8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): December 30, 2008

INTERPHASE CORPORATION
(Exact name of registrant as specified in its charter)

Texas	0-13071	75-1549797
(State or other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

2901 North Dallas Parkway, Suite 200, Plano, Texas	75093
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (214) 654-5000

Not Applicable

(Former name or former address if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01. Entry into a Material Definitive Agreement.

On December 30, 2008, Interphase Corporation entered into Amended and Restated Employment, Confidentiality, and Non-Competition Agreements with its executive team, including Gregory B. Kalush, Chief Executive Officer; Thomas N. Tipton, Jr., Chief Financial Officer; Marc E. DeVinney Vice President of Engineering; James W. Gragg Vice President of Operations and Fulfillment; Randall E. McComas, Vice President of Global Sales and Customer Support; Deborah A. Shute, Vice President of Human Resource and Administration; and Yoram Soloman Vice President of Corporate Strategy & Business Development.

The Amended and Restated Agreements replace the Executive Employment Agreements previously in place for the aforementioned executives. The Amended and Restated Agreements were revised to comply with the documentary requirements of Section 409A of the Internal Revenue Code of 1986, as amended, and the treasury regulations and other official guidance effective January 1, 2009.

Item 9.01.       Financial Statements and Exhibits

(d) Exhibits

Exhibit 10.1 – Amended and Restated Employment, Confidentiality, and Non-Competition Agreement with Mr. Gregory B. Kalush

Exhibit 10.2 – Amended and Restated Employment, Confidentiality, and Non-Competition Agreement with Mr. Thomas N. Tipton Jr.

Exhibit 10.3 – Amended and Restated Employment, Confidentiality, and Non-Competition Agreement with Mr. Marc E. DeVinney

Exhibit 10.4 – Amended and Restated Employment, Confidentiality, and Non-Competition Agreement with Mr. James W. Gragg

Exhibit 10.5 – Amended and Restated Employment, Confidentiality, and Non-Competition Agreement with Mr. Randall E. McComas

Exhibit 10.6 – Amended and Restated Employment, Confidentiality, and Non-Competition Agreement with Ms. Deborah A. Shute

Exhibit 10.7 – Amended and Restated Employment, Confidentiality, and Non-Competition Agreement with Mr. Yoram Soloman

SIGNATURE

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 hereunto duly authorized.

Interphase Corporation

Date: December 31, 2008

By: /s/ Thomas N. Tipton Jr.
Title: Chief Financial Officer,
Vice President of Finance and Treasurer

EXHIBIT INDEX

Exhibit 10.1 – Amended and Restated Employment, Confidentiality, and Non-Competition Agreement with Mr. Gregory B. Kalush

Exhibit 10.2 – Amended and Restated Employment, Confidentiality, and Non-Competition Agreement with Mr. Thomas N. Tipton Jr.

Exhibit 10.3 – Amended and Restated Employment, Confidentiality, and Non-Competition Agreement with Mr. Marc E. DeVinney

Exhibit 10.4 – Amended and Restated Employment, Confidentiality, and Non-Competition Agreement with Mr. James W. Gragg

Exhibit 10.5 – Amended and Restated Employment, Confidentiality, and Non-Competition Agreement with Mr. Randall E. McComas

Exhibit 10.6 – Amended and Restated Employment, Confidentiality, and Non-Competition Agreement with Ms. Deborah A. Shute

Exhibit 10.7 – Amended and Restated Employment, Confidentiality, and Non-Competition Agreement with Mr. Yoram Soloman

EX-10.1

EXHIBIT 10.1

[THIS AGREEMENT IS SUBJECT TO ARBITRATION]

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into effective as of the 30^th day of December, 2008 (the “Effective Date”), by and between Interphase Corporation (the “Corporation”) and Gregory B. Kalush (the “Executive”).

WHEREAS, the Corporation and the Executive are parties to that certain Employment Agreement dated March 12, 2000, which sets forth the terms and conditions of the Executive’s employment with the Corporation (the “2000 Agreement”); and

WHEREAS, the Corporation and the Executive desire to amend and restate the 2000 Agreement on the terms and conditions set forth herein in a manner intended to take into account the provisions of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”);

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 continues the employment of the Executive in the capacity of President and Chief Executive Officer, and the Executive hereby accepts such continued employment, on the terms and conditions hereinafter set forth.

2. Duties. The Executive’s general duties and responsibilities as President and Chief Executive Officer shall be overseeing the general operations of the Corporation. The Executive will also serve as Chairman of the Board, or any such other position to which he is appointed by the Board of Directors of the Corporation.

3. Term. The “initial term” of employment under this Agreement, as amended and restated, shall terminate on March 12, 2009, the end of the current term of the Agreement, subject to the termination provisions in Section 10. After the expiration of the initial term of this amended and restated Agreement, this Agreement and the Executive’s employment hereunder, will continue for successive two (2) year terms, unless, as provided in Section 10(a), more than thirty (30) days prior to the expiration of the then current term (i.e., initial or renewal) of this Agreement, either the Executive or the Corporation gives notice to the other party that this Agreement will not be renewed.

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4. Salary and Other Compensation. As compensation for the services to be rendered by the Executive to the Corporation pursuant to this Agreement, the Executive shall be paid the following compensation and other benefits:

(a) Base Salary: A base salary at an annual rate of $325,000.00, payable in bi-weekly installments will be paid to the Executive. The base salary may not be decreased at any time during the term of the Executive’s employment hereunder and shall be reviewed annually throughout the term of this Agreement by the Board of Directors or Compensation Committee of the Board of Directors (the “Compensation Committee”). References in this Agreement to the Executive’s “base salary” shall refer to the base salary, as adjusted from time to time in accordance with this Section 4(a), payable to the Executive at any relevant time.

(b) Bonus: The Executive shall be eligible for an annual Executive Bonus based upon the guidelines contained in the Corporation’s Executive Bonus Plan. The Executive’s “annual bonus target” for the period January 1, 2008 through December 31, 2008 shall be $200,000 and thereafter shall be established by the Board of Directors or the Compensation Committee (if such authority is delegated to the Compensation Committee). The Executive must be employed by the Corporation through the payment date of any such annual bonus as a condition to receive the bonus.

(c) Equity Awards: As provided in the 2000 Agreement, the Executive has been awarded stock options to purchase 100,000 shares of common stock of the Corporation under its Amended and Restated Stock Option Plan (the “Option”) and in accordance with prior action of the Board of Directors, the Option vested as follows: (i) 33,334 of the total shares covered by the Option vested on March 12, 2000; (ii) an additional 33,333 of the total shares covered by the Option vested on March 12, 2001; and (iii) the remaining 33,333 shares covered by the Option vested on March 12, 2002.

The exercise price, term and other relevant provisions of the Option (including, but not limited to, which options are incentive stock options and which are nonqualified options) are contained in Option Agreements # 1083 and 1085 executed by the Executive (the “Option Agreements”). In the event of any conflict between the terms of this Section 4(c) and the Option Agreements, the Option Agreements shall control.

The Executive has received other equity awards subsequent to the award referred to above. In addition, the Executive shall be eligible to participate in equity awards as determined by the Compensation Committee of the Corporation’s Board of Directors under the Corporation’s Long-Term Stock Incentive Plan or other equity award plan maintained by the Corporation during the term of this Agreement.

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(d) Expense Reimbursements: The Corporation agrees to reimburse the Executive, in accordance with the Corporation’s policies regarding reimbursement of business expenses, for the reasonable and necessary business expenses incurred by the Executive in the performance of his duties.

(e) Office Furnishings: The Corporation agrees to provide a personal computer and office space and furnishings to the Executive commensurate with the Corporation’s decor and culture.

(f) Executive Benefit Plans: The Executive shall be allowed to participate, to the extent he may be eligible, in any profit sharing, retirement, insurance or other benefit plan or programs maintained by the Corporation from time to time. The Corporation shall also provide the Executive with the life insurance policy for which the Corporation shall pay the premiums on the Executive’s life with a $1M (One Million Dollar) death benefit as in effect as of the Effective Date, payable to the Executive’s designated beneficiary.

5. 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 the Executive in accordance with the Corporation’s Articles of Incorporation and Bylaws. This Section 5 shall survive the expiration of this Agreement.

6. Health and Corporate Owned Life Insurance. The Corporation agrees to offer coverage to the Executive under the group health plan maintained by the Corporation from time to time on the same basis as other executives of the Corporation. The Corporation, in its discretion, may apply for and procure in its own name and for its own benefit, life insurance on the life of the Executive in any amount or amounts considered advisable by the Corporation, and the Executive shall submit to any medical or other examination and execute and deliver any application or other instrument in writing, reasonably necessary to effectuate such insurance.

7. Vacations and Leave. The Executive shall be entitled to four (4) weeks of paid vacation per year to be accrued in accordance with the Corporation’s vacation policy in effect from time to time and ten (10) sick days per year, and any other paid leave benefits provided for in the Corporation’s Policy Guide.

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8. Non-Disclosure of Confidential Information. During the term of the Executive’s employment, the Corporation has and promises to continue to provide the Executive, and he will be making use of, acquiring, and/or adding to, confidential information of a special and unique nature and value relating to such matters as the patents, copyrights, proprietary information, trade secrets, systems, product developments, procedures, manuals, confidential reports, lists of customers (which are deemed for all purposes confidential and proprietary) of the Corporation and its Affiliates (an “Affiliate” of the Corporation being defined as any person controlling, controlled by, or under common control with the Corporation), as well as the nature and type of services rendered by the Corporation and its Affiliates, the equipment and methods used and preferred by the customers of the Corporation and its Affiliates, and the fees paid by them. The Corporation and its Affiliates are sometimes hereinafter referred to as the “Interphase Group.” The Executive further agrees that if a third party (e.g., vendors, customers and manufacturers) contracts with the Interphase Group or any member thereof 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 be subject to the same protection as other Confidential Trade Secret Information (as hereinafter defined) of the Interphase Group.

As a material inducement to the Corporation to enter into this Agreement and to pay the Executive the compensation and benefits stated herein and as a condition of employment and continued employment, the Executive shall keep confidential all such confidential and proprietary information which the Executive learns or acquires as a result of his employment with the Corporation (collectively, “Confidential Trade Secret Information”). 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 business of the Interphase Group, which gives the Interphase Group an advantage over a competitor who does not know or use it.

The Executive agrees (i) that the remedy at law for any breach or threatened breach of this Section 8 is inadequate and (ii) that, in the event of breach or threatened breach of this Section 8, the Corporation (or any other member of the Interphase Group) shall be entitled to injunctive relief and specific performance to enforce this Section 8. Injunctive relief and/or specific performance will be in addition to whatever other remedy is available to the Corporation (or other member of the Interphase Group) at law, under this Agreement or otherwise. The Executive agrees that damages for use of any identified Confidential Trade Secret Information in violation of this Section 8 shall be 100% of the gross amount of revenue derived or resulting from unauthorized use of such information.

9. Covenants Not to Compete. The Executive acknowledges that the services he is to render to the Corporation are of a special and unusual character with a unique value to the Interphase Group, the loss of which cannot adequately be compensated by damages in an action at law. Accordingly, the Executive agrees that during the term of his employment with the Corporation and for a period of two (2) years immediately following the date of termination, for whatever reason, of his employment with the Corporation:

(a) The Executive shall not, directly or indirectly, without the express written consent of the Corporation, (i) solicit or induce, or attempt to solicit or induce, any current or future employee of the Interphase Group, or any member thereof, to leave or cease his relationship with the Interphase Group, for any reason whatsoever, and/or (ii) hire any current or future employee of the Interphase Group or any member thereof on the Executive’s behalf or on behalf of any subsequent employer of the Executive.

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(b) The Executive shall not, directly or indirectly, within the Restricted Territory (as hereinafter defined), without the express written consent of the Corporation: (i) engage, as an owner, employer, consultant or otherwise, in any business or activity that is competitive with the business of the Interphase Group; and/or (ii) be employed by, or provide competitive services or assistance to, a Competing Business (as hereinafter defined) which would potentially involve, directly or indirectly, the use and/or disclosure of Confidential Trade Secret Information, as defined in Section 8. For purposes of this Section 9, the “Restricted Territory” shall mean North America, Europe, Japan, Korea, Australia, Thailand, China, Singapore and India. For purposes of this Section 9, 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 Interphase Group, or any member thereof, as of the date of the Executive’s separation from employment with the Corporation. If the Executive desires to work for a Competing Business in an area that is not competitive with the business of the Interphase Group, the Executive must give written notice to the Board of Directors of the Corporation and obtain its approval that the employment will not violate the terms and conditions of this Section before beginning employment with the Competing Business.

(c) The Executive shall not, directly or indirectly, solicit or attempt to solicit the existing or prospective customers of the Interphase Group to purchase services or products that are competitive with those marketed, offered for sale and/or under any stage of development by the Interphase Group as of the date of the Executive’s separation from employment with the Corporation. For purposes of this Agreement, existing customers shall mean those persons or firms to whom the Interphase Group, or any member thereof, has made a sale in the preceding twelve (12) months prior to the Executive’s separation from employment; prospective customers shall mean those persons or firms that the Interphase Group, or any member thereof, has solicited to purchase, and/or with whom the Interphase Group, or any member thereof, has negotiated to sell, the products or services of the Interphase Group within the preceding twelve (12) months prior to the Executive’s separation from employment.

(d) In the event that, notwithstanding the foregoing, any of the provisions of this Section 9 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 provisions had not been included therein. In the event that any provision of this Section 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.

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(e) The Executive agrees (i) that the remedy at law for any breach or threatened breach of this Section 9 is inadequate and (ii) that, in the event of breach or threatened breach of this Section 9, the Corporation shall be entitled to injunctive relief and specific performance to enforce this Section 9. Injunctive relief and/or specific performance will be in addition to whatever other remedy is available to the Corporation at law, under this Agreement or otherwise. The Executive agrees that the damages for breach of this Section 9 shall be 100% of the gross amount of revenue derived or resulting from the breach of the covenant in this Section 9.

10. Termination. This Agreement, and the Executive’s employment hereunder, will terminate as follows:

(a) Non-renewal of Employment Agreement. The Executive is notified by the Corporation, or the Executive gives notice to the Corporation, more than thirty (30) days prior to the expiration of the then current (i.e., initial or renewal) term that this Agreement will not be renewed. Notice of non-renewal of this Agreement shall be communicated by dated, written “Notice of Non-Renewal” sent by Registered Mail, signed receipt requested.

(b) Death. The Executive’s employment hereunder shall automatically terminate upon his death.

(c) 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, the Executive shall have been absent from his duties under this Agreement on a substantially full-time basis for a period of three (3) or more consecutive months, and thereafter, within thirty (30) days after the Corporation notifies the Executive in writing that it intends to replace him, the Executive shall not have returned to the performance of such duties on a full-time basis. Should the Executive be diagnosed as permanently disabled by his treating physician, the Corporation can terminate his employment for “Disability” without waiting for the expiration of the three-month period. Without limiting the foregoing, until the Corporation terminates the Executive’s employment hereunder on account of Disability, the Executive shall be treated as on a bona fide paid leave of absence and receive his full compensation as provided in Section 4 of this Agreement, at the same time and on the same basis described in Section 4; provided however, that no such compensation shall be payable under this Agreement for any period in excess of six (6) months.

(d) By the Executive. The Executive may resign at any time upon thirty (30) days written notice to the Board of Directors of the Corporation.

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(e) By the Corporation. The Corporation may terminate the Executive immediately for “Overt Misconduct.” For purposes of this Agreement, “Overt Misconduct” means (i) any act or course of conduct by the Executive constituting a criminal act or (ii) 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 (iii) the commission by the Executive of an act or course of conduct involving moral turpitude, or (iv) a breach by the Executive of either or both of Sections 8 or 9 of this Agreement, or (v) 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 Sections 8 or 9) by the Executive of this Agreement, provided that before a termination of the Executive pursuant to this subsection 10(e)(v) shall be considered for “Overt Misconduct,” the Corporation’s Board of Directors must give the Executive written notice and fifteen (15) days to cure such violation or failure. In the event the Corporation asserts that the Executive has committed an act of Overt Misconduct, the termination notice must specify in detail the misconduct alleged, and the witnesses or other basis for such allegation.

(f) Notice of Termination. Notice of termination shall be communicated by dated, written “Notice of Termination” sent by Registered Mail, signed receipt requested.

11. Payments Upon Termination. Payments to the Executive upon termination of employment (“Termination Payments”) shall be as follows:

(a) Upon Resignation by the Executive. In the event of a resignation by the Executive, the Executive shall be entitled (i) to his earned, but unpaid, base salary through his last date of employment and to compensation for any accrued, but unused vacation as of the date of his resignation, payable, in each case, in accordance with the Corporation’s normal payroll practices, (ii) to exercise vested stock options that are outstanding at the time of the Executive’s termination in accordance with the terms of the Executive’s stock option grant agreements, and (iii) to any unpaid expense reimbursements for expenses incurred prior to his resignation, subject to the provisions of Section 21. The Executive’s election not to renew this Agreement as described in Section 10(a) shall be deemed for purposes of this Section 11 to be a “resignation” by the Executive.

(b) Upon Non-Renewal of the Executive’s Employment Agreement by the Corporation or Termination by the Corporation for other than Overt Misconduct. In the event that the Corporation (A) elects not to renew this Agreement and at the time of such non-renewal election by the Corporation, the Executive is willing and able to execute a new agreement containing terms and conditions substantially similar to those in this Agreement and to continue to provide services to the Corporation substantially similar to the services provided at the time the Corporation elects not to renew, or (B) terminates the Executive for other than Overt Misconduct (or death or Disability), then the Executive shall be entitled to the following termination payments and benefits:

(i) The Executive shall receive his earned, but unpaid, base salary through his last date of employment and compensation for any accrued, but unused vacation as of the date of termination (or non-renewal) payable, in each case, in accordance with the Corporation’s normal payroll practices. The Executive shall also be entitled to any unpaid expense reimbursements for expenses incurred prior to his date of termination (or non-renewal), subject to the provisions of Section 21.

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(ii) Subject to the Executive’s execution of a general release of claims and covenant not to sue in a form acceptable to the Corporation (the “Release”), the Executive shall receive severance payments in the amount of three (3) years’ base salary, payable in bi-weekly installments over a thirty-six (36) month period at the current effective base salary rate at the time of non-renewal of this agreement. Such severance payments shall commence, subject to the payment timing provisions of Section 19(b), on the first payroll date of the Corporation following the Executive’s termination of employment provided the Executive has executed and delivered the Release to the Corporation prior to such date (and not revoked the Release during the applicable revocation period). Notwithstanding any provision in the preceding sentence to the contrary, if the severance payments would be considered “non-qualified deferred compensation” under Section 409A of the Code, the payment of severance payments shall commence, subject to the payment timing provisions of Section 19(b), on the first regularly scheduled payroll date of the Corporation occurring after the expiration of sixty (60) days following the Executive’s date of termination, provided the Executive has executed and delivered the Release to the Corporation prior to such date (and not revoked the Release during the applicable revocation period). The form of the Release will be provided to the Executive not later than five (5) days following the Executive’s date of termination. In addition, if the Executive has satisfied the eligibility conditions for severance payments described above, including without limitation, by the execution and delivery to the Corporation of the Release within the time periods following the Executive’s date of termination described above (and not revoked the Release during the applicable revocation period) and in connection with the Executive’s termination of employment the Executive is eligible for and timely elects to continue Executive’s coverage under the Corporation’s group health plan pursuant to Section 4980B of the Code and Section 601 et seq. of the Employee Retirement Income Security Act of 1974, as amended (“COBRA Coverage”) and to continue the coverage of Executive’s dependents who are eligible for COBRA Coverage as a result of Executive’s termination of employment (the “Qualified Beneficiaries”), the Corporation will pay the premium cost for COBRA Coverage for the Executive and for the Qualified Beneficiaries for the 18-month period following the Executive’s termination of employment or such shorter period during which the Executive (or with respect to any of the Qualified Beneficiaries, such Qualified Beneficiary) continues to be eligible for COBRA Coverage. The severance payments will be reduced by any compensation (e.g., base salary, bonus, commission or similar payments) that the Executive receives from other employment (including, but not limited to, self employment by the Executive) during the three (3) year severance pay period. The Executive agrees to keep the Corporation fully informed of such compensation received from other employment.

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(iii) The exercise period of the Executive’s vested stock options (whether such options are nonqualified stock options or incentive stock options described in Section 422 of the Code) that are outstanding on the date of the Executive’s termination of employment (or the date of non-renewal of this Agreement under this Section 11(b)) and were granted to the Executive as a result of the Executive’s employment under this Agreement or the 2000 Agreement and specifically excluding any stock options granted to the Executive as a result of his service as a member of the Corporation’s Board of Directors (the “Outstanding Stock Options”) shall be extended for a period equal to the shorter of (A) three (3) years or (B) the earlier of the latest date upon which the stock option could have expired by its original terms under any circumstances or the 10th anniversary of the original date of grant of the stock option; provided, however, that for each of Executive’s vested stock options, if on the date of the Executive’s termination of employment (or the date of non-renewal of this Agreement under this Section 11(b)), the exercise price of the vested stock option is greater than the fair market value of the underlying stock determined on the same date, the Executive’s vested stock option shall be cancelled (in lieu of the extension of the exercise period described above) and the Corporation will grant to the Executive a new nonqualified stock option under substantially similar terms and conditions as the cancelled option and with respect to the same number of vested shares at the same exercise price but exercisable for a term of three (3) years.

(c) Upon Disability of the Executive. In the event of termination of the Executive’s employment by reason of Disability, the Executive shall be entitled to the following termination payments and benefits:

(i) The Executive shall receive his earned, but unpaid, base salary through his last date of employment and compensation for any accrued, but unused vacation as of the date of termination for disability payable, in each case, in accordance with the Corporation’s normal payroll practices. The Executive shall also be entitled to payment of any unpaid expense reimbursements for expenses incurred prior to the termination of his employment for for disability, subject to the provisions of Section 4(d).

(ii) Subject to the Executive’s execution of the Release, the Executive shall receive severance payments in the amount of two (2) years’ base salary, payable in bi-weekly installments over a thirty-six (36) month period commencing, subject to the payment timing provisions of Section 19(b), on the first payroll period of the Corporation following the termination of Executive’s employment at the current base salary rate as of the date of the termination of Executive’s employment for Disability, provided the Executive has executed and delivered the Release to the Corporation prior to such date (and not revoked the Release during the applicable revocation period). Notwithstanding any provision in the preceding sentence to the contrary, if the severance payments

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would be considered “non-qualified deferred compensation” under Section 409A of the Code, the payment of severance payments shall commence, subject to the payment timing provisions of Section 19(b), on the first regularly scheduled payroll date of the Corporation occurring after the expiration of sixty (60) days following the date of Executive’s termination, provided the Executive has executed and delivered the Release to the Corporation prior to such date (and not revoked the Release during the applicable revocation period). The form of the Release will be provided to the Executive not later than five (5) days following the date of Executive’s termination. In addition, if the Executive has satisfied the eligibility conditions for severance payments described above, including without limitation, by the execution and delivery to the Corporation of the Release within the time periods following the Executive’s date of termination described above (and not revoked the Release during the applicable revocation period) and in connection with the termination of Executive’s employment the Executive is eligible for and timely elects to continue Executive’s coverage under the Corporation’s group health plan pursuant to Section 4980B of the Code and Section 601 et seq. of the Employee Retirement Income Security Act of 1974, as amended (“COBRA Coverage”) and to continue the coverage of Executive’s dependents who are eligible for COBRA Coverage as a result of the termination of Executive’s employment (the “Qualified Beneficiaries”), the Corporation will pay the premium cost for COBRA Coverage for the Executive and for the Qualified Beneficiaries for the 18-month period following the termination of Executive’s employment or such shorter period during which the Executive (or with respect to any of the Qualified Beneficiaries, such Qualified Beneficiary) continues to be eligible for COBRA Coverage.

(iii) Subject to the Executive’s execution of the Release, the Executive shall receive payment of two (2) years of the Executive’s annual bonus (determined as provided below) based on the Corporation’s Executive Bonus Plan payable in bi-weekly installments over a thirty-six (36) month period commencing, subject to the payment timing provisions of Section 19(b), with the first payroll period of the Corporation following the termination of Executive’s employment, provided the Executive has executed and delivered the Release to the Corporation prior to such date (and not revoked the Release during the applicable revocation period). Notwithstanding any provision in the preceding sentence to the contrary, if the severance payments would be considered “non-qualified deferred compensation” under Section 409A of the Code, the payment of severance payments shall commence, subject to the payment timing provisions of Section 19(b), on the first regularly scheduled payroll date of the Corporation following sixty (60) days following the date of Executive’s termination, provided the Executive has executed and delivered the Release to the Corporation prior to such date (and not revoked the Release during the applicable revocation period). The form of the Release will be provided to the Executive not later than five (5) days following the date of Executive’s termination. For this purpose, the annual bonus amount will be the greater of the prior fiscal year’s Executive Bonus Plan payment or 100% of the Executive’s Bonus Plan target for the year in which his employment terminates.

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(iv) The exercise period of the Executive’s vested stock options (whether such options are nonqualified stock options or incentive stock options described in Section 422 of the Code) that are outstanding on the date of the Executive’s termination of employment and were granted to the Executive as a result of the Executive’s employment under this Agreement or the 2000 Agreement and specifically excluding any stock options granted to the Executive as a result of his service as a member of the Corporation’s Board of Directors shall be extended for a period equal to the shorter of (A) three (3) years or (B) the earlier of the latest date upon which the stock option could have expired by its original terms under any circumstances or the 10th anniversary of the original date of grant of the stock option; provided, however, that for each of Executive’s vested stock options, if on the date of the Executive’s termination of employment, the exercise price of the vested stock option is greater than the fair market value of the underlying stock determined on the same date, the Executive’s vested stock option shall be cancelled (in lieu of the extension of the exercise period described above) and the Corporation will grant to the Executive a new nonqualified stock option under substantially similar terms and conditions as the cancelled option and with respect to the same number of vested shares at the same exercise price but exercisable for a term of three (3) years.

(d) Upon Death. In the event the Executive’s employment is terminated by reason of his death, the Executive’s estate shall be entitled:

(i) To the Executive’s earned, but unpaid base salary through his last date of employment and payment for any accrued, but unused vacation as of the date of termination for death, payable, in each case, in accordance with normal payroll practices of the Corporation.

(ii) To payment of any unpaid expense reimbursements for expenses incurred prior to the Executive’s termination for death, subject to the provisions of Section 21.

(iii) The exercise period of the Executive’s vested stock options (whether such options are nonqualified stock options or incentive stock options described in Section 422 of the Code) that are outstanding on the date of the Executive’s death and were granted to the Executive as a result of the Executive’s employment under this Agreement or the 2000 Agreement and specifically excluding any stock options granted to the Executive as a result of his service as a member of the Corporation’s Board of Directors shall be extended for a period equal to the shorter of (A) three (3) years or (B) the earlier of the latest date upon which the stock option could have expired by its original terms under any circumstances or the 10th anniversary of the original date of grant of the stock option; provided, however, that for each of Executive’s vested stock options, if on the date of the Executive’s death, the exercise price of the vested stock option is greater than the fair market value of the underlying stock determined on the same date, the Executive’s vested stock option shall be cancelled and the Corporation will grant to the Executive’s estate (in lieu of the extension of the exercise price described above) a new nonqualified stock option under substantially similar terms and conditions as the cancelled option and with respect to the same number of vested shares at the same exercise price but exercisable for a term of three (3) years.

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(e) Upon Termination for Overt Misconduct. The Executive shall be entitled (i) to his earned, but unpaid, base salary through his last date of employment and to any earned or unused vacation as of the date of termination, payable, in each case, in accordance with the normal payroll practices of the Corporation, (ii) to any unpaid expense reimbursements incurred while performing his executive duties, subject to the provisions of Section 4(d), and (iii) to exercise vested stock options in accordance with the terms of the Executive’s stock option grant agreements.

12. Acquisition of Shares by One Investor or Group. Notwithstanding any provision herein to the contrary, if at any time during the term of this Agreement any one person, or more than one person acting as a group (as determined under Treasury Regulation Section 1.409A-3(h)(5)(v)), acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of the common stock of the Corporation possessing thirty (30) percent or more of the total voting power of the stock of the Corporation and such acquisition constitutes a “change in the effective control of a corporation” for purposes of Section 409A of the Code (the “Acquisition”), then the Executive shall not be entitled to receive any severance or other pay provided for in Sections 11(b) and 11(c) of this Agreement, but the Executive shall instead receive (i) a lump sum payment in the amount of two (2) years’ base salary at the current base salary amount payable within thirty (30) days of the Acquisition, and (ii) the Executive shall also receive a lump sum payment payable within thirty (30) days of the Acquisition equal to two years of the Executive’s annual bonus (determined as provided below) based on the Corporation’s Executive Bonus Plan. For purposes of this Section 12, the annual bonus amount will be the greater of the prior fiscal year’s Executive Bonus payment or 100% of the Executive’s Bonus Plan target for the fiscal year in which the Acquisition occurs. In addition, the vesting of all of the Executive’s Outstanding Stock Options shall be accelerated on the date of the Acquisition and the exercise period of the Executive’s vested stock options (whether such options are nonqualified stock options or incentive stock options described in Section 422 of the Code) that are outstanding on the date of the acquisition and were granted to the Executive as a result of the Executive’s employment under this Agreement or the 2000 Agreement and specifically excluding any stock options granted to the Executive as a result of his service as a member of the Corporation’s Board of Directors shall be extended for a period equal to the shorter of (A) three (3) years or (B) the earlier of the latest date upon which the stock option could have expired by its original terms under any circumstances or the 10th anniversary of the original date of grant of the stock option; provided, however, that for each of Executive’s vested stock options, if on the date of the acquisition, the exercise price of the vested stock option is greater than the fair market value of the underlying stock determined on the same date, the Executive’s vested stock option shall be cancelled (in lieu of the extension of the exercise period described above) and the Corporation will grant to the Executive a new nonqualified stock option under substantially similar terms and conditions as the cancelled option and with respect to the same number of vested shares at the same exercise price but exercisable for a term of three (3) years.

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13. Tax Gross Up Payment.

(a) Excess Parachute Payment. If the Executive incurs the excise tax (the “Excise Tax”) imposed by Section 4999 of the Code on “excess parachute payments” within the meaning of Section 280G(b)(1) of the Code as the result of the receipt of any payments under this Agreement, the Corporation shall pay to the Executive a gross up payment (the “Gross Up Payment”) such that the net amount retained by the Executive, after deduction of (i) any such Excise Tax upon any payments under this Agreement (other than payments provided by Section 11 and this Section 13) and (ii) any federal, state and local income and employment taxes (together with penalties and interest) and Excise Tax upon the payments provided by this Section 13 shall be equal to the amount of the payments that the Executive is entitled to receive under this Agreement (other than payments provided by this Section 13).

(b) Applicable Rates. For purposes of determining the Gross Up Payment amount, the Executive shall be deemed:

(i) to pay federal income taxes at the highest marginal rate of federal income taxation applicable to individual taxpayers in the calendar year in which the Gross Up Payment is made (which rate shall be adjusted as necessary to take into account the effect of any reduction in deductions, exemptions or credits otherwise available to the Executive had the Gross Up Payment not been received);

(ii) to pay additional employment taxes as a result of the receipt of the Gross Up Payment in an amount equal to the highest marginal rate of employment taxes applicable to wages; provided that if any employment tax is applied only up to a specified maximum amount of wages, such limit shall be taken into account for purposes of such calculation; and

(iii) to pay state and local income taxes at the highest marginal rates of taxation in the state and locality of the Executive’s residence on the date of the termination, net of the maximum reduction in federal income taxes that could be obtained from deduction of such state and local taxes.

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(c) Determination of Gross Up Payment Amount. The determination of the Gross Up Payment amount shall be made by a nationally recognized public accounting firm selected by the Executive and reasonably acceptable to the Corporation (the “Accountants”). If the Excise Tax amount payable by the Executive, is different from the Excise Tax amount computed by the Accountants for purposes of determining the Gross Up Payment amount, then appropriate adjustments to the Gross Up Payment amount shall be made. For purposes of determining the initial Gross Up Payment amount prior to such determination of the actual Excise Tax amount, the following assumptions shall be utilized:

(i) the payments provided for in Section 12, and the Gross Up Payment, shall be treated as “parachute payments” pursuant to Section 280G of the Code without regard to whether a change in control satisfies the requirements of Section 280G(b)(2)(A)(i) of the Code;

(ii) no portion of any payment made pursuant to Section 11, shall be treated as a parachute payment;

(iii) the amount payable to the Executive pursuant to Section 12 shall be:

(A) deemed to be equal to 150% of the highest annual base compensation at any time during the Executive’s employment with the Corporation;

(B) deemed to have been paid immediately following the change in control;

(C) deemed to include the additional amount payable under Section 13, if any, for additional taxes payable by the Executive as a result of the receipt of the payment described in Section 12; and

(D) treated 100% as a parachute payment;

(iv) the “ascertainable fair market value” (as set forth in Treasury Regulation Section 1.280G-1, Q&A 13) of the Executive’s stock options, the vesting of which was accelerated by the change in control as provided for in Section 12, shall be equal to the product of (A) and (B) as set forth below:

(A) the number of shares covered by such options; and

(B) the difference between:

(1) the fair market value per share as of the date of the change in control; and

(2) the exercise price per share of stock subject to such Options; and

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(v) for purposes of applying the rules set forth in Treasury Regulation Section 1.280G-1, Q&A 24(c) to a payment described in Treasury Regulation Section 1.280G-1, Q&A 24(b), the amount reflecting the lapse of the obligation to continue performing services shall be equal to the minimum amount allowed for such payment as set forth in Treasury Regulation Section 1.280G-1, Q&A 24(c).

(d) Time For Payment. The Corporation shall pay the Gross Up Payment within thirty (30) days following the date the Executive provides the Corporation with written notice of the Executive’s payment of the taxes to which the Excise Tax relates, along with a copy of the return or returns filed by the Executive reflecting remittance of such taxes, but in no event later than by the end of the Executive’s taxable year next following the taxable year in which the Executive remits the related taxes.

14. Outplacement Services. If the Executive is terminated by the Corporation for any reason other than Overt Misconduct, the Corporation agrees to reimburse the Executive for any reasonable outplacement consulting fees and expenses incurred by the Executive during the two year period following such termination; provided that the aggregate amount reimbursed by the Corporation shall not exceed 15% of the Executive’s Base Salary in effect immediately prior such termination. In addition and as to each reimbursement payment, to the extent that any reimbursement under this Section 14 is not deductible by the Executive for federal, state and local income tax purposes, Corporation shall pay the Executive an additional amount such that the net amount retained by the Executive, after deduction of any federal, state and local income tax on the reimbursement and such additional amount, shall be equal to the reimbursement payment. The Executive shall promptly submit to the Corporation all requests for reimbursement under this Section 14 and provide that such requests are promptly submitted, all amounts payable under this Section 14 shall be paid by Corporation within fifteen (15) days after the Executive’s presentation to Corporation of any statements of such reimbursement amounts; provided, however, that (i) reimbursement for reasonable outplacement consulting fees and expenses shall be made no later than the last day of the third taxable year of the Executive following the taxable year of the Executive in which the Executive’s termination of employment occurred and (ii) the tax gross up payment provided for in this Section 14 shall be made by the end of the Executive’s taxable year next following the Executive’s taxable year in which the Executive remits the related taxes.

15. Withholding. All payments required to be made to the Executive by Corporation shall be subject to the withholding of such amounts, if any, relating to federal, state and local taxes as may be required by law.

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16. Arbitration. Any dispute, controversy or claim arising out of or relating to this Agreement, or breach thereof, except for requests for injunctive relief, specific performance and declaratory relief shall be settled by the following arbitration procedure:

The parties hereto shall expeditiously seek to resolve between themselves such dispute, controversy or claim. If they shall fail to reach such a resolution, within twenty (20) days of such failure, each party shall appoint one (1) arbitrator. Within twenty (20) days after both arbitrators have been appointed, the arbitrators shall jointly appoint a third arbitrator. Within thirty (30) days after the appointment of the third arbitrator, the three-person arbitration panel shall consider all relevant evidence concerning such dispute, controversy or claim and reach its award or decision concerning such dispute, controversy or claim. Any arbitration must take place in Dallas, Texas. In reaching their award or decision, the arbitrators shall have no authority to change or modify any provision of this Agreement. The prevailing party shall be entitled to reimbursement for all legal fees and expenses incurred in conjunction with the arbitration, and the non-prevailing party will be responsible to pay the fees and costs of the arbitrators. Judgment upon any award rendered by the arbitrators may be entered in any United States District Court.

17. Resignation Upon Termination. In the event of termination of the Executive’s employment with the Corporation, for whatever reason, the Executive hereby agrees to resign from all positions held in the Corporation, and in any member of the Interphase Group, including, without limitations, any position as a director, officer, agent, trustee or consultant of the Corporation.

18. Right to Obtain Insurance. The Corporation may, at its option, fund all or any portion of its severance obligations through life, disability or other appropriate insurance on the Executive. In regard to the foregoing, the Executive agrees to fully cooperate with the Corporation in connection with the Corporation’s efforts to obtain any such insurance. Such cooperation shall include, but shall not be limited to, submission to any medical or other examination and execution of applications or other instruments reasonably necessary to effectuate such insurance. The Executive acknowledges the Corporation is not obligated to acquire insurance pursuant to this Section 18, such decision being solely at the Corporation’s discretion.

19. Additional Termination Provisions.

(a) Separation from Service. Notwithstanding anything to the contrary in this Agreement, with respect to any amounts payable to the Executive under this Agreement in connection with a termination of the Executive’s employment that would be considered “non-qualified deferred compensation” under Section 409A of the Code, in no event shall a termination of employment be considered to have occurred under this Agreement unless such termination constitutes the Executive’s “separation from service” with the Corporation as such term is defined in Treasury Regulation Section 1.409A-1(h) and any successor provision thereto (“Separation from Service”).

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(b) Section 409A Compliance. Notwithstanding anything contained in this Agreement to the Contrary, to the maximum extent permitted by applicable law, the severance payments payable to the Executive pursuant to Section 11 shall be made in reliance upon Treasury Regulation Section 1.409A-1(b)(9)(iii) (relating to separation pay plans) or Treasury Regulation Section 1.409A-1(b)(4) (relating to short-term deferrals, for all amounts payable under the schedule prior to March 15 of the calendar year following the calendar year in which the Executive is terminated by the Corporation pursuant to Section 11(b)). However, to the extent any such payments are treated as “non-qualified deferred compensation” subject to Section 409A of the Code, and if the Executive is deemed at the time of his Separation from Service to be a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code, then to the extent delayed commencement of any portion of the benefits to which the Executive is entitled under this Agreement is required in order to avoid a prohibited payment under Section 409A(a)(2)(B)(i) of the Code, such portion of the Executive’s termination benefits shall not be provided to the Executive prior to the earlier of (i) the expiration of the six-month period measured from the date of the Executive’s Separation from Service or (ii) the date of the Executive’s death. Upon the earlier of such dates, all payments deferred pursuant to this Section 19(b) shall be paid in a lump sum to the Executive. The determination of whether the Executive is a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code as of the time of his Separation from Service shall be made by the Corporation in accordance with the terms of Section 409A of the Code and applicable guidance thereunder (including without limitation Treasury Regulation Section 1.409A-1(i) and any successor provision thereto).

20. Section 409A; Separate Payments. This Agreement is intended to be written, administered, interpreted and construed in a manner such that no payment or benefits provided under the Agreement become subject to (a) the gross income inclusion set forth within Section 409A(a)(1)(A) of the Code or (b) the interest and additional tax set forth within Section 409A(a)(1)(B) of the Code (collectively, “Section 409A Penalties”), including, where appropriate, the construction of defined terms to have meanings that would not cause the imposition of Section 409A Penalties. In no event shall the Corporation be required to provide a tax gross-up payment to the Executive or otherwise reimburse the Executive with respect to Section 409A Penalties. For purposes of Section 409A of the Code (including, without limitation, for purposes of Treasury Regulation Section 1.409A-2(b)(2)(iii)), each payment that the Executive may be eligible to receive under this Agreement shall be treated as a separate and distinct payment and shall not collectively be treated as a single payment. The Executive acknowledges and understands that neither the Corporation nor any employee or agent of the Corporation has provided the Executive any tax advice regarding this Agreement or amounts payable under this Agreement and that the Corporation has urged the Executive to seek advice from the Executive’s own tax advisor regarding the tax consequences of this Agreement to the Executive.

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21. In-kind Benefits and Reimbursements. Notwithstanding any thing to the contrary in this Agreement, in-kind benefits and reimbursements provided under this Agreement during any tax year of the Executive shall not affect in-kind benefits or reimbursements to be provided in any other tax year of the Executive and are not subject to liquidation or exchange for another benefit. Notwithstanding any thing to the contrary in this Agreement, reimbursement requests must be timely submitted by the Executive and, if timely submitted, reimbursement payments shall be made to the Executive as soon as administratively practicable following such submission in accordance with the Corporation’s policies regarding reimbursements, but in no event later than the last day of Executive’s taxable year following the taxable year in which the expense was incurred. In no event shall the Executive be entitled to any reimbursement payments after the last day of Executive’s taxable year following the taxable year in which the expense was incurred. This Section shall only apply to in-kind benefits and reimbursements that would result in taxable compensation income to the Executive.

22. 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.

23. Governing Law. This Agreement shall in all respects be subject to, and governed by, the laws of the State of Texas.

24. 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 this Agreement.

25. 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 the Executive at the address hereinafter set forth following the Executive’s signature, or at such other address or addresses as either party may hereafter designate in writing to the other.

26. 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.

27. Amendments. This Agreement may be amended at any time by mutual consent of the parties hereto; provided that any amendment shall be consistent with the provisions of Sections 20 and 21. Any such amendment to be valid must be in writing and signed by the Corporation and the Executive.

28. Survival. The provisions of Sections 5, 8, 9, 17 and any other provisions of this Agreement which by its terms is intended to so survive, will survive termination or expiration of this Agreement.

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29. Entire Agreement. This Agreement contains the entire agreement and understanding by and between the Executive and the Corporation with respect to the employment of the Executive, and no representations, promises, agreements, or understandings, written or oral, relating to the employment of the Executive by the Corporation not contained herein shall be of any force or effect. This Agreement supersedes and replaces, in all respects, the 2000 Agreement. Notwithstanding the above, any stock option agreements existing between the Corporation and the Executive as of the date of this Agreement shall not be superseded by this Agreement except as specifically provided otherwise in this Agreement.

30. Burden and Benefit. This Agreement shall be binding upon, and shall inure to the benefit of, the Corporation and the Executive, and their respective heirs, personal and legal representatives, successors, and assigns.

31. References to Gender and Number Terms. In construing this Agreement, feminine or neuter 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.

32. Headings. The various headings in this Agreement are inserted for convenience only and are not part of this Agreement.

[Remainder of page intentionally left blank]

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

INTERPHASE CORPORATION:

By:	/s/ Michael J. Myers MICHAEL J. MYERS	/s/ Gregory B. Kalush GREGORY B. KALUSH
	Chairman, Compensation Committee	CEO, President and
		Chairman of the Board
	Address for Notice Purposes:	Address for Notice Purposes:
	Board of Directors	Gregory B. Kalush
	Interphase Corporation	Interphase Corporation
	2901 N. Dallas Parkway, Suite 200
	Plano, Texas 75093

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EX-10.2

EXHIBIT 10.2

[THIS AGREEMENT IS SUBJECT TO ARBITRATION]

AMENDED AND RESTATED EMPLOYMENT, CONFIDENTIALITY, AND
NON-COMPETITION AGREEMENT

THIS AGREEMENT dated and effective as of the 30^th day of December, 2008 by and between Interphase Corporation, a Texas corporation (the “Company”), and Thomas N. Tipton, Jr., (“Executive.”). The Company’s principal place of business is located at 2901 North Dallas Parkway, Suite 200, Plano, TX 75093.

WHEREAS, the Company and Executive are parties to that certain Employment, Confidentiality, and Non-Competition Agreement dated December 19, 2005, which sets forth the terms and conditions of the Executive’s employment with the Company; and

WHEREAS, the Company and Executive desire to amend and restate such agreement on the terms and conditions set forth herein in a manner intended to take into account the provisions of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”);

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

Background Statement

The Company enables rapid platform design and integration for the global voice and data communications markets through custom and off-the-shelf communications equipment, embedded software development suites, and systems integration and consulting services for telecom and enterprise networks. Executive desires to continue to be employed by the Company. The Company desires to continue to employ Executive under the terms and conditions of this Agreement.

This Agreement sets forth the terms of Executive’s employment. The parties agree that this Agreement is supported by valuable consideration, that mutual promises and obligations have been undertaken by the parties to it, and that the agreement is entered into voluntarily by the parties.

Statement of Agreement

1. Duties. Executive shall devote Executive’s best efforts to the business of the Company. Executive shall perform such duties and responsibilities customary to the position of Chief Financial Officer and Vice President of Finance, including those described on Exhibit A to this Agreement. Executive shall also perform those duties assigned by the Company from time to time.

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2.

Terms. The “initial term” of employment under this Agreement, as amended and restated, shall terminate on June 19, 2009, the end of the current term of this Agreement. The initial term of this amended and restated Agreement shall automatically renew for successive six (6) month periods, referred to as “successor terms,” unless either party gives thirty (30) days written notice of its intention not to renew prior to the expiration of the initial or any successor term or Executive is terminated for Cause (as described in Paragraph 3(c) of this Agreement).

3.

Terminable For Cause or on Account of Death or Disability. This Agreement may be terminated by the Company prior to the expiration of the initial term or any successor term as follows:

(a)	Due to the death of Executive;
(b)	Due to a physical or mental disability which prevents Executive from performing the essential functions of his full duties for a period of ninety (90) consecutive days during the term of this Agreement, as determined in good faith by a physician reasonably acceptable to the Company; or,
(c)	For Cause, which is (i) fraud, misappropriation, embezzlement, dishonesty, or other act of material misconduct against the Company or any affiliate of the Company; (ii) failure to perform specific and lawful directives of Executive’s superiors; (iii) violation of any rules or regulations of any governmental or regulatory body, which is materially injurious to the financial condition of the Company; (iv) conviction of or plea of guilty or nolo contendere to a felony; (v) violation of the provisions of Paragraphs 8, 9, 10, 11, 13, or 16; or, (vi) substantial failure to perform the duties and responsibilities of Executive under this Agreement.

	In the event of termination under this Paragraph 3, Executive shall be entitled only to Executive’s base salary earned through the date of termination paid in accordance with the Company’s normal payroll practices. No accrued but unpaid bonuses or commissions shall be due to Executive.
4.	Termination Without Cause or Nonrenewal.

(a) In the event (i) the Company gives Executive thirty (30) days written notice of its intention not renew a term of this Agreement pursuant to the provisions of Paragraph 2 and at the time the term of this Agreement expires as a result of such notice, Executive is willing and able to execute a new agreement containing terms and conditions substantially similar to those in this Agreement and to continue to provide services to the Company substantially similar to the services provided at the time the term expires, or (ii) Executive is terminated during a term of this Agreement without Cause, the Executive shall receive: (A) the balance of base salary due under this Agreement for the balance of its term on the regular pay dates of the Company (the “Remaining Term Payments”) and thereafter, (B) subject to the Executive’s execution of a general release of claims and

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	covenant not to sue in a form acceptable to the company (the “Release”), severance pay based on Executive’s monthly base salary at the time of termination in an amount equal to six (6) months of such monthly base salary, payable in bi-weekly installments in accordance with the Company’s normal payroll practices (the “Severance Payments”). In addition, if Executive is eligible for Severance Payments and has executed a Release, and in connection with Executive’s termination of employment Executive is eligible for and timely elects to continue Executive’s coverage under the Company’s group health plan pursuant to Section 4980B of the Internal Revenue Code of 1986, as amended (the “Code”) and Section 601 et.esq. of the Employee Retirement Income Security Act of 1974, as amended (“COBRA Coverage”), the Company will pay the individual premium cost for COBRA Coverage for Executive for the period during which Executive is receiving Remaining Term Payments and Severance Payments or such shorter period during which Executive continues to be eligible for COBRA Coverage.
(b)	The Company shall begin payment of the Severance Payments on the first regularly scheduled payroll date of the Company occurring after completion of the Remaining Term payments, if any, provided Executive has executed and delivered the Release to the Company prior to such date (and not revoked the Release during the applicable revocation period). Notwithstanding any provision in the preceding sentence to the contrary, if the Severance Payments would be considered “non-qualified deferred compensation” under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), the payment of Severance Payments shall commence on the first regularly scheduled payroll date of the Company following the later of (i) sixty (60) days following Executive’s date of termination or (ii) completion of the Remaining Term Payments; provided Executive has executed and delivered the Release to the Company prior to such date (and not revoked the Release during the applicable revocation period). The form of the Release will be provided to the Executive not later than five (5) days following Executive’s date of termination.
(c)	No accrued but unpaid bonuses or commissions shall be due to Executive under this Paragraph 4. No other severance payment or benefits shall be due Executive other than those provided for under this Agreement. Notwithstanding anything stated herein to the contrary, in the event Executive becomes employed during the period in which the Executive is eligible to receive post-employment payments under this Paragraph 4, Executive shall notify the Company of such employment within ten (10) days following the employment commencement date and any amounts received by Executive in the form of compensation, salary, or other payments as a result of such employment shall reduce any remaining Severance Payments or other amounts or liability owed by the Company to the Executive under this Paragraph 4.

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5.	Compensation. Employer shall pay and provide benefits to Executive according to the provisions of Executive’s compensation plan described in the attached Exhibit B. Executive’s compensation plan shall be reviewed on a periodic basis. The Company reserves the right, and Executive hereby authorizes Company, to make deductions from Executive’s pay or bonuses to satisfy any outstanding obligations of Executive to the Company. The Company may offset against the final payment of wages or bonuses owed to Executive any amounts due the Company from Executive; provided, however, no such offset shall be made against any amount in excess of $5,000 that would be considered “non-qualified deferred compensation” under Section 409A of the Code.
6.	Changes in Position, Location, or Compensation. If the Company transfers, promotes, or reassigns Executive to another position or geographic area, or both parties agree to a change in compensation or benefits during a term of this Agreement or upon the renewal of a term of this Agreement, an updated employment agreement may be substituted by agreement of the parties but is not required. Mutually-agreeable changes in compensation or benefits shall be effected by amendment to and incorporation of a modified Exhibit B, initialed by the parties or their authorized representative. All provisions, promises, terms or conditions not modified by an amendment of Exhibits A — C shall remain in effect and shall not be deemed revoked or modified beyond the changes set forth in one or more amended Exhibits. Notwithstanding the preceding, any changes or amendments to this Agreement shall be consistent with the provisions of Sections 20 and 21 hereof.
7.	Executive Representation/Warranty. Executive represents that Executive is not a party to any agreement with a third party, or limited by a court order, containing a non-competition provision or other restriction which would preclude Executive’s employment with Company or any of the services which Executive will provide on the Company’s behalf.
8.	Duty of Loyalty. Executive acknowledges the common law duties of reasonable care, loyalty, and honesty which arise out of the principal/agent relationship of the parties. While employed and thereafter for whatever term the law may impose, Executive shall not engage in any activity to the detriment of the Company. By way of illustration and not as a limitation, Executive shall not discuss with any customer or potential customer of the Company any plans by Executive or any other Executives of the Company to leave the employment of the Company and compete with the Company.
9.	Company Documents. Executive agrees and acknowledges that Executive holds as the Company’s property all memoranda, books, papers, letters, and other data, including duplicates, relating to the Company’s business and affairs (“Company Documents”). This includes Company Documents created or used by Executive or otherwise coming into Executive’s possession in connection with the performance of Executive’s job duties. All Company Documents in the possession, custody, or control of Executive shall be returned to the Company at the time of termination of employment.

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Confidential Information and Non-Competition

10. In exchange for the mutual promises and obligations contained in this Agreement, and contemporaneous with its execution or soon thereafter, Employer promises to deliver to Executive or permit Executive to acquire, be exposed to, and/or have access to material, data, and information of the Company and/or its customers or clients that is confidential, proprietary and/or a trade secret (“Confidential Information”). At all times, both during and after the termination of employment, the Executive shall keep and retain in confidence and shall not disclose, except as required in the course of the Executive’s employment with the Company, to any person, firm or corporation, or use for the Executive’s own purposes, any Confidential Information. For the purposes of this Paragraph, such information shall include, but is not limited to:

(a)	The Company’s standard operating procedures, processes, formulae, know-how, scientific, technical, or product information, whether patentable or not, which is of value to the Company and not generally known by the Company’s competitors;
(b)	All confidential information obtained from third parties and customers concerning their products, business, or equipment specifications;
(c)	Confidential business information of the Company, including, but not limited to, marketing and business plans, strategies, projections, business opportunities, client identities or lists, sales and cost information, internal financial statements or reports, profit, loss, or margin information, customer price information; and,
(d)	Other information designated by the Company or deemed by law to be confidential information.

11. Non-Competition. In consideration of the mutual promises contained in this Agreement, the sufficiency of which is acknowledged by the parties, Executive agrees that during the term of his employment and for a period of twelve (12) calendar months after termination of employment from the Company (whether voluntary or involuntary), Executive shall not, directly or indirectly, either as principal, agent, manager, employee, partner, shareholder, director, officer, consultant or otherwise:

(a)	Become associated or affiliated with, employed by, or financially interested in any business operation which competes in the business currently engaged in by Company. (The phrase “business currently engaged in by the Company” includes, but is not limited to, the type of activities in which the Company was engaged during Executive’s tenure, such as designs and delivers high performance connectivity adapters for computer and telecommunication networks.)
(b)	Solicit or attempt to solicit the business or patronage of any person, firm, corporation, partnership, association, department of government or other entity with whom the Company has had any contact during a period of twelve (12) calendar months preceding the date of this Agreement (“Customers”), or otherwise induce such Customers to reduce, terminate, restrict or otherwise alter business relationships with the Company in any fashion; or,
(c)	In any way solicit or attempt to solicit the business or patronage of any Customers.

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(d) The parties intend the above restrictions on competition to be completely severable and independent, and any invalidity or unenforceability of any one or more such restrictions shall not render invalid or unenforceable any one or more restrictions.

12. Limitations on Scope. In recognition of the broad geographic scope of the Company’s business and the ease of competing with the Company in any part of the United States, the restrictions on competition set forth herein are intended to cover the following geographic areas:

(a)	The geographic territory identified on the attached Exhibit C;
(b)	The cities containing a facility or operation owned or managed by the Company; and,
(c)	A fifty (50) mile radius outside the boundary limits of each such city.

	The parties intend the above geographical areas to be completely severable and independent, and any invalidity or unenforceability of this Agreement with respect to any one area shall not render this Agreement unenforceable as applied to any one or more of the other areas.
13.	Non-Solicitation of Employees. During employment and for a period of twelve (12) months after termination, Executive agrees not to hire, employ, solicit, divert, recruit, or attempt to induce, directly or indirectly, any existing or future employee of the Company to leave their position with the Company or to become associated with a competing business.

Remedies for Breach

14. Company’s Right to Obtain an Injunction. Executive acknowledges that the Company will have no adequate means of protecting its rights under Paragraphs 10, 11, 12, or 13 of this Agreement other than be securing an injunction (a court order prohibiting the Executive from violating the Agreement). Accordingly, the Executive agrees that the Company is entitled to enforce this Agreement by obtaining a temporary, preliminary, and permanent injunction and any other appropriate equitable relief. Executive acknowledges that the Company’s recovery of damages will not be an adequate means to redress a breach of this Agreement. Nothing contained in this Paragraph, however, shall prohibit the Company from pursuing any remedies in addition to injunctive relief, including recovery of damages. Executive expressly acknowledges that the Company has sole discretion regarding whether to seek a remedy for breaches of Paragraphs 10, 11, 12, or 13 in a court of competent jurisdiction or by arbitration procedures outlined in Paragraph 15.

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15. Arbitration. Executive and the Company agree that any unresolved dispute or controversy involving a claim for monetary damages and/or declaratory or injunctive relief arising under or in connection with this Agreement shall be settled exclusively by arbitration, conducted before a single arbitrator in Dallas, Texas, according to the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator’s award in any court having jurisdiction. The direct expense of any arbitration proceeding shall be borne by the Company. Notwithstanding the foregoing, nothing in this Paragraph is intended to subject a claim by either party arising under Paragraphs 10, 11, 12, or 13 to mandatory arbitration. Any claim arising under Paragraphs 10, 11, 12, or 13 shall be litigated in the courts of the relevant jurisdiction and venue.

Inventions and Discoveries

16. Discoveries, Inventions, & Copyrights. Executive shall disclose promptly to the Company any and all conceptions and ideas for inventions, improvements, and valuable discoveries, whether patentable or not, which are conceived or made by the Executive, solely or jointly, during Executive’s term of employment and which pertain to the business activities of the Company. Executive hereby assigns and agrees to assign all his interest therein to the Company or to its nominee. Whenever requested to do so by the Company, Executive shall execute any and all applications, assignments, or other instruments which the Company shall deem necessary to apply for and obtain Letters of Patent of the United States or any foreign country or to otherwise protect the Company’s interest therein.

General Provisions

17.	Condition to Seeking Subsequent Employment. Executive agrees to show a copy of this Agreement to any Competitor with whom Executive interviews during the Executive’s employment with the Company or with whom the Executive interviews within twelve (12) months following the effective date of the termination of the Executive’s employment with the Company.
18.	Attorneys’ Fees. If any party shall obtain a final judgment of a court of competent jurisdiction, subject to no further appeal, pursuant to which any other party shall be determined to have breached its obligations hereunder or made any misrepresentations, such prevailing party shall be entitled to recover, in addition to any award of damages, reasonable attorneys’ fees, costs, and expenses incurred by such party in obtaining such judgment.
19.	Non-Disparagement and Confidentiality. Except as may be required by law or as consented to in writing by an authorized officer or agent of the Company, Executive agrees not to make any statements whatsoever, directly or indirectly, written or oral, which could reasonably become public, which could be interpreted as embarrassing, disparaging, prejudicial, or in any way detrimental or inimical to the interests of the Company. Furthermore, Executive agrees to hold confidential and not to disclose, make public, or to communicate orally or in writing to any person or entity (other than Executive’s significant other and immediate family), directly or indirectly, the terms of this Agreement or any matters set forth herein, except only: (a) as may be compelled by court orders; (b) as may be necessary to enforce the terms of this Agreement; (c) to legal, accounting, and financial advisors; (d) as may be necessary in connection with the application for or obtaining loans or credit; (e) as may be necessary to comply with applicable laws and government regulations; or, (f) as may be necessary or desirable in obtaining future employment.

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20. Additional Termination Provisions.

(a)

Separation from Service. Notwithstanding anything to the contrary in this Agreement, with respect to the Severance Payments or any other amounts payable to Executive under this Agreement in connection with a termination of Executive’s employment that would be considered “non-qualified deferred compensation” under Section 409A of the Code, in no event shall a termination of employment be considered to have occurred under this Agreement unless such termination constitutes Executive’s “separation from service” with the Company as such term is defined in Treasury Regulation Section 1.409A-1(h) and any successor provision thereto (“Separation from Service”).

(b)

Section 409A Compliance. Notwithstanding anything contained in this Agreement to the Contrary, to the maximum extent permitted by applicable law, the Remaining Term Payments and the Severance Payments payable to Executive pursuant to Paragraph 4 shall be made in reliance upon Treasury Regulation Section 1.409A-1(b)(9)(iii) (relating to separation pay plans) or Treasury Regulation Section 1.409A-1(b)(4) (relating to short-term deferrals). However, to the extent any such payments are treated as non-qualified deferred compensation subject to Section 409A of the Code, and if Executive is deemed at the time of his Separation from Service to be a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code, then to the extent delayed commencement of any portion of the benefits to which Executive is entitled under this Agreement is required in order to avoid a prohibited payment under Section 409A(a)(2)(B)(i) of the Code, such portion of Executive’s termination benefits shall not be provided to Executive prior to the earlier of (i) the expiration of the six-month period measured from the date of Executive’s Separation from Service or (ii) the date of Executive’s death. Upon the earlier of such dates, all payments deferred pursuant to this Paragraph 20(b) shall be paid in a lump sum to Executive. The determination of whether Executive is a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code as of the time of his Separation from Service shall made by the Company in accordance with the terms of Section 409A of the Code and applicable guidance thereunder (including without limitation Treasury Regulation Section 1.409A-1(i) and any successor provision thereto).

21. Section 409A; Separate Payments. This Agreement is intended to be written, administered, interpreted and construed in a manner such that no payment or benefits provided under the Agreement become subject to (a) the gross income inclusion set forth within Section 409A(a)(1)(A) of the Code or (b) the interest and additional tax set forth within Section 409A(a)(1)(B) of the Code (collectively, “Section 409A Penalties”), including, where appropriate, the construction of defined terms to have meanings that would not cause the imposition of Section 409A Penalties. In no event shall the Company be required to provide a tax gross-up payment to Executive or otherwise reimburse Executive with respect to Section 409A Penalties.

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	For purposes of Section 409A of the Code (including, without limitation, for purposes of Treasury Regulation Section 1.409A-2(b)(2)(iii)), each payment that Executive may be eligible to receive under this Agreement shall be treated as a separate and distinct payment and shall not collectively be treated as a single payment. Executive acknowledges and understands that neither the Company nor any employee or agent of the Company has provided Executive any tax advice regarding this Agreement or amounts payable under this Agreement and that the Company has urged Executive to seek advice from Executive’s own tax advisor regarding the tax consequences of this Agreement to Executive.
22.	Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Company, its subsidiaries, affiliates, successors, and assigns.
23.	Nonwaiver. Any waiver by the Company of a breach of any provision of this Agreement must be in writing and signed by the Company to be effective. Any waiver by the Company of a breach of any provision of this Agreement shall not operate or be construed as a waiver by the Company of any different or subsequent breach of this Agreement by Executive.
24.	Applicable Law. This Agreement shall be construed in accordance with and governed by the laws of the State of Texas, without giving effect to the conflict of laws provisions thereof.
25.	Forum Selection Clause. Any and all causes of action for equitable relief relating to the enforcement of this Agreement and not otherwise subject to the mandatory arbitration provisions of Paragraph 15 may, in the Employer’s sole discretion, be brought in the United States District Court for the Northern District of Texas or the Dallas County District of the Texas State Courts. The parties agree that the provisions of this Paragraph benefit both Employer and Executive. Any and all causes of action by and between Employer and Executive can be quickly and efficiently resolved in the agreed-upon forum, which will not unduly burden either Employer or Executive, and which will substantially aid Employer and Executive in providing the opportunity for uniform treatment with respect to any issues relating to the covenants contained in this Agreement.
26.	Entire Agreement; Amendment. This Agreement represents the entire agreement between the Company and the Executive with respect to the subject matter hereof, supersedes all prior agreements dealing with the same subject matter. This Agreement may be amended at any time by the mutual consent of the parties hereto, with any such amendment to be invalid unless in writing, signed by the Company and Executive; provided that any such amendment shall be consistent with the provisions of Paragraphs 20 and 21 hereof.
27.	Severability. The invalidity of any term or provision of this Agreement, including any term or provision of Paragraphs 10, 11, 12, or 13 shall not invalidate or otherwise affect any other term or provision of this Agreement.

The remainder of this page is intentionally left blank

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IN WITNESS WHEREOF, the Company and Executive have duly executed this Agreement to be effective as of the day and year first above written.

Interphase Corporation
By:	/s/ Gregory B. Kalush
	Gregory B. Kalush
Its: President and Chief Executive Officer
Executive
/s/ Thomas N. Tipton, Jr.
Thomas N. Tipton, Jr.

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Exhibit A

Job Description

Job Title: CFO & VP of Finance	Department: Executive
Reports To: CEO	FLSA Status: Exempt
Prepared By: G. Kalush & D. Shute	Approved By: G. Kalush & D. Shute
Prepared Date: December 12, 2005	Approved Date: December 12, 2005

SUMMARY
Overall responsibility for all aspects of Finance, Treasury, Accounting, and IT for Interphase on a worldwide basis. This position holds the responsibility for the creating, gaining approval of and implementing the financial strategy (and architecture) for the company, including the management of the company’s controls, establishing effective measurements and review processes, participating in the architecture of significant transactions (whether with key OEM customers, potential M&A activities, or key strategic partnerships). This position is a key member of the executive team and is an officer of the company, and as such will prepare for and be a key representative of management at all Board meetings.

ESSENTIAL DUTIES AND RESPONSIBILITIES include the following. Other duties may be assigned. Management reserves the right to change these duties at any time.

The CFO and VP of Finance position is responsible for establishing the financial architecture for Interphase, a publicly traded company. This includes the establishment and implementation of all of the company’s financial controls, preparation and interpretation of financial reports in accordance with GAAP, all SEC reporting, safeguarding of the company’s assets, sound financial guidance in all significant transactions (whether with key OEM customers, potential M&A activities, or key strategic partnerships), treasury functions, and assisting the CEO with company strategy and support as necessary. This position in a “right-hand” to the CEO, and as such must act in harmony with the direction that the CEO sets for the company.

Responsible for coordinating and ensuring the efficient and effective creation (working with other senior executives) of the company’s annual operating and strategic plans. This includes the development of the all financial and accounting plans and policies of the company. Prepares financial and economic analysis for operating plans of the organization, and helps coach peer executives to a balanced, financially sound plan.

Maintains healthy, positive and honest relationships with the banking community, public audit partners, Wall Street analysts and shareholders.

Directs Finance and Accounting, Treasury, MIS, and Investor Relations, establishing benchmarked goals and creative plans to achieve those goals for each responsibility.

Coordinates and directs all financial operations including: budgeting, tax, audit, SEC compliance, legal counsel, cash management, care and custody of funds and other financial assets, and business risk management (and insurance) programs.

Participates in any merger and acquisition decisions, and maps all due diligence processes. This includes potentially related activities such as business divestitures, partnerships, joint ventures, etc. This role is a key advisor-ship role to the CEO on behalf of the company.

Responsible for reviewing and approving all company contractual obligations including OEM agreements, NDA agreements, etc.

Responsible for the creation and leadership of the company’s investor relations program, ensure that the company is properly and honestly promoted in the market, this will include the joint creation of the company’s “story” and the road shows and street relationships to deliver it.

Responsible for producing and publishing the company’s annual report.

In conjunction with CEO, creates the Delegation of Authority Matrix.

SUPERVISORY RESPONSIBILITIES
The CFO directs and leads subordinate managers including: the Corporate Controller, Financial Planning & Analysis Manager, European Finance & HR Manager, Contracts Manager, and the IT Manager. Responsible for the overall direction, coordination, and evaluation of these units. Carries out supervisory responsibilities in accordance with the organization’s policies and applicable laws and governmental regulations. Responsibilities include interviewing, hiring, and training employees; planning, assigning, and directing work; appraising performance; rewarding and disciplining employees; addressing complaints and resolving problems, and motivating team.

QUALIFICATIONS To perform this job successfully, the individual must be able to perform each essential duty satisfactorily. The requirements listed below are representative of the knowledge, skill, and/or ability required. Reasonable accommodations may be made to enable individuals with disabilities to perform the essential functions.

EDUCATION and/or EXPERIENCE
Bachelor’s degree (B. A.) or equivalent; plus ten or more years related experience and/or training; or equivalent combination of education and experience. Must have strong leadership skills and the ability to inspire and motivate teams to perform well and meet company objectives. Must have a current CPA license in good standing.

LANGUAGE SKILLS
Ability to read, analyze, and interpret financial statements and reports, complex contracts and legal documents. Ability to write speeches and articles for publication that conform to prescribed style and format. Ability to effectively present information to customers, the Sr. Leadership Team, the Board of Directors, our employees, public groups, and/or the media.

OTHER SKILLS AND ABILITIES
Must have excellent communication skills (reading, writing, speaking, and presentation), understanding of business and finance-related concepts, analytical skills, creative thinking skills, skills in tactfully addressing various tasks, and the ability to occasionally work under pressure or in a deadline-oriented environment. Able to communicate and partner effectively with employees at all levels, as well as with customers, analysts, investors, the Board of Directors and the business community. Must be able to handle multiple tasks concurrently, prioritizing as necessary. Must be very computer literate. Proficient with the Microsoft Suite of products to create PowerPoint presentations, Word documents, Excel spreadsheets, and do email. Strong knowledge of database and accounting computer application systems which supply the most accurate financial information. Excellent analytical, mathematical, and organizational skills.

REASONING ABILITY
Ability to define problems, collect data, establish facts, draw valid conclusions. Ability to interpret an extensive variety of technical instructions in mathematical or diagram form and deal with several abstract and concrete variables.

PHYSICAL DEMANDS
The physical demands described here are representative of those that must be met by an employee to successfully perform the essential functions of this job. Reasonable accommodations may be made to enable individuals with disabilities to perform the essential functions.

While performing the duties of this job, the employee is regularly required to use hands to finger, handle, or feel and talk or hear. The employee frequently is required to walk, sit, and reach with hands and arms. The employee is occasionally required to stand. The employee must occasionally lift and/or move up to 10 pounds. Specific vision abilities required by this job include close vision and color vision.

WORK ENVIRONMENT
The work environment characteristics described here are representative of those an employee encounters while performing the essential functions of this job. Reasonable accommodations may be made to enable individuals with disabilities to perform the essential functions.

Normal Office Environment, though some travel may be required. A valid passport will be necessary.

Initials _____
_____

Exhibit A

Exhibit B

Compensation

Base Salary. $7,115.38 per pay period ($185,000/year on an annual basis), of which there are 26 in each calendar year, less deductions as may be required by law or authorized by Executive.

Annual Bonus. Executive shall be eligible for an annual bonus for FY2008 in an amount up to $55,000 under and subject to the terms and conditions of the Company’s Executive Bonus Plan. During the term of this Agreement, Executive shall be eligible for an annual bonus under the Company’s Executive Bonus Plan, as determined by the Compensation Committee of the Company’s Board of Directors (the “Compensation Committee”) in its sole discretion (collectively, “Annual Bonus”). It is generally anticipated that Executive’s Annual Bonus target will be an amount not less than $30,000. The opportunity to earn an Annual Bonus and the actual amount of the Annual Bonus will be determined in accordance with criteria established by the Compensation Committee and based on Executive’s achievement of specific corporate objectives as determined by the Compensation Committee. Executive must continue to be employed by the Company through the payment date of any such Annual Bonus as a condition to receiving the bonus.

Equity Awards. Pursuant to the provisions of this Agreement prior to its amendment and restatement as set forth herein, the Company has, according to the Company’s Long-Term Stock Incentive Plan and with the approval of the CEO and Board of Directors, granted to Executive 10,000 shares of restricted stock of the Company. Executive’s right, title, and interest to any stock conferred under the Employment Agreement shall be controlled and governed by terms and conditions of the Company’s Long-Term Stock Incentive Plan. Executive shall be eligible to participate in equity awards as determined by the Compensation Committee under the Company’s Long-Term Stock Incentive Plan or other equity award plan maintained by the Company during the term of this Agreement.

Executive Benefit Plans. Based on the plans maintained by the Company from time to time during the term of this Agreement for its similarly situated executives, and subject to change at any time, Executive will be provided with a comprehensive and competitive benefits package including medical, dental, life, AD&D, STD and the Company’s discretionary matching 401(k) plan . The Executive shall be eligible to participate in such benefit plans, according to the terms and conditions of those plans. The Executive will pay the same amount as all other similarly situated executive and non-executive employees for health premiums.

Severance Pay. Executive shall be eligible for 6 months of base salary, subject to terms and conditions of this Agreement. Please refer to Paragraph 4 of this Agreement, “Termination Without Cause or Nonrenewal.”

Executive Disability Plan. The Executive is eligible to apply through Interphase for a voluntary, individual Executive Disability Plan. If approved by the carrier for coverage, the premiums will be paid for by the Executive.

Vacation and Leave. Executive shall be entitled to four (4) weeks of vacation per year, accrued monthly and in accordance with the Company’s vacation policy in effect from time to time, and six (6) sick days per year, and any other paid leave benefits provided for in the Company’s Policy Guide.

Cell Phone & Computer. Executive will be furnished with a laptop and cell phone/PDA for business purposes.

Office Furnishings. The Company agrees to provide office space and furnishings to Executive commensurate with the Company’s decor and culture.

Initials:_____
_____

Exhibit B

Exhibit C

Designated Cities — Per Paragraph 11a of Employment, Confidentiality,
and Non-Compete Agreement.

The Continental United States

Initials:_____
_____

Exhibit C

EX-10.3

EXHIBIT 10.3

[THIS AGREEMENT IS SUBJECT TO ARBITRATION]

AMENDED AND RESTATED EMPLOYMENT,
CONFIDENTIALITY, AND NON-COMPETITION AGREEMENT

THIS AGREEMENT dated and effective as of the 30^th day of December, 2008 by and between Interphase Corporation, a Texas corporation (the “Company”), and Marc E. DeVinney, (“Executive”). The Company’s principal place of business is located at 2901 North Dallas Parkway, Suite 200, Plano, TX 75093.

WHEREAS, the Company and Executive are parties to that certain Employment, Confidentiality, and Non-Competition Agreement dated August 31, 2007, which sets forth the terms and conditions of the Executive’s employment with the Company; and

WHEREAS, the Company and Executive desire to amend and restate such agreement on the terms and conditions set forth herein in a manner intended to take into account the provisions of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”);

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

Background Statement

The Company enables rapid platform design and integration for the global voice and data communications markets through custom and off-the-shelf communications equipment, embedded software development suites, and systems integration and consulting services for telecom and enterprise networks. Executive desires to continue to be employed by the Company. The Company desires to continue to employ Executive under the terms and conditions of this Agreement.

This Agreement sets forth the terms of Executive’s employment. The parties agree that this Agreement is supported by valuable consideration, that mutual promises and obligations have been undertaken by the parties to it, and that the agreement is entered into voluntarily by the parties.

Statement of Agreement

1. Duties. Executive shall devote Executive’s best efforts to the business of the Company. Executive shall perform such duties and responsibilities customary to the position of Vice President of Engineering, including those described on Exhibit A to this Agreement. Executive shall also perform those duties assigned by the Company from time to time.

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2.

Terms. The “initial term” of employment under this Agreement, as amended and restated, shall terminate on February 28, 2009 the end of the current term of this Agreement. The initial term of this amended and restated Agreement shall automatically renew for successive six (6) month periods, referred to as “successor terms,” unless either party gives thirty (30) days written notice of its intention not to renew prior to the expiration of the initial or any successor term or Executive is terminated for Cause (as described in Paragraph 3(c) of this Agreement).

3.

Terminable For Cause or on Account of Death or Disability. This Agreement may be terminated by the Company prior to the expiration of the initial term or any successor term as follows:

(a)	Due to the death of Executive;
(b)	Due to a physical or mental disability which prevents Executive from performing the essential functions of his full duties for a period of ninety (90) consecutive days during the term of this Agreement, as determined in good faith by a physician reasonably acceptable to the Company; or,
(c)	For Cause, which is (i) fraud, misappropriation, embezzlement, dishonesty, or other act of material misconduct against the Company or any affiliate of the Company; (ii) failure to perform specific and lawful directives of Executive’s superiors; (iii) violation of any rules or regulations of any governmental or regulatory body, which is materially injurious to the financial condition of the Company; (iv) conviction of or plea of guilty or nolo contendere to a felony; (v) violation of the provisions of Paragraphs 8, 9, 10, 11, 13, or 16; or, (vi) substantial failure to perform the duties and responsibilities of Executive under this Agreement.

	In the event of termination under this Paragraph 3, Executive shall be entitled only to Executive’s base salary earned through the date of termination paid in accordance with the Company’s normal payroll practices. No accrued but unpaid bonuses or commissions shall be due to Executive.
4.	Termination Without Cause or Nonrenewal.

(a) In the event (i) the Company gives Executive thirty (30) days written notice of its intention not renew a term of this Agreement pursuant to the provisions of Paragraph 2 and at the time the term of this Agreement expires as a result of such notice, Executive is willing and able to execute a new agreement containing terms and conditions substantially similar to those in this Agreement and to continue to provide services to the Company substantially similar to the services provided at the time the term expires, or (ii) Executive is terminated during a term of this Agreement without Cause, the Executive shall receive: (A) the balance of base salary due under this Agreement for the balance of its term on the regular pay dates of the Company (the “Remaining Term Payments”) and thereafter, (B) subject to the Executive’s execution of a general release of claims and

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	covenant not to sue in a form acceptable to the company (the “Release”), severance pay based on Executive’s monthly base salary at the time of termination in an amount equal to six (6) months of such monthly base salary, payable in bi-weekly installments in accordance with the Company’s normal payroll practices (the “Severance Payments”). In addition, if Executive is eligible for Severance Payments and has executed a Release, and in connection with Executive’s termination of employment Executive is eligible for and timely elects to continue Executive’s coverage under the Company’s group health plan pursuant to Section 4980B of the Internal Revenue Code of 1986, as amended (the “Code”) and Section 601 et.esq. of the Employee Retirement Income Security Act of 1974, as amended (“COBRA Coverage”), the Company will pay the individual premium cost for COBRA Coverage for Executive for the period during which Executive is receiving Remaining Term Payments and Severance Payments or such shorter period during which Executive continues to be eligible for COBRA Coverage.
(b)	The Company shall begin payment of the Severance Payments on the first regularly scheduled payroll date of the Company occurring after completion of the Remaining Term payments, if any, provided Executive has executed and delivered the Release to the Company prior to such date (and not revoked the Release during the applicable revocation period). Notwithstanding any provision in the preceding sentence to the contrary, if the Severance Payments would be considered “non-qualified deferred compensation” under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), the payment of Severance Payments shall commence on the first regularly scheduled payroll date of the Company following the later of (i) sixty (60) days following Executive’s date of termination or (ii) completion of the Remaining Term Payments; provided Executive has executed and delivered the Release to the Company prior to such date (and not revoked the Release during the applicable revocation period). The form of the Release will be provided to the Executive not later than five (5) days following Executive’s date of termination.
(c)	No accrued but unpaid bonuses or commissions shall be due to Executive under this Paragraph. No other severance payment or benefits shall be due Executive other than those provided for under this Agreement. Notwithstanding anything stated herein to the contrary, in the event Executive becomes employed during the period in which the Executive is eligible to receive post-employment payments under this Paragraph 4, Executive shall notify the Company of such employment within ten (10) days following the employment commencement date and any amounts received by Executive in the form of compensation, salary, or other payments as a result of such employment shall reduce any remaining Severance Payments or other amounts or liability owed by the Company to the Executive under this Paragraph 4.

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5.	Compensation. Employer shall pay and provide benefits to Executive according to the provisions of Executive’s compensation plan described in the attached Exhibit B. Executive’s compensation plan shall be reviewed on a periodic basis. The Company reserves the right, and Executive hereby authorizes Company, to make deductions from Executive’s pay or bonuses to satisfy any outstanding obligations of Executive to the Company. The Company may offset against the final payment of wages or bonuses owed to Executive any amounts due the Company from Executive; provided, however no such offset shall be made against any amount in excess of $5,000 that would be considered “non-qualified deferred compensation” under Section 409A of the Code.
6.	Changes in Position, Location, or Compensation. If the Company transfers, promotes, or reassigns Executive to another position or geographic area, or both parties agree to a change in compensation or benefits during a term of this Agreement or upon the renewal of a term of this Agreement, an updated employment agreement may be substituted by agreement of the parties but is not required. Mutually-agreeable changes in compensation or benefits shall be effected by amendment to and incorporation of a modified Exhibit B, initialed by the parties or their authorized representative. All provisions, promises, terms or conditions not modified by an amendment of Exhibits A — C shall remain in effect and shall not be deemed revoked or modified beyond the changes set forth in one or more amended Exhibits. Notwithstanding the preceding, any changes or amendments to this Agreement shall be consistent with the provisions of Sections 20 and 21 hereof.
7.	Executive Representation/Warranty. Executive represents that Executive is not a party to any agreement with a third party, or limited by a court order, containing a non-competition provision or other restriction which would preclude Executive’s employment with Company or any of the services which Executive will provide on the Company’s behalf.
8.	Duty of Loyalty. Executive acknowledges the common law duties of reasonable care, loyalty, and honesty which arise out of the principal/agent relationship of the parties. While employed and thereafter for whatever term the law may impose, Executive shall not engage in any activity to the detriment of the Company. By way of illustration and not as a limitation, Executive shall not discuss with any customer or potential customer of the Company any plans by Executive or any other Executives of the Company to leave the employment of the Company and compete with the Company.
9.	Company Documents. Executive agrees and acknowledges that Executive holds as the Company’s property all memoranda, books, papers, letters, and other data, including duplicates, relating to the Company’s business and affairs (“Company Documents”). This includes Company Documents created or used by Executive or otherwise coming into Executive’s possession in connection with the performance of Executive’s job duties. All Company Documents in the possession, custody, or control of Executive shall be returned to the Company at the time of termination of employment.

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Confidential Information and Non-Competition

10. In exchange for the mutual promises and obligations contained in this Agreement, and contemporaneous with its execution or soon thereafter, Employer promises to deliver to Executive or permit Executive to acquire, be exposed to, and/or have access to material, data, and information of the Company and/or its customers or clients that is confidential, proprietary and/or a trade secret (“Confidential Information”). At all times, both during and after the termination of employment, the Executive shall keep and retain in confidence and shall not disclose, except as required in the course of the Executive’s employment with the Company, to any person, firm or corporation, or use for the Executive’s own purposes, any Confidential Information. For the purposes of this Paragraph, such information shall include, but is not limited to:

(a)	The Company’s standard operating procedures, processes, formulae, know-how, scientific, technical, or product information, whether patentable or not, which is of value to the Company and not generally known by the Company’s competitors;
(b)	All confidential information obtained from third parties and customers concerning their products, business, or equipment specifications;
(c)	Confidential business information of the Company, including, but not limited to, marketing and business plans, strategies, projections, business opportunities, client identities or lists, sales and cost information, internal financial statements or reports, profit, loss, or margin information, customer price information; and,
(d)	Other information designated by the Company or deemed by law to be confidential information.

11. Non-Competition. In consideration of the mutual promises contained in this Agreement, the sufficiency of which is acknowledged by the parties, Executive agrees that during the term of his employment and for a period of twelve (12) calendar months after termination of employment from the Company (whether voluntary or involuntary), Executive shall not, directly or indirectly, either as principal, agent, manager, employee, partner, shareholder, director, officer, consultant or otherwise:

(a)	Become associated or affiliated with, employed by, or financially interested in any business operation which competes in the business currently engaged in by Company. (The phrase “business currently engaged in by the Company” includes, but is not limited to, the type of activities in which the Company was engaged during Executive’s tenure, such as designs and delivers high performance connectivity adapters for computer and telecommunication networks.)
(b)	Solicit or attempt to solicit the business or patronage of any person, firm, corporation, partnership, association, department of government or other entity with whom the Company has had any contact during a period of twelve (12) calendar months preceding the date of this Agreement (“Customers”), or otherwise induce such Customers to reduce, terminate, restrict or otherwise alter business relationships with the Company in any fashion; or,
(c)	In any way solicit or attempt to solicit the business or patronage of any Customers.

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(d) The parties intend the above restrictions on competition to be completely severable and independent, and any invalidity or unenforceability of any one or more such restrictions shall not render invalid or unenforceable any one or more restrictions.

12. Limitations on Scope. In recognition of the broad geographic scope of the Company’s business and the ease of competing with the Company in any part of the United States, the restrictions on competition set forth herein are intended to cover the following geographic areas:

(a)	The geographic territory identified on the attached Exhibit C;
(b)	The cities containing a facility or operation owned or managed by the Company; and,
(c)	A fifty (50) mile radius outside the boundary limits of each such city.

	The parties intend the above geographical areas to be completely severable and independent, and any invalidity or unenforceability of this Agreement with respect to any one area shall not render this Agreement unenforceable as applied to any one or more of the other areas.
13.	Non-Solicitation of Employees. During employment and for a period of twelve (12) months after termination, Executive agrees not to hire, employ, solicit, divert, recruit, or attempt to induce, directly or indirectly, any existing or future employee of the Company to leave their position with the Company or to become associated with a competing business.

Remedies for Breach

14.

Company’s Right to Obtain an Injunction. Executive acknowledges that the Company will have no adequate means of protecting its rights under Paragraphs 10, 11, 12, or 13 of this Agreement other than be securing an injunction (a court order prohibiting the Executive from violating the Agreement). Accordingly, the Executive agrees that the Company is entitled to enforce this Agreement by obtaining a temporary, preliminary, and permanent injunction and any other appropriate equitable relief. Executive acknowledges that the Company’s recovery of damages will not be an adequate means to redress a breach of this Agreement. Nothing contained in this Paragraph, however, shall prohibit the Company from pursuing any remedies in addition to injunctive relief, including recovery of damages. Executive expressly acknowledges that the Company has sole discretion regarding whether to seek a remedy for breaches of Paragraphs 10, 11, 12, or 13 in a court of competent jurisdiction or by arbitration procedures outlined in Paragraph 15.

15.

Arbitration. Executive and the Company agree that any unresolved dispute or controversy involving a claim for monetary damages and/or declaratory or injunctive relief arising under or in connection with this Agreement shall be settled exclusively by arbitration, conducted before a single arbitrator in Dallas, Texas, according to the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator’s award in any court having jurisdiction. The direct expense of any arbitration proceeding shall be borne by the Company. Notwithstanding the foregoing, nothing in this Paragraph is intended to subject a claim by either party arising under Paragraphs 10, 11, 12, or 13 to mandatory arbitration. Any claim arising under Paragraphs 10, 11, 12, or 13 shall be litigated in the courts of the relevant jurisdiction and venue.

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Inventions and Discoveries

16. Discoveries, Inventions, & Copyrights. Executive shall disclose promptly to the Company any and all conceptions and ideas for inventions, improvements, and valuable discoveries, whether patentable or not, which are conceived or made by the Executive, solely or jointly, during Executive’s term of employment and which pertain to the business activities of the Company. Executive hereby assigns and agrees to assign all his interest therein to the Company or to its nominee. Whenever requested to do so by the Company, Executive shall execute any and all applications, assignments, or other instruments which the Company shall deem necessary to apply for and obtain Letters of Patent of the United States or any foreign country or to otherwise protect the Company’s interest therein.

General Provisions

17.	Condition to Seeking Subsequent Employment. Executive agrees to show a copy of this Agreement to any Competitor with whom Executive interviews during the Executive’s employment with the Company or with whom the Executive interviews within twelve (12) months following the effective date of the termination of the Executive’s employment with the Company.
18.	Attorneys’ Fees. If any party shall obtain a final judgment of a court of competent jurisdiction, subject to no further appeal, pursuant to which any other party shall be determined to have breached its obligations hereunder or made any misrepresentations, such prevailing party shall be entitled to recover, in addition to any award of damages, reasonable attorneys’ fees, costs, and expenses incurred by such party in obtaining such judgment.
19.	Non-Disparagement and Confidentiality. Except as may be required by law or as consented to in writing by an authorized officer or agent of the Company, Executive agrees not to make any statements whatsoever, directly or indirectly, written or oral, which could reasonably become public, which could be interpreted as embarrassing, disparaging, prejudicial, or in any way detrimental or inimical to the interests of the Company. Furthermore, Executive agrees to hold confidential and not to disclose, make public, or to communicate orally or in writing to any person or entity (other than Executive’s significant other and immediate family), directly or indirectly, the terms of this Agreement or any matters set forth herein, except only: (a) as may be compelled by court orders; (b) as may be necessary to enforce the terms of this Agreement; (c) to legal, accounting, and financial advisors; (d) as may be necessary in connection with the application for or obtaining loans or credit; (e) as may be necessary to comply with applicable laws and government regulations; or, (f) as may be necessary or desirable in obtaining future employment.

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20. Additional Termination Provisions.

(a)

Separation from Service. Notwithstanding anything to the contrary in this Agreement, with respect to the Severance Payments or any other amounts payable to Executive under this Agreement in connection with a termination of Executive’s employment that would be considered “non-qualified deferred compensation” under Section 409A of the Code, in no event shall a termination of employment be considered to have occurred under this Agreement unless such termination constitutes Executive’s “separation from service” with the Company as such term is defined in Treasury Regulation Section 1.409A-1(h) and any successor provision thereto (“Separation from Service”).

(b)

Section 409A Compliance. Notwithstanding anything contained in this Agreement to the Contrary, to the maximum extent permitted by applicable law, the Remaining Term Payments and the Severance Payments payable to Executive pursuant to Paragraph 4 shall be made in reliance upon Treasury Regulation Section 1.409A-1(b)(9)(iii) (relating to separation pay plans) or Treasury Regulation Section 1.409A-1(b)(4) (relating to short-term deferrals). However, to the extent any such payments are treated as “non-qualified deferred compensation” subject to Section 409A of the Code, and if Executive is deemed at the time of his Separation from Service to be a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code, then to the extent delayed commencement of any portion of the benefits to which Executive is entitled under this Agreement is required in order to avoid a prohibited payment under Section 409A(a)(2)(B)(i) of the Code, such portion of Executive’s termination benefits shall not be provided to Executive prior to the earlier of (i) the expiration of the six-month period measured from the date of Executive’s Separation from Service or (ii) the date of Executive’s death. Upon the earlier of such dates, all payments deferred pursuant to this Paragraph 20(b) shall be paid in a lump sum to Executive. The determination of whether Executive is a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code as of the time of his Separation from Service shall made by the Company in accordance with the terms of Section 409A of the Code and applicable guidance thereunder (including without limitation Treasury Regulation Section 1.409A-1(i) and any successor provision thereto).

21. Section 409A; Separate Payments. This Agreement is intended to be written, administered, interpreted and construed in a manner such that no payment or benefits provided under the Agreement become subject to (a) the gross income inclusion set forth within Section 409A(a)(1)(A) of the Code or (b) the interest and additional tax set forth within Section 409A(a)(1)(B) of the Code (collectively, “Section 409A Penalties”), including, where appropriate, the construction of defined terms to have meanings that would not cause the imposition of Section 409A Penalties. In no event shall the Company be required to provide a tax gross-up payment to Executive or otherwise reimburse Executive with respect to Section 409A Penalties. For purposes of Section 409A of the Code (including, without limitation, for purposes of Treasury Regulation Section 1.409A-2(b)(2)(iii)), each payment that Executive may be eligible to receive under this Agreement shall be treated as a separate and distinct payment and shall not collectively be treated as a single payment. Executive acknowledges and understands that neither the Company nor any employee or agent of the Company has provided Executive any tax advice regarding this Agreement or amounts payable under this Agreement and that the Company has urged Executive to seek advice from Executive’s own tax advisor regarding the tax consequences of this Agreement to Executive.

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22.	Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Company, its subsidiaries, affiliates, successors, and assigns.
23.	Nonwaiver. Any waiver by the Company of a breach of any provision of this Agreement must be in writing and signed by the Company to be effective. Any waiver by the Company of a breach of any provision of this Agreement shall not operate or be construed as a waiver by the Company of any different or subsequent breach of this Agreement by Executive.
24.	Applicable Law. This Agreement shall be construed in accordance with and governed by the laws of the State of Texas, without giving effect to the conflict of laws provisions thereof.
25.	Forum Selection Clause. Any and all causes of action for equitable relief relating to the enforcement of this Agreement and not otherwise subject to the mandatory arbitration provisions of Paragraph 15 may, in the Employer’s sole discretion, be brought in the United States District Court for the Northern District of Texas or the Dallas County District of the Texas State Courts. The parties agree that the provisions of this Paragraph benefit both Employer and Executive. Any and all causes of action by and between Employer and Executive can be quickly and efficiently resolved in the agreed-upon forum, which will not unduly burden either Employer or Executive, and which will substantially aid Employer and Executive in providing the opportunity for uniform treatment with respect to any issues relating to the covenants contained in this Agreement.
26.	Entire Agreement; Amendment. This Agreement represents the entire agreement between the Company and the Executive with respect to the subject matter hereof, supersedes all prior agreements dealing with the same subject matter. This Agreement may be amended at any time by the mutual consent of the parties hereto, with any such amendment to be invalid unless in writing, signed by the Company and Executive; provided that any such amendment shall be consistent with the provisions of Paragraphs 20 and 21 hereof.
27.	Severability. The invalidity of any term or provision of this Agreement, including any term or provision of Paragraphs 10, 11, 12, or 13 shall not invalidate or otherwise affect any other term or provision of this Agreement.

The remainder of this page is intentionally left blank

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IN WITNESS WHEREOF, the Company and Executive have duly executed this Agreement to be effective as of the day and year first above written.

Interphase Corporation
By:	/s/ Gregory B. Kalush
	Gregory B. Kalush
Its: President and Chief Executive Officer
Executive
/s/ Marc E. DeVinney
Marc E. DeVinney

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Exhibit A

Job Description

Job Title: VP of Engineering	Department: Engineering
Reports To: President and CEO	FLSA Status: Exempt
Prepared By: D. Shute & G. Kalush	Approved By: Deborah Shute
Prepared Date: August 7, 2007	Approved Date: August 13, 2007

SUMMARY
As the senior Engineering individual for the company, the VP of Engineering is fully responsible for representing and leading all global Engineering functions in product development and new product development activities. Ultimately oversees and ensures success of all product development, Engineering schedule accuracy, goal attainment, budget responsibilities, key corporate and Engineering processes, and personnel-related decisions.

The Vice President of Engineering is a member of the Executive Team and has responsibilities critical to the short-term and long-term profitability, growth, and overall success of the Company. Reporting directly to the CEO, this position provides proactive Engineering team leadership and organizational leadership. The VP of Engineering plays a key role in contributing to the company’s strategic direction and overall strategy in conjunction with the Chief Technology Officer, VP of Strategic Marketing, and CEO.

As a member of the Executive Team, the VP of Engineering must embrace the organization’s vision, goals, and values, and display a sense of unity and alignment with the CEO and the rest of the leadership team which is necessary to achieve superior business results within the Company.

ESSENTIAL DUTIES AND RESPONSIBILITIES include the following. Other duties may be assigned. Management reserves the right to change these duties at any time.

Engineering Leadership

Overall responsibility for all aspects of Engineering (hardware and software development, SVT, DVT), Interoperability and Systems Integration, and Engineering Project Management for the Company on a worldwide basis. This includes establishing effective metrics/measurements and review processes.

Accountable for creating, gaining approval of, and implementing the Engineering strategy and architecture for the Company.

Plans and directs the overall Engineering function through local and remote management in multiple development locations toward the achievement of corporate goals and objectives.

Accountabilities encompass:
Software Development
Hardware Development
SVT
DVT
CAD
Interoperability
Systems Integration
Engineering Project Management

Implements processes, procedures, systems that maintain the integrity and accuracy of the Company’s Engineering schedules. Advises the CEO, the Executive Team, and other internal teams on these matters, as required.

Directs a team of Engineering professionals.

Functions as a responsive “business partner” supporting other functions, i.e., sales, marketing, manufacturing, operations, supply chain management, finance, human resources, etc., by providing a broad range of pro-active support, insight and attention to detail in areas such as:

Customer responses (RFI, RFQ, RFP, etc.)
Technical Feasibility studies and ERA (Engineering Requirements Analysis)
CPCD’s & MRD’s
CP-12 process deliverables and execution
PIDs (Product Development Documentation)
Engineering Schedules
Engineering change orders
Operating Plans and Budgeting
Headcount changes
Employee relations

Manages the project management function ensuring Engineering schedules stay on track and that all potential impacts or slips are communication appropriately with the Executives and CEO.

Further the collection and use of information gathering (including schedule status, variances, hours worked by person by product, project expenses) using analytical tools, analyses, and metrics essential to assessing overall business performance and variances from “Plan”. Produces reports and “dashboard” metrics that drive meaningful information and decision making further down the organizational ladder. Ensures the full commitment and optimization of the company’s SAP system, and other software tools available.

Builds and maintains a strong Engineering team. Makes enlightened decisions regarding the staff’s selection, promotion, and development. Must develop a Succession Plan with ready-now backups to engineering leadership within a two to three (2-3) year period and make every effort to develop and broaden the incumbent Directors of Engineering, Managers, and principle staff as appropriate.

Establishes Engineering’s vision and mission, short-term and long-range operating plans, programs, budgets, and development schedules. Implements the necessary strategies, initiatives, and processes to achieve success.

The VP of Engineering is responsible for the establishing and maintaining the processes, metrics, policies, programs, and objectives to ensure Interphase meets its development commitments to it’s customers for all scheduled product deliveries.

Directs and coordinates the activities of local and remote Engineering teams on a global basis and ensures effective communication, consistency, and alignment in their practices and systems, and timeliness of their committed deliverables.

Ensures process excellence and compliance to CP12 and other key processes involving Engineering.

Advances the R&D process from design initiatives at the customer level to specification, design for testing, design for manufacturing, and migration from one technology to another within the context of the design capabilities of the organization.

Ensures the company’s vision and values are instilled in the Engineering/development organization.

Confers with CEO to review achievements and to discuss required changes in programs, resources, processes, strategies or goals as a result of current customer or market conditions.

Maintains significant interaction with suppliers, marketing and Engineering/development teams to effectively evaluate future programs under consideration.

Executive Management
Contributes as a member of the CEO’s Executive Staff on all long-term strategic and annual operating planning activities. Participates in future plans and the associated business/budgeting activities to achieve desired results. Prepares detailed budgets, operating plans, CAPEX plans, cost reduction programs, etc.

Supports the integration of new products, programs, customers, partners, vendors, and potential acquisitions from an operational perspective, as well as other proposed business development and strategic alliance initiatives. Visible to customers and involved in “adding value” throughout the organization. (Viewed and leveraged as a resource by peers.)

In tandem with other key leaders, cultivates a synergistic environment in which there is cross-functional discussion and the formulation of action plans to pro-actively address the company’s SWOT, customer requests and requirements, business development opportunities, promising new products, acquisitions, etc.

Actively participates in customer/partner/vendor meetings, audits, and presentations, “world tours”, and trade show activities as appropriate. Presents at Operations Reviews and Board Meetings as requested or required.

The VP of Engineering will assist the Chief Technology Officer, the VP of Strategic Marketing and the CEO and the rest of the company’s executive management team in setting the future direction and vision for the company and helping to develop strategies to achieve the company’s long-term goals. This includes any necessary realignment in the company’s skills, processes, and metrics to be successful in achieving future strategic directions.

This position will assist the CTO in the assessment of emerging technologies for positioning Interphase to take maximum advantage of our company’s core competencies, skills and market position. Also serves to assist the CTO as the technology guide for the company.

Participates closely with the CTO, VP of Global Sales, the VP of Strategic Marketing, and the CEO in developing the strategic product plan for Interphase.

Assists the CTO, VP of Strategic Marketing, and CEO in the formulation and development of the company’s strategic vision, complete with the assessment of resources and skills required, technology risk, development assurance programs and required strategic business partners necessary to secure a strong portfolio of successful programs for a five-year business horizon. Participates in strategic planning sessions.

Recommends outsourcing and partnership opportunities as needs arise to improve time to market, or achieve corporate objectives.

SUPERVISORY RESPONSIBILITIES The VP of Engineering directs and leads subordinate managers including Directors of Engineering (Europe and North America), Director of Interoperability & Systems Integration, and Sr. Manager of Project Management. Responsible for the overall direction, coordination, and evaluation of these units. Carries out supervisory responsibilities in accordance with the organization’s policies and applicable laws and governmental regulations. Responsibilities include interviewing, hiring, and training employees; planning, assigning, and directing work; appraising performance; rewarding and disciplining employees; addressing complaints and resolving problems.

QUALIFICATIONS To perform this job successfully, an individual must be able to perform each essential duty satisfactorily. The requirements listed below are representative of the knowledge, skill, and/or ability required. Reasonable accommodations may be made to enable individuals with disabilities to perform the essential functions.

EDUCATION and/or EXPERIENCE
B.S. degree in Electrical Engineering or Computer Science is required. An advanced technical degree (M.S. or PhD) and/or MBA would be highly desirable.

Prefer fifteen (15+) years of broad Engineering experience, in the design and development of hardware and/or software products for the computer or telecommunications networking industry. Experience should be ideally and predominantly secured with either an established or start-up telecom equipment provider, and/or high tech software/hardware engineering services company.

Must have strong leadership skills and the ability to inspire and motivate teams to perform well and meet company objectives. Must have the ability to translate customer and/or marketing requirements into high performing products. May be asked to interface with major customers to understand their needs and communicate that across the organization to various departments. Leadership skills also include the ability to develop and communicate vision and business strategies. Must have knowledge of market and emerging technologies.

Ideally, five plus (5+) years of background functioning as the senior Engineering leader of a Company, major operating group or subsidiary with accountability for software, hardware, and Engineering project management. Prefer that they been a member of the Executive Committee.

Requires an extremely capable VP of Engineering who can truly operate as an influential member of the CEO’s Staff while making “value-added” contributions in Engineering and throughout the organization. Building solid working relationships with key Executive Officers and the Company’s Board of Directors will also be imperative to the overall execution of the VP’s responsibilities.

Must possess a balanced business background encompassing more than just technical skills. Equally important, will be the ability to aggressively contribute to the company’s long-term and short-term strategic vision, functioning as a major contributor in support of the Company’s growth strategy, new products, and services is a high priority, as is the need to become the CEO’s confidant and “business partner”.

COMMUNICATION AND LANGUAGE SKILLS
Must communicate effectively, concisely, and accurately with integrity, having the ability to decipher and understand complex customer and market requirements, analyze and interpret complex scientific and technical journals and documentation, financial reports, and legal documents and be able to explain them accurately. Must possess the ability to respond to inquiries or complaints from customers, partners, regulatory agencies, members of the business community, Board members, or employees that are from the simple to the complex in nature. Must possess the ability to effectively and concisely express key relevant information in written form, whether writing speeches, or articles for publication that conform to prescribed style and format. Ability to effectively present information to customers, the executive Leadership Team, the Board of Directors, our employees, public groups, and/or the media.

MATHEMATICAL SKILLS
Ability to work with advanced engineering and mathematical concepts such as algorithms, probability and statistical inference, and fundamentals of plane and solid geometry and trigonometry. Ability to apply concepts such as fractions, percentages, ratios, and proportions to practical situations.

REASONING ABILITY
Excellent ability to read and understand very complex and technical information and then apply that knowledge of information to the company’s own situation to develop strategies and solve problems. Must be able to pro-actively and effectively define problems, collect data, establish facts, make sound recommendations, draw valid conclusions, and solve complex problems daily. Ability to interpret an extensive variety of technical instructions or engineering schematics in mathematical or diagram form and deal with several abstract and concrete variables.

PHYSICAL DEMANDS The physical demands described here are representative of those that must be met by an employee to successfully perform the essential functions of this job. Reasonable accommodations may be made to enable individuals with disabilities to perform the essential functions.

While performing the duties of this job, the employee is regularly required to talk and hear. The employee frequently is required to walk, sit, stand, and reach with hands and arms. International travel requires sitting for prolonged periods of time. The employee must occasionally lift and/or move up to 25 pounds. Specific vision abilities required by this job include close vision and color vision.

WORK ENVIRONMENT
The work environment characteristics described here are representative of those an employee encounters while performing the essential functions of this job. Reasonable accommodations may be made to enable individuals with disabilities to perform the essential functions.

This position does require regular and significant travel, both national and international. Employee must possess, or be qualified to obtain, a valid passport.

Initials _____
_____

Exhibit A

Exhibit B

Compensation

Base Salary. $6,730.77 per pay period ($175,000/year on an annual basis), of which there are 26 in each calendar year, less deductions as may be required by law or authorized by Executive.

Annual Bonus. Executive shall be eligible for an annual bonus for FY2008 in an amount up to $40,000 under and subject to the terms and conditions of the Company’s Executive Bonus Plan. During the term of this Agreement, Executive shall be eligible for an annual bonus under the Company’s Executive Bonus Plan as determined by the Compensation Committee of the Company’s Board of Directors (the “Compensation Committee”) in its sole discretion (collectively, “Annual Bonus”). It is generally anticipated that Executive’s Annual Bonus target will be an amount not less than $35,000. The opportunity to earn an Annual Bonus and the actual amount of the Annual Bonus will be determined in accordance with criteria established by the Compensation Committee and based on Executive’s achievement of specific corporate objectives as determined by the Compensation Committee. Executive must continue to be employed by the Company through the payment date of any such Annual Bonus as a condition to receiving the bonus.

Equity Awards. Pursuant to the provisions of this Agreement prior to its amendment and restatement as set forth herein the Company has, according to the Company’s Long-Term Stock Incentive Plan and with the approval of the CEO and Board of Directors, granted to Executive 10,000 shares of restricted stock of the Company. Executive’s right, title, and interest to any stock conferred under the Employment Agreement shall be controlled and governed by terms and conditions of the Company’s Long-Term Stock Incentive Plan. Executive shall be eligible to participate in equity awards as determined by the Compensation Committee under the Company’s Long-Term Stock Incentive Plan or other equity award plan maintained by the Company during the term of this Agreement.

Executive Benefit Plans. Based on the plans maintained by the company from time to time during the term of this Agreement for its similarly situated executives, and subject to change at any time, the Executive will be provided with a comprehensive and competitive benefits package including medical, dental, vision, life, AD&D, STD, LTD, etc., all effective on hire date. Executive will be 401k eligible with discretionary matching contribution after 60 days of employment. The Executive shall be eligible to participate in such benefit plans, according to the terms and conditions of those plans. Executive will pay same amount as all other similarly situated executive and non-executive employees for health premiums.

Severance Pay. Executive shall be eligible for 6 months of base salary, subject to terms and conditions of this Agreement. Please refer to Paragraph 4 of this Agreement, “Termination Without Cause or Nonrenewal.”

Executive Disability Plan. The Executive is eligible to apply for a voluntary Executive Disability Plan. If approved by the carrier for coverage, the premiums will be paid for by the Executive.

Vacation and Leave. Executive shall be entitled to three (3) weeks of vacation per year, accrued monthly and in accordance with the Company’s vacation policy in effect from time to time, and six (6) sick days per year, and any other paid leave benefits provided for in the Company’s Policy Guide.

Cell Phone & Computer. Executive will be furnished with a laptop and cell phone/PDA for business purposes.

Office Furnishings. The Company agrees to provide office space and furnishings to Executive commensurate with the Company’s decor and culture.

Initials:_____
_____

Exhibit B

Exhibit C

Designated Cities — Per Paragraph 11a of Employment, Confidentiality,
and Non-Compete Agreement.

The Continental United States

Initials:_____
_____

Exhibit C

EX-10.4

EXHIBIT 10.4

[THIS AGREEMENT IS SUBJECT TO ARBITRATION]

AMENDED AND RESTATED EMPLOYMENT,
CONFIDENTIALITY, AND NON-COMPETITION AGREEMENT

THIS AGREEMENT dated and effective as of the 30^th day of December, 2008 by and between Interphase Corporation, a Texas corporation (the “Company”), and James W. Gragg, “Executive.” The Company’s principal place of business is located at 2901 North Dallas Parkway, Suite 200, Plano, TX 75093.

WHEREAS, the Company and Executive are parties to that certain Employment, Confidentiality, and Non-Competition Agreement dated November 1, 2004, which sets forth the terms and conditions of the Executive’s employment with the Company; and

WHEREAS, the Company and Executive desire to amend and restate such agreement on the terms and conditions set forth herein in a manner intended to take into account the provisions of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”);

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

Background Statement

The Company enables rapid platform design and integration for the global voice and data communications markets through custom and off-the-shelf communications equipment, embedded software development suites, and systems integration and consulting services for telecom and enterprise networks. Executive desires to continue to be employed by the Company. The Company desires to continue to employ Executive under the terms and conditions of this Agreement.

This Agreement sets forth the terms of Executive’s employment. The parties agree that this Agreement is supported by valuable consideration, that mutual promises and obligations have been undertaken by the parties to it, and that the agreement is entered into voluntarily by the parties.

Statement of Agreement

1. Duties. Executive shall devote Executive’s best efforts to the business of the Company. Executive shall perform such duties and responsibilities customary to the position of Vice President of Operations & Fulfillment, including those described on Exhibit A to this Agreement. Executive shall also perform those duties assigned by the Company from time to time.

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2.

Terms. The “initial term” of employment under this Agreement, as amended and restated, shall terminate on May 1, 2009, the end of the current term of this Agreement. The initial term of this amended and restated Agreement shall automatically renew for successive six (6) month periods, referred to as “successor terms,” unless either party gives thirty (30) days written notice of its intention not to renew prior to the expiration of the initial or any successor term or Executive is terminated for Cause (as described in Paragraph 3(c) of This Agreement).

3.

Terminable For Cause or on Account of Death or Disability. This Agreement may be terminated by the Company prior to the expiration of the initial term or any successor term as follows:

(a)	Due to the death of Executive;
(b)	Due to a physical or mental disability which prevents Executive from performing the essential functions of his full duties for a period of ninety (90) consecutive days during the term of this Agreement, as determined in good faith by a physician reasonably acceptable to the Company; or,
(c)	For Cause, which is (i) fraud, misappropriation, embezzlement, dishonesty, or other act of material misconduct against the Company or any affiliate of the Company; (ii) failure to perform specific and lawful directives of Executive’s superiors; (iii) violation of any rules or regulations of any governmental or regulatory body, which is materially injurious to the financial condition of the Company; (iv) conviction of or plea of guilty or nolo contendere to a felony; (v) violation of the provisions of Paragraphs 8, 9, 10, 11, 13, or 16; or, (vi) substantial failure to perform the duties and responsibilities of Executive under this Agreement.

	In the event of termination under this Paragraph 3, Executive shall be entitled only to Executive’s base salary earned through the date of termination paid in accordance with the Company’s normal payroll practices. No accrued but unpaid bonuses or commissions shall be due to Executive.
4.	Termination Without Cause or Nonrenewal.

(a) In the event (i) the Company gives Executive thirty (30) days written notice of its intention not renew a term of this Agreement, pursuant to the provisions of Paragraph 2 and at the time the term of this Agreement expires as a result of such notice, Executive is willing and able to execute a new agreement containing terms and conditions substantially similar to those in this Agreement and to continue to provide services to the Company substantially similar to the services provided at the time the term expires or (ii) Executive is terminated during a term of this Agreement without Cause, the Executive shall receive (A) the balance of base salary due under this Agreement for the balance of its term on the regular pay dates of the Company (the “Remaining Term Payments”) and thereafter, (B) subject to the Executive’s execution of a general release of claims and

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	covenant not to sue in a form acceptable to the company (the “Release”), severance pay based on Executive’s monthly base salary at the time of termination in an amount equal to six (6) months of such monthly base salary, payable in bi-weekly installments in accordance with the Company’s normal payroll practices (the “Severance Payments”). In addition, if Executive is eligible for Severance Payments and has executed a Release, and in connection with Executive’s termination of employment Executive is eligible for and timely elects to continue Executive’s coverage under the Company’s group health plan pursuant to Section 4980B of the Internal Revenue Code of 1986, as amended (the “Code”) and Section 601 et.esq. of the Employee Retirement Income Security Act of 1974, as amended (“COBRA Coverage”), the Company will pay the individual premium cost for COBRA Coverage for Executive for the period during which Executive is receiving Remaining Term Payments and Severance Payments or such shorter period during which Executive continues to be eligible for COBRA Coverage.
(b)	The Company shall begin payment of the Severance Payments on the first regularly scheduled payroll date of the Company occurring after completion of the Remaining Term payments, if any, provided Executive has executed and delivered the Release to the Company prior to such date (and not revoked the Release during the applicable revocation period). Notwithstanding any provision in the preceding sentence to the contrary, if the Severance Payments would be considered “non-qualified deferred compensation” under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), the payment of Severance Payments shall commence on the first regularly scheduled payroll date of the Company following the later of (i) sixty (60) days following Executive’s date of termination or (ii) completion of the Remaining Term Payments; provided Executive has executed and delivered the Release to the Company prior to such date (and not revoked the Release during the applicable revocation period). The form of the Release will be provided to the Executive not later than five (5) days following Executive’s date of termination.
(c)	No accrued but unpaid bonuses or commissions shall be due to Executive under this Paragraph 4. No other severance payment or benefits shall be due Executive other than those provided for under this Agreement. Notwithstanding anything stated herein to the contrary, in the event Executive becomes employed during the period in which the Executive is eligible to receive post-employment payments under this Paragraph 4, Executive shall notify the Company of such employment within ten (10) days following the employment commencement date and any amounts received by Executive in the form of compensation, salary, or other payments as a result of such employment shall reduce any remaining Severance Payments or other amounts or liability owed by the Company to the Executive under this Paragraph 4.

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5.	Compensation. Employer shall pay and provide benefits to Executive according to the provisions of Executive’s compensation plan described in the attached Exhibit B. Executive’s compensation plan shall be reviewed on a periodic basis. The Company reserves the right, and Executive hereby authorizes Company, to make deductions from Executive’s pay or bonuses to satisfy any outstanding obligations of Executive to the Company. The Company may offset against the final payment of wages or bonuses owed to Executive any amounts due the Company from Executive; provided, however, no such offset shall be made against any amount in excess of $5,000 that is considered to be “non-qualified deferred compensation” under Section 409A of the Code.
6.	Changes in Position, Location, or Compensation. If the Company transfers, promotes, or reassigns Executive to another position or geographic area, or both parties agree to a change in compensation or benefits during a term of this Agreement or upon the renewal of a term of this Agreement, an updated employment agreement may be substituted by agreement of the parties but is not required. Mutually-agreeable changes in compensation or benefits shall be effected by amendment to and incorporation of a modified Exhibit B, initialed by the parties or their authorized representative. All provisions, promises, terms or conditions not modified by an amendment of Exhibits A — C shall remain in effect and shall not be deemed revoked or modified beyond the changes set forth in one or more amended Exhibits. Notwithstanding the preceding, any changes or amendments to this Agreement shall be consistent with the provisions of Sections 20 and 21 hereof.
7.	Executive Representation/Warranty. Executive represents that Executive is not a party to any agreement with a third party, or limited by a court order, containing a non-competition provision or other restriction which would preclude Executive’s employment with Company or any of the services which Executive will provide on the Company’s behalf.
8.	Duty of Loyalty. Executive acknowledges the common law duties of reasonable care, loyalty, and honesty which arise out of the principal/agent relationship of the parties. While employed and thereafter for whatever term the law may impose, Executive shall not engage in any activity to the detriment of the Company. By way of illustration and not as a limitation, Executive shall not discuss with any customer or potential customer of the Company any plans by Executive or any other Executives of the Company to leave the employment of the Company and compete with the Company.
9.	Company Documents. Executive agrees and acknowledges that Executive holds as the Company’s property all memoranda, books, papers, letters, and other data, including duplicates, relating to the Company’s business and affairs (“Company Documents”). This includes Company Documents created or used by Executive or otherwise coming into Executive’s possession in connection with the performance of Executive’s job duties. All Company Documents in the possession, custody, or control of Executive shall be returned to the Company at the time of termination of employment.

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Confidential Information and Non-Competition

10. In exchange for the mutual promises and obligations contained in this Agreement, and contemporaneous with its execution or soon thereafter, Employer promises to deliver to Executive or permit Executive to acquire, be exposed to, and/or have access to material, data, and information of the Company and/or its customers or clients that is confidential, proprietary and/or a trade secret (“Confidential Information”). At all times, both during and after the termination of employment, the Executive shall keep and retain in confidence and shall not disclose, except as required in the course of the Executive’s employment with the Company, to any person, firm or corporation, or use for the Executive’s own purposes, any Confidential Information. For the purposes of this Paragraph, such information shall include, but is not limited to:

(a)	The Company’s standard operating procedures, processes, formulae, know-how, scientific, technical, or product information, whether patentable or not, which is of value to the Company and not generally known by the Company’s competitors;
(b)	All confidential information obtained from third parties and customers concerning their products, business, or equipment specifications;
(c)	Confidential business information of the Company, including, but not limited to, marketing and business plans, strategies, projections, business opportunities, client identities or lists, sales and cost information, internal financial statements or reports, profit, loss, or margin information, customer price information; and,
(d)	Other information designated by the Company or deemed by law to be confidential information.

11. Non-Competition. In consideration of the mutual promises contained in this Agreement, the sufficiency of which is acknowledged by the parties, Executive agrees that during the term of his employment and for a period of twelve (12) calendar months after termination of employment from the Company (whether voluntary or involuntary), Executive shall not, directly or indirectly, either as principal, agent, manager, employee, partner, shareholder, director, officer, consultant or otherwise:

(a)	Become associated or affiliated with, employed by, or financially interested in any business operation which competes in the business currently engaged in by Company. (The phrase “business currently engaged in by the Company” includes, but is not limited to, the type of activities in which the Company was engaged during Executive’s tenure, such as designs and delivers high performance connectivity adapters for computer and telecommunication networks.)
(b)	Solicit or attempt to solicit the business or patronage of any person, firm, corporation, partnership, association, department of government or other entity with whom the Company has had any contact during a period of twelve (12) calendar months preceding the date of this Agreement (“Customers”), or otherwise induce such Customers to reduce, terminate, restrict or otherwise alter business relationships with the Company in any fashion; or,
(c)	In any way solicit or attempt to solicit the business or patronage of any Customers.

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(d) The parties intend the above restrictions on competition to be completely severable and independent, and any invalidity or unenforceability of any one or more such restrictions shall not render invalid or unenforceable any one or more restrictions.

12. Limitations on Scope. In recognition of the broad geographic scope of the Company’s business and the ease of competing with the Company in any part of the United States, the restrictions on competition set forth herein are intended to cover the following geographic areas:

(a)	The geographic territory identified on the attached Exhibit C;
(b)	The cities containing a facility or operation owned or managed by the Company; and,
(c)	A fifty (50) mile radius outside the boundary limits of each such city.

	The parties intend the above geographical areas to be completely severable and independent, and any invalidity or unenforceability of this Agreement with respect to any one area shall not render this Agreement unenforceable as applied to any one or more of the other areas.
13.	Non-Solicitation of Employees. During employment and for a period of twelve (12) months after termination, Executive agrees not to hire, employ, solicit, divert, recruit, or attempt to induce, directly or indirectly, any existing or future employee of the Company to leave their position with the Company or to become associated with a competing business.

Remedies for Breach

14. Company’s Right to Obtain an Injunction. Executive acknowledges that the Company will have no adequate means of protecting its rights under Paragraphs 10, 11, 12, or 13 of this Agreement other than be securing an injunction (a court order prohibiting the Executive from violating the Agreement). Accordingly, the Executive agrees that the Company is entitled to enforce this Agreement by obtaining a temporary, preliminary, and permanent injunction and any other appropriate equitable relief. Executive acknowledges that the Company’s recovery of damages will not be an adequate means to redress a breach of this Agreement. Nothing contained in this Paragraph, however, shall prohibit the Company from pursuing any remedies in addition to injunctive relief, including recovery of damages. Executive expressly acknowledges that the Company has sole discretion regarding whether to seek a remedy for breaches of Paragraphs 10, 11, 12, or 13 in a court of competent jurisdiction or by arbitration procedures outlined in Paragraph 15.

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15. Arbitration. Executive and the Company agree that any unresolved dispute or controversy involving a claim for monetary damages and/or declaratory or injunctive relief arising under or in connection with this Agreement shall be settled exclusively by arbitration, conducted before a single arbitrator in Dallas, Texas, according to the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator’s award in any court having jurisdiction. The direct expense of any arbitration proceeding shall be borne by the Company. Notwithstanding the foregoing, nothing in this Paragraph is intended to subject a claim by either party arising under Paragraphs 10, 11, 12, or 13 to mandatory arbitration. Any claim arising under Paragraphs 10, 11, 12, or 13 shall be litigated in the courts of the relevant jurisdiction and venue.

Inventions and Discoveries

16. Discoveries, Inventions, & Copyrights. Executive shall disclose promptly to the Company any and all conceptions and ideas for inventions, improvements, and valuable discoveries, whether patentable or not, which are conceived or made by the Executive, solely or jointly, during Executive’s term of employment and which pertain to the business activities of the Company. Executive hereby assigns and agrees to assign all his interest therein to the Company or to its nominee. Whenever requested to do so by the Company, Executive shall execute any and all applications, assignments, or other instruments which the Company shall deem necessary to apply for and obtain Letters of Patent of the United States or any foreign country or to otherwise protect the Company’s interest therein.

General Provisions

17.	Condition to Seeking Subsequent Employment. Executive agrees to show a copy of this Agreement to any Competitor with whom Executive interviews during the Executive’s employment with the Company or with whom the Executive interviews within twelve (12) months following the effective date of the termination of the Executive’s employment with the Company.
18.	Attorneys’ Fees. If any party shall obtain a final judgment of a court of competent jurisdiction, subject to no further appeal, pursuant to which any other party shall be determined to have breached its obligations hereunder or made any misrepresentations, such prevailing party shall be entitled to recover, in addition to any award of damages, reasonable attorneys’ fees, costs, and expenses incurred by such party in obtaining such judgment.
19.	Non-Disparagement and Confidentiality. Except as may be required by law or as consented to in writing by an authorized officer or agent of the Company, Executive agrees not to make any statements whatsoever, directly or indirectly, written or oral, which could reasonably become public, which could be interpreted as embarrassing, disparaging, prejudicial, or in any way detrimental or inimical to the interests of the Company. Furthermore, Executive agrees to hold confidential and not to disclose, make public, or to communicate orally or in writing to any person or entity (other than Executive’s significant other and immediate family), directly or indirectly, the terms of this Agreement or any matters set forth herein, except only: (a) as may be compelled by court orders; (b) as may be necessary to enforce the terms of this Agreement; (c) to legal, accounting, and financial advisors; (d) as may be necessary in connection with the application for or obtaining loans or credit; (e) as may be necessary to comply with applicable laws and government regulations; or, (f) as may be necessary or desirable in obtaining future employment.

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20. Additional Termination Provisions.

(a)

Separation from Service. Notwithstanding anything to the contrary in this Agreement, with respect to the Severance Payments or any other amounts payable to Executive under this Agreement in connection with a termination of Executive’s employment that would be considered “non-qualified deferred compensation” under Section 409A of the Code, in no event shall a termination of employment be considered to have occurred under this Agreement unless such termination constitutes Executive’s “separation from service” with the Company as such term is defined in Treasury Regulation Section 1.409A-1(h) and any successor provision thereto (“Separation from Service”).

(b)

Section 409A Compliance. Notwithstanding anything contained in this Agreement to the Contrary, to the maximum extent permitted by applicable law, the Remaining Term Payments and the Severance Payments payable to Executive pursuant to Paragraph 4 shall be made in reliance upon Treasury Regulation Section 1.409A-1(b)(9)(iii) (relating to separation pay plans) or Treasury Regulation Section 1.409A-1(b)(4) (relating to short-term deferrals). However, to the extent any such payments are treated as “non-qualified deferred compensation” subject to Section 409A of the Code, and if Executive is deemed at the time of his Separation from Service to be a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code, then to the extent delayed commencement of any portion of the benefits to which Executive is entitled under this Agreement is required in order to avoid a prohibited payment under Section 409A(a)(2)(B)(i) of the Code, such portion of Executive’s termination benefits shall not be provided to Executive prior to the earlier of (i) the expiration of the six-month period measured from the date of Executive’s Separation from Service or (ii) the date of Executive’s death. Upon the earlier of such dates, all payments deferred pursuant to this Paragraph 20(b) shall be paid in a lump sum to Executive. The determination of whether Executive is a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code as of the time of his Separation from Service shall made by the Company in accordance with the terms of Section 409A of the Code and applicable guidance thereunder (including without limitation Treasury Regulation Section 1.409A-1(i) and any successor provision thereto).

21. Section 409A; Separate Payments. This Agreement is intended to be written, administered, interpreted and construed in a manner such that no payment or benefits provided under the Agreement become subject to (a) the gross income inclusion set forth within Section 409A(a)(1)(A) of the Code or (b) the interest and additional tax set forth within Section 409A(a)(1)(B) of the Code (collectively, “Section 409A Penalties”), including, where appropriate, the construction of defined terms to have meanings that would not cause the imposition of Section 409A Penalties. In no event shall the Company be required to provide a tax gross-up payment to Executive or otherwise reimburse Executive with respect to Section 409A Penalties. For purposes of Section 409A of the Code (including, without limitation, for purposes of Treasury Regulation Section 1.409A-2(b)(2)(iii)), each payment that Executive may be eligible to receive under this Agreement shall be treated as a separate and distinct payment and shall not collectively be treated as a single payment. Executive acknowledges and understands that neither the Company nor any employee or agent of the Company has provided Executive any tax advice regarding this Agreement or amounts payable under this Agreement and that the Company has urged Executive to seek advice from Executive’s own tax advisor regarding the tax consequences of this Agreement to Executive.

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22.	Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Company, its subsidiaries, affiliates, successors, and assigns.
23.	Nonwaiver. Any waiver by the Company of a breach of any provision of this Agreement must be in writing and signed by the Company to be effective. Any waiver by the Company of a breach of any provision of this Agreement shall not operate or be construed as a waiver by the Company of any different or subsequent breach of this Agreement by Executive.
24.	Applicable Law. This Agreement shall be construed in accordance with and governed by the laws of the State of Texas, without giving effect to the conflict of laws provisions thereof.
25.	Forum Selection Clause. Any and all causes of action for equitable relief relating to the enforcement of this Agreement and not otherwise subject to the mandatory arbitration provisions of Paragraph 15 may, in the Employer’s sole discretion, be brought in the United States District Court for the Northern District of Texas or the Dallas County District of the Texas State Courts. The parties agree that the provisions of this Paragraph benefit both Employer and Executive. Any and all causes of action by and between Employer and Executive can be quickly and efficiently resolved in the agreed-upon forum, which will not unduly burden either Employer or Executive, and which will substantially aid Employer and Executive in providing the opportunity for uniform treatment with respect to any issues relating to the covenants contained in this Agreement.
26.	Entire Agreement; Amendment. This Agreement represents the entire agreement between the Company and the Executive with respect to the subject matter hereof, supersedes all prior agreements dealing with the same subject matter. This Agreement may be amended at any time by the mutual consent of the parties hereto, with any such amendment to be invalid unless in writing, signed by the Company and Executive; provided that any such amendment shall be consistent with the provisions of Paragraphs 20 and 21 hereof.
27.	Severability. The invalidity of any term or provision of this Agreement, including any term or provision of Paragraphs 10, 11, 12, or 13 shall not invalidate or otherwise affect any other term or provision of this Agreement.

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IN WITNESS WHEREOF, the Company and Executive have duly executed this Agreement to be effective as of the day and year first above written.

Interphase Corporation
By:	/s/ Gregory B. Kalush
	Gregory B. Kalush
Its: President and Chief Executive Officer
Executive
/s/ James W. Gragg
James W. Gragg

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Exhibit A

Job Description

Job Title: Vice President, Operations & Fulfillment	Department: Manufacturing
Reports To: CEO	FLSA Status: Exempt
Prepared By: D. Shute	Approved By: CEO & HR
Prepared Date: 10/29/04	Approved Date: 10/29/04

SUMMARY
Responsible for directing and controlling multiple manufacturing and operational functions, including, Material Planning, Quality Assurance, Incoming Inspection, Inventory Control, Surface Mount Board Assembly, Rework/touchup of assemblies, Mechanical Assembly, Production Test, Final Inspection, and Shipping and Receiving. Responsibility also includes the leadership of the Customer Fulfillment, Documentation Control, Return Material (RMA), and Manufacturing and Test Engineering Departments. Also chartered with ensuring the overall internal and external customer experience at Interphase is as close to best-in-class as possible in the areas for which this position is responsible.

ESSENTIAL DUTIES AND RESPONSIBILITIES include the following. Other duties may be assigned. Management reserves the right to change these duties at any time.

1.	Ensures Interphase manufactures an extremely high quality product to customer and/or company specifications, and that the product is delivered on time and in the manner in which the customer and/or company expects.
2.	Responsible for creating and maintaining a best-in-class manufacturing organization consisting of quality people, processes, programs, and products.
3.	Responsible for ensuring the company satisfactorily maintains its ISO:9000 and TL9000 quality certifications.
4.	Ensure effective communication, coordination, processes, and procedures between all cross-functional areas in Operations & Fulfillment, particularly between order management, contracts, configurations, production planning, and document control.
5.	Sets the long-term vision and mission of the organization, identifying short-term and long-term objectives, and developing strategies and tactics to link those objectives to corporate goals. Conveys initiatives, goals and values throughout the organization, and ensure management team does as well.
6.	Ensures key departmental metrics are established and performance to goals are tracked and reported on.

7.	Responsible for participating in the company’s annual planning process, including strategic decision making on future direction of company, developing functional operational plan, establishing budgets, etc.
8.	Personally manages the Engineering Departments associated with manufacturing including Manufacturing Engineering, Test Engineering and Component Engineering.
9.	Assists Production Planning with determination of manufacturing schedules, capacity analysis and inventory requirements. Involves detailed management of purchasing and inventory based on input from Executive Master Schedules, Sales Outlooks, OEM forecasts and historical material requirements.
10.	Ensures adequate training of managers and other manufacturing employees in related processes to accepted industry standards and applicable laws.
11.	Provides tactical initiatives and solutions to the manufacturing processes to ensure the ability to manufacture the advanced technology of LAN, SAN and WAN products.
12.	Maintains concise communications with the executive team to provide timely status and important issues for their review and recommendations.
13.	Participates in contract reviews, customer audits, as well as ISO audits, providing management responsibility representation and manufacturing process review.
14.	Leads the investigation and resolution efforts whenever product issues are determined to exist with a customer.

SUPERVISORY RESPONSIBILITIES
Manages several subordinate managers and staff including the Director of Customer Fulfillment, Sr. Manager of Manufacturing, Manager of Quality Assurance, and the Test Engineering team. Also, matrix manages the Manager of Purchasing. Is responsible for the overall direction, coordination, and evaluation of these units. Carries out supervisory responsibilities in accordance with the organization’s policies and applicable laws. Responsibilities include interviewing, hiring, and training employees; planning, assigning, and directing work; appraising performance; rewarding and disciplining employees; addressing complaints and resolving problems.

QUALIFICATIONS To perform this job successfully, an individual must be able to perform each essential duty satisfactorily. The requirements listed below are representative of the knowledge, skill, and/or ability required. Reasonable accommodations may be made to enable individuals with disabilities to perform the essential functions.

EDUCATION and/or EXPERIENCE
Bachelor’s degree or higher in engineering or business, or equivalent, with 15 or more years experience in the electronic manufacturing industry, or equivalent combination of education and experience.

OTHER SKILLS AND ABILITIES
Knowledge of general business and accounting practices related to budgets, costing and inventory management. Excellent interpersonal skills (written and verbal communication), ability to effectively lead teams of people toward common goals even under difficult circumstances, and the ability to motivate others. Strong negotiation and conflict resolution skills necessary. Ability to effectively conduct presentations to the rest of the company, our customers, and our Board of Directors. May be requested to participate in industry forums or associations on behalf of the company.

OTHER QUALIFICATIONS
Very computer literate. Proficient with the Microsoft Suite of products to create Excel spreadsheets and PowerPoint presentations, and well as do email and Word documents. Must be able to conduct effective cost-benefit analyses on capital expenditure requests, automation enhancements, department initiatives, etc.

REASONING ABILITY
Must demonstrate the ability to analyze and solve problems related to people and manufacturing processes.

PHYSICAL DEMANDS The physical demands described here are representative of those that must be met by an employee to successfully perform the essential functions of this job. Reasonable accommodations may be made to enable individuals with disabilities to perform the essential functions.

While performing the duties of this job, the employee is regularly required to talk or hear. The employee frequently is required to walk; sit; use hands to finger, handle, or feel; and reach with hands and arms. The employee is occasionally required to stand. The employee must occasionally lift and/or move up to 25 pounds. Specific vision abilities required by this job include color vision, close vision, and ability to adjust focus.

WORK ENVIRONMENT The work environment characteristics described here are representative of those an employee encounters while performing the essential functions of this job. Reasonable accommodations may be made to enable individuals with disabilities to perform the essential functions.

This position does require occasional travel, both national and international. Employee must possess, or be qualified to obtain, a valid passport.

The noise level in the work environment is usually moderate—manufacturing and normal office environment.

Initials _____
_____

Exhibit A

Exhibit B

Compensation

Base Salary. $6,730.77 per pay period ($175,000/year on an annual basis), of which there are 26 in each calendar year, less deductions as may be required by law or authorized by Executive.

Performance Bonus. Executive shall be eligible for an annual bonus for FY2008 in an amount up to $45,000 under and subject to the terms and conditions of the Company’s Executive Bonus Plan. During the term of this Agreement, Executive shall be eligible for an annual bonus under the Company’s existing Executive Bonus Plan as determined by the Compensation Committee of the Company’s Board of Directors (the “Compensation Committee”) in its sole discretion (collectively, “Annual Bonus”). It is generally anticipated that Executive’s Annual Bonus target will be an amount not less than $30,000. The opportunity to earn an Annual Bonus and the actual amount of the Annual Bonus will be determined in accordance with criteria established by the Compensation Committee and based on Executive’s achievement of specific corporate objectives, as determined by the Compensation Committee. Executive must continue to be employed by the Company through the payment date of any such Annual Bonus as a condition to receiving the bonus.

Equity Awards. Pursuant to the provisions of this Agreement prior to its amendment and restatement as set forth herein, the Company has, according to the Company’s Long-Term Stock Incentive Plan, granted to Executive options to purchase 10,000 shares of common stock of the Company. Executive’s right, title, and interest to any stock options conferred under the Employment Agreement shall be controlled and governed by terms and conditions of the Company’s Long-Term Stock Incentive Plan. Executive shall be eligible to participate in equity awards as determined by the Compensation Committee under the Company’s Long-Term Stock Incentive Plan or other equity award plan maintained by the Company during the term of this Agreement.

Severance Pay. Executive shall be eligible for 6 months of base salary, subject to terms and conditions of this Agreement. Please refer to Paragraph 4 of this Agreement, “Termination Without Cause or Nonrenewal.”

Vacation and Leave. Executive shall be entitled to four (4) weeks of vacation per year, accrued monthly, and in accordance with the Company’s vacation policy in effect from time to time, and six (6) sick days per year, and any other paid leave benefits provided for in the Company’s Policy Guide.

Office Furnishings. The Company agrees to provide, and has already provided, office space and furnishings to Executive commensurate with the Company’s decor and culture.

Executive Benefit Plans. Executive shall be eligible to participate in any profit sharing, retirement, medical benefit, or disability benefit plan maintained by the Company from time to time during the term of this Agreement for its similarly situated executives, if any, according to the terms and conditions of those plans.

Initials:_____
_____

Exhibit B

Exhibit C

Designated Cities — Per Paragraph 11a of Employment, Confidentiality,
and Non-Compete Agreement.

The Continental United States

Initials:_____
_____

Exhibit C

EX-10.5

EXHIBIT 10.5

[THIS AGREEMENT IS SUBJECT TO ARBITRATION]

AMENDED AND RESTATED EMPLOYMENT, CONFIDENTIALITY, AND
NON-COMPETITION AGREEMENT

THIS AGREEMENT dated and effective as of the 30^th day of December 2008 by and between Interphase Corporation, a Texas corporation (the “Company”), and Randall E. McComas, (“Executive”). Company’s principal place of business is located at 2901 North Dallas Parkway, Suite 200, Plano, Texas, 75093.

WHEREAS, the Company and Executive are parties to that certain Employment, Confidentiality, and Non-Competition Agreement dated February 15, 2002, which sets forth the terms and conditions of the Executive’s employment with the Company; and

WHEREAS, the Company and Executive desire to amend and restate such agreement on the terms and conditions set forth herein in a manner intended to take into account the provisions of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”);

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

Background Statement

The Company is engaged in the computer and telecommunications server markets, including local area networking, wide area networking, and storage area networking. Executive desires to continue to be employed by the Company. The Company desires to continue to employ Executive, under the terms and conditions of this Agreement.

This Agreement sets forth the terms of Executive’s employment. The parties agree that this Agreement is supported by valuable consideration, that mutual promises and obligations have been undertaken by the parties to it, and that the agreement is entered into voluntarily by the parties.

Statement of Agreement

1. Duties. Executive shall devote Executive’s best efforts to the business of the Company. Executive shall perform such duties and responsibilities customary to the position of Vice President of Global Sales & Customer Support, including those described on Exhibit A to this Agreement. Executive shall also perform those duties assigned by the Company from time to time.

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2.

Terms. The “initial term” of employment under this Agreement, as amended and restated, shall terminate on February 15, 2009, the end of the current term of this Agreement. The initial term of this amended and restated Agreement shall automatically renew for successive six (6) month periods, referred to as “successor terms,” unless either party gives thirty (30) days written notice of its intention not to renew prior to the expiration of the initial or any successor term or Executive is terminated for Cause (as described in Paragraph 3(c) of this Agreement).

3.

Terminable For Cause of on Account of Death or Disability. This Agreement may be terminated by the Company prior to the expiration of the initial term or any successor term as follows:

(a)	Due to the death of Executive;
(b)	Due to a physical or mental disability which prevents Executive from performing the essential functions of his full duties for a period of ninety (90) consecutive days during the term of this Agreement, as determined in good faith by a physician reasonably acceptable to the Company; or,
(c)	For Cause, which is (i) fraud, misappropriation, embezzlement, dishonesty, or other act of material misconduct against the Company or any affiliate of the Company; (ii) failure to perform specific and lawful directives of Executive’s superiors; (iii) violation of any rules or regulations of any governmental or regulatory body, which is materially injurious to the financial condition of the Company; (iv) conviction of or plea of guilty or nolo contendere to a felony; (v) violation of the provisions of Paragraphs 8, 9, 10, 11, 13, or 16; or, (vi) substantial failure to perform the duties and responsibilities of Executive under this Agreement.

	In the event of termination under this Paragraph 3, Executive shall be entitled only to Executive’s base salary earned through the date of termination paid in accordance with the Company’s normal payroll practices. No accrued but unpaid bonuses or commissions shall be due to Executive.
4.	Termination Without Cause or Nonrenewal.

(a) In the event (i) the Company gives Executive thirty (30) days written notice of its intention not renew a term of this Agreement pursuant to the provisions of Paragraph 2 and at the time the term of this Agreement expires as a result of such notice, Executive is willing and able to execute a new agreement containing terms and conditions substantially similar to those in this Agreement and to continue to provide services to the Company substantially similar to the services provided at the time the term expires, or (ii) Executive is terminated during a term of this Agreement without Cause, the Executive shall receive: (A) the balance of base salary due under this Agreement for the balance of its term on the regular pay dates of the Company (the “Remaining Term Payments”) and thereafter, (B) subject to the Executive’s execution of a general release of claims and

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	covenant not to sue in a form acceptable to the company (the “Release”), severance pay based on Executive’s monthly base salary at the time of termination in an amount equal to six (6) months of such monthly base salary, payable in bi-weekly installments in accordance with the Company’s normal payroll practices (the “Severance Payments”). In addition, if Executive is eligible for Severance Payments and has executed a Release, and in connection with Executive’s termination of employment Executive is eligible for and timely elects to continue Executive’s coverage under the Company’s group health plan pursuant to Section 4980B of the Internal Revenue Code of 1986, as amended (the “Code”) and Section 601 et.esq. of the Employee Retirement Income Security Act of 1974, as amended (“COBRA Coverage”), the Company will pay the premium cost for COBRA Coverage for individual Executive for the period during which Executive is receiving Remaining Term Payments and Severance Payments or such shorter period during which Executive continues to be eligible for COBRA Coverage.
(b)	The Company shall begin payment of the Severance Payments on the first regularly scheduled payroll date of the Company occurring after completion of the Remaining Term payments, if any, provided Executive has executed and delivered the Release to the Company prior to such date (and not revoked the Release during the applicable revocation period). Notwithstanding any provision in the preceding sentence to the contrary, if the Severance Payments would be considered “non-qualified deferred compensation” under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), the payment of Severance Payments shall commence on the first regularly scheduled payroll date of the Company following the later of (i) sixty (60) days following Executive’s date of termination or (ii) completion of the Remaining Term Payments; provided Executive has executed and delivered the Release to the Company prior to such date (and not revoked the Release during the applicable revocation period). The form of the Release will be provided to the Executive not later than five (5) days following Executive’s date of termination.
(c)	No accrued but unpaid bonuses or commissions shall be due to Executive under this Paragraph 4. No other severance payment or benefits shall be due Executive other than those provided for under this Agreement. Notwithstanding anything stated herein to the contrary, in the event Executive becomes employed during the period in which the Executive is eligible to receive post-employment payments under this Paragraph 4, Executive shall notify the Company of such employment within ten (10) days following the employment commencement date and any amounts received by Executive in the form of compensation, salary, or other payments as a result of such employment shall reduce any remaining Severance Payments or other amounts or liability owed by the Company to the Executive under this Paragraph 4.

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5.	Compensation. Employer shall pay and provide benefits to Executive according to the provisions of Executive’s compensation plan described in the attached Exhibit B. Executive’s compensation plan shall be reviewed on a periodic basis. The Company reserves the right, and Executive hereby authorizes Company, to make deductions from Executive’s pay or bonuses to satisfy any outstanding obligations of Executive to the Company. The Company may offset against the final payment of wages or bonuses owed to Executive any amounts due the Company from Executive; provided, however, no such offset shall be made against any amount in excess of $5,000 that is considered to be “non-qualified deferred compensation” under Section 409A of the Code.
6.	Changes in Position, Location, or Compensation. If the Company transfers, promotes, or reassigns Executive to another position or geographic area, or both parties agree to a change in compensation or benefits during a term of this Agreement or upon the renewal of a term of this Agreement, an updated employment agreement may be substituted by agreement of the parties but is not required. Mutually-agreeable changes in compensation or benefits shall be effected by amendment to and incorporation of a modified Exhibit B, initialed by the parties or their authorized representative. All provisions, promises, terms or conditions not modified by an amendment of Exhibits A — C shall remain in effect and shall not be deemed revoked or modified beyond the changes set forth in one or more amended Exhibits. Notwithstanding the preceding, any changes or amendments to this Agreement shall be consistent with the provisions of Section 20 and 21 hereof.
7.	Executive Representation/Warranty. Executive represents that Executive is not a party to any agreement with a third party, or limited by a court order, containing a non-competition provision or other restriction which would preclude Executive’s employment with Company or any of the services which Executive will provide on the Company’s behalf.
8.	Duty of Loyalty. Executive acknowledges the common law duties of reasonable care, loyalty, and honesty which arise out of the principal/agent relationship of the parties. While employed and thereafter for whatever term the law may impose, Executive shall not engage in any activity to the detriment of the Company. By way of illustration and not as a limitation, Executive shall not discuss with any customer or potential customer of the Company any plans by Executive or any other Executives of the Company to leave the employment of the Company and compete with the Company.
9.	Company Documents. Executive agrees and acknowledges that Executive holds as the Company’s property all memoranda, books, papers, letters, and other data, including duplicates, relating to the Company’s business and affairs (“Company Documents”). This includes Company Documents created or used by Executive or otherwise coming into Executive’s possession in connection with the performance of Executive’s job duties. All Company Documents in the possession, custody, or control of Executive shall be returned to the Company at the time of termination of employment.

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Confidential Information and Non-Competition

10. In exchange for the mutual promises and obligations contained in this Agreement, and contemporaneous with its execution or soon thereafter, Employer promises to deliver to Executive or permit Executive to acquire, be exposed to, and/or have access to material, data, and information of the Company and/or its customers or clients that is confidential, proprietary and/or a trade secret (“Confidential Information”). At all times, both during and after the termination of employment, the Executive shall keep and retain in confidence and shall not disclose, except as required in the course of the Executive’s employment with the Company, to any person, firm or corporation, or use for the Executive’s own purposes, any Confidential Information. For the purposes of this Paragraph, such information shall include, but is not limited to:

(a)	The Company’s standard operating procedures, processes, formulae, know-how, scientific, technical, or product information, whether patentable or not, which is of value to the Company and not generally known by the Company’s competitors;
(b)	All confidential information obtained from third parties and customers concerning their products, business, or equipment specifications;
(c)	Confidential business information of the Company, including, but not limited to, marketing and business plans, strategies, projections, business opportunities, client identities or lists, sales and cost information, internal financial statements or reports, profit, loss, or margin information, customer price information; and,
(d)	Other information designated by the Company or deemed by law to be confidential information.

11. Non-Competition. In consideration of the mutual promises contained in this Agreement, the sufficiency of which is acknowledged by the parties, Executive agrees that during the term of his employment and for a period of twelve (12) calendar months after termination of employment from the Company (whether voluntary or involuntary), Executive shall not, directly or indirectly, either as principal, agent, manager, employee, partner, shareholder, director, officer, consultant or otherwise:

(a)	Become associated or affiliated with, employed by, or financially interested in any business operation which competes in the business currently engaged in by Company. (The phrase “business currently engaged in by the Company” includes, but is not limited to, the type of activities in which the Company was engaged during Executive’s tenure, such as designs and delivers high performance connectivity adapters for computer and telecommunication networks.)
(b)	Solicit or attempt to solicit the business or patronage of any person, firm, corporation, partnership, association, department of government or other entity with whom the Company has had any contact during a period of twelve (12) calendar months preceding the date of this Agreement (“Customers”), or otherwise induce such Customers to reduce, terminate, restrict or otherwise alter business relationships with the Company in any fashion; or,
(c)	In any way solicit or attempt to solicit the business or patronage of any Customers.

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(d) The parties intend the above restrictions on competition to be completely severable and independent, and any invalidity or unenforceability of any one or more such restrictions shall not render invalid or unenforceable any one or more restrictions.

12. Limitations on Scope. In recognition of the broad geographic scope of the Company’s business and the ease of competing with the Company in any part of the United States, the restrictions on competition set forth herein are intended to cover the following geographic areas:

(a)	The geographic territory identified on the attached Exhibit C;
(b)	The cities containing a facility or operation owned or managed by the Company; and,
(c)	A fifty (50) mile radius outside the boundary limits of each such city.

	The parties intend the above geographical areas to be completely severable and independent, and any invalidity or unenforceability of this Agreement with respect to any one area shall not render this Agreement unenforceable as applied to any one or more of the other areas.
13.	Non-Solicitation of Employees. During employment and for a period of twelve (12) months after termination, Executive agrees not to hire, employ, solicit, divert, recruit, or attempt to induce, directly or indirectly, any existing or future employee of the Company to leave their position with the Company or to become associated with a competing business.

Remedies for Breach

14.

Company’s Right to Obtain an Injunction. Executive acknowledges that the Company will have no adequate means of protecting its rights under Paragraphs 10, 11, 12, or 13 of this Agreement other than be securing an injunction (a court order prohibiting the Executive from violating the Agreement). Accordingly, the Executive agrees that the Company is entitled to enforce this Agreement by obtaining a temporary, preliminary, and permanent injunction and any other appropriate equitable relief. Executive acknowledges that the Company’s recovery of damages will not be an adequate means to redress a breach of this Agreement. Nothing contained in this Paragraph, however, shall prohibit the Company from pursuing any remedies in addition to injunctive relief, including recovery of damages. Executive expressly acknowledges that the Company has sole discretion regarding whether to seek a remedy for breaches of Paragraphs 10, 11, 12, or 13 in a court of competent jurisdiction or by arbitration procedures outlined in Paragraph 15.

15.

Arbitration. Except for the provisions of Paragraphs 10, 11, 12, or 13, Executive and the Company agree that all Disputes, as defined in Article 1 of the Alternative Dispute Resolution Procedure (the “ADR Procedure”), regarding the termination of employment or other covered Disputes, shall be resolved exclusively in accordance with the Company’s ADR Procedure. Executive warrants and represents that Executive has received, read, and understands the Company’s ADR Procedure.

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Inventions and Discoveries

16. Discoveries, Inventions, & Copyrights. Executive shall disclose promptly to the Company any and all conceptions and ideas for inventions, improvements, and valuable discoveries, whether patentable or not, which are conceived or made by the Executive, solely or jointly, during Executive’s term of employment and which pertain to the business activities of the Company. Executive hereby assigns and agrees to assign all his interest therein to the Company or to its nominee. Whenever requested to do so by the Company, Executive shall execute any and all applications, assignments, or other instruments which the Company shall deem necessary to apply for and obtain Letters of Patent of the United States or any foreign country or to otherwise protect the Company’s interest therein.

General Provisions

17.	Condition to Seeking Subsequent Employment. Executive agrees to show a copy of this Agreement to any Competitor with whom Executive interviews during the Executive’s employment with the Company or with whom the Executive interviews within twelve (12) months following the effective date of the termination of the Executive’s employment with the Company.
18.	Attorneys’ Fees. If any party shall obtain a final judgment of a court of competent jurisdiction, subject to no further appeal, pursuant to which any other party shall be determined to have breached its obligations hereunder or made any misrepresentations, such prevailing party shall be entitled to recover, in addition to any award of damages, reasonable attorneys’ fees, costs, and expenses incurred by such party in obtaining such judgment.
19.	Non-Disparagement and Confidentiality. Except as may be required by law or as consented to in writing by an authorized officer or agent of the Company, Executive agrees not to make any statements whatsoever, directly or indirectly, written or oral, which could reasonably become public, which could be interpreted as embarrassing, disparaging, prejudicial, or in any way detrimental or inimical to the interests of the Company. Furthermore, Executive agrees to hold confidential and not to disclose, make public, or to communicate orally or in writing to any person or entity (other than Executive’s significant other and immediate family), directly or indirectly, the terms of this Agreement or any matters set forth herein, except only: (a) as may be compelled by court orders; (b) as may be necessary to enforce the terms of this Agreement; (c) to legal, accounting, and financial advisors; (d) as may be necessary in connection with the application for or obtaining loans or credit; (e) as may be necessary to comply with applicable laws and government regulations; or, (f) as may be necessary or desirable in obtaining future employment.

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20. Additional Termination Provisions.

(a)

Separation from Service. Notwithstanding anything to the contrary in this Agreement, with respect to the Severance Payments or any other amounts payable to Executive under this Agreement in connection with a termination of Executive’s employment that would be considered “non-qualified deferred compensation” under Section 409A of the Code, in no event shall a termination of employment be considered to have occurred under this Agreement unless such termination constitutes Executive’s “separation from service” with the Company as such term is defined in Treasury Regulation Section 1.409A-1(h) and any successor provision thereto (“Separation from Service”).

(b)

Section 409A Compliance. Notwithstanding anything contained in this Agreement to the Contrary, to the maximum extent permitted by applicable law, the Remaining Term Payments and the Severance Payments payable to Executive pursuant to Paragraph 4 shall be made in reliance upon Treasury Regulation Section 1.409A-1(b)(9)(iii) (relating to separation pay plans) or Treasury Regulation Section 1.409A-1(b)(4) (relating to short-term deferrals). However, to the extent any such payments are treated as “non-qualified deferred compensation” subject to Section 409A of the Code, and if Executive is deemed at the time of his Separation from Service to be a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code, then to the extent delayed commencement of any portion of the benefits to which Executive is entitled under this Agreement is required in order to avoid a prohibited payment under Section 409A(a)(2)(B)(i) of the Code, such portion of Executive’s termination benefits shall not be provided to Executive prior to the earlier of (i) the expiration of the six-month period measured from the date of Executive’s Separation from Service or (ii) the date of Executive’s death. Upon the earlier of such dates, all payments deferred pursuant to this Paragraph 20(b) shall be paid in a lump sum to Executive. The determination of whether Executive is a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code as of the time of his Separation from Service shall made by the Company in accordance with the terms of Section 409A of the Code and applicable guidance thereunder (including without limitation Treasury Regulation Section 1.409A-1(i) and any successor provision thereto).

21. Section 409A; Separate Payments. This Agreement is intended to be written, administered, interpreted and construed in a manner such that no payment or benefits provided under the Agreement become subject to (a) the gross income inclusion set forth within Section 409A(a)(1)(A) of the Code or (b) the interest and additional tax set forth within Section 409A(a)(1)(B) of the Code (collectively, “Section 409A Penalties”), including, where appropriate, the construction of defined terms to have meanings that would not cause the imposition of Section 409A Penalties. In no event shall the Company be required to provide a tax gross-up payment to Executive or otherwise reimburse Executive with respect to Section 409A Penalties. For purposes of Section 409A of the Code (including, without limitation, for purposes of Treasury Regulation Section 1.409A-2(b)(2)(iii)), each payment that Executive may be eligible to receive under this Agreement shall be treated as a separate and distinct payment and shall not collectively be treated as a single payment. Executive acknowledges and understands that neither the Company nor any employee or agent of the Company has provided Executive any tax advice regarding this Agreement or amounts payable under this Agreement and that the Company has urged Executive to seek advice from Executive’s own tax advisor regarding the tax consequences of this Agreement to Executive.

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22.	Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Company, its subsidiaries, affiliates, successors, and assigns.
23.	Nonwaiver. Any waiver by the Company of a breach of any provision of this Agreement must be in writing and signed by the Company to be effective. Any waiver by the Company of a breach of any provision of this Agreement shall not operate or be construed as a waiver by the Company of any different or subsequent breach of this Agreement by Executive.
24.	Applicable Law. This Agreement shall be construed in accordance with and governed by the laws of the State of Texas, without giving effect to the conflict of laws provisions thereof.
25.	Forum Selection Clause. Any and all causes of action for equitable relief relating to the enforcement of this Agreement and not otherwise subject to the mandatory arbitration provisions of Paragraph 15 may, in the Employer’s sole discretion, be brought in the United States District Court for the Northern District of Texas or the Dallas County District of the Texas State Courts. The parties agree that the provisions of this Paragraph benefit both Employer and Executive. Any and all causes of action by and between Employer and Executive can be quickly and efficiently resolved in the agreed-upon forum, which will not unduly burden either Employer or Executive, and which will substantially aid Employer and Executive in providing the opportunity for uniform treatment with respect to any issues relating to the covenants contained in this Agreement.
26.	Entire Agreement; Amendment. This Agreement represents the entire agreement between the Company and the Executive with respect to the subject matter hereof, supersedes all prior agreements dealing with the same subject matter. This Agreement may be amended at any time by the mutual consent of the parties hereto, with any such amendment to be invalid unless in writing, signed by the Company and Executive; provided that any such amendment shall be consistent with the provisions of Paragraphs 20 and 21 hereof.
27.	Severability. The invalidity of any term or provision of this Agreement, including any term or provision of Paragraphs 10, 11, 12, or 13 shall not invalidate or otherwise affect any other term or provision of this Agreement.

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IN WITNESS WHEREOF, the Company and Executive have duly executed this Agreement to be effective as of the day and year first above written.

Interphase Corporation
By:	/s/ Gregory B. Kalush
	Gregory B. Kalush
Its:	President and Chief Executive Officer
Executive
/s/ Randall E. McComas
Randall E. McComas

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Exhibit A

Job Description

Job Title: VP, Global Sales & Customer Support	Department: Sales
Reports To: President and CEO	FLSA Status: Exempt
Prepared By: D. Shute	Approved By: G. Kalush
Prepared Date: April 5, 2006	Approved Date: 11-5-08
Revised Date: November 5, 2008

SUMMARY
Responsible for leading global sales and customer support activities, as well as MARCOM. Responsible for achieving targeted revenue attainment for the company, ensuring customers receive world class support, and that the company attains 100% satisfied customers. Leads the people, processes, policies, and programs necessary to achieve company objectives. Responsible for setting the long-term sales, marketing, and customer support vision and strategy for the company to achieve the company’s long-term goals and objectives.

ESSENTIAL DUTIES AND RESPONSIBILITIES include the following. Other duties may be assigned. Management reserves the right to change these duties at any time.

Achieves quarterly and annual sales results that meet or exceed committed company expectations.

Establishes a process of disciplined sales planning, strategic account penetration and sales leadership, demonstrated through the timely creating, and update of meaningful Strategic Account Plans. These plans should discuss the multi-functional actions that the company must take in order to penetrate and grow revenues within our targeted strategic accounts. Global Account Managers are responsible (under the guidance and direction of this position) for updating and communicating our customer penetration status, recommending new approaches to grow our presence and revenues within these accounts, and document our progress and actions on a quarterly basis.

Directs, and coordinates the activities of Sales management (including the Global Account Managers) with those of Marketing, Manufacturing, and Engineering to ensure accurate information is communicated and committed to customers and partners.

Establishes and implements a sales forecasting process that provides timely, accurate and reliable “closest to the pin” forecasts that allow the company to plan its production, inventory and expense tracks.

Designs and executes approved sales strategy to achieve committed corporate strategies including:

• Revenue objectives

• Strategic account penetration goals

• Customer service and support response time commitments

• Customer Satisfaction targets

• Sales and Customer Support quarterly and annual expense commitments

Recommends and drives activities and processes to improve the organization’s competitive position and ensure 100% customer satisfaction while producing maximum sales volume required to achieve company profit goals.

Maintains Sales and Customer Support reporting each month that includes (but is not limited to):

• Monthly and quarterly Sales quota achievement

• Strategic Account Plan creation, review and communication of action plans to increase penetration

• Strategic opportunities (RFPs and RFQs) status and action plans as appropriate

• Estimated (long and short term) future period revenue growth by account and opportunity

• Win/Loss reviews and recommendations on how to improve our win ratio.

Manages Marketing Communications & Administration.

• Responsible for all marketing communications activities associated with Interphase’s products, its brand, and any collateral material provided to its sales and support teams related to product and/or company promotion. This includes all promotional and advertising programs.

• Ensures our Web site is effective, up to date and easy to navigate and find by prospective customers. Must ensure we are optimized in our investments to gain the greatest leverage (and coverage) possible by electronic means through the Web site.

• Ensures we are properly represented in all major magazine “shopping guides” for issues that relate to our target product areas; and identifies meaningful messages aimed at the customers who would have an interest in our solution offerings and who read these publications.

Advises executive team on trends and directions of key customers and recommends alternative product and solution directions for the company.

Coordinates with executives of the company to ensure we create streamlined processes with disciplined execution for all customer interfacing activities.

Recommends customer pricing strategies in conjunction with Finance and Marketing.

Confers with chief executive officer to review achievements and discuss required changes in goals or objectives resulting from current status and conditions.

SUPERVISORY RESPONSIBILITIES
Is responsible for the overall direction, coordination, and evaluation of the global Sales and Customer Support team. Carries out supervisory responsibilities in accordance with the organization’s policies and applicable laws. Responsibilities include interviewing, hiring, and training employees; planning, assigning, and directing work; appraising performance; rewarding and disciplining employees; addressing complaints and resolving problems.

QUALIFICATIONS To perform this job successfully, an individual must be able to perform each essential duty satisfactorily. The requirements listed below are representative of the knowledge, skill, and/or ability required. Reasonable accommodations may be made to enable individuals with disabilities to perform the essential functions.

EDUCATION and/or EXPERIENCE
Bachelor’s degree (B. A.) or equivalent; plus eight to ten years related experience and/or training; or equivalent combination of education and experience. Must have extensive sales and marketing experience in North America, Europe and the Asia/Pacific Rim regions. This position requires a proven track record of driving sales through OEM account managers and distribution networks as well as managing the customer support efforts through subordinate managers. Must have developed a working knowledge of Telecommunications and Computer Networking product markets. Must also possess an effective strategic, as well as tactical execution style.

COMMUNICATIONS AND LANGUAGE SKILLS
Must communicate effectively, concisely and accurately, having the ability to decipher and understand customer and marketing requirements, financial reports, and legal documents and be able to explain them accurately. Must possess the ability to respond to complex inquiries or complaints from customers, partners, regulatory agencies, members of the business community, or employees. Must possess the ability to effectively and concisely express key relevant information in written form, whether writing speeches, or articles for publication that conform to prescribed style and format. Ability to effectively present information to customers, the executive Leadership Team, the Board of Directors, our employees, public groups, and/or the media.

MATHEMATICAL SKILLS
Ability to work with mathematical concepts such as probability and statistical inference, and fundamentals of plane and solid geometry and trigonometry. Ability to apply concepts such as fractions, percentages, ratios, and proportions to practical situations.

REASONING ABILITY
Excellent ability to define problems, collect data, establish facts, and draw valid conclusions. Ability to interpret an extensive variety of technical instructions in mathematical or diagram form and deal with several abstract and concrete variables.

PHYSICAL DEMANDS The physical demands described here are representative of those that must be met by an employee to successfully perform the essential functions of this job. Reasonable accommodations may be made to enable individuals with disabilities to perform the essential functions.

While performing the duties of this job, the employee is regularly required to use hands to finger, handle, or feel and talk or hear. The employee frequently is required to walk, stand, sit, and reach with hands and arms. The employee must occasionally lift and/or move up to 10 pounds. Specific vision abilities required by this job include close vision and color vision.

WORK ENVIRONMENT The work environment characteristics described here are representative of those an employee encounters while performing the essential functions of this job. Reasonable accommodations may be made to enable individuals with disabilities to perform the essential functions.

Normal office environnent. Extensive domestic and international travel required.

Initials _____

_____

Exhibit A

Exhibit B

Compensation

Base Salary. $9,038.46 per pay period ($235,000/year on an annual basis), of which there are 26 in each calendar year, less deductions as may be required by law or authorized by Executive.

Annual Bonus. Executive shall be eligible for an annual bonus for FY2008 in an amount up to $110,000 under and subject to the terms and conditions of the Company’s Executive Bonus Plan. During the term of this Agreement, Executive shall be eligible for an annual bonus in an amount under the Company’s existing Executive Bonus Plan as determined by the Compensation Committee of the Company’s Board of Directors (the “Compensation Committee”) in its sole discretion (collectively, “Annual Bonus”). It is generally anticipated that Executive’s Annual Bonus target will be an amount not less than $70,000. The opportunity to earn an Annual Bonus and the actual amount of the Annual Bonus will be determined in accordance with criteria established by the Compensation Committee and based on Executive’s achievement of specific corporate objective as determined by the Compensation Committee. Executive must continue to be employed by the Company through the payment date of any such Annual Bonus as a condition to receiving the bonus.

Equity Awards. Pursuant to the provisions of this Agreement prior to its amendment and restatement as set forth herein, the Company has, according to the Company’s Amended and Restated Stock Option Plan, granted to Executive options to purchase 100,000 shares of common stock of the Company. Executive’s right, title, and interest to any stock options conferred under the Employment Agreement shall be controlled and governed by terms and conditions of the Company’s Amended and Restated Stock Option Plan. Executive shall be eligible to participate in equity awards as determined by the Compensation Committee under the Company’s Long-Term Stock Incentive Plan or other equity award plan maintained by the Company during the term of this Agreement.

Vacation and Leave. Executive shall be entitled to four (4) weeks of vacation per year, accrued monthly and in accordance with the Company’s vacation policy in effect from time to time, and six (6) sick days per year, and any other paid leave benefits provided for in the Company’s Policy Guide.

Severance Pay. Executive shall be eligible, for severance pay as described in, and subject to the terms and conditions of Paragraph 4 of this Agreement, “Termination Without Cause or Nonrenewal.”

Office Furnishings. The Company agrees to provide office space and furnishings to Executive commensurate with the Company’s decor and culture.

Executive Benefit Plans. Executive shall be eligible to participate in any profit sharing, retirement, medical benefit, or disability benefit plan maintained by the Company from time to time during the term of this Agreement for its similarly situated executives, if any, according to the terms and conditions of those plans.

Initials:_____

_____

Exhibit B

Exhibit C

Designated Cities — Per Paragraph 11a of Employment, Confidentiality,
and Non-Compete Agreement.

The Continental United States

Initials:_____

_____

Exhibit C

EX-10.6

EXHIBIT 10.6

[THIS AGREEMENT IS SUBJECT TO ARBITRATION]

AMENDED AND RESTATED EMPLOYMENT,
CONFIDENTIALITY, AND NON-COMPETITION AGREEMENT

THIS AGREEMENT dated and effective as of the 30^th day of December, 2008 by and between Interphase Corporation, a Texas corporation (the “Company”), and Deborah A. Shute, “Executive.” The Company’s principal place of business is located at 2901 North Dallas Parkway, Suite 200, Plano, TX 75093.

WHEREAS, the Company and Executive are parties to that certain Employment, Confidentiality, and Non-Competition Agreement dated November 24, 1999, which sets forth the terms and conditions of the Executive’s employment with the Company; and

WHEREAS, the Company and Executive desire to amend and restate such agreement on the terms and conditions set forth herein in a manner intended to take into account the provisions of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”);

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

Background Statement

The Company enables rapid platform design and integration for the global voice and data communications markets through custom and off-the-shelf communications equipment, embedded software development suites, and systems integration and consulting services for telecom and enterprise networks. Executive desires to continue to be employed by the Company. The Company desires to continue to employ Executive under the terms and conditions of this Agreement.

This Agreement sets forth the terms of Executive’s employment. The parties agree that this Agreement is supported by valuable consideration, that mutual promises and obligations have been undertaken by the parties to it, and that the agreement is entered into voluntarily by the parties.

Statement of Agreement

1. Duties. Executive shall devote Executive’s best efforts to the business of the Company. Executive shall perform such duties and responsibilities customary to the position of Vice President of Human Resources & Administration, including those described on Exhibit A to this Agreement. Executive shall also perform those duties assigned by the Company from time to time.

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2.

Terms. The “initial term” of employment under this Agreement, as amended and restated, shall terminate on May 24, 2009, the end of the current term of this Agreement. The initial term of this amended and restated Agreement shall automatically renew for successive six (6) month periods, referred to as “successor terms,” unless either party gives thirty (30) days written notice of its intention not to renew prior to the expiration of the initial or any successor term or Executive is terminated for Cause (as described in Paragraph 3(c) of This Agreement).

3.

Terminable For Cause or on Account of Death or Disability. This Agreement may be terminated by the Company prior to the expiration of the initial term or any successor term as follows:

(a)	Due to the death of Executive;
(b)	Due to a physical or mental disability which prevents Executive from performing the essential functions of his full duties for a period of ninety (90) consecutive days during the term of this Agreement, as determined in good faith by a physician reasonably acceptable to the Company; or,
(c)	For Cause, which is (i) fraud, misappropriation, embezzlement, dishonesty, or other act of material misconduct against the Company or any affiliate of the Company; (ii) failure to perform specific and lawful directives of Executive’s superiors; (iii) violation of any rules or regulations of any governmental or regulatory body, which is materially injurious to the financial condition of the Company; (iv) conviction of or plea of guilty or nolo contendere to a felony; (v) violation of the provisions of Paragraphs 8, 9, 10, 11, 13, or 16; or, (vi) substantial failure to perform the duties and responsibilities of Executive under this Agreement.

	In the event of termination under this Paragraph 3, Executive shall be entitled only to Executive’s base salary earned through the date of termination paid in accordance with the Company’s normal payroll practices. No accrued but unpaid bonuses or commissions shall be due to Executive.
4.	Termination Without Cause or Nonrenewal.

(a) In the event (i) the Company gives Executive thirty (30) days written notice of its intention not renew a term of this Agreement, pursuant to the provisions of Paragraph 2 and at the time the term of this Agreement expires as a result of such notice, Executive is willing and able to execute a new agreement containing terms and conditions substantially similar to those in this Agreement and to continue to provide services to the Company substantially similar to the services provided at the time the term expires or (ii) Executive is terminated during a term of this Agreement without Cause, the Executive shall receive (A) the balance of base salary due under this Agreement for the balance of its term on the regular pay dates of the Company (the “Remaining Term Payments”) and thereafter, (B) subject to the Executive’s execution of a general release of claims and

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	covenant not to sue in a form acceptable to the company (the “Release”), severance pay based on Executive’s monthly base salary at the time of termination in an amount equal to six (6) months of such monthly base salary, payable in bi-weekly installments in accordance with the Company’s normal payroll practices (the “Severance Payments”). In addition, if Executive is eligible for Severance Payments and has executed a Release, and in connection with Executive’s termination of employment Executive is eligible for and timely elects to continue Executive’s coverage under the Company’s group health plan pursuant to Section 4980B of the Internal Revenue Code of 1986, as amended (the “Code”) and Section 601 et.esq. of the Employee Retirement Income Security Act of 1974, as amended (“COBRA Coverage”), the Company will pay the individual premium cost for COBRA Coverage for Executive for the period during which Executive is receiving Remaining Term Payments and Severance Payments or such shorter period during which Executive continues to be eligible for COBRA Coverage.
(b)	The Company shall begin payment of the Severance Payments on the first regularly scheduled payroll date of the Company occurring after completion of the Remaining Term payments, if any, provided Executive has executed and delivered the Release to the Company prior to such date (and not revoked the Release during the applicable revocation period). Notwithstanding any provision in the preceding sentence to the contrary, if the Severance Payments would be considered “non-qualified deferred compensation” under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), the payment of Severance Payments shall commence on the first regularly scheduled payroll date of the Company following the later of (i) sixty (60) days following Executive’s date of termination or (ii) completion of the Remaining Term Payments; provided Executive has executed and delivered the Release to the Company prior to such date (and not revoked the Release during the applicable revocation period). The form of the Release will be provided to the Executive not later than five (5) days following Executive’s date of termination.
(c)	No accrued but unpaid bonuses or commissions shall be due to Executive under this Paragraph 4. No other severance payment or benefits shall be due Executive other than those provided for under this Agreement. Notwithstanding anything stated herein to the contrary, in the event Executive becomes employed during the period in which the Executive is eligible to receive post-employment payments under this Paragraph 4, Executive shall notify the Company of such employment within ten (10) days following the employment commencement date and any amounts received by Executive in the form of compensation, salary, or other payments as a result of such employment shall reduce any remaining Severance Payments or other amounts or liability owed by the Company to the Executive under this Paragraph 4.

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5.	Compensation. Employer shall pay and provide benefits to Executive according to the provisions of Executive’s compensation plan described in the attached Exhibit B. Executive’s compensation plan shall be reviewed on a periodic basis. The Company reserves the right, and Executive hereby authorizes Company, to make deductions from Executive’s pay or bonuses to satisfy any outstanding obligations of Executive to the Company. The Company may offset against the final payment of wages or bonuses owed to Executive any amounts due the Company from Executive; provided, however, no such offset shall be made against any amount in excess of $5,000 that is considered to be “non-qualified deferred compensation” under Section 409A of the Code.
6.	Changes in Position, Location, or Compensation. If the Company transfers, promotes, or reassigns Executive to another position or geographic area, or both parties agree to a change in compensation or benefits during a term of this Agreement or upon the renewal of a term of this Agreement, an updated employment agreement may be substituted by agreement of the parties but is not required. Mutually-agreeable changes in compensation or benefits shall be effected by amendment to and incorporation of a modified Exhibit B, initialed by the parties or their authorized representative. All provisions, promises, terms or conditions not modified by an amendment of Exhibits A — C shall remain in effect and shall not be deemed revoked or modified beyond the changes set forth in one or more amended Exhibits. Notwithstanding the preceding, any changes or amendments to this Agreement shall be consistent with the provisions of Sections 20 and 21 hereof.
7.	Executive Representation/Warranty. Executive represents that Executive is not a party to any agreement with a third party, or limited by a court order, containing a non-competition provision or other restriction which would preclude Executive’s employment with Company or any of the services which Executive will provide on the Company’s behalf.
8.	Duty of Loyalty. Executive acknowledges the common law duties of reasonable care, loyalty, and honesty which arise out of the principal/agent relationship of the parties. While employed and thereafter for whatever term the law may impose, Executive shall not engage in any activity to the detriment of the Company. By way of illustration and not as a limitation, Executive shall not discuss with any customer or potential customer of the Company any plans by Executive or any other Executives of the Company to leave the employment of the Company and compete with the Company.
9.	Company Documents. Executive agrees and acknowledges that Executive holds as the Company’s property all memoranda, books, papers, letters, and other data, including duplicates, relating to the Company’s business and affairs (“Company Documents”). This includes Company Documents created or used by Executive or otherwise coming into Executive’s possession in connection with the performance of Executive’s job duties. All Company Documents in the possession, custody, or control of Executive shall be returned to the Company at the time of termination of employment.

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Confidential Information and Non-Competition

10. In exchange for the mutual promises and obligations contained in this Agreement, and contemporaneous with its execution or soon thereafter, Employer promises to deliver to Executive or permit Executive to acquire, be exposed to, and/or have access to material, data, and information of the Company and/or its customers or clients that is confidential, proprietary and/or a trade secret (“Confidential Information”). At all times, both during and after the termination of employment, the Executive shall keep and retain in confidence and shall not disclose, except as required in the course of the Executive’s employment with the Company, to any person, firm or corporation, or use for the Executive’s own purposes, any Confidential Information. For the purposes of this Paragraph, such information shall include, but is not limited to:

(a)	The Company’s standard operating procedures, processes, formulae, know-how, scientific, technical, or product information, whether patentable or not, which is of value to the Company and not generally known by the Company’s competitors;
(b)	All confidential information obtained from third parties and customers concerning their products, business, or equipment specifications;
(c)	Confidential business information of the Company, including, but not limited to, marketing and business plans, strategies, projections, business opportunities, client identities or lists, sales and cost information, internal financial statements or reports, profit, loss, or margin information, customer price information; and,
(d)	Other information designated by the Company or deemed by law to be confidential information.

11. Non-Competition. In consideration of the mutual promises contained in this Agreement, the sufficiency of which is acknowledged by the parties, Executive agrees that during the term of his employment and for a period of twelve (12) calendar months after termination of employment from the Company (whether voluntary or involuntary), Executive shall not, directly or indirectly, either as principal, agent, manager, employee, partner, shareholder, director, officer, consultant or otherwise:

(a)	Become associated or affiliated with, employed by, or financially interested in any business operation which competes in the business currently engaged in by Company. (The phrase “business currently engaged in by the Company” includes, but is not limited to, the type of activities in which the Company was engaged during Executive’s tenure, such as designs and delivers high performance connectivity adapters for computer and telecommunication networks.)
(b)	Solicit or attempt to solicit the business or patronage of any person, firm, corporation, partnership, association, department of government or other entity with whom the Company has had any contact during a period of twelve (12) calendar months preceding the date of this Agreement (“Customers”), or otherwise induce such Customers to reduce, terminate, restrict or otherwise alter business relationships with the Company in any fashion; or,
(c)	In any way solicit or attempt to solicit the business or patronage of any Customers.

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(d) The parties intend the above restrictions on competition to be completely severable and independent, and any invalidity or unenforceability of any one or more such restrictions shall not render invalid or unenforceable any one or more restrictions.

12. Limitations on Scope. In recognition of the broad geographic scope of the Company’s business and the ease of competing with the Company in any part of the United States, the restrictions on competition set forth herein are intended to cover the following geographic areas:

(a)	The geographic territory identified on the attached Exhibit C;
(b)	The cities containing a facility or operation owned or managed by the Company; and,
(c)	A fifty (50) mile radius outside the boundary limits of each such city.

	The parties intend the above geographical areas to be completely severable and independent, and any invalidity or unenforceability of this Agreement with respect to any one area shall not render this Agreement unenforceable as applied to any one or more of the other areas.
13.	Non-Solicitation of Employees. During employment and for a period of twelve (12) months after termination, Executive agrees not to hire, employ, solicit, divert, recruit, or attempt to induce, directly or indirectly, any existing or future employee of the Company to leave their position with the Company or to become associated with a competing business.

Remedies for Breach

14.

Company’s Right to Obtain an Injunction. Executive acknowledges that the Company will have no adequate means of protecting its rights under Paragraphs 10, 11, 12, or 13 of this Agreement other than be securing an injunction (a court order prohibiting the Executive from violating the Agreement). Accordingly, the Executive agrees that the Company is entitled to enforce this Agreement by obtaining a temporary, preliminary, and permanent injunction and any other appropriate equitable relief. Executive acknowledges that the Company’s recovery of damages will not be an adequate means to redress a breach of this Agreement. Nothing contained in this Paragraph, however, shall prohibit the Company from pursuing any remedies in addition to injunctive relief, including recovery of damages. Executive expressly acknowledges that the Company has sole discretion regarding whether to seek a remedy for breaches of Paragraphs 10, 11, 12, or 13 in a court of competent jurisdiction or by arbitration procedures outlined in Paragraph 15.

15.

Arbitration. Executive and the Company agree that any unresolved dispute or controversy involving a claim for monetary damages and/or declaratory or injunctive relief arising under or in connection with this Agreement shall be settled exclusively by arbitration, conducted before a single arbitrator in Dallas, Texas, according to the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator’s award in any court having jurisdiction. The direct expense of any arbitration proceeding shall be borne by the Company. Notwithstanding the foregoing, nothing in this Paragraph is intended to subject a claim by either party arising under Paragraphs 10, 11, 12, or 13 to mandatory arbitration. Any claim arising under Paragraphs 10, 11, 12, or 13 shall be litigated in the courts of the relevant jurisdiction and venue.

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Inventions and Discoveries

16. Discoveries, Inventions, & Copyrights. Executive shall disclose promptly to the Company any and all conceptions and ideas for inventions, improvements, and valuable discoveries, whether patentable or not, which are conceived or made by the Executive, solely or jointly, during Executive’s term of employment and which pertain to the business activities of the Company. Executive hereby assigns and agrees to assign all his interest therein to the Company or to its nominee. Whenever requested to do so by the Company, Executive shall execute any and all applications, assignments, or other instruments which the Company shall deem necessary to apply for and obtain Letters of Patent of the United States or any foreign country or to otherwise protect the Company’s interest therein.

General Provisions

17.	Condition to Seeking Subsequent Employment. Executive agrees to show a copy of this Agreement to any Competitor with whom Executive interviews during the Executive’s employment with the Company or with whom the Executive interviews within twelve (12) months following the effective date of the termination of the Executive’s employment with the Company.
18.	Attorneys’ Fees. If any party shall obtain a final judgment of a court of competent jurisdiction, subject to no further appeal, pursuant to which any other party shall be determined to have breached its obligations hereunder or made any misrepresentations, such prevailing party shall be entitled to recover, in addition to any award of damages, reasonable attorneys’ fees, costs, and expenses incurred by such party in obtaining such judgment.
19.	Non-Disparagement and Confidentiality. Except as may be required by law or as consented to in writing by an authorized officer or agent of the Company, Executive agrees not to make any statements whatsoever, directly or indirectly, written or oral, which could reasonably become public, which could be interpreted as embarrassing, disparaging, prejudicial, or in any way detrimental or inimical to the interests of the Company. Furthermore, Executive agrees to hold confidential and not to disclose, make public, or to communicate orally or in writing to any person or entity (other than Executive’s significant other and immediate family), directly or indirectly, the terms of this Agreement or any matters set forth herein, except only: (a) as may be compelled by court orders; (b) as may be necessary to enforce the terms of this Agreement; (c) to legal, accounting, and financial advisors; (d) as may be necessary in connection with the application for or obtaining loans or credit; (e) as may be necessary to comply with applicable laws and government regulations; or, (f) as may be necessary or desirable in obtaining future employment.

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20. Additional Termination Provisions.

(a)

Separation from Service. Notwithstanding anything to the contrary in this Agreement, with respect to the Severance Payments or any other amounts payable to Executive under this Agreement in connection with a termination of Executive’s employment that would be considered “non-qualified deferred compensation” under Section 409A of the Code, in no event shall a termination of employment be considered to have occurred under this Agreement unless such termination constitutes Executive’s “separation from service” with the Company as such term is defined in Treasury Regulation Section 1.409A-1(h) and any successor provision thereto (“Separation from Service”).

(b)

Section 409A Compliance. Notwithstanding anything contained in this Agreement to the Contrary, to the maximum extent permitted by applicable law, the Remaining Term Payments and the Severance Payments payable to Executive pursuant to Paragraph 4 shall be made in reliance upon Treasury Regulation Section 1.409A-1(b)(9)(iii) (relating to separation pay plans) or Treasury Regulation Section 1.409A-1(b)(4) (relating to short-term deferrals). However, to the extent any such payments are treated as “non-qualified deferred compensation” subject to Section 409A of the Code, and if Executive is deemed at the time of his Separation from Service to be a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code, then to the extent delayed commencement of any portion of the benefits to which Executive is entitled under this Agreement is required in order to avoid a prohibited payment under Section 409A(a)(2)(B)(i) of the Code, such portion of Executive’s termination benefits shall not be provided to Executive prior to the earlier of (i) the expiration of the six-month period measured from the date of Executive’s Separation from Service or (ii) the date of Executive’s death. Upon the earlier of such dates, all payments deferred pursuant to this Paragraph 20(b) shall be paid in a lump sum to Executive. The determination of whether Executive is a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code as of the time of his Separation from Service shall be made by the Company in accordance with the terms of Section 409A of the Code and applicable guidance thereunder (including without limitation Treasury Regulation Section 1.409A-1(i) and any successor provision thereto).

21. Section 409A; Separate Payments. This Agreement is intended to be written, administered, interpreted and construed in a manner such that no payment or benefits provided under the Agreement become subject to (a) the gross income inclusion set forth within Section 409A(a)(1)(A) of the Code or (b) the interest and additional tax set forth within Section 409A(a)(1)(B) of the Code (collectively, “Section 409A Penalties”), including, where appropriate, the construction of defined terms to have meanings that would not cause the imposition of Section 409A Penalties. In no event shall the Company be required to provide a tax gross-up payment to Executive or otherwise reimburse Executive with respect to Section 409A Penalties. For purposes of Section 409A of the Code (including, without limitation, for purposes of Treasury Regulation Section 1.409A-2(b)(2)(iii)), each payment that Executive may be eligible to receive under this Agreement shall be treated as a separate and distinct payment and shall not collectively be treated as a single payment. Executive acknowledges and understands that neither the Company nor any employee or agent of the Company has provided Executive any tax advice regarding this Agreement or amounts payable under this Agreement and that the Company has urged Executive to seek advice from Executive’s own tax advisor regarding the tax consequences of this Agreement to Executive.

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22.	Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Company, its subsidiaries, affiliates, successors, and assigns.
23.	Nonwaiver. Any waiver by the Company of a breach of any provision of this Agreement must be in writing and signed by the Company to be effective. Any waiver by the Company of a breach of any provision of this Agreement shall not operate or be construed as a waiver by the Company of any different or subsequent breach of this Agreement by Executive.
24.	Applicable Law. This Agreement shall be construed in accordance with and governed by the laws of the State of Texas, without giving effect to the conflict of laws provisions thereof.
25.	Forum Selection Clause. Any and all causes of action for equitable relief relating to the enforcement of this Agreement and not otherwise subject to the mandatory arbitration provisions of Paragraph 15 may, in the Employer’s sole discretion, be brought in the United States District Court for the Northern District of Texas or the Dallas County District of the Texas State Courts. The parties agree that the provisions of this Paragraph benefit both Employer and Executive. Any and all causes of action by and between Employer and Executive can be quickly and efficiently resolved in the agreed-upon forum, which will not unduly burden either Employer or Executive, and which will substantially aid Employer and Executive in providing the opportunity for uniform treatment with respect to any issues relating to the covenants contained in this Agreement.
26.	Entire Agreement; Amendment. This Agreement represents the entire agreement between the Company and the Executive with respect to the subject matter hereof, supersedes all prior agreements dealing with the same subject matter. This Agreement may be amended at any time by the mutual consent of the parties hereto, with any such amendment to be invalid unless in writing, signed by the Company and Executive; provided that any such amendment shall be consistent with the provisions of Paragraphs 20 and 21 hereof.
27.	Severability. The invalidity of any term or provision of this Agreement, including any term or provision of Paragraphs 10, 11, 12, or 13 shall not invalidate or otherwise affect any other term or provision of this Agreement.

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IN WITNESS WHEREOF, the Company and Executive have duly executed this Agreement to be effective as of the day and year first above written.

Interphase Corporation
By:	/s/ Gregory B. Kalush
	Gregory B. Kalush
Its: President and Chief Executive Officer
Executive
/s/ Deborah A. Shute
Deborah A. Shute

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Exhibit A

Job Description

Job Title: VP of HR & Administration	Department: Human Resources
Reports To: President and CEO	FLSA Status: Exempt
Prepared By: HR & Gregory B. Kalush	Approved By: G. Kalush
Prepared Date: December 30, 2008	Approved Date: 12-30-08

SUMMARY The Vice President of HR & Administration is a strategic business partner and member of the Executive Team, and has responsibilities critical to the short-term and long-term profitability, growth, and overall success of the Company. Reporting directly to the CEO, this position provides proactive HR team leadership and organizational leadership.

As the senior Human Resources individual for the company, the VP of Human Resources & Administration is fully responsible for leading all global Human Resources & Administrative functions and activities. Directs the development and implementation of most or all company-wide human resources policies and programs covering employment, benefits, compensation, AA / EEO compliance, organizational development, safety and health, and employee relations, etc. Ensures compliance with all country / federal, state and local labor laws where the Company has employees. Responsible for functional goal setting / attainment, meeting or exceeding budget targets, establishing corporate policies and key HR processes, and making personnel-related decisions consistent with approved policies, procedures, and practice.

As a member of the Executive Team, the VP of HR & Administration must embrace the organization’s vision, goals, and values, and display a sense of unity and alignment with the CEO and the rest of the leadership team which is necessary to achieve superior business results within the Company.

ESSENTIAL DUTIES AND RESPONSIBILITIES include the following. Other duties may be assigned. Management reserves the right to change these duties at any time.

Executive Management

Contributes as a member of the CEO’s Executive Staff on all short-term, long-term strategic and annual operating planning activities. Participates in future plans and the associated business/budgeting activities, SWOT analyses, etc., to achieve desired results. Prepares detailed budgets, operating plans, CAPEX plans, cost reduction programs, etc.

Actively engaged in the company’s formulation, implementation, and evaluation of strategic initiatives. Visible to internal customers and involved in “adding value” throughout the organization. (Viewed and leveraged as a resource by peers.)

In tandem with other key leaders, cultivates a synergistic environment in which there is cross-functional discussion and the formulation of action plans to pro-actively address the company’s SWOT, or participate in the due diligence process related to merger and acquisition activity, etc.

Human Resources Leadership

Overall responsibility for all aspects of HR & Administration for the Company on a worldwide basis. This includes establishing effective metrics/measurements, reporting on performance to goals, and ensuring key HR processes enable company success.

Accountable for creating, gaining approval of, and implementing the HR strategy to align HR activities with business goals and objectives. Accountabilities encompass:

• Strategic HR Management (Advice & Counsel to Management)

• Workforce Planning & Employment (Staffing)

• Human Resources Development (Training & Development)

• Total Rewards (Compensation & Benefits)

• Employee Relations (Performance Management, Compliance)

• Risk Management (Worker’s Compensation, Health and Safety)

Establishes HR’s vision and mission, short-term and long-range operating plans, programs, and budgets. Implements the necessary strategies, initiatives, and processes to achieve success.

As Strategic Business Partner, establishes trust and credibility with the organization and works cooperatively with leadership to understand and solve their key business issues with a focus on areas that provide value to the organization and assist the organization in achieving its business objectives. Provides decision support to leadership, makes recommendations for improvements, and personally acts as appropriate to design and implement people, process, or system changes to achieve desired results. Understands the business, and is sought after by leadership because of results orientation and the value provided.

Responsible for promoting strong employee engagement and retention and ensuring compliance with all federal, state and local labor laws as well as company policies and procedures.

Furthers a motivated and engaged workforce by ensuring the right people are in the right jobs, providing quality people supervisors and leaders, promoting good working conditions and eradicating conditions to the contrary, and ensuring competitive pay and benefits, training and development opportunities, and recognition and morale activities.

Provides sound advice and counsel to management and employees from the simple to the complex in all areas of Human Resources that is timely and appropriate, within the guidelines of company policies and procedures, past practice, best practice, and applicable laws. Ensures the CEO is alerted and properly updated throughout any serious employee relations matter. Through subordinate managers, promptly investigates, documents, and resolves employee relations issues in the company, particularly all harassment and discrimination complaints.

Acts as employee advocate to raise the questions, concerns, and issues of the employees within the company and works diligently to ensure they are understood and resolved appropriately. Ensures prompt response to unemployment or 3^rd party claims (TWC, EEOC, etc.), and represents the company in any hearing, deposition, or other legal matter as appropriate.

Proposes retention strategies and works on approved initiatives to implement them. Manages the Employee Suggestion systems and employee climate surveys.

Ultimately responsible for the company’s Policy Guide and any new policies or revisions required to comply with the law or changing business practice. Recommends new processes, policies, or procedures as needed, and assists in updating outdated ones and ensuring employees are notified as appropriate.

Ensures strong internal controls for HR’s key processes and compliance to ISO/TL and SOX standards. Documents all key HR processes in cooperation with other HR staff, ensures appropriate contributors are properly trained, keeps processes updated on a regular basis, and identifies control issues and rectifies them promptly.

Ensures all terminated employees are out processed appropriately. Negotiates separations as needed. Reviews exit interviews and related paperwork and shares with leadership, identifying trends or changes required. Secures company assets, and advises management on transition issues.

Leads, and actively participates in, any rightsizing activities, terminations, or job eliminations deemed necessary to ensure the business needs are met, the employee’s dignity is maintained, the company’s reputation internally and externally in the community is upheld, and that all laws are complied with related to WARN, COBRA, EEOC, Wage and Hour, etc.

Ensures preparation of a timely and legally compliant annual Affirmative Action Plan, as well as EEO-1, and Vets100 reports. Communicates, and trains, management as needed. Implements any corrective actions timely. Manages any required recruitment activities or good faith efforts.

Is responsible for full life-cycle recruiting globally that is pro-active, timely, and responsive. Ensures business needs are identified and understood, that a comprehensive recruiting strategy is prepared and agreed upon, and appropriate approvals are obtained.

Ensures the organization’s staffing needs are addressed expeditiously through a formal process including signed personnel requisitions, approved positions are posted, qualified candidates are interviewed, references are checked, pre-employment testing is administered (drug and background checks), new hires are processed and on-boarded appropriately, and all applicable laws are complied with (i.e. Executive Orders, FLSA, EEOC, etc).

Manages all compensation and benefit-related activities and programs. Ensures the Company maintains excellent compensation and benefits with a focus on competitiveness, retention, effectiveness, and affordability from both the Company and Employee perspective. Ensures Key Talent are identified and given extra consideration with regard to compensation-related programs.

Ensures department records, including the HRIS system, personnel files, benefit files, training records, and I-9 records, are maintained appropriately and in compliance with department processes, company policy, and all applicable laws—including retention timeframes.

Implements processes, procedures, systems that maintain the integrity and accuracy of the Company’s HR records and ensure compliance with country / federal, state, and local labor laws as well as ISO & TL, and SOX. Advises the CEO, the Executive Team, and other internal teams on these matters, as required. Participates in customer/partner/vendor audits, as appropriate. Presents at quarterly Operations Reviews and Board Meetings as requested or required.

Assists the CEO and Executive Team with any special projects that arise including those related to mergers & acquisitions, divestitures, etc.

Confers with CEO to review achievements and to discuss required changes in programs, resources, processes, strategies or goals as a result of current business or market conditions.

SUPERVISORY RESPONSIBILITIES
The VP of HR & Administration directs and leads subordinate managers including HR Managers (Europe and North America), an HR Generalist, and three Executive Assistants. Responsible for the overall direction, coordination, and evaluation of these units. Carries out supervisory responsibilities in accordance with the organization’s policies and applicable laws and governmental regulations. Responsibilities include interviewing, hiring, and training employees; planning, assigning, and directing work; appraising performance; rewarding and disciplining employees; addressing complaints and resolving problems.

QUALIFICATIONS To perform this job successfully, an individual must be able to perform each essential duty satisfactorily. The requirements listed below are representative of the knowledge, skill, and/or ability required. Reasonable accommodations may be made to enable individuals with disabilities to perform the essential functions.

EDUCATION and/or EXPERIENCE
B.S. degree in Business Administration, Human Resources Management , Human Resource Development, Industrial / Organizational Psychology, Management, or Organizational Management / Development . An advanced technical degree (M.S. or PhD) and/or MBA would be highly desirable.

Prefer ten (10+) years of progressively responsible HR leadership experience, preferably in a technology environment. Manufacturing and/or telecom experience a plus.

Must have strong leadership skills and the ability to inspire and motivate employees to perform well and meet company objectives. Will interface with all levels of the organization, including the Board of Directors. Leadership skills also include the ability to develop and communicate vision and business strategies. Must have knowledge of business and HR best practices.

Ideally, five plus (5+) years of background functioning as the senior HR leader of a Company, major operating group or subsidiary with accountability for strategic HR management, workforce planning, employee relations, compensation and benefits. Prefer that they have been a member of the Executive Committee.

Requires an extremely capable VP of HR & Administration who can truly operate as an influential member of the CEO’s Staff while making “value-added” contributions in HR and throughout the organization. Building solid working relationships with key Executive Officers and the Company’s Board of Directors will also be imperative to the overall execution of the VP’s responsibilities.

Must possess a balanced business background encompassing more than just technical and interpersonal skills. Equally important, will be the ability to aggressively contribute to the company’s long-term and short-term strategic vision, functioning as a major contributor in support of the Company’s growth strategy, new products, and services is a high priority, as is the need to become the CEO’s confidant and “business partner”.

COMMUNICATION AND LANGUAGE SKILLS
Must possess excellent verbal and written communications skills. Able to communicate effectively with employees at all levels. Must communicate concisely and accurately with integrity, having the ability to decipher and understand moderately complex laws, analyze and interpret moderately complex financial reports, and legal documents and be able to explain them accurately. Must possess the ability to respond to (and resolve) inquiries or complaints from employees, Board Members, customers, partners, regulatory agencies, and members of the business community that are from the simple to the complex in nature. Must possess the ability to effectively and concisely express key relevant information in written form, whether preparing presentations, or writing employee communications, newsletter articles, etc. Ability to effectively present information to the Executive Leadership Team, the Board of Directors, our employees, public groups, and/or the media.

REASONING ABILITY
Excellent ability to read and understand very complex and technical information and then apply that knowledge of information to the company’s own situation to develop strategies and solve problems. Must be able to pro-actively and effectively define problems, collect data, establish facts, make sound recommendations, draw valid conclusions, and solve complex problems daily.

PHYSICAL DEMANDS The physical demands described here are representative of those that must be met by an employee to successfully perform the essential functions of this job. Reasonable accommodations may be made to enable individuals with disabilities to perform the essential functions.

While performing the duties of this job, the employee is regularly required to talk and hear. The employee frequently is required to walk, sit, stand, and reach with hands and arms. International travel requires sitting for prolonged periods of time. The employee must occasionally lift and/or move up to 25 pounds. Specific vision abilities required by this job include close vision and color vision.

WORK ENVIRONMENT The work environment characteristics described here are representative of those an employee encounters while performing the essential functions of this job. Reasonable accommodations may be made to enable individuals with disabilities to perform the essential functions.

Normal office and engineering lab environment. Regular domestic and international travel required (up to 25%); must possess valid passport.

Initials _____
_____

Exhibit A

Exhibit B

Compensation

Base Salary. $6,076.92 per pay period ($158,000/year on an annual basis), of which there are 26 in each calendar year, less deductions as may be required by law or authorized by Executive.

Performance Bonus. Executive shall be eligible for an annual bonus for FY2008 in an amount up to $45,000 under and subject to the terms and conditions of the Company’s Executive Bonus Plan. During the term of this Agreement, Executive shall be eligible for an annual bonus under the Company’s existing Executive Bonus Plan as determined by the Compensation Committee of the Company’s Board of Directors (the “Compensation Committee”) in its sole discretion (collectively, “Annual Bonus”). It is generally anticipated that Executive’s Annual Bonus target will be an amount not less than $30,000. The opportunity to earn an Annual Bonus and the actual amount of the Annual Bonus will be determined in accordance with criteria established by the Compensation Committee and based on Executive’s achievement of specific corporate objectives, as determined by the Compensation Committee. Executive must continue to be employed by the Company through the payment date of any such Annual Bonus as a condition to receiving the bonus.

Equity Awards. Executive shall be eligible to participate in equity awards as determined by the Compensation Committee under the Company’s Long-Term Stock Incentive Plan or other equity award plan maintained by the Company during the term of this Agreement.

Severance Pay. Executive shall be eligible for 6 months of base salary, subject to terms and conditions of this Agreement. Please refer to Paragraph 4 of this Agreement, “Termination Without Cause or Nonrenewal.”

Vacation and Leave. Executive shall be entitled to four (4) weeks of vacation per year, accrued monthly, and in accordance with the Company’s vacation policy in effect from time to time, and six (6) sick days per year, and any other paid leave benefits provided for in the Company’s Policy Guide.

Office Furnishings. The Company agrees to provide, and has already provided, office space and furnishings to Executive commensurate with the Company’s decor and culture.

Executive Benefit Plans. Executive shall be eligible to participate in any profit sharing, retirement, medical benefit, or disability benefit plan maintained by the Company from time to time during the term of this Agreement for its similarly situated executives, if any, according to the terms and conditions of those plans.

Initials:_____
_____

Exhibit B

Exhibit C

Designated Cities — Per Paragraph 11a of Employment, Confidentiality,
and Non-Compete Agreement.

The Continental United States

Initials:_____
_____

Exhibit C

EX-10.7

EXHIBIT 10.7

[THIS AGREEMENT IS SUBJECT TO ARBITRATION]

AMENDED AND RESTATED EMPLOYMENT, CONFIDENTIALITY, AND NON-COMPETITION AGREEMENT

THIS AGREEMENT dated and effective as of the 30^th day of December, 2008 by and between Interphase Corporation, a Texas corporation (the “Company”) and Yoram Solomon (“Executive).” The Company’s principal place of business is located at 2901 North Dallas Parkway, Suite 200, Plano, TX 75093.

WHEREAS, the Company and Executive are parties to that certain Employment, Confidentiality, and Non-Competition Agreement dated November 17, 2008, which sets forth the terms and conditions of the Executive’s employment with the Company; and

WHEREAS, the Company and Executive desire to amend and restate such agreement on the terms and conditions set forth herein;

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

The Company enables rapid platform design and integration for the global voice and data communications markets through custom and off-the-shelf communications equipment, embedded software development suites, and systems integration and consulting services for telecom and enterprise networks. Executive desires to continue to be employed by the Company. The Company desires to continue to employ Executive under the terms and conditions of this Agreement.

This Agreement sets forth the terms of Executive’s employment. The parties agree that this Agreement is supported by valuable consideration, that mutual promises and obligations have been undertaken by the parties to it, and that the agreement is entered into voluntarily by the parties.

Statement of Agreement

1. Duties. Executive shall devote Executive’s best efforts to the business of the Company. Executive shall perform such duties and responsibilities customary to the position of Vice President of Corporate Strategy & Business Development including those described on Exhibit A to this Agreement. Executive shall also perform those duties assigned by the Company from time to time.

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2. Terms. The “initial term” of employment under this Agreement, as amended and restated, shall terminate on May 17, 2009, the end of the current term of this Agreement. The initial term of this amended and restated Agreement shall automatically renew for successive six (6) month periods, referred to as “successor terms,” unless either party gives thirty (30) days written notice of its intention not to renew prior to the expiration of the initial or any successor term or Executive is terminated for Cause (as described in Paragraph 3(c) of this Agreement.

3. Terminable For Cause or on Account of Death or Disability. This Agreement may be terminated by the Company prior to the expiration of the initial term or any successor term as follows:

(a)	Due to the death of Executive;
(b)	Due to a physical or mental disability which prevents Executive from performing the essential functions of his full duties for a period of ninety (90) consecutive days during the term of this Agreement, as determined in good faith by a physician reasonably acceptable to the Company; or,
(c)	For Cause, which is (i) fraud, misappropriation, embezzlement, dishonesty, or other act of material misconduct against the Company or any affiliate of the Company; (ii) failure to perform specific and lawful directives of Executive’s superiors; (iii) violation of any rules or regulations of any governmental or regulatory body, which is materially injurious to the financial condition of the Company; (iv) conviction of or plea of guilty or nolo contendere to a felony; (v) violation of the provisions of Paragraphs 8, 9, 10, 11, 13, or 16; or, (vi) substantial failure to perform the duties and responsibilities of Executive under this Agreement.

In the event of termination under this Paragraph 3, Executive shall be entitled only to Executive’s base salary earned through the date of termination paid in accordance with the Company’s normal payroll practices. No accrued but unpaid bonuses or commissions shall be due to Executive.

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4. Termination Without Cause or Nonrenewal.

(a) In the event (i) the Company gives Executive thirty (30) days written notice of its intention not renew a term of this Agreement pursuant to the provisions of Paragraph 2 and at the time the term of this Agreement expires as a result of such notice, Executive is willing and able to execute a new agreement containing terms and conditions substantially similar to those in this Agreement and to continue to provide services to the Company substantially similar to the services provided at the time the term expires, or (ii) Executive is terminated during a term of this Agreement without Cause, the Executive shall receive: (A) the balance of base salary due under this Agreement for the balance of its term on the regular pay dates of the Company (the “Remaining Term Payments”) and thereafter, (B) subject to the Executive’s execution of a general release of claims and covenant not to sue in a form acceptable to the Company (the “Release”), severance pay based on Executive’s monthly base salary at the time of termination in an amount equal to (x) three (3) months of such monthly base salary if Executive’s termination of employment with the Company occurs during the first year of his employment under this Agreement or (y) six (6) months of such monthly base salary if Executive’s termination of employment with the Company occurs after the first anniversary of Executive’s employment commencement date with the Company under this Agreement, payable, in each case, in bi-weekly installments in accordance with the Company’s normal payroll practices (the “Severance Payments”). In addition, if Executive is eligible for Severance Payments and has executed a Release, and in connection with Executive’s termination of employment Executive is eligible for and timely elects to continue Executive’s coverage under the Company’s group health plan pursuant to Section 4980B of the Internal Revenue Code of 1986, as amended (the “Code”) and Section 601 et.seq. of the Employee Retirement Income Security Act of 1974, as amended (“COBRA Coverage”), the Company will pay the premium cost for individual COBRA Coverage for Executive for the period during which Executive is receiving Remaining Term Payments and Severance Payments or such shorter period during which Executive continues to be eligible for COBRA Coverage.

(b) The Company shall begin payment of the Severance Payments on the first regularly scheduled payroll date of the Company occurring after completion of the Remaining Term Payments, if any; provided Executive has executed and delivered the Release to the Company prior to such date (and not revoked the Release during the applicable revocation period). Notwithstanding any provision in the preceding sentence to the contrary, if the Severance Payments would be considered “non-qualified deferred compensation” under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), the payment of Severance Payments shall commence on the first regularly scheduled payroll date of the Company following the later of (i) sixty (60) days following Executive’s date of termination or (ii) completion of the Remaining Term Payments; provided Executive has executed and delivered the Release to the Company prior to such date (and not revoked the Release during the applicable revocation period). The form of the Release will be provided to the Executive not later than five (5) days following Executive’s date of termination.

(c) No accrued but unpaid bonuses or commissions shall be due to Executive under this Paragraph 4. No other severance payment or benefits shall be due Executive other than those provided for under this Agreement. Notwithstanding anything stated herein to the contrary, in the event Executive becomes employed during the period in which the Executive is eligible to receive post-employment payments under this Paragraph 4, Executive shall notify the Company of such employment within ten (10) days following the employment commencement date and any amounts received by Executive in the form of compensation, salary, or other payments as a result of such employment shall reduce any remaining Severance Payments or other amounts or liability owed by the Company to the Executive under this Paragraph 4.

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5. Compensation. Employer shall pay and provide benefits to Executive according to the provisions of Executive’s compensation plan described in the attached Exhibit B. Executive’s compensation plan shall be reviewed on a periodic basis. The Company reserves the right, and Executive hereby authorizes Company, to make deductions from Executive’s pay or bonuses to satisfy any outstanding obligations of Executive to the Company. The Company may offset against the final payment of wages or bonuses owed to Executive any amounts due the Company from Executive; provided, however, no such offset shall be made against any amount in excess of $5,000 that would be considered “non-qualified deferred compensation” under Section 409A of the Code.

6. Changes in Position, Location, or Compensation. If the Company transfers, promotes, or reassigns Executive to another position or geographic area, or both parties agree to a change in compensation or benefits during a term of this Agreement or upon the renewal of a term of this Agreement, an updated employment agreement may be substituted by agreement of the parties but is not required. Mutually-agreeable changes in compensation or benefits shall be effected by amendment to and incorporation of a modified Exhibit B, initialed by the parties or their authorized representative. All provisions, promises, terms or conditions not modified by an amendment of Exhibits A — C shall remain in effect and shall not be deemed revoked or modified beyond the changes set forth in one or more amended Exhibits. Notwithstanding the preceding, any changes or amendments to this Agreement shall be consistent with the provisions of Sections 20 and 21 hereof.

7. Executive Representation/Warranty. Executive represents that Executive is not a party to any agreement with a third party, or limited by a court order, containing a non-competition provision or other restriction which would preclude Executive’s employment with Company or any of the services which Executive will provide on the Company’s behalf.

8. Duty of Loyalty. Executive acknowledges the common law duties of reasonable care, loyalty, and honesty which arise out of the principal/agent relationship of the parties. While employed and thereafter for whatever term the law may impose, Executive shall not engage in any activity to the detriment of the Company. By way of illustration and not as a limitation, Executive shall not discuss with any customer or potential customer of the Company any plans by Executive or any other Executives of the Company to leave the employment of the Company and compete with the Company.

9. Company Documents. Executive agrees and acknowledges that Executive holds as the Company’s property all memoranda, books, papers, letters, and other data, including duplicates, relating to the Company’s business and affairs (“Company Documents”). This includes Company Documents created or used by Executive or otherwise coming into Executive’s possession in connection with the performance of Executive’s job duties. All Company Documents in the possession, custody, or control of Executive shall be returned to the Company at the time of termination of employment.

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Confidential Information and Non-Competition

10. In exchange for the mutual promises and obligations contained in this Agreement, and contemporaneous with its execution or soon thereafter, Employer promises to deliver to Executive or permit Executive to acquire, be exposed to, and/or have access to material, data, and information of the Company and/or its customers or clients that is confidential, proprietary and/or a trade secret (“Confidential Information”). At all times, both during and after the termination of employment, the Executive shall keep and retain in confidence and shall not disclose, except as required in the course of the Executive’s employment with the Company, to any person, firm or corporation, or use for the Executive’s own purposes, any Confidential Information. For the purposes of this Paragraph, such information shall include, but is not limited to:

11. The Company’s standard operating procedures, processes, formulae, know-how, scientific, technical, or product information, whether patentable or not, which is of value to the Company and not generally known by the Company’s competitors;

12. All confidential information obtained from third parties and customers concerning their products, business, or equipment specifications;

13. Confidential business information of the Company, including, but not limited to, marketing and business plans, strategies, projections, business opportunities, client identities or lists, sales and cost information, internal financial statements or reports, profit, loss, or margin information, customer price information; and,

14. Other information designated by the Company or deemed by law to be confidential information.

15. Non-Competition. In consideration of the mutual promises contained in this Agreement, the sufficiency of which is acknowledged by the parties, Executive agrees that during the term of his employment and for a period of twelve (12) calendar months after termination of employment from the Company (whether voluntary or involuntary), Executive shall not, directly or indirectly, either as principal, agent, manager, employee, partner, shareholder, director, officer, consultant or otherwise:

(a) Become associated or affiliated with, employed by, or financially interested in any business operation which competes in the business currently engaged in by Company. (The phrase “business currently engaged in by the Company” includes, but is not limited to, the type of activities in which the Company was engaged during Executive’s tenure, such as designs and delivers high performance connectivity adapters for computer and telecommunication networks.)

(b) Solicit or attempt to solicit the business or patronage of any person, firm, corporation, partnership, association, department of government or other entity with whom the Company has had any contact during a period of twelve (12) calendar months preceding the date of this Agreement (“Customers”), or otherwise induce such Customers to reduce, terminate, restrict or otherwise alter business relationships with the Company in any fashion; or,

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(c) In any way solicit or attempt to solicit the business or patronage of any Customers.

(d) The parties intend the above restrictions on competition to be completely severable and independent, and any invalidity or unenforceability of any one or more such restrictions shall not render invalid or unenforceable any one or more restrictions.

16. Limitations on Scope. In recognition of the broad geographic scope of the Company’s business and the ease of competing with the Company in any part of the United States, the restrictions on competition set forth herein are intended to cover the following geographic areas:

(a) The geographic territory identified on the attached Exhibit C;

(b) The cities containing a facility or operation owned or managed by the Company; and,

(c) A fifty (50) mile radius outside the boundary limits of each such city.

The parties intend the above geographical areas to be completely severable and independent, and any invalidity or unenforceability of this Agreement with respect to any one area shall not render this Agreement unenforceable as applied to any one or more of the other areas.

17. Non-Solicitation of Employees. During employment and for a period of twelve (12) months after termination, Executive agrees not to hire, employ, solicit, divert, recruit, or attempt to induce, directly or indirectly, any existing or future employee of the Company to leave their position with the Company or to become associated with a competing business.

Remedies for Breach

18. Company’s Right to Obtain an Injunction. Executive acknowledges that the Company will have no adequate means of protecting its rights under Paragraphs 10, 11, 12, or 13 of this Agreement other than be securing an injunction (a court order prohibiting the Executive from violating the Agreement). Accordingly, the Executive agrees that the Company is entitled to enforce this Agreement by obtaining a temporary, preliminary, and permanent injunction and any other appropriate equitable relief. Executive acknowledges that the Company’s recovery of damages will not be an adequate means to redress a breach of this Agreement. Nothing contained in this Paragraph, however, shall prohibit the Company from pursuing any remedies in addition to injunctive relief, including recovery of damages. Executive expressly acknowledges that the Company has sole discretion regarding whether to seek a remedy for breaches of Paragraphs 10, 11, 12, or 13 in a court of competent jurisdiction or by arbitration procedures outlined in Paragraph 15.

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19. Arbitration. Executive and the Company agree that any unresolved dispute or controversy involving a claim for monetary damages and/or declaratory or injunctive relief arising under or in connection with this Agreement shall be settled exclusively by arbitration, conducted before a single arbitrator in Dallas, Texas, according to the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator’s award in any court having jurisdiction. The direct expense of any arbitration proceeding shall be borne by the Company. Notwithstanding the foregoing, nothing in this Paragraph is intended to subject a claim by either party arising under Paragraphs 10, 11, 12, or 13 to mandatory arbitration. Any claim arising under Paragraphs 10, 11, 12, or 13 shall be litigated in the courts of the relevant jurisdiction and venue.

Inventions and Discoveries

20. Discoveries, Inventions, & Copyrights. Executive shall disclose promptly to the Company any and all conceptions and ideas for inventions, improvements, and valuable discoveries, whether patentable or not, which are conceived or made by the Executive, solely or jointly, during Executive’s term of employment and which pertain to the business activities of the Company. Executive hereby assigns and agrees to assign all his interest therein to the Company or to its nominee. Whenever requested to do so by the Company, Executive shall execute any and all applications, assignments, or other instruments which the Company shall deem necessary to apply for and obtain Letters of Patent of the United States or any foreign country or to otherwise protect the Company’s interest therein. Notwithstanding anything contained herein to the contrary, nothing in this Paragraph 16 is intended to divest, transfer, abrogate or otherwise relinquish any right, title, or interest of Executive in any patent related to image processing for video conferencing that shall be filed with the U.S. Patent and Trademark Office by Executive during the six month period following the Effective Date of this Agreement and which is unrelated to business of the Company and does not result from any work performed by Executive for the Company.

General Provisions

21. Condition to Seeking Subsequent Employment. Executive agrees to show a copy of this Agreement to any Competitor with whom Executive interviews during the Executive’s employment with the Company or with whom the Executive interviews within twelve (12) months following the effective date of the termination of the Executive’s employment with the Company.

22. Attorneys’ Fees. If any party shall obtain a final judgment of a court of competent jurisdiction, subject to no further appeal, pursuant to which any other party shall be determined to have breached its obligations hereunder or made any misrepresentations, such prevailing party shall be entitled to recover, in addition to any award of damages, reasonable attorneys’ fees, costs, and expenses incurred by such party in obtaining such judgment.

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23. Non-Disparagement and Confidentiality. Except as may be required by law or as consented to in writing by an authorized officer or agent of the Company, Executive agrees not to make any statements whatsoever, directly or indirectly, written or oral, which could reasonably become public, which could be interpreted as embarrassing, disparaging, prejudicial, or in any way detrimental or inimical to the interests of the Company. Furthermore, Executive agrees to hold confidential and not to disclose, make public, or to communicate orally or in writing to any person or entity (other than Executive’s significant other and immediate family), directly or indirectly, the terms of this Agreement or any matters set forth herein, except only: (a) as may be compelled by court orders; (b) as may be necessary to enforce the terms of this Agreement; (c) to legal, accounting, and financial advisors; (d) as may be necessary in connection with the application for or obtaining loans or credit; (e) as may be necessary to comply with applicable laws and government regulations; or, (f) as may be necessary or desirable in obtaining future employment.

24. Additional Termination Provisions.

(a) Separation from Service. Notwithstanding anything to the contrary in this Agreement, with respect to the Severance Payments or any other amounts payable to Executive under this Agreement in connection with a termination of Executive’s employment that would be considered “non-qualified deferred compensation” under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), in no event shall a termination of employment be considered to have occurred under this Agreement unless such termination constitutes Executive’s “separation from service” with the Company as such term is defined in Treasury Regulation Section 1.409A-1(h) and any successor provision thereto (“Separation from Service”).

(b) Section 409A Compliance. Notwithstanding anything contained in this Agreement to the contrary, to the maximum extent permitted by applicable law, the Remaining Term Payments and the Severance Payments payable to Executive pursuant to Paragraph 4 shall be made in reliance upon Treasury Regulation Section 1.409A-1(b)(9)(iii) (relating to separation pay plans) or Treasury Regulation Section 1.409A-1(b)(4) (relating to short-term deferrals). However, to the extent any such payments are treated as non-qualified deferred compensation subject to Section 409A of the Code, and if Executive is deemed at the time of his Separation from Service to be a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code, then to the extent delayed commencement of any portion of the benefits to which Executive is entitled under this Agreement is required in order to avoid a prohibited payment under Section 409A(a)(2)(B)(i) of the Code, such portion of Executive’s termination benefits shall not be provided to Executive prior to the earlier of (i) the expiration of the six-month period measured from the date of Executive’s Separation from Service or (ii) the date of Executive’s death. Upon the earlier of such dates, all payments deferred pursuant to this Paragraph 20(b) shall be paid in a lump sum to Executive. The determination of whether Executive is a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code as of the time of his Separation from Service shall be made by the Company in accordance with the terms of Section 409A of the Code and applicable guidance thereunder (including without limitation Treasury Regulation Section 1.409A-1(i) and any successor provision thereto).

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25. Section 409A; Separate Payments. This Agreement is intended to be written, administered, interpreted and construed in a manner such that no payment or benefits provided under the Agreement become subject to (a) the gross income inclusion set forth within Section 409A(a)(1)(A) of the Code or (b) the interest and additional tax set forth within Section 409A(a)(1)(B) of the Code (collectively, “Section 409A Penalties”), including, where appropriate, the construction of defined terms to have meanings that would not cause the imposition of Section 409A Penalties. In no event shall the Company be required to provide a tax gross-up payment to Executive or otherwise reimburse Executive with respect to Section 409A Penalties. For purposes of Section 409A of the Code (including, without limitation, for purposes of Treasury Regulation Section 1.409A-2(b)(2)(iii)), each payment that Executive may be eligible to receive under this Agreement shall be treated as a separate and distinct payment and shall not collectively be treated as a single payment. Executive acknowledges and understands that neither the Company nor any employee or agent of the Company has provided Executive any tax advice regarding this Agreement or amounts payable under this Agreement and that the Company has urged Executive to seek advice from Executive’s own tax advisor regarding the tax consequences of this Agreement to Executive.

26. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Company, its subsidiaries, affiliates, successors, and assigns.

27. Nonwaiver. Any waiver by the Company of a breach of any provision of this Agreement must be in writing and signed by the Company to be effective. Any waiver by the Company of a breach of any provision of this Agreement shall not operate or be construed as a waiver by the Company of any different or subsequent breach of this Agreement by Executive.

28. Applicable Law. This Agreement shall be construed in accordance with and governed by the laws of the State of Texas, without giving effect to the conflict of laws provisions thereof.

29. Forum Selection Clause. Any and all causes of action for equitable relief relating to the enforcement of this Agreement and not otherwise subject to the mandatory arbitration provisions of Paragraph 15 may, in the Employer’s sole discretion, be brought in the United States District Court for the Northern District of Texas or the Dallas County District of the Texas State Courts. The parties agree that the provisions of this Paragraph benefit both Employer and Executive. Any and all causes of action by and between Employer and Executive can be quickly and efficiently resolved in the agreed-upon forum, which will not unduly burden either Employer or Executive, and which will substantially aid Employer and Executive in providing the opportunity for uniform treatment with respect to any issues relating to the covenants contained in this Agreement.

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30. Entire Agreement; Amendment. This Agreement represents the entire agreement between the Company and the Executive with respect to the subject matter hereof, supersedes all prior agreements dealing with the same subject matter. This Agreement may be amended at any time by the mutual consent of the parties hereto, with any such amendment to be invalid unless in writing, signed by the Company and Executive; provided that any such amendment shall be consistent with the provisions of Paragraphs 20 and 21 hereof.

31. Severability. The invalidity of any term or provision of this Agreement, including any term or provision of Paragraphs 10, 11, 12, or 13 shall not invalidate or otherwise affect any other term or provision of this Agreement.

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Interphase Corporation
By:	/s/ Gregory B. Kalush
	Gregory B. Kalush
	Its: President and Chief Executive Officer
Executive
/s/ Yoram Solomon
Yoram Solomon

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Exhibit A

Job Description

Job Title: VP, Corp Strategy & Business Development	Department: NEW
Reports To: President and CEO	FLSA Status: Exempt
Prepared By: D. Shute & G. Kalush	Approved By:
Prepared Date: August 15, 2008	Approved Date:

SUMMARY

The VP of Corporate Strategy & Business Development serves as the focal point for strategy formation for the company. This staff position reports to the CEO and provides creative insight to the CEO and Executive Team to complement the organization’s operational strength. In conjunction with the CEO and Executive Team, this position draws upon the deep technical strength of the candidate to define and shape the medium and long-term growth strategy of the company; it is also responsible for coordinating and pulling together the strategic plan (process), and for identifying and evaluating growth options including the assessment of potential joint ventures, potential M&A options, specific emerging technologies to invest in, and strategic products and services for the company to focus on.

The VP of Corporate Strategy & Business Development is a member of the Executive Team and provides innovative insight to the rest of the team in terms of possible strategic directions the company should investigate and pursue. This position has virtually no operational responsibilities; its focus is on inspiring creativity and a sustainable innovation culture within the company while providing imaginative (but well thought through) alternative business directions for the Company and it’s executives to consider. This position’s responsibilities play a key role in contributing to the company’s strategic direction, and are critical to the long-term profitable growth and overall success of the Company,

As a member of the Executive Team, the VP of Corporate Strategy & Business Development must embrace and promote the organization’s vision, goals, and values, and operate with a sense of unity and alignment with the CEO and the rest of the leadership team, which is deemed necessary to achieve superior business results within the Company.

ESSENTIAL DUTIES AND RESPONSIBILITIES

Key Accountabilities:

Strategic Direction Leadership:

• Has the responsibility for providing leadership and guidance for the formation of the Company’s long term vision and direction.

• Leads the company’s assessment of emerging technologies and recommends Interphase’s positioning to take maximum advantage of our company’s core competencies, skills and market position.

• Provides a strong perspective on future strategic direction for the company and recommends potential new markets and/or products and services to the CEO and Executive Team.

• Identifies, analyzes, and recommends potential acquisitions, strategic alliances, joint ventures, licensing agreements, divestitures to the CEO and eventually the rest of the Executive Team and serves as the internal champion once those recommendations are accepted toward the realization of strategic goals.

• Confers with CEO to discuss required changes in market direction, product portfolio, resources/skills, processes, strategies or goals as a result of current or future customer trends and/or market conditions.

Market & Customer Intelligence:

• Collaborates with diverse internal and external stakeholders to create a market perspective, and gathers market intelligence. Develops strategies regarding new business development initiatives and provides compelling insights and perspectives to our Executive Team to help them prioritize the most viable opportunities in order to help steer the company in the right direction.

• Engages customers, partners, vendors, investment banking community leaders, standards committees, industry analysts, potential M&A targets, etc., to develop sources of information and analysis and determine viable future directions that Interphase should consider, potential investments Interphase should consider, and make those recommendations to the CEO and Executive Team, and assist the CEO in these discussions with the Board of Directors.

Joint Development, Partnerships, and M&A Activity:

• Evaluates new technology directions and business development opportunities such as strategic partnerships, joint development, outsourcing, and mergers & acquisitions of outside capability to improve time to market, advance the company’s market position, and ensure its ability to achieve its current and future business plan objectives. Proactively evaluates these potential options and makes recommendations to the CEO.

• Provides a financial evaluation of strategic and investment options.

• Once an idea is agreed upon amongst the CEO and Executive Team, this position serves as an internal “champion” to help drive the idea (whether an M&A, strategic partnership, joint development, divestitures or outsourcing proposal) from initial idea through successful completion. This may include coordinating activities around valuation work, organizing due diligence and management meetings, and act as an advisor /partner to Executive Team and the CEO throughout the process.

Strategic Planning Process:

• Working in partnership with the CEO and Executive Team, owns the end-to-end strategic planning process and provides functional excellence in strategic planning to the organization. Acts as a key partner to the business in developing the annual Business Strategic Review, which is a five year plan dimensioning the strategic priorities for the organization.

• Implements a methodology and process for formulating vision and strategy and ensuring a continuous cycle of update into the future year. Acts as an active guide in the strategic technology vision and business direction (i.e. selection of strategic markets) for the organization.

• Maintains significant interaction with customers, suppliers, marketing and engineering/development teams to effectively evaluate future programs under consideration; and advises the CEO, the Executive Team, and other internal team members on these matters.

Strategy Spokesperson:

• Actively speaks at, presents, and/or participates in customer presentations, “world tours”, and trade show activities as appropriate.

• Presents at Board Meetings as requested or required.

Other duties may be assigned. Management reserves the right to change these duties at any time.

SUPERVISORY RESPONSIBILITIES

The VP of Corporate Strategy & Business Development has no direct reports.

QUALIFICATIONS

To perform this job successfully, an individual must be able to perform each essential duty satisfactorily. The requirements listed below are representative of the knowledge, skill, and/or ability required. Reasonable accommodations may be made to enable individuals with disabilities to perform the essential functions.

EDUCATION and/or EXPERIENCE

Bachelor’s degree in Engineering (BSEE) or very strong technical background is required. An MBA is preferred.

Prefer ten (10+) years in a corporate business development setting, doing business strategy development. Management / marketing strategy consultancy experience for technology companies is highly preferred.

Strong communications industry experience is required; an emphasis in data, voice and video communications technologies is desired. Possess a strong understanding of convergent & telecommunications business models and competitive landscape.

Ideally, five plus (5+) years of background functioning as the senior leader of business development, corporate strategy, or CTO of a Company, major operating group or subsidiary with accountability for setting the company’s strategic vision.

Legal and financial acumen is preferred.

Must be an enthusiastic, ethical, persuasive leader who commands respect by word and deed. Must be a team player who thrives in a fast-paced environment.

A broad understanding of computer/communications-related technologies.

Extremely capable VP of Corporate Strategy & Business Development who can truly operate as an influential member of the CEO’s Staff while making “value-added” contributions in throughout the organization. Building solid working relationships with Executive Officers and the Company’s Board of Directors will also be imperative to the overall execution of the VP of Corporate Strategy & Business Development’s responsibilities.

Must possess a balanced business background encompassing more than strictly technical skills; equally important, will be the ability to aggressively contribute to the company’s long-term and short-term strategic vision. This position functions as a major contributor in support of the Company’s growth strategy, new products, and services is a high priority, as is the need to become the CEO’s confidant and “business partner”.

Must possess leadership qualities and be able to work well with the rest of the Executive Team. The right candidate will inspire and motivate the organization toward creativity and innovativeness, in accepting the adopted strategic direction, and in assisting the Executive Team in communicating to the organization what we are trying to accomplish and why. Leadership skills also include the ability to collaborate and partner well with others, and to develop and communicate vision and business strategies. Must have extensive knowledge of market and emerging technologies.

COMMUNICATION AND LANGUAGE SKILLS

Must communicate effectively, concisely, and accurately with integrity and consistent to our Corporate Values, having the ability to decipher and understand technically complex customer and market requirements, analyze and interpret complex scientific and technical journals and documentation, financial reports, and legal documents and be able to explain them accurately. Must be a strong influencer with strong collaboration and negotiation skills. Must possess the ability to respond to inquiries or complaints from customers, partners, regulatory agencies, members of the business community, Board members, or employees that are from the simple to the complex in nature. Must possess the ability to effectively and concisely express key relevant information in written form, whether writing speeches, or articles for publication that conform to prescribed style and format. Must have the ability to present ideas effectively to customers, the Executive Team, the Board of Directors, our employees, and external constituencies such as legal counsel, public audit firm, conference participants, public groups, and/or the media. Multi-lingual ability (French, English) is desirable.

REASONING ABILITY

Excellent ability to read and understand very complex and technical information and then apply that knowledge of information to the company’s own situation to develop strategies and solve problems. Must be able to pro-actively and effectively define problems, collect data, establish facts, make sound recommendations, draw valid conclusions, and solve complex problems daily. Ability to interpret an extensive variety of technical instructions or engineering schematics in mathematical or diagram form and deal with several abstract and concrete variables. Ability to make predictions with relative confidence by synthesizing customer information, market information, analyst projections, hypothetical models, company trends in performance, and make sound recommendations.

PHYSICAL DEMANDS

The physical demands described here are representative of those that must be met by an employee to successfully perform the essential functions of this job. Reasonable accommodations may be made to enable individuals with disabilities to perform the essential functions.

While performing the duties of this job, the employee is regularly required to speak and listen. The employee frequently is required to walk, sit, stand, and reach with hands and arms. International travel requires sitting for prolonged periods of time.

WORK ENVIRONMENT

The work environment characteristics described here are representative of those an employee encounters while performing the essential functions of this job. Reasonable accommodations may be made to enable individuals with disabilities to perform the essential functions.

Normal office and engineering lab environment. Regular domestic and international travel required (up to 35%).

Initials                     
                    

Exhibit A

Exhibit B

Compensation

Base Salary. $7,115.39 per pay period ($185,000/year on an annual basis), of which there are 26 in each calendar year, less deductions as may be required by law or authorized by Executive.

Annual Bonus. During the term of this Agreement, Executive shall be eligible for an annual bonus under the Company’s Executive Bonus Plan, as determined by the Compensation Committee of the Company’s Board of Directors (the “Compensation Committee”) in its sole discretion (collectively, “Annual Bonus”). It is generally anticipated that Executive’s Annual Bonus target will be an amount not less then $40,000. The opportunity to earn an Annual Bonus and the actual amount of the Annual Bonus will be determined in accordance with criteria (“Bonus Criteria”) established by the Compensation Committee and based on Executive’s achievement of specific corporate objectives as determined by the Compensation Committee. Executive must continue to be employed by the Company through the payment date of any such Annual Bonus as a condition to receiving the bonus.

Equity. The Company shall, according to the Company’s Long-Term Stock Incentive Plan and with the approval of the CEO and the Compensation Committee, grant to Executive 20,000 shares of restricted stock of the Company. Executive’s right, title, and interest to any stock conferred under the Employment Agreement shall be controlled and governed by terms and conditions of the Company’s Long-Term Stock Incentive Plan. The per share price will be determined as of the close of NASDAQ trading on Executive’s first day of employment. Executive shall be eligible to participate in equity awards as determined by the Compensation Committee under the Company’s Long-Term Stock Incentive Plan or other equity award plan maintained by the Company during the term of this agreement.

Executive Benefit Plans. Based on the plans maintained by the Company from time to time during the term of this Agreement for its similarly situated executives, and subject to change at any time, the Executive will be provided with a comprehensive and competitive benefits package including medical, dental, vision, life, AD&D, STD, and LTD. Executive shall be eligible to participate in such benefit plans, according to the terms and conditions of those plans. Executive will pay same amount as all other similarly situated executive employees for health premiums.

Severance Pay. Eligible for 3 months of base salary if terminated anytime within first year of employment; and 6 months of base salary if terminated anytime after first anniversary of employment, subject to terms and conditions of this Agreement. Please refer to Paragraph 4, “Termination Without Cause or Nonrenewal.”

Executive Disability Plan. The Executive is eligible to apply through the Company for a voluntary, individual Executive Disability Plan. If approved by the carrier for coverage, the premiums will be paid for by the Executive.

Vacation 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 Company’s Policy Guide.

Cell Phone & Computer. Executive will be furnished with a laptop and cell phone/PDA for business purposes.

Office Furnishings. The Company agrees to provide office space and furnishings to Executive commensurate with the Company’s decor and culture.

Initials:                     
                    

Exhibit B

Exhibit C

Designated Cities — Per Paragraph 11a of Employment, Confidentiality,
and Non-Compete Agreement.

The Continental United States

Initials:                    
                    

Exhibit C