1
EXHIBIT 10.1
[BANK ONE LOGO]
BUSINESS LOAN AGREEMENT
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Principal Loan Date Maturity Loan No Call Collateral Account Officer Initials
$4,500,000.00 06-01-2001 05-31-2002 123 0961515929 03025
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References in the shaded area are for Lender's use only and do not limit the applicability of this
document to any particular loan or item.
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<Table>
BORROWER: TERAFORCE TECHNOLOGY CORPORATION LENDER: BANK ONE, NA WITH ITS MAIN OFFICE IN CHICAGO, ILLINOIS
1240 E. CAMPBELL ROAD DALLAS COMMERCIAL - DALLAS
RICHARDSON, TX 75081 1717 MAIN STREET
DALLAS, TX 75201
</Table>
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THIS BUSINESS LOAN AGREEMENT BETWEEN TERAFORCE TECHNOLOGY CORPORATION
("BORROWER") AND BANK ONE, NA WITH ITS MAIN OFFICE IN CHICAGO, ILLINOIS
("LENDER") IS MADE AND EXECUTED AS OF JUNE 1, 2001. THIS AGREEMENT GOVERNS ALL
LOANS, CREDIT FACILITIES AND/OR OTHER FINANCIAL ACCOMMODATIONS DESCRIBED HEREIN
AND, UNLESS OTHERWISE AGREED TO IN WRITING BY LENDER AND BORROWER, ALL OTHER
PRESENT AND FUTURE LOANS, CREDIT FACILITIES AND OTHER FINANCIAL ACCOMMODATIONS
PROVIDED BY LENDER TO BORROWER. ALL SUCH LOANS, CREDIT FACILITIES AND OTHER
FINANCIAL ACCOMMODATIONS, TOGETHER WITH ALL RENEWALS, AMENDMENTS AND
MODIFICATIONS THEREOF, ARE REFERRED TO IN THIS AGREEMENT INDIVIDUALLY AS THE
"LOAN" AND COLLECTIVELY AS THE "LOANS." BORROWER UNDERSTANDS AND AGREES THAT:
(a) IN GRANTING, RENEWING, OR EXTENDING ANY LOAN, LENDER IS RELYING UPON
BORROWER'S REPRESENTATIONS, WARRANTIES, AND AGREEMENTS, AS SET FORTH IN THIS
AGREEMENT; AND (b) ALL SUCH LOANS SHALL BE AND SHALL REMAIN SUBJECT TO THE
FOLLOWING TERMS AND CONDITIONS OF THIS AGREEMENT.
TERM. This Agreement shall be effective as of June 1, 2001, and shall continue
thereafter until all Loans and other obligations owing by Borrower to Lender
hereunder have been paid in full and Lender has no commitments or obligations to
make further advances under the Loans to Borrower.
DEFINITIONS. The following words shall have the following meanings when used in
this Agreement. Terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code as adopted in
the State of Texas. All references to dollar amounts shall mean amounts in
lawful money of the United States of America.
AGREEMENT. The word "Agreement" means this Business Loan Agreement, as may
be amended or modified from time to time, together with all exhibits and
schedules attached hereto from time to time.
BORROWER. The word "Borrower" means TERAFORCE TECHNOLOGY CORPORATION.
COLLATERAL. The word "Collateral" means and includes without limitation all
property and assets granted as collateral for any Loan, whether real or
personal property, whether granted directly or indirectly, whether granted
now or in the future, and whether granted in the form of a security
interest, mortgage, deed of trust, assignment, pledge, chattel mortgage,
chattel trust, factor's lien, equipment trust, conditional sale, trust
receipt, lien, charge, lien or title retention contract, lease or
consignment intended as a security device, or any other security or lien
interest whatsoever, whether created by law, contract, or otherwise.
ERISA. The word "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended.
GRANTOR. The word "Grantor" means and includes each and all of the persons
or entities granting a Security Interest in any Collateral for any of the
Loans.
GUARANTOR. The word "Guarantor" means and includes each and all of the
guarantors, sureties, and accommodation parties for any of the Loans.
INDEBTEDNESS. The word "Indebtedness" means the indebtedness evidenced by
the Note, including all principal and accrued interest thereon, together
with all other liabilities, costs and expenses for which Borrower is
responsible under this Agreement or under any of the Related Documents.
LENDER. The word "Lender" means Bank One, NA with its main office in
Chicago, Illinois, its successors and assigns.
NOTE. The word "Note" means the promissory note of even date herewith which
evidences Borrower's $4,500,000 Loan in favor of Lender, as well as any
amendment, modification, renewal or replacement thereof.
RELATED DOCUMENTS. The words "Related Documents" mean and include without
limitation the Note and all credit agreements, loan agreements,
environmental agreements, guaranties, security agreements, mortgages, deeds
of trust, and all other instruments, agreements and documents, whether now
or hereafter existing, executed in connection with the Note.
SECURITY AGREEMENT. The words "Security Agreement" mean and include without
limitation any agreements, promises, covenants, arrangements,
understandings or other agreements, whether created by law, contract, or
otherwise, evidencing, governing, representing, or creating a Security
Interest.
SECURITY INTEREST. The words "Security Interest" mean and include without
limitation any type of security interest, whether in the form of a lien,
charge, mortgage, deed of trust, assignment, pledge, chattel mortgage,
chattel trust, factor's lien, equipment trust, conditional sale, trust
receipt, lien or title retention contract, lease or consignment intended as
a security device, or any other security or lien interest whatsoever,
whether created by law, contract, or otherwise.
REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as
of the date of this Agreement, as of the date of each request for an advance or
disbursement of Loan proceeds, as of the date of any renewal, extension or
modification of any Loan, and at all times any Indebtedness exists hereafter:
ORGANIZATION. Borrower is a corporation which is duly organized, validly
existing, and in good standing under the laws of the state of Borrower's
incorporation and is duly qualified and in good standing in other states in
which Borrower is doing business. Borrower has the full power and authority
to own its properties and to transact the businesses in which it is
presently engaged or presently proposes to engage.
AUTHORIZATION. The execution, delivery, and performance of this Agreement
and all Related Documents to which Borrower is a party have been duly
authorized by all necessary action; do not require the consent or approval
of any other person, regulatory authority or governmental body; and do not
conflict with, result in a violation of, or constitute a default under (a)
any provision of its articles of incorporation or organization, or bylaws,
or any agreement or other instrument binding upon Borrower or (b) any law,
governmental regulation, court decree, or order applicable to Borrower.
Borrower has all requisite power and authority to execute and deliver this
Agreement and all other Related Documents to which Borrower is a party.
FINANCIAL INFORMATION. Each financial statement of Borrower supplied to
Lender truly and completely discloses Borrower's financial condition as of
the date of the statement, and there has been no material adverse change in
Borrower's financial condition subsequent to the date of the most recent
financial statement supplied to Lender. Borrower has no material contingent
obligations except as disclosed in such financial statements.
LEGAL EFFECT. This Agreement and all other Related Documents to which
Borrower is a party constitute legal, valid and binding obligations of
Borrower enforceable against Borrower in accordance with their respective
terms, except as limited by bankruptcy, insolvency or similar laws of
general application relating to the enforcement of creditors' rights and
except to the extent specific remedies may generally be limited by
equitable principles.
PROPERTIES. Except as contemplated by this Agreement or as previously
disclosed in Borrower's financial statements or in writing to Lender and as
accepted by Lender, and except for property tax liens for taxes not
presently due and payable, Borrower is the sole owner of, and has good
title to, all of Borrower's properties free and clear of all Security
Interests, and has not executed any security documents or financing
statements relating to such properties. All of Borrower's properties are
titled in Borrower's legal name, and Borrower has not used, or filed a
financing statement under, any other name for at least the last six (6)
years.
COMPLIANCE. Except as disclosed in writing to Lender (a) Borrower is
conducting Borrower's businesses in material compliance with all applicable
federal, state and local laws, statutes, ordinances, rules, regulations,
orders, determinations and court decisions, including without limitation,
those pertaining to health or environmental matters, and (b) Borrower
otherwise does not have any known material contingent liability in
connection with the release into the environment, disposal or the improper
storage of any toxic or hazardous
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06-01-2001 BUSINESS LOAN AGREEMENT PAGE 2
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substance or solid waste.
LITIGATION AND CLAIMS. No litigation, claim, investigation, administrative
proceeding or similar action (including those for unpaid taxes) against
Borrower is pending or threatened, and no other event has occurred which
may in any one case or in the aggregate materially adversely affect
Borrower's financial condition or properties, other than litigation,
claims, or other events, if any, that have bean disclosed to and
acknowledged by Lender in writing. Except as disclosed in the Borrower's
10-K.
TAXES. All tax returns and reports of Borrower that are or were required
to be filed, have been filed, and all taxes, assessments and other
governmental charges have been paid in full, except those that have been
disclosed in writing to Lender which are presently being or to be
contested by Borrower in good faith in the ordinary course of business and
for which adequate reserves have been provided.
LIEN PRIORITY. Unless otherwise previously disclosed to and approved by
Lender in writing, Borrower has not entered into any Security Agreements,
granted a Security Interest or permitted the filing or attachment of any
Security Interests on or affecting any of the Collateral, except in favor
of Lender.
LICENSES, TRADEMARKS AND PATENTS. Borrower possesses and will continue to
possess all permits, licenses, trademarks, patents and rights thereto
which are needed to conduct Borrower's business and Borrower's business
does not conflict with or violate any valid rights of others with respect
to the foregoing.
COMMERCIAL PURPOSES. Borrower intends to use the Loan proceeds solely for
business or commercial related purposes approved by Lender and such
proceeds will not be used for the purchasing or carrying of "margin stock"
as defined in Regulation U issued by the Board of Governors of the Federal
Reserve System.
INELIGIBLE SECURITIES. No portion or any advance or Loan made hereunder
shall be used directly or indirectly to purchase ineligible securities, as
defined by applicable regulations of the Federal Reserve Board,
underwritten by Lender or any other affiliate of Banc One Corporation
during the underwriting period and for 30 days thereafter.
EMPLOYEE BENEFIT PLANS. Each employee benefit plan as to which Borrower
may have any liability complies in all material respects with all
applicable requirements of law and regulations, and (i) no Reportable
Event nor Prohibited Transaction (as defined in ERISA) has occurred with
respect to any such plan, (ii) Borrower has not withdrawn from any such
plan or initiated steps to do so, (iii) no steps have been taken to
terminate any such plan, and (iv) there are no unfunded liabilities other
than those previously disclosed to Lender in writing.
LOCATION OF BORROWER'S OFFICES AND RECORDS. Borrower's place of business,
or Borrower's chief executive office if Borrower has more than one place
of business, is located at 1240 E. CAMPBELL ROAD, RICHARDSON, TX 75081.
Unless Borrower has designated otherwise in writing this location is also
the office or offices where Borrower keeps its records concerning the
Collateral.
INFORMATION. All information heretofore or contemporaneously herewith
furnished by Borrower to Lender for the purposes of or in connection with
this Agreement or any transaction contemplated hereby is, and all
information hereafter furnished by or on behalf of Borrower to Lender will
be, true and accurate in every material respect on the date as of which
such information is dated or certified; and none of such information is or
will be incomplete by omitting to state any material fact necessary to
make such information not misleading.
SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Borrower understands and
agrees that Lender, without independent investigation, is relying upon the
above representations and warranties in extending Loan advances to
Borrower. Borrower further agrees that the foregoing representations and
warranties shall be continuing in nature and shall remain in full force
and effect during the term of this Agreement.
AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, while
this Agreement is in effect, Borrower will:
DEPOSITORY RELATIONSHIP. Establish and maintain its primary operating
account(s) with Lender.
LITIGATION. Promptly inform Lender in writing of (a) all material adverse
changes in Borrower's financial condition, (b) all existing and all
threatened litigation, claims, investigations, administrative proceedings
or similar actions affecting Borrower or any Guarantor which could
materially affect the financial condition of Borrower or the financial
condition of any Guarantor, and (c) the creation, occurrence or assumption
by Borrower of any actual or contingent liabilities not permitted under
this Agreement.
FINANCIAL RECORDS. Maintain its books and records in accordance with
generally accepted accounting principles, applied on a consistent basis,
and permit Lender to examine, audit and make and take away copies or
reproductions of Borrower's books and records at all reasonable times. If
Borrower now or at any time hereafter maintains any records (including
without limitation computer generated records and computer software
programs for the generation of such records) in the possession of a third
party, Borrower, upon request of Lender, shall notify such party to permit
Lender free access to such records at all reasonable times and to provide
Lender with copies of any records it may request, all at Borrower's
expense.
ADDITIONAL INFORMATION. Furnish such additional information and
statements, lists of assets and liabilities, agings of receivables and
payables, inventory schedules, budgets, forecasts, tax returns, and other
reports with respect to Borrower's financial condition and business
operations as Lender may request from time to time.
INSURANCE REPORTS. Furnish to Lender, upon request of Lender, reports on
each existing insurance policy showing such information as Lender may
reasonably request, including without limitation the following: (a) the
name of the insurer; (b) the risks insured; (c) the amount of the policy;
(d) the properties insured; (a) the then current property values on the
basis of which insurance has been obtained, and the manner of determining
those values; and (f) the expiration date of the policy.
OTHER AGREEMENTS. Comply with all terms and conditions of all other
agreements, whether now or hereafter existing, between Borrower and any
other party and notify Lender immediately in writing of any default in
connection with any other such agreements.
LOAN PROCEEDS. Use all Loan proceeds solely for Borrower's business
operations, unless specifically consented to the contrary by Lender in
writing.
TAXES, CHARGES AND LIENS. Pay and discharge when due all of its
indebtedness and obligations, including without limitation all
assessments, taxes, governmental charges, levies and liens, of every kind
and nature, imposed upon Borrower or its properties, income, or profits,
prior to the date on which penalties would attach, and all lawful claims
that, if unpaid, might become a lien or charge upon any of Borrower's
properties, income, or profits; provided however, Borrower will not be
required to pay and discharge any such assessment, tax, charge, levy, lien
or claim so long as (a) the legality of the same shall be contested in
good faith by appropriate proceedings, and (b) Borrower shall have
established on its books adequate reserves with respect to such contested
assessment, tax, charge, levy, lien, or claim in accordance with generally
accepted accounting principles. Borrower, upon demand of Lender, will
furnish to Lender evidence of payment of the assessments, taxes, charges,
levies, liens and claims and will authorize the appropriate governmental
official to deliver to Lender at any time a written statement of any
assessments, taxes, charges, levies, liens and claims against Borrower's
properties, income, or profits.
PERFORMANCE. Perform and comply with all terms, conditions, and provisions
set forth in this Agreement and in the Related Documents in a timely
manner, and promptly notify Lender if Borrower learns of the occurrence of
any event which constitutes an Event of Default under this Agreement or
under any of the Related Documents.
OPERATIONS. Conduct its business affairs in a reasonable and prudent
manner and In compliance with all applicable federal, state and municipal
laws, ordinances, rules and regulations respecting its properties,
charters, businesses and operations, including without limitation,
compliance with the Americans With Disabilities Act, all applicable
environmental statutes, rules, regulations and ordinances and with all
minimum funding standards and other requirements of ERISA and other laws
applicable to Borrower's employee benefit plans.
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06-01-2001 BUSINESS LOAN AGREEMENT PAGE 3
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ADDITIONAL ASSURANCES. Make, execute and deliver to Lender such promissory
notes, mortgages, deeds of trust, security agreements, financing
statements, instruments, documents and other agreements as Lender or its
attorneys may reasonably request to evidence and secure the Loans and to
perfect all Security Interests.
NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this
Agreement is in effect, Borrower shall not, without the prior written consent of
Lender:
MAINTAIN BASIC BUSINESS. Engage in any business activities substantially
different than those in which Borrower is presently engaged.
CONTINUITY OF OPERATIONS. Cease operations, liquidate, dissolve or merge
or consolidate with or into any other entity.
CONDITIONS PRECEDENT TO ADVANCES. If Lender is obligated to make any Loan
advances or to otherwise disburse any Loan proceeds to Borrower, such obligation
shall be subject to the conditions precedent that as of the date of such advance
or disbursement and after giving effect thereto (a) all representations and
warranties made to Lender in this Agreement and the Related Documents shall be
true and correct as of and as if made on such date, (b) no material adverse
change in the financial condition of Borrower or any Guarantor since the
effective date of the most recent financial statements furnished to Lender, or
in the value of any Collateral, shall have occurred and be continuing, (c) no
event has occurred and is continuing, or would result from the requested advance
or disbursement, which with notice or lapse of time, or both, would constitute
an Event of Default, (d) no Guarantor has sought, claimed or otherwise attempted
to limit, modify or revoke such Guarantor's guaranty of any Loan, and (e) Lender
has received all Related Documents appropriately executed by Borrower and all
other proper parties.
ADDITIONAL PROVISION - PRINCIPAL PAYMENTS ON NOTE. Included as a Note under this
Agreement is a promissory note of even date herewith in the stated principal
amount of $4,500,000 executed by Borrower and payable to the order of Lender
(the "Draw Note"). Prior to the maturity date of the Draw Note, Borrower intends
to cause Intelect Network Technologies ("Intelect"), its wholly owned
subsidiary, to sell, for cash, assets consisting of accounts receivable,
finished goods inventory, component inventory, and fixed assets (collectively,
the "Intelect Assets"). Borrower has represented to Lender that the Intelect
Assets have a liquidation value of approximately $6,200,000. Prior to any sale
of any of the Intelect Assets, Borrower shall establish a deposit account with
Lender (the "Intelect Account") which shall be assigned to Lender as security
for payment of the Draw Note. Notwithstanding anything contained in the Draw
Note, upon a sale of any of the Intelect Assets with respect to which Borrower
or Intelect is to receive consideration in the amount of $50,000 or more.
Borrower shall cause all of such consideration to be remitted directly to Lender
for Borrower's account to be applied to prepay the principal balance of the Draw
Note. If at any time the proceeds of any such sale are in excess of the unpaid
principal balance of the Draw Note, such excess shall be deposited by Lender
into the Intelect Account. Upon a sale of any of the Intelect Assets with
respect to which Borrower or Intelect is to receive consideration in an amount
which is less than $50,000, Borrower shall cause all of the proceeds of such
sale to be deposited into the Intelect Account. At any time when the Intelect
Account has a balance which is $50,000 or more, Lender may withdraw from the
Intelect Account and apply to the prepayment of the Draw Note, an amount equal
to the lesser of (i) the then unpaid principal balance of the Draw Note or (ii)
the balance in the Intelect Account.
RIGHT OF SETOFF. Unless a lien would be prohibited by law or would render a
nontaxable account taxable, Borrower grants to Lender a contractual security
interest in, and hereby assigns, conveys, delivers, pledges, and transfers to
Lender all Borrower's right, title and interest in and to, Borrower's accounts
with Lender (whether checking, savings, or any other account), including without
limitation all accounts held jointly with someone else and all accounts Borrower
may open in the future. Borrower authorizes Lender, to the extent permitted by
applicable law, to charge or setoff all sums owing on the Indebtedness against
any and all such accounts.
EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default
under this Agreement:
DEFAULT ON INDEBTEDNESS. Failure of Borrower to make any payment when due
on any of the Indebtedness.
OTHER DEFAULTS. Failure of Borrower, any Guarantor or any Grantor to
comply with or to perform when due any other term, obligation, covenant or
condition contained in this Agreement, the Note or in any of the other
Related Documents, or failure of Borrower to comply with or to perform any
other term, obligation, covenant or condition contained in any other
agreement now existing or hereafter arising between Lender and Borrower.
FALSE STATEMENTS. Any warranty, representation or statement made or
furnished to Lender under this Agreement or the Related Documents is false
or misleading in any material respect.
DEFAULT TO THIRD PARTY. The acceleration of the maturity of any
indebtedness owing by Borrower, Grantor or any Guarantor to any third
party under any agreement or undertaking.
BANKRUPTCY OR INSOLVENCY. If the Borrower, Grantor or any Guarantor: (i)
becomes insolvent, or makes a transfer in fraud of creditors, or makes an
assignment for the benefit of creditors, or admits in writing its
inability to pay its debts as they become due; (ii) generally is not
paying its debts as such debts become due; (iii) has a receiver, trustee
or custodian appointed for, or take possession of, all or substantially
all of the assets of such party or any of the Collateral, either in a
proceeding brought by such party or in a proceeding brought against such
party and such appointment is not discharged or such possession is not
terminated within sixty (60) days after the effective date thereof or such
party consents to or acquiesces in such appointment or possession; (iv)
files a petition for relief under the United States Bankruptcy Code or any
other present or future federal or state insolvency, bankruptcy or similar
laws (all of the foregoing hereinafter collectively called "APPLICABLE
BANKRUPTCY LAW") or an involuntary petition for relief is filed against
such party under any Applicable Bankruptcy Law and such involuntary
petition is not dismissed within sixty (60) days after the filing thereof,
or an order for relief naming such party is entered under any Applicable
Bankruptcy Law, or any composition, rearrangement, extension,
reorganization or other relief of debtors now or hereafter existing is
requested or consented to by such party; (v) fails to have discharged
within a period of sixty (60) days any attachment, sequestration or
similar writ levied upon any property of such party; or (vi) fails to pay
within thirty (30) days any final money judgment against such party.
LIQUIDATION, DEATH AND RELATED EVENTS. If Borrower, Grantor or any
Guarantor is an entity, the liquidation, dissolution, merger or
consolidation of any such entity or, if any of such parties is an
individual, the death or legal incapacity of any such individual.
CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Borrower, any
creditor of any Grantor against any collateral securing the Indebtedness,
or by any governmental agency.
EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, Lender may,
at its option, without further notice or demand, (a) terminate all commitments
and obligations of Lender to make Loans to Borrower, if any, (b) declare all
Loans and any other Indebtedness immediately due and payable, (c) refuse to
advance any additional amounts under the Note, or (d) exercise all the rights
and remedies provided in the Note or in any of the Related Documents or
available at law, in equity, or otherwise; provided, however, if any Event of
Default of the type described in the "Bankruptcy or Insolvency" subsection above
shall occur, all Loans and any other Indebtedness shall automatically become due
and payable, without any notice, demand or action by Lender. Except as may be
prohibited by applicable law, all of Lender's rights and remedies shall be
cumulative and may be exercised singularly or concurrently. Election by Lender
to pursue any remedies shall not exclude pursuit of any other remedy, and an
election to make expenditures or to take action to perform an obligation of
Borrower or any Grantor shall not affect Lender's right to declare a default and
to exercise its rights and remedies.
MISCELLANEOUS PROVISIONS.
AMENDMENTS. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to
the matters set forth in this Agreement. No alteration of or amendment to
this Agreement shall be effective unless given in writing and signed by
the party or parties sought to be charged or bound by the alteration or
amendment. This Agreement supersedes all existing loan agreements
previously executed between Borrower and Lender with respect to the Loans
unless Borrower and Lender agree in writing to the contrary.
APPLICABLE LAW. This Agreement has been delivered to Lender and accepted
by Lender in the State of Texas. Subject to the provisions on arbitration,
this Agreement shall be governed by and construed in accordance with the
laws of the State of Texas without regard to any conflict of laws or
provisions thereof.
JURY WAIVER. THE UNDERSIGNED HEREBY VOLUNTARILY, KNOWINGLY, IRREVOCABLY
AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN
RESOLVING ANY DISPUTE (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE)
BETWEEN OR AMONG THE UNDERSIGNED AND LENDER ARISING OUT OF OR IN ANY
WAY RELATED TO THIS DOCUMENT, AND ANY OTHER RELATED DOCUMENT, OR ANY
RELATIONSHIP BETWEEN LENDER AND THE BORROWER. THIS PROVISION IS A
MATERIAL INDUCEMENT TO LENDER TO PROVIDE THE FINANCING DESCRIBED
HEREIN OR IN THE OTHER RELATED DOCUMENTS.
ARBITRATION. Lender and Borrower agree that upon the written demand of
either party, whether made before or after the institution of any legal
proceedings, but prior to the rendering of any judgment in that
proceeding, all disputes, claims and controversies between them, whether
individual, joint, or class in nature, arising from this Agreement, any
Related Document or otherwise, including without limitation contract
disputes and tort claims, shall be resolved by binding arbitration
pursuant to the Commercial Rules of the American Arbitration Association
("AAA"). Any arbitration proceeding held pursuant to this arbitration
provision shall be conducted in the city nearest the Borrower's address
having an AAA regional office, or at any other place selected by mutual
agreement of the parties. No act to take or dispose of any Collateral
shall constitute a waiver of this arbitration agreement or be prohibited
by this arbitration agreement. This
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arbitration provision shall not limit the right of either party during any
dispute, claim or controversy to seek, use, and employ ancillary, or
preliminary rights and/or remedies, judicial or otherwise, for the
purposes of realizing upon, preserving, protecting, foreclosing upon or
proceeding under forcible entry and detainer for possession of, any real
or personal property, and any such action shall not be deemed an election
of remedies. Such remedies include, without limitation, obtaining
injunctive relief or a temporary restraining order, invoking a power of
sale under any deed of trust or mortgage, obtaining a writ of attachment
or imposition of a receivership, or exercising any rights relating to
personal property, including exercising the right of set-off, or taking or
disposing of such property with or without judicial process pursuant to
the Uniform Commercial Code. Any disputes, claims, or controversies
concerning the lawfulness or reasonableness of an act, or exercise of any
right or remedy, concerning any Collateral, including any claim to
rescind, reform, or otherwise modify any agreement relating to the
Collateral, shall also be arbitrated; provided, however that no arbitrator
shall have the right or the power to enjoin or restrain any act of either
party. Judgment upon any award rendered by any arbitrator may be entered
in any court having jurisdiction. The statute of limitations, estoppel,
waiver, laches and similar doctrines which would otherwise be applicable
in an action brought by a party shall be applicable in any arbitration
proceeding, and the commencement of an arbitration proceeding shall be
deemed the commencement of any action for these purposes. The Federal
Arbitration Act (Title 9 of the United States Code) shall apply to the
construction, interpretation, and enforcement of this arbitration
provision.
CAPTION HEADINGS. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions
of this Agreement.
CONSENT TO LOAN PARTICIPATION. Borrower agrees and consents to Lender's
sale or transfer, whether now or later, of one or more participation
interests in the Loans to one or more purchasers, whether related or
unrelated to Lender. Lender may provide, without any limitation
whatsoever, to any one or more purchasers, or potential purchasers, any
information or knowledge Lender may have about Borrower or about any other
matter relating to the Loan, and Borrower hereby waives any rights to
privacy it may have with respect to such matters. Borrower additionally
waives any and all notices of sale of participation interests, as well as
all notices of any repurchase of such participation interests.
COSTS AND EXPENSES. Except as otherwise limited by the Texas Finance Code,
as supplemented by Texas Credit Title, Borrower agrees to pay upon demand
all of Lender's expenses, including attorneys' fees, incurred in
connection with the preparation, execution, enforcement, modification and
collection of this Agreement or in connection with the Loans made pursuant
to this Agreement. Lender may hire one or more attorneys to help collect
the Indebtedness if Borrower does not pay, and Borrower will pay Lender's
reasonable attorneys' fees.
NOTICES. All notices required to be given under this Agreement shall be
given in writing, and shall be effective when actually delivered or when
deposited with a nationally recognized overnight courier or deposited in
the United States mail, first class, postage prepaid, addressed to the
party to whom the notice is to be given at the address shown above. Any
party may change its address for notices under this Agreement by giving
formal written notice to the other parties, specifying that the purpose
of the notice is to change the party's address. To the extent permitted by
applicable law, if there is more than one Borrower notice to any Borrower
will constitute notice to all Borrowers. For notice purposes, Borrower
will keep Lender informed at all times of Borrower's current address(es).
SEVERABILITY. If a court of competent jurisdiction finds any provision of
this Agreement to be invalid or unenforceable as to any person or
circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances. If feasible, any
such offending provision shall be deemed to be modified to be within the
limits of enforceability or validity; however, if the offending provision
cannot be so modified, it shall be stricken and all other provisions of
this Agreement in all other respects shall remain valid and enforceable.
COUNTERPARTS. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original and all of which together shall
constitute the same document. Signature pages may be detached from the
counterparts to a single copy of this Agreement to physically form one
document.
SUCCESSORS AND ASSIGNS. All covenants and agreements contained by or on
behalf of Borrower shall bind its successors and assigns and shall inure
to the benefit of Lender, its successors and assigns. Borrower shall not,
however, have the right to assign its rights under this Agreement or any
interest therein, without the prior written consent of Lender.
SURVIVAL. All warranties, representations, and covenants made by Borrower
in this Agreement or in any certificate or other instrument delivered by
Borrower to Lender under this Agreement shall be considered to have been
relied upon by Lender and will survive the making of the Loan and delivery
to Lender of the Related Documents, regardless of any investigation made
by Lender or on Lender's behalf.
TIME IS OF THE ESSENCE. Time is of the essence in the performance of this
Agreement.
WAIVER. Lender shall not be deemed to have waived any rights under this
Agreement unless such waiver is given in writing and signed by Lender. No
delay or omission on the part of Lender in exercising any right shall
operate as a waiver of such right or any other right. A waiver by Lender
of a provision of this Agreement shall not prejudice or constitute a
waiver of Lender's right otherwise to demand strict compliance with that
provision or any other provision of this Agreement. No prior waiver by
Lender, nor any course of dealing between Lender and Borrower, or between
Lender and any Grantor or Guarantor, shall constitute a waiver of any of
Lender's rights or of any obligations of Borrower or of any Grantor as to
any future transactions. Whenever the consent of Lender is required under
this Agreement, the granting of such consent by Lender in any instance
shall not constitute continuing consent in subsequent instances where such
consent is required, and in all cases such consent may be granted or
withheld in the sole discretion of Lender.
BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN
AGREEMENT, AND BORROWER AGREES TO ITS TERMS. THIS AGREEMENT IS EXECUTED AS OF
THE DATE SET FORTH ABOVE.
BORROWER:
TERAFORCE TECHNOLOGY CORPORATION
By: /s/ ROBERT P. CAPPS
------------------------------------------
AUTHORIZED SIGNER
###
LENDER:
BANK ONE, NA WITH ITS MAIN OFFICE IN CHICAGO, ILLINOIS
By: /s/ BRADLEY C PETERS, Vice President
------------------------------------------
AUTHORIZED OFFICER
================================================================================
LASER PRO, Reg. U.S. Pat. & T.M. Off., Ver. 3.27a (c) 2001 CFI ProServices, Inc.
All rights reserved. [TX-C40 E3.27 F3.27 P3.27 CD006536.LN C9.OVL]