Filed by Bowne Pure Compliance





Exhibit 10.1




LOAN AGREEMENT




Dated as of December 19, 2008




between




INTERPHASE CORPORATION




and




TEXAS CAPITAL BANK, NATIONAL ASSOCIATION



 


 









 





Table of Contents




	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	ARTICLE I Definitions
	 	 	1	 
	 
	 	 	 	 
	Section 1.1 Definitions
	 	 	1	 
	Section 1.2 Accounting Matters
	 	 	8	 
	Section 1.3 Other Definitional Provisions
	 	 	8	 
	 
	 	 	 	 
	ARTICLE II Revolving Credit Advances and Guidance Line of Credit
	 	 	8	 
	 
	 	 	 	 
	Section 2.1 Revolving Credit Advances
	 	 	8	 
	Section 2.2 General Provisions Regarding Interest; Etc
	 	 	10	 
	Section 2.3 Unused Facility Fee
	 	 	10	 
	Section 2.4 Use of Proceeds
	 	 	10	 
	 
	 	 	 	 
	ARTICLE III Payments
	 	 	11	 
	 
	 	 	 	 
	Section 3.1 Method of Payment
	 	 	11	 
	Section 3.2 Prepayments
	 	 	11	 
	 
	 	 	 	 
	ARTICLE IV Security
	 	 	11	 
	 
	 	 	 	 
	Section 4.1 Collateral
	 	 	11	 
	Section 4.2 Setoff
	 	 	11	 
	 
	 	 	 	 
	ARTICLE V Conditions Precedent
	 	 	12	 
	 
	 	 	 	 
	Section 5.1 Initial Extension of Credit
	 	 	12	 
	Section 5.2 All Extensions of Credit
	 	 	13	 
	 
	 	 	 	 
	ARTICLE VI Representations and Warranties
	 	 	13	 
	 
	 	 	 	 
	Section 6.1 Corporate Existence
	 	 	13	 
	Section 6.2 Financial Statements; Etc
	 	 	14	 
	Section 6.3 Action; No Breach
	 	 	14	 
	Section 6.4 Operation of Business
	 	 	14	 
	Section 6.5 Litigation and Judgments
	 	 	14	 
	Section 6.6 Rights in Properties; Liens
	 	 	15	 
	Section 6.7 Enforceability
	 	 	15	 
	Section 6.8 Approvals
	 	 	15	 
	Section 6.9 Debt
	 	 	15	 
	Section 6.10 Taxes
	 	 	15	 
	Section 6.11 Use of Proceeds; Margin Securities
	 	 	15	 
	Section 6.12 ERISA
	 	 	15	 
	Section 6.13 Disclosure
	 	 	16	 
	Section 6.14 Subsidiaries, Ventures, Etc
	 	 	16	 






 


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Table of Contents





	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	Section 6.15 Agreements
	 	 	16	 
	Section 6.16 Compliance with Laws
	 	 	16	 
	Section 6.17 Inventory
	 	 	16	 
	Section 6.18 Investment Company Act
	 	 	16	 
	Section 6.19 Public Utility Holding Company Act
	 	 	17	 
	Section 6.20 Intellectual Property
	 	 	17	 
	Section 6.21 Depository Relationship
	 	 	17	 
	 
	 	 	 	 
	ARTICLE VII Affirmative Covenants
	 	 	17	 
	 
	 	 	 	 
	Section 7.1 Reporting Requirements
	 	 	17	 
	Section 7.2 Maintenance of Existence; Conduct of Business
	 	 	19	 
	Section 7.3 Maintenance of Properties
	 	 	19	 
	Section 7.4 Taxes and Claims
	 	 	19	 
	Section 7.5 Insurance
	 	 	19	 
	Section 7.6 Inspection Rights
	 	 	19	 
	Section 7.7 Keeping Books and Records
	 	 	19	 
	Section 7.8 Compliance with Laws
	 	 	19	 
	Section 7.9 Compliance with Agreements
	 	 	19	 
	Section 7.10 Further Assurances
	 	 	20	 
	Section 7.11 ERISA
	 	 	20	 
	 
	 	 	 	 
	ARTICLE VIII Negative Covenants
	 	 	20	 
	 
	 	 	 	 
	Section 8.1 Transactions With Affiliates
	 	 	20	 
	Section 8.2 Nature of Business
	 	 	20	 
	Section 8.3 Environmental Protection
	 	 	20	 
	Section 8.4 Accounting
	 	 	20	 
	Section 8.5 No Negative Pledge
	 	 	20	 
	 
	 	 	 	 
	ARTICLE IX Financial Covenants
	 	 	21	 
	 
	 	 	 	 
	OMITTED
	 	 	21	 
	 
	 	 	 	 
	ARTICLE X Default
	 	 	21	 
	 
	 	 	 	 
	Section 10.1 Events of Default
	 	 	21	 
	Section 10.2 Remedies Upon Default
	 	 	23	 
	Section 10.3 Performance by the Lender
	 	 	23	 






 


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Table of Contents





	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	ARTICLE XI Miscellaneous
	 	 	23	 
	 
	 	 	 	 
	Section 11.1 Expenses
	 	 	23	 
	Section 11.2 INDEMNIFICATION
	 	 	24	 
	Section 11.3 Limitation of Liability
	 	 	24	 
	Section 11.4 No Duty
	 	 	24	 
	Section 11.5 Lender Not Fiduciary
	 	 	25	 
	Section 11.6 Omitted
	 	 	25	 
	Section 11.7 No Waiver; Cumulative Remedies
	 	 	25	 
	Section 11.8 Successors and Assigns
	 	 	25	 
	Section 11.9 Survival
	 	 	25	 
	Section 11.10 ENTIRE AGREEMENT; AMENDMENT
	 	 	25	 
	Section 11.11 Notices
	 	 	26	 
	Section 11.12 Governing Law; Venue; Service of Process
	 	 	26	 
	Section 11.13 Counterparts
	 	 	26	 
	Section 11.14 Severability
	 	 	26	 
	Section 11.15 Headings
	 	 	26	 
	Section 11.16 Participations; Etc
	 	 	26	 
	Section 11.17 Construction
	 	 	27	 
	Section 11.18 Independence of Covenants
	 	 	27	 
	Section 11.19 WAIVER OF JURY TRIAL
	 	 	27	 
	Section 11.20 Arbitration
	 	 	27	 
	Section 11.21 Additional Interest Provision
	 	 	29	 
	Section 11.22 Ceiling Election
	 	 	30	 






 


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LOAN AGREEMENT




THIS LOAN AGREEMENT (the “Agreement”) dated as of December 19, 2008, is between
INTERPHASE CORPORATION, a Texas corporation (the “Borrower”), and TEXAS CAPITAL BANK,
NATIONAL ASSOCIATION, a national banking association (the “Lender”).



R E C I T A L S:




The Borrower has requested that the Lender extend credit to the Borrower in as described in
this Agreement. The Lender is willing to make such credit available to the Borrower upon and
subject to the provisions, terms and conditions hereinafter set forth.



NOW THEREFORE, in consideration of the premises and the mutual covenants herein contained, the
parties hereto agree as follows:



ARTICLE I




Definitions




Section 1.1 Definitions. As used in this Agreement, all exhibits, appendices and schedules
hereto and in any note, certificate, report or other Loan Documents made or delivered pursuant to
this Agreement, the following terms will have the meanings given such terms in this Section
1 or in the provision, section or recital referred to below:




“AAA” has the meaning for such term set forth in Section 11.20 of the Agreement.



“Advance” means an advance by the Lender to the Borrower pursuant to Section 2.1(a) of
this Agreement.



“Advance Request Form” means a certificate, in a form approved by the Lender, properly
completed and signed by the Borrower requesting an Advance.



“Affiliate” means, as to any Person, any other Person (a) that directly or indirectly,
through one or more intermediaries, controls or is controlled by, or is under common control with,
such Person; (b) that directly or indirectly beneficially owns or holds five percent (5%) or more
of any class of voting stock of such Person; or (c) five percent (5%) or more of the voting stock
of which is directly or indirectly beneficially owned or held by the Person in question. The term
“control” means the possession, directly or indirectly, of the power to direct or cause direction
of the management and policies of a Person, whether through the ownership of voting securities, by
contract, or otherwise; provided, however, in no event shall the Lender be deemed an Affiliate of
the Borrower or any of its Subsidiaries or Affiliates.



“Agreement” has the meaning set forth in the Introductory Paragraph hereto, as the
same may, from time to time, be amended, modified, restated, renewed, waived, supplemented, or
otherwise changed, and includes all schedules, exhibits and appendices attached or otherwise
identified therewith.





			
	 	 	 
	LOAN AGREEMENT
	 	Page 1





 


 









 





“Borrowing Base” means, at any time, an amount equal to seventy-five percent (75%) of
the Market Value of (a) commercial paper in the Collateral Account rated P-1/A-1 by Moody’s and
Standard & Poor’s, respectively, and (b) investment grade securities rated BBB or better by
Standard & Poor’s.



“Borrowing Base Report” means, as of any date of preparation, a certificate setting
forth the Borrowing Base (in a form acceptable to the Lender prepared by and certified by the chief
financial officer of the Borrower.



“Borrower” means the Person identified as such in the Introductory Paragraph hereof,
and its successors and assigns.




“Business Day” has the meaning assigned to it in the Note.



“Capital Expenditure” shall mean any expenditure by a Person for (a) an asset which
will be used in a year or years subsequent to the year in which the expenditure is made and which
asset is properly classified in relevant financial statements of such Person as equipment, real
property, a fixed asset or a similar type of capitalized asset in accordance with GAAP or (b) an
asset relating to or acquired in connection with an acquired business, and any and all acquisition
costs related to (a) or (b) above.



“Capital Lease Obligation” shall mean the amount of Debt under a lease of Property by
a Person that would be shown as a liability on a balance sheet of such Person prepared for
financial reporting purposes in accordance with GAAP.



“Code” means the Internal Revenue Code of 1986, as amended, and the regulations
promulgated and rulings issued thereunder.



“Collateral” has the meaning for such term set forth in Section 4.1 of this
Agreement.



“Collateral Account” means that certain custodian account no. 004239 maintained by
Texas Capital Bank, National Association, as custodian, in the name of Borrower. Lender shall have
a first priority security interest in such account and all financial assets set forth therein, and
there shall exist no other lien, security interest or other encumbrance in such account or
financial assets.



“Commitment” means the obligation of the Lender to make Advances pursuant to
Section 2.1 in an aggregate principal amount at any time outstanding up to but not
exceeding Five Million and No/100 Dollars ($5,000,000.00), subject, however, to termination
pursuant to Section 10.2.



“Compliance Certificate” means a certificate (in a form acceptable to Lender) prepared
by and executed by the chief financial officer of the Borrower.





			
	 	 	 
	LOAN AGREEMENT
	 	Page 2





 


 









 





“Constituent Documents” means (i) in the case of a corporation, its articles or
certificate of incorporation and bylaws; (ii) in the case of a general partnership, its partnership
agreement; (iii) in the case of a limited partnership, its certificate of limited partnership and
partnership agreement; (iv) in the case of a trust, its trust agreement; (v) in the case of a joint
venture, its joint venture agreement; (vi) in the case of a limited liability company, its articles
of organization and operating agreement or regulations; and (vii) in the case of any other entity,
its organizational and governance documents and agreements.



“Debt” means as to any Person at any time (without duplication): (a) all obligations
of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, notes,
debentures, or other similar instruments, (c) all obligations of such Person to pay the deferred
purchase price of property or services, except trade accounts payable of such Person arising in the
ordinary course of business that are not past due by more than ninety (90) days, (d) all Capital
Lease Obligations of such Person, (e) all Debt or other obligations of others Guaranteed by such
Person, (f) all obligations secured by a Lien existing on property owned by such Person, whether or
not the obligations secured thereby have been assumed by such Person or are non-recourse to the
credit of such Person, (g) any other obligation for borrowed money or other financial
accommodations which in accordance with GAAP would be shown as a liability on the balance sheet of
such Person, (h) any repurchase obligation or liability of a Person with respect to accounts,
chattel paper or notes receivable sold by such Person, (i) any liability under a sale and leaseback
transaction that is not a Capital Lease Obligation, (j) any obligation under any so-called
“synthetic leases”, (k) any obligation arising with respect to any other transaction that is the
functional equivalent of borrowing but which does not constitute a liability on the balance sheets
of a Person, (l) all reimbursement obligations of such Person (whether contingent or otherwise) in
respect of letters of credit, bankers’ acceptances, surety or other bonds and similar instruments,
and (m) all liabilities of such Person in respect of unfunded vested benefits under any Plan.



“Default” means an Event of Default or the occurrence of an event or condition which
with notice or lapse of time or both would become an Event of Default.




“Default Interest Rate” has the meaning assigned to it in the Note.



“Dispute” means any action, dispute, claim or controversy of any kind, whether in
contract or tort, statutory or common law, legal or equitable, now existing or hereafter arising
under or in connection with, or in any way pertaining to, this Agreement and each other document,
contract and instrument required hereby or now or hereafter delivered to Lender in connection
herewith, or any past, present or future extensions of credit and other activities, transactions or
obligations of any kind related directly or indirectly to any of the foregoing documents, including
without limitation, any of the foregoing arising in connection with the exercise of any self-help,
ancillary or other remedies pursuant to any of the foregoing documents. 




“Disclosure Schedule” means the schedule of the same name attached hereto.




“Dollars” and “$” mean lawful money of the United States of America.



“Environmental Laws” means any and all federal, state, and local laws, regulations,
judicial decisions, orders, decrees, plans, rules, permits, licenses, and other governmental
restrictions and requirements pertaining to health, safety, or the environment, including, without
limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980,
42 U.S.C. § 9601 et seq., the Resource Conservation and Recovery Act of 1976, 42 U.S.C. § 6901 et
seq., the Occupational Safety and Health Act, 29 U.S.C. § 651 et seq., the Clean Air Act, 42 U.S.C.
§ 7401 et seq., the Clean Water Act, 33 U.S.C. § 1251 et seq., and the Toxic Substances Control
Act, 15 U.S.C. § 2601 et seq., as the same may be amended or supplemented from time to time.





			
	 	 	 
	LOAN AGREEMENT
	 	Page 3





 


 









 





“Environmental Liabilities” means, as to any Person, all liabilities, obligations,
responsibilities, Remedial Actions, losses, damages, punitive damages, consequential damages,
treble damages, costs, and expenses, (including, without limitation, all reasonable fees,
disbursements and expenses of counsel, expert and consulting fees and costs of investigation and
feasibility studies), fines, penalties, sanctions, and interest incurred as a result of any claim
or demand, by any Person, whether based in contract, tort, implied or express warranty, strict
liability, criminal or civil statute, including any Environmental Law, permit, order or agreement
with any Governmental Authority or other Person, arising from environmental, health or safety
conditions or the Release or threatened Release of a Hazardous Material into the environment,
resulting from the past, present, or future operations of such Person or its Affiliates.



“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from
time to time, and the regulations and published interpretations thereunder.



“ERISA Affiliate” means any corporation or trade or business which is a member of the
same controlled group of corporations (within the meaning of Section 414(b) of the Code) as the
Borrower or is under common control (within the meaning of Section 414(c) of the Code) with the
Borrower.




“Event of Default” has the meaning specified in Section 10.1.



“GAAP” means generally accepted accounting principles, applied on a consistent basis,
as set forth in Opinions of the Accounting Principles Board of the American Institute of Certified
Public Accountants and/or in statements of the Financial Accounting Standards Board and/or their
respective successors and which are applicable in the circumstances as of the date in question.
Accounting principles are applied on a “consistent basis” when the accounting principles applied in
a current period are comparable in all material respects to those accounting principles applied in
a preceding period.



“Governmental Authority” means any nation or government, any state or political
subdivision thereof and any entity exercising executive, legislative, judicial, regulatory, or
administrative functions of or pertaining to government.



“Guarantee” by any Person means any obligation, contingent or otherwise, of such
Person directly or indirectly guaranteeing any Debt or other obligation of any other Person as well
as any obligation or liability, direct or indirect, contingent or otherwise, of such Person (a) to
purchase or pay (or advance or supply funds for the purchase or payment of) such Debt or other
obligation or liability (whether arising by virtue of partnership arrangements, by agreement to
keep-well, to purchase assets, goods, securities or services, to operate Property, to take-or-pay,
or to maintain net worth or working capital or other financial statement conditions or otherwise)
or (b) entered into for the purpose of indemnifying or assuring in any other manner the
obligee of such Debt or other obligation or liability of the payment thereof or to protect the
obligee against loss in respect thereof (in whole or in part), provided that the term Guarantee
shall not include endorsements for collection or deposit in the ordinary course of business. The
term “Guarantee” used as a verb has a corresponding meaning.




			
	 	 	 
	LOAN AGREEMENT
	 	Page 4





 


 









 





“Guarantor” means any Person who from time to time guarantees all or any part of the
Obligations.



“Guaranty” means a written guaranty of each Guarantor in favor of the Lender, in form
and substance satisfactory to Lender, as the same may be amended, modified, restated, renewed,
replaced, extended, supplemented or otherwise changed from time to time.



“Guidance Line of Credit” means the guidance line of credit established in Section
2.1(b) hereof.



“Guidance Line Obligations” means, at any time, the aggregate outstanding obligations
of Borrower to Lender under foreign currency forward contracts entered into pursuant to
Section 2.1(b) of this Agreement.



“Guidance Line Borrowing Base Usage” means, at any time, the greater of (i) twenty
percent (20%) of the Guidance Line Obligations, and (ii) 110% of the aggregate mark to market
losses on any of Borrower’s foreign currency exchange contracts with Lender.



“Hazardous Material” means any substance, product, waste, pollutant, material,
chemical, contaminant, constituent, or other material which is or becomes listed, regulated, or
addressed under any Environmental Law, including, without limitation, asbestos, petroleum, and
polychlorinated biphenyls.



“Lien” means any lien, mortgage, security interest, tax lien, pledge, charge,
hypothecation, assignment, preference, priority, or other encumbrance of any kind or nature
whatsoever (including, without limitation, any conditional sale or title retention agreement),
whether arising by contract, operation of law, or otherwise.



“Loan Documents” means this Agreement and all promissory notes, security agreements,
deeds of trust, assignments, letters of credit, guaranties, foreign currency forward contracts, and
other instruments, documents, and agreements executed and delivered pursuant to or in connection
with this Agreement, as such instruments, documents, and agreements may be amended, modified,
renewed, restated, extended, supplemented, replaced, consolidated, substituted, or otherwise
changed from time to time.



“Market Value” means, for any asset, the current market value of such asset determined
by Lender using its most readily available sources, and such determination shall be deemed final
and conclusive for all purposes.




			
	 	 	 
	LOAN AGREEMENT
	 	Page 5





 


 









 





“Maximum Lawful Rate” means, at any time, the maximum rate of interest which may be
charged, contracted for, taken, received or reserved by the Lender in accordance with applicable
Texas law (or applicable United States federal law to the extent that such law permits Lender to
charge, contract for, receive or reserve a greater amount of interest than under Texas law).
The Maximum Lawful Rate shall be calculated in a manner that takes into account any and all fees,
payments, and other charges in respect of the Loan Documents that constitute interest under
applicable law. Each change in any interest rate provided for herein based upon the Maximum Lawful
Rate resulting from a change in the Maximum Lawful Rate shall take effect without notice to the
Borrower at the time of such change in the Maximum Lawful Rate.



“Multiemployer Plan” means a multiemployer plan defined as such in Section 3(37) of
ERISA to which contributions have been made by the Borrower or any ERISA Affiliate and which is
covered by Title IV of ERISA.



“Note” means the promissory note of the Borrower payable to the order of the Lender
evidencing the Advances, in form and substance acceptable to Lender, and all amendments,
extensions, renewals, replacements, and modifications thereof.



“Obligated Party” means any Guarantor or any other Person who is or becomes party to
any agreement that guarantees or secures payment and performance of the Obligations or any part
thereof.



“Obligations” means all obligations, indebtedness, and liabilities of the Borrower,
each Guarantor and any other Obligated Party to the Lender or Affiliates of the Lender, or both,
now existing or hereafter arising, whether direct, indirect, related, unrelated, fixed, contingent,
liquidated, unliquidated, joint, several, or joint and several, including, without limitation, the
obligations, indebtedness, and liabilities under this Agreement, any Swap Contract, any foreign
currency forward contract, the other Loan Documents, any cash management or treasury services
agreements and all interest accruing thereon (whether a claim for post-filing or post-petition
interest is allowed in any insolvency, reorganization or similar proceeding) and all attorneys’
fees and other expenses incurred in the enforcement or collection thereof.



“PBGC” means the Pension Benefit Guaranty Corporation or any entity succeeding to all
or any of its functions under ERISA.



“Person” means any individual, corporation, limited liability company, business trust,
association, company, partnership, joint venture, Governmental Authority, or other entity, and
shall include such Person’s heirs, administrators, personal representatives, executors, successors
and assigns.



“Plan” means any employee benefit or other plan established or maintained by the
Borrower or any ERISA Affiliate and which is covered by Title IV of ERISA.



“Pledge Agreement” means the Pledge Agreement of the Borrower in favor of the Lender,
in form and substance satisfactory to the Lender, as the same may be amended, restated,
supplemented, modified, or changed from time to time.



“Principal Office” means the principal office of the Lender, presently located at 2100
McKinney Avenue, Suite 900, Dallas, Texas 75201.



“Prohibited Transaction” means any transaction set forth in Section 406 of ERISA or
Section 4975 of the Code.




			
	 	 	 
	LOAN AGREEMENT
	 	Page 6





 


 









 





“Property” of a Person means any and all property, whether real, personal, tangible,
intangible or mixed, of such Person, or any other assets owned, operated or leased by such Person.



“Related Indebtedness” has the meaning set forth in Section 11.21 of this
Agreement.



“Release” means, as to any Person, any release, spill, emission, leaking, pumping,
injection, deposit, disposal, disbursement, leaching, or migration of Hazardous Materials into the
indoor or outdoor environment or into or out of property owned by such Person, including, without
limitation, the movement of Hazardous Materials through or in the air, soil, surface water, ground
water, or property.



“Remedial Action” means all actions required to (a) clean up, remove, treat, or
otherwise address Hazardous Materials in the indoor or outdoor environment, (b) prevent the Release
or threat of Release or minimize the further Release of Hazardous Materials so that they do not
migrate or endanger or threaten to endanger public health or welfare or the indoor or outdoor
environment, or (c) perform pre-remedial studies and investigations and post-remedial monitoring
and care.




“Reportable Event” means any of the events set forth in Section 4043 of ERISA.



“Security Documents” means the Pledge Agreement, any Guaranty and each and every
security agreement, guaranty, pledge, mortgage, deed of trust or other collateral security
agreement required by or delivered to the Lender from time to time to secure the Obligations or any
portion thereof.



“Subsidiary” means (a) any corporation of which at least a majority of the outstanding
shares of stock having by the terms thereof ordinary voting power to elect a majority of the board
of directors of such corporation (irrespective of whether or not at the time stock of any other
class or classes of such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time directly or indirectly owned or controlled by the
Borrower or one or more of the Subsidiaries or by the Borrower and one or more of the Subsidiaries;
and (b) any other entity (i) of which at least a majority of the ownership, equity or voting
interest is at the time directly or indirectly owned or controlled by one or more of the Borrower
and the Subsidiaries and (ii) which is treated as a subsidiary in accordance with GAAP.



“Swap Contract” means any agreement (including related confirmations and schedules)
between the Borrower and the Lender or any Affiliate of the Lender now existing or hereafter
entered into which is, or relates to, a rate swap, basis swap, forward rate transaction, cap
transaction, floor transaction, collar transaction or any other similar transactions (including any
option with respect to any of these transactions) or any combination thereof.



“Termination Date” means 11:00 A.M. Dallas, Texas time on December 19, 2013, or such
earlier date on which the Commitment terminates as provided in this Agreement.



“UCC” means the Chapters 1 through 11 of the Texas Business and Commerce Code, as
amended from time to time.




			
	 	 	 
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	 	Page 7





 


 









 





Section 1.2 Accounting Matters. Any accounting term used in this Agreement or the other
Loan Documents shall have, unless otherwise specifically provided therein, the meaning customarily
given such term in accordance with GAAP, and all financial computations thereunder shall be
computed, unless otherwise specifically provided therein, in accordance with GAAP consistently
applied; provided, that all financial covenants and calculations in the Loan Documents shall be
made in accordance with GAAP as in effect on the date of this Agreement unless the Borrower and the
Lender shall otherwise specifically agree in writing. That certain items or computations are
explicitly modified by the phrase “in accordance with GAAP” shall in no way be construed to limit
the foregoing.



Section 1.3 Other Definitional Provisions. All definitions contained in this Agreement are
equally applicable to the singular and plural forms of the terms defined. The words “hereof”,
“herein”, and “hereunder” and words of similar import referring to this Agreement refer to this
Agreement as a whole and not to any particular provision of this Agreement. Unless otherwise
specified, all Article and Section references pertain to this Agreement. Terms used herein that
are defined in the UCC, unless otherwise defined herein, shall have the meanings specified in the
UCC.



ARTICLE II




Revolving Credit Advances and Guidance Line of Credit





Section 2.1 Revolving Credit Advances.




A. Advances. Subject to the terms and conditions of this Agreement, the
Lender agrees to make one or more Advances to the Borrower from time to time from
the date hereof to and including the Termination Date in an aggregate principal
amount at any time outstanding up to but not exceeding the amount of the Commitment,
provided that the aggregate amount of all Advances at any time outstanding shall not
exceed the (A) lesser of (i) the amount of the Commitment or (ii) the Borrowing
Base, minus (B) the Guidance Line Borrowing Base Usage. Subject to the foregoing
limitations, and the other terms and provisions of this Agreement, the Borrower may
borrow, repay, and reborrow hereunder.




1. The Note. The obligation of the Borrower to repay the Advances
and interest thereon shall be evidenced by the Note executed by the
Borrower, payable to the order of the Lender, in the principal amount of the
Commitment as originally in effect, and dated the date hereof.




2. Repayment of Advances. The Borrower shall repay the unpaid
principal amount of all Advances on the Termination Date, unless sooner due
by reason of acceleration by the Lender as provided in this Agreement.




3. Prepayment. Borrower shall be entitled to prepay the Advances in
accordance with the terms and provision of the Note.




			
	 	 	 
	LOAN AGREEMENT
	 	Page 8





 


 









 






4. Interest. The unpaid principal amount of the Note shall, subject
to the following sentence, bear interest as provided in the Note. If at any
time the rate of interest specified in the Note would exceed the Maximum
Lawful Rate but for the provisions thereof limiting interest to the Maximum
Lawful Rate, then any subsequent reduction shall not reduce the rate of
interest on the Advances below the Maximum Lawful Rate until the aggregate
amount of interest accrued on the Advances equals the aggregate amount of
interest which would have accrued on the Advances if the interest rate had
not been limited by the Maximum Lawful Rate. Accrued and unpaid interest on
the Advances shall be payable as provided in the Note and on the Termination
Date.




5. Borrowing Procedure. The Borrower shall give the Lender notice
of each Advance by means of an Advance Request Form containing the
information required therein and delivered (by hand or by mechanically
confirmed facsimile) to the Lender no later than 3:00 p.m. (Texas time) on
the day on which the Advance is desired to be funded. Advances shall be in
a minimum amount of $50,000.00. The Lender at its option may accept
telephonic requests for such Advances, provided that such acceptance shall
not constitute a waiver of the Lender’s right to require delivery of an
Advance Request Form in connection with subsequent Advances. Any telephonic
request for a Advance by the Borrower shall be promptly confirmed by
submission of a properly completed Advance Request Form to the Lender, but
failure to deliver an Advance Request Form shall not be a defense to payment
of the Advance. The Lender shall have no liability to the Borrower for any
loss or damage suffered by the Borrower as a result of the Lender’s honoring
of any requests, execution of any instructions, authorizations or agreements
or reliance on any reports communicated to it telephonically, by facsimile
or electronically and purporting to have been sent to the Lender by the
Borrower and the Lender shall have no duty to verify the origin of any such
communication or the identity or authority of the Person sending it.
Subject to the terms and conditions of this Agreement, each Advance shall be
made available to the Borrower by depositing the same, in immediately
available funds, in an account of the Borrower designated by the Borrower
maintained with the Lender at the Principal Office.




B. Guidance Line of Credit. Lender may, in its sole and absolute
discretion, enter into foreign currency forward contracts with Borrower from time to
time from the date hereof to December 19, 2013 up to the aggregate amount of
$7,500,000.00; provided, however, (i) that the Guidance Line
Borrowing Base Usage shall not exceed the Borrowing Base minus all outstanding
Advances, and (ii) the term of any such foreign currency forward contract cannot
exceed one (1) year and cannot extend past the Termination Date. No provision in
this
Agreement or any other Loan Document shall in any way obligate Lender to enter into
any foreign currency forward contract with Borrower. Borrower shall execute any and
all documents, instruments and agreements requested by Lender in connection with
such forward contracts and such items shall be deemed to be Loan Documents for all
purposes.




			
	 	 	 
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	 	Page 9





 


 









 






Section 2.2 General Provisions Regarding Interest; Etc.




A. Default Interest. Any outstanding principal of any Advance and (to the
fullest extent permitted by law) any other amount payable by the Borrower under this
Agreement or any other Loan Document that is not paid in full when due (whether at
stated maturity, by acceleration, or otherwise) shall bear interest at the Default
Interest Rate for the period from and including the due date thereof to but
excluding the date the same is paid in full. Additionally, upon the occurrence of
an Event of Default (and from the date of such occurrence) all outstanding and
unpaid principal amounts of all of the Obligations shall, to the extent permitted by
law, bear interest at the Default Interest Rate until such time as the Lender shall
waive in writing the application of the Default Interest Rate to such Event of
Default situation. Interest payable at the Default Interest Rate shall be payable
from time to time on demand.




B. Computation of Interest. Interest on the Advances and all other amounts
payable by the Borrower hereunder shall be computed on the basis of a year of 360
days and the actual number of days elapsed (including the first day but excluding
the last day) unless such calculation would result in a usurious rate, in which case
interest shall be calculated on the basis of a year of 365 or 366 days, as the case
may be.



Section 2.3 Unused Facility Fee. The Borrower agrees to pay to the Lender an unused
facility fee on the daily average unused amount of the Commitment for the period from and including
the date of this Agreement to and including the Termination Date, at the rate set forth below per
annum based on a 360 day year and the actual number of days elapsed based on the respective total
deposits maintained by Borrower with Lender. For the purpose of calculating the commitment fee
hereunder, the Commitment shall be deemed utilized by the amount of all outstanding Advances. The
unused facility fee shall be payable in arrears on the first day of each calendar quarter
commencing January 1, 2009, based on the average of Borrower’s deposits maintained with Lender
during the immediately preceding calendar quarter (rounded up to the next highest dollar) and on
the Termination Date. Borrower shall use its deposit balance with Lender to offset any treasury
management fees charged by Lender. The initial Unused Facility Fee for the calendar quarter ending
December 31, 2008 shall be .75%.



	 	 	 	 	 
	Total Deposits	 	Unused Facility Fee	 
	 
	 	 	 	 
	$15,000,000 or more
	 	 	.25	%
	 
	 	 	 	 
	$10,000,001 to $14,999,999
	 	 	.375	%
	 
	 	 	 	 
	$5,000,001 to $10,000,000
	 	 	.50	%
	 
	 	 	 	 
	$5,000,000 or less
	 	 	.75	%






Section 2.4 Use of Proceeds. The proceeds of the Advances shall be used by the Borrower
for business and commercial purposes.




			
	 	 	 
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ARTICLE III




Payments




Section 3.1 Method of Payment. All payments of principal, interest, and other amounts to
be made by the Borrower under this Agreement and the other Loan Documents shall be made to the
Lender at the Principal Office in Dollars and immediately available funds, without setoff,
deduction, or counterclaim, and free and clear of all taxes at the time and in the manner provided
in the Note.




Section 3.2 Prepayments.




A. Voluntary Prepayments. The Borrower may prepay all or any portion of the
Note to the extent and in the manner provided for therein.




B. Mandatory Prepayment. The Borrower must pay on DEMAND the amount by
which at any time the unpaid principal balance of the Note, plus the Guidance Line
Borrowing Base Usage, exceed the Borrowing Base.



ARTICLE IV




Security




Section 4.1 Collateral. To secure full and complete payment and performance of the
Obligations, the Borrower shall execute and deliver or cause to be executed and delivered all of
the Security Documents required by the Lender covering the Property and collateral described in
such Security Documents (which, together with any other Property and collateral described in the
Security Agreement, and any other property which may now or hereafter secure the Obligations or any
part thereof, is sometimes herein called the “Collateral”). The Borrower shall execute and cause
to be executed such further documents and instruments, including without limitation, Uniform
Commercial Code financing statements, as the Lender, in its sole discretion, deems necessary or
desirable to create, evidence, preserve, and perfect its liens and security interests in the
Collateral.



Section 4.2 Setoff. If an Event of Default shall have occurred and be continuing, the
Lender shall have the right to set off and apply against the Obligations in such manner as the
Lender may determine, at any time and without notice to the Borrower, any and all deposits (general
or special, time or demand, provisional or final) or other sums at any time credited by or owing
from the Lender to the Borrower whether or not the Obligations are then due. As further
security for the Obligations, the Borrower hereby grants to the Lender a security interest in all
money, instruments, and other property of the Borrower now or hereafter held by the Lender,
including, without limitation, property held in safekeeping. In addition to the Lender’s right of
setoff and as further security for the Obligations, the Borrower hereby grants to the Lender a
security interest in all deposits (general or special, time or demand, provisional or final) and
other accounts of the Borrower now or hereafter on deposit with or held by the Lender and all other
sums at any time credited by or owing from the Lender to the Borrower. The rights and remedies of
the Lender hereunder are in addition to other rights and remedies (including, without limitation,
other rights of setoff) which the Lender may have.




			
	 	 	 
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ARTICLE V




Conditions Precedent




Section 5.1 Initial Extension of Credit. The obligation of the Lender to make the initial
Advance under the Note is subject to the condition precedent that the Lender shall have received on
or before the day of such Advance all of the following, each dated (unless otherwise indicated) the
date hereof, in form and substance satisfactory to the Lender:




A. Resolutions. Resolutions of the Board of Directors (or other governing
body) of the Borrower certified by the Secretary or an Assistant Secretary (or other
custodian of records) of the Borrower which authorize the execution, delivery, and
performance by the Borrower of this Agreement and the other Loan Documents to which
the Borrower is or is to be a party;




B. Incumbency Certificate. A certificate of incumbency certified by an
authorized officer or representative certifying the names of the individuals or
other Persons authorized to sign this Agreement and each of the other Loan Documents
to which the Borrower is or is to be a party (including the certificates
contemplated herein) on behalf of the Borrower together with specimen signatures of
such Persons;




C. Constituent Documents. The Constituent Documents for the Borrower as of
a date acceptable to the Lender;




D. Governmental Certificates. Certificates of the appropriate government
officials of the state of incorporation or organization of the Borrower as to the
existence and good standing of the Borrower, each of a date acceptable to lender;




E. Note. The Note executed by the Borrower;




F. Security Documents. The Security Documents executed by the Borrower and
other Obligated Parties;




G. Financing Statements. Uniform Commercial Code financing statements
executed by the Borrower and covering such Collateral as the Lender may request;




H. Control Agreement. A Control Agreement, in form and substance acceptable
to Lender pertaining to the Collateral Account;




I. Insurance Matters. Copies of insurance certificates describing all
insurance policies required by Section 7.5;




			
	 	 	 
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J. UCC Search. The results of a Uniform Commercial Code search showing all
financing statements and other documents or instruments on file against the Borrower
in the office of the Secretary of State of Texas, such search to be as of a date no
more than ten (10) days prior to the date of the initial Advance or the Letter of
Credit;




K. Opinion of Counsel. A favorable opinion of legal counsel to the Borrower
and the Guarantors, as to such other matters as the Lender may reasonably request;
and




L. Attorneys’ Fees and Expenses. Evidence that the costs and expenses
(including reasonable attorneys’ fees) referred to in Section 11.1, to the
extent incurred, shall have been paid in full by the Borrower.




M. Additional Items. The additional items set forth on Schedule
5.1(n).



Section 5.2 All Extensions of Credit. The obligation of the Lender to make any Advance
(including the initial Advance) is subject to the following additional conditions precedent:




A. Request for Advance. The Lender shall have received in accordance with
this Agreement an Advance Request Form pursuant to the Lender’s requirements dated
the date of such Advance and executed by an authorized officer of the Borrower;




B. No Default, Etc. No Default or material adverse change or effect shall
have occurred and be continuing, or would result from or after giving effect to such
Advance;




C. Representations and Warranties. All of the representations and
warranties contained in Article VI hereof and in the other Loan Documents shall be
true and correct on and as of the date of such Advance with the same force and
effect as if such representations and warranties had been made on and as of such
date; and




D. Additional Documentation. The Lender shall have received such additional
approvals, opinions, or documents as the Lender or its legal counsel may reasonably
request.



ARTICLE VI




Representations and Warranties




To induce the Lender to enter into this Agreement, and except as set forth on the Disclosure
Schedule, the Borrower represents and warrants to the Lender that:



Section 6.1 Corporate Existence. The Borrower and each of its Subsidiaries (a) is a
corporation duly organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation; (b) has all requisite power and authority to own its assets and
carry on its business as now being or as proposed to be conducted; and (c) is qualified to do
business in all jurisdictions in which the nature of its business makes such qualification
necessary and where failure to so qualify would have a material adverse effect on its business,
condition (financial or otherwise), operations, prospects, or properties. The Borrower has the
power and authority to execute, deliver, and perform its obligations under this Agreement and the
other Loan Documents to which it is or may become a party.




			
	 	 	 
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	 	Page 13





 


 









 





Section 6.2 Financial Statements; Etc. The Borrower has delivered to the Lender audited
consolidated financial statements of the Borrower and its Subsidiaries as at and for the fiscal
year ended December 31, 2007 and unaudited consolidated financial statements of the Borrower and
its Subsidiaries for the six (6) month period ended June 30, 2008. Such financial statements are
true and correct, have been prepared in accordance with GAAP, and fairly and accurately present, on
a consolidated basis, the financial condition of the Borrower and its Subsidiaries as of the
respective dates indicated therein and the results of operations for the respective periods
indicated therein. Neither the Borrower nor any of its Subsidiaries has any material contingent
liabilities, liabilities for taxes, unusual forward or long-term commitments, or unrealized or
anticipated losses from any unfavorable commitments except as referred to or reflected in such
financial statements. There has been no material adverse change in the business, condition
(financial or otherwise), operations, prospects, or properties of the Borrower or any of its
Subsidiaries since the effective date of the most recent financial statements referred to in this
Section. All projections delivered by the Borrower to the Lender have been prepared in good faith,
with care and diligence and use assumptions that are reasonable under the circumstances at the time
such projections were prepared and delivered to the Lender and all such assumptions are disclosed
in the projections.



Section 6.3 Action; No Breach. The execution, delivery, and performance by the Borrower of
this Agreement and the other Loan Documents to which the Borrower is or may become a party and
compliance with the terms and provisions hereof and thereof have been duly authorized by all
requisite action on the part of the Borrower and do not and will not (a) violate or conflict with,
or result in a breach of, or require any consent under (i) Constituent Documents of the Borrower or
any of its Subsidiaries, (ii) any applicable law, rule, or regulation or any order, writ,
injunction, or decree of any Governmental Authority or arbitrator, or (iii) any agreement or
instrument to which the Borrower or any of its Subsidiaries is a party or by which any of them or
any of their Properties is bound or subject, or (b) constitute a default under any such agreement
or instrument, or result in the creation or imposition of any Lien upon any of the revenues or
assets of the Borrower or any Subsidiary.



Section 6.4 Operation of Business. The Borrower and each of its Subsidiaries possess all
licenses, permits, franchises, patents, copyrights, trademarks, and tradenames, or rights thereto,
necessary to conduct their respective businesses substantially as now conducted and as presently
proposed to be conducted, and the Borrower and each of its Subsidiaries are not in violation of any
valid rights of others with respect to any of the foregoing.



Section 6.5 Litigation and Judgments. There is no action, suit, investigation, or
proceeding before or by any Governmental Authority or arbitrator pending, or to the knowledge of
the Borrower, threatened against or affecting the Borrower or any of its Subsidiaries, that would,
if adversely determined, have a material adverse effect on the business, condition (financial or
otherwise), operations, prospects, or properties of the Borrower or any of its Subsidiaries or the
ability of the Borrower to pay and perform the Obligations. There are no outstanding judgments
against the Borrower or any Subsidiary of the Borrower.





			
	 	 	 
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	 	Page 14





 


 









 





Section 6.6 Rights in Properties; Liens. The Borrower and each of its Subsidiaries have
good and indefeasible title to or valid leasehold interests in their respective Properties,
including the Properties reflected in the financial statements described in Section 6.2,
and none of the Properties of the Borrower or any Subsidiary is subject to any Lien, except as
permitted by Section 8.2.



Section 6.7 Enforceability. This Agreement constitutes, and the other Loan Documents to
which the Borrower is party, when delivered, shall constitute legal, valid, and binding obligations
of the Borrower, enforceable against the Borrower in accordance with their respective terms, except
as limited by bankruptcy, insolvency, or other laws of general application relating to the
enforcement of creditors’ rights.



Section 6.8 Approvals. No authorization, approval, or consent of, and no filing or
registration with, any Governmental Authority or third party is or will be necessary for the
execution, delivery, or performance by the Borrower of this Agreement and the other Loan Documents
to which the Borrower is or may become a party or the validity or enforceability thereof.



Section 6.9 Debt. The Borrower and its Subsidiaries have no Debt except as shown on the
financial statements set forth in the June 30, 2008 10Q submitted by the Borrower to the SEC.



Section 6.10 Taxes. The Borrower and each Subsidiary have filed all tax returns (federal,
state, and local) required to be filed, including all income, franchise, employment, property, and
sales tax returns, and have paid all of their respective liabilities for taxes, assessments,
governmental charges, and other levies that are due and payable. The Borrower knows of no pending
investigation of the Borrower or any Subsidiary by any taxing authority or of any pending but
unassessed tax liability of the Borrower or any Subsidiary.



Section 6.11 Use of Proceeds; Margin Securities. Neither the Borrower nor any Subsidiary
is engaged principally, or as one of its important activities, in the business of extending credit
for the purpose of purchasing or carrying margin stock (within the meaning of Regulations G, T, U,
or X of the Board of Governors of the Federal Reserve System), and no part
of the proceeds of any Advance will be used to purchase or carry any margin stock or to extend
credit to others for the purpose of purchasing or carrying margin stock.



Section 6.12 ERISA. The Borrower and each Subsidiary are in compliance in all material
respects with all applicable provisions of ERISA. Neither a Reportable Event nor a Prohibited
Transaction has occurred and is continuing with respect to any Plan. No notice of intent to
terminate a Plan has been filed, nor has any Plan been terminated. No circumstances exist which
constitute grounds entitling the PBGC to institute proceedings to terminate, or appoint a trustee
to administer, a Plan, nor has the PBGC instituted any such proceedings. Neither the Borrower nor
any ERISA Affiliate has completely or partially withdrawn from a Multiemployer Plan. The Borrower
and each ERISA Affiliate have met their minimum funding requirements under ERISA with respect to
all of their Plans, and the present value of all vested benefits under each Plan do not exceed the
fair market value of all Plan assets allocable to such benefits, as determined on the most recent
valuation date of the Plan and in accordance with ERISA. Neither the Borrower nor any ERISA
Affiliate has incurred any liability to the PBGC under ERISA.




			
	 	 	 
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	 	Page 15





 


 









 





Section 6.13 Disclosure. No statement, information, report, representation, or warranty
made by the Borrower in this Agreement or in any other Loan Document or furnished to the Lender in
connection with this Agreement or any of the transactions contemplated hereby contains any untrue
statement of a material fact or omits to state any material fact necessary to make the statements
herein or therein not misleading. There is no fact known to the Borrower which has a material
adverse effect, or which might in the future have a material adverse effect, on the business,
condition (financial or otherwise), operations, prospects, or properties of the Borrower or any
Subsidiary that has not been disclosed in writing to the Lender.



Section 6.14 Subsidiaries, Ventures, Etc. The Borrower has no Subsidiaries, Affiliates or
joint ventures or partnerships other than those listed on the Disclosure Schedule and the
Disclosure Schedule sets forth the jurisdiction of incorporation or organization of each such
Person and the percentage of the Borrower’s ownership interest in such Person. All of the
outstanding capital stock or other ownership interest of Person described in the Disclosure
Schedule has been validly issued, is fully paid, and is nonassessable.



Section 6.15 Agreements. Neither the Borrower nor any Subsidiary is a party to any
indenture, loan, or credit agreement, or to any lease or other agreement or instrument, or subject
to any charter or corporate or other organizational restriction which could have a material adverse
effect on the business, condition (financial or otherwise), operations, prospects, or properties of
the Borrower or any Subsidiary, or the ability of the Borrower to pay and perform its obligations
under the Loan Documents to which it is a party. Neither the Borrower nor any Subsidiary is in
default in any respect in the performance, observance, or fulfillment of any of the obligations,
covenants, or conditions contained in any agreement or instrument material to its business to which
it is a party.



Section 6.16 Compliance with Laws. Neither the Borrower nor any Subsidiary is in violation
in any material respect of any law, rule, regulation, order, or decree of any Governmental
Authority or arbitrator.



Section 6.17 Inventory. All inventory of the Borrower has been and will hereafter be
produced in compliance with all applicable laws, rules, regulations, and governmental standards,
including, without limitation, the minimum wage and overtime provisions of the Fair Labor Standards
Act, as amended (29 U.S.C. §§ 201-219), and the regulations promulgated thereunder.



Section 6.18 Investment Company Act. Neither the Borrower nor any Subsidiary is an
“investment company” within the meaning of the Investment Company Act of 1940, as amended.





			
	 	 	 
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Section 6.19 Public Utility Holding Company Act. Neither the Borrower nor any Subsidiary
is a “holding company” or a “subsidiary company” of a “holding company” or an “affiliate” of a
“holding company” or a “public utility” within the meaning of the Public Utility Holding Company
Act of 1935, as amended.



Section 6.20 Intellectual Property. All material intellectual property owned or used by
the Borrower, any Subsidiary or any Obligated Party is listed, together with application or
registration numbers, where applicable, in the Disclosure Schedule. Each Person identified
on the Disclosure Schedule owns, or is licensed to use, all Intellectual Property necessary to
conduct its business as currently conducted except for such Intellectual Property the failure of
which to own or license could not reasonably be expected to have a material adverse effect. Each
Person identified on the Disclosure Schedule will maintain the patenting and registration of all
Intellectual Property with the United States Patent and Trademark Office, the United States
Copyright Office, or other appropriate Governmental Authority and each Person identified on the
Disclosure Schedule will promptly patent or register, as the case may be, all new Intellectual
Property and notify the Lender in writing five (5) Business Days prior to filing any such new
patent or registration.



Section 6.21 Depository Relationship. To induce the Lender to establish the interest rates
provided for in the Note, the Borrower will use the Lender as its principal depository bank and the
Borrower covenants and agrees to maintain the Lender as its principal depository bank, including
for the maintenance of business, cash management, operating and administrative deposit accounts.



ARTICLE VII




Affirmative Covenants




The Borrower covenants and agrees that, as long as the Obligations or any part thereof are
outstanding or the Lender has any Commitment hereunder, the Borrower will perform and observe the
following positive covenants, unless the Lender shall otherwise consent in writing:



Section 7.1 Reporting Requirements. The Borrower will furnish to the Lender:




A. Annual Financial Statements. As soon as available, and in any event
within ninety (90) days after the end of each fiscal year of the Borrower, beginning
with the fiscal year ending December 31, 2008, (i) a copy of the annual audit report
of the Borrower and the Subsidiaries for such fiscal year containing, on a
consolidated and consolidating basis, balance sheets and statements of
income, retained earnings, and cash flow as at the end of such fiscal year and for
the 12-month period then ended, in each case setting forth in comparative form the
figures for the preceding fiscal year, all in reasonable detail and audited and
certified by Borrower’s independent certified public accountants to the effect that
such report has been prepared in accordance with GAAP and containing no material
qualifications or limitations on scope;





			
	 	 	 
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B. Quarterly Financial Statements. As soon as available, and in any event
within forty-five (45) days after the end of each of the quarters of each fiscal
year of the Borrower, a copy of an unaudited financial report of the Borrower and
its Subsidiaries as of the end of such fiscal quarter and for the portion of the
fiscal year then ended, containing, on a consolidated and consolidating basis,
balance sheets and statements of income, retained earnings, and cash flow, in each
case setting forth in comparative form the figures for the corresponding period of
the preceding fiscal year, all in reasonable detail certified by the chief financial
officer of the Borrower to have been prepared in accordance with GAAP and to fairly
and accurately present (subject to year-end audit adjustments) the financial
condition and results of operations of the Borrower and its Subsidiaries, on a
consolidated and consolidating basis, at the date and for the periods indicated
therein;




C. Borrowing Base Report. As soon as available, and in any event within
thirty (30) days after the end of each calendar quarter, a Borrowing Base Report, in
a form acceptable to the Lender, certified by the chief financial officer of the
Borrower;




D. Notice of Litigation. Promptly after the commencement thereof, notice of
all actions, suits, and proceedings before any Governmental Authority or arbitrator
affecting the Borrower or any Subsidiary which, if determined adversely to the
Borrower or such Subsidiary, would require Borrower or such Subsidiary to pay
$5,000,000.00 or more to the successful party;




E. Notice of Default. As soon as possible and in any event within ten (10)
days after the occurrence of each Default, a written notice setting forth the
details of such Default and the action that the Borrower has taken and proposes to
take with respect thereto;




F. Reports to Other Creditors. Promptly after the furnishing thereof,
copies of any statement or report furnished to any other party pursuant to the terms
of any indenture, loan, or credit or similar agreement and not otherwise required to
be furnished to the Lender pursuant to any other clause of this Section;




G. Collateral Account. As soon as available, and in any event within ten
(10) days after each calendar quarter, a copy of the quarterly statement pertaining
to the Collateral Account.



To the extent that the financial statements described in Subsections A and B above are generally
available to the public, Borrower shall be deemed in compliance with such Subsections.





			
	 	 	 
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Section 7.2 Maintenance of Existence; Conduct of Business. The Borrower will preserve and
maintain, and will cause each Subsidiary to preserve and maintain, its existence and all of its
leases, privileges, licenses, permits, franchises, qualifications, and rights that are necessary or
desirable in the ordinary conduct of its business. The Borrower will conduct, and will cause each
Subsidiary to conduct, its business in an orderly and efficient manner in accordance with good
business practices. Without limitation, the Borrower will not make (and will not permit any of its
Subsidiaries to make) any material change in its credit collection policies if such change would
materially impair the collectability of any Account, nor will it rescind, cancel or modify any
Account except in the ordinary course of business.



Section 7.3 Maintenance of Properties. The Borrower will maintain, keep, and preserve, and
cause each Subsidiary to maintain, keep, and preserve, all of its Properties (tangible and
intangible) necessary or useful in the proper conduct of its business in good working order and
condition.



Section 7.4 Taxes and Claims. The Borrower will pay or discharge, and will cause each
Subsidiary to pay or discharge, at or before maturity or before becoming delinquent (a) all taxes,
levies, assessments, and governmental charges imposed on it or its income or profits or any of its
property, and (b) all lawful claims for labor, material, and supplies, which, if unpaid, might
become a Lien upon any of its property; provided, however, that neither the Borrower nor any
Subsidiary shall be required to pay or discharge any tax, levy, assessment, or governmental charge
which is being contested in good faith by appropriate proceedings diligently pursued, and for which
adequate reserves have been established.



Section 7.5 Insurance. The Borrower will maintain, and will cause each of the Subsidiaries
to maintain, insurance with financially sound and reputable insurance companies in such amounts and
covering such risks as is usually carried by corporations engaged in similar businesses and owning
similar properties in the same general areas in which the Borrower and the Subsidiaries operate,
provided that in any event the Borrower will maintain and cause each Subsidiary to maintain
workmen’s compensation insurance, property insurance, comprehensive general liability insurance.



Section 7.6 Inspection Rights. At any reasonable time and from time to time, the Borrower
will permit, and will cause each Subsidiary to permit, representatives of the Lender to examine the
Collateral and conduct Collateral audits, to examine, copy, and make extracts from its books and
records, to visit and inspect its properties, and to discuss its business, operations, and
financial condition with its officers, employees, and independent certified public accountants.



Section 7.7 Keeping Books and Records. The Borrower will maintain, and will cause each
Subsidiary to maintain, proper books of record and account in which full, true, and correct entries
in conformity with GAAP shall be made of all dealings and transactions in relation to its business
and activities.



Section 7.8 Compliance with Laws. The Borrower will comply, and will cause each Subsidiary
to comply, in all material respects with all applicable laws, rules, regulations, orders, and
decrees of any Governmental Authority or arbitrator.



Section 7.9 Compliance with Agreements. The Borrower will comply, and will cause each
Subsidiary to comply, in all material respects with all agreements, contracts, and instruments
binding on it or affecting its properties or business.





			
	 	 	 
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Section 7.10 Further Assurances. The Borrower will, and will cause each Subsidiary to,
execute and deliver such further agreements and instruments and take such further action as may be
requested by the Lender to carry out the provisions and purposes of this Agreement and the other
Loan Documents and to create, preserve, and perfect the Liens of the Lender in the Collateral.



Section 7.11 ERISA. The Borrower will comply, and will cause each Subsidiary to comply,
with all minimum funding requirements, and all other material requirements, of ERISA, if
applicable, so as not to give rise to any liability thereunder.



ARTICLE VIII




Negative Covenants




The Borrower covenants and agrees that, as long as the Obligations or any part thereof are
outstanding or the Lender has any Commitment hereunder, the Borrower will perform and observe the
following negative covenants, unless the Lender shall otherwise consent in writing:



Section 8.1 Transactions With Affiliates. The Borrower will not enter into, and will not
permit any Subsidiary to enter into, any transaction, including, without limitation, the purchase,
sale, or exchange of property or the rendering of any service, with any Affiliate of the Borrower
or such Subsidiary, except in the ordinary course of and pursuant to the reasonable requirements of
the Borrower’s or such Subsidiary’s business and upon fair and reasonable terms no less favorable
to the Borrower or such Subsidiary than would be obtained in a comparable arm’s-length transaction
with a Person not an Affiliate of the Borrower or such Subsidiary.



Section 8.2 Nature of Business. The Borrower will not become a private company or de-list
its common stock from NASDAQ.



Section 8.3 Environmental Protection. The Borrower will not, and will not permit any of
its Subsidiaries to, (a) use (or permit any tenant to use) any of their respective properties or
assets for the handling, processing, storage, transportation, or disposal of any Hazardous
Material, (b) generate any Hazardous Material, (c) conduct any activity that is likely to cause a
Release or threatened Release of any Hazardous Material, or (d) otherwise conduct any activity or
use any of their respective properties or assets in any manner that is likely to violate any
Environmental Law or create any Environmental Liabilities for which the Borrower or any of its
Subsidiaries would be responsible.



Section 8.4 Accounting. The Borrower will not, and will not permit any of its Subsidiaries
to, change its fiscal year or make any change (a) in accounting treatment or
reporting practices, except as allowed by GAAP, or (b) in tax reporting treatment, except as
allowed by law and disclosed to the Lender.



Section 8.5 No Negative Pledge. The Borrower will not, and will not permit any Subsidiary
to, enter into or permit to exist any arrangement or agreement, other than pursuant to this
Agreement or any Loan Document, which directly or indirectly prohibits the Borrower or any
Subsidiary from creating or incurring a Lien on any of its assets.




			
	 	 	 
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ARTICLE IX




Financial Covenants




OMITTED




ARTICLE X




Default




Section 10.1 Events of Default. Each of the following shall be deemed an “Event of
Default”:




A. The Borrower shall fail to pay the Obligations or any part thereof shall not be
paid within five (5) days of when due or declared due.




B. The Borrower shall fail to provide to the Lender timely any notice of Default as
required by Section 7.1(g) of this Agreement or the Borrower shall breach
any provision of Article VIII of this Agreement.




C. Any representation or warranty made or deemed made by the Borrower or any
Obligated Party (or any of their respective officers) in any Loan Document or in any
certificate, report, notice, or financial statement furnished at any time in
connection with this Agreement shall be false, misleading, or erroneous in any
material respect when made or deemed to have been made.




D. The Borrower or any Obligated Party shall fail to perform, observe, or comply
with any covenant, agreement, or term contained in this Agreement or any other Loan
Document (other than as covered by Section 10.1(a) and (b) above), and such
failure continues for more than thirty (30) days following the date such failure
first began.




E. The Borrower, any Subsidiary, or any Obligated Party shall commence a voluntary
proceeding seeking liquidation, reorganization, or other relief with respect to
itself or its debts under any bankruptcy, insolvency, or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver, liquidator,
custodian, or other similar official of it or a substantial part of its property or
shall consent to any such relief or to the appointment of or taking possession by
any such official in an involuntary case or other proceeding commenced against it or
shall make a general assignment for the benefit of
creditors or shall generally fail to pay its debts as they become due or shall take
any corporate action to authorize any of the foregoing.




F. The Borrower, any Subsidiary, or any Obligated Party shall fail to pay when due
any principal of or interest on any Debt (other than the Obligations), or the
maturity of any such Debt shall have been accelerated, or any such Debt shall have
been required to be prepaid prior to the stated maturity thereof, or any event shall
have occurred that permits (or, with the giving of notice or lapse of time or both,
would permit) any holder or holders of such Debt or any Person acting on behalf of
such holder or holders to accelerate the maturity thereof or require any such
prepayment.




			
	 	 	 
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G. This Agreement or any other Loan Document shall cease to be in full force and
effect or shall be declared null and void or the validity or enforceability thereof
shall be contested or challenged by the Borrower, any Subsidiary, any Obligated
Party or any of their respective shareholders, or the Borrower or any Obligated
Party shall deny that it has any further liability or obligation under any of the
Loan Documents, or any lien or security interest created by the Loan Documents shall
for any reason cease to be a valid, first priority perfected security interest in
and lien upon any of the Collateral purported to be covered thereby.




H. If any Obligated Party is a corporation, partnership or other entity, such Person
shall be the subject of a bankruptcy or receivership proceeding or shall have
dissolved, liquidated or otherwise ceased doing business.




I. The Borrower, any of its Subsidiaries, or any Obligated Party, or any of their
properties, revenues, or assets, shall become subject to an order of forfeiture,
seizure, or divestiture (whether under RICO or otherwise) and the same shall not
have been discharged within thirty (30) days from the date of entry thereof.




J. An involuntary proceeding shall be commenced against the Borrower, any
Subsidiary, or any Obligated Party seeking liquidation, reorganization, or other
relief with respect to it or its debts under any bankruptcy, insolvency, or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian, or other similar official for it or a substantial
part of its property, and such involuntary proceeding shall remain undismissed and
unstayed for a period of thirty (30) days.




K. A final judgment or judgments for the payment of money in excess of Five Million
and No/100 Dollars ($5,000,000.00) in the aggregate shall be rendered by a court or
courts against the Borrower, any of its Subsidiaries, or any Obligated Party and the
same shall not be discharged (or provision shall not be made for such discharge), or
a stay of execution thereof shall not be procured, within thirty (30) days from the
date of entry thereof and the Borrower or the relevant Subsidiary or Obligated Party
shall not, within said period of thirty (30) days, or such longer period during
which execution of the same shall have been stayed, appeal therefrom and cause the
execution thereof to be stayed during such appeal.




L. The outstanding amount of the Advances, plus the outstanding Guidance Line
Obligations, shall at any time exceed: (i) eighty-five percent (85%) of the
Borrowing Base and the continuation thereof for five (5) calendar days, or (ii)
ninety percent (90%) of the Borrowing Base.



			
	 	 	 
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Section 10.2 Remedies Upon Default. If any Event of Default shall occur and be continuing,
the Lender may without notice terminate the Commitment and declare the Obligations or any part
thereof to be immediately due and payable, and the same shall thereupon become immediately due and
payable, without notice, demand, presentment, notice of dishonor, notice of acceleration, notice of
intent to accelerate, notice of intent to demand, protest, or other formalities of any kind, all of
which are hereby expressly waived by the Borrower; provided, however, that upon the occurrence of
an Event of Default under Section 10.1(e) or Section 10.1(m), the Commitment shall
automatically terminate, and the Obligations shall become immediately due and payable without
notice, demand, presentment, notice of dishonor, notice of acceleration, notice of intent to
accelerate, notice of intent to demand, protest, or other formalities of any kind, all of which are
hereby expressly waived by the Borrower. If any Event of Default shall occur and be continuing,
the Lender may cause the Collateral Account to be liquidated and the proceeds applied to the
Obligations in such order as Lender may determine, and may exercise all other rights and remedies
available to it in law or in equity, under the Loan Documents, or otherwise.



Section 10.3 Performance by the Lender. If the Borrower shall fail to perform any covenant
or agreement contained in any of the Loan Documents, the Lender may perform or attempt to perform
such covenant or agreement on behalf of the Borrower. In such event, the Borrower shall, at the
request of the Lender, promptly pay any amount expended by the Lender in connection with such
performance or attempted performance to the Lender, together with interest thereon at the Default
Rate from and including the date of such expenditure to but excluding the date such expenditure is
paid in full. Notwithstanding the foregoing, it is expressly agreed that the Lender shall not have
any liability or responsibility for the performance of any obligation of the Borrower under this
Agreement or any other Loan Document.



ARTICLE XI




Miscellaneous




Section 11.1 Expenses. The Borrower hereby agrees to pay on demand: (a) all costs and
expenses of the Lender in connection with the preparation, negotiation, execution, and delivery of
this Agreement and the other Loan Documents and any and all amendments, modifications, renewals,
extensions, and supplements thereof and thereto, including, without limitation, the reasonable fees
and expenses of legal counsel, advisors, consultants, and auditors for the Lender, (b) all costs
and expenses of the Lender in connection with any Default and the enforcement of this Agreement or
any other Loan Document, including, without limitation, the fees and expenses of legal counsel,
advisors, consultants, and auditors for the Lender, (c) all transfer, stamp, documentary, or other
similar taxes, assessments, or charges levied by any Governmental Authority in respect of this
Agreement or any of the other Loan Documents, (d) all costs, expenses, assessments, and other
charges incurred in connection with any filing, registration, recording, or perfection of any
security interest or Lien contemplated by this
Agreement or any other Loan Document, and (e) all other costs and expenses incurred by the Lender
in connection with this Agreement or any other Loan Document, any litigation, dispute, suit,
proceeding or action; the enforcement of its rights and remedies, protection of its interests in
bankruptcy, insolvency or other legal proceedings, including, without limitation, all costs,
expenses, and other charges (including the Lender’s internal charges) incurred in connection with
evaluating, observing, collecting, examining, auditing, appraising, selling, liquidating, or
otherwise disposing of the Collateral or other assets of the Borrower.




			
	 	 	 
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Section 11.2 INDEMNIFICATION. THE BORROWER SHALL INDEMNIFY THE LENDER AND EACH AFFILIATE
THEREOF AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS, AND AGENTS FROM, AND HOLD
EACH OF THEM HARMLESS AGAINST, ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES, PENALTIES,
JUDGMENTS, DISBURSEMENTS, COSTS, AND EXPENSES (INCLUDING ATTORNEYS’ FEES) TO WHICH ANY OF THEM MAY
BECOME SUBJECT WHICH DIRECTLY OR INDIRECTLY ARISE FROM OR RELATE TO (A) THE NEGOTIATION, EXECUTION,
DELIVERY, PERFORMANCE, ADMINISTRATION, OR ENFORCEMENT OF ANY OF THE LOAN DOCUMENTS, (B) ANY OF THE
TRANSACTIONS CONTEMPLATED BY THE LOAN DOCUMENTS, (C) ANY BREACH BY THE BORROWER OF ANY
REPRESENTATION, WARRANTY, COVENANT, OR OTHER AGREEMENT CONTAINED IN ANY OF THE LOAN DOCUMENTS, (D)
THE PRESENCE, RELEASE, THREATENED RELEASE, DISPOSAL, REMOVAL, OR CLEANUP OF ANY HAZARDOUS MATERIAL
LOCATED ON, ABOUT, WITHIN, OR AFFECTING ANY OF THE PROPERTIES OR ASSETS OF THE BORROWER OR ANY
SUBSIDIARY, (E) THE USE OR PROPOSED USE OF ANY LETTER OF CREDIT, (F) ANY AND ALL TAXES, LEVIES,
DEDUCTIONS, AND CHARGES IMPOSED ON THE LENDER OR ANY OF THE LENDER’S CORRESPONDENTS IN RESPECT OF
ANY LETTER OF CREDIT, OR (G) ANY INVESTIGATION, LITIGATION, OR OTHER PROCEEDING, INCLUDING, WITHOUT
LIMITATION, ANY THREATENED INVESTIGATION, LITIGATION, OR OTHER PROCEEDING, RELATING TO ANY OF THE
FOREGOING. WITHOUT LIMITING ANY PROVISION OF THIS AGREEMENT OR OF ANY OTHER LOAN DOCUMENT, IT IS
THE EXPRESS INTENTION OF THE PARTIES HERETO THAT EACH PERSON TO BE INDEMNIFIED UNDER THIS SECTION
SHALL BE INDEMNIFIED FROM AND HELD HARMLESS AGAINST ANY AND ALL LOSSES, LIABILITIES, CLAIMS,
DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS, AND EXPENSES (INCLUDING ATTORNEYS’ FEES)
ARISING OUT OF OR RESULTING FROM THE SOLE CONTRIBUTORY OR ORDINARY NEGLIGENCE OF SUCH PERSON.



Section 11.3 Limitation of Liability. Neither the Lender nor any Affiliate, officer,
director, employee, attorney, or agent of the Lender shall have any liability with respect to, and
the Borrower hereby waives, releases, and agrees not to sue any of them upon, any claim for any
special, indirect, incidental, or consequential damages suffered or incurred by the Borrower in
connection with, arising out of, or in any way related to, this Agreement or any of the other Loan
Documents, or any of the transactions contemplated by this Agreement or any of the other Loan
Documents. The Borrower hereby waives, releases, and agrees not to sue the Lender or any of the
Lender’s Affiliates, officers, directors, employees, attorneys, or agents for punitive damages in
respect of any claim in connection with, arising out of, or in any way related to, this
Agreement or any of the other Loan Documents, or any of the transactions contemplated by this
Agreement or any of the other Loan Documents.



Section 11.4 No Duty. All attorneys, accountants, appraisers, and other professional
Persons and consultants retained by the Lender shall have the right to act exclusively in the
interest of the Lender and shall have no duty of disclosure, duty of loyalty, duty of care, or
other duty or obligation of any type or nature whatsoever to the Borrower or any of the Borrower’s
shareholders or any other Person.



			
	 	 	 
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Section 11.5 Lender Not Fiduciary. The relationship between the Borrower and the Lender is
solely that of debtor and creditor, and the Lender has no fiduciary or other special relationship
with the Borrower, and no term or condition of any of the Loan Documents shall be construed so as
to deem the relationship between the Borrower and the Lender to be other than that of debtor and
creditor.



Section 11.6 Omitted.



Section 11.7 No Waiver; Cumulative Remedies. No failure on the part of the Lender to
exercise and no delay in exercising, and no course of dealing with respect to, any right, power, or
privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power, or privilege under this Agreement preclude any other or further
exercise thereof or the exercise of any other right, power, or privilege. The rights and remedies
provided for in this Agreement and the other Loan Documents are cumulative and not exclusive of any
rights and remedies provided by law.



Section 11.8 Successors and Assigns. This Agreement is binding upon and shall inure to the
benefit of the Lender and the Borrower and their respective successors and assigns, except that the
Borrower may not assign or transfer any of its rights or obligations under this Agreement without
the prior written consent of the Lender.



Section 11.9 Survival. All representations and warranties made in this Agreement or any
other Loan Document or in any document, statement, or certificate furnished in connection with this
Agreement shall survive the execution and delivery of this Agreement and the other Loan Documents,
and no investigation by the Lender or any closing shall affect the representations and warranties
or the right of the Lender to rely upon them. Without prejudice to the survival of any other
obligation of the Borrower hereunder, the obligations of the Borrower under subsections 11.1, and
11.2 shall survive repayment of the Note and termination of the Commitment.



Section 11.10 ENTIRE AGREEMENT; AMENDMENT. THIS AGREEMENT, THE NOTE, AND THE OTHER LOAN
DOCUMENTS REFERRED TO HEREIN EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND
SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER
WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES
HERETO. THERE ARE NO ORAL AGREEMENTS
AMONG THE PARTIES HERETO. The provisions of this Agreement and the other Loan Documents to which
the Borrower is a party may be amended or waived only by an instrument in writing signed by the
parties hereto.



			
	 	 	 
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Section 11.11 Notices. Unless otherwise expressly provided herein, all notices and other
communications provided for hereunder shall be in writing (including by facsimile transmission) and
mailed, faxed or delivered, to the address, facsimile number or subject to the last sentence hereof
electronic mail address specified for notices below the signatures hereon or to such other address
as shall be designated by such party in a notice to the other parties. All such other notices and
other communications shall be deemed to have been given or made upon the earliest to occur of
(i) actual receipt by the intended recipient or (ii) (A) if delivered by hand or courier, when
signed for by the designated recipient; (B) if delivered by mail, four business days after deposit
in the mail, postage prepaid; (C) if delivered by facsimile when sent and receipt has been
confirmed by telephone; and (D) if delivered by electronic mail (which form of delivery is subject
to the provisions of the last sentence below) when delivered; provided, however, that notices and
other communications pursuant to Article II shall not be effective until actually received
by the Lender. Electronic mail and intranet websites may be used only to distribute only routine
communications, such as financial statements and other information, and to distribute Loan
Documents for execution by the parties thereto, and may not be used for any other purpose.



Section 11.12 Governing Law; Venue; Service of Process. This Agreement shall be governed
by and construed in accordance with the laws of the State of Texas and the applicable laws of the
United States of America. This Agreement has been entered into in Dallas County, Texas, and it
shall be performable for all purposes in Dallas County, Texas. Any action or proceeding against
the Borrower under or in connection with any of the Loan Documents may be brought in any state or
federal court in Dallas County, Texas. The Borrower hereby irrevocably (a) submits to the
nonexclusive jurisdiction of such courts, and (b) waives any objection it may now or hereafter have
as to the venue of any such action or proceeding brought in any such court or that any such court
is an inconvenient forum. The Borrower agrees that service of process upon it may be made by
certified or registered mail, return receipt requested, at its address specified or determined in
accordance with the provisions of Section 11.12. Nothing herein or in any of the other
Loan Documents shall affect the right of the Lender to serve process in any other manner permitted
by law or shall limit the right of the Lender to bring any action or proceeding against the
Borrower or with respect to any of its property in courts in other jurisdictions. Any action or
proceeding by the Borrower against the Lender shall be brought only in a court located in Dallas
County, Texas.



Section 11.13 Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall constitute one and the
same instrument.



Section 11.14 Severability. Any provision of this Agreement held by a court of competent
jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder of this
Agreement and the effect thereof shall be confined to the provision held to be invalid or illegal.



Section 11.15 Headings. The headings, captions, and arrangements used in this Agreement
are for convenience only and shall not affect the interpretation of this Agreement.



Section 11.16 Participations; Etc. The Lender shall have the right at any time and from
time to time to grant participations in, and sell and transfer, the Obligations and any Loan
Documents. Each actual or proposed participant or assignee, as the case may be, shall be entitled
to receive all information received by the Lender regarding the Borrower and its Subsidiaries,
including, without limitation, information required to be disclosed to a participant or assignee
pursuant to Banking Circular 181 (Rev., August 2, 1984), issued by the Comptroller of the Currency
(whether the actual or proposed participant or assignee is subject to the circular or not).




			
	 	 	 
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Section 11.17 Construction. The Borrower and the Lender acknowledge that each of them has
had the benefit of legal counsel of its own choice and has been afforded an opportunity to review
this Agreement and the other Loan Documents with its legal counsel and that this Agreement and the
other Loan Documents shall be construed as if jointly drafted by the Borrower and the Lender.



Section 11.18 Independence of Covenants. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not permitted by any of such
covenants, the fact that it would be permitted by an exception to, or be otherwise within the
limitations of, another covenant shall not avoid the occurrence of a Default if such action is
taken or such condition exists.



Section 11.19 WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
BORROWER HEREBY IRREVOCABLY AND EXPRESSLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR
RELATING TO ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY OR THE ACTIONS OF
LENDER IN THE NEGOTIATION, ADMINISTRATION, OR ENFORCEMENT THEREOF.




Section 11.20 Arbitration.




A. Upon the demand of any party, any dispute shall be resolved by binding
arbitration (except as set forth in Section 11.20(e) below) in accordance with the
terms of this Agreement or the other Loan Documents. Any party may by summary
proceedings bring an action in court to compel arbitration of a Dispute. Any party
who fails or refuses to submit to arbitration following a lawful demand by any other
party shall bear all costs and expenses incurred by such other party in compelling
arbitration of any Dispute.




B. Arbitration proceedings shall be administered by the American Arbitration
Association (“AAA”) or such other administrator as the parties shall mutually agree
upon in accordance with the AAA Commercial Arbitration Rules. All Disputes
submitted to arbitration shall be resolved in accordance with the Federal
Arbitration Act (Title 9 of the United States Code), notwithstanding any
conflicting choice of law provision in any of the foregoing documents. The
arbitration shall be conducted at a location in Texas selected by the AAA or other
administrator. If there is any inconsistency between the terms hereof and any such
rules, the terms and procedures set forth herein shall control.. All statutes of
limitation applicable to any Dispute shall apply to any arbitration proceeding. All
discovery activities shall be expressly limited to matters directly relevant to the
Dispute being arbitrated. Judgment upon any award rendered in an arbitration may be
entered in any court having jurisdiction; provided however, that nothing contained
herein shall be deemed to be a waiver by any party that is a bank of the protections
afforded to it under Section 91 of Title 12 of the United States Code or any similar
applicable state law.



			
	 	 	 
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C. No provision hereof shall limit the right of any party to exercise self-help
remedies such as setoff, foreclosure against or sale of any real or personal
property collateral or security, or to obtain provisional or ancillary remedies,
including without limitation, injunctive relief, sequestration, attachment,
garnishment or the appointment of a receiver from a court of competent jurisdiction
before, after or during the pendency of any arbitration or other proceeding. The
exercise of any such remedy shall not waive the right of any party to compel
arbitration hereunder.




D. Arbitrators must be active members of the Texas State Bar with expertise in the
substantive law applicable to the subject matter of the Dispute. Arbitrators are
empowered to resolve Disputes by summary rulings in response to motions filed prior
to the final arbitration hearing. Arbitrators (i) shall resolve all Disputes in
accordance with the substantive law of the State of Texas, (ii) may grant any remedy
or relief that a court of the State of Texas could order or grant within the scope
hereof and such ancillary relief as is necessary to make effective any award, and
(iii) shall have the power to award recovery of all costs and fees, to impose
sanctions and to take such other actions as they deem necessary to the same extent a
judge could pursuant to the Federal Rules of Civil Procedure, the Texas Rules of
Civil Procedure or other applicable law. Any Dispute in which the amount in
controversy is $5,000,000 or less shall be decided by a single arbitrator who shall
not render an award of greater than $5,000,000 (including damages, costs, fees and
expenses). By submission to a single arbitrator, each party expressly waives any
right or claim to recover more than $5,000,000. Any Dispute in which the amount in
controversy exceeds $5,000,000 shall be decided by majority vote of a panel of three
arbitrators; provided however, that all three arbitrators must actively participate
in all hearings and deliberations.




E. Notwithstanding anything herein to the contrary, in any arbitration in which the
amount in controversy exceeds $25,000,000, the arbitrators shall be required to make
specific, written findings of fact and conclusions of law. In such arbitrations (i)
the arbitrators shall not have the power to make any award which is not supported by
substantial evidence or which is based on legal error, (ii) an award shall not be
binding upon the parties unless the findings of fact are supported by substantial
evidence and the conclusions of law are not erroneous
under the substantive law of the State of Texas, and (iii) the parties shall have in
addition to the grounds referred to in the Federal Arbitration Act for vacating,
modifying or correcting an award the right to judicial review of (1) whether the
findings of fact rendered by the arbitrators are supported by substantial evidence,
and (2) whether the conclusions of law are erroneous under the substantive law of
the State of Texas. Judgment confirming an award in such a proceeding may be
entered only if a court determines the award is supported by substantial evidence
and not based on legal error under the substantive law of the State of Texas.




			
	 	 	 
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F. To the maximum extent practicable, the AAA, the arbitrators and the parties shall
take all action required to conclude any arbitration proceeding within 180 days of
the filing of the Dispute with the AAA. No arbitrator or other party to an
arbitration proceeding may disclose the existence, content or results thereof,
except for disclosures of information by a party required in the ordinary course of
its business, by applicable law or regulation, or to the extent necessary to
exercise any judicial review rights set forth herein. If more than one agreement for
arbitration by or between the parties potentially applies to a Dispute, the
arbitration provision most directly related to the foregoing documents or the
subject matter of the Dispute shall control. If any provision of this Agreement
shall be held to be prohibited by or invalid under applicable law, such provision
shall be ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or any remaining provisions of this
Agreement. This arbitration provision shall survive termination, amendment or
expiration of any of the foregoing documents or any relationship between the
parties.




G. Lender and Borrower hereby agree to keep all Disputes and arbitration proceedings
strictly confidential, provided, however, that Lender and Borrower may disclose such
confidential information as is necessary in any litigation between Lender and
Borrower or as required by applicable law and, on a confidential basis, to
accountants, attorneys and other consultants in the ordinary course of business.



Section 11.21 Additional Interest Provision. It is expressly stipulated and agreed to be
the intent of the Borrower and the Lender at all times to comply strictly with the applicable Texas
law governing the maximum rate or amount of interest payable on the indebtedness evidenced by the
Note, any Loan Document, and the Related Indebtedness (or applicable United States federal law to
the extent that it permits the Lender to contract for, charge, take, reserve or receive a greater
amount of interest than under Texas law). If the applicable law is ever judicially interpreted so
as to render usurious any amount (i) contracted for, charged, taken, reserved or received pursuant
to the Note, any of the other Loan Documents or any other communication or writing by or between
the Borrower and the Lender related to the transaction or transactions that are the subject matter
of the Loan Documents, (ii) contracted for, charged, taken, reserved or received by reason of the
Lender’s exercise of the option to accelerate the maturity of the Note and/or any and all
indebtedness paid or payable by the Borrower to the Lender pursuant to any Loan Document other than
the Note (such other indebtedness being referred to in this Section as the “Related
Indebtedness”), or (iii) the Borrower will have paid or
the Lender will have received by reason of any voluntary prepayment by the Borrower of the Note
and/or the Related Indebtedness, then it is the Borrower’s and the Lender’s express intent that all
amounts charged in excess of the Maximum Lawful Rate shall be automatically canceled, ab
initio, and all amounts in excess of the Maximum Lawful Rate theretofore collected by the
Lender shall be credited on the principal balance of the Note and/or the Related Indebtedness (or,
if the Note and all Related Indebtedness have been or would thereby be paid in full, refunded to
the Borrower), and the provisions of the Note and the other Loan Documents shall immediately be
deemed reformed and the amounts thereafter collectible hereunder and thereunder reduced, without
the necessity of the execution of any new document, so as to comply with the applicable law, but so
as to permit the recovery of the fullest amount otherwise called for hereunder




			
	 	 	 
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 and thereunder;
provided, however, if the Note has been paid in full before the end of the stated term of any the
Note, then the Borrower and the Lender agree that the Lender shall, with reasonable promptness
after the Lender discovers or is advised by the Borrower that interest was received in an amount in
excess of the Maximum Lawful Rate, either refund such excess interest to the Borrower and/or credit
such excess interest against the Note and/or any Related Indebtedness then owing by the Borrower to
the Lender. The Borrower hereby agrees that as a condition precedent to any claim seeking usury
penalties against the Lender, the Borrower will provide written notice to the Lender, advising the
Lender in reasonable detail of the nature and amount of the violation, and the Lender shall have
sixty (60) days after receipt of such notice in which to correct such usury violation, if any, by
either refunding such excess interest to the Borrower or crediting such excess interest against the
Note and/or the Related Indebtedness then owing by the Borrower to the Lender. All sums contracted
for, charged, taken, reserved or received by the Lender for the use, forbearance or detention of
any debt evidenced by the Note and/or the Related Indebtedness shall, to the extent permitted by
applicable law, be amortized or spread, using the actuarial method, throughout the stated term of
the Note and/or the Related Indebtedness (including any and all renewal and extension periods)
until payment in full so that the rate or amount of interest on account of the Note and/or the
Related Indebtedness does not exceed the Maximum Lawful Rate from time to time in effect and
applicable to the Note and/or the Related Indebtedness for so long as debt is outstanding. In no
event shall the provisions of Chapter 346 of the Texas Finance Code (which regulates certain
revolving credit loan accounts and revolving triparty accounts) apply to the Note and/or any of the
Related Indebtedness. Notwithstanding anything to the contrary contained herein or in any of the
other Loan Documents, it is not the intention of the Lender to accelerate the maturity of any
interest that has not accrued at the time of such acceleration or to collect unearned interest at
the time of such acceleration.



Section 11.22 Ceiling Election. To the extent that Lender is relying on Chapter 303 of the
Texas Finance Code to determine the Maximum Lawful Rate payable on the Note and/or any other
portion of the Indebtedness, the Lender will utilize the weekly ceiling from time to time in effect
as provided in such Chapter 303, as amended. To the extent United States federal law permits the
Lender to contract for, charge, take, receive or reserve a greater amount of interest than under
Texas law, Lender will rely on United States federal law instead of such Chapter 303 for the
purpose of determining the Maximum Lawful Rate. Additionally, to the extent permitted by
applicable law now or hereafter in effect, the Lender may, at its option and from time to time,
utilize any other method of establishing the Maximum Lawful Rate under such Chapter 303 or under
other applicable law by giving notice, if required, to the Borrower as provided by applicable law
now or hereafter in effect.



(Signature page follows)





			
	 	 	 
	LOAN AGREEMENT
	 	Page 30






 


 









 





IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and
year first above written.



	 	 	 	 	 
	 	
BORROWER:



INTERPHASE CORPORATION,

a Texas corporation

 	 
	 	By:  	/s/ Thomas N. Tipton, Jr.
 	 
	 	 	Name:  	Thomas N. Tipton, Jr. 	 
	 	 	Title:  	Chief Financial Officer 	 


Address for Notices:

2901 Dallas Parkway

Suite 200

Plano, Texas 75093

Telephone No.: (214) 654-5368

Fax No.: (214) 654-5500

Attention: Thomas N. Tipton, Jr.

e-mail: ttipton@iphase.com




	 	 	 	 	 
	 	LENDER:



TEXAS CAPITAL BANK,

NATIONAL ASSOCIATION

 	 
	 	By:  	/s/ Richard L. Rogers
 	 
	 	 	Name:  	Richard L. Rogers 	 
	 	 	Title:  	Senior Vice President 	 


Address for Notices:

2100 McKinney Avenue

Suite 900

Dallas, Texas 75201

Telephone No.: (214) 932-6854

Fax No.: (214) 932-6607

Attention: Richard L. Rogers

e-mail: rick.rogers@texascapitalbank.com




			
	 	 	 
	LOAN AGREEMENT
	 	Page 31






 


 









 







INDEX TO SCHEDULES




	 	 	 	 	 
	Description of Schedules	 	Article/Section	 
	 
	 	 	 	 
	Conditions Precedent
	 	 	5.1	(h)
	Disclosure Schedule
	 	VI	 






			
	 	 	 
	LOAN AGREEMENT
	 	Page 32