EXHIBIT 10.2
REIMBURSEMENT AGREEMENT
BY AND BETWEEN
TERAFORCE TECHNOLOGY CORPORATION
AND
O.S. XXXXX, JR.
Dated as of October 12, 2001
TABLE OF CONTENTS
Page
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ARTICLE I GENERAL TERMS...................................................2
Section 1.1. Definitions.................................................2
Section 1.2. Interpretation..............................................4
ARTICLE II THE GUARANTIES..................................................5
ARTICLE III REIMBURSEMENT...................................................5
Section 3.1. Reimbursable Amounts and Other Payments.....................5
Section 3.2. Obligations Absolute........................................5
Section 3.3 Security Interest...........................................6
Section 3.4 Indemnity...................................................6
ARTICLE IV ADDITIONAL AGREEMENTS...........................................6
Section 4.1. Payment Obligations.........................................6
ARTICLE V WARRANTS........................................................7
Section 5.1. Warrants....................................................7
Section 5.2. Additional Warrants.........................................7
Section 5.3. Registration Rights.........................................7
ARTICLE VI ADDITIONAL GUARANTORS...........................................7
Section 6.1 Adding Additional Guarantors................................7
Section 6.2 Consideration for Additional Guarantees.....................7
Section 6.3 Reimbursement Obligation....................................8
ARTICLE VII REPRESENTATIONS AND WARRANTIES..................................8
Section 7.1. Representations and Warrants of the Company.................8
ARTICLE VIII AFFIRMATIVE COVENANTS...........................................9
Section 8.1 Conduct of Business.........................................9
ARTICLE IX NEGATIVE COVENANTS..............................................9
Section 9.1. Restrictions on Borrowing...................................9
Section 9.2. Liens and Pledges of Assets and Stock.......................9
Section 9.3 No Mergers, etc.............................................9
ARTICLE X COVENANTS.......................................................9
Section 10.1 Successors and Assigns......................................9
Section 10.2. Notices.....................................................9
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Section 10.3. Amendment..................................................10
Section 10.4. Effect of Delay and Waivers................................10
Section 10.5. Counterparts...............................................10
Section 10.6. Severability...............................................11
Section 10.7. Governing Law and Jurisdiction.............................11
Section 10.8. Consent....................................................11
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REIMBURSEMENT AGREEMENT
This
REIMBURSEMENT AGREEMENT dated as of October 12, 2001, (the
"Agreement), is made by and between
TERAFORCE TECHNOLOGY CORPORATION, a Delaware
corporation (the "Company"), and O.S. XXXXX, JR., an individual residing in
Xxxxxx County,
Texas ("Xxxxx or "Guarantor") and such other parties that may be
added from time to time pursuant to Article IV herein; (the Company and
Guarantor collectively referred to as the "Parties")
W I T N E S S E T H:
WHEREAS, effective June 1, 2001, the Company entered into a loan
arrangement with Bank One, N.A. (the "Bank") providing for the loan of up to
$4,500,000 to the Company (the "June Loan Agreement"); and
WHEREAS, in order to induce the Bank to enter into the June Loan Agreement,
Xxxxx and certain other persons issued letters of credit in the aggregate face
amount of $5,000,000 (the "Letters of Credit") in order to secure the loan
thereunder; and
WHEREAS, due to a need for additional capital and to maintain financial
flexibility, effective the date hereof, the Company desires to enter into a
revolving loan agreement with the Bank which would enable the Company to have a
line of credit to borrow at any one time up to $1,500,000, subject to the terms
and conditions therein (the "Loan Agreement"); and
WHEREAS, in order to induce the Bank to enter into the Loan Agreement,
pursuant to consideration to be given by the Company to Guarantor, Guarantor has
or will execute a limited guaranty agreement to secure the Company's obligations
under the Loan Agreement (the "Guaranty"); and
WHEREAS, the Bank shall provide Advances (as hereinafter defined) to the
Company in accordance with the provisions of the Loan Agreement and, subject to
the terms and conditions of the Loan Agreement, shall be entitled to make demand
upon Guarantor pursuant to the provisions of Guaranty in the cas of an Event of
Default (as defined in the Loan Agreement) by the Company under the Loan
Agreement or Loan Documents (as hereinafter defined); and
WHEREAS, Guarantor agreed to execute the Guaranty provided that the Company
executes and delivers this Agreement, subject to the terms and conditions
provided herein;
NOW, THEREFORE, in consideration of the foregoing, the Company hereby
covenants and agrees with Guarantor as follows:
ARTICLE I
GENERAL TERMS
Section 1.1. Definitions. As used in this Agreement, the following terms
shall have the following meanings:
"Advances" shall mean an advance of funds under and subject to the
terms and conditions of the Loan Agreement and other Loan Documents, provided
that the principal amount outstanding shall never exceed the Loan Maximum.
"Agreement" shall have the meaning specified in the preamble.
"Associated Expenses" shall mean the expenses associated with
recovering the Guarantor Advances, excluding the Guarantor Advances and
interest thereon.
"Bank" shall have the meaning set forth in the recitals.
"Common Stock" shall mean the common stock, par value $0.01, of the
Company.
"Company" shall have the meaning specified in the preamble.
"Demand for Reimbursement" shall have the meaning specified in Section
3.1(a).
"Draft" means, with respect to a Guaranty, any negotiable or
non-negotiable instrument or demand for payment on a Guaranty.
"Excess Amount" shall have the meaning specified in Section 4.1.
"Governmental Authority" means any United States or foreign federal,
territorial, state or local governmental authority, quasi-governmental
authority, instrumentality, court, government or self-regulatory organization,
commission, tribunal or organization or any regulatory, administrative or other
agency, or any political or other subdivision, department or branch of any of
the foregoing.
"Guarantor Advance" shall mean the amount of money advanced by the
Guarantor to the Bank pursuant to a demand for payment by the Bank on his
Guaranty.
"Guarantor" shall have the meaning specified in the preamble.
"Guaranties" and "Guaranty" shall have the meaning set forth in the
recitals.
"Issuers" shall mean those parties issuing the Letters of Credit in
the Original
Reimbursement Agreement. Specifically, the Issuers are O.S. Xxxxx,
Jr., Xxxxx Xxxxxxx and Xxxxxx X. Xxxx.
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"June Loan Agreement" shall have the meaning set forth in the recitals.
"Letters of Credit" shall have the meaning set forth in the recitals.
"Lien" means any lien, mortgage, security interest, pledge, assignment,
charge, title retention agreement or encumbrance of any kind and any other
arrangement for a creditor's claim to be satisfied from assets or proceeds
prior to the claims of other creditors or the owners.
"Loan" shall mean the term Loan entered into by and between the Company
and the Bank effective the date hereof.
"Loan Agreement" shall have the meaning set forth in the recitals.
"Loan Documents" shall mean the Loan Agreement with the Bank and all
exhibits and related documents thereto, as they may be amended, extended or
modified from time to time, including, without limitation, a promissory note.
"Loan Maximum" shall mean the principal amount outstanding of One Million
Five Hundred Thousand Dollars ($1,500,000), as such amount may be increased by
agreement from time to time between the Company and the Bank.
"Major Transaction" shall mean (i) the closing of the sale of any business
or assets of the Company or any subsidiary of the Company, or (ii) the
settlement of litigation or the collection by the Company of a final judgment
in such litigation, provided such sale, settlement, or collection results in
net cash proceeds to the Company of more than Ten Million Dollars ($10,000,000).
"Original
Reimbursement Agreement" shall mean that certain
Reimbursement
Agreement dated June 1, 2001 among the Company, and O.S. Xxxxx, Jr., Xxxxx
Xxxxxxx, and Xxxxxx Xxxx.
"Permitted Liens" means (a) Liens for taxes or governmental assessments,
employee benefit obligations, charges or claims the payment of which is not yet
due, or are being contested in good faith for which adequate reserves have been
established or (b) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other similar Persons and other Liens
imposed by applicable law incurred in the ordinary course of business for sums
not yet delinquent or not material in amount and being contested in good faith.
"Person" means an individual, corporation, partnership, association,
limited liability company, trust, estate or other similar business entity or
organization, including a Governmental Authority.
"Redemption Obligations" means, at any time, the aggregate of all
obligations of the Company to reimburse Guarantor under Section 2.1(a).
"Registration Rights Agreement" shall have the meaning specified in
Section 5.2.
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"Reimbursement Obligation" shall have the meaning specified in Section
3.1(a).
"Related Documents" shall mean the Warrants, the Replacement Warrants
and the Registration Rights Agreement.
"Security Agreement" shall have the meaning specified in Section 3.3.
"Warrants" shall have the meaning specified in Section 5.1.
Section 1.2. Interpretation.
(a) In this Agreement:
(i) the singular number includes the plural number and vice
versa;
(ii) reference to any gender includes each other gender;
(iii) the words "herein," "hereof" 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;
(iv) reference to any Person includes such Person's heirs,
administrators, successors and assigns but, if applicable, only if such heirs,
administrators, successors and assigns are permitted by this Agreement, and
reference to a Person in a particular capacity excludes such Person in any other
capacity or individually, provided that nothing in this subclause (iv) is
intended to authorize any assignment not otherwise permitted by this Agreement;
(v) reference to any agreement, document or instrument means
such agreement, document or instrument as amended, supplemented or modified and
in effect from time to time in accordance with the terms thereof and, if
applicable, the terms hereof, and reference to the Note includes any Note issued
pursuant hereto in extension or renewal hereof and in substitution or
replacement herefor;
(vi) unless the context indicates otherwise, reference to any
Article, Section, Schedule or Exhibit means such Article or Section hereof or
such Schedule or Exhibit hereto;
(vii) the words "including" (and with correlative meaning
"include") means including, without limiting the generality of any description
preceding such term;
(viii) with respect to the determination of any period of time,
the word "from" means "from and including" and the word "to" means "to, but
excluding";
(ix) reference to any law means such as amended, modified,
codified or reenacted, in whole or in part, and in effect from time to time; and
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(b) No provision of this Agreement shall be interpreted or construed
against any Person solely because that Person or its legal representative
drafted such provision.
ARTICLE II
THE GUARANTIES
Section 2.1 Guaranty. On the terms and subject to the terms hereof,
Guarantor agrees to issue the Guaranty to the Bank in order to fully secure the
Company's obligations under the Loans. The Guaranty shall be substantially in
the form attached hereto as Exhibit A.
ARTICLE III
REIMBURSEMENT
Section 3.1. Reimbursable Amounts and Other Payments.
(a) Amounts. The Company shall reimburse Guarantor the amount paid
by Guarantor to the Bank equal to the amount of his Guarantor Advance and any
taxes, fees, changes or other costs and expenses incurred by Guarantor in
connection with such payment (the "Reimbursement Obligation"). Each such
Reimbursement Obligation shall be paid by the Company to Guarantor promptly upon
written demand from Guarantor ("Demand for Reimbursement"), but in no event
later than thirty (30) days after such demand. Each such Demand for
Reimbursement, in order to be valid, shall be accompanied by sufficient
documentation supporting the amount of the Reimbursement Obligation.
(b) Interest. The Company shall pay interest on any and all amounts
remaining unpaid under Section 3.1(a) at any time from the date such amounts
become payable until paid in full, payable on demand, at simple interest at the
prime rate established by Bank One, N.A., plus 2.0% per annum (or, if less, the
highest rate permitted under applicable law).
(c) Currency. All payments by the Company to Guarantor shall be made
in lawful currency of the United States of America and in immediately available
funds at, and pursuant to, such instructions as Guarantor may from time to time
give.
Section 3.2. Obligations Absolute.
(a) The Company's obligations under this Article III shall be
absolute and unconditional irrespective of any set-off, counterclaim, or defense
to payment which the Company may have or have had against the Bank.
(b) The Company hereby agrees that Guarantor shall not be responsible
for, and the Reimbursement Obligations shall not be affected by, among other
things,
(i) the validity or genuineness of documents or of any
endorsements thereon even though such documents shall prove to be
invalid, fraudulent, or forged;
(ii) any dispute between the Company and the Bank; or
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(iii) any claims whatsoever of the Company against the Bank.
(c) Guarantor shall not be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any message or
advice, howsoever transmitted, in connection with the Guaranty, except for
errors or omissions caused by Guarantor's primary negligence or willful
misconduct.
(d) The Company agrees that any action taken or omitted by the
Guarantor in connection with the Guaranty, provided Guarantor's actions are not
the result of Guarantor's primary negligence, willful misconduct, or breach of
contractual obligations, shall be binding on the Company and shall not result in
any liability to Guarantor.
Section 3.3 Security Interest The Company hereby appoints Xxxxx as its
true and lawful attorney-in-fact to execute and deliver on the Company's behalf
the Security Agreement upon the occurrence of any Reimbursement Obligation, the
form of which is attached as Exhibit B, (the "Security Agreement") and execute
and file any necessary UCC financing statements, to grant to Guarantor a valid
lien and security interest, which shall be subject to and subordinated to any
lien(s) and security interests created in the Accounts and Inventory (each as
defined in the Security Agreement) of the Company, pursuant to the Original
Reimbursement Agreement.
Section 3.4 Indemnity In addition the rights and obligations set forth in
Section 3.1(a), the Company hereby agrees to indemnify and hold harmless
Guarantor, and each of his respective successors, heirs and assigns, from and
against any and all claims and damages, losses, liabilities, costs or expenses
(including reasonable attorneys fees) which Guarantor may incur by reason of or
in connection with the issuance, execution and delivery or transfer or payment
or failure to pay the Guaranty except to the extent of the primary negligence or
willful misconduct of Guarantor, or as may be attributable to Guarantor's breach
of his obligations under this Agreement.
ARTICLE IV
ADDITIONAL AGREEMENTS
Section 4.1 Payment Obligations.
(a) Upon the closing of a Major Transaction pursuant to which the
Company receives cash consideration, after repayment by the Company of its
obligations to the Bank under the June Loan Agreement and the Loan Agreement and
the Loan Documents, together with any related costs and expenses, including
attorneys fees, and after repayment by the Company of its obligations to the
parties under the Original
Reimbursement Agreement, the Company shall pay an
aggregate sum of Three Hundred Ninety-Six Thousand Dollars ($396,000.00) to
Xxxxx (the "Excess Amount").
(b) In the event Paragraph 3.4 of the Warrants results in a re-set of
the exercise price of the Warrants, to the extent all of the Warrants are
outstanding and held by Xxxxx, the Company shall pay to Xxxxx the aggregate sum
of One Hundred Ninety-Eight Thousand Dollars ($198,000.00).
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ARTICLE V
WARRANTS
Section 5.1 Warrants. As an additional inducement to enter into this
Agreement, the Company agrees to issue to Xxxxx Warrants to purchase an
aggregate of 360,000 shares of Common Stock at an exercise price per share of
NO AND 20/100 DOLLARS ($0.20), the form of which is attached as Exhibit C (the
"Warrants").
Section 5.2 Additional Warrants. As an inducement to enter into this
Agreement, but for which Xxxxx would not do, the Company agrees to issue to
Xxxxx Warrants to purchase an aggregate of 600,000 shares of Common Stock at
an exercise price per share of NO AND 80/100 DOLLARS ($0.80), the form of which
is attached as Exhibit D (the "Additional Warrants").
Section 5.3 Registration Rights. The Company further agrees to grant
the registration rights to register the resale of the shares of Common Stock to
be issued pursuant to the Warrants and the Additional Warrants in accordance
with the Registration Rights Agreement attached hereto as Exhibit E (the
"Registration Rights Agreement").
ARTICLE VI
ADDITIONAL GUARANTORS
Section 6.1 Adding Additional Guarantors. From time to time the
Company may seek to increase the amount available for borrowing under the Loan
Agreement and may seek additional Guarantors to increase the amount guaranteed
by Xxxxx. The granting of such additional credit and the acceptance of
additional Guarantors or the increase in the amount guaranteed by existing
guarantors will be subject to the approval and consent of the Bank and the
Company. The maximum aggregate amount of such additional credit shall be up to
$1,500,000, in increments of not less than $500,000.
Section 6.2 Consideration for Additional Guarantees. For each $500,000
of additional credit provided to the Company by the Bank as a result of the
execution of new or amended guarantees of such credit, the guarantors providing
such additional guarantee shall receive the following consideration:
(a) Payment Obligations. Pursuant to and in accordance with
the terms and conditions of Section 4.1(a) herein, the aggregate sum of
$132,000 to be divided among the guarantors in proportion to their respective
amounts guaranteed. Pursuant to and in accordance with the terms and conditions
of Section 4.1(b) herein, the aggregate sum of $66,000 to be divided among the
guarantors in proportion to their respective amounts guaranteed.
(b) Warrants. Warrants for the purchase of an aggregate of
120,000 shares of Common Stock at an exercise price of $0.20 pursuant to the
terms and conditions of Section 5.1 herein to be divided among the guarantors
in proportion to their respective amounts guaranteed. Warrants for the purchase
of an aggregate of 200,000 shares of Common Stock at an exercise price of $0.80
per share pursuant to the terms and conditions of Section 5.2 herein to be
divided among the guarantors in proportion to their respective amounts
guaranteed.
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(c) Registration Rights. Registration rights relating to such warrants
pursuant to the terms and conditions of Section 5.3 herein.
Section 6.3 Reimbursement Obligation. Each additional guarantor shall
execute such documents as may be required in order to be subject to the terms
and conditions of this Agreement as a guarantor and the Company shall execute
such documents as may be reasonably necessary to confirm the reimbursement of
such obligations pursuant to Article III of this Agreement.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
Section 7.1. Representations and Warrants of the Company. The Company
hereby represents and warrants to Guarantor as follows:
(a) Corporate Existence and Good Standing. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to own its property and carry on its business as now conducted, and is
in good standing and authorized to do business in each jurisdiction in which the
Company owns real property or conducts such business, where the failure to
maintain such good standing or authorization is reasonably expected to have a
materially adverse effect on its business, operations or financial or other
condition, or could materially adversely affect its ability to perform its
obligations under this Agreement.
(b) Authorization and Validity. This Agreement and Related Documents
have been duly authorized by all necessary corporate action, and each has been
duly executed and delivered by the Company and each is valid, binding and
enforceable against the Company in accordance with its terms except as may be
limited by bankruptcy or insolvency laws and similar laws affecting creditor
rights generally and by general principles of equity.
(c) No Conflict; Government Consent; Title to Assets; No Liens.
Neither the execution and delivery of this Agreement and Related Documents, nor
the consummation of the transactions contemplated hereby or thereby nor
compliance with the terms hereof or thereof under the circumstances contemplated
hereby or thereby will conflict with, are prohibited by or will contravene,
violate or constitute a breach of or a default under the Amended and Restated
Certificate of Incorporation or By-Laws of the Company or constitute on the part
of the Company a material breach of or a material default under any agreement or
other instrument to which the Company is a party or any existing law,
administrative regulation, or, to its knowledge, any court order or consent
decree to which the Company is subject, or by which any of its properties is
bound.
7.2 Representations of Guarantor. Guarantor represents and warrants
to the Company 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 such Guarantor, except as may be limited by bankruptcy and
insolvency laws, and similar laws affecting creditors rights generally and by
general principals of equity. Guarantor represents and warrants to the Company
that the provisions of Section 2.3 of
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the Warrant and the Additional Warrant are true and correct as though made on
the date hereof, and will be true and correct on the date of exercise of the
Warrant and the Additional Warrant.
ARTICLE VIII
AFFIRMATIVE COVENANTS
Section 8.1. Conduct of Business. The Company covenants and agrees that
it shall remain duly incorporated, validly existing and in good standing as a
domestic corporation in the State of Delaware, will not voluntarily dissolve
without first discharging its obligations under this Agreement.
ARTICLE IX
NEGATIVE COVENANTS
Section 9.1. Restrictions on Borrowing. So long as the Guaranty is
outstanding, except for obligations of the Company on the date hereof or under
the Loan Agreement, or which may arise under the Original
Reimbursement
Agreement, and extensions or refinancings under such agreements, the Company
shall not, nor permit any of its subsidiaries to, create, incur, assume or
suffer to exist any liability for borrowed money with an aggregate amount
outstanding in excess of $1,000,000, without the consent of Guarantor, which
consent shall not be unreasonably withheld.
Section 9.2. Liens and Pledges of Assets and Stock. So long as the
Guaranty is outstanding, the Company shall not create, incur, assume or suffer
to exist, directly or indirectly, any Lien on its assets without the consent of
Guarantor, which consent shall not be unreasonably withheld; provided, however,
that this Section 9.2 shall not prohibit the Company from creating, assuming or
suffering to exist the following Liens: (i) Liens existing as of the date hereof
and renewals and replacements thereof or the repledging of assets pledged
thereunder; (ii) Liens incurred in the ordinary course of business not in
connection with the borrowing of money; (iii) Liens arising out of the Original
Reimbursement Agreement and the documents in connection therewith; (iv) Liens
arising from this Agreement and the documents in connection therewith; and (v)
Permitted Liens.
Section 9.3. No Mergers, etc. Except as otherwise permitted in the Loan
Agreement or herein, the Company will not sell, transfer or otherwise dispose of
all or substantially all of its assets (either in a single transaction or in a
series of related transactions), and will not merge into or consolidate with any
partnership, corporation or other entity and will not permit one or more
partnerships, corporations or other entities to merge into or consolidate with
it without the prior express written consent of Guarantor, which consent will
not be unreasonably withheld.
ARTICLE X
COVENANTS
Section 10.1. Successors and Assigns. This Agreement shall be binding
upon each party and their respective successors, heirs and assigns.
Section 10.2. Notices. All notices, requests and demands to or upon the
respective parties shall be in writing (including by facsimile) and, unless
otherwise expressly provided herein, shall
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be deemed to have been duly given or made (a) in the case of delivery by hand,
when delivered, (b) in the case of delivery by mail, three (3) days after being
deposited in the mails, postage prepaid, or (c) in the case of delivery by
facsimile, when sent and receipt has been confirmed, addressed as follows:
If to Xxxxx: O. S. Xxxxx, Jr.
0 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Telecopier: (000) 000-0000
If to the Company:
TeraForce Technology Corporation
Attn.: Xxxxxx X. Xxxxxxxx, Chairman & CEO
0000 Xxxx Xxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxx 00000
Telecopier: (000) 000-0000
with a copy to: Bisk & Fitch, L.L.P.
Attn.: Xxxxxxx X. Xxxxxx, Esq.
00 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Telecopier: (000) 000-0000
Any entity entitled to receive notice hereunder may, by notice given
hereunder, designate any further or different addresses to which subsequent
notices, certificates or other communications shall be sent.
Section 10.3. Amendment. This Agreement may be amended, modified or
discharged only upon an agreement in writing of the Company and Guarantor.
Section 10.4. Effect of Delay and Waivers. No delay or omission to exercise
any right or power accruing upon any default, omission or failure of performance
hereunder shall impair any such right or power or shall be construed to be a
waiver thereof, but any such right and power may be exercised from time to time
and as often as may be deemed expedient. In order to entitle Guarantor to
exercise any remedy now or hereafter existing at law or in equity or by statute,
it shall not be necessary to give any notice, other than such notice as may be
herein expressly required. In the event any provision contained in this
Agreement should be breached by any party and thereafter waived by the other
party so empowered to act, such waiver shall be limited to the particular breach
so waived and shall not be deemed to waive any other breach hereunder. No
waiver, amendment, release or modification of this Agreement shall be
established by conduct, custom or course of dealing, but solely by an instrument
in writing duly executed by the parties thereunto duly authorized by this
Agreement.
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Section 10.5. Counterparts. This Agreement may be executed simultaneously
in counterparts, each of which shall be deemed an original, but both of which
together shall constitute one and the same instrument.
Section 10.6. Severability. The invalidity or unenforceability of any one
or more phrases, sentences, clauses or Sections contained in this Agreement
shall not affect the validity or enforceability of the remaining portions of
this Agreement, or any part thereof. In particular, this section means (among
other things) that the Company does not agree or intend to pay, and Guarantor
does not agree to contract for, charge, collect, take, reserve or receive
(collectively referred to herein as "charge or collect"), any amount in the
nature of interest or in the nature of a fee for anything construed to be a
loan, which would in any way or event (including demand, prepayment, or
acceleration) cause Guarantor to charge or collect more for entering into this
Agreement than the maximum amount Guarantor would be permitted to charge or
collect by federal law or the laws of the State of
Texas. Any such excess
interest or unauthorized fee shall, instead or anything stated to the contrary,
be applied first to reduce the principal balance of the loan, if any, and when
the principal has been paid in full, refunded to the Company.
Section 10.7. Governing Law and Jurisdiction.
This Agreement shall be governed by and construed in accordance with the laws
of the State of
Texas.
Section 10.8 Consent. By signing this Agreement, Xxxxx irrevocably
consents to the Company entering into the Loan Agreement, notwithstanding
anything to the contrary in the Original Reimbursement Agreement.
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This Agreement has been signed by the Company as of the date first above
written.
COMPANY:
TeraForce Technology Corporation
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------------------------
Xxxxxx X. Xxxxxxxx, Chairman & CEO
GUARANTOR:
/s/ O. S. Xxxxx, Jr.
--------------------------------------------
O. S. Xxxxx, Jr.
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