voss, based upon
the number of meetings attended, plus an annual retainer. This amount
is reasonably estimated to be approximately $20,000 per year, per
director. The remaining independent director, Mr. Polley received an
annual retainer of $100,000. Mr. Kalush does not receive cash
compensation as a director.
Directors Stock Options
In May 1999, each incumbent director was granted an option under
the Directors Stock Option Plan for 5,000 shares of Common Stock (an
aggregate of 35,000 shares). These options have an exercise price of
$7.50 per share (fair market value on the date of grant) and will fully
vest at 5 p.m. on the day preceding the 2000 annual meeting of
shareholders. See also "Amendment to Amended and Restated Director
Stock Option Plan."
<PAGE>
Audit Committee Chairman's Letter
The Audit Committee (under this caption, the "Committee") of the
Board of Directors is currently composed of Mr. Hug, Chairman, Mr.
Segrest, and Mr. Voss.
The purpose of the Audit Committee is to assist the Board of
Directors in carrying out its responsibility to oversee the Company's
internal controls and financial reporting process. The Committee may
take whatever actions it deems necessary to carry out its function. At
a minimum, however, the Committee is charged with taking the following
actions:
1. Meeting privately with the independent public accountants prior to
the public release of quarterly and annual operating results;
2. Meeting privately with the independent public accountants as soon
as possible after receipt of the final audit report;
3. At least annually, meeting privately with the Company's outside
counsel;
4. At least annually, meeting privately with the Company's Chief
Accounting Officer;
5. At least annually, meeting with the President, Chief Financial
Officer and Chief Accounting Officer to discuss (a)any significant
financial reporting issues discussed with the independent public
accountants since the last meeting, (b) any significant legal
issues discussed with the Company's outside legal counsel since
the last meeting, and (c) any other matters which management or
the Committee requests be discussed;
6. At least annually, reporting to the Board of Directors its
activities since the last meeting or any other matters which the
Committee feels should be brought to the Board's attention;
7. Confirming management's selection of the independent public
accountants; and
8. Writing a letter to be included in the Company's Annual Report or
Proxy Statement describing the Committee's responsibilities and
activities during the year.
The Committee took all these actions during (or with regard to)
the fiscal year ended December 31, 1999. In its private meetings with
the independent public accountants, the Committee inquired as to such
things as their overall level of comfort with the Company's financial
statements and internal controls, whether it considered management's
determination of reserves and other estimates used in preparing the
financial statements to be reasonable, whether there had been any
disagreement (resolved or not) with management regarding any financial
reporting issue, and if there were any other matters which needed to be
brought to the Committee's attention.
February 9, 2000 Paul N. Hug
Chairman
<PAGE>
EXECUTIVE OFFICERS
The executive officers of the Company, their respective ages, positions
held and tenure as officers are listed below:
Executive
Officers of
the Company
Name Age Position(s) Held with the Company Since
----------------- --- --------------------------------- -----------
R. Stephen Polley 49 Chairman of the Board 1993
and former Chief Executive Officer
Gregory B. Kalush 43 Chief Executive Officer 1998
and President
Steven P. Kovac 44 Chief Financial Officer, 1999
VP of Finance and Treasurer
R. Stephen Polley joined the Company as President and Chief
Operating Officer and was elected a director by the Board of Directors
in November 1993. In June 1994, Mr. Polley was named Chief Executive
Officer of the Company and appointed Chairman of the Board of
Directors. In March 1999, Mr. Polley resigned all officer positions,
but remained Chairman of the Board. In June 1998, Mr. Polley was
appointed a director of ObjectSpace. ObjectSpace is a provider of
distributed computing solutions built on 100% Pure Java(tm). From
August 1992 to February 1993, Mr. Polley acted as a consultant in
strategic and management matters and as a director for Computer
Automation, Inc. Computer Automation provided various products and
services for use in facsimile management systems, minicomputers and
microcomputers. From 1987 to April 1992, Mr. Polley served as
President, Chief Executive Officer and a director of Intellicall, Inc.,
a diversified supplier of telecommunications products and services
including private pay telephones and microprocessor-based automated
operator systems. Mr. Polley is not seeking reelection of the Board of
Directors.
Gregory B. Kalush joined the Company in February 1998, as Chief
Financial Officer, Vice President of Finance and Treasurer. In March
1999, Mr. Kalush was appointed Chief Executive Officer, President, and
Director of the Company. Prior to joining Interphase, Mr. Kalush was
with DSC Communications Corporation from 1995 to 1997. While at DSC he
served as Vice President Transmission Data Services, Vice President of
Operations, International Access Products and Group Vice President of
Finance, Transport Systems Group. Prior to DSC, Mr. Kalush was with
IBM Corporation from 1978 to 1994. During that time his positions
included Chief Financial Officer and Operations Executive for the Skill
Dynamics Unit, Director of Finance, Planning and Administration for the
southwest area, and Division Director of Finance and Operations for the
Data Systems division.
<PAGE>
Steven P. Kovac joined the Company in May 1999 as Chief Financial
Officer, Vice President of Finance and Treasurer. Prior to Interphase,
From 1997 to 1999 Mr. Kovac served as Chief Operating Officer and Chief
Financial Officer for TPN Inc., a satellite television network. From
1989 to 1997 Mr. Kovac was the Regional Vice President of Finance and
Chief Financial Officer for AT&T Wireless Services, McCaw Cellular
Communications and LIN Cellular Communications. From 1988 to 1989 Mr.
Kovac was Vice President of Finance and Administration for BBL
Industries, which manufactures paging terminals and voice messaging
equipment. Mr. Kovac is a member of the Board of Directors for
Integrated Systems Corporation, a reseller of DSL and satellite ISP,
located in Denver, Colorado.
EXECUTIVE COMPENSATION
Report of the Compensation Committee of the
Board of Directors on Executive Compensation
The Compensation Committee (under this caption, the "Committee")
is responsible for structuring and monitoring the Company's executive
compensation program. The Committee is currently composed of four non-
employee members of the Board of Directors: Mr. Polley, Chairman, Mr.
Halpin, Mr. Hug and Mr. Segrest. Recommendations of the Committee are
ultimately reviewed, considered and approved by the Board of Directors;
however, after the executive compensation program has been approved by
the Board of Directors, the Committee performs ministerial functions
effecting and implementing aspects of the program on behalf of the
Board of Directors.
The Committee views its primary objective to be the structuring of
a compensation strategy designed to align the interests of executives
with the interests of shareholders by creating incentives which are
performance-based and tied to the attainment of overall Company goals.
The markets in which the Company competes are highly competitive and
to succeed in them over the long term the Company must be able to
attract, motivate and retain executives with extraordinary
qualifications and talents. The Committee evaluates the compensation
strategy and compensation plans accordingly.
Salient components of the executive compensation program include
annual salary, annual bonus plan and stock option grants.
At this time, based on the Company's current executive
compensation structure, the Company does not believe it is necessary to
adopt a policy with respect to qualifying executive compensation in
excess of $1 million for deductibility under Sections 162(m) of the
Internal Revenue Code, except with respect to the Amended and Restated
Stock Option Plan.
Annual salary
The Committee attempts to establish annual salary levels that are
appropriate with regard to (i) competitive salary levels, (ii)
qualifications and experience, and (iii) the longevity, performance and
responsibility of the executive. At least annually, the Committee
reviews executive salaries and recommends adjustments where
appropriate.
<PAGE>
Executive bonus plan
The executive bonus plan is intended to link executive
compensation with the attainment of defined Company goals on an annual
basis.
Each fiscal year the Committee, after consulting with management
of the Company, establishes annual financial targets for the Company. A
target annual bonus amount is established based upon these financial
targets. The actual payment of bonuses is primarily dependent upon the
extent to which these Company-wide objectives are achieved. The
financial targets established for 1999 were achieved, thus executive
bonuses were paid.
Stock option grants
Through the granting of stock options the Company intends to align
the executives' long-term interests with those of the shareholders of
the Company by tying executive compensation to the long-term
performance of the Company's stock price. This is the Company's
principal long-term incentive to executives.
The Committee recommends to the General Stock Option Committee the
number of shares to be granted to an executive based upon several
factors including, but not limited to, management's recommendation, the
executive's salary level, performance, position, contribution to the
management team, and contribution to the overall success of the
Company.
Chief Executive Officer compensation
During fiscal 1999, Mr. Kalush received a base salary of $225,000
under an employment agreement with the Company. Additionally, Mr.
Kalush participated in the 1999 annual bonus plan which established
specific operating objectives related to Company-wide financial
performance, including development and implementation of key product
and strategic plans of the Company.
Prior to his resignation as Chief Executive Officer, Mr. Polly
received a base salary of $250,000 per year under an employment
agreement with the Company.
Summary
The Compensation Committee, in its judgment, has established
executive compensation levels which reflect the Committee's desire to
reward executives for individual contribution to the attainment of the
Company's goals while linking each executive's financial opportunity
with increased value to the shareholders.
THE COMPENSATION COMMITTEE
R. Stephen Polley
James F. Halpin
Paul N. Hug
David H. Segrest
<PAGE>
Employment Agreements
The Board of Directors approved Mr. Kalush's current employment
agreement, effective March 12, 1999, pursuant to which the Company
employs Mr. Kalush as its Chief Executive Officer and President, at a
base salary from March 1999 until March 2000 of $225,000 per year.
After the expiration of the initial term of employment, the employment
agreement will continue for successive one year terms, unless either
Mr. Kalush or the Company gives notice to the other party more than 30
days prior to the expiration of the current term that the agreement
will not be renewed. In addition, in accordance with his employment
agreement, Mr. Kalush (i) received in March 1999 a non-qualified stock
option for 77,578 common shares, and an incentive stock option for
22,422 common shares, all for a ten year term and an exercise price of
$7.313 per share, and received in October 1999 a non-qualified stock
option for 50,000 common shares for a ten year term and an exercise
price of $23.00 per share, (ii) is entitled to an annual bonus based
upon the guidelines contained in the Company's Executive Bonus Plan,
with his "annual bonus target" being established by the Compensation
Committee, and (iii) is entitled to certain benefits available to
officers of the Company generally.
Mr. Kalush's employment agreement permits the Company to terminate
Mr. Kalush without further compensation for overt misconduct. If Mr.
Kalush dies or the Company elects not to extend the then current term
of Mr. Kalush's employment agreement or terminates Mr. Kalush's
employment agreement by reason of disability, then Mr. Kalush will be
entitled to (i) receive severance compensation in the amount of one
year's base salary, and (ii) receive a pro rata payment of his bonus
for the year in which he is terminated. However, if Mr. Kalush's
employment is terminated (i) by means of the Company's election not to
renew the employment term he will be entitled to receive an amount
equal to his last year's bonus, or (ii) following a "change in control"
(as defined below), he will be entitled to severance compensation in
the amount of two year' base salary and his last year's bonus.
In the event of a "change in control" of the Company, all
outstanding stock options of Mr. Kalush will become exercisable. A
"change in control" under these arrangements occurs when one investor,
including its affiliated, owns 20% or more of the outstanding Common
Stock of the Company. In addition, under certain circumstances Mr.
Kalush is given an additional period of up to three years to exercise
his options.
The Board of Directors approved Mr. Kovac's current
employment agreement, effective May 11, 1999, pursuant to which the
Company employs Mr. Kovac as its Chief Financial Officer, Vice
President of Finance and Treasurer, at a base salary of $175,000 per
year. In addition, in accordance with his employment agreement, Mr.
Kovac (i) received in May 1999 a non-qualified stock option for 40,300
common shares, and an incentive stock option for 59,700 common shares,
all for a ten year term and an exercise price of $8.375 per share, (ii)
is entitled to an annual bonus based upon the guidelines contained in
the Company's Executive Bonus Plan, with his "annual bonus target"
being established by the Compensation Committee, and (iii) is entitled
to certain benefits available to officers of the Company generally.
<PAGE>
Mr. Kovac's employment agreement permits the Company to terminate
Mr. Kovac without further compensation for willful neglect of his
duties. If the Company terminates Mr. Kovac for any reason other than
willful neglect, Mr. Kovac will receive (i) nine months severance pay
at his base salary, and (ii) receive a pro rata payment of his bonus
for the year in which he is terminated. In the event of a "change
in control" of the Company, as defined above, all outstanding stock
options of Mr. Kovac will become exercisable, subject to certain
restrictions.
The Board of Directors approved Mr. Polley's employment agreement,
effective September 1996, pursuant to which the Company employed Mr.
Polley as its Chairman of the Board, Chief Executive Officer, Chief
Operating Officer and President, at a base salary from July 1997 until
September 1999 of $250,000 per year. Effective March 12, 1999 Mr.
Polley resigned his position of Chief Executive Officer, Chief
Operating Officer and President, but remained Chairman of the Board
until the May 3, 2000 annual meeting of shareholders. During 1999, he
acted as a consultant to the Company, and will continue until the May
3, 2000 annual meeting of shareholder. In this role, he received
compensation of $80,000 for 1999.
Summary Compensation Table
A summary compensation table has been provided below and includes
individual compensation information on the Chief Executive Officer and
certain other executive officers (collectively, the "Named Executive
Officers") during fiscal 1999.
<TABLE>
Annual Compensation (1) Long-term Compensation
------------------------- ----------------------
Other Securities
Annual Underlying All Other
Salary Bonus Compensation Options/SAR's Compensation (3)
Year ($) ($) ($) (2) (#) ($)
---- -------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Gregory B. Kalush 1999 215,000 197,008 - 155,000 5,000
Chief Executive 1998 160,000 - - 60,000 5,661
Officer
and President
Steven P. Kovac 1999 112,000 63,043 - 100,000 -
Chief Financial
Officer, VP Finance
and Treasurer
R. Stephen Polley 1999 48,000 - 80,000 5,000 -
Chief Executive 1998 250,000 - - 5,000 7,786
Officer
and President 1997 225,000 99,000 - 5,000 8,968
(1) The table does not include the cost to the Company of benefits
furnished to certain officers, including premiums for life and
health insurance. No executive officer named above received
other compensation in excess of the lesser of $50,000 or 10%
of such officers' salary and bonus compensation .
(2) Annual retain for services as Chairman of the Board per
employment agreement.
(3) "All Other Compensation" consists of matching and discretionary
(as defined) payments by the Company pursuant to its 401(k) plan
as well as payment of accrued, but unused, vacation benefits
pursuant to Company policy.
</TABLE>
<PAGE>
Option/SAR Grants in Last Fiscal Year
The following table provides information with respect to stock
options/SARs granted to the Named Executive Officers during the fiscal
year ended December 31, 1999. The potential realized value reported
below assumes compounded annual rates of return over the term of the
options.
<TABLE>
Number of Total Options/
Securities SARs Granted at Assumed Annual Rates
Underlying to Employees of Stock Price Appreciation
Options/SARs in Fiscal Exercise for Option Term
Granted Year Price Expiration 5 Percent 10 Percent
Name (#) (%) ($) Date ($) ($)
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Gregory B. Kalush 100,000 12% $ 7.313 3/12/2009 $ 459,874 $1,165,392
5,000 6% $ 7.500 5/5/2004 $ 10,361 $ 22,894
50,000 6% $23.000 10/20/2009 $ 723,229 $1,832,803
R. Stephen Polley 5,000 6% $ 7.500 5/5/2004 $ 10,361 $ 22,894
Steven P. Kovac 100,000 12% $ 8.375 5/11/09 $ 526,699 $1,334,759
</TABLE>
Aggregated Option/SAR Exercises in Last Fiscal Year
and Fiscal Year End Option/SAR Values
The following table discloses incentive stock option exercises for
the Named Executive Officers during the fiscal year ended December 31,
1999. In addition, the number and value of unexercised options/SARs
that were outstanding at December 31, 1999 are summarized in the table.
A distinction is made between options/SARs that were exercisable
(vested) at December 31, 1999 and those options/SARs that were not
exercisable at December 31, 1999.
<TABLE>
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money
Shares Options/SARs Options/SARs
Acquired on Value at fiscal Year End at fiscal Year End
Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable
Name (#) ($) (#) (#)
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gregory B. Kalush - - 37,000 / 178,000 $520,864 / $ 1,810,959
R. Stephen Polley 277,500 2,904,510 40,000 / - 389,925 / -
Steven P. Kovac - - - / 100,000 - / $1,275,000
</TABLE>
<PAGE>
Stock Performance Graph
The following chart compares the cumulative total shareholder
return on Common Stock during the fiscal years ended December 31, 1999,
1998, 1997, 1996 and 1995, and October 31, 1995 with the cumulative
total return on the NASDAQ market index and a peer group index. The
peer group consists of companies with the same four-digit SIC code as
the Company (3577). The Company relied upon information provided by
another firm with respect to the peer group stock performance. The
Company did not attempt to validate the information supplied to it
other than review it for reasonableness. The comparison assumes $100
was invested on October 31, 1994 in the Common Stock and in each of the
foregoing indices and assumes reinvestment of dividends.
[PERFORMANCE GRAPH APPEARS HERE]
Cumulative Return
10/94 10/95 12/95 12/96 12/97 12/98 12/99
----- ----- ----- ----- ----- ----- -----
Interphase
Corporation 100 96 97 83 48 58 176
PEER Group 100 209 210 314 329 663 1465
NASDAQ 100 134 137 166 207 291 526
CERTAIN RELATED TRANSACTIONS
David H. Segrest, is the Assistant Secretary and a director of the
Company, and a member of the Compensation Committee and the Audit
Committee of the Board of Directors of the Company. Mr. Segrest is
also a partner of Gardere & Wynne, L.L.P., the Company's general
counsel. Mr. Segrest and others at Gardere & Wynne, L.L.P., provide
legal services to the Company and are typically compensated at
prevailing hourly rates. During 1999, the Company paid Gardere &
Wynne, L.L.P. approximately $366,000 for services provided.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten
percent of the Common Stock to file reports of ownership and changes in
ownership on Forms 3, 4 and 5 with the Securities and Exchange
Commission and furnish the Company with a copy. Based solely on the
Company's review of the copies of such forms it has received, the
Company believes that all its officers, directors, and greater than ten
percent shareholders complied with all filing requirements applicable
to them during the reporting period ended December 31, 1999, except
that Form 4 was late for Mr. Thawley.
<PAGE>
AMENDMENT TO AMENDED AND RESTATED STOCK OPTION PLAN
In 1984, the Company adopted a stock option plan for employees,
which was amended and restated in 1994 (the "Employee Plan"), and also
amended in 1995. All employees of the Company are eligible for grants
including the President, Executive Vice Presidents, Vice Presidents and
other executives of the Company, and the Company receives no
consideration as a result of option grants or extensions. The Employee
Plan is administered by the Board of Directors. The Board of Directors
has delegated the authority to grant stock options under the Employee
Plan to a General Stock Option Committee and a New Employee and
Retention Stock Option Committee. See also "Election of Directors-
Committees and Meetings of the Board of Directors."
Incentive options ("Incentive Options") may be granted for a term
of up to five years in the case of employees who own in excess of 10%
of the Company's outstanding stock and up to ten years in the case of
all other employees. Nonqualified stock options ("Nonqualified Stock
Options") may be granted for a term of up to ten years to all
employees. Nonqualified Stock Options may be granted at less than fair
market value. Incentive Options may be granted to purchase shares at
not less than their fair market value as of the date of grant, or 110%
of fair market value in the case of any employee holding in excess of
10% of the outstanding stock as of the date of the grant. Options
granted under the Employee Plan cannot be transferred other than by
will or by the laws of descent and distribution. The fair market value
of the Common Stock as of March 6, 2000, was $24.188 per share.
The Board of Directors has adopted an amendment to the Employee
Plan (the "Amendment") (see Exhibit A), subject to the approval of the
shareholders at the annual meeting. The Employee Plan currently covers
2,350,000 shares of Common Stock and all available stock options
thereunder have been granted. The purpose of the Amendment is to
increase the aggregate number of shares of Common Stock issuable upon
exercise of options granted under the Employee Plan by 1,150,000 shares
to a total of 3,500,000 shares.
The purpose of the Employee Plan is to promote the interests of
the Company and its shareholders by (i) attracting and retaining key
employees, (ii) motivating such individuals by means of performance-
related incentives to achieve longer-range performance goals and (iii)
encouraging such persons to become owners of Common Stock.
In addition, competition for highly qualified individuals within
the Company's industry is intense, and to successfully attract and
retain the best candidates, the Company must continue to offer a
competitive equity incentive program as an essential component of its
compensation packages.
<PAGE>
The Employee Plan provides that if an optionee dies or becomes
disabled while in the employ of the Company but prior to termination of
his right to exercise an option in accordance with the provisions of
his stock option agreement without having totally exercised his option,
the option may be exercised, to the extent of the shares with respect
to which the option could have been exercised by the optionee on the
date of the optionee's death or disability, by (i) the optionee's
estate or by the person who acquired the right to exercise the option
by bequest or inheritance or by reason of the death of the optionee in
the event of the optionee's death, or (ii) the optionee or his personal
representative in the event of the optionee's disability, provided the
option is exercised prior to the date of its expiration or not more
than one year from the date of the optionee's death or disability
whichever first occurs.
Shares to be optioned and sold under the Employee Plan may be made
available from either authorized but unissued Common Stock or Common
Stock held by the Company in its treasury. Shares that by reason of
the expiration of an option or otherwise are no longer subject to
purchase pursuant to an option granted under the Employee Plan may be
reoffered under the Employee Plan.
The Employee Plan may be amended or discontinued by the Board of
Directors without the approval of the shareholders of the Company,
except that any amendment that would (a) materially increase the
benefits accruing to participants under the Employee Plan,
(b) materially increase the number of securities that may be issued
under the Employee Plan, or (c) materially modify the requirements or
eligibility for participation in the Employee Plan must be approved by
the shareholders of the Company.
Unless sooner terminated by action of the Board of Directors, the
Employee Plan will terminate on November 8, 2004.
Incentive Options granted under the Employee Plan are currently
entitled to "incentive stock option" treatment for federal income tax
purposes provided by Section 422 of the Internal Revenue Code. The
Company will not be entitled to a deduction upon any exercise of an
incentive option. The optionee's gain on exercise (the excess of the
fair market value at the time of exercise over the exercise price) of
an Incentive Option is a tax preference item and, while not being
included in ordinary income for normal income tax purposes, is included
in taxable income for purposes of calculating alternative minimum tax.
The gain realized upon the subsequent disposition of the stock acquired
upon exercise of the Incentive Option will be entitled to capital gain
treatment, provided that no such disposition is made within two years
after the Incentive Option was granted or one year after the Incentive
Option was exercised. If such holding period requirements are not
satisfied, the optionee will recognize ordinary income equal to the
lesser of (i) the fair market value of the stock on the date of
exercise minus the exercise price or, (ii) the amount realized on the
disposition minus the exercise price, and may receive a credit against
income tax to the extent alternative minimum tax liability was incurred
upon exercise. If the optionee must recognize ordinary income, the
Company will be entitled to a corresponding deduction.
<PAGE>
Under present federal income tax laws, the grant of Nonqualified
Stock Options under the Employee Plan will not result in taxable income
to the optionee. Generally, the exercise of a Nonqualified Stock
Option under the Employee Plan will result in recognition of ordinary
income following exercise in an amount equal to the excess of the then
fair market value of shares acquired over the exercise price for those
shares. The Company will be entitled to a corresponding deduction at
that time.
The foregoing statements are based upon federal income tax laws
and regulations and are subject to change if the tax laws and
regulations, or interpretations thereof, change.
The Amendment is being submitted for shareholder approval pursuant
to the requirements of the National Association of Securities Dealers
for securities traded on the National Market System, and of Sections
162(m) and 422 of the Internal Revenue Code. Section 162(m) of the
Internal Revenue Code limits the Company's tax deduction for
compensation expense to any one executive officer to $1 million per
year, except that compensation under certain shareholder-approved
incentive compensation plans is not subject to this limit; this Plan is
being amended subject to shareholder approval to conform with this
exception to Section 162(m). Section 422 of the Internal Revenue Code
requires shareholder approval in order for options to be treated as
incentive stock options. Approval of the Amendment will require the
affirmative vote of the holders of a majority of the shares of Common
Stock present in person or by proxy and entitled to be voted at the
meeting. The Board of Directors has approved the Amendment and
recommends that the shareholders vote "for" approval of the Amendment.
AMENDMENT TO AMENDED AND RESTATED DIRECTOR STOCK OPTION PLAN
In 1994, the Board of Directors of the Company formalized its
program of granting stock options to the Directors (the "Directors
Plan"), which was amended and restated in 1996. The Directors Plan
provides for the grant of stock options for up to 500,000 shares of
Common Stock of the Company. All directors of the Company are eligible
for grants under the Directors Plan, and the Company receives no
consideration as a result of option grants or extensions. The Board of
Directors administers the Directors Plan.
The Directors Plan provides that in each year during the term of
the Directors Plan each director elected at the annual shareholders
meeting who has not previously served as a director of the Company will
automatically be granted a five-year option to purchase 10,000 shares
of Common Stock at an option price equal to the closing price of Common
Stock on the date of such annual shareholders meeting. The Directors
Plan further provides that in each year during the term of the
Directors Plan each other director elected at the annual shareholders
meeting will automatically be granted a five-year option to purchase
5,000 shares of Common Stock at an option price equal to the closing
price of Common Stock on the date of such annual shareholders meeting.
The Director Plan further provides for the automatic grant of an option
to each newly elected or appointed director immediately upon their
election or appointment even if elected or appointed at a time other
than an annual shareholders meeting As of March 6, 2000, the aggregate
number of shares for which options have been granted under the
Directors Plan is 180,000.
<PAGE>
Directors may elect by written notice to the Company not to
receive one or more option grants under the Directors Plan. Each
director accepting an option under the Directors Plan will sign a stock
option agreement in the form approved by the Board of Directors.
Options cannot be transferred except by will or the laws of descent and
distribution. The fair market value of the Common Stock as of March 6,
2000, was $24.188 per share.
The Board of Directors has adopted an amendment to the Directors
Plan (see Exhibit B), subject to the approval of the shareholders at
the annual meeting. The Directors Plan currently covers 500,000 shares
of Common Stock and all available stock options thereunder have been
granted. One purpose of the amendment is to increase the aggregate
number of shares of Common Stock issuable upon exercise of options
granted under the Director Plan by 250,000 shares to a total of 750,000
shares. The amendment further provides that in each year during the
term of the Directors Plan each director elected at the annual
shareholders meeting who has not previously served as a director of the
Company will automatically be granted a ten-year option to purchase
20,000 shares of Common Stock at an option price equal to the closing
price of Common Stock on the date of such annual shareholders meeting.
The amendment further provides that in each year during the term of
the Directors Plan each other director elected at the annual
shareholders meeting will automatically be granted a ten-year option to
purchase 10,000 shares of Common Stock at an option price equal to the
closing price of Common Stock on the date of such annual shareholders
meeting.
The purpose of the Directors Plan is to provide directors of the
Company with a proprietary interest in the Company through the granting
of options which will increase the interest of the directors in the
Company's welfare, furnish an incentive to the directors to continue
their services for the Company, and provide a means through which the
Company may attract able persons to serve on the Board of Directors.
The Directors Plan provides that if an optionee dies or becomes
disabled prior to termination of his right to exercise an option in
accordance with the provisions of his stock option agreement without
having totally exercised his option, the option may be exercised at any
time prior to the date of its expiration by (i) the optionee's estate
or by the person who acquired the right to exercise the option by
bequest or inheritance or by reason of the death of the optionee in the
event of the optionee's death, or (ii) the optionee or his personal
representative in the event of the optionee's disability, subject to
the other terms of the Directors Plan and applicable laws, rules, and
regulations.
Shares to be optioned and sold under the Directors Plan may be
made available from either authorized but unissued Common Stock or
Common Stock held by the Company in its treasury. Shares that by
reason of the expiration of an option or otherwise are no longer
subject to purchase pursuant to an option granted under the Directors
Plan may be reoffered under the Directors Plan.
<PAGE>
The Directors Plan may be amended or discontinued by the Board of
Directors without the approval of the shareholders of the Company,
except that any amendment that would (a) materially increase the
benefits accruing to participants under the Directors Plan,
(b) materially increase the number of securities that may be issued
under the Directors Plan, or (c) materially modify the requirement of
eligibility for participation in the Directors Plan, must be approved
by the shareholders of the Company. In addition, the Directors Plan
cannot be amended more than once in any six-month period, except in
limited circumstances.
Unless sooner terminated by action of the Board of Directors, the
Directors Plan will terminate on May 5, 2004.
Under present federal income tax laws, the grant of an option
under the Directors Plan will not result in taxable income to the
director. Generally, the exercise of an option granted under the
Directors Plan will result in the recognition of ordinary income
following exercise in an amount equal to the excess of the then fair
market value of shares acquired over the exercise price for those
shares. The Company will be entitled to a corresponding deduction at
that time. The foregoing statements are based upon federal income tax
laws and regulations and are subject to change if the laws and
regulations, or interpretations thereof, change.
The amendment to the Directors Plan is being submitted for
shareholder approval pursuant to the requirements of the National
Association of Securities Dealers for securities traded on the National
Market System. Approval of the amendment will require the affirmative
vote of the holders of majority of the shares of Common Stock present
in person or by proxy and entitled to vote at the meeting. The Board
of Directors has unanimously approved the amendment to the Directors
Plan and recommends that the shareholders vote "for" approval of the
amendment.
AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION
The Company's Article of Incorporation (the "Articles") currently
provide that the Company is authorized to issue 100,000,000 shares of
Common Stock at zero par value. The Board of Directors has adopted an
amendment to the Articles, (see Exhibit C), subject to the approval of
the shareholders at the annual meeting, that would provide for the par
value to be $.10 per share.
If the proposed amendment is approved, the Board of Directors
feels this will more accurately report to the shareholders the equity
value of the Company. The change will not have a material effect on
the outstanding Common Stock, and new stock certificates will not be
issued.
The amendment to the Articles is being submitted for shareholder
approval as required by the Texas Business Corporation Act. Approval
of the amendment will require the affirmative vote of the holders of at
least 66 2/3% of the shares of Common Stock outstanding and entitled to
be vote at the meeting. The Board of Directors has unanimously
approved the amendment and recommends that the shareholders vote "for"
approval of the amendment.
<PAGE>
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
ARTHUR ANDERSEN LLP served as the independent auditors of the
Company for the fiscal year ended December 31, 1999. A representative
of ARTHUR ANDERSEN LLP is expected to be present at the annual meeting
and will have the opportunity to make a statement and will be available
to answer appropriate shareholder questions.
SHAREHOLDERS' PROPOSALS
Any proposals that shareholders of the Company desire to have
presented at the 2001 annual meeting of shareholders must be received
by the Company at its principal executive offices no later than
December 2, 2000, whether or not the shareholder wishes to include the
proposal in the Company's proxy materials.
MISCELLANEOUS
The Annual Report to Shareholders of the Company for 1999,
which includes financial statements, accompanying this Proxy Statement,
does not form any part of the material for the solicitation of proxies.
The Company will provide without charge to each person whose
proxy is solicited hereby a copy of the Company's 1999 Form 10-K upon
written request as set forth below. Exhibits to the Form 10-K are also
available upon written request upon payment of a reasonable charge to
cover the Company's cost in providing such exhibits. Written requests
should be sent to Investor Relations, Interphase Corporation, 13800
Senlac, Dallas, Texas, 75234.
By Order of the Board of Directors
S. THOMAS THAWLEY
Secretary
Dallas, Texas
March 30, 2000
<PAGE>
EXHIBIT A
AMENDMENT NO. 4
TO THE
INTERPHASE CORPORATION
AMENDED AND RESTATED STOCK OPTION PLAN
Pursuant to Section 17 of the Interphase Corporation Amended and
Restated Stock Option Plan (the "Plan"), the Plan is hereby amended as
follows:
1. Section 5 of the Plan is hereby amended to read in its
entirety as follows:
5. SHARES SUBJECT TO PLAN. The Board may not grant
options under the Plan for more than 3,500,000 shares of
Common Stock of the Company, but this number may be adjusted
to reflect, if deemed appropriate by the Board, any stock
dividend, stock split, share combination, recapitalization or
the like, of or by the Company. Shares to be optioned and
sold may be made available from either authorized but
unissued Common Stock or Common Stock held by the Company in
its treasury. Shares that by reason of the expiration of an
option or otherwise are no longer subject to purchase
pursuant to an option granted under the Plan may be reoffered
under the Plan.
IN WITNESS WHEREOF, the undersigned has executed this Amendment
effective as of the 19th day of January, 2000.
INTERPHASE CORPORATION
By: _______________________
Gregory B. Kalush, President
<PAGE>
EXHIBIT B
AMENDMENT NO. 2
TO THE INTERPHASE CORPORATION
AMENDED AND RESTATED DIRECTORS STOCK OPTION PLAN
Pursuant to Section 15 of the Interphase Corporation Amended and
Restated Directors Stock Option Plan (the "Plan"), the Plan is hereby
amended, subject to approval by the Company's stockholders, as follows:
1. Section 4 of the Plan is hereby amended by changing the
number of shares in the first sentence from 500,000 to 750,000.
2. Sections 5(c)and(d) of the Plan are hereby amended by
changing references from 5,000 shares to 10,000 shares and a reference
from 10,000 shares to 20,000 shares.
3. Section 8 of the Plan is hereby amended to read in its
entirety as follows:
"8. OPTION PERIOD. The Option Period will begin
on the effective date of the option grant and,
except for options described in Section 5(a), will
terminate on the tenth anniversary of that date."
IN WITNESS WHEREOF, the undersigned has executed this Amendment
effective as of the ______ day of ___________________, 2000.
INTERPHASE CORPORATION
By: _______________________
Gregory B. Kalush, President
<PAGE>
EXHIBIT C
ARTICLES OF AMENDMENT
TO THE ARTICLES OF INCORPORATION
OF
INTERPHASE CORPORATION
Pursuant to the provisions of Article 4.04 of the Texas Business
Corporation Act, Interphase Corporation, a Texas corporation (the
"Corporation"), hereby adopts the following Articles of Amendment to
its Articles of Incorporation to establish a par value for each share
of Common Stock of the Corporation.
ARTICLE ONE. The name of the Corporation is Interphase
Corporation.
ARTICLE TWO. The following amendment to the Articles of
Incorporation was adopted by the shareholders of the Corporation on May
3, 2000:
Article IV of the Articles of Incorporation is hereby amended to
read in its entirety as follows:
"ARTICLE IV
The aggregate number of shares which the corporation
shall have the authority to issue is one hundred
million (100,000,000) consisting of one hundred
million shares of Common Stock with the par value
of $.10 per share.
At each meeting of the shareholders of the corporation,
each holder of record of shares of the Common Stock
of the corporation, who was such holder on the date
fixed by the Board of Directors as the record date
for determining persons entitled to vote at such
meeting, shall be entitled to one vote, to be cast
in person or by proxy, for each share of Common
Stock held by him on such record date."
ARTICLE THREE. The number of shares of Common Stock of the
Corporation outstanding and entitled to vote was ___________________ at
the time of the adoption of this amendment.
ARTICLE FOUR. The number of shares voted FOR the amendment was
__________________, the number of shares voted AGAINST the amendment
was _____________, and the number of shares ABSTAINING was __________.
<PAGE>
ARTICLE FIVE. Upon issuance of the Certificate of Amendment, each
share of the issued and outstanding Common Stock, no par value, of the
Corporation held by each and every shareholder will be automatically
and without further action converted into one (1) share of Common
Stock, $.10 par value, of the Corporation.
ARTICLE SIX. Upon issuance of the Certificate of Amendment, by
virtue of the conversion of the Common Stock of the Corporation from no
par value per share to $.10 par value per share, the stated capital of
the Corporation shall be changed from $____________ to $_____________ .
DATED as of the ______ day of May, 2000.
INTERPHASE CORPORATION
By: __________________
Gregory B. Kalush, President
<PAGE>
FORM OF PROXY CARD FOR INTERPHASE CORPORATION 2000 ANNUAL MEETING
PROXY
INTERPHASE CORPORATION
The undersigned hereby (a) acknowledges receipt of the Notice of Annual
Meeting of Shareholders of Interphase Corporation (the "Company") to be
held on May 3, 2000 at 10:00 a.m. local time at the Renaissance Hotel
at 4099 Valley View Lane, Dallas, Texas 75244, and the Proxy Statement
in connection therewith, and (b) appoints Gregory B. Kalush and S.
Thomas Thawley, and each of them, the undersigned's proxies with full
power of substitution, for and in the name, place and stead of the
undersigned, to vote upon and act with respect to all of the shares of
Common Stock of the Company standing in the name of the undersigned or
with respect to which the undersigned is entitled to vote and act at
said meeting or at any adjournment thereof, and the undersigned directs
that this proxy be voted as follows:
1. ELECTION OF DIRECTORS ____ FOR nominees listed below except
as marked to the contrary below
____ WITHHOLD AUTHORITY to vote for
all nominees listed below
James F. Halpin, Paul N. Hug,
Gregory B. Kalush, David H.
Segrest, S. Thomas Thawley and
William R. Voss
INSTRUCTION: To withhold authority to vote for any individual
nominee, write that nominee's name in the space below.
_______________________________________________________________________
2. PROPOSAL TO AMEND THE COMPANY'S STOCK OPTION PLAN TO INCREASE THE
AGGREGATE NUMBER OF SHARES ISSUABLE UPON EXERCISE OF OPTIONS THEREUNDER
FROM 2,350,000 TO 3,500,000.
___ FOR ___ AGAINST ___ ABSTAIN
_______________________________________________________________________
3. PROPOSAL TO AMEND THE COMPANY'S DIRECTOR STOCK OPTION PLAN TO
INCREASE THE AGGREGATE NUMBER OF SHARES ISSUABLE UPON EXERCISE OF
OPTIONS THEREUNDER FROM 500,000 TO 750,000 SHARES AND TO PROVIDE THAT
EACH ANNUAL GRANT IS INCREASED FROM 5,000 TO 10,000 SHARES, AND THAT
NEW DIRECTOR GRANTS ARE INCREASED FROM 10,000 TO 20,000 SHARES, AND TO
PROVIDE THAT THE OPTION TERM IS INCREASED FROM FIVE TO TEN YEARS.
___ FOR ___ AGAINST ___ ABSTAIN
_______________________________________________________________________
4. PROPOSAL TO AMEND THE COMPANY'S ARTICLES OF INCORPORATION TO
CHANGE THE STATED PAR VALUE OF INTERPHASE COMMON STOCK FROM ZERO PAR
TO $.10 PAR VALUE PER SHARE.
____ FOR ____ AGAINST ____ ABSTAIN
_______________________________________________________________________
5. IN THE DISCRETION OF THE PROXIES, ON ANY OTHER MATTERS THAT MAY
PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEROF.
____ FOR ____ AGAINST ____ ABSTAIN
_______________________________________________________________________
(continued and to be dated and signed on the reverse side)
<PAGE>
(continued from other side)
If more than one of the proxies above shall be present in person
or by substitute at the meeting or any adjournment thereof, both of
said proxies so present and voting, either in person or by substitute,
shall exercise all of the powers hereby given.
THIS PROXY WILL BE VOTED AS SPECIFIED ABOVE. IF NO SPECIFICATION
IS MADE, THIS PROXY WILL BE VOTED FOR ALL OF THE MATTERS REFERRED TO
ABOVE.
The undersigned hereby revokes any proxy or proxies heretofore
given to vote upon or act with respect to such stock and hereby
ratifies and confirms all that said proxies, their substitutes, or any
of them, may lawfully do by virtue hereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE
COMPANY.
Dated:_______________________________
_____________________________________
Signature
____________________________________
(Signature if held jointly)
Please date the proxy and sign your
name exactly as it appears hereon.
Where there is more than one owner,
each should sign. When signing as
an attorney, administrator, executor,
guardian or trustee, please add your
title as such. If executed by a
corporation, the proxy should be
signed by a duly authorized officer.
Please date and sign the proxy and
return it promptly whether or not
you expect to attend the meeting.
You may nevertheless vote in person
if you do attend.
