exv10wxpy



 








Exhibit 10(p)




[THIS
AGREEMENT IS SUBJECT TO ARBITRATION]




EMPLOYMENT AGREEMENT




          THIS
EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into
as of the 11th of May,
1999, (“Effective Date”) by and between Interphase Corporation and its subsidiaries (the
“Corporation”), and Steven P. Kovac (“Executive”).




          WHEREAS, the Corporation desires to enter into an employment relationship with Executive on
certain terms and conditions as set forth herein; and




          WHEREAS, Executive is willing to accept such employment on such terms; and




          NOW, THEREFORE, the parties hereto, in consideration of the mutual covenants and promises
hereinafter contained, do hereby agree as follows:





	1)	 	Employment. The Corporation hereby employs Executive
and Executive hereby accepts
employment on the following terms and conditions. Executive will be employed by the
Corporation as the Vice President of Finance and Chief Financial Officer of the Corporation.
In that capacity, Executive will be an Officer of the Corporation and will report directly to
the Chief Executive Officer of the Corporation. Executive agrees to review and comply with
all policies and procedures in the Corporation’s Employee Handbook.
	 
	2)	 	Term. Executive’s employment with the Corporation
will be “At Will”, and thus, either party may terminate the relationship at any time for any reason, subject to the termination
provisions in paragraphs 6 and 7. Only the Chief Executive Officer of the Corporation has any
authority to modify this Agreement or enter into any other agreement for employment for any
specified time or to make any agreement contrary to the “At Will” relationship. Executive
further understands that any reference to dates and/or periods of time in his Agreement,
including any reference to rights Executive may have at certain specified dates after his
execution of this Agreement, are expressly conditional upon Executive remaining in the
employment of the Corporation at the specified time or date and are in no way intended to
alter the “At Will” nature of Executive’s employment.
	 
	3)	 	Salary and Other Compensation. As compensation for the services to be rendered
by Executive to the Corporation pursuant to this Agreement, Executive shall be paid
the following compensation and other benefits:






	 	a)	 	Salary: $6,730.77 per pay period, of which there are 26 in each
calendar year, less deductions as may be required by law. The Corporation
reserves the right to: (i) make deductions from Executive’s pay to satisfy any
outstanding obligations; and/or (ii) make deductions from Executive’s pay to
satisfy any losses resulting from unlawful activities. In each case,




 









 






	 	 	 	deductions to be made only after final adjudication by a court of competent
jurisdiction.
	 
	 	b)	 	Bonus: Executive shall be eligible for an annual bonus
based upon the Corporation’s
existing Executive Bonus Plan; the “annual bonus
target”shall be $40,000 if the Corporation satisfies the criteria for achieving said bonus as outlined in the Executive
Bonus Plan. Executive understands and agrees that for any calendar year 1999, he shall
be eligible for a full year of his annual target bonus. The Corporation reserves the
right to: (i) make deductions from Executive’s bonus to satisfy any
outstanding obligations; and/or (ii) make deductions from Executive’s bonus to
satisfy any losses resulting from unlawful activities.
	 
	 	c)	 	Stock Options:






	 	1)	 	Option Grant: The Corporation shall, in accordance
with the Corporation’s
Amended and Restated Stock Option Plan, grant to Executive options to purchase
100,000 shares of common stock of the Corporation which options shall vest in
accordance with sub-part 3) below. To the maximum extent permitted within the
meaning of Section 422 of the Internal Revenue Code of 1986, as
amended, a portion of
the option grant will be incentive stock options with the balance being nonqualified
stock options. Such option grant shall be in consideration of Executive’s agreement
to abide by the covenant not to compete provisions and nondisclosure requirements
contained in paragraphs 4 and 5 of this Agreement. Executive
certifies that, as of the
Effective Date, he has seen or been given access to the items listed on Attachment A,
“List of Confidential Information”.
	 
	 	2)	 	Option Price: The price at which Executive may
exercise the stock
options will be the closing price of the Corporation’s common stock on Executive’s
Effective Date. A separate stock option agreement will be prepared for
Executive covering the incentive and nonqualified stock option grants.
	 
	 	3)	 	Vesting Schedule: Executive’s right to exercise the stock
options granted to him herein will vest, provided that Executive
remains employed by
the Corporation, at the rate of 20% annually, beginning on the first date of his
employment, provided that Executive will have no right to exercise any such options
prior to the first anniversary of his employment with the Corporation (except as
provided in sub-part below). Subject to the provisions of sub-part (4), below,
Executive must exercise his options within 10 years of the Effective Date
or Executive will lose and forever waive his rights to exercise such options.




 









 






	 	4)	 	Rights Upon Termination of Employment: Notwithstanding
the other provisions of this Agreement, in the event
Executive’s employment with the Corporation terminates for any reason
(i) Executive must exercise all vested options within 90 days of
the date of
termination, or  Executive will lose and forever waive
his rights to exercise such
of options and (ii) any options in which Executive has not vested as of the date of
termination will lapse and may not at any time be exercised by Executive.
	 
	 	5)	 	Regulation of Rights: Executive must comply
with all requirements regarding purchasing the Corporation’s
Common Stock and
exercising stock options, including, without limitation, requirements
promulgated by the Corporation and the Securities and Exchange Commission. In this
regard, Executive must report to the Corporation any activity such as selling,
purchasing or exercising the Corporation’s Common Stock and/or stock options. Any
questions regarding reporting requirements should be directed to
the Corporation’s Chief Executive Officer.
	 
	 	6)	 	Upon Acquisition of Shares by One Investor: Notwithstanding
any provision herein to the contrary, if at any time during the term
of this Agreement
one investor (including all affiliates, as defined in Rule 405 promulgated pursuant
to the Securities Act of 1933, as amended, of such investoi) accumulates 30% or
more of the out standing common stock of the Corporation all of the stock
options (the “Executive Stock Options”) which have been
granted pursuant to the Plan,
or otherwise, shall be accelerated and become immediately vested. The Executive
Stock Options as so accelerated are hereinafter referred to as the
“Advanced Options.” If any of the Executive’s Incentive Stock Options, including
the Advanced Options that fall within the definition of the Executive’s
Incentive Stock Options, which are vested are not exercised prior to their
termination, then the Corporation shall grant a fully-vested
nonqualified stock option
to the Executive for the same number of vested shares not exercised and at the same
exercise price.






	 	d)	 	Office Furnishings: The Corporation agrees to provide
office space and furnishings
to Executive commensurate with the Corporation’s décor and culture.
	 
	 	e)	 	Executive Benefit Plans: Executive shall be allowed to
participate, to the
extent they may be eligible, in any profit sharing, retirement, insurance or other
Executive benefit plan maintained by the Corporation. In the event Executive elects to
participate in the Corporation’s medical, dental, vision, and life insurance plans, the
Corporation will pay the entire cost of such coverage for Executive and his immediate
family.




 









 








	 	f)	 	Vacations and Leave: Executive shall be entitled to three (3) weeks of
vacation per year, accrued monthly, and six (6) sick days per year, and any
other paid leave benefits provided for in the Corporation’s Employee Handbook.






	4)	 	Non-Disclosure of Confidential Information. Executive acknowledges that
beginning on Effective Date, the Corporation shall provide to Executive, and he will otherwise
be making use of, acquiring, and/or adding to special training and
confidential information of a
special and unique nature and value relating to such matters as the
Corporation’s copyrights,
proprietary information, trade secrets, systems, product developments, procedures, manuals,
confidential reports, lists of customers (which are deemed for all purposes confidential and
proprietary), as well as the nature and type of services rendered by the Corporation, the
equipment and methods used and preferred by the Corporation’s customers, and the fees paid by
them. Executive further agrees that if a third party (e.g., vendors, customers and
manufacturers) contracts with the Corporation, the information obtained or received from
a third party including, but not limited to, its patents, copyrights, proprietary information,
trade secrets, systems, product development, procedures manuals, and confidential reports, will
be treated in the same manner and subject to the same protection as other Confidential
Trade Secret Information (as hereinafter defined) of the Corporation.






     As a material inducement to the Corporation to enter into this Agreement and to pay
Executive the compensation and benefits stated herein and as a condition of employment and
continued employment, Executive shall keep confidential all such confidential and proprietary
information which Executive learns or acquires as a result of his employment with the
Corporation. By way of example, “Confidential Trade Secret Information” may consist of any idea,
process, design, concept, formula, pattern, device, development, customer information or
compilation of information which is used in the Corporation’s business, which gives the
Corporation an advantage over a competitor who does not know or use it.




     Executive agrees that the appropriate remedy for any breach of this paragraph 4 is a suit
for injunctive relief and specific performance in any court of competent jurisdiction.
Executive agrees that damages for use of any identified Confidential Trade Secret Information
in violation of this paragraph 4 shall be 100% of the gross amount of revenue derived from
unauthorized use of such information.




	5)	 	Covenants Not to Compete. Executive acknowledges that the confidential
information which the Corporation may provide to him under the terms of paragraph 4 of
this Agreement is special and unique, and that the receipt of it by
Executive is of benefit and
value to him. Executive acknowledges delivery and receipt of such
confidential information
and specialized training contemporaneously and/or in conjunction with
the execution of this
Agreement, such confidential information and training being given and delivered to Executive
expressly in consideration for his agreement to be bound by the provisions of this Paragraph.
Executive also acknowledges that Corporation does not normally disclose such confidential
information and takes steps to protect it. Executive further acknowledges that the services
he/she is to render to the




 









 












Corporation are of a special and unusual character with a unique value to the Corporation, the loss
of which cannot adequately be compensated by damages in action at law. Accordingly, and expressly
in consideration for the Corporation’s agreement in paragraph 4 of this agreement to provide
confidential information to him, Executive agrees that during the term of his employment and for a
period of twelve (12) months from the date this Agreement is terminated, for whatever reason:




	 	a)	 	Executive shall not, directly or indirectly, without the
express written consent
of the Corporation, solicit or induce, or attempt to solicit or induce, any employee
of the Corporation, current or future, to leave or cease their relationship with the
Corporation, for any reason whatsoever, or hire any current or future employee of the
Corporation.
	 
	 	b)	 	Executive shall not, directly or indirectly, without the
express written consent
of the Corporation (i) engage in any business or activity that
is competitive with the
business of the Corporation; and/or (ii) be employed by, or provide competitive
services or assistance to, a “Competing Business” (hereinafter defined) which would
potentially involve, directly or indirectly, the use and/or disclosure of the
Corporation’s Confidential Trade Secret Information. For purposes of this
Agreement, a Competing Business means any person or firm that offers services or
products that are directly competitive with those marketed, offered for sale
and/or under any stage of development by the Corporation as of the
date of Executive’s
separation from employment. If Executive desires to work for a Competing Business in
an area that is not competitive with the business of the Corporation, Executive must
give written notice to the Chief Executive Officer of the Corporation and obtain his
approval that the employment will not violate the terms and conditions of
this paragraph 5 before beginning employment with the Competing Business.
	 
	 	c)	 	Executive will not solicit or attempt to solicit the Corporation’s existing
or prospective customers to purchase services or products that are competitive
with those marketed, offered for sale and/or under any stage of development by the
Corporation as of the date of Executive’s separation from the Corporation. For
purposes of this Agreement,existing customers shall mean those persons or
firms that the Corporation has made a sale to in the twelve (12) months
preceding Executive’s separation from employment; prospective
customers shall mean
those persons or firms that the Corporation has solicited and/or negotiated to sell
the Corporation’s products or services to within the twelve (12) months
preceding Executive’s separation from the Corporation.
	 
	 	d)	 	In the event that any of the provisions of this paragraph 5
shall be held to be
invalid or unenforceable, the remaining provisions thereof
shall nevertheless
continue to be valid and enforceable as though the invalid




 









 












	 	 	 	or unenforceable parts had not been included therein. In the event that any
provision of this paragraph 5 relating to the time period and/or the areas of
restriction and/or related aspects shall be declared by a court of competent
jurisdiction to exceed the maximum restrictiveness such court deems reasonable and
enforceable, the time period and/or areas of restriction and/or related aspects deemed
reasonable and enforceable by the court shall become and thereafter be the maximum
restriction in such regard, and the restriction shall remain enforceable to the fullest
extent deemed reasonable by such court.
	 
	 	e)	 	Executive agrees that the appropriate remedy for any breach of this
paragraph 5 is a suit for injunctive relief and/or specific performance in any court
of competent jurisdiction. Executive agrees that the Corporation also has the right
to seek damages for any breach of this paragraph 5. The Corporation has sole
discretion regarding whether to seek a remedy for breach of this paragraph in a Court
of competent jurisdiction and/or through arbitration procedures outlined in paragraph
9.






	6)	 	Termination. This Agreement will terminate as follows:






	 	a)	 	Death. Executive’s employment hereunder shall automatically terminate upon
his death.
	 
	 	b)	 	Disability. The Corporation may terminate the Executive’s employment
hereunder in the event of the Executive’s Disability (as hereinafter defined). For
purposes of this Agreement, “Disability” shall mean that, as a result of the
Executive’s Incapacity due to illness or injury, Executive shall have been absent
from his duties under this Agreement on a substantially full-time basis or a period
of three (3) or more consecutive months, and thereafter, within thirty (30) days
after the Corporation notifies Executive in writing that it intends to replace him,
Executive shall not have returned to the performance of such duties on a full-time
basis. Should Executive be diagnosed as permanently disabled by his treating
physician, the Corporation can terminate his employment without waiting for the
expiration of the three-month period. Without limiting the foregoing, until the
Corporation terminates Executive’s employment hereunder on account of Disability, the
Executive shall receive his full compensation as provided in Paragraph 3 of this
Agreement.
	 
	 	c)	 	By Executive. Executive may resign at any time upon thirty (30) days notice to the Chief Executive Officer of the Corporation.
	 
	 	d)	 	By the Corporation.






	 	(1)	 	The Corporation may terminate Executive for any reason or no reason
upon thirty (30) days written notice to Executive.




 









 






	 	(2)	 	The Corporation may terminate Executive immediately for Willful
Neglect of his duties and responsibilities. For purposes of this
Agreement, “Willful Neglect” means (a) any act or course of conduct by
the Executive constituting a criminal act or (b) an act by the
Executive that is not authorized by the Board of Directors of the
Corporation, or a committee thereof, and which results in gain to or personal enrichment of the Executive at the expense of the
Corporation, or (c) the commission by the Executive of an act or
course of conduct involving moral turpitude, or (d) a breach by
Executive of either or both of Paragraphs 4 and 5 of this Agreement,
or (e) the Executive’s intentional violation of reasonable written
instructions or policies established by the Corporation’s Board of
Directors with respect to the operation of the Corporation’s business
and affairs, or the Executive’s failure to carry out reasonable
written instructions or policies of the Board of Directors, or a
material breach (other than a breach of Paragraphs 4 or 5) by the
Executive of this Agreement, provided that before a termination of
the Executive pursuant to this subsection 10(d)(i)(e) shall be
considered for “Willful Neglect”, the Corporation’s Board of Directors
must give the Executive written notice and (30) days to cure such
violation or failure.






	7)	 	Payment Upon Termination. Notwithstanding any other
provision of this Agreement,
payments and/or benefits to Executive upon termination shall be as follows, and only as
follows:






	 	a)	 	Upon Death or Disability: Executive shall be entitled to earned, but
unpaid salary, pro-rata bonus as determined by the Corporation and
vested options.
	 
	 	b)	 	Upon Resignation by Executive and Upon Termination for Willful Neglect:
Executive shall be entitled to his earned, but unpaid salary and vested
options.
	 
	 	c)	 	Upon Termination for Other than Willful Neglect: If the Corporation
terminates Executive’s employment for any reason other than Willful Neglect, Executive will be eligible for 9 months of severance pay at his
base salary rate, payable in 18 bi-weekly payments consistent with the
Corporation’s normal payroll cycle, if and only if he executes a general release
of all claims against the Corporation upon separation of his employment with
the Corporation. The severance payment, pro-rated bonus as determined by the
Corporation, and vested options will be the only entitlements made to Executive
upon separation of his employment with the Corporation. Executive will not
receive accrued vacation or any




 









 






	 		 	other monetary payment from the Corporation. Eighty percent of this severance
payment will be allocated to Executive’s agreement to abide by the covenant not
to compete provisions and nondisclosure requirements contained in paragraphs 4
and 5 of this Agreement. Executive’s obligations under paragraphs 4 and 5 of
this Agreement will continue regardless of whether Executive receives a
severance payment from the Corporation. The Executive shall not be required to
mitigate the amount of any severance payment provided for in this Agreement by
seeking other employment or otherwise.






	8)	 	Non-Disparagement. Executive agrees that he will not disparage the Corporation, in
any manner, upon separation of his employment from the Corporation. Likewise,
Corporation agrees that it will not disparage the Employee, in any manner, upon
separation of his employment from the Corporation.
	 
	9)	 	Arbitration. Subject to the provisions of paragraphs 4 and 5, Executive and
Corporation agree that all Disputes, as defined in Article I of the Alternative Dispute
Resolution Procedure (the “ADR Procedure”), regarding the termination of employment
or other covered Dispute shall be resolved exclusively in accordance with the
Corporation’s ADR Procedure. The parties, however, agree that the ADR Procedure
does not apply to claims for unemployment compensation benefits or claims by the
Corporation for injunctive relief, specific performance, and/or damages as provided for
in paragraphs 4 and 5 of this Agreement. Executive represents, warrants and agrees
that (a) Executive has received, read and understands the Corporation’s ADR
Procedure; (b) Executive must file a claim under the ADR Procedure within one-hundred and eighty (180) days of being notified of the termination or other adverse
employment decision; (c) arbitration may be compelled and enforced under the
Federal Arbitration Act; (d) any arbitration award is final and binding upon both
Executive and the Corporation; (e) the ADR Procedure shall survive the employer-Executive relationship and applies to any Dispute whether it is asserted during or after
Executive’s separation of employment; and (f) the ADR Procedure does not alter the
parties’ “At Will” employment relationship.
	 
	10)	 	Indemnification. The Corporation agrees to provide the Executive with coverage
under its Director’s and Officer’s liability insurance policy. The Corporation also
agrees to indemnify and defend Executive in accordance with the Corporation’s
Bylaws.
	 
	11)	 	Resignation Upon Termination. In the event of separation of Executive’s employment
with the Corporation, Executive hereby agrees to resign from all positions held in the
Corporation, including, without limitation, any position of director, officer, agent,
trustee, or consultant of the Corporation.
	 
	12)	 	Waiver. A party’s failure to insist on compliance or enforcement of any provision of
this Agreement, shall not affect the validity or enforceability or constitute a waiver of




 









 






	 	 	future enforcement of that provision or of any other provision of this Agreement by that party
or any other party.
	 
	13)	 	Governing Law. This Agreement shall in all respects be subject to, and governed by,
the laws of the State of Texas.
	 
	14)	 	Severability. The invalidity or unenforceability of any provision in the Agreement
shall not in any way affect the validity or enforceability of any other provision and this
Agreement shall be construed in all respects as if such invalid or unenforceable
provision had never been in the Agreement.
	 
	15)	 	Notice. Any and all notices required or permitted herein shall be deemed delivered if
delivered personally or if mailed by registered or certified mail to the Corporation at its
principal place of business and to Executive at the address hereinafter set forth
following Executive’s signature, or at such other address or addresses as either party
may hereafter designate in writing to the other.
	 
	16)	 	Assignment. This Agreement, together with any amendments hereto, shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors, assigns, heirs and personal representatives, except that the rights and
benefits of either of the parties under this Agreement may not be assigned without the
prior written consent of the other party.
	 
	17)	 	Amendments. This Agreement may be amended in writing at any time by mutual
consent of the parties hereto. Any purported amendment that is not in writing and
signed by the Corporation and Executive is invalid.
	 
	18)	 	Entire Agreement. This Agreement contains the entire agreement and understanding
by and between Executive and the Corporation with respect to the employment of
Executive, and no representations, promises, agreements, or understandings, written
or oral, including the letter offer of employment dated May 5, 1999, relating to the
employment of Executive by the Corporation not contained herein shall be of any
force or effect.
	 
	19)	 	Burden and Benefit. This Agreement shall be binding upon, and shall inure to the
benefit of, the Corporation and Executive, and their respective heirs, personal and
legal representatives, successors, and assigns.
	 
	20)	 	References to Gender and Number Terms. In construing this Agreement, feminine or
number pronouns shall be substituted for those masculine in form and vice versa, and
plural terms shall be substituted for singular and singular for plural in any place which
the context so requires.
	 
	21)	 	Headings. The various headings in this Agreement are inserted for convenience only
and are not part of the Agreement.




 









 










IN WITNESS
WHEREOF, the Corporation and Executive have duly executed this Agreement as of
the Effective Date.




	 	 	 	 	 	 	 	 	 	 	 
	INTERPHASE CORPORATION	 	 	 	STEVEN P. KOVAC	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Gregory B. Kalush
	 	 	 	By:
	 	/s/ Steven P. Kovac	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 

	 	GREGORY B. KALUSH	 	 	 	 	 	 	 	 
	 

	 	President and Chief Executive Officer	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 





	 	 	 
	Address for Notice Purposes:

	 	Address for Notice Purposes:






Chief Executive Officer

Interphase Corporation

13800 Senlac Road

Dallas, Texas 75234




 









 





ATTACHMENT A



List of Confidential Information





	•	 	Overall corporate strategy (including subsidiaries)
	 
	•	 	FY 1999 Business Plan, Revenue, Expense and Earnings Projections
	 
	•	 	FY 1999 Budgets, Margin Analyses
	 
	•	 	Product Strategy including Marketing Plans and Product Roadmaps
	 
	•	 	Customer and Supplier Lists
	 
	•	 	Pricing Strategy
	 
	•	 	Bills of Materials
	 
	•	 	Telephone Listing of Current Employees








 









 








January 19, 2000




Mr. Steve P. Kovac
 c/o
Interphase Corporation

13800 Senlac Road
 Dallas, Texas 75234




	 	 	 
	Re:

	 	Employment Agreement dated
May 11, 1999 (the “Employment Agreement”) by and
between Interphase Corporation and Its Subsidiaries (“Interphase”) and Steven P.
Kovac





Dear Steve:




     Attached
as Exhibit A is a copy of the Employment Agreement. This letter sets forth
Interphase’s understanding of the agreement reached between us regarding amendment of
the Employment Agreement, which understanding is as follows:



          (1) The Employment Agreement is amended by adding thereto a new provision
which is in addition to, and not in lieu or substitution of, any other provision of the
Employment Agreement. Such new provision which shall be added to the Employment Agreement as numbered
paragraph 22 reads in its entirety as follows:




	 	 	 
	 

	 	“22. Acceleration of Options Upon Acquisition of Shares by One
Investor. If at any time during the term of this Agreement, one
investor (including all affiliates, as defined in Rule 405
promulgated pursuant to the Securities Act of 1933, as amended, of
such investor) accumulates 20% or more of the outstanding Common
Stock of the Corporation then, effective as of the date of such
accumulation, all of the Executive Stock Options shall be
accelerated.”






          (2) Except
as expressly amended by this letter agreement, the Employment Agreement, and each and every provision thereof, is expressly ratified, affirmed, adopted and
approved.




  Steve, if this letter agreement correctly sets forth your understanding of the agreement
reached with Interphase regarding amendment of the Employment Agreement, please so indicate by
signing below, whereupon this shall become a binding agreement.



	 	 	 	 	 	 	 
	 	 	Sincerely,	 	 
	 
	 	 	 	 	 	 
	 	 	Interphase Corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	BY:
	 	/s/ Gregory B. Kalus	 	 
	 

	 	 	 	 	 	 
	 

	 	Its:
	 	CEO &
PRESIDENT	 	 






	 
	Agreed to and Accepted By:

	 

	/s/ Steven
P. Kovac

	Steven P. Kovac

	Dated:
1/20, 2000