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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) August 30, 2001
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TeraForce Technology Corporation
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(Exact name of registrant as specified in its charter)
Delaware 0-11630 76-0471342
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1240 East Campbell Road, Richardson, Texas 75081
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (469) 330-4960
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On August 30, 2001, TeraForce Technology Corporation (the "Company")
and Singapore Technologies Electronics Limited ("ST Elect") completed a
transaction whereby a newly formed joint venture entity acquired certain assets
of the Company's wholly-owned subsidiary, Intelect Network Technologies Company
("INT"). The joint venture entity, Intelect Technologies Inc. ("Intelect
Technologies"), is a Delaware corporation. Intelect Technologies is initially
owned 67% by ST Elect and 33% by the Company, with each company having
proportionate board of director representation.
Intelect Technologies has purchased from INT certain fixed assets,
intangible assets, inventory and intellectual property related to the OmniLynx
product line. Intelect Technologies has also hired certain former employees of
INT and has assumed occupancy and financial responsibility for a facility
previously utilized by INT. At closing, INT received a cash payment of
$1,000,000 and will receive additional periodic payments based on utilization of
the inventory acquired from INT and on the financial position of Intelect
Technologies. INT could receive a maximum of approximately $6,500,000 under this
formula. The purchase price for the assets was based upon arms-length
negotiation between the Company and ST Elect. Intelect Technologies has also
acquired the Company's rights to the name "Intelect."
The Agreement to Form Joint Venture was signed on August 17, 2001, by
the Company, ST Elect and INT. This agreement contains a noncompetition clause
stating that the Company will not associate with or lend assistance to any
entity that competes with the OmniLynx product line.
Pursuant to a Transition Services Agreement, Intelect Technologies will
provide, at its cost, product support and warranty services to INT on behalf of
existing customers of INT. Also pursuant to this agreement the Company will
provide, at its cost, Intelect Technologies with certain engineering services,
and transitional accounting and related services.
Ownership of shares in Intelect Technologies is subject to a
Stockholder Agreement. The Stockholder Agreement covers certain corporate
governance issues, stockholder voting rights, preferential rights to purchase
another stockholder's shares, maintenance rights on future share issuances, a
"drag-along" provision that may be enforced by ST Elect if it decides to sell
all of its shares of Intelect Technologies, and certain other matters.
The Company, INT and Intelect Technologies also signed a Sharing
Agreement that describes how proceeds, inventory and assets will be allocated
between the companies. The Company has agreed to indemnify Intelect Technologies
for a limited time from certain intellectual property claims. The combined
liability of the Company and INT under this provision is limited to $750,000.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business to Be Acquired: N/A
(b) Pro Forma Financial Information
Pro forma financial information reflecting the effect of the
transaction described in Item 2. above will be filed within 60 days of the
required filing date for this report on Form 8-K.
(c) Exhibits:
Exhibit Description of Exhibit
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10.1 Agreement to Form Joint Venture
10.2 Sharing Agreement
10.3 Stockholders Agreement
10.4 Transition Services Agreement
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TeraForce Technology Corporation
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(Registrant)
Date: September 7 , 2001 By: /s/ Herman M. Frietsch
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(Signature)
Herman M. Frietsch
Chairman of the Board and CEO
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INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
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10.1 Agreement to Form Joint Venture
10.2 Sharing Agreement
10.3 Stockholders Agreement
10.4 Transition Services Agreement