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                                                                    EXHIBIT 10.3

                             STOCKHOLDERS AGREEMENT

                                      AMONG

                           INTELECT TECHNOLOGIES INC.,

                        TERAFORCE TECHNOLOGY CORPORATION,

                   SINGAPORE TECHNOLOGIES ELECTRONICS LIMITED,

                                       AND

                    THE ADDITIONAL STOCKHOLDERS NAMED HEREIN

                      DATED EFFECTIVE AS OF AUGUST 30, 2001

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                             STOCKHOLDERS AGREEMENT

         THIS STOCKHOLDERS AGREEMENT (this "Agreement") is entered into
effective as of August 30, 2001, among Intelect Technologies Inc., a Delaware
corporation (the "Company"), TeraForce Technology Corporation, a Delaware
corporation ("TeraForce"), Singapore Technologies Electronics Limited, a
Singapore corporation ("STE"), and the other stockholders named from time to
time on the signature pages hereto.

         WHEREAS, the Company was duly formed under the laws of the State of
Delaware on August 17, 2001; and

         WHEREAS, the Company issued 3,000 shares of Company Common Stock to
TeraForce and 6,000 shares of Company Common Stock to STE;

         NOW, THEREFORE, for and in consideration of the mutual covenants and
promises hereinafter set forth, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, it is agreed that:

                                   ARTICLE 1.
                                  DEFINITIONS

         For purposes of this Agreement, the following terms have the meanings
specified or referenced to in this Article 1:

         "Additional Proportionate Share" means (i) with respect to Remaining
Stockholders, the fraction, the numerator of which is the number of Shares held
by the Remaining Stockholder (excluding Shares issuable upon conversion,
exercise, or exchange of any other securities that have not been converted,
exercised, or exchanged) and the denominator of which is the number of Shares
held by all of the Remaining Stockholders (excluding Shares issuable upon
conversion, exercise, or exchange of any other securities that have not been
converted, exercised, or exchanged) electing to purchase Remaining Offered
Shares.

         "Agreed Value" means the fair market value per share of the Shares as
of the Company's most recently completed fiscal quarter preceding the date of
the proposed Disposition of Shares pursuant to this Agreement. The Agreed Value
of Shares shall be determined by agreement between the Person(s) who has an
option or is obligated under this Agreement to purchase the Shares in question,
on the one hand (referred to in this paragraph as "purchaser"), and the
Stockholder and/or other Person from whom the purchaser has an option or is
obligated to purchase the Shares, on the other hand (referred to in this
paragraph as "seller"), or, if such agreement has not been reached by the 30th
day after the date of the notice or other event that requires the determination
of Agreed Value, then the seller and purchaser shall each select an independent
investment banking firm within 10 days to determine the fair market value of the
Shares. In the event that the independent investment banking firms selected by
the seller and purchaser cannot agree on the fair market value of the Shares,
then the two independent investment banking firms shall mutually select a third
independent investment banking firm to determine the fair market value of the
Shares, and the value selected by such independent investment banking firm shall
be binding upon all of the parties hereto. Each such independent investment
banking firm may use any customary method of determining fair market value. The
cost of the independent investment banking firm selected by the seller shall be
paid by the seller, the cost of the independent investment banking firm selected
by the purchaser shall be paid by the purchaser, and the cost of the independent
investment banking firm selected by the two independent investment banking firms
appointed by each of the seller and the purchaser shall be paid one-half by the
seller and one-half by the purchaser. Each party shall have the opportunity to
present information to the investment banking firm regarding the fair market
value of the Shares. In determining

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the Agreed Value, the independent investment banking firms shall not discount
the Agreed Value, or take any deductions with respect thereto, due to (i) any
restrictions on the transferability of the Shares as a result of this Agreement,
the securities laws or otherwise, or (ii) the Shares representing a minority
interest in the Company.

         "Agreement" is defined in the introductory paragraph to this Agreement.

         "Bankruptcy Law" is defined in Section 3.1(a)(iii).

         "Commission" means the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.

         "Common Stock" means the Common Stock, par value $0.01 per share, of
the Company.

         "Community Property Event" means any event (including, without
limitation, events relating to death or divorce or an event listed in clauses
(i) through (viii) of Section 3.1(a)) that involves only the Community Property
Interest of any spouse of a Stockholder and results in the Community Property
Stockholder no longer having full and exclusive voting and investment power with
respect to such Community Property Stockholder's Shares.

         "Community Property Interest" means any community property interest in
any Shares.

         "Community Property Stockholder" means the Stockholder sharing an
interest in Shares related to a Community Property Interest.

         "Company" is defined in the introductory paragraph to this Agreement
and includes all Subsidiaries of the Company, from time to time, unless the
context otherwise requires.

         "Disposition" is defined in Article 2.

         "Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission thereunder.

         "Issuance Date" is defined in Article 10.

         "Issuance Notice" is defined in Article 10.

         "Legal Action" is defined in Section 11.3.

         "Offered Shares" is defined in Section 3.1(a).

         "Permitted Transfer" means (1) a Disposition by a Stockholder to which
TeraForce and STE have consented in writing; provided, however, that the
restrictions regarding transfer contained in this Agreement shall continue to be
applicable to such Shares after any such transfer; and provided, further, that
the transferees of such Shares shall execute an Addendum Agreement, or (2) a
pledge or other encumbrance of Shares securing a loan so long as the pledgee
agrees in writing prior to the execution of the pledge that upon any transfer to
the pledgee of any Shares upon foreclosure or otherwise, such Shares and the
pledgee thereof shall remain and become subject to the restrictions contained in
this Agreement. A transfer to an affiliate of STE will be a Permitted Transfer.

         "Permitted Transferee" means a Person who acquires Shares pursuant to a
Permitted Transfer.

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         "Person" means any natural person, corporation, limited partnership,
limited liability company, general partnership, joint stock company, joint
venture, association, company, trust, bank, trust company, land trust, business
trust or other organization, whether or not a legal entity.

         "Price" is defined in Article 10.

         "Proportionate Share" means (i) with respect to the Remaining
Stockholders, the product of a fraction, the numerator of which is the number of
Shares held by the Remaining Stockholder (excluding Shares issuable upon
conversion, exercise, or exchange of any securities that have not been
converted, exercised, or exchanged), and the denominator of which is the number
of Shares held by all Remaining Stockholders (excluding Shares issuable upon
conversion, exercise, or exchange of any securities that have not been
converted, exercised or exchanged).

         "Remaining Offered Shares" means the Offered Shares that the Company
and the Remaining Stockholders have not elected to purchase.

         "Remaining Stockholder" means all Stockholders other than the Selling
Stockholder.

         "Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder.

         "Selling Stockholder" is defined in Section 3.1(a).

         "Stockholders" means, collectively, each of the original signatory
parties to this Agreement who are holders of Shares; any transferee, successor
or assigns of any such signatory party in interest or power with respect to any
Shares owned beneficially now or in the future by any such signatory party; and
any Person who may subsequently acquire any Shares; provided, that no successor
or assignment shall be deemed to be permitted under this Agreement by virtue of
this definition.

         "Shares" means any and all issued and outstanding shares of Common
Stock, whether now owned or hereafter acquired.

         "Transfer Event" is defined in Section 3.1(a).

         "Transfer Event Notice" means a written notice setting forth in detail
the circumstances of a Transfer Event under Section 3.1(a), including, without
limitation, the name and address of the proposed purchaser, and the proposed
purchase price, the form of consideration to be paid, the terms, the conditions
of the sale, and a copy of the contract or court order, if any, with respect to
the Transfer Event.

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                                   ARTICLE 2.
                           RESTRICTION ON DISPOSITION

         No Shares or interest therein, may be sold, assigned, transferred
(whether or not for consideration), registered for transfer, given, donated,
subjected to an option to purchase, or in any manner disposed of, or subjected
to an agreement to do any of the foregoing (any of the foregoing hereby being
referred to as a "Disposition") by any Stockholder, a Stockholder's spouse, if
any, or any successor in interest thereof, other than pursuant to a Permitted
Transfer or except in accordance with this Agreement. Subject to Section 11.5,
any attempted Disposition, other than a Permitted Transfer or except in
accordance with this Agreement, shall be void and ineffectual.

                                   ARTICLE 3.
                      RIGHT OF FIRST REFUSAL; FORCED SALE

         SECTION 3.1 RIGHT OF FIRST REFUSAL.

                  (a) Transfer Events; Notice. The following constitute a
         "Transfer Event":

                           (i) If any Stockholder shall attempt a Disposition of
                  any Shares or any interest therein, other than a Permitted
                  Transfer or a Disposition in accordance with Section 3.2;

                           (ii) If any Stockholder shall make an assignment for
                  the benefit of creditors;

                           (iii) If any Stockholder shall file, or consent to
                  the filing of, a petition under any federal or state
                  insolvency, bankruptcy, reorganization or similar law
                  (collectively, "Bankruptcy Law") or petition for, or consent
                  to, the taking of possession by a trustee, receiver or similar
                  official of any of the Stockholder's assets;

                           (iv) If any Stockholder shall be adjudicated as
                  bankrupt or insolvent under any Bankruptcy Law by a judgment
                  which has become final;

                           (v) If any Stockholder shall suffer an attachment,
                  sequestration, foreclosure, turnover order, writ of execution
                  or garnishment or any other method of seizure to be levied
                  against any Shares or any interest therein;

                           (vi) If any Stockholder shall have any Shares or any
                  interest therein, subjected to a Disposition in any other way
                  whatsoever, other than a Permitted Transfer;

                           (vii) If any Stockholder shall die, such
                  Stockholder's Shares have not been devised to a Permitted
                  Transferee and 60 days shall pass after the Stockholder's
                  death (unless a shorter period of time is necessary to prevent
                  a Disposition of the Stockholder's Shares to a Person other
                  than a Permitted Transferee); or

                           (viii) A Community Property Event.

         In the event of a Transfer Event, the Stockholder whose Shares are
         involved in any Transfer Event (the "Selling Stockholder"), the Selling
         Stockholder's legal representative, the estate of said deceased
         Stockholder, or the Selling Stockholder's surviving spouse, shall
         within 10 business days of the date of such Transfer Event deliver to
         the Company a Transfer Event Notice.

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                  The Company shall promptly deliver copies of the Transfer
         Event Notice to the other Stockholders. Notice by the Company shall be
         deemed the Selling Stockholder's offer of the entire legal and
         beneficial interest in the Shares involved in the Transfer Event (the
         "Offered Shares") for sale to the Remaining Stockholders at the price
         and upon the terms and conditions set forth in this Section 3.1. If the
         Transfer Event Notice is not delivered to the Company, the Company,
         upon being advised of any such Transfer Event, shall prepare and send
         the Transfer Event Notice on the Company's own initiative (the Transfer
         Event Notice being deemed received by the Company on the date the
         Company delivers it), whereupon the Offered Shares shall be deemed so
         offered to the Remaining Stockholders, pursuant to this Section 3.1.

                  (b) Purchase Option of Stockholders. Each Remaining
         Stockholder shall have the option to purchase, on the terms provided
         herein, all or a portion of the number of Offered Shares equal to the
         product of the number of the Offered Shares multiplied by the
         Stockholder's Proportionate Share. A Remaining Stockholder desiring to
         exercise the option under this Section 3.1(b) shall give written notice
         thereof to the Selling Stockholder, such notice to be dated and sent no
         later than 30 days after the Remaining Stockholder's receipt of the
         Transfer Event Notice. Failure to so notify the Selling Stockholder
         shall be deemed a failure to exercise the option in this Section
         3.1(b). In addition, if any Remaining Stockholder fails or is deemed to
         fail to exercise the option to purchase his Proportionate Share of the
         Offered Shares, then each of the Remaining Stockholders who has elected
         to purchase his Proportionate Share of the Offered Shares may elect to
         purchase a number of the Remaining Offered Shares equal to the product
         of the number of Remaining Offered Shares multiplied by the
         Stockholder's Additional Proportionate Share; provided, that the
         Remaining Stockholder so elects in his notice to the Selling
         Stockholder under this Section 3.1(b). Subject to other provisions of
         this Section 3.1, such purchases shall take place at a closing held
         within 30 days after the expiration of the Remaining Stockholder's
         option pursuant to this Section 3.1(b).

                  (c) Disposition to Third Party. If all of such Offered Shares
         are not purchased pursuant to Section 3.1, then no Offered Shares may
         be purchased by the Stockholders or the Remaining Stockholders pursuant
         to Section 3.1, and the Selling Stockholder may retain the Offered
         Shares or, subject to Section 3.2, make a Disposition of all (but not
         less than all) of the Offered Shares to any transferee named in the
         Transfer Event Notice within but not later than 90 days after the date
         on which the option in Section 3.1(b) expires. The Offered Shares must
         be disposed of at the same or higher price and upon substantially the
         same terms and conditions to the transferee as those contained in the
         Transfer Event Notice. If the price, terms, or conditions are to vary
         substantially or the Disposition is to occur after the 90-day period,
         then the Selling Stockholder's right to make a Disposition of any of
         the Shares pursuant to this Section 3.1 shall terminate, and the terms
         of this Section 3.1 shall again become effective.

                  (d) Purchase Price; Form of Payment. The purchase price per
         Offered Share shall be (i) in the case of a proposed Disposition
         involving a voluntary sale to a transferee, the price to be paid per
         Offered Share by the transferee, payable in cash, provided, that, if
         the consideration offered by the third-party transferee is not cash,
         the cash price per Offered Share shall equal the fair market value (as
         determined by an independent investment banker) of the consideration
         described in the Transfer Event Notice or (ii) in the case of any other
         proposed Disposition, the lower of (a) the price set by a court order,
         if applicable, or (b) the Agreed Value, payable in either case in the
         form of cash.

                  (e) Closing. The closing of the purchase of any Offered Shares
         pursuant to this Section 3.1 shall take place on the date determined in
         accordance with this Agreement or on such other date and at a place and
         time as is mutually agreed upon in writing by the purchasers and the
         Selling Stockholder. At the closing, the Selling Stockholder (or his or
         her legal representative)

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         shall deliver to the purchasers the certificates representing the
         Shares to be transferred, duly endorsed with any required transfer
         stamps affixed and any required transfer taxes paid, by the Selling
         Stockholder, free and clear of any liens, claims or encumbrances (other
         than the restrictions imposed by this Agreement), against delivery of
         the purchase price.

         SECTION 3.2 FORCED SALE. If STE shall receive a bona fide offer (the
"Total Offer") from a third party to purchase all (but not less than all) of the
shares of Common Stock then issued and outstanding (but not limited to the
shares of Common Stock then owned by STE only), which STE is willing to accept,
STE shall have the option, by giving each of the Stockholders (other than STE)
notice (the "Drag Along Notice"), to require that each of the Stockholders
(other than STE) shall have the obligation to sell to the third party all (but
not less than all) the shares of Common Stock then owned by each such
Stockholder for the same price per share and on the same terms and conditions as
are proposed by the third party in the Total Offer to STE.

                                   ARTICLE 4.
                               SUPERMAJORITY VOTE

         The following decisions shall require the affirmative vote of the
holders of 75% of the Shares then outstanding and entitled to vote:

         (i)      the amendment, alteration or repeal of the Company's
                  Certificate of Incorporation or Bylaws, other than an
                  amendment to the Certificate of Incorporation to increase the
                  authorized number of shares of common stock from 10,000 to
                  50,000;

         (ii)     the merger or consolidation of the Company with or into any
                  other entity or similar business combination;

         (iii)    the incurrence of indebtedness or the pledge of any of the
                  Company's assets to secure indebtedness;

         (iv)     the sale or lease of all or substantially all of the Company's
                  assets (excluding inventory sold in the ordinary course of
                  business) in one or a series of transactions; or

         (v)      the reorganization, recapitalization, restructuring or similar
                  transaction of the Company.

                                   ARTICLE 5.
                                     LEGEND

         The following legend shall be placed on all certificates representing
Shares:

         "THE SALE, TRANSFER, ASSIGNMENT, PLEDGE, GIFT, ENCUMBRANCE, OR OTHER
         DISPOSITION AND THE VOTING RIGHTS OF THE SHARES EVIDENCED BY THIS
         CERTIFICATE ARE SUBJECT TO THE RESTRICTIONS, TERMS, AND CONDITIONS,
         CONTAINED IN A STOCKHOLDERS AGREEMENT DATED AS OF AUGUST 28, 2001. A
         COPY OF THAT AGREEMENT MAY BE OBTAINED WITHOUT CHARGE UPON WRITTEN
         REQUEST TO THE COMPANY AT ITS PRINCIPAL PLACE OF BUSINESS OR ITS
         REGISTERED OFFICE."

         All Shares owned by the Stockholders or the spouses of the
Stockholders, whether outstanding at the date hereof or hereafter issued, shall
be subject to the terms of this Agreement and shall be represented by a
certificate or certificates bearing the foregoing legend.

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                                   ARTICLE 6.
                                REPRESENTATIONS

         SECTION 6.1 STOCKHOLDER REPRESENTATIONS AND COVENANTS. Each Stockholder
individually represents as of the date hereof that such Stockholder owns the
number of Shares set forth opposite such Stockholder's name on Exhibit A, free
from any liens, claims or encumbrances whatsoever other than the restrictions
imposed by this Agreement.

         SECTION 6.2 SPOUSE REPRESENTATIONS. Each spouse of a Stockholder
individually is bound by, and such spouse's interest, if any, in any Shares is
subject to, the terms of this Agreement. Nothing in this Agreement shall create
a community property interest where none otherwise exists. Each spouse of a
Stockholder individually acknowledges that he or she is benefited by this
Agreement and that the mutual obligations contained in this Agreement constitute
adequate consideration for entering into this Agreement.

                                   ARTICLE 7.
                                  TERMINATION

         This Agreement shall automatically terminate upon the occurrence of any
of the following events:

                  (a) The Disposition of all of the Shares of any Stockholder in
         accordance with this Agreement, but only as to such Stockholder and not
         the Shares;

                  (b) The complete liquidation of the Company; or

                  (c) The consummation of a registered public offering of the
         Shares underwritten by a nationally or regionally recognized investment
         banking firm that generates offering proceeds to the Company of at
         least $25 million.

                                   ARTICLE 8.
                                NEW STOCKHOLDERS

         Other than in respect of options and shares of Common Stock issuable
under any employee stock option plan or similar plan adopted by the Company, it
shall be a condition to the issuance by the Company, or the transfer of Shares
in accordance with this Agreement, of Shares to a person or entity other than an
existing Stockholder that the recipient of such shares or securities and such
recipient's spouse, if any, shall become a signatory to this Agreement by an
Addendum Agreement with the blanks appropriately completed. The Company is
hereby granted authority and a limited power-of-attorney to execute the Addendum
Agreement for new Stockholders on behalf of the Stockholders.

                                   ARTICLE 9.
                             MANAGEMENT AND CONTROL

         SECTION 9.1 BOARD OF DIRECTORS. The Company's board of directors shall
be initially composed of two (2) directors. In accordance with the Bylaws, and
as soon as practicable following the formation of the Company, each Stockholder
will cause its respective designee to the board of directors to (i) increase the
size of the board of directors to five (5) persons; (ii) elect two additional
designees of STE to the board of directors; and (iii) elect one additional
designee of TeraForce to the board of directors.

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         SECTION 9.2 ELECTION OF DIRECTORS BY STE.

                  (a) STE shall have the right to appoint three (3) members of
         the Company's board of directors and shall have the right to appoint
         the Chairman of the Board. TeraForce hereby agrees to vote its Shares
         in favor of the persons STE nominates for membership on the board of
         directors.

                  (b) A director elected by STE pursuant to this Article 9 shall
         serve until his successor is duly elected and qualified or until his
         removal. Such a director may be removed without cause at any time by
         action, and only by such action, of STE. If the office of a director
         elected by STE pursuant to this Article 9 becomes vacant by reason of
         death, resignation, retirement, disqualification, removal from office
         or otherwise, such vacancy may be filled by the action, and only by
         such action, of STE.

                  (c) STE shall have the right to nominate key appointment
         holders in the Company, including but not limited to the Chief
         Executive Officer.

         SECTION 9.3 ELECTION OF DIRECTORS BY TERAFORCE.

                  (a) TeraForce shall have the right to appoint two (2) members
         of the Company's Board of Directors. STE hereby agrees to vote its
         Shares in favor of the persons STE nominates for membership on the
         board of directors.

                  (b) A director elected by TeraForce pursuant to this Article 9
         shall serve until his successor is duly elected and qualified or until
         his removal. Such a director may be removed without cause at any time
         by action, and only by such action, of TeraForce. If the office of a
         director elected by TeraForce pursuant to this Article 9 becomes vacant
         by reason of death, resignation, retirement, disqualification, removal
         from office or otherwise, such vacancy may be filled by the action, and
         only by such action, of TeraForce.

                                   ARTICLE 10.
                               MAINTENANCE RIGHTS

         SECTION 10.1 MAINTENANCE RIGHTS. The Stockholders shall have the right
(which may be exercised in whole or in part) to purchase their respective
proportionate share of any additional capital stock issued by the Company, at
the same Price and on the same terms as the capital stock to be sold by the
Company. The number of shares or other units of capital stock the Stockholders
shall have a right to acquire pursuant to this Article 10 shall be based upon
the proportion of the total outstanding shares of Common Stock which is owned by
each Stockholder. Stockholders who elect to exercise their right in full to
purchase the Offered Shares shall also have the right (which may be exercised in
whole or in part) to purchase their respective proportionate share of the stock
that was offered but not purchased by the other Stockholders. The Company shall
notify the Stockholders in writing (an "Issuance Notice") at least 10 business
days prior to the issuance of any capital stock. Each Issuance Notice shall set
forth the capital stock proposed to be issued and sold, the Price to be paid for
such capital stock and the proposed date of issuance (the "Issuance Date"). The
Stockholders shall notify the Company prior to the Issuance Date if they elect
to exercise their right to purchase capital stock and if they make such an
election, shall make payment in cash for the capital stock by certified check or
wire transfer prior to the Issuance Date. Upon receipt of such payment by the
Company, the Stockholders shall be deemed for all purposes to be the owner of
such shares of capital stock, and the Company shall cause certificates
representing such capital stock to be issued to the Stockholders as soon as
practicable. Any Offered Shares not purchased by the Stockholders may then be
offered by the Company to outside investors on the same terms offered to the
Stockholders. The Company may sell capital stock described in an Issuance
Notice, during a period not to exceed 90 days after the receipt of the
Stockholders of the Issuance Notice. Thereafter, any issuance by the Company
must again be preceded by an offer to the Stockholders.

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         As used herein, the "Price" at which capital stock is to be issued by
the Company shall be (i) in the case of cash consideration paid for such capital
stock, the amount of such cash consideration and (ii) in the case of noncash
consideration, the fair market value of such consideration, as determined in
good faith by the members of the board of directors of the Company.

         SECTION 10.2 EXCEPTIONS. Notwithstanding the foregoing, the rights
created by this Article 10 shall not apply to any issuance of capital stock (i)
pursuant to any thrift plan, stock purchase plan, stock bonus plan, stock option
plan, employee stock ownership plan or other incentive or profit sharing
arrangement for the benefit of employees or non-employee directors of the
Company or its subsidiaries, (ii) in connection with any stock split or a
dividend or distribution of shares of Common Stock to all of the holders
thereof, or (iii) pursuant to any transaction registered under the Securities
Act.

         SECTION 10.3 TERMINATION OF MAINTENANCE RIGHTS. The provisions of this
Article 10 and the rights granted hereunder shall terminate upon the date of the
consummation of a registered public offering of the Shares underwritten by a
nationally or regionally recognized investment banking firm that generates
offering proceeds to the Company of at least $25 million.

                                   ARTICLE 11.
                                  MISCELLANEOUS

         SECTION 11.1 SIMULTANEOUS DEATH. If a Stockholder and his or her
spouse reside in a state with community property laws and both suffer a common
accident or casualty which results in their respective deaths within 60 days of
each other, it shall be conclusively presumed, for the purpose of this
Agreement, that the Stockholder died first and his or her spouse died
thereafter.

         SECTION 11.2 BINDING EFFECT. This Agreement shall be binding upon the
parties hereto, their heirs, administrators, executors, successors and assigns.
The obligations of the Stockholders under this Agreement shall be binding upon
any person or entity (other than the Company) acquiring any Shares, regardless
of how acquired from a Stockholder.

         SECTION 11.3 ATTORNEYS' FEES. If any Stockholder unsuccessfully
challenges the operation of this Agreement by commencing a suit or proceeding in
any court ("Legal Action"), or the Company or any Stockholder successfully
resorts to Legal Action to enforce this Agreement against a Stockholder, then
the unsuccessful parties shall pay all reasonable legal fees of all other
parties to such Legal Action.

         SECTION 11.4 SPECIFIC PERFORMANCE. The parties acknowledge that
remedies at law will be inadequate remedies for breach of this Agreement and
consequently agree that this Agreement shall be enforceable by specific
performance. The remedy of specific performance shall be cumulative of all of
the rights and remedies at law or in equity of the parties under this Agreement.

         SECTION 11.5 TRANSFERS IN VIOLATION OF AGREEMENT. Any transfer or
attempted transfer of any Shares not in full compliance with the terms of this
Agreement shall be null and void, and the Company shall not record such transfer
on its books or treat any purported transferee of such Shares as the owner of
such Shares for any purpose. Notwithstanding the preceding, the Company, at any
time prior to the expiration of six months after the Company receives written
notice of such transfer, may purchase any improperly transferred Shares at a
price and in all respects as if notice of the proposed transfer had been timely
given as provided herein instead of treating the transfer as void. In enforcing
such rights, the Company may hold and refuse to transfer any Shares or any
certificate therefor presented to it for transfer, in addition to, and without
prejudice to, any and all other rights or remedies that may be available to it.

         SECTION 11.6 NOTICES. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by certified or
registered mail, postage prepaid with return receipt

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requested, telecopy (with hardcopy delivered by overnight courier service), or
delivered by hand, messenger or overnight courier service, and shall be deemed
given when received at the addresses of the parties set forth below, or at such
other address furnished in writing to the other parties hereto.

                  Company:          Intelect Technologies Inc.
                                    1225 Commerce Drive
                                    Richardson, Texas 75081
                                    Attn: Chief Executive Officer
                                    Fax:  (972) 367-2200

                  TeraForce:        TeraForce Technology Corporation
                                    1240 E. Campbell Road
                                    Richardson, Texas 75081
                                    Attn: Robert P. Capps
                                    Telecopy: (469) 330-4972

                  with a copy to:   Haynes and Boone, LLP
                                    1600 N. Collins, Suite 2000
                                    Richardson, Texas 75080
                                    Attn: William L. Boeing
                                    Telecopy: (972) 680-7551

                  STE:              Singapore Technologies Electronics Limited
                                    24 Ang Mo Kio Street 65
                                    Singapore 569061
                                    Attn:  Ng Kim Hock
                                    Fax:  (65) 4848840
                                    Fax:  (214) 902-0938

         SECTION 11.7 ENTIRE AGREEMENT; COUNTERPARTS. This Agreement (including
the Exhibits hereto) constitutes the entire agreement among the parties hereto
with respect to the subject matter hereof and supersedes all prior oral and
written agreements between the parties. This Agreement may not be modified,
amended or otherwise changed in any manner except by a writing executed by the
Company and all Stockholders that are a party to this Agreement. This Agreement
may be executed in a number of identical counterparts (including counterparts or
signature pages executed and transmitted by telecopy) with the same effect as if
all signatories had signed the same document. All counterparts must be construed
together to constitute one and the same instrument.

         SECTION 11.8 WAIVER. The waiver by one party of a breach of any
provision of this Agreement by the other party shall not operate or be construed
as a waiver of any subsequent breach of the same or any other provision by the
other party. Either party hereto may waive the benefit of any provision or
condition for its benefit contained in this Agreement.

         SECTION 11.9 GOVERNING LAW. THIS AGREEMENT SHALL BE INTERPRETED AND THE
RIGHTS OF THE PARTIES DETERMINED IN ACCORDANCE WITH THE LAWS OF THE UNITED
STATES APPLICABLE THERETO AND THE LAWS OF THE STATE OF TEXAS APPLICABLE TO AN
AGREEMENT EXECUTED, DELIVERED AND PERFORMED IN SUCH STATE. Each party hereto
hereby irrevocably submits to the exclusive jurisdiction of the United States
District Court for the Northern District of Texas and, if such court does not
have jurisdiction, of the courts of the State of Texas in Dallas County, for the
purposes of any action arising out of this Agreement, or the subject matter
hereof or thereof brought by any other party.

<PAGE>   12

         SECTION 11.10 REFORMATION; SEVERABILITY. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, such provision shall be
reformed to best effectuate the intent of the parties and permit enforcement
thereof, and the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby. If such
provision is not capable of reformation, it shall be severed from this agreement
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.

         SECTION 11.11 TITLES AND SUBTITLES. The titles of the paragraphs and
subparagraphs of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement. References to "Sections"
herein are references to Sections of this Agreement. The words "herein,"
"hereof," "hereto" and "hereunder" and other words of similar import refer to
this Agreement as a whole and not to any particular Article, Section or other
subdivision.

                                    * * * * *

<PAGE>   13

EXECUTED as of the date first stated above.

                                    INTELECT TECHNOLOGIES INC.

                                    By:  /s/ Darly G. Lewellyn
                                       -----------------------
                                    Name:    Daryl G. Lewellyn
                                    Title:   President and Secretary

                                    TERAFORCE TECHNOLOGY CORPORATION

                                    By:  /s/ Robert P.Capps
                                       --------------------
                                    Name:    Robert P. Capps
                                    Title:   Executive Vice President and Chief
                                             Financial Officer

                                    SINGAPORE TECHNOLOGIES ELECTRONICS LIMITED

                                    By:  /s/ Ng Kim Hock
                                       -----------------
                                    Name:    Ng Kim Hock
                                    Title:   Vice President (USA Operations)<PAGE>   1
                                                                    EXHIBIT 10.4

                                   ----------

                          TRANSITION SERVICES AGREEMENT

         This TRANSITION SERVICES AGREEMENT (this "Agreement") is made as of
August 30, 2001, by and between TeraForce Technology Corporation, a Delaware
corporation (the "Seller"), and Intelect Technologies Inc., a Delaware
corporation (the "Buyer").

                                    RECITALS

A. This Agreement is the Transition Services Agreement referred to in that
certain Agreement to Form Joint Venture (the "Joint Venture Agreement"), dated
as of August 17, 2001, by and among Seller and Singapore Technologies
Electronics Limited.

B. Pursuant to the Joint Venture Agreement, Seller's subsidiary has on this date
sold to Buyer certain assets identified in the Joint Venture Agreement, such
sale taking place on the date hereof (the "Effective Date").

C. Seller has requested that for a limited term Buyer provide certain warranty
and support services to Seller upon the terms and subject to the conditions set
forth herein.

D. Buyer has requested that for a limited term Seller provide certain
engineering, financial and support services to Buyer upon the terms and subject
to the conditions set forth herein.

                                    AGREEMENT

         NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties contained herein and in the Joint Venture Agreement and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties, intending to be legally bound, hereby agree as
follows:

                                   ARTICLE ONE

                                   DEFINITIONS

         All capitalized terms that are used and not specifically defined herein
shall have the meanings assigned to them in the Joint Venture Agreement.

                                   ARTICLE TWO

                                SERVICES PROVIDED

         Section 2.1 Buyer Services Provided. On and subject to the provisions
of this Agreement, during the term of this Agreement, Seller hereby engages
Buyer as an independent contractor, not as an agent, for the purpose of
performing the services described on Exhibit A (the "Buyer Services"), and Buyer
shall perform the Buyer Services for the Seller on the terms and conditions set
forth in this Agreement.

         Section 2.2 Seller Services Provided. On and subject to the provisions
of this Agreement, during the term of this Agreement, Buyer hereby engages
Seller as an independent contractor, not as an agent, for the

<PAGE>   2

purpose of performing the services described on Exhibit B (the "Seller
Services"), and Seller shall perform the Seller Services for the Buyer on the
terms and conditions set forth in this Agreement.

         Section 2.3 Standard of Service. In performing the respective services,
each party shall use the same degree of skill, prudence, competence and
diligence as it used in the performance of the same or similar tasks for or on
its own behalf, subject in each case to any provisions set forth on Exhibit A
and on Exhibit B, respectively.

                                  ARTICLE THREE

                                      TERM

         Section 3.1 Term. This Agreement shall become effective on the
Effective Date and shall continue in effect until the second anniversary of the
date of this Agreement.

                                  ARTICLE FOUR

                                     CHARGES

         Section 4.1 Monthly Fees for Buyer Services. Seller shall pay Buyer for
the services provided hereunder, together with all reasonable out-of-pocket
costs and expenses (but excluding general, administrative and other overhead
costs and expenses) and costs of employees of a party hereto directly allocated
to a particular project equal to that employee's regular compensation plus
benefits allocated and charged on an hourly basis (but excluding bonuses and
similar extraordinary compensation), equipment or automobile rental costs,
copying costs, attorneys' fees, consultant fees or costs or fees associated with
any other service provider (the "Direct Costs") incurred by Buyer in connection
with the performance of the Buyer Services, on a monthly basis on or before the
10th day following the receipt by the Seller of an itemized invoice from the
Buyer outlining the costs for the preceding month. Seller shall not be required
to pay, nor shall Buyer be entitled to reimbursement for, Buyer's office
overhead.

         Section 4.2 Monthly Fees for Seller Services. Subject to the offset
described below, Buyer shall pay Seller for the services provided hereunder,
together with all Direct Costs incurred by Seller in connection with the
performance of the Seller Services, on a monthly basis on or before the 10th day
following the receipt by the Buyer of an itemized invoice from the Seller
outlining the costs for the preceding month. Buyer shall not be required to pay,
nor shall Seller be entitled to reimbursement for, Seller's office overhead.
Seller consents to the offset of amounts owed by Buyer to Seller under this
Agreement against amounts owed by Buyer to Intelect Network Technologies, Inc.
("INT") under the Sharing Agreement between Buyer and INT dated the date hereof.

                                  ARTICLE FIVE

                           RELEASE AND INDEMNIFICATION

         Section 5.1 Release.

         (a)      BUYER SHALL NOT BE LIABLE TO SELLER FOR: (1) DELAYS, ERRORS,
                  MALFUNCTIONS OR BREAKDOWNS RELATING TO THE BUYER SERVICES,

<PAGE>   3

                  UNLESS SUCH DELAYS, ERRORS, MALFUNCTIONS OR BREAKDOWNS ARE
                  ATTRIBUTABLE TO OR ARE THE RESULT OF BUYER'S GROSS NEGLIGENCE
                  OR WILLFUL MISCONDUCT; OR (2) ANY ACTION OR OMISSION TAKEN OR
                  NOT TAKEN IN ACCORDANCE WITH THIS AGREEMENT OR PURSUANT TO
                  INSTRUCTIONS PROPERLY RECEIVED FROM SELLER, UNLESS SUCH ACTION
                  OR OMISSION, AS THE CASE MAY BE, IS ATTRIBUTABLE TO OR IS THE
                  RESULT OF BUYER'S BREACH OF ITS OBLIGATIONS HEREUNDER, OR ITS
                  GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

         (b)      SELLER SHALL NOT BE LIABLE TO BUYER FOR: (1) DELAYS, ERRORS,
                  MALFUNCTIONS OR BREAKDOWNS RELATING TO THE SELLER SERVICES,
                  UNLESS SUCH DELAYS, ERRORS, MALFUNCTIONS OR BREAKDOWNS ARE
                  ATTRIBUTABLE TO OR ARE THE RESULT OF SELLER'S GROSS NEGLIGENCE
                  OR WILLFUL MISCONDUCT; OR (2) ANY ACTION OR OMISSION TAKEN OR
                  NOT TAKEN IN ACCORDANCE WITH THIS AGREEMENT OR PURSUANT TO
                  INSTRUCTIONS PROPERLY RECEIVED FROM BUYER, UNLESS SUCH ACTION
                  OR OMISSION, AS THE CASE MAY BE, IS ATTRIBUTABLE TO OR IS THE
                  RESULT OF SELLER'S BREACH OF ITS OBLIGATIONS HEREUNDER, OR ITS
                  GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

         Section 5.2 Indemnification.

         (a)      BUYER SHALL INDEMNIFY, DEFEND AND HOLD HARMLESS SELLER,
                  SELLER'S AFFILIATES AND SELLER'S DELEGATES AND THEIR
                  RESPECTIVE PAST, PRESENT AND FUTURE OFFICERS, DIRECTORS,
                  EMPLOYEES, AGENTS AND REPRESENTATIVES (EACH INDIVIDUALLY
                  REFERRED TO HEREIN AS A "SELLER INDEMNIFIED PARTY"), WITHOUT
                  LIMITATION, FROM AND AGAINST ANY AND ALL LOSSES, RESULTING
                  FROM ANY CLAIM ARISING IN CONNECTION WITH, OR RELATED TO, THIS
                  AGREEMENT AND THE SELLER SERVICES PROVIDED HEREUNDER; THE
                  FOREGOING INDEMNIFICATION SPECIFICALLY INCLUDING THOSE CLAIMS
                  WHICH ARISE OUT OF THE SELLER INDEMNIFIED PARTY'S SOLE, JOINT
                  OR CONTRIBUTORY NEGLIGENCE, BUT SPECIFICALLY EXCLUDING THOSE
                  CLAIMS WHICH ARISE OUT OF THE GROSS NEGLIGENCE OR WILLFUL
                  MISCONDUCT OF THE SELLER INDEMNIFIED PARTY.

         (b)      SELLER SHALL INDEMNIFY, DEFEND AND HOLD HARMLESS BUYER,
                  BUYER'S AFFILIATES AND BUYER'S DELEGATES AND THEIR RESPECTIVE
                  PAST, PRESENT AND FUTURE OFFICERS, DIRECTORS, EMPLOYEES,
                  AGENTS AND REPRESENTATIVES (EACH INDIVIDUALLY REFERRED TO
                  HEREIN AS A "BUYER INDEMNIFIED PARTY"), WITHOUT LIMITATION,
                  FROM AND AGAINST ANY AND ALL LOSSES, RESULTING FROM ANY CLAIM
                  ARISING IN CONNECTION WITH, OR RELATED TO, THIS AGREEMENT AND
                  THE BUYER SERVICES PROVIDED HEREUNDER; PROVIDED, HOWEVER, THAT
                  AS TO WARRANTY SERVICES PROVIDED BY BUYER FOR PRODUCTS
                  PREVIOUSLY SOLD BY SELLER, SUCH INDEMNITY ONY EXTENDS TO THE
                  WARRANTY SERVICE ITSELF AD NOT TO (AND BUYER SHALL BE HELD
                  HARMLESS FROM CLAIMS ARISING OUT OF) CLAIMS IN RESPECT OF THE
                  PRODUCT BEING SERVICED; THE FOREGOING INDEMNIFICATION
                  SPECIFICALLY INCLUDING THOSE CLAIMS WHICH ARISE OUT OF THE
                  BUYER INDEMNIFIED PARTY'S SOLE, JOINT OR CONTRIBUTORY

<PAGE>   4

                  NEGLIGENCE, BUT SPECIFICALLY EXCLUDING THOSE CLAIMS WHICH
                  ARISE OUT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE
                  BUYER INDEMNIFIED PARTY.

         Section 5.3 Intent of the Parties.

         (a)      IT IS THE EXPRESS INTENT OF BUYER AND SELLER THAT BUYER DEFEND
                  AND INDEMNIFY THE SELLER INDEMNIFIED PARTY AGAINST THOSE
                  CLAIMS IDENTIFIED IN SECTION 5.2 WHICH ARISE FROM THE
                  NEGLIGENCE (ACTIVE OR PASSIVE) OF THE SELLER INDEMNIFIED
                  PARTY, OTHER THAN THROUGH GROSS NEGLIGENCE OR WILLFUL
                  MISCONDUCT. SELLER'S DECISION TO ENTER INTO THIS AGREEMENT AND
                  TO PROVIDE THE SELLER SERVICES IDENTIFIED HEREIN ARE IN
                  EXCHANGE FOR THE LIMITED LIABILITY REFERRED TO IN SECTION 5.2
                  AND THIS SECTION 5.4. SELLER WOULD NOT HAVE ENTERED INTO THIS
                  AGREEMENT FOR THE CONSIDERATION PROVIDED HEREIN BUT FOR
                  BUYER'S AGREEMENT TO INDEMNIFY THE SELLER INDEMNIFIED PARTIES
                  AS PROVIDED ABOVE.

         (b)      IT IS THE EXPRESS INTENT OF BUYER AND SELLER THAT SELLER
                  DEFEND AND INDEMNIFY THE BUYER INDEMNIFIED PARTY AGAINST THOSE
                  CLAIMS IDENTIFIED IN SECTION 5.3 WHICH ARISE FROM THE
                  NEGLIGENCE (ACTIVE OR PASSIVE) OF THE BUYER INDEMNIFIED PARTY,
                  OTHER THAN THROUGH GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
                  BUYER'S DECISION TO ENTER INTO THIS AGREEMENT AND TO PROVIDE
                  THE BUYER SERVICES IDENTIFIED HEREIN ARE IN EXCHANGE FOR THE
                  LIMITED LIABILITY REFERRED TO IN SECTION 5.3 AND THIS SECTION
                  5.4. BUYER WOULD NOT HAVE ENTERED INTO THIS AGREEMENT FOR THE
                  CONSIDERATION PROVIDED HEREIN BUT FOR SELLER'S AGREEMENT TO
                  INDEMNIFY THE BUYER INDEMNIFIED PARTIES AS PROVIDED ABOVE.

         Section 5.4 Survival of Indemnification Obligations.

         (a)      Buyer's obligations under Article Five hereof shall continue
                  for a period of two (2) years following the expiration or
                  termination of this Agreement.

         (b)      Seller's obligations under Article Five hereof shall continue
                  for a period of two (2) years following the expiration or
                  termination of this Agreement.

         Section 5.5 Notification of Claim.

         (a)      The Seller Indemnified Party shall give prompt written notice
                  to the Buyer of the receipt of any claim or the commencement
                  of any action which is or may be covered by the applicable
                  indemnity, but the failure to so notify the Buyer shall not
                  relieve the Buyer of any liability that it may have under this
                  Article Five except to the extent that the defense of such
                  action is prejudiced thereby. Upon receipt of such notice, the
                  Buyer shall immediately assume the defense thereof with
                  counsel satisfactory to the Seller Indemnified Party. No
                  compromise or settlement thereof may be effected by the Buyer
                  without the Seller Indemnified Party's consent.

         (b)      The Buyer Indemnified Party shall give prompt written notice
                  to the Seller of the receipt of any claim or the commencement
                  of any action which is or may be covered by the applicable

<PAGE>   5

                  indemnity, but the failure to so notify the Seller shall not
                  relieve the Seller of any liability that it may have under
                  this Article Five except to the extent that the defense of
                  such action is prejudiced thereby. Upon receipt of such
                  notice, the Seller shall immediately assume the defense
                  thereof with counsel satisfactory to the Buyer Indemnified
                  Party. No compromise or settlement thereof may be effected by
                  the Seller without the Buyer Indemnified Party's consent.

         Section 5.6 No Warranties.

         (a)      Buyer makes no representation or warranty, express or implied,
                  regarding the Buyer Services, their implementation, related
                  training, or database support beyond the express terms of this
                  Agreement. BUYER DISCLAIMS AND SELLER HEREBY WAIVES, ANY AND
                  ALL OTHER WARRANTIES, WHETHER EXPRESS OR IMPLIED, INCLUDING,
                  BUT NOT LIMITED TO, ANY WARRANTY OF MERCHANTABILITY OR FITNESS
                  FOR INTENDED USE, OR, EXCEPT AS OTHERWISE STATED HEREIN, ANY
                  LIABILITY IN CONTRACT, NEGLIGENCE, OR TORT WITH RESPECT TO THE
                  DATA, PRODUCTS AND/OR THE BUYER SERVICES FURNISHED HEREUNDER.

         (b)      Seller makes no representation or warranty, express or
                  implied, regarding the Seller Services, their implementation,
                  related training, or database support beyond the express terms
                  of this Agreement. SELLER DISCLAIMS AND BUYER HEREBY WAIVES,
                  ANY AND ALL OTHER WARRANTIES, WHETHER EXPRESS OR IMPLIED,
                  INCLUDING, BUT NOT LIMITED TO, ANY WARRANTY OF MERCHANTABILITY
                  OR FITNESS FOR INTENDED USE, OR, EXCEPT AS OTHERWISE STATED
                  HEREIN, ANY LIABILITY IN CONTRACT, NEGLIGENCE, OR TORT WITH
                  RESPECT TO THE DATA, PRODUCTS AND/OR THE SELLER SERVICES
                  FURNISHED HEREUNDER.

         Section 5.7 Limitation of Damages.

         (a)      NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, THE
                  LIABILITY OF THE BUYER UNDER THIS AGREEMENT FOR ANY BREACH,
                  DEFAULT, OR EVENT OF DEFAULT UNDER THIS AGREEMENT SHALL BE
                  STRICTLY LIMITED TO SUCH ACTUAL AND INCIDENTAL DAMAGES AS WERE
                  DIRECTLY INCURRED BY THE SELLER BY REASON OF SUCH BREACH,
                  DEFAULT OR EVENT OF DEFAULT. IN NO EVENT SHALL THE BUYER EVER
                  BE LIABLE, NOR SHALL THE SELLER EVER RECOVER, AND HEREBY
                  WAIVES, ANY CONSEQUENTIAL OR SPECIAL DAMAGES (INCLUDING BUT
                  NOT LIMITED TO LOST PROFITS OR DAMAGES FOR LOST BUSINESS
                  OPPORTUNITY).

         (b)      NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, THE
                  LIABILITY OF THE SELLER UNDER THIS AGREEMENT FOR ANY BREACH,
                  DEFAULT, OR EVENT OF DEFAULT UNDER THIS AGREEMENT SHALL BE
                  STRICTLY LIMITED TO SUCH ACTUAL AND INCIDENTAL DAMAGES AS WERE
                  DIRECTLY INCURRED BY THE BUYER BY REASON OF SUCH BREACH,
                  DEFAULT OR EVENT OF DEFAULT. IN NO EVENT SHALL THE SELLER EVER
                  BE LIABLE, NOR SHALL THE SELLER EVER RECOVER, AND HEREBY
                  WAIVES, ANY CONSEQUENTIAL OR SPECIAL DAMAGES (INCLUDING BUT
                  NOT LIMITED TO LOST PROFITS OR DAMAGES FOR LOST BUSINESS
                  OPPORTUNITY).

<PAGE>   6

                                   ARTICLE SIX

                                  FORCE MAJEURE

         Section 6.1 Force Majeure.

         (a)      Buyer shall not be liable for delays or failure in its
                  performance hereunder to the extent that such delay or failure
                  of performance is not the result of Buyer's lack of reasonable
                  diligence, if caused by any act of God, war, strike, lockout,
                  labor dispute, work stoppage, fire, act of government, or any
                  other cause, whether similar or dissimilar, beyond the control
                  of the Buyer (any such act or cause being herein called a
                  "Force Majeure Cause").

         (b)      Seller shall not be liable for delays or failure in its
                  performance hereunder to the extent that such delay or failure
                  of performance is not the result of Seller's lack of
                  reasonable diligence, if caused by any Force Majeure Cause.

                                  ARTICLE SEVEN

                                      TITLE

         Section 7.1 Title to Buyer Intellectual Property. Title and full and
complete ownership rights to all software, technology, know-how or proprietary
information (including any copyright or patent rights relating thereto), owned
or developed by Buyer, relating to the Buyer Services and used in the
performance of this Agreement shall remain with Buyer. Seller acknowledges that
such software, technology or proprietary information is Confidential Information
(as defined in Article Eight), whether or not such information or any portion
thereof is or may be protectable under the copyright, patent or trade secret
laws.

         Section 7.2 Title to Seller Intellectual Property. Title and full and
complete ownership rights to all software, technology, know-how or proprietary
information (including any copyright or patent rights relating thereto), owned
or developed by Seller, relating to the Seller Services and used in the
performance of this Agreement shall remain with Seller other than such
intellectual property developed by Seller as part of any engineering design
services performed for Buyer pursuant to Section 2.1 of this Agreement, in which
case such intellectual property shall be transferred to Buyer. Buyer
acknowledges that such software, technology or proprietary information is
Confidential Information (as defined in Article Eight), whether or not such
information or any portion thereof is or may be protectable under the copyright,
patent or trade secret laws.

<PAGE>   7

                                  ARTICLE EIGHT

                                 CONFIDENTIALITY

         Section 8.1 Confidential Information. For purposes of this Agreement,
"Confidential Information" shall mean any and all or (i) trade secrets, (ii)
confidential or other proprietary information of a party or its Affiliates
concerning past, present or future research, development, business activities or
affairs, finances, properties, methods of operation, processes and systems. The
parties expressly acknowledge and agree that the term "Confidential Information"
shall include, but is not limited to all documentation, software programs,
procedures, and services supplied in connection with the services hereunder. The
party which receives Confidential Information from the other party agrees to
maintain such information in secrecy at all times, using the same degree of care
with respect to such Confidential Information as it uses in protecting its own
proprietary information, trade secrets and similar items; provided, however,
that Confidential Information may be used in an action by one party to this
Agreement against the other, subject to the conditions set forth in Section 8.2.
Information of either party which would otherwise be considered Confidential
Information shall not be considered Confidential Information if such information
is in the public domain, or is placed in the public domain through no violation
of this Agreement, or is lawfully obtained from another source free of
restriction.

         Section 8.2 Nondisclosure. Neither party shall sell, transfer, publish,
disclose, display or otherwise make available the Confidential Information of
the other party to any third party, except (i) as necessary in furtherance of
the purposes of this Agreement, or (ii) as may be required by applicable law, in
which case the party from whom disclosure is sought shall promptly notify the
other party. To the extent that the other party objects to disclosure of such
Confidential Information, the party from which disclosure is sought shall (i)
use reasonable and lawful efforts to resist making any disclosure of such
Confidential Information, (ii) use reasonable and lawful efforts to limit the
amount of such Confidential Information to be disclosed, and (iii) use all
reasonable best efforts to obtain a protective order or other appropriate relief
to minimize the further dissemination of any Confidential Information to be
disclosed. In addition, neither party shall disclose the Confidential
Information of the other party to any employee or agent except on a need-to-know
basis. Each party shall use reasonable efforts to inform all such employees and
agents that the Confidential Information of the other party is subject to this
non-disclosure obligation. Furthermore, neither party shall use the Confidential
Information of the other party for any purpose other than as expressly provided
in this Agreement.

         Section 8.3 Return of Confidential Information. Upon termination of
this Agreement for any cause or reason, each party shall deliver to the other
party all of such other party's Confidential Information then in its possession,
including all copies thereof.

         Section 8.4 Survival. The restrictions of this Article Eight shall
survive for a period of two (2) years after the termination or expiration of
this Agreement.

         Section 8.5 Affiliates. Seller and Buyer each agree to cause their
respective Affiliates to comply in all respects with the restrictions of this
Article Eight.

         Section 8.6 Confidentiality Agreement. The provisions of this Article
Eight are in addition to, and shall not be deemed to affect the terms and
provisions of, any existing confidentiality agreement between the parties. To
the extent the provisions hereof may be deemed to be inconsistent with the terms
of any such other confidentiality agreement, or such other confidentiality
agreement shall be silent as to such items, this Agreement shall control with
respect to any Confidential Information relating to this Agreement. Upon the
written consent of the other party, which consent shall not be unreasonably
withheld, Buyer or Seller may

<PAGE>   8

provide this Agreement to third party lenders or investors; provided, however,
that the party receiving this Agreement shall, prior to obtaining it, enter into
a confidentiality agreement with the disclosing Buyer or Seller, as the case may
be, for the benefit of the other party.

                                  ARTICLE NINE

                             TERMINATION AND DEFAULT

         Section 9.1 Default. The following events shall constitute "Events of
Default" (whether any such event shall be voluntary or involuntary or come about
or be effected by operation of law or pursuant to or in compliance with any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body) and each such Event of Default shall be
deemed to exist and continue so long as, but only as long as, it shall not have
been remedied or waived by the nondefaulting party in writing:

         Section 9.1.1 Buyer Defaults.

         (a)      Buyer fails to pay, or cause to be paid, any amount due
                  hereunder as it becomes due in accordance with the terms of
                  this Agreement and such payment is not made within five (5)
                  Business Days after written notice thereof to Buyer by Seller;

         (b)      Buyer fails to punctually and properly perform any other
                  covenant, agreement, representation, obligation, term or
                  condition contained herein and such failure continues for a
                  period of fifteen (15) days after receipt by Buyer of written
                  notice thereof from Seller;

         (c)      Buyer terminates or cancels this Agreement or any portion
                  thereof, except as expressly permitted hereunder;

         (d)      Buyer shall (i) apply for or consent to the appointment of a
                  receiver, trustee, custodian, intervener or liquidator for
                  itself or for all or a substantial part of Buyer's assets,
                  (ii) file a voluntary petition in bankruptcy, admit in writing
                  that Buyer is unable to pay Buyer's debts as they become due
                  or generally not pay its debts as they become due, (iii) make
                  a general assignment for the benefit of creditors, (iv) file a
                  petition or answer seeking reorganization or an arrangement
                  with creditors or seeking to take advantage of any bankruptcy
                  or insolvency laws, (v) file an answer admitting the material
                  allegations of, or consent to, or default in answering, a
                  petition filed against Buyer in any bankruptcy, reorganization
                  or insolvency proceeding or (vi) take corporate action for the
                  purpose of effecting any of the foregoing;

         (e)      An involuntary proceeding shall be commenced against Buyer
                  seeking bankruptcy or reorganization of Buyer or the
                  appointment of a receiver, custodian, trustee, liquidator or
                  other similar official of Buyer, or all or substantially all
                  of its assets, and such proceeding shall not have been
                  dismissed within thirty (30) days of the filing thereof; or an
                  order, order for relief, judgment or decree shall be entered
                  by any court of competent jurisdiction or other competent
                  authority approving a petition or complaint seeking
                  reorganization of Buyer or appointing a receiver, custodian,
                  trustee, liquidator or other similar official of Buyer or of
                  all or substantially all of its assets; or

         (f)      This Agreement shall, subsequent to the effectiveness hereof,
                  cease to be a legal, valid, binding agreement enforceable
                  against Buyer in accordance with its terms, or shall in any
                  way be terminated (prior to a scheduled expiration) or become
                  or be declared ineffective or inoperative, or shall in any way
                  whatsoever cease to give or provide to Seller the respective

<PAGE>   9

                  rights, titles, interests, remedies, powers or privileges
                  intended to be created hereby for any reason whatsoever,
                  excluding any of the foregoing arising from a breach by Seller
                  of any of its obligations hereunder.

         Section 9.1.2  Seller Defaults.

         (a)      Seller fails to pay, or cause to be paid, any amount due
                  hereunder as it becomes due in accordance with the terms of
                  this Agreement and such payment is not made within five (5)
                  Business Days after written notice thereof to Seller by Buyer;

         (b)      Seller fails to punctually and properly perform any covenant,
                  agreement, representation, obligation, term or condition
                  contained herein and such failure continues for a period of
                  fifteen (15) days after receipt by Seller of written notice
                  thereof from Buyer;

         (c)      Seller terminates or cancels this Agreement or any portion
                  thereof, except as expressly permitted hereunder;

         (d)      Seller shall (i) apply for or consent to the appointment of a
                  receiver, trustee, custodian, intervener or liquidator for
                  itself or for all or a substantial part of Seller's assets,
                  (ii) file a voluntary petition in bankruptcy, admit in writing
                  that Seller is unable to pay Seller's debts as they become due
                  or generally not pay its debts as they become due, (iii) make
                  a general assignment for the benefit of creditors, (iv) file a
                  petition or answer seeking reorganization or an arrangement
                  with creditors or seeking to take advantage of any bankruptcy
                  or insolvency laws, (v) file an answer admitting the material
                  allegations of, or consent to, or default in answering, a
                  petition filed against Seller in any bankruptcy,
                  reorganization or insolvency proceeding or (vi) take corporate
                  action for the purpose of effecting any of the foregoing;

         (e)      An involuntary proceeding shall be commenced against Seller
                  seeking bankruptcy or reorganization of Seller or the
                  appointment of a receiver, custodian, trustee, liquidator or
                  other similar official of Seller, or all or substantially all
                  of its assets, and such proceeding shall not have been
                  dismissed within thirty (30) days of the filing thereof; or an
                  order, order for relief, judgment or decree shall be entered
                  by any court of competent jurisdiction or other competent
                  authority approving a petition or complaint seeking
                  reorganization of Seller or appointing a receiver, custodian,
                  trustee, liquidator or other similar official of Seller or of
                  all or substantially all of its assets; or

<PAGE>   10

         (f)      This Agreement shall, subsequent to the effectiveness hereof,
                  cease to be a legal, valid, binding agreement enforceable
                  against Seller in accordance with its terms, or shall in any
                  way be terminated (prior to a scheduled expiration) or become
                  or be declared ineffective or inoperative, or shall in any way
                  whatsoever cease to give or provide to Buyer the respective
                  rights, titles, interests, remedies, powers or privileges
                  intended to be created hereby for any reason whatsoever,
                  excluding any of the foregoing arising from a breach by Buyer
                  of any of its obligations hereunder.

         Section 9.2 Remedies upon the Occurrence of an Event of Default.

                  Section 9.2.1 Seller's Remedies. Upon the occurrence of an
         Event of Default under Section 9.1.1, and at any time thereafter so
         long as such Event of Default shall be continuing, Seller may, at its
         option declare this Agreement to be in default by a written notice to
         Buyer; and at any time thereafter, so long as Buyer shall not have
         remedied all outstanding Events of Default, Seller may do one or more
         of the following as Seller in its sole discretion shall elect: (i)
         terminate this Agreement and terminate Buyer's access to the Seller
         Services provided hereunder; and (ii) recover all legal and equitable
         remedies to which it is entitled, by virtue of the occurrence of any
         Event of Default in accordance with Section 9.3.

                  Section 9.2.2 Buyer's Remedies. Upon the occurrence of an
         Event of Default under Section 9.1.2, and at any time thereafter so
         long as such Event of Default shall be continuing, Buyer may, at its
         option declare this Agreement to be in default by written notice to
         Seller; and at any time thereafter, so long as Seller shall not have
         remedied all outstanding Events of Default, Buyer may do any one or
         more of the following as Buyer in its sole discretion shall elect: (i)
         terminate this Agreement and terminate Seller's access to the Buyer
         Services provided hereunder; and (ii) recover all legal and equitable
         remedies to which it is entitled by virtue of the occurrence of any
         Event of Default in accordance with Section 9.3.

         Section 9.3 Remedies Cumulative. Subject to the limitations contained
in Section 5.7, no remedy referred to in this Article Nine is intended to be
exclusive, but each shall be cumulative and in addition to any other remedy
referred to above or otherwise available at law or in equity, and the exercise
by any party hereto of any one or more of such remedies shall not preclude the
simultaneous or later exercise by such party of any or all of such other
remedies. No express or implied waiver by any party hereto of any Event of
Default shall in any way be, or be construed as a waiver of, any future or
further Event of Default.

                                   ARTICLE TEN

                            ASSIGNMENT AND DELEGATION

         Section 10.1 Survival. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns; provided, however, that except as provided in Sections 10.2, 10.3, 10.4
and 10.5, no party hereto may assign its rights or delegate its obligations
without the express written consent of the other party hereto, which shall not
be unreasonably withheld

         Section 10.2 Assignment by Seller. After the Closing Date, Seller shall
be entitled to assign all of its rights and obligations to any successor entity
that may acquire all or substantially all its assets or business, by merger or
otherwise.

         Section 10.3 Assignment by Buyer. After the Closing Date, Buyer shall
be entitled to assign all of its rights and obligations to any successor entity
that may acquire all or substantially all its assets or business, by merger or
otherwise.

<PAGE>   11

         Section 10.4 Delegation of Duties of Seller for Buyer. Seller may
delegate all its obligations pursuant to this Agreement to any Affiliate of
Seller. In performance of their respective obligations under this Agreement,
Seller and its Affiliates may (i) act directly or through agents, counsel
(in-house or outside) or other persons; (ii) delegate the performance of its
obligations and functions; and (iii) consult with agents, counsel (in-house or
outside) and other persons. Neither Seller nor its Affiliates will be liable for
the default or misconduct of any persons employed, consulted, or engaged
thereby.

         Section 10.5 Delegation of Duties of Buyer for Seller. Buyer may
delegate all its obligations pursuant to this Agreement to any Affiliate of
Buyer. In performance of their respective obligations under this Agreement,
Buyer and its Affiliates may (i) act directly or through agents, counsel
(in-house or outside) or other persons; (ii) delegate the performance of its
obligations and functions; and (iii) consult with agents, counsel (in-house or
outside) and other persons. Neither Buyer nor its Affiliates will be liable for
the default or misconduct of any persons employed, consulted, or engaged
thereby.

                                 ARTICLE ELEVEN

                                  MISCELLANEOUS

         Section 11.1 No Agency.

         (a)      This agreement to provide the Buyer Services shall not be
                  construed as one of agency by Buyer for the Seller, but as one
                  in which Buyer is engaged independently in the business of
                  performing services for Seller as an independent contractor.
                  At no time shall any employee of Buyer or any independent
                  contractors hired by Buyer and/or their employees be
                  considered employees of the Seller, and Buyer shall be solely
                  responsible for all matters pertaining to such employees and
                  independent contractors.

         (b)      This agreement to provide the Seller Services shall not be
                  construed as one of agency by Seller for the Buyer, but as one
                  in which Seller is engaged independently in the business of
                  performing services for Buyer as an independent contractor. At
                  no time shall any employee of Seller or any independent
                  contractors hired by Seller and/or their employees be
                  considered employees of the Buyer, and Seller shall be solely
                  responsible for all matters pertaining to such employees and
                  independent contractors.

         Section 11.2 No Third Party Beneficiaries. Except for rights and
benefits conferred on certain of Seller's Affiliates and Buyer's Affiliates as
set forth in this Agreement, all rights, remedies and obligations of the parties
hereunder shall accrue or apply solely to the parties hereto or their permitted
successors or assigns and there is no intent to benefit any third parties.

         Section 11.3 Notices. All notices and other communications hereunder
shall be sufficiently given for all purposes hereunder if given in accordance
with the provisions of Section 8.7 of the Joint Venture Agreement.

         Section 11.4 Governing Law . THIS AGREEMENT SHALL BE INTERPRETED AND
THE RIGHTS OF THE PARTIES DETERMINED IN ACCORDANCE WITH THE LAWS OF THE UNITED
STATES APPLICABLE THERETO AND THE LAWS OF THE STATE OF TEXAS APPLICABLE TO AN
AGREEMENT EXECUTED, DELIVERED AND PERFORMED IN SUCH STATE. Each party hereto
hereby irrevocably submits to the exclusive jurisdiction of the United States
District Court for the

<PAGE>   12

Northern District of Texas and, if such court does not have jurisdiction, of the
courts of the State of Texas in Dallas County, for the purposes of any action
arising out of this Agreement, or the subject matter hereof or thereof brought
by any other party.

         Section 11.5 Amendment; Waiver . No term or provision of this Agreement
may be changed, waived, discharged or terminated orally, but only by written
instrument signed by the party against whom enforcement of the change, waiver,
discharge or termination is sought. Any consent or approval specified herein of
a party hereto may be withheld entirely in such party's discretion unless it is
herein expressly provided that such consent may not be unreasonably withheld. No
waiver of a breach of any provision of this Agreement by either party shall
constitute a waiver of any subsequent breach of the same or any other provision
hereof, and no waiver shall be effective unless made in writing.

         Section 11.6 Captions. The captions appearing in this Agreement have
been inserted as a matter of convenience and in no way define, limit or enlarge
the scope of this Agreement or any of the provisions hereto.

         Section 11.7 Partial Invalidity. Wherever possible, each provision
hereof shall be interpreted in such manner as to be effective and valid under
applicable law, but in case any one or more of the provisions contained herein
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provisions of this Agreement, and this Agreement shall be construed as if
such invalid, illegal or unenforceable provision or provisions had never been
contained herein unless the deletion of such provision or provisions would
result in such a material change as to cause completion of the transactions
contemplated hereby to be unreasonable; provided, however, that if, in the
reasonable opinion of any party to this Agreement, any such partial invalidity,
illegality or unenforceability affects the commercial basis of this Agreement,
such party shall so inform the other party, whereupon the parties shall
negotiate to agree upon an amendment to the Agreement that will maintain the
balance of the commercial interests of the parties under this Agreement. If,
however, such negotiations shall not be successfully concluded within thirty
(30) days, either party shall have the right to terminate this Agreement upon
giving at least thirty (30) days written notice to the other party.

         Section 11.8 Entirety. This Agreement is executed pursuant to and
subject to the terms of the Joint Venture Agreement and, when taken together
with the Joint Venture Agreement and any other agreements ancillary thereto,
embodies the entire agreement between the parties hereto concerning the subject
matter hereof and terminates and supersedes all prior or contemporaneous
agreements, discussions, undertakings and understandings, whether written or
oral, express or implied, concerning the subject matter hereof. Additional
rights and obligations of the parties set forth in the Joint Venture Agreement
shall be unimpaired and undiminished hereby.

         Section 11.9 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, and all such
counterparts shall constitute one and the same instrument.

         Section 11.10 Survival. Except as otherwise expressly limited herein,
the representations, warranties, covenants, agreements and indemnities set forth
in this Agreement, and the obligations hereunder, shall survive the expiration
or other termination of this Agreement.

         Section 11.11 Successors and Assigns. Subject to the terms hereof, this
Agreement shall bind and benefit Seller, Buyer and their respective successors
and permitted assigns.

         Section 11.12 Transaction Expenses. Except as specifically set forth
herein each of Seller and

<PAGE>   13

Buyer shall be responsible for their own legal and out-of-pocket expenses
arising from the transactions contemplated herein.

         Section 11.13 Effectiveness. Notwithstanding anything contained in this
Agreement to the contrary, this Agreement will not be binding upon any party
hereto until the Effective Date.

         Section 11.14 Time of Essence. With respect to all time periods
referred to herein, time is of the essence.

                                      *****

<PAGE>   14

         IN WITNESS WHEREOF, Seller and Buyer have executed this Agreement as of
the day and year first above written.

                                          TERAFORCE TECHNOLOGY CORPORATION,
                                             a Delaware corporation

                                          By:  /s/ Robert P. Capps
                                             ----------------------------------
                                          Name:  Robert P. Capps
                                          Title: Executive Vice President

                                          INTELECT TECHNOLOGIES INC.,
                                                     a Delaware corporation

                                          By:  /s/ Darly G. Lewellyn
                                             ----------------------------------
                                          Name:  Daryl G. Lewellyn
                                          Title: President and Secretary

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