Document:

<PAGE>   1
                                                                     EXHIBIT 4.3

                          REGISTRATION RIGHTS AGREEMENT

         This Registration Rights Agreement ("Agreement") is made and entered
into as of June 1, 2001, by and among TeraForce Technology Corporation, a
Delaware corporation (the "Company") and Oscar S. Wyatt, Jr, an individual
residing in Harris County, Texas ("Wyatt"), Morton A. Cohn, an individual
residing in Harris County, Texas ("Cohn") and Fayez Sarofim, an individual
residing in Harris County, Texas ("Sarofim") (Wyatt, Cohn, and Sarofim are
referred to herein collectively as the "Investors"). In order to induce
Investors to enter into that certain Reimbursement Agreement dated as of even
date hereof (the "Reimbursement Agreement") with the Company, whereby Investors
issued a letter of credit securing payment of a bank loan to the Company of
which this Agreement is an exhibit, the Company has agreed to issue to the
Investors the Warrants (as hereafter defined) and to provide the registration
rights set forth in this Agreement.

         The parties hereby agree as follows:

         1. Definitions

         As used in this Agreement, the following capitalized terms shall have
the following meanings:

         Board: shall mean the Board of Directors of the Company.

         Common Stock: shall mean the common stock, par value $0.01 per share,
of the Company.

         Effective Registration Statement: shall mean the currently effective
registration statement covering the Registered Shares on Form S-3 filed with the
Securities and Exchange Commission on April 13, 2001 (Registration No.
333-58970) declared effective on April 27, 2001, including the Prospectus
included in such registration statement, amendments (including post-effective
amendments) and supplements to such registration statement, and all exhibits to
and all material incorporated by reference in such registration statement.

         Exchange Act: shall mean the Securities Exchange Act of 1934, as from
time to time amended.

         Holder: shall mean Investors, or any permitted assignee of Investors.
For purposes of this Agreement, the Holder of Warrants shall also be deemed to
be the Holder of the Common Stock into which such Warrants may be exercised.

         Person: shall mean a natural person, partnership, corporation, business
trust, association, joint venture or other entity or a government or agency or
political subdivision thereof.

         Prospectus: shall mean the Prospectus included in any Registration
Statement, as supplemented by any and all Prospectus supplements and as amended
by any and all post-effective amendments and including all material incorporated
by reference in such Prospectus.

         Registered Shares: shall mean the warrant shares issuable upon exercise
of those certain Amended and Restated Warrants, of even date herewith, issued to
Investors (more specifically to

<PAGE>   2

Wyatt, for 500,000 warrant shares, to Cohn for 150,000 warrant shares and to
Sarofim for 150,000 warrant shares) pursuant to the Reimbursement Agreement.

         Registration: shall mean a piggyback registration described in Section
2(a) hereof.

         Registration Expenses: shall mean the out-of-pocket expenses of a
Registration, including:

                  (a) all registration and filing fees (including fees with
         respect to filings required to be made with the National Association of
         Securities Dealers, Inc.);

                  (b) fees and expenses of compliance with securities or blue
         sky laws (including fees and disbursements of counsel for the
         underwriters in connection with blue sky qualifications of the
         Registrable Securities);

                  (c) printing, messenger, telephone and delivery expenses;

                  (d) fees and disbursements of counsel for the Company; and

                  (e) fees and disbursements of all independent certified public
         accountants of the Company incurred specifically in connection with
         such Registration.

         Registrable Securities: shall mean (a) the shares of Common Stock
issued or issuable (directly or indirectly) upon exercise of Warrants, and (b)
any securities issued or issuable with respect to such Common Stock by way of a
stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or reorganization.

         Registration Statement: shall mean any registration statement which
covers Registrable Securities pursuant to the provisions of this Agreement,
including the Prospectus included in such registration statement, amendments
(including post-effective amendments) and supplements to such registration
statement, and all exhibits to and all material incorporated by reference in
such registration statement.

         Replacement Warrants: shall mean these certain Warrants to purchase
Common Stock of the Company which were originally issued to the Investors and
repriced to $0.75 per share pursuant to the Reimbursement Agreement.

         Securities Act: shall mean the Securities Act of 1933, as from time to
time amended.

         SEC: shall mean the Securities and Exchange Commission.

         Underwritten Public Offering: shall mean a public offering in which
Common Stock of the Company is offered and sold on a firm commitment basis
through one or more underwriters, pursuant to (a) an effective registration
statement under the Securities Act and (b) an underwriting agreement between the
Company and such underwriters.

                                      -2-
<PAGE>   3

         Warrants: shall mean those certain Warrants, of even date herewith,
issued to the Investors, pursuant to the Reimbursement Agreement, having an
exercise price of $0.75 per share, but shall not include the Replacement
Warrants.

         2. Registrations

         (a) Piggyback Registrations

                  Unless all of the Registrable Securities are covered by
effective registration statements, or if the shares issuable upon exercise of
the Warrants may be re-sold pursuant to Rule 144(k) under the Securities Act,
each time the Company decides to file a Registration Statement under the
Securities Act (other than on Forms S-4 or S-8 or any successor form for the
registration of securities issued or to be issued in connection with a merger or
acquisition or employee benefit plan) covering the offer and sale by it, or
other holders of the Company's securities who may demand registration of such
securities of any of its securities for money, the Company shall give written
notice thereof to all Holders of Registrable Securities. The Company shall
include in such Registration Statement such shares of Registrable Securities for
which it has received written requests to register such shares within 30 days
after such written notice has been given. If the Registration Statement is to
cover an Underwritten Public Offering, such Registrable Securities shall be
included in the underwriting on the same terms and conditions as the securities
otherwise being sold through the underwriters.

         If in the good faith judgment of the managing underwriter in any
Underwritten Public Offering, the inclusion of all of the shares of Registrable
Securities and any other Common Stock requested to be registered would interfere
with the successful marketing of a smaller number of such shares, then the
number of shares of Registrable Securities and other Common Stock to be included
in the offering shall be made in accordance with the following priorities: (1)
first, the shares to be sold for the account of the Company, (2) second, the
number of shares to be registered for the Holder reduced on a pro-rata basis
based on the number of shares to be sold by the Holder as compared to the number
of shares to be sold by all other selling stockholders.

         All shares so excluded from the underwritten public offering shall be
withheld from the market by the Holders thereof for a period (not to exceed 30
days prior to the effective date and 90 days thereafter) that the managing
underwriter reasonably determines is necessary in order to effect the
Underwritten Public Offering.

         The Company may decline to file a Registration Statement after giving
notice to any Holder pursuant to this Section 2(a), or withdraw a Registration
Statement after filing and after such notice, but prior to the effectiveness
thereof, provided, that the Company shall promptly notify each Holder in writing
of any such action and provided, further, that the Company shall bear all
expenses which would otherwise have been charged to the Holder in connection
with such withdrawn Registration Statement.

                                      -3-
<PAGE>   4

         3. Registration Procedures

         If and whenever the Company is required to register Registrable
Securities, the Company will use its commercially reasonable best efforts to
effect such registration to permit the sale of such Registrable Securities in
accordance with the intended plan of distribution thereof, and pursuant thereto
the Company will as expeditiously as possible:

                  (a) prepare and file with the SEC as soon as practicable a
         Registration Statement with respect to such Registrable Securities and
         use its commercially reasonable best efforts to cause such Registration
         Statement to become effective and remain effective until the
         Registrable Securities covered by such Registration Statement have been
         sold;

                  (b) prepare and file with the SEC such amendments and
         post-effective amendments to the Registration Statement, and such
         supplements to the Prospectus, as may be requested by any Holder of
         Registrable Securities or any underwriter of Registrable Securities or
         as may be required by the rules, regulations or instructions applicable
         to the registration form used by the Company or by the Securities Act
         or rules and regulations thereunder to keep the Registration Statement
         effective until all Registrable Securities covered by such Registration
         Statement are sold in accordance with the intended plan of distribution
         set forth in such Registration Statement or supplement to the
         Prospectus, unless such Registrable Securities may otherwise be re-sold
         pursuant to Rule 144(k) under the Securities Act;

                  (c) deliver to each selling Holder of Registrable Securities
         and the underwriters, if any, without charge, as many copies of each
         Prospectus (and each preliminary Prospectus) as such Persons may
         reasonably request (the Company hereby consenting to the use of each
         such Prospectus (or preliminary Prospectus) by each of the selling
         Holders of Registrable Securities and the underwriters, if any, in
         connection with the offering and sale of the Registrable Securities
         covered by such Prospectus (or preliminary Prospectus); and

                  (d) prior to any public offering of Registrable Securities,
         register or qualify or cooperate with the selling Holders of
         Registrable Securities, the underwriters, if any, and their respective
         counsel in connection with the registration or qualification of such
         Registrable Securities for offer and sale under the securities or blue
         sky laws of such jurisdictions as such selling Holders or underwriters
         may designate in writing and do anything else necessary or advisable to
         enable the disposition in such jurisdictions of the Registrable
         Securities covered by the Registration Statement; provided that the
         Company shall not be required to qualify generally to do business in
         any jurisdiction where it is not then so qualified or to take any
         action which would subject it to general service of process in any such
         jurisdiction where it is not then so subject.

         4. Registration Expenses

         The Registration Expenses of all Registrations shall be borne by the
Company, except that (i) the fees and disbursements of any counsel to the
selling security holders shall be paid by such holders if such security holders
are unwilling to be represented by counsel to the Company and (ii)

                                      -4-
<PAGE>   5

the selling security holders shall pay all incremental federal and state filing
fees incurred as a result of the inclusion of the Registrable Securities in a
Registration pursuant to Section 2(a).

         5. Requirements for Participation in Underwritten Public Offerings

         No person may participate in any Underwritten Public Offering pursuant
to a Registration initiated by the Company hereunder unless such Person (a)
agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Company and (b) completes and executes
all questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements;
provided, that the term of such underwriting arrangement in connection with the
sale of Registrable Securities shall be no less favorable than the terms
afforded to any other holder of securities participating in the Underwritten
Public Offering.

         6. Suspension of Sales

         Upon receipt of written notice from the Company that a Registration
Statement or Prospectus contains an untrue statement or alleged untrue statement
of material fact or an omission or alleged omission to state a material fact
necessary to make the statements made therein not misleading, each Holder of
Registrable Securities shall forthwith discontinue disposition of Registrable
Securities until such Holder has received copies of a supplemented or amended
Prospectus, or until such Holder is advised in writing by the Company that the
use of the Prospectus may be resumed, and, if so directed by the Company, such
Holder shall deliver to the Company (at the Company's expense) all copies, other
than permanent file copies then in such Holder's possession, of the Prospectus
covering such Registrable Securities current at the time of receipt of such
notice.

         7. Indemnification

         (a) To the fullest extent permitted by law, the Company will, and
hereby does, indemnify, hold harmless and defend each of the Holders who holds
such Registrable Securities and the Registered Shares, the directors, officers,
partners, employees, agents of, and each person, if any, who controls any Holder
within the meaning of the Securities Act or the Exchange Act (each, an
"Indemnified Person"), against any losses, claims, damages, liabilities,
judgments, fines, penalties, charges, costs, attorneys' fees, amounts paid in
settlement or expenses, joint or several, (collectively, "Claims") incurred in
investigating, preparing or defending any action, claim, suit, inquiry,
proceeding, investigation or appeal taken from the foregoing by or before any
court or governmental, administrative or other regulatory agency, body or the
SEC, whether pending or threatened, whether or not an indemnified party is or
may be a party thereto ("Indemnified Damages"), to which any of them may become
subject to the extent such Claims (or actions or proceedings, whether commenced
or threatened, in respect thereof) are attributable to: (i) any untrue statement
or alleged untrue statement of a material fact in a Registration Statement or
the Effective Registration Statement or any post-effective amendment thereto or
in any filing made in connection with the qualification of the offering under
the securities or other "blue sky" laws of any jurisdiction in which Registrable
Securities or Registered Shares are offered ("Blue Sky Filing"), or the omission
or alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which the statements therein were made, not

                                      -5-
<PAGE>   6
misleading, (ii) any untrue statement or alleged untrue statement of a
material fact contained in any preliminary Prospectus (but only to the extent
that the Company specifically authorizes in writing the use of such preliminary
Prospectus by the Holder) or the final Prospectus (as amended or supplemented,
if the Company files any amendment thereof or supplement thereto with the SEC)
or the omission or alleged omission to state therein any material fact necessary
to make the statements made therein, in light of the circumstances under which
the statements therein were made, not misleading, or (iii) any violation or
alleged violation by the Company of the Securities Act, the Exchange Act, any
state securities law, or any rule or regulation thereunder relating to the offer
or sale of the Registrable Securities or the Registered Shares pursuant to a
Registration Statement (the matters in the foregoing clauses (i) through (iii)
being, collectively, "Violations"). Notwithstanding anything to the contrary
contained herein, the indemnification provisions contained in this Section 7(a):
(i) shall not apply to a Claim by an Indemnified Person arising out of or based
upon a Violation which occurs in reliance upon and in conformity with written
information furnished to the Company by such Indemnified Person or underwriter
for such Indemnified Person for use in connection with the preparation of the
Registration Statement or any such amendment thereof or supplement thereto; (ii)
with respect to any Prospectus, shall not inure to the benefit of any such
person from whom the person asserting any such Claim purchased the Registrable
Securities or the Registered Shares that are the subject thereof (or to the
benefit of any person controlling such person) if the Indemnified Person was
promptly advised in writing not to use the incorrect Prospectus prior to the use
giving rise to a Violation and such Indemnified Person, notwithstanding such
advice, used it; (iii) shall not be available to the extent such Claim is based
on a failure of the Holder to deliver or to cause to be delivered the Prospectus
made available by the Company or any Violation by the Holder of the Plan of
Distribution set forth in the Prospectus; (iv) shall not apply to amounts paid
in settlement of any Claim if such settlement is effected without the prior
written consent of the Company, which consent shall not be unreasonably
withheld; and (v) with respect to any preliminary Prospectus shall not inure to
the benefit of any Indemnified Person if the untrue statement or omission of
material fact contained in the preliminary Prospectus was corrected on a timely
basis in the Prospectus, as then amended or supplemented. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of the Indemnified Person.

         (b) To the fullest extent permitted by law, in connection with the
Registration Statement or the Effective Registration Statement in which a Holder
is participating, each such Holder agrees to indemnify, hold harmless and
defend, to the same extent and in the same manner as is set forth in Section
7(d), the Company, each of its directors, each of its officers who signs the
Registration Statement, each person, if any, who controls the Company within the
meaning of the Securities Act or the Exchange Act (collectively an "Indemnified
Party"), against any Claim or Indemnified Damages to which any of them may
become subject, under the Securities Act, the Exchange Act or otherwise, insofar
as such Claim or Indemnified Damages arise out of or are based upon any
Violation, to the extent, (i) that such Violation occurs in reliance upon and in
conformity with written information furnished to the Company by such Holder for
use in connection with such Registration Statement or the Effective Registration
Statement, (ii) that such Violation arises out of a misstatement or omission in
a preliminary Prospectus or a Prospectus which the Company advised the Holder in
writing to not use, and the Holder subsequently used it, (iii) the Holder failed
to deliver or cause to be delivered the Prospectus made available by the
Company, or (iv) for any

                                      -6-
<PAGE>   7

Violation by the Holder of the provisions in the plan of distribution set forth
in the Prospectus. In such event the Holder will reimburse any legal or other
expenses reasonably incurred by the Indemnified Party in connection with
investigating or defending any such Claim; provided, however, that the indemnity
provisions contained in this Section 7(b) and the provisions with respect to
contribution contained in Section 7(d) shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of such Holder, which consent shall not be unreasonably withheld. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such Indemnified Party.

         (c) Promptly after receipt by an Indemnified Person or Indemnified
Party, as the case may be, under this Section 7 of notice of the commencement of
any action or proceeding (including any governmental action or proceeding)
involving a Claim, such Indemnified Person or Indemnified Party, as the case may
be, shall, if a Claim in respect thereof is to be made against any indemnifying
party under this Section 7, deliver to the indemnifying party a written notice
of the commencement thereof, and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume control of the
defense thereof and to select counsel therefore. If the indemnifying party
selects counsel pursuant to the preceding sentence, the Indemnified Person or
the Indemnified Party, as the case may be, shall have the right to approve such
counsel which approval shall not be unreasonably withheld. In the event that the
Indemnified Person or the Indemnified Party, as the case may be, does not
approve of the selection of counsel by the indemnifying party and the
withholding of such approval is reasonable, then the indemnifying party shall be
responsible for the reasonable costs and expenses of one counsel selected by the
Indemnified Person and the Indemnified Party, as the case may be, to represent
their interests, provided that the indemnifying party shall not be responsible
for the costs and expenses of more than one counsel total selected by the
Indemnified Party or Indemnified Person. The Indemnified Party or Indemnified
Person, as the case may be, shall cooperate fully with the indemnifying party in
connection with any negotiation or defense of any such action or claim by the
indemnifying party and shall furnish to the indemnifying party all information
reasonably available to the Indemnified Party or Indemnified Person, as the case
may be, which relates to such action or claim. The indemnifying party shall keep
the Indemnified Party or Indemnified Person, as the case may be, fully notified
at all times as to the status of the defense or any settlement negotiations with
respect thereto. No indemnifying party shall be liable for any settlement of any
action, claim or proceeding effected without its written consent, provided,
however, that the indemnifying party shall not unreasonably withhold, delay or
condition its consent. No indemnifying party shall, without the consent of the
Indemnified Party or Indemnified Person, as the case may be, consent to entry of
any judgment or enter into any settlement or other compromise which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party or Indemnified Person, as the case may be, of a
release from all liability in respect to such claim or litigation. Following
indemnification as provided for hereunder, the indemnifying party shall be
subrogated to all rights of the Indemnified Party or Indemnified Person, as the
case may be, with respect to all third parties, firms or corporations relating
to the matter for which indemnification has been made. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of any
liability to the Indemnified Person or

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<PAGE>   8

Indemnified Party, as the case may be, under this Section 7(c), except to the
extent that the indemnifying party is prejudiced in its ability to defend such
action.

         (d) To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Section 7(c) to the fullest extent permitted by law; provided, however,
that no seller of Registrable Securities or Registered Shares guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any seller of Registrable
Securities or Registered Shares who was not guilty of fraudulent
misrepresentation.

         8. Other Obligations and Agreements

         (a) So long as the Company has a class of securities registered
pursuant to Section 12 of the Exchange Act and so long as the Holder own any of
the shares issuable upon exercise of the Warrants and such shares are
"restricted securities" (as defined in Rule 144), with a view of making
available to the Holder the benefits of Rule 144 under the Securities Act and
any other rule or regulation of the SEC that may at any time permit the Holder
to sell the shares to the public without registration, the Company agrees to use
its commercially reasonable best efforts to:

         (i)      make and keep public information available, as those terms are
                  understood and defined in Rule 144, at all times;

         (ii)     file with the SEC in a timely manner all reports and other
                  documents required of the Company under the Securities Act and
                  the Exchange Act; and

         (iii)    make available to the Holder, so long as the Holder own any
                  Registrable Securities or Registered Shares a copy of the most
                  recent annual or quarterly report of the Company and such
                  other SEC reports and documents filed by the Company and such
                  other information (but not opinion of counsel) as may be
                  reasonably requested by the Holder seeking to avail itself of
                  any rule or regulation of the SEC with permits the selling of
                  any such securities without registration.

         (b) If required under the rules of the Nasdaq Stock Market, Inc., the
Company shall file before the Closing any required applications and
notifications in connection with the issuance of the Warrants. The Company shall
use its commercially reasonable best efforts either to secure and maintain
designation and quotation of all the Registrable Securities covered by the
Registration Statement and all Registered Securities covered by the Effective
Registration Statement on the Nasdaq Market or, if, despite the Company's
commercially reasonable best efforts to satisfy the preceding clause, the
Company is unsuccessful in satisfying the preceding clause, then the Company
shall use its commercially reasonable best efforts to secure the inclusion for
quotation on the OTC Bulletin Board for such Registrable Securities and, without
limiting the generality of the foregoing, to arrange for at least two market
makers to register with the National Association of Securities Dealers, Inc.
("NASD") as such with respect to such shares.

                                      -8-
<PAGE>   9

         9. Miscellaneous

         (a) Notices

                  All notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, registered first-class
mail, telex, telecopier or air courier guaranteeing overnight delivery: (i) if
to a Holder of Registrable Securities, at the most current address set forth in
the Company's stock transfer books; and (ii) if to the Company, at its address
set forth in the Reimbursement Agreement. All such notices and communications
shall be deemed to have been duly given: at the time delivered by hand
(including by telecopy), if personally delivered; three business days after
being deposited in the mail, postage prepaid, if mailed, upon confirmation if
sent by telecopier; when receipt acknowledged, if to an air courier guaranteeing
overnight delivery. The Company shall promptly provide a list of the most
current addresses of the Holders of Registrable Securities given to it in
accordance with the provisions hereof to any such Holder for the purpose of
enabling such Holder to communicate with other Holders in connection with this
Agreement.

         (b) Successors and Assigns

                  This Agreement shall inure to the benefit of and be binding
upon the successors and assigns of the Company. This Agreement may not be
assigned by the Holders, except with the prior written consent of the Company
(which shall not unreasonably be withheld in the case of the sale or transfer of
substantially all of the Registrable Securities to not more than one party).

         (c) Counterparts

                  This Agreement may be executed in any number of counterparts
and by the parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.

         (d) Governing Law

                  This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.

         (e) Severability

                  In the event that any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions contained
herein shall not be affected or impaired thereby.

                                      -9-
<PAGE>   10

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.

                                  TERAFORCE TECHNOLOGY CORPORATION

                                  By:   /s/ Herman M. Frietsch
                                     -------------------------------------------
                                  Name:  Herman M. Frietsch
                                  Title: Chairman and Chief Executive Officer

                                  INVESTORS

                                  /s/ Oscar S. Wyatt, Jr.
                                  ----------------------------------------------
                                  Oscar S. Wyatt, Jr.

                                  /s/ Morton A. Cohn
                                  ----------------------------------------------
                                  Morton A. Cohn

                                  /s/ Fayez Sarofim
                                  ----------------------------------------------
                                  Fayez Sarofim

                                      -10-<PAGE>   1
                                                                    EXHIBIT 10.1

[BANK ONE LOGO]

                            BUSINESS LOAN AGREEMENT

<TABLE>
--------------------------------------------------------------------------------------------------------------
<CAPTION>
  Principal      Loan Date      Maturity     Loan No    Call    Collateral     Account     Officer    Initials
<S>              <C>           <C>           <C>        <C>     <C>          <C>           <C>        <C>
$4,500,000.00    06-01-2001    05-31-2002                          123        0961515929    03025
--------------------------------------------------------------------------------------------------------------
     References in the shaded area are for Lender's use only and do not limit the applicability of this
document to any particular loan or item.
--------------------------------------------------------------------------------------------------------------
</TABLE>

<Table>
<S>                                                    <C>
BORROWER:  TERAFORCE TECHNOLOGY CORPORATION            LENDER:  BANK ONE, NA WITH ITS MAIN OFFICE IN CHICAGO, ILLINOIS
           1240 E. CAMPBELL ROAD                                DALLAS COMMERCIAL - DALLAS
           RICHARDSON, TX 75081                                 1717 MAIN STREET
                                                                DALLAS, TX 75201

</Table>

===============================================================================

THIS BUSINESS LOAN AGREEMENT BETWEEN TERAFORCE TECHNOLOGY CORPORATION
("BORROWER") AND BANK ONE, NA WITH ITS MAIN OFFICE IN CHICAGO, ILLINOIS
("LENDER") IS MADE AND EXECUTED AS OF JUNE 1, 2001. THIS AGREEMENT GOVERNS ALL
LOANS, CREDIT FACILITIES AND/OR OTHER FINANCIAL ACCOMMODATIONS DESCRIBED HEREIN
AND, UNLESS OTHERWISE AGREED TO IN WRITING BY LENDER AND BORROWER, ALL OTHER
PRESENT AND FUTURE LOANS, CREDIT FACILITIES AND OTHER FINANCIAL ACCOMMODATIONS
PROVIDED BY LENDER TO BORROWER. ALL SUCH LOANS, CREDIT FACILITIES AND OTHER
FINANCIAL ACCOMMODATIONS, TOGETHER WITH ALL RENEWALS, AMENDMENTS AND
MODIFICATIONS THEREOF, ARE REFERRED TO IN THIS AGREEMENT INDIVIDUALLY AS THE
"LOAN" AND COLLECTIVELY AS THE "LOANS." BORROWER UNDERSTANDS AND AGREES THAT:
(a) IN GRANTING, RENEWING, OR EXTENDING ANY LOAN, LENDER IS RELYING UPON
BORROWER'S REPRESENTATIONS, WARRANTIES, AND AGREEMENTS, AS SET FORTH IN THIS
AGREEMENT; AND (b) ALL SUCH LOANS SHALL BE AND SHALL REMAIN SUBJECT TO THE
FOLLOWING TERMS AND CONDITIONS OF THIS AGREEMENT.

TERM. This Agreement shall be effective as of June 1, 2001, and shall continue
thereafter until all Loans and other obligations owing by Borrower to Lender
hereunder have been paid in full and Lender has no commitments or obligations to
make further advances under the Loans to Borrower.

DEFINITIONS. The following words shall have the following meanings when used in
this Agreement. Terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code as adopted in
the State of Texas. All references to dollar amounts shall mean amounts in
lawful money of the United States of America.

     AGREEMENT. The word "Agreement" means this Business Loan Agreement, as may
     be amended or modified from time to time, together with all exhibits and
     schedules attached hereto from time to time.

     BORROWER. The word "Borrower" means TERAFORCE TECHNOLOGY CORPORATION.

     COLLATERAL. The word "Collateral" means and includes without limitation all
     property and assets granted as collateral for any Loan, whether real or
     personal property, whether granted directly or indirectly, whether granted
     now or in the future, and whether granted in the form of a security
     interest, mortgage, deed of trust, assignment, pledge, chattel mortgage,
     chattel trust, factor's lien, equipment trust, conditional sale, trust
     receipt, lien, charge, lien or title retention contract, lease or
     consignment intended as a security device, or any other security or lien
     interest whatsoever, whether created by law, contract, or otherwise.

     ERISA. The word "ERISA" means the Employee Retirement Income Security Act
     of 1974, as amended.

     GRANTOR. The word "Grantor" means and includes each and all of the persons
     or entities granting a Security Interest in any Collateral for any of the
     Loans.

     GUARANTOR. The word "Guarantor" means and includes each and all of the
     guarantors, sureties, and accommodation parties for any of the Loans.

     INDEBTEDNESS. The word "Indebtedness" means the indebtedness evidenced by
     the Note, including all principal and accrued interest thereon, together
     with all other liabilities, costs and expenses for which Borrower is
     responsible under this Agreement or under any of the Related Documents.

     LENDER. The word "Lender" means Bank One, NA with its main office in
     Chicago, Illinois, its successors and assigns.

     NOTE. The word "Note" means the promissory note of even date herewith which
     evidences Borrower's $4,500,000 Loan in favor of Lender, as well as any
     amendment, modification, renewal or replacement thereof.

     RELATED DOCUMENTS. The words "Related Documents" mean and include without
     limitation the Note and all credit agreements, loan agreements,
     environmental agreements, guaranties, security agreements, mortgages, deeds
     of trust, and all other instruments, agreements and documents, whether now
     or hereafter existing, executed in connection with the Note.

     SECURITY AGREEMENT. The words "Security Agreement" mean and include without
     limitation any agreements, promises, covenants, arrangements,
     understandings or other agreements, whether created by law, contract, or
     otherwise, evidencing, governing, representing, or creating a Security
     Interest.

     SECURITY INTEREST. The words "Security Interest" mean and include without
     limitation any type of security interest, whether in the form of a lien,
     charge, mortgage, deed of trust, assignment, pledge, chattel mortgage,
     chattel trust, factor's lien, equipment trust, conditional sale, trust
     receipt, lien or title retention contract, lease or consignment intended as
     a security device, or any other security or lien interest whatsoever,
     whether created by law, contract, or otherwise.

REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as
of the date of this Agreement, as of the date of each request for an advance or
disbursement of Loan proceeds, as of the date of any renewal, extension or
modification of any Loan, and at all times any Indebtedness exists hereafter:

     ORGANIZATION. Borrower is a corporation which is duly organized, validly
     existing, and in good standing under the laws of the state of Borrower's
     incorporation and is duly qualified and in good standing in other states in
     which Borrower is doing business. Borrower has the full power and authority
     to own its properties and to transact the businesses in which it is
     presently engaged or presently proposes to engage.

     AUTHORIZATION. The execution, delivery, and performance of this Agreement
     and all Related Documents to which Borrower is a party have been duly
     authorized by all necessary action; do not require the consent or approval
     of any other person, regulatory authority or governmental body; and do not
     conflict with, result in a violation of, or constitute a default under (a)
     any provision of its articles of incorporation or organization, or bylaws,
     or any agreement or other instrument binding upon Borrower or (b) any law,
     governmental regulation, court decree, or order applicable to Borrower.
     Borrower has all requisite power and authority to execute and deliver this
     Agreement and all other Related Documents to which Borrower is a party.

     FINANCIAL INFORMATION. Each financial statement of Borrower supplied to
     Lender truly and completely discloses Borrower's financial condition as of
     the date of the statement, and there has been no material adverse change in
     Borrower's financial condition subsequent to the date of the most recent
     financial statement supplied to Lender. Borrower has no material contingent
     obligations except as disclosed in such financial statements.

     LEGAL EFFECT. This Agreement and all other Related Documents to which
     Borrower is a party constitute legal, valid and binding obligations of
     Borrower enforceable against Borrower in accordance with their respective
     terms, except as limited by bankruptcy, insolvency or similar laws of
     general application relating to the enforcement of creditors' rights and
     except to the extent specific remedies may generally be limited by
     equitable principles.

     PROPERTIES. Except as contemplated by this Agreement or as previously
     disclosed in Borrower's financial statements or in writing to Lender and as
     accepted by Lender, and except for property tax liens for taxes not
     presently due and payable, Borrower is the sole owner of, and has good
     title to, all of Borrower's properties free and clear of all Security
     Interests, and has not executed any security documents or financing
     statements relating to such properties. All of Borrower's properties are
     titled in Borrower's legal name, and Borrower has not used, or filed a
     financing statement under, any other name for at least the last six (6)
     years.

     COMPLIANCE. Except as disclosed in writing to Lender (a) Borrower is
     conducting Borrower's businesses in material compliance with all applicable
     federal, state and local laws, statutes, ordinances, rules, regulations,
     orders, determinations and court decisions, including without limitation,
     those pertaining to health or environmental matters, and (b) Borrower
     otherwise does not have any known material contingent liability in
     connection with the release into the environment, disposal or the improper
     storage of any toxic or hazardous
<PAGE>   2
06-01-2001                 BUSINESS LOAN AGREEMENT                        PAGE 2
LOAN NO                           (CONTINUED)
================================================================================

      substance or solid waste.

      LITIGATION AND CLAIMS. No litigation, claim, investigation, administrative
      proceeding or similar action (including those for unpaid taxes) against
      Borrower is pending or threatened, and no other event has occurred which
      may in any one case or in the aggregate materially adversely affect
      Borrower's financial condition or properties, other than litigation,
      claims, or other events, if any, that have bean disclosed to and
      acknowledged by Lender in writing. Except as disclosed in the Borrower's
      10-K.

      TAXES. All tax returns and reports of Borrower that are or were required
      to be filed, have been filed, and all taxes, assessments and other
      governmental charges have been paid in full, except those that have been
      disclosed in writing to Lender which are presently being or to be
      contested by Borrower in good faith in the ordinary course of business and
      for which adequate reserves have been provided.

      LIEN PRIORITY. Unless otherwise previously disclosed to and approved by
      Lender in writing, Borrower has not entered into any Security Agreements,
      granted a Security Interest or permitted the filing or attachment of any
      Security Interests on or affecting any of the Collateral, except in favor
      of Lender.

      LICENSES, TRADEMARKS AND PATENTS. Borrower possesses and will continue to
      possess all permits, licenses, trademarks, patents and rights thereto
      which are needed to conduct Borrower's business and Borrower's business
      does not conflict with or violate any valid rights of others with respect
      to the foregoing.

      COMMERCIAL PURPOSES. Borrower intends to use the Loan proceeds solely for
      business or commercial related purposes approved by Lender and such
      proceeds will not be used for the purchasing or carrying of "margin stock"
      as defined in Regulation U issued by the Board of Governors of the Federal
      Reserve System.

      INELIGIBLE SECURITIES. No portion or any advance or Loan made hereunder
      shall be used directly or indirectly to purchase ineligible securities, as
      defined by applicable regulations of the Federal Reserve Board,
      underwritten by Lender or any other affiliate of Banc One Corporation
      during the underwriting period and for 30 days thereafter.

      EMPLOYEE BENEFIT PLANS. Each employee benefit plan as to which Borrower
      may have any liability complies in all material respects with all
      applicable requirements of law and regulations, and (i) no Reportable
      Event nor Prohibited Transaction (as defined in ERISA) has occurred with
      respect to any such plan, (ii) Borrower has not withdrawn from any such
      plan or initiated steps to do so, (iii) no steps have been taken to
      terminate any such plan, and (iv) there are no unfunded liabilities other
      than those previously disclosed to Lender in writing.

      LOCATION OF BORROWER'S OFFICES AND RECORDS. Borrower's place of business,
      or Borrower's chief executive office if Borrower has more than one place
      of business, is located at 1240 E. CAMPBELL ROAD, RICHARDSON, TX 75081.
      Unless Borrower has designated otherwise in writing this location is also
      the office or offices where Borrower keeps its records concerning the
      Collateral.

      INFORMATION. All information heretofore or contemporaneously herewith
      furnished by Borrower to Lender for the purposes of or in connection with
      this Agreement or any transaction contemplated hereby is, and all
      information hereafter furnished by or on behalf of Borrower to Lender will
      be, true and accurate in every material respect on the date as of which
      such information is dated or certified; and none of such information is or
      will be incomplete by omitting to state any material fact necessary to
      make such information not misleading.

      SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Borrower understands and
      agrees that Lender, without independent investigation, is relying upon the
      above representations and warranties in extending Loan advances to
      Borrower. Borrower further agrees that the foregoing representations and
      warranties shall be continuing in nature and shall remain in full force
      and effect during the term of this Agreement.

AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, while
this Agreement is in effect, Borrower will:

      DEPOSITORY RELATIONSHIP. Establish and maintain its primary operating
      account(s) with Lender.

      LITIGATION. Promptly inform Lender in writing of (a) all material adverse
      changes in Borrower's financial condition, (b) all existing and all
      threatened litigation, claims, investigations, administrative proceedings
      or similar actions affecting Borrower or any Guarantor which could
      materially affect the financial condition of Borrower or the financial
      condition of any Guarantor, and (c) the creation, occurrence or assumption
      by Borrower of any actual or contingent liabilities not permitted under
      this Agreement.

      FINANCIAL RECORDS. Maintain its books and records in accordance with
      generally accepted accounting principles, applied on a consistent basis,
      and permit Lender to examine, audit and make and take away copies or
      reproductions of Borrower's books and records at all reasonable times. If
      Borrower now or at any time hereafter maintains any records (including
      without limitation computer generated records and computer software
      programs for the generation of such records) in the possession of a third
      party, Borrower, upon request of Lender, shall notify such party to permit
      Lender free access to such records at all reasonable times and to provide
      Lender with copies of any records it may request, all at Borrower's
      expense.

      ADDITIONAL INFORMATION. Furnish such additional information and
      statements, lists of assets and liabilities, agings of receivables and
      payables, inventory schedules, budgets, forecasts, tax returns, and other
      reports with respect to Borrower's financial condition and business
      operations as Lender may request from time to time.

      INSURANCE REPORTS. Furnish to Lender, upon request of Lender, reports on
      each existing insurance policy showing such information as Lender may
      reasonably request, including without limitation the following: (a) the
      name of the insurer; (b) the risks insured; (c) the amount of the policy;
      (d) the properties insured; (a) the then current property values on the
      basis of which insurance has been obtained, and the manner of determining
      those values; and (f) the expiration date of the policy.

      OTHER AGREEMENTS. Comply with all terms and conditions of all other
      agreements, whether now or hereafter existing, between Borrower and any
      other party and notify Lender immediately in writing of any default in
      connection with any other such agreements.

      LOAN PROCEEDS. Use all Loan proceeds solely for Borrower's business
      operations, unless specifically consented to the contrary by Lender in
      writing.

      TAXES, CHARGES AND LIENS. Pay and discharge when due all of its
      indebtedness and obligations, including without limitation all
      assessments, taxes, governmental charges, levies and liens, of every kind
      and nature, imposed upon Borrower or its properties, income, or profits,
      prior to the date on which penalties would attach, and all lawful claims
      that, if unpaid, might become a lien or charge upon any of Borrower's
      properties, income, or profits; provided however, Borrower will not be
      required to pay and discharge any such assessment, tax, charge, levy, lien
      or claim so long as (a) the legality of the same shall be contested in
      good faith by appropriate proceedings, and (b) Borrower shall have
      established on its books adequate reserves with respect to such contested
      assessment, tax, charge, levy, lien, or claim in accordance with generally
      accepted accounting principles. Borrower, upon demand of Lender, will
      furnish to Lender evidence of payment of the assessments, taxes, charges,
      levies, liens and claims and will authorize the appropriate governmental
      official to deliver to Lender at any time a written statement of any
      assessments, taxes, charges, levies, liens and claims against Borrower's
      properties, income, or profits.

      PERFORMANCE. Perform and comply with all terms, conditions, and provisions
      set forth in this Agreement and in the Related Documents in a timely
      manner, and promptly notify Lender if Borrower learns of the occurrence of
      any event which constitutes an Event of Default under this Agreement or
      under any of the Related Documents.

      OPERATIONS. Conduct its business affairs in a reasonable and prudent
      manner and In compliance with all applicable federal, state and municipal
      laws, ordinances, rules and regulations respecting its properties,
      charters, businesses and operations, including without limitation,
      compliance with the Americans With Disabilities Act, all applicable
      environmental statutes, rules, regulations and ordinances and with all
      minimum funding standards and other requirements of ERISA and other laws
      applicable to Borrower's employee benefit plans.

<PAGE>   3

06-01-2001                 BUSINESS LOAN AGREEMENT                       PAGE 3
LOAN NO                           (CONTINUED)
================================================================================

      ADDITIONAL ASSURANCES. Make, execute and deliver to Lender such promissory
      notes, mortgages, deeds of trust, security agreements, financing
      statements, instruments, documents and other agreements as Lender or its
      attorneys may reasonably request to evidence and secure the Loans and to
      perfect all Security Interests.

NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this
Agreement is in effect, Borrower shall not, without the prior written consent of
Lender:

      MAINTAIN BASIC BUSINESS. Engage in any business activities substantially
      different than those in which Borrower is presently engaged.

      CONTINUITY OF OPERATIONS. Cease operations, liquidate, dissolve or merge
      or consolidate with or into any other entity.

CONDITIONS PRECEDENT TO ADVANCES. If Lender is obligated to make any Loan
advances or to otherwise disburse any Loan proceeds to Borrower, such obligation
shall be subject to the conditions precedent that as of the date of such advance
or disbursement and after giving effect thereto (a) all representations and
warranties made to Lender in this Agreement and the Related Documents shall be
true and correct as of and as if made on such date, (b) no material adverse
change in the financial condition of Borrower or any Guarantor since the
effective date of the most recent financial statements furnished to Lender, or
in the value of any Collateral, shall have occurred and be continuing, (c) no
event has occurred and is continuing, or would result from the requested advance
or disbursement, which with notice or lapse of time, or both, would constitute
an Event of Default, (d) no Guarantor has sought, claimed or otherwise attempted
to limit, modify or revoke such Guarantor's guaranty of any Loan, and (e) Lender
has received all Related Documents appropriately executed by Borrower and all
other proper parties.

ADDITIONAL PROVISION - PRINCIPAL PAYMENTS ON NOTE. Included as a Note under this
Agreement is a promissory note of even date herewith in the stated principal
amount of $4,500,000 executed by Borrower and payable to the order of Lender
(the "Draw Note"). Prior to the maturity date of the Draw Note, Borrower intends
to cause Intelect Network Technologies ("Intelect"), its wholly owned
subsidiary, to sell, for cash, assets consisting of accounts receivable,
finished goods inventory, component inventory, and fixed assets (collectively,
the "Intelect Assets"). Borrower has represented to Lender that the Intelect
Assets have a liquidation value of approximately $6,200,000. Prior to any sale
of any of the Intelect Assets, Borrower shall establish a deposit account with
Lender (the "Intelect Account") which shall be assigned to Lender as security
for payment of the Draw Note. Notwithstanding anything contained in the Draw
Note, upon a sale of any of the Intelect Assets with respect to which Borrower
or Intelect is to receive consideration in the amount of $50,000 or more.
Borrower shall cause all of such consideration to be remitted directly to Lender
for Borrower's account to be applied to prepay the principal balance of the Draw
Note. If at any time the proceeds of any such sale are in excess of the unpaid
principal balance of the Draw Note, such excess shall be deposited by Lender
into the Intelect Account. Upon a sale of any of the Intelect Assets with
respect to which Borrower or Intelect is to receive consideration in an amount
which is less than $50,000, Borrower shall cause all of the proceeds of such
sale to be deposited into the Intelect Account. At any time when the Intelect
Account has a balance which is $50,000 or more, Lender may withdraw from the
Intelect Account and apply to the prepayment of the Draw Note, an amount equal
to the lesser of (i) the then unpaid principal balance of the Draw Note or (ii)
the balance in the Intelect Account.

RIGHT OF SETOFF. Unless a lien would be prohibited by law or would render a
nontaxable account taxable, Borrower grants to Lender a contractual security
interest in, and hereby assigns, conveys, delivers, pledges, and transfers to
Lender all Borrower's right, title and interest in and to, Borrower's accounts
with Lender (whether checking, savings, or any other account), including without
limitation all accounts held jointly with someone else and all accounts Borrower
may open in the future. Borrower authorizes Lender, to the extent permitted by
applicable law, to charge or setoff all sums owing on the Indebtedness against
any and all such accounts.

EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default
under this Agreement:

      DEFAULT ON INDEBTEDNESS. Failure of Borrower to make any payment when due
      on any of the Indebtedness.

      OTHER DEFAULTS. Failure of Borrower, any Guarantor or any Grantor to
      comply with or to perform when due any other term, obligation, covenant or
      condition contained in this Agreement, the Note or in any of the other
      Related Documents, or failure of Borrower to comply with or to perform any
      other term, obligation, covenant or condition contained in any other
      agreement now existing or hereafter arising between Lender and Borrower.

      FALSE STATEMENTS. Any warranty, representation or statement made or
      furnished to Lender under this Agreement or the Related Documents is false
      or misleading in any material respect.

      DEFAULT TO THIRD PARTY. The acceleration of the maturity of any
      indebtedness owing by Borrower, Grantor or any Guarantor to any third
      party under any agreement or undertaking.

      BANKRUPTCY OR INSOLVENCY. If the Borrower, Grantor or any Guarantor: (i)
      becomes insolvent, or makes a transfer in fraud of creditors, or makes an
      assignment for the benefit of creditors, or admits in writing its
      inability to pay its debts as they become due; (ii) generally is not
      paying its debts as such debts become due; (iii) has a receiver, trustee
      or custodian appointed for, or take possession of, all or substantially
      all of the assets of such party or any of the Collateral, either in a
      proceeding brought by such party or in a proceeding brought against such
      party and such appointment is not discharged or such possession is not
      terminated within sixty (60) days after the effective date thereof or such
      party consents to or acquiesces in such appointment or possession; (iv)
      files a petition for relief under the United States Bankruptcy Code or any
      other present or future federal or state insolvency, bankruptcy or similar
      laws (all of the foregoing hereinafter collectively called "APPLICABLE
      BANKRUPTCY LAW") or an involuntary petition for relief is filed against
      such party under any Applicable Bankruptcy Law and such involuntary
      petition is not dismissed within sixty (60) days after the filing thereof,
      or an order for relief naming such party is entered under any Applicable
      Bankruptcy Law, or any composition, rearrangement, extension,
      reorganization or other relief of debtors now or hereafter existing is
      requested or consented to by such party; (v) fails to have discharged
      within a period of sixty (60) days any attachment, sequestration or
      similar writ levied upon any property of such party; or (vi) fails to pay
      within thirty (30) days any final money judgment against such party.

      LIQUIDATION, DEATH AND RELATED EVENTS. If Borrower, Grantor or any
      Guarantor is an entity, the liquidation, dissolution, merger or
      consolidation of any such entity or, if any of such parties is an
      individual, the death or legal incapacity of any such individual.

      CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of foreclosure or
      forfeiture proceedings, whether by judicial proceeding, self-help,
      repossession or any other method, by any creditor of Borrower, any
      creditor of any Grantor against any collateral securing the Indebtedness,
      or by any governmental agency.

EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, Lender may,
at its option, without further notice or demand, (a) terminate all commitments
and obligations of Lender to make Loans to Borrower, if any, (b) declare all
Loans and any other Indebtedness immediately due and payable, (c) refuse to
advance any additional amounts under the Note, or (d) exercise all the rights
and remedies provided in the Note or in any of the Related Documents or
available at law, in equity, or otherwise; provided, however, if any Event of
Default of the type described in the "Bankruptcy or Insolvency" subsection above
shall occur, all Loans and any other Indebtedness shall automatically become due
and payable, without any notice, demand or action by Lender. Except as may be
prohibited by applicable law, all of Lender's rights and remedies shall be
cumulative and may be exercised singularly or concurrently. Election by Lender
to pursue any remedies shall not exclude pursuit of any other remedy, and an
election to make expenditures or to take action to perform an obligation of
Borrower or any Grantor shall not affect Lender's right to declare a default and
to exercise its rights and remedies.

MISCELLANEOUS PROVISIONS.

      AMENDMENTS. This Agreement, together with any Related Documents,
      constitutes the entire understanding and agreement of the parties as to
      the matters set forth in this Agreement. No alteration of or amendment to
      this Agreement shall be effective unless given in writing and signed by
      the party or parties sought to be charged or bound by the alteration or
      amendment. This Agreement supersedes all existing loan agreements
      previously executed between Borrower and Lender with respect to the Loans
      unless Borrower and Lender agree in writing to the contrary.

      APPLICABLE LAW. This Agreement has been delivered to Lender and accepted
      by Lender in the State of Texas. Subject to the provisions on arbitration,
      this Agreement shall be governed by and construed in accordance with the
      laws of the State of Texas without regard to any conflict of laws or
      provisions thereof.

      JURY WAIVER. THE UNDERSIGNED HEREBY VOLUNTARILY, KNOWINGLY, IRREVOCABLY
      AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN
      RESOLVING ANY DISPUTE (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE)
      BETWEEN OR AMONG THE UNDERSIGNED AND LENDER ARISING OUT OF OR IN ANY
      WAY RELATED TO THIS DOCUMENT, AND ANY OTHER RELATED DOCUMENT, OR ANY
      RELATIONSHIP BETWEEN LENDER AND THE BORROWER. THIS PROVISION IS A
      MATERIAL INDUCEMENT TO LENDER TO PROVIDE THE FINANCING DESCRIBED
      HEREIN OR IN THE OTHER RELATED DOCUMENTS.

      ARBITRATION. Lender and Borrower agree that upon the written demand of
      either party, whether made before or after the institution of any legal
      proceedings, but prior to the rendering of any judgment in that
      proceeding, all disputes, claims and controversies between them, whether
      individual, joint, or class in nature, arising from this Agreement, any
      Related Document or otherwise, including without limitation contract
      disputes and tort claims, shall be resolved by binding arbitration
      pursuant to the Commercial Rules of the American Arbitration Association
      ("AAA"). Any arbitration proceeding held pursuant to this arbitration
      provision shall be conducted in the city nearest the Borrower's address
      having an AAA regional office, or at any other place selected by mutual
      agreement of the parties. No act to take or dispose of any Collateral
      shall constitute a waiver of this arbitration agreement or be prohibited
      by this arbitration agreement. This

<PAGE>   4

06-01-2001                 BUSINESS LOAN AGREEMENT                       PAGE 4
LOAN NO                           (CONTINUED)
================================================================================

      arbitration provision shall not limit the right of either party during any
      dispute, claim or controversy to seek, use, and employ ancillary, or
      preliminary rights and/or remedies, judicial or otherwise, for the
      purposes of realizing upon, preserving, protecting, foreclosing upon or
      proceeding under forcible entry and detainer for possession of, any real
      or personal property, and any such action shall not be deemed an election
      of remedies. Such remedies include, without limitation, obtaining
      injunctive relief or a temporary restraining order, invoking a power of
      sale under any deed of trust or mortgage, obtaining a writ of attachment
      or imposition of a receivership, or exercising any rights relating to
      personal property, including exercising the right of set-off, or taking or
      disposing of such property with or without judicial process pursuant to
      the Uniform Commercial Code. Any disputes, claims, or controversies
      concerning the lawfulness or reasonableness of an act, or exercise of any
      right or remedy, concerning any Collateral, including any claim to
      rescind, reform, or otherwise modify any agreement relating to the
      Collateral, shall also be arbitrated; provided, however that no arbitrator
      shall have the right or the power to enjoin or restrain any act of either
      party. Judgment upon any award rendered by any arbitrator may be entered
      in any court having jurisdiction. The statute of limitations, estoppel,
      waiver, laches and similar doctrines which would otherwise be applicable
      in an action brought by a party shall be applicable in any arbitration
      proceeding, and the commencement of an arbitration proceeding shall be
      deemed the commencement of any action for these purposes. The Federal
      Arbitration Act (Title 9 of the United States Code) shall apply to the
      construction, interpretation, and enforcement of this arbitration
      provision.

      CAPTION HEADINGS. Caption headings in this Agreement are for convenience
      purposes only and are not to be used to interpret or define the provisions
      of this Agreement.

      CONSENT TO LOAN PARTICIPATION. Borrower agrees and consents to Lender's
      sale or transfer, whether now or later, of one or more participation
      interests in the Loans to one or more purchasers, whether related or
      unrelated to Lender. Lender may provide, without any limitation
      whatsoever, to any one or more purchasers, or potential purchasers, any
      information or knowledge Lender may have about Borrower or about any other
      matter relating to the Loan, and Borrower hereby waives any rights to
      privacy it may have with respect to such matters. Borrower additionally
      waives any and all notices of sale of participation interests, as well as
      all notices of any repurchase of such participation interests.

      COSTS AND EXPENSES. Except as otherwise limited by the Texas Finance Code,
      as supplemented by Texas Credit Title, Borrower agrees to pay upon demand
      all of Lender's expenses, including attorneys' fees, incurred in
      connection with the preparation, execution, enforcement, modification and
      collection of this Agreement or in connection with the Loans made pursuant
      to this Agreement. Lender may hire one or more attorneys to help collect
      the Indebtedness if Borrower does not pay, and Borrower will pay Lender's
      reasonable attorneys' fees.

      NOTICES. All notices required to be given under this Agreement shall be
      given in writing, and shall be effective when actually delivered or when
      deposited with a nationally recognized overnight courier or deposited in
      the United States mail, first class, postage prepaid, addressed to the
      party to whom the notice is to be given at the address shown above. Any
      party may change its address for notices under this Agreement by giving
      formal written notice to the other parties, specifying that the purpose
      of the notice is to change the party's address. To the extent permitted by
      applicable law, if there is more than one Borrower notice to any Borrower
      will constitute notice to all Borrowers. For notice purposes, Borrower
      will keep Lender informed at all times of Borrower's current address(es).

      SEVERABILITY. If a court of competent jurisdiction finds any provision of
      this Agreement to be invalid or unenforceable as to any person or
      circumstance, such finding shall not render that provision invalid or
      unenforceable as to any other persons or circumstances. If feasible, any
      such offending provision shall be deemed to be modified to be within the
      limits of enforceability or validity; however, if the offending provision
      cannot be so modified, it shall be stricken and all other provisions of
      this Agreement in all other respects shall remain valid and enforceable.

      COUNTERPARTS. This Agreement may be executed in one or more counterparts,
      each of which shall be deemed an original and all of which together shall
      constitute the same document. Signature pages may be detached from the
      counterparts to a single copy of this Agreement to physically form one
      document.

      SUCCESSORS AND ASSIGNS. All covenants and agreements contained by or on
      behalf of Borrower shall bind its successors and assigns and shall inure
      to the benefit of Lender, its successors and assigns. Borrower shall not,
      however, have the right to assign its rights under this Agreement or any
      interest therein, without the prior written consent of Lender.

      SURVIVAL. All warranties, representations, and covenants made by Borrower
      in this Agreement or in any certificate or other instrument delivered by
      Borrower to Lender under this Agreement shall be considered to have been
      relied upon by Lender and will survive the making of the Loan and delivery
      to Lender of the Related Documents, regardless of any investigation made
      by Lender or on Lender's behalf.

      TIME IS OF THE ESSENCE. Time is of the essence in the performance of this
      Agreement.

      WAIVER. Lender shall not be deemed to have waived any rights under this
      Agreement unless such waiver is given in writing and signed by Lender. No
      delay or omission on the part of Lender in exercising any right shall
      operate as a waiver of such right or any other right. A waiver by Lender
      of a provision of this Agreement shall not prejudice or constitute a
      waiver of Lender's right otherwise to demand strict compliance with that
      provision or any other provision of this Agreement. No prior waiver by
      Lender, nor any course of dealing between Lender and Borrower, or between
      Lender and any Grantor or Guarantor, shall constitute a waiver of any of
      Lender's rights or of any obligations of Borrower or of any Grantor as to
      any future transactions. Whenever the consent of Lender is required under
      this Agreement, the granting of such consent by Lender in any instance
      shall not constitute continuing consent in subsequent instances where such
      consent is required, and in all cases such consent may be granted or
      withheld in the sole discretion of Lender.

BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN
AGREEMENT, AND BORROWER AGREES TO ITS TERMS. THIS AGREEMENT IS EXECUTED AS OF
THE DATE SET FORTH ABOVE.

BORROWER:

TERAFORCE TECHNOLOGY CORPORATION

By: /s/ ROBERT P. CAPPS
    ------------------------------------------
    AUTHORIZED SIGNER

###

LENDER:

BANK ONE, NA WITH ITS MAIN OFFICE IN CHICAGO, ILLINOIS

By: /s/ BRADLEY C PETERS, Vice President
    ------------------------------------------
    AUTHORIZED OFFICER

================================================================================
LASER PRO, Reg. U.S. Pat. & T.M. Off., Ver. 3.27a (c) 2001 CFI ProServices, Inc.
All rights reserved. [TX-C40 E3.27 F3.27 P3.27 CD006536.LN C9.OVL]

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