Document:

EX-10.2

LOAN AGREEMENT

This Loan Agreement (the “Loan Agreement”) is entered into by and between DNA
COMPUTING SOLUTIONS, INC., a Delaware corporation (“Borrower”) and ENCORE BANK, a federal
savings association (“Lender”):

1. Credit Facility. Subject to the terms and conditions set forth in this Loan
Agreement and the other agreements, instruments and documents evidencing, securing, governing,
guaranteeing and/or pertaining to the Loans, as hereinafter defined (collectively, together with
the Loan Agreement, referred to hereinafter as the “Loan Documents”), Lender hereby agrees
to provide to Borrower the credit facility described below (the “Credit Facility”):

(a) Revolving Line of Credit. Subject to the terms and conditions set forth herein,
Lender agrees to lend to Borrower, on a revolving basis from time to time during the period
commencing on the date hereof and continuing for a period of one (1) year from the date hereof such
amounts as Borrower may request hereunder, but expressly subject to the terms, conditions and
limitations hereof and in the Note hereinafter described ; and provided,
however, the total principal amount outstanding at any time shall not exceed TWO MILLION
SEVEN HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($2,750,000.00) (the “Revolving Line of
Credit”). Subject to the terms and conditions hereof, Borrower may borrow, repay and re-borrow
hereunder. Borrower understands and agrees that Borrower shall repay the entire outstanding
principal amount on the Revolving Line of Credit, together with all accrued but unpaid interest
thereon.

All advances under the Credit Facility shall be collectively called the “Loans”.
Lender reserves the right to require Borrower to give Lender not less than two (2) business days
prior notice of each requested advance under the Credit Facility, specifying (i) the aggregate
amount of such requested advance and (ii) the requested date of such advance.

2. Promissory Note. The Loans shall be evidenced by a promissory note (together with
any renewals, extensions and increases thereof, collectively, the “Note”) duly executed by
Borrower, in form and substance acceptable to Lender, and payable as therein provided.

3. Collateral. As collateral and security for the indebtedness evidenced by the Note
and any and all other indebtedness or obligations from time to time owing by Borrower to Lender,
Borrower shall grant, and hereby grants, to Lender, its successors and assigns, a first and prior
lien and security interest in and assignment to the property described hereinbelow, together with
any and all products and proceeds thereof (the “Collateral”):

(a) All present and future accounts, chattel paper, documents, instruments, deposit accounts,
general intangibles and intellectual property rights (including any right to payment for goods sold
or services rendered arising out of the sale or delivery of personal property or work done or labor
performed by Borrower), now or hereafter owned, held, or acquired by Borrower, together with any
and all books of account, customer lists and other records relating in any way to the foregoing

(b) All present and hereafter acquired inventory (including without limitation, all raw
materials, work in process and finished goods) held, possessed, owned, held on consignment, or held
for sale, lease, return or to be furnished under contracts of service, in whole or in part, by
Borrower wherever located.

(c) All equipment and fixtures of whatsoever kind and character now or hereafter possessed,
held, acquired, leased or owned by Borrower and used or usable in Borrower’s business, together
with all replacements, accessories, additions, substitutions and accessions to all of the
foregoing.

The term “Collateral” shall also include all records and data relating to any of the
foregoing (including, without limitation, any computer software and programs on which such records
and data may be located). The Collateral shall be described in more detail in the Security
Agreement of even date. Borrower agrees to execute such security agreements, financing statements,
assignments, and other agreements and documents as Lender shall deem appropriate and otherwise
require from time to time to more fully create and perfect Lender’s lien and security interests in
the Collateral.

4. Guarantors. As a condition precedent to the Lender’s obligation to make the Loans
to Borrower, Borrower agrees to cause TeraForce Technology Corporation, a Delaware corporation,
Richard E. Bean, Robert E. Garrison, II, Steven A. Webster, James R. Hawkins, Peter W. Badger, John
H. Styles and Donald R. Campbell (collectively, the “Guarantors”) to each execute and
deliver to Lender contemporaneously herewith a guaranty agreement, in form and substance
satisfactory to Lender, thereby unconditionally guaranteeing re-payment of the Loans and all
obligations of the Borrower hereunder.

5. Representations and Warranties. Borrower hereby represents and warrants, and upon
each request for an advance under the Credit Facility further represents and warrants, to Lender as
follows:

(a) Existence. Borrower is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and all other states where it is doing business,
is authorized to do business in the State of Texas and has all requisite power and authority to
execute and deliver the Loan Documents.

(b) Binding Obligations. The execution, delivery, and performance of this Loan
Agreement and all of the other Loan Documents by Borrower have been duly authorized by all
necessary action by Borrower, and constitute legal, valid and binding obligations of Borrower,
enforceable 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.

(c) No Consent. The execution, delivery and performance of this Loan Agreement and
the other Loan Documents, and the consummation of the transactions contemplated hereby and thereby,
do not (i) conflict with, result in a violation of, or constitute a default under (A) any provision
of its articles of incorporation, bylaws or other instrument binding upon Borrower, or (B) any law,
governmental regulation, court decree or order applicable to Borrower, or (ii) require the consent,
approval or authorization of any third party.

(d) Financial Condition. Each financial statement of Borrower supplied to the Lender
truly discloses and fairly presents Borrower’s financial condition as of the date of each such
statement. There has been no material adverse change in such financial condition or results of
operations of Borrower subsequent to the date of the most recent financial statement supplied to
Lender.

(e) Litigation. There are no actions, suits, arbitrations, mediations or proceedings,
pending or, to the knowledge of Borrower, threatened against or affecting Borrower or the
properties of Borrower, before any court or governmental department, commission or board, which, if
determined adversely to Borrower, would have a material adverse effect on the financial condition,
properties, or operations of Borrower.

(f) Taxes; Governmental Charges. Borrower has filed all federal, state and local tax
reports and returns required by any law or regulation to be filed by it and has either duly paid
all taxes, duties and charges indicated due on the basis of such returns and reports, or made
adequate provision for the payment thereof, and the assessment of any material amount of additional
taxes in excess of those paid and reported is not reasonably expected.

6. Conditions Precedent to Advances. Lender’s obligation to make any advance under
this Loan Agreement and the other Loan Documents shall be subject to the conditions precedent that,
as of the date of such advance and after giving effect thereto (i) all representations and
warranties made to Lender in this Loan Agreement and the other Loan Documents shall be true and
correct, as of and as if made on such date, (ii) no material adverse change in the financial
condition of Borrower since the effective date of the most recent financial statements furnished to
Lender by Borrower shall have occurred and be continuing, (iii) no event has occurred and is
continuing, or would result from the requested advance, which with notice or lapse of time, or
both, would constitute an Event of Default (as hereinafter defined), and (iv) Lender’s receipt of
all Loan Documents appropriately executed by Borrower and all other proper parties.

7. Affirmative Covenants. Until (i) the Note and all other obligations and
liabilities of Borrower under this Loan Agreement and the other Loan Documents are fully paid and
satisfied, and (ii) the Lender has no further commitment to lend hereunder, Borrower agrees and
covenants that it will, unless Lender shall otherwise consent in writing:

(a) Accounts and Records and Information. Maintain its books and records in
accordance with generally accepted accounting principles. Borrower shall execute such other and
further documents and information as Lender may request.

(b) Right of Inspection. Permit Lender to examine, audit and make and take away
copies or reproductions of Borrower’s books and records, at all reasonable times, and the right to
examine and photocopy all such materials.

(c) Right to Additional Information. Furnish Lender with such additional information
and statements, lists of assets and liabilities, tax returns, and other reports with respect to
Borrower’s financial condition and business operations as Lender may request from time to time.

(d) Compliance with Laws. Conduct its business in an orderly and efficient manner
consistent with good business practices, and perform and comply with all statutes, rules,
regulations and/or ordinances imposed by any governmental unit upon Borrower and its businesses,
operations and properties (including without limitation, all applicable environmental statutes,
rules, regulations and ordinances).

(e) Taxes. 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
(i) the legality of the same shall be contested in good faith by appropriate judicial,
administrative or other legal proceedings, and (ii) 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, consistently applied.

(f) Insurance. Maintain insurance, including but not limited to, fire insurance,
comprehensive property damage, public liability, worker’s compensation, business interruption and
other insurance deemed necessary or otherwise required by Lender.

(g) Notice of Indebtedness. Promptly inform Lender of the creation, incurrence or
assumption by Borrower of any actual or contingent liabilities not permitted under this Loan
Agreement.

(h) Notice of Litigation. Promptly after the commencement thereof, notify Lender of
all actions, suits, arbitrations and proceedings before any court or any governmental department,
commission or board affecting Borrower or any of its properties.

(i) Notice of Material Adverse Change. Promptly inform Lender of (i) any and all
material adverse changes in Borrower’s financial condition, and (ii) all claims made against
Borrower which could materially affect the financial condition of Borrower.

(j) Additional Documentation. Execute and deliver, or cause to be executed and
delivered, any and all other agreements, instruments or documents which Lender may request in order
to give effect to the transactions contemplated under this Loan Agreement and the other Loan
Documents.

8. Negative Covenants. Until (i) the Note and all other obligations and liabilities
of Borrower under this Loan Agreement and the other Loan Documents are fully paid and satisfied,
and (ii) the Lender has no further commitment to lend hereunder, Borrower will not, without the
prior written consent of Lender:

(a) Nature of Business. Make any material change in the nature of its business as
carried on as of the date hereof.

(b) Liquidations, Mergers, Consolidations. Liquidate, merge or consolidate with or
into any other entity.

(c) Sale of Assets. Sell, transfer or otherwise dispose of any of its assets or
properties, other than in the ordinary course of business.

(d) Liens. Create or incur any lien or encumbrance on any of its assets, other than
(i) liens and security interests securing indebtedness owing to Lender, (ii) liens for taxes,
assessments or similar charges that are (1) not yet due or (2) being contested in good faith by
appropriate proceedings and for which Borrower has established adequate reserves, and (iii) liens
and security interests existing as of the date hereof which have been disclosed to and approved by
Lender in writing.

(e) Indebtedness. Create, incur or assume any indebtedness for borrowed money or
issue or assume any other note, debenture, bond or other evidences of indebtedness, or guarantee
any such indebtedness or such evidences of indebtedness of others, other than (i) borrowings from
Lender, and (ii) borrowings outstanding on the date hereof and disclosed in writing to Lender.

(f) Transfer of Ownership. Permit the sale, pledge or other transfer of any of the
stock or ownership interests in Borrower.

(g) Change in Management. Permit a change in the senior management of Borrower.

(h) Loans. Make any loans to any person or entity.

(i) Transactions with Affiliates. Enter into any transaction, including, without
limitation, the purchase, sale or exchange of property or the rendering of any service, with any
Affiliate (as hereinafter defined) of Borrower, except in the ordinary course of and pursuant to
the reasonable requirements of Borrower’s business and upon fair and reasonable terms no less
favorable to Borrower than would be obtained in a comparable arm’s-length transaction with a person
or entity not an Affiliate of Borrower. As used herein, the term “Affiliate” means any
individual or entity directly or indirectly controlling, controlled by, or under common control
with, another individual or entity.

9. Subordination. Borrower and Guarantors expressly subordinates any and all
indebtedness between Borrower and/or any Affiliate and/or Guarantors to this Loan and Loan
Documents , as well as any security interests and liens relating to such other indebtedness.

10. Reporting Requirements. Until (i) the Note and all other obligations and
liabilities of Borrower under this Loan Agreement and the other Loan Documents are fully paid and
satisfied, and (ii) the Lender has no further commitment to lend hereunder, Borrower will, unless
Lender shall otherwise consent in writing, furnish to Lender:

(a) Interim Financial Statements. As soon as available, and in any event within
forty-five(45) days after the end of each fiscal quarter year-end of Borrower, a balance sheet and
income statement of Borrower as of the end of such fiscal quarter, all in form and substance and in
detail satisfactory to Lender and duly certified (subject to year-end review adjustments) by the
chief financial officer of Borrower (i) as being true and correct in all material aspects to the
best of his or her knowledge and (ii) as having been prepared in accordance with generally accepted
accounting principles, consistently applied.

(b) Annual Financial Statements. Upon the request of Lender, Borrower shall promptly
furnish (and in all events within 30 days of such request) a fiscal year-end financial statement of
Borrower, a balance sheet and income statement of Borrower as of the end of such fiscal year, all
in form and substance and in detail satisfactory to Lender.

(c) Guarantor’s Financial Statements. Upon the request of Lender, each Guarantor
shall promptly furnish (and in all events within 30 days of such request) a current financial
statement (including a balance sheet, cash flow statement and statement of contingent liabilities)
of such Guarantor.

(d) Compliance Certificate. Upon the request of Lender , a certificate signed by the
chief financial officer of Borrower stating that Borrower is in full compliance with all of its
obligations under this Loan Agreement and all other Loan Documents and is not in default of any
term or provisions hereof or thereof, and demonstrating compliance with all financial covenants set
forth in this Loan Agreement.

(e) Tax Returns. Upon the request of Lender (and in all events within 30 days of such
request), copies of Borrower’s and each Guarantor’s filed federal income tax returns.

11. Events of Default. Each of the following shall constitute an “Event of
Default” under this Loan Agreement:

(a) The failure, refusal or neglect of Borrower to pay when due any part of the principal of,
or interest on, the Note or any other indebtedness or obligations owing to Lender by Borrower from
time to time.

(b) The failure of Borrower or any Obligated Party (as defined below) to timely and properly
observe, keep or perform any covenant, agreement, warranty or condition required herein or in any
of the other Loan Documents following fifteen (15) days notice and opportunity to cure to the
Borrower of a non-monetary default.

(c) The occurrence of an event of default under any of the other Loan Documents or under any
other agreement now existing or hereafter arising between Lender and Borrower.

(d) Any representation contained herein or in any of the other Loan Documents made by Borrower
or any Obligated Party is false or misleading in any material respect.

(e) The occurrence of any event which permits the acceleration of the maturity of any
indebtedness owing by Borrower to any third party under any agreement or understanding.

(f) If Borrower or any Obligated Party: (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, 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 thirty (30) 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.

(g) If Borrower or any Obligated Party is an entity, the liquidation, dissolution, merger or
consolidation of any such entity or, if Borrower or any Obligated Party is an individual, the death
or legal incapacity of any such individual.

(h) The entry of any judgment against Borrower or any Obligated Party or the issuance or entry
of any attachment or other lien against any of the property of Borrower or any Obligated Party for
an amount in excess of $50,000.00, if undischarged, unbonded or undismissed to the satisfaction of
Lender within thirty (30) days after such entry.

(i) If an officer of the Borrower or any Guarantor is convicted of a felony or crime involving
moral turpitude.

Nothing contained in this Loan Agreement shall be construed to limit the events of default
enumerated in any of the other Loan Documents and all such events of default shall be cumulative.
The term “Obligated Party”, as used herein, shall mean any party other than Borrower who
secures, guarantees and/or is otherwise obligated to pay all or any portion of the indebtedness
evidenced by the Note, including each of the Guarantors. By their execution below, each Guarantor
as an Obligated Party consents and agrees to be bound by all of the terms hereof

12. Remedies. Upon the occurrence of any one or more of the foregoing Events of
Default, the entire unpaid balance of principal of the Note, together with all accrued but unpaid
interest thereon, and all other indebtedness owing to Lender by Borrower at such time shall, at the
option of Lender, become immediately due and payable without further notice, demand, presentation,
notice of dishonor, notice of intent to accelerate, notice of acceleration, protest or notice of
protest of any kind, all of which are expressly waived by Borrower, (b) Lender may, at its option,
cease further advances under any of the Note and (c) Lender may enforce all rights and remedies
under the Loan Documents. All rights and remedies of Lender set forth in this Loan Agreement and
in any of the other Loan Documents may also be exercised by Lender, at its option to be exercised
in its sole discretion, upon the occurrence of an Event of Default.

13. Rights Cumulative. All rights of Lender under the terms of this Loan Agreement
shall be cumulative of, and in addition to, the rights of Lender under any and all other agreements
between Borrower and Lender (including, but not limited to, the other Loan Documents), and not in
substitution or diminution of any rights now or hereafter held by Lender under the terms of any
other agreement.

14. Waiver. Neither the failure nor any delay on the part of Lender to exercise any
right, power or privilege herein or under any of the other Loan Documents shall operate as a waiver
thereof, nor shall any single or partial exercise of such right, power or privilege preclude any
other or further exercise thereof or the exercise of any other right, power or privilege. No
waiver of any provision in this Loan Agreement or in any of the other Loan Documents and no
departure by Borrower therefrom shall be effective unless the same shall be in writing and signed
by Lender, and then shall be effective only in the specific instance and for the purpose for which
given and to the extent specified in such writing. No modification or amendment to this Loan
Agreement or to any of the other Loan Documents shall be valid or effective unless the same is
signed by the party against whom it is sought to be enforced.

15. Benefits. This Loan Agreement shall be binding upon and inure to the benefit of
Lender and Borrower, and their respective successors and assigns, provided, however, that Borrower
may not, without the prior written consent of Lender, assign any rights, powers, duties or
obligations under this Loan Agreement or any of the other Loan Documents.

16. Notices. All notices, requests, demands or other communications required or
permitted to be given pursuant to this Agreement shall be in writing and given by (i) personal
delivery, (ii) expedited delivery service with proof of delivery, or (iii) United States mail,
postage prepaid, registered or certified mail, return receipt requested, sent to the intended
addressee at the address set forth on the first page hereof and shall be deemed to have been
received either, in the case of personal delivery, as of the time of personal delivery, in the case
of expedited delivery service, as of the date of first attempted delivery at the address and in the
manner provided herein, or in the case of mail, upon deposit in a depository receptacle under the
care and custody of the United States Postal Service. Either party shall have the right to change
its address for notice hereunder to any other location within the continental United States by
notice to the other party of such new address at least thirty (30) days prior to the effective date
of such new address.

17. Construction. This Loan Agreement and the other Loan Documents have been executed
and delivered in the State of Texas, shall be governed by and construed in accordance with the laws
of the State of Texas, and shall be performable by the parties hereto in the county in Texas where
the Lender’s address set forth on the first page hereof is located.

18. Invalid Provisions. If any provision of this Loan Agreement or any of the other
Loan Documents is held to be illegal, invalid or unenforceable under present or future laws, such
provision shall be fully severable and the remaining provisions of this Loan Agreement or any of
the other Loan Documents shall remain in full force and effect and shall not be affected by the
illegal, invalid or unenforceable provision or by its severance.

19. Expenses. Borrower shall pay all costs and expenses (including, without
limitation, reasonable attorneys’ fees) in connection with (i) any action required in the course of
administration of the indebtedness and obligations evidenced by the Loan Documents, and (ii) any
action in the enforcement of Lender’s rights upon the occurrence of Event of Default.

20. Participation of the Loans. Borrower agrees that Lender may, at its option, sell
interests in the Loans and its rights under this Loan Agreement to a financial institution or
institutions and, in connection with each such sale, Lender may disclose any financial and other
information available to Lender concerning Borrower to each perspective purchaser.

21. Conflicts. In the event any term or provision hereof is inconsistent with or
conflicts with any provision of the other Loan Documents, the terms and provisions contained in
this Loan Agreement shall be controlling.

22. Counterparts. This Loan Agreement may be separately executed in any number of
counterparts, each of which shall be an original, but all of which, taken together, shall be deemed
to constitute one and the same instrument.

23. Facsimile Documents and Signatures. For purposes of negotiating and finalizing
this Loan Agreement, if this document or any document executed in connection with it is transmitted
by facsimile machine, it shall be treated for all purposes as an original document. Additionally,
the signature of any party on this document transmitted by way of a facsimile machine shall be
considered for all purposes as an original signature. Any such faxed document shall be considered
to have the same binding legal effect as an original document. At the request of any party, any
faxed document shall be re-executed by each signatory party in an original form.

24. Document Imaging. Borrower and the Guarantors acknowledge, understand and agree
that the Lender’s document retention policy may involve the imaging of the Loan Documents and the
destruction of the paper original and Borrower and the Guarantors waive any right to claim that the
imaged copy is not an original for all purposes.

25. Usury Savings. It is the intention of Borrower and Lender to conform strictly to
applicable usury laws. Accordingly, if the transactions contemplated hereby would be usurious
under applicable law (including the laws of the State of Texas and the laws of the United States of
America), then, in that event, notwithstanding anything to the contrary in any agreement entered
into in connection with or as security for this Note, it is agreed as follows: (i) the aggregate
of all consideration which constitutes interest under applicable law that is taken, reserved,
contracted for, charged or received under this Agreement or under any other agreements or otherwise
in connection with this Agreement shall under no circumstances exceed the Maximum Lawful Rate, and
any excess shall be applied on this Agreement by the holder thereof to reduce the principal amount
owing hereunder in the inverse order of its maturity and not to the payment of interest (or, if
this Agreement shall have been paid in full, refunded to the Borrower); and (ii) in the event that
maturity of this Agreement is accelerated by reason of an election by the holder thereof resulting
from any default hereunder or otherwise, or in the event of any required or permitted prepayment,
then such consideration that constitutes interest may never exceed the Maximum Lawful Rate, and
excess interest, if any, provided for in this Agreement or otherwise shall be canceled
automatically as of the date of such acceleration or prepayment and, if theretofore prepaid, shall
be credited on this Agreement to reduce the principal in the inverse order of its maturity and not
to the payment of interest (or if this Agreement shall have been paid in full, refunded to the
Borrower). All interest paid or agreed to be paid to Lender shall, to the extent permitted by
applicable law, be amortized, prorated, allocated and spread throughout the full loan period
(including any renewal or extension hereof) so that interest thereon for such full period shall not
exceed the Maximum Lawful Rate. If from any possible construction of any document interest would
otherwise be payable in excess of the Maximum Lawful Rate, then such document is automatically
reformed and the interest payable is automatically reduced to the Maximum Lawful Rate without the
necessity of execution of any amendment or new document. By its execution below Borrower confirms
to Lender that it is not aware that this Agreement or the loan transaction is or may be usurious in
any respect. To induce Lender to make the loan evidenced by this Agreement, Borrower agrees with
and covenants to Lender that if at any time Borrower believes or discovers that any term or
provision of this Agreement (or any other document in connection with this Agreement) or any action
taken by Lender in connection with this Agreement (or any other document in connection with this
Agreement) is or may be in violation of the usury laws or any other applicable law, Borrower will
immediately give written notice to Lender specifying with particularity the nature and extent of
any such potential violation of the usury laws or any other applicable law, and afford to Lender a
reasonable period (of not less than 60 days) within which to cure same. Borrower agrees with and
covenants to Lender that in no instance will Borrower make any claim, bring any suit, prosecute or
otherwise assert any cause of action, proceeding, claim, counterclaim, or defense in respect of any
violation of the usury laws or any other applicable law, unless, as a condition precedent thereto,
Borrower has given to Lender such notice and afforded to Lender such opportunity to cure as
provided in this paragraph.

26. Legal Tender. All sums payable under this Agreement must be paid in lawful money
of the United States of America that, at the time of payment, is legal tender for the payment of
public and private debts. If the date for any payment due hereunder falls on a Saturday, Sunday or
legal holiday for commercial banks under applicable law, then such payment shall be due on the next
succeeding business day. In the event payments under this Agreement are required to be made on the
29th, 30th, or 31st day of the month and such date does not exist
in the applicable month, the payment shall be due on the last business day of such month. Any
check, draft, money order or other instrument given in payment of all or any portion hereof may be
accepted by Lender and handled in collection in the customary manner, but the same shall not
constitute payment hereunder nor diminish any rights of Lender except to the extent that actual
cash proceeds of such instrument are unconditionally received by Lender.

27. Independent Counsel. By his execution below, Borrower acknowledges that he has
had the right to have independent legal counsel of his own choosing review this Agreement prior to
its execution

28. Partial Invalidity. In the event that any clause or provisions of this Agreement
or any document or instrument contemplated by this Agreement shall be held to be invalid by any
court of competent jurisdiction, the invalidity of such clause or provision shall not affect any of
the remaining portions or provisions of this Agreement.

29. Time. Time is of the essence in connection with all of the obligations imposed
under this Agreement.

30. Improper Financial Transactions.

(i) Borrower is, and shall remain at all times, in full compliance with all applicable laws
and regulations of the United States of America that prohibit, regulate or restrict financial
transactions, and any amendments or successors thereto and any applicable regulations promulgated
thereunder (collectively, the “Financial Control Laws”), including but not limited to those
related to money laundering offenses and related compliance and reporting requirements (including
any money laundering offenses prohibited under the Money Laundering Control Act, 18 U.S.C. Sections
1956, 1957 and the Bank Secrecy Act, 31 U.S.C. Sections 5311 et seq.) and the Foreign Assets
Control Regulations, 31 C.F.R. Section 500 et seq.

(ii) Borrower represents and warrants that: (i) Borrower is not a Barred Person (hereinafter
defined); (ii) Borrower is not owned or controlled, directly or indirectly, by any Barred Person;
and (iii) Borrower is not acting, directly or indirectly, for or on behalf of any Barred Person.

(iii) Borrower represents and warrants that it understands and has been advised by legal
counsel on the requirements of the Financial Control Laws.

(iv) Under any provision of this Agreement or any of the other Loan Documents where the
Lender shall have the right to approve or consent to any particular action, including without
limitation any (i) sale, transfer, assignment of the Property or of any direct or indirect
ownership interest in Borrower, (ii) leasing of the Property, or any portion thereof, or (iii)
incurring of additional financing secured by Property, or any portion thereof or by any direct of
indirect ownership interest in the Borrower, Lender shall have the right to withhold such approval
or consent, in its sole discretion, if the granting of such approval or consent could be construed
as a violation of any of the Financial Control Laws.

(v) Borrower covenants and agrees that it will upon request provide Lender with (or cooperate
with Lender in obtaining) information required by Lender for purposes of complying with any
Financial Control Laws.

As used in this Agreement, the term “Barred Person” shall mean (i) any person, group or entity
named as a “Specially Designated National and Blocked Person” or as a person who commits, threatens
to commit, supports, or is associated with terrorism as designated by the United States Department
of the Treasury’s Office of Foreign Assets Control (“OFAC”), (ii) any person, group or entity named
in the lists maintained by the United Stated Department of Commerce (Denied Persons and Entities),
(iii) any government or citizen of any country that is subject to a United States Embargo
identified in regulations promulgated by OFAC and (iv) any person, group or entity named as a
denied or blocked person or terrorist in any other list maintained by any agency of the United
States government.

31. BORROWER AND GUARANTORS VOLUNTARILY AND KNOWINGLY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE LOAN, THIS AGREEMENT OR ANY OF THE LOAN
DOCUMENTS.

THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

Executed this the      day of March, 2005.

BORROWER:

DNA COMPUTING SOLUTIONS, INC.,

a Delaware corporation

	 	 	 
	 
	 	 
	
 
	 	By:
	
 
	 	 
	
 
	 	Name:Robert P. Capps

Title:Executive Vice President
	 
	 	 
	
 
	 	LENDER:
	
 
	 	 

ENCORE BANK,

a federal savings association

By:

Name:

Title:

1

	 	 	 
	STATE OF TEXAS

COUNTY OF HARRIS

	 	§

§

§

This instrument was acknowledged before me on the      day of March, 2005, by Robert P.
Capps, Executive Vice President of DNA COMPUTING SOLUTIONS, INC., a Delaware corporation, on behalf
of said corporation.

(Seal)

Notary Public in and for the State of Texas

	 	 	 
	STATE OF TEXAS

COUNTY OF HARRIS

	 	§

§

§

This instrument was acknowledged before me on the      day of March, 2005, by
     ,      of ENCORE BANK, a federal savings association,
on behalf of said federal savings association.

(Seal)

Notary Public in and for the State of Texas

2EX-10.3

LOAN AGREEMENT

This Loan Agreement (the “Loan Agreement”) is entered into between TERAFORCE
TECHNOLOGY CORPORATION, a Delaware corporation (“Borrower” or “TERA”), and DON B.
CARMICHAEL (“Lender”):

1. Credit Facility. Subject to the terms and conditions set forth in this Loan
Agreement and the other agreements, instruments and documents evidencing, securing, governing,
guaranteeing and/or pertaining to the Loans, as hereinafter defined (collectively, together with
the Loan Agreement, referred to hereinafter as the “Loan Documents”), Lender hereby agrees
to provide to Borrower the credit facility described below (the “Credit Facility”):

(a) Convertible Note. Subject to the terms and conditions set forth herein, Lender
agrees to lend to Borrower, the sum of FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($500,000.00) (the
"Convertible Note”) which shall be evidenced by a promissory note. Borrower understands
and agrees that Borrower shall repay the entire outstanding principal amount on the Convertible
Note, together with all accrued and unpaid interest theron.

2. Collateral. As collateral and security for the indebtedness evidenced by the
Convertible Note the Lender shall enter into an Inter-creditor Agreement with the individuals that
provide limited guaranties of the Borrowers’ $2,750,000 revolving credit agreement with Encore Bank
dated March  , 2005 (the “Encore Guarantors”). Such agreement will provide that claims of the
Lender related to this agreement shall be pari passu with those of the Encore Guarantors and that
the Lender will share in any collateral or security interests accruing to the Encore Guarantors.

3. Conversion Rights and Warrants. 

(a) Warrants. As an inducement to enter into this Agreement, TERA agrees to issue to
the Lender warrants to purchase an aggregate of 5,000,000 shares of TERA’s common stock, par value
$0.01 (the “Common Stock”) at an exercise price per share of $0.10, the form of which is attached
as Exhibit A (the “Warrants”).

(b) Conversion Rights. As long as the Loan is outstanding Lender shall have the
right to convert any or all of the amount of the Loan plus accrued interest then outstanding into a
number of shares of Common Stock equal to amount of the Loan to be converted divided by $0.20.

(c) Registration Rights. The TERA further agrees to grant the registration rights to
register the resale of the shares of Common Stock to be issued pursuant to the Conversion Rights
and the Warrants and the in accordance with the Registration Rights Agreement attached hereto as
Exhibit B(the “Registration Rights Agreement”).

(d) Subsequent Financings. Should TERA, at any time while the Convertible Note is
outstanding, issue Common Stock at a price per share less than $0.133, or issue warrants or
convertible securities that provide for an exercise or conversion price of less than $0.133 per
share, then the conversion rate in Sections 4(b) and the Warrant exercise price in Section 4(a)
above shall be reduced to such amount and the exercise price of the warrants shall be reduced to
such amount, provided such amount is less than the conversion rate or exercise price than in effect
        .

4. Representations and Warranties of Lender. Lender represents and warrants to TERA
that he has full power and authority to execute and deliver this Agreement and the Related
Documents, and that this Agreement and Related Documents are valid, binding and enforceable in
accordance with their terms as they relate to the Lender, except as may be limited by bankruptcy
and insolvency laws, and similar laws affecting creditors rights generally and by general
principals of equity. Lender represents and warrants that he (a) has such knowledge and experience
in financial and business matters that Lender is capable of evaluating the merits and risks of his
or her investment and has the financial ability to assume the monetary risk associated therewith;
(b) is able to bear the complete loss of his or her investment; (c) has received such documents and
information from the TERA as such Lender has requested and has had the opportunity to ask questions
of, and receive answers from, the TERA and the terms and conditions of the offering of the Warrants
and the Common Stock to be issued pursuant to the Conversion Rights and the Warrants and to obtain
additional information; (d) is an “accredited investor” as defined in Rule 501(a) of Regulation D
promulgated under the 1933 Act; and (e) is not relying upon any statements or instruments made or
issued by any person other than the TERA in making a decision to invest in the Shares.

5. Representations and Warranties of Borrower. Borrower hereby represents and
warrants to Lender as follows:

(a) Existence. Borrower is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and all other states where it is doing business,
is authorized to do business in the State of Texas and has all requisite power and authority to
execute and deliver the Loan Documents.

(b) Binding Obligations. The execution, delivery, and performance of this Loan
Agreement and all of the other Loan Documents by Borrower have been duly authorized by all
necessary action by Borrower, and constitute legal, valid and binding obligations of Borrower,
enforceable 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.

(c) No Consent. The execution, delivery and performance of this Loan Agreement and
the other Loan Documents, and the consummation of the transactions contemplated hereby and thereby,
do not (i) conflict with, result in a violation of, or constitute a default under (A) any provision
of its articles of incorporation, bylaws or other instrument binding upon Borrower, or (B) any law,
governmental regulation, court decree or order applicable to Borrower, or (ii) require the consent,
approval or authorization of any third party.

(d) Financial Condition. Each financial statement of Borrower supplied to the Lender
truly discloses and fairly presents Borrower’s financial condition as of the date of each such
statement. There has been no material adverse change in such financial condition or results of
operations of Borrower subsequent to the date of the most recent financial statement supplied to
Lender.

(e) Litigation. There are no actions, suits, arbitrations, mediations or proceedings,
pending or, to the knowledge of Borrower, threatened against or affecting Borrower or the
properties of Borrower, before any court or governmental department, commission or board, which, if
determined adversely to Borrower, would have a material adverse effect on the financial condition,
properties, or operations of Borrower.

(f) Taxes; Governmental Charges. Borrower has filed all federal, state and local tax
reports and returns required by any law or regulation to be filed by it and has either duly paid
all taxes, duties and charges indicated due on the basis of such returns and reports, or made
adequate provision for the payment thereof, and the assessment of any material amount of additional
taxes in excess of those paid and reported is not reasonably expected.

6. Affirmative Covenants. Until (i) the Note and all other obligations and
liabilities of Borrower under this Loan Agreement and the other Loan Documents are fully paid and
satisfied, and (ii) the Lender has no further commitment to lend hereunder, Borrower agrees and
covenants that it will, unless Lender shall otherwise consent in writing:

(a) Accounts and Records and Information. Maintain its books and records in
accordance with generally accepted accounting principles. Borrower shall execute such other and
further documents and information as Lender may request.

(b) Right of Inspection. Permit Lender to examine, audit and make and take away
copies or reproductions of Borrower’s books and records, at all reasonable times, and the right to
examine and photocopy all such materials.

(c) Right to Additional Information. Furnish Lender with such additional information
and statements, lists of assets and liabilities, tax returns, and other reports with respect to
Borrower’s financial condition and business operations as Lender may request from time to time.

(d) Compliance with Laws. Conduct its business in an orderly and efficient manner
consistent with good business practices, and perform and comply with all statutes, rules,
regulations and/or ordinances imposed by any governmental unit upon Borrower and its businesses,
operations and properties (including without limitation, all applicable environmental statutes,
rules, regulations and ordinances).

(e) Taxes. 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
(i) the legality of the same shall be contested in good faith by appropriate judicial,
administrative or other legal proceedings, and (ii) 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, consistently applied.

(f) Insurance. Maintain insurance, including but not limited to, fire insurance,
comprehensive property damage, public liability, worker’s compensation, business interruption and
other insurance deemed necessary or otherwise required by Lender.

(g) Notice of Indebtedness. Promptly inform Lender of the creation, incurrence or
assumption by Borrower of any actual or contingent liabilities not permitted under this Loan
Agreement.

(h) Notice of Litigation. Promptly after the commencement thereof, notify Lender of
all actions, suits, arbitrations and proceedings before any court or any governmental department,
commission or board affecting Borrower or any of its properties.

(i) Notice of Material Adverse Change. Promptly inform Lender of (i) any and all
material adverse changes in Borrower’s financial condition, and (ii) all claims made against
Borrower which could materially affect the financial condition of Borrower.

(j) Additional Documentation. Execute and deliver, or cause to be executed and
delivered, any and all other agreements, instruments or documents which Lender may request in order
to give effect to the transactions contemplated under this Loan Agreement and the other Loan
Documents.

7. Negative Covenants. Until (i) the Convertible Note and all other obligations and
liabilities of Borrower under this Loan Agreement and the other Loan Documents are fully paid and
satisfied, and (ii) the Lender has no further commitment to lend hereunder, Borrower will not,
without the prior written consent of Lender:

(a) Nature of Business. Make any material change in the nature of its business as
carried on as of the date hereof.

(b) Liquidations, Mergers, Consolidations. Liquidate, merge or consolidate with or
into any other entity.

(c) Sale of Assets. Sell, transfer or otherwise dispose of any of its assets or
properties, other than in the ordinary course of business.

(d) Liens. Create or incur any lien or encumbrance on any of its assets, other than
(i) liens and security interests securing indebtedness owing to Lender, (ii) liens for taxes,
assessments or similar charges that are (1) not yet due or (2) being contested in good faith by
appropriate proceedings and for which Borrower has established adequate reserves, and (iii) liens
and security interests existing as of the date hereof which have been disclosed to and approved by
Lender in writing.

(e) Indebtedness. Create, incur or assume any indebtedness for borrowed money or
issue or assume any other note, debenture, bond or other evidences of indebtedness, or guarantee
any such indebtedness or such evidences of indebtedness of others, other than (i) borrowings from
Lender, and (ii) borrowings outstanding on the date hereof and disclosed in writing to Lender.

(f) Change in Management. Permit a change in the senior management of Borrower.

(g) Loans. Make any loans to any person or entity.

(h) Transactions with Affiliates. Enter into any transaction, including, without
limitation, the purchase, sale or exchange of property or the rendering of any service, with any
Affiliate (as hereinafter defined) of Borrower, except in the ordinary course of and pursuant to
the reasonable requirements of Borrower’s business and upon fair and reasonable terms no less
favorable to Borrower than would be obtained in a comparable arm’s-length transaction with a person
or entity not an Affiliate of Borrower. As used herein, the term “Affiliate” means any
individual or entity directly or indirectly controlling, controlled by, or under common control
with, another individual or entity.

8. Reporting Requirements. Until (i) the Note and all other obligations and
liabilities of Borrower under this Loan Agreement and the other Loan Documents are fully paid and
satisfied, and (ii) the Lender has no further commitment to lend hereunder, Borrower will, unless
Lender shall otherwise consent in writing, furnish to Lender:

(a) Interim Financial Statements. As soon as available, and in any event within
forty-five(45) days after the end of each fiscal quarter year-end of Borrower, a balance sheet and
income statement of Borrower as of the end of such fiscal quarter, all in form and substance and in
detail satisfactory to Lender and duly certified (subject to year-end review adjustments) by the
chief financial officer of Borrower (i) as being true and correct in all material aspects to the
best of his or her knowledge and (ii) as having been prepared in accordance with generally accepted
accounting principles, consistently applied.

(b) Annual Financial Statements. Upon the request of Lender, Borrower shall promptly
furnish (and in all events within 30 days of such request) a fiscal year-end financial statement of
Borrower, a balance sheet and income statement of Borrower as of the end of such fiscal year, all
in form and substance and in detail satisfactory to Lender.

(c) Guarantor’s Financial Statements. Upon the request of Lender, each Guarantor
shall promptly furnish (and in all events within 30 days of such request) a current financial
statement (including a balance sheet, cash flow statement and statement of contingent liabilities)
of such Guarantor.

(d) Compliance Certificate. Upon the request of Lender , a certificate signed by the
chief financial officer of Borrower stating that Borrower is in full compliance with all of its
obligations under this Loan Agreement and all other Loan Documents and is not in default of any
term or provisions hereof or thereof, and demonstrating compliance with all financial covenants set
forth in this Loan Agreement.

(g) Tax Returns. Upon the request of Lender (and in all events within 30 days of such
request), copies of Borrower’s and each Guarantor’s filed federal income tax returns.

9. Events of Default. Each of the following shall constitute an “Event of
Default” under this Loan Agreement:

(a) The failure, refusal or neglect of Borrower to pay when due any part of the principal of,
or interest on, the Note or any other indebtedness or obligations owing to Lender by Borrower from
time to time.

(b) The failure of Borrower to timely and properly observe, keep or perform any covenant,
agreement, warranty or condition required herein or in any of the other Loan Documents.

(c) The occurrence of an event of default under any of the other Loan Documents or under any
other agreement now existing or hereafter arising between Lender and Borrower.

(d) Any representation contained herein or in any of the other Loan Documents made by Borrower
is false or misleading in any material respect.

(e) The occurrence of any event which permits the acceleration of the maturity of any
indebtedness owing by Borrower to any third party under any agreement or understanding.

(f) If Borrower: (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, 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 thirty (30) 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.

(g) The liquidation, dissolution, merger or consolidation of Borrower.

(h) The entry of any judgment against Borrower or the issuance or entry of any attachment or
other lien against any of the property of Borrower for an amount in excess of $50,000 , if
undischarged, unbonded or undismissed to the satisfaction of Lender within thirty (30) days after
such entry.

(i) If an officer of the Borrower or the Guarantor is convicted of a felony or crime
involving moral turpitude.

Nothing contained in this Loan Agreement shall be construed to limit the events of default
enumerated in any of the other Loan Documents and all such events of default shall be cumulative.

10. Remedies. Upon the occurrence of any one or more of the foregoing Events of
Default, the entire unpaid balance of principal of the Note, together with all accrued but unpaid
interest thereon, and all other indebtedness owing to Lender by Borrower at such time shall, at the
option of Lender, become immediately due and payable without further notice, demand, presentation,
notice of dishonor, notice of intent to accelerate, notice of acceleration, protest or notice of
protest of any kind, all of which are expressly waived by Borrower, (b) Lender may, at its option,
cease further advances under any of the Note and (c) Lender may enforce all rights and remedies
under the Loan Documents. All rights and remedies of Lender set forth in this Loan Agreement and
in any of the other Loan Documents may also be exercised by Lender, at its option to be exercised
in its sole discretion, upon the occurrence of an Event of Default.

11. Rights Cumulative. All rights of Lender under the terms of this Loan Agreement
shall be cumulative of, and in addition to, the rights of Lender under any and all other agreements
between Borrower and Lender (including, but not limited to, the other Loan Documents), and not in
substitution or diminution of any rights now or hereafter held by Lender under the terms of any
other agreement.

12. Waiver. Neither the failure nor any delay on the part of Lender to exercise any
right, power or privilege herein or under any of the other Loan Documents shall operate as a waiver
thereof, nor shall any single or partial exercise of such right, power or privilege preclude any
other or further exercise thereof or the exercise of any other right, power or privilege. No
waiver of any provision in this Loan Agreement or in any of the other Loan Documents and no
departure by Borrower therefrom shall be effective unless the same shall be in writing and signed
by Lender, and then shall be effective only in the specific instance and for the purpose for which
given and to the extent specified in such writing. No modification or amendment to this Loan
Agreement or to any of the other Loan Documents shall be valid or effective unless the same is
signed by the party against whom it is sought to be enforced.

13. Benefits. This Loan Agreement shall be binding upon and inure to the benefit of
Lender and Borrower, and their respective successors and assigns, provided, however, that Borrower
may not, without the prior written consent of Lender, assign any rights, powers, duties or
obligations under this Loan Agreement or any of the other Loan Documents.

14. Notices. All notices, requests, demands or other communications required or
permitted to be given pursuant to this Agreement shall be in writing and given by (i) personal
delivery, (ii) expedited delivery service with proof of delivery, or (iii) United States mail,
postage prepaid, registered or certified mail, return receipt requested, sent to the intended
addressee at the address set forth on the first page hereof and shall be deemed to have been
received either, in the case of personal delivery, as of the time of personal delivery, in the case
of expedited delivery service, as of the date of first attempted delivery at the address and in the
manner provided herein, or in the case of mail, upon deposit in a depository receptacle under the
care and custody of the United States Postal Service. Either party shall have the right to change
its address for notice hereunder to any other location within the continental United States by
notice to the other party of such new address at least thirty (30) days prior to the effective date
of such new address.

15. Construction. This Loan Agreement and the other Loan Documents have been executed
and delivered in the State of Texas, shall be governed by and construed in accordance with the laws
of the State of Texas, and shall be performable by the parties hereto in the county in Texas where
the Lender’s address set forth on the first page hereof is located.

16. Invalid Provisions. If any provision of this Loan Agreement or any of the other
Loan Documents is held to be illegal, invalid or unenforceable under present or future laws, such
provision shall be fully severable and the remaining provisions of this Loan Agreement or any of
the other Loan Documents shall remain in full force and effect and shall not be affected by the
illegal, invalid or unenforceable provision or by its severance.

17. Expenses. Borrower shall pay all costs and expenses (including, without
limitation, reasonable attorneys’ fees) in connection with (i) any action required in the course of
administration of the indebtedness and obligations evidenced by the Loan Documents, and (ii) any
action in the enforcement of Lender’s rights upon the occurrence of Event of Default.

18. Conflicts. In the event any term or provision hereof is inconsistent with or
conflicts with any provision of the other Loan Documents, the terms and provisions contained in
this Loan Agreement shall be controlling.

19. Counterparts. This Loan Agreement may be separately executed in any number of
counterparts, each of which shall be an original, but all of which, taken together, shall be deemed
to constitute one and the same instrument.

20. Facsimile Documents and Signatures. For purposes of negotiating and finalizing
this Loan Agreement, if this document or any document executed in connection with it is transmitted
by facsimile machine, it shall be treated for all purposes as an original document. Additionally,
the signature of any party on this document transmitted by way of a facsimile machine shall be
considered for all purposes as an original signature. Any such faxed document shall be considered
to have the same binding legal effect as an original document. At the request of any party, any
faxed document shall be re-executed by each signatory party in an original form.

21. Legal Tender. All sums payable under this Agreement must be paid in lawful money
of the United States of America that, at the time of payment, is legal tender for the payment of
public and private debts. If the date for any payment due hereunder falls on a Saturday, Sunday or
legal holiday for commercial banks under applicable law, then such payment shall be due on the next
succeeding business day. In the event payments under this Agreement are required to be made on the
29th, 30th, or 31st day of the month and such date does not exist
in the applicable month, the payment shall be due on the last business day of such month. Any
check, draft, money order or other instrument given in payment of all or any portion hereof may be
accepted by Lender and handled in collection in the customary manner, but the same shall not
constitute payment hereunder nor diminish any rights of Lender except to the extent that actual
cash proceeds of such instrument are unconditionally received by Lender.

22. Independent Counsel. By his execution below, Borrower acknowledges that he has
had the right to have independent legal counsel of his own choosing review this Agreement prior to
its execution

23. Partial Invalidity. In the event that any clause or provisions of this Agreement
or any document or instrument contemplated by this Agreement shall be held to be invalid by any
court of competent jurisdiction, the invalidity of such clause or provision shall not affect any of
the remaining portions or provisions of this Agreement.

24. Time. Time is of the essence in connection with all of the obligations imposed
under this Agreement.

25. BORROWER AND GUARANTORS VOLUNTARILY AND KNOWINGLY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE LOAN, THIS AGREEMENT OR ANY OF THE LOAN
DOCUMENTS.

THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

1

Executed this the 9th day of March, 2005.

BORROWER:

TERAFORCE TECHNOLOGY CORPORATION,

a Delaware corporation

By: /s/ Robert P. Capps Name: Robert P. Capps

	 
	 	 	Title:Executive Vice President
	 	 	LENDER:

DON B. CARMICHAEL

s/s Don B. Carmichael

2

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