<PAGE>   1
                                                                    EXHIBIT 10.2









                             REIMBURSEMENT AGREEMENT


                                  BY AND AMONG

                        TERAFORCE TECHNOLOGY CORPORATION



                                       AND



                              OSCAR S. WYATT, JR.,
                                 MORTON A. COHN
                                       AND
                                  FAYEZ SAROFIM








                            Dated as of June 1, 2001







<PAGE>   2



<Table>
<Caption>
                                                  TABLE OF CONTENTS
                                                                                                            Page
                                                                                                            ----
<S>                                                                                                         <C>
Parties...................................................................................................... 1

Preamble..................................................................................................... 1

                                                      ARTICLE I

Section 1.1       Definitions................................................................................ 2
        1.2       Interpretation............................................................................. 3
                                                     ARTICLE II

Section 2.1       Letter of Credit Commitment................................................................ 4

                                                     ARTICLE III

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

Section 4.1       Warrants................................................................................... 6
Section 4.2       Replacement Warrants ...................................................................... 6
Section 4.3       Registration Rights........................................................................ 7

                                                      ARTICLE V

Section 5.1       Representations of the Company............................................................. 7
Section 5.2       Representations of the Issuers............................................................. 8

                                                     ARTICLE VI

Section 6.1       Conduct of Business........................................................................ 8

                                                     ARTICLE VII

Section 7.1       Sections on Borrowing...................................................................... 9
Section 7.2       Liens and Pledges of Assets and Stock ..................................................... 9
</Table>



                                       ii
<PAGE>   3


<Table>
<S>                                                                                                          <C>
                                                    ARTICLE VIII

Section 8.1       Successors and Assigns.....................................................................  9
Section 8.2       Notices....................................................................................  9
Section 8.3       Amendment.................................................................................. 10
Section 8.4       Effect of Delay and Waivers................................................................ 10
Section 8.5       Counterparts............................................................................... 10
Section 8.6       Severability............................................................................... 11
Section 8.7       Governing Law and Jurisdiction............................................................. 11
</Table>




                                       iii
<PAGE>   4



                             REIMBURSEMENT AGREEMENT


                  This REIMBURSEMENT AGREEMENT dated as of June 1, 2001, (the
"Agreement), is made by and among TERAFORCE TECHNOLOGY CORPORATION, a Delaware
corporation (the "Company"), and O. S. WYATT, JR., an individual residing in
Harris County, Texas ("Wyatt"), MORTON A. COHN, an individual residing in Harris
County, Texas ("Cohn") and FAYEZ SAROFIM, an individual residing in Harris
County, Texas ("Sarofim") (Wyatt, Cohn and Sarofim collectively the "Issuers";
the Company and the Issuers collectively referred to as the "Parties") upon and
subject to the following terms and conditions:

                                   WITNESSETH:

                  WHEREAS, prior to, or contemporaneously with, the execution
and delivery of this Agreement, the Company entered into a loan arrangement with
Bank One, N.A. (the "Bank") providing for a the loan of money from time to time
to the Company (the "Loan Agreement"); and

                  WHEREAS, in order to induce the Bank to enter into the Loan
Agreement, the Company has requested and the Issuers have or will issue to the
Bank a letter of credit or letters of credit in the amount of $5,000,000 to
secure the Company's obligations under the Loan Agreement (the "Letter of
Credit"); 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 draw upon the Letter of Credit in the event of default by the Company under
the Loan Agreement or Loan Documents (as hereinafter defined); and

                  WHEREAS, the Issuers agreed to issue the Letter of Credit for
the account of the Company provided that the Company executes and delivers this
Agreement, subject to the terms and conditions provided herein; and

                  WHEREAS, in consideration of the issuance of the Letter of
Credit, the Company has agreed to (i) issue and deliver to the Issuers warrants
to purchase common stock of the Company for the number of shares provided herein
(the "Warrants"); (ii) issue and deliver amended and restated warrants in
replacement and substitution for currently existing warrants held by the Lender
and repricing such replacement warrants as provided herein (the "Replacement
Warrants"); and (iii) upon a Redemption Obligation (as defined herein) to grant
a first lien and security interest in and to the accounts receivable and
inventory of the Company;

                  NOW, THEREFORE, in consideration of the foregoing, the Company
hereby covenants and agrees with the Issuers as follows:




<PAGE>   5




                                    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 Drawn Amount, excluding the Drawn Amount 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 mean 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 Letter of Credit, any
negotiable or non-negotiable instrument or demand for payment presented for loan
under a Letter of Credit.

                  "Drawn Amount" shall mean the total aggregate amount of monies
drawn from the Letter of Credit representing Advances made by the Bank and other
payments due under the Loan Agreement and associated Loan Documents which have
been defaulted upon.

                  "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.

                  "Issuers" shall mean collectively Wyatt, Cohn and Sarofim.

                  "Letter of Credit" shall have the meaning set forth in section
2.1 hereof.

                  "Letter of Credit Commitment" shall mean the sum of
$5,000,000.

                  "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.



                                      -2-
<PAGE>   6



                  "Loan" shall mean the term Loan entered into by and between
the Company and the Bank having a maximum principal amount of Advances of
$4,500,000.

                  "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 of Four Million
Five Hundred Thousand Dollars ($4,500,000).

                  "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 immaterial 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 the Issuers under Section 2.1(a).

                  "Related Documents" shall men the Security Agreement, the
Warrants, the Replacement Warrants and the Registration Rights Agreement.

                  "Replacement Warrants" shall have the meaning specified in
Section 4.2.

                  "Security Agreement" shall have the meaning specified in
Section 3.3.

                  "Warrants" shall mean those certain Warrants dated have the
meaning specified in Section 4.1.

         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;



                                      -3-
<PAGE>   7



                           (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
successors and assigns but, if applicable, only if such 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

                  (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 LETTER OF CREDIT

         Section 2.1. Letter Of Credit Commitment.

                  On the terms and subject to the terms hereof, each of the
Issuers agree to issue a letter of credit to the Bank for the account of the
Company in order to secure the Company's obligations under the Loans
(individually a "Letter of Credit"; collectively the "Letters of Credit"). Each
Letter of Credit shall be an irrevocable standby Letter of Credit and shall
contain such terms and conditions as are determined by the Bank. The aggregate
face amount of all of the Letters of Credit shall be an amount equal to the
Letter of Credit Commitment and the expiry date of each Letter of Credit shall
be upon the discharge of the Company's obligations under the Loan Agreement or
such later date as set forth in the Letter of Credit (the "Letter of Credit
Expiration Date"). Each Issuer agrees to make such renewals or amendments to the
Letter of Credit as the Bank may request, but in no event




                                      -4-
<PAGE>   8



shall the Issuers be obligated to renew or amend the Letter of Credit to the
extent that it would exceed the face amount of the Letter of Credit or be
extended beyond the Letter of Credit Expiration Date.


                                   ARTICLE III
                                  REIMBURSEMENT

         Section 3.1. Reimbursable Amounts and Other Payments

                  (a) Amounts. The Company shall reimburse each Issuer (i) the
proportionate amount owed to the Issuer based on the amount of each Draft paid
by the Issuer on his Letter of Credit, and (ii) any taxes, fees, changes or
other costs and expenses incurred by the Issuer in connection with such payment.
Each such reimbursement obligation shall be paid by the Company to the Issuer
promptly upon written demand from the Issuers ("Demand for Reimbursement"), but
in no event greater than thirty (30) days. Each such Demand for Reimbursement,
in order to be valid, shall be accompanied by sufficient documentation from the
Bank certifying the amount drawn by the Bank on the Letter of Credit (and
interest on such sum as provided in subsection (b) below) equal to the aggregate
of the amounts, if any, which shall have been drawn upon the Letter of Credit by
the Bank (the "Drawn Amount") at any time plus all reasonable direct
out-of-pocket charges and expenses which the Issuers may pay or incur relative
to the Drawn Amount.

                  (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 the Issuers shall
be made in lawful currency of the United States of America and in immediately
available funds at, and pursuant to, such instructions as the Issuer may from
time to time give.

                  (d) Letter of Credit Expiration Date. In the event that there
are any outstanding Loans (as defined in the Loan Agreement) in effect as of
June 15, 2002 which result in the Letter of Credit not being released by the
Bank, the Company agrees to either refinance or pay off such Loans or make such
other accommodations with the Bank in order to ensure the Letter of Credit will
be promptly released by the Bank and returned to the Issuers.

         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 or the
Issuers.

                  (b) The Company hereby agrees that the Issuers shall not be
responsible for, and the Reimbursement Obligations shall not be affected by,
among other things,




                                      -5-
<PAGE>   9



                           (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

                           (iii) any claims whatsoever of the Company against
                           the Bank.

                  (c) The Issuers 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 any Letter of Credit, except
for errors or omissions caused by Issuers primary negligence or willful
misconduct.

                  (d) The Company agrees that any action taken or omitted by the
Issuers in connection with the Letter of Credit, provided the Issuers actions
are not the result of the Issuers primary negligence, willful misconduct, or
breach of contractual obligations, shall be binding on the Company and shall not
result in any liability to each or all of the Issuers.

         Section 3.3. Security Interest. The Company hereby appoints the Issuers
as its true and lawful attorney-in-fact to execute and deliver on the Company's
behalf the Security Agreement, the form of which is attached as Exhibit A, (the
"Security Agreement") and execute and file any necessary UCC financing
statements to grant to Issuers a valid first lien security interest in the
Accounts and Inventory (each as defined in the Security Agreement) of the
Company upon the occurrence of any Reimbursement Obligation.

         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 the Issuers, and each of their respective successors, heirs and
assigns, from and against any and all claims and damages, losses, liabilities,
costs or expenses (including reasonable attorneys fees) which the Issuers may
incur by reason of or in connection with the issuance, execution and delivery
or transfer or payment or failure to pay the Letter of Credit, except to the
extent of the primary negligence or willful misconduct of the Issuers, or as may
be attributable to the Issuers breach of their respective obligations under this
Agreement.

                                   ARTICLE IV
                                    WARRANTS

         Section 4.1. Warrants. As an inducement to enter into this Agreement,
but for which the Issuers would not do, the Company agrees to issue to the
Issuers Warrants to purchase an aggregate of 1,200,000 shares of Common Stock at
an exercise price per share of NO AND 75/100 DOLLARS ($0.75), the form of which
is attached as Exhibit B, such warrants to be allocated in accordance with the
Issuers percentage interest in the Letter of Credit (the "Warrants").

         Section 4.2. Replacement Warrants. As a further inducement to enter
into this Reimbursement Agreement, the Company agrees to reissue to the Issuers
warrants in replacement and substitution for currently outstanding warrants held
by each of the Issuers, repriced to reflect an exercise price per share of NO
AND 75/100 DOLLARS ($0.75) (the "Replacement Warrants").



                                      -6-
<PAGE>   10



Copies of the form of the individual Replacement Warrants are attached hereto as
Exhibits C-1 through C-3 and shall be allocated as follows with respect to the
Issuers:

                  (a) Wyatt shall receive three Replacement Warrants to purchase
an aggregate of 500,000 warrant shares representing the replacement of currently
exercisable warrants to purchase shares, as follows: 50,000 shares at an
exercise price of $2.00 per share expiring May 8, 2002, 300,000 shares at an
exercise price of $1.50 per share expiring March 8, 2002, and 150,000 shares
with an original exercise price of $2.998 per share expiring on December 31,
2003;

                  (b) Cohn shall receive a Replacement Warrant to purchase
150,000 warrant shares representing the replacement of currently exercisable
warrants to purchase 150,000 shares with an original exercise price of $2.998
per share expiring on December 31, 2003; and

                  (c) Sarofim shall receive a Replacement Warrant to purchase
150,000 warrant shares representing the replacement of currently exercisable
warrants to purchase 150,000 with an original exercise price of $2.998 per share
expiring on December 31, 2003.

                  (d) Authorization and Validity. This Agreement and each other
Related Documents to which the Company is a party is in the form so authorized,
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 and similar laws affecting creditor rights generally
and by general principles of equity provided, however, that nothing herein shall
be construed so as to limit in any way the Issuers' rights or abilities to
pursue or enforce their remedies in any court or proceeding.

                  (e) No Conflict; Government Consent. Neither the execution and
delivery of this Agreement or any such Related Document, 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.

         Section 4.3. Registration Rights. The Company further agrees to grant
piggyback registration rights to register the resale of the shares of Common
Stock to be issued in accordance with the Warrants in accordance with the
Registration Rights Agreement attached hereto as Exhibit D (the "Registration
Rights Agreement").


                                    ARTICLE V
                         REPRESENTATIONS AND WARRANTIES

         Section 5.1. Representations of the Company. The Company hereby
represents and warrants to the Issuers as follows:



                                      -7-
<PAGE>   11



                  (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 has been duly
authorized by all necessary corporate action, and has been duly executed and
delivered by the Company and 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
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, 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. The Company has
good and indefeasible title to its Accounts and Inventory, all of which are free
and clear of all Liens, except for Liens permitted under section 7.2

                  Section 5.2. Representations of the Issuers. The Issuers
severally but not jointly represent and warrant to the Company with respect to
themselves that each has full power and authority to execute and deliver this
Agreement and the Related Documents, and that this Agreement and the Related
Documents are valid, binding and enforceable in accordance with their terms as
they relate to each Issuer, except as may be limited by bankruptcy and
insolvency laws, and similar laws affecting creditors rights generally and by
general principals of equity.

                                   ARTICLE VI
                              AFFIRMATIVE COVENANTS

                  Section 6.1. 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 and except as otherwise permitted in the
Loan Agreement or herein, it 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




                                      -8-
<PAGE>   12



permit one or more partnerships, corporations or other entities to merge into or
consolidate with it without the prior express written consent of the Issuers
which will not be unreasonably withheld.

                                  ARTICLE VII
                               NEGATIVE COVENANTS

         Section 7.1. Sections on Borrowing.

                  So long as the Letter of Credit is outstanding, except for
obligations of the Company on the date hereof or under the Loan Agreement, and
extensions or refinancings thereof, 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 the Issuers, which consent shall not be unreasonably
withheld.

         Section 7.2. Liens and Pledges of Assets and Stock.

                  So long as the Letter of Credit is outstanding, the Company
shall not create, incur, assume or suffer to exist, directly or indirectly, any
Lien on its assets (including the Accounts or the Inventory) without the consent
of Issuers which consent shall not be unreasonably withheld; provided, however,
that this Section 7.2 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; or (iii) Permitted Liens.

                                  ARTICLE VIII
                                    COVENANTS

                  Section 8.1. Successors and Assigns. This Agreement shall be
binding upon each party and their respective successors and assigns.

                  Section 8.2. 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 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 Wyatt:           Oscar S. Wyatt, Jr.
                                     8 Greenway Plaza, Suite 930
                                     Houston, Texas 77046
                                     Telecopier: (713) 877-7192


              If to Sarofim:         c/o Mrs. Raye G. White
                                     Fayez Sarofim & Company
                                     2 Houston Center, Suite 2907
                                     Houston, Texas 77010
                                     Telecopier: (713) 654-4015



                                      -9-
<PAGE>   13

              If to Cohn:            Morton A. Cohn
                                     800 Bering, Suite 210
                                     Houston, Texas 77010
                                     Telecopier: (713) 978-6196

              If to the Company:     TeraForce Technology Corporation
                                     Attn.: Herman M. Frietsch, Chairman & CEO
                                     1240 East Campbell Road
                                     Richardson, Texas 75081
                                     Telecopier: (469) 330-4999

              with a copy to:        Bisk & Fitch, L.L.P.
                                     Attn.: Michael T. Larkin, Esq.
                                     24 Greenway Plaza, Suite 750
                                     Houston, Texas 77046
                                     Telecopier: (713) 871-0721

                  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 8.3. Amendment.

                  This Agreement may be amended, modified or discharged only
upon an agreement in writing of the Company and the Issuers.


         Section 8.4. 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 the Issuer 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.

         Section 8.5. Counterparts



                                      -10-
<PAGE>   14



                  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 8.6. 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.

         Section 8.7. Governing Law and Jurisdiction

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




                                      -11-
<PAGE>   15




         This Agreement has been signed by the Company as of the date first
above written.


                                    COMPANY:
                                    TeraForce Technology Corporation



                                    By: /s/ Herman M. Frietsch,
                                       -----------------------------------------
                                       Herman M. Frietsch, Chairman & CEO






                                    ISSUERS:



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


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



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




                                      -12-