**Exhibit 4.2**
**REGISTRATION RIGHTS AGREEMENT**
     This Registration Rights Agreement (the “Agreement”) is dated as of August19, 2004 and is by and between TeraForce Technology Corporation, a Delawarecorporation (the “Company”) and Zurich American Insurance Company, acorporation organized under the laws of the State of New York (the “Zurich”).
RECITALS
     WHEREAS, as of an even date herewith, Zurich has made a loan to theCompany in the amount of $ 189,298 (the “Loan”); and
     WHEREAS, as of an even date herewith, the Company has issued to Zurich awarrant for the purchase of the Company’s common stock, par value $0.01 pershare (the “Common Stock”) as security for the Loan (the “Warrant”); and
     WHEREAS, pursuant to the Warrant, the Zurich has the right to acquire948,517 shares of Common Stock; and
     WHEREAS, the parties desire to set forth the Zurich’s rights and theCompany’s obligations to cause the registration of the Registrable Securities(as defined herein) pursuant to the Securities Act (as defined herein);
     NOW, THEREFORE, in consideration of Zurich making the Loan, and for othergood and valuable consideration, the receipt and sufficiency of which arehereby acknowledged, the parties hereto agree as follows:
Section 1. Definitions and Usage.
     As used in this Agreement:
     1.1 Definitions.
     (a) “Blackout Period” shall have the meaning set forth in Section 3.
     (b) “Business Day” shall mean any day except Saturday, Sunday and any daywhich shall be a legal holiday or a day on which banking institutions in thestate of New York generally are authorized or required by law or othergovernment actions to close.
     (c) “Commission” shall mean the Securities and Exchange Commission.
     (d) “Common Stock” shall mean (i) the common stock of the Company, parvalue $.01 per share, and (ii) shares of capital stock of the Company issued bythe Company in respect of or in exchange for shares of such common stock inconnection with any stock dividend or distribution, stock split-up,recapitalization, recombination or exchange by the Company generally of sharesof such common stock.
     (e) “Continuously Effective,” with respect to a specified registrationstatement, shall mean that it shall not cease to be effective and available forTransfers of Registrable Securities thereunder for
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longer than either (i) any ten (10) consecutive business days, or (ii) anaggregate of fifteen (15) business days during the period specified in therelevant provision of this Agreement.
     (f) “Effectiveness Period” shall have the meaning set forth in Section 2.
     (g) “Exchange Act” shall mean the Securities Exchange Act of 1934, asamended.
     (h) “Loan” shall have the meaning set forth in the Recitals to thisAgreement.
     (i) “Filing Date” shall have the meaning set forth in Section 2.
     (j) “Holders” shall mean the Zurich and the transferees of the RegistrableSecurities of the Zurich, at such times as such Persons shall own RegistrableSecurities. For purposes of this Agreement, a Person will be deemed to be aholder and an owner of Registrable Securities whenever such Person has theright to acquire such Registrable Securities (by conversion, purchase orotherwise), whether or not such acquisition has actually been effected andwhether or not such right is currently exercisable.
     (k) “Person” shall mean any individual, sole proprietorship, partnership,limited liability company, joint venture, trust, incorporated organization,association, corporation, institution, public benefit corporation, entity orgovernment (whether federal, state, county, city, municipal or otherwise,including, without limitation, any instrumentality, division, agency, body ordepartment thereof).
     (l) “Prospectus” means the prospectus included in the RegistrationStatement (including, without limitation, a prospectus that includes anyinformation previously omitted from a prospectus filed as part of an effectiveregistration statement in reliance upon Rule 430A promulgated under theSecurities Act), as amended or supplement by any prospectus supplement, withrespect to the terms of the offering of any portion of the RegistrableSecurities covered by the Registration Statement, and all other amendments andsupplements to the Prospectus, including post-effective amendments, and allmaterial incorporated by reference or deemed to be incorporated by reference insuch Prospectus.
     (m) “Register,” “registered,” and “registration” shall refer to aregistration effected by preparing and filing a registration statement orsimilar document in compliance with the Securities Act, and the declaration orordering by the Commission of effectiveness of such registration statement ordocument.
     (n) “Registrable Securities” shall mean the Shares; provided, however,that Registrable Securities shall not include any Registrable Securities whichhave theretofore been registered and sold pursuant to the Securities Act orwhich have been sold to the public pursuant to Rule 144 or any similar rulepromulgated by the Commission pursuant to the Securities Act, and, providedfurther, the Company shall have no obligation under Section 2 or Section 3 toregister any Registrable Securities if the Company delivers to the Holdersrequesting such registration an opinion of counsel to the effect that theproposed sale or disposition of all of the Registrable Securities for whichregistration was requested does not require registration under the SecuritiesAct for a sale or disposition in a single public sale, and offers to remove anyand all legends restricting transfer from the certificates evidencing suchRegistrable Securities.
     (o) “Registration Statement” means the registration statement and anyadditional registration statements contemplated by Section 2 including (in eachcase) the Prospectus, amendments and supplements to such registration statementor Prospectus, including pre- and post-effective amendments,
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all exhibits thereto, and all material incorporated by reference or deemed tobe incorporated by reference in such registration statement.
     (p) “Securities Act” shall mean the Securities Act of 1933, as amended.
     (q) “Shares” shall mean the shares of Common Stock issued upon exercise ofthe Warrant.
     (r) “Transfer” shall mean and include the act of selling, giving,transferring, creating a trust (voting or otherwise) and transferring titlethereto, assigning or otherwise disposing of (other than pledging,hypothecating or otherwise transferring as security) (and correlative wordsshall have correlative meanings); provided however, that any transfer or otherdisposition upon foreclosure or other exercise of remedies of a securedcreditor after an event of default under or with respect to a pledge,hypothecation or other transfer as security shall constitute a “Transfer.”
     (s) “Violation” shall have the meaning set forth in Section 6.
     (t) “Warrants” shall have the meaning set forth in the recitals to thisAgreement.
     1.2 Usage.
     (a) References to a Person are also references to its assigns andsuccessors in interest (by means of merger, consolidation or sale of all orsubstantially all the assets of such Person or otherwise, as the case may be).
     (b) References to Registrable Securities “owned” by a Holder shall includeRegistrable Securities beneficially owned by such Person but which are held ofrecord in the name of a nominee, trustee, custodian, or other agent.
     (c) References to a document are to a document as amended, waived andotherwise modified from time to time and references to a statute or othergovernmental rule are to a statute or other governmental rule as amended andotherwise modified from time to time (and references to any provision thereofshall include references to any successor provision).
     (d) References to Sections or to Schedules or Exhibits are to sectionshereof or schedules or exhibits hereto, unless the context otherwise requires.
     (e) The definitions set forth herein are equally applicable both to thesingular and plural forms and the feminine, masculine and neuter forms of theterms defined.
     (f) The term “including” and correlative terms shall be deemed to befollowed by “without limitation” whether or not followed by such words or wordsof like import.
     (g) The term “hereof” and similar terms refer to this Agreement as awhole.
     (h) The “date of” any notice or request given pursuant to this Agreementshall be determined in accordance with Section 10.2.
Section 2. Shelf Registration. On or prior to December 31, 2004 (the “FilingDate”), the Company shall prepare and file with the Commission a “Shelf”Registration Statement covering all Registrable Securities for an offering tobe made on a continuous basis pursuant to Rule 415. The Registration Statementshall
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be on Form S-3 (if the Company is not then eligible to register for resale theRegistrable Securities on Form S-3 such registration shall be on anotherappropriate form in accordance herewith). The Company shall use its bestefforts to cause the Registration Statement to be declared effective under theSecurities Act as promptly as possible after the filing thereof, and shall useits best efforts to keep such Registration Statement Continuously Effectiveunder the Securities Act until the date when all Registrable Securities coveredby such Registration Statement have been sold or may be sold withoutrestrictions pursuant to Rule 144(k) as determined by the counsel to theCompany pursuant to a written opinion letter to such effect, addressed andacceptable to the Company’s transfer agent (the “Effectiveness Period”),provided, however, that the Company shall not be deemed to have used its bestefforts to keep the Registration Statement effective during the EffectivenessPeriod if it voluntarily takes any action that would result in the Holder notbeing able to sell the Registrable Securities covered by such RegistrationStatement during the Effectiveness Period, unless such action is pursuant to aBlackout Period (as defined in Section 3) permitted hereunder, required underapplicable law or the Company has filed a post-effective amendment to theRegistration Statement and the Commission has not declared it effective.
     Section 3.Registration Procedures.
     In connection with the Company’s registration obligations hereunder, the Company shall:
     (a) Prepare and file with the Commission on or prior to the Filing Date, aRegistration Statement on Form S-3 (or if the Company is not then eligible toregister for resale the Registrable Securities on Form S-3 such registrationshall be on another appropriate form in accordance herewith) which shallcontain the “Plan of Distribution” and cause the Registration Statement tobecome effective and remain effective as provided herein; provided, however,that not less than ten (10) Business Days prior to the filing of theRegistration Statement or any related Prospectus or any amendment or supplementthereto (including any document that would be incorporated or deemed to beincorporated therein by reference), the Company shall (i) furnish to the Holdercopies of all such documents proposed to be filed, which documents (other thanthose incorporated or deemed to be incorporated by reference) will be subjectto the review and comment of the Holder, and (ii) cause its officers anddirectors, counsel and independent certified public accountants to respond tosuch inquiries as shall be necessary, in the reasonable opinion of respectivecounsel to the Holder, to conduct a reasonable investigation within the meaningof the Securities Act. The Company shall not file the Registration Statementor any such Prospectus or any amendments or supplements thereto to which theZurich shall reasonably object on a timely basis.
     (b) (i) Prepare and file with the Commission such amendments, includingpost-effective amendments, to the Registration Statement as may be necessary tokeep the Registration Statement Continuously Effective as to the applicableRegistrable Securities for the Effectiveness Period and prepare and file withthe Commission such additional Registration Statements in order to register forresale under the Securities Act all of the Registrable Securities; (ii) causethe related Prospectus to be amended or supplemented by any required Prospectussupplement, and as so supplemented or amended to be filed pursuant to Rule 424(or any similar provisions then in force) promulgated under the Securities Act;(iii) respond as promptly as reasonably possible to any comments received fromthe Commission with respect to the Registration Statement or any amendmentthereto and as promptly as reasonably possible provide the Holder true andcomplete copies of all correspondence from and to the Commission relating tothe Registration Statement; and (iv) comply in all material respects with theprovisions of the Securities Act and the Exchange Act with respect to thedisposition of all Registrable Securities covered by the Registration Statementduring the Effectiveness Period in accordance with the intended methods ofdisposition by the Holder set forth in the Registration Statement as so amendedor in such Prospectus as so supplemented.
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     (c) Notify the Holder as promptly as reasonably possible (and, in the caseof (i)(A) below, not less than five (5) days prior to such filing) and (ifrequested by such Holder) confirm such notice in writing no later than one (1)Business Day following the day (i)(A) when a Prospectus or any Prospectussupplement or post-effective amendment to the Registration Statement isproposed to be filed; (B) when the Commission notifies the Company whetherthere will be a “review” of such Registration Statement and whenever theCommission comments in writing on such Registration Statement (the Companyshall provide true and complete copies thereof and all written responsesthereto to the Holder); and (C) with respect to the Registration Statement orany post-effective amendment, when the same has become effective; (ii) of anyrequest by the Commission or any other Federal or state governmental authorityfor amendments or supplements to the Registration Statement or Prospectus orfor additional information; (iii) of the issuance by the Commission of any stoporder suspending the effectiveness of the Registration Statement covering anyor all of the Registrable Securities or the initiation of any proceedings forthat purpose; (iv) if at any time any of the representations and warranties ofthe Company contained in any agreement contemplated hereby ceases to be trueand correct in all material respects; (v) of the receipt by the Company of anynotification with respect to the suspension of the qualification or exemptionfrom qualification of any of the Registrable Securities for sale in anyjurisdiction, or the initiation or threatening of any proceeding for suchpurpose; and (vi) the occurrence of any event that makes any statement made inthe Registration Statement or Prospectus or any document incorporated or deemedto be incorporated therein by reference untrue in any material respect or thatrequires any revisions to the Registration Statement, Prospectus or otherdocuments so that in the case of the Registration Statement, it will notcontain any untrue statement of a material fact or omit to state any materialfact required to be stated therein or necessary to make the statements thereinnot misleading, and that in the case of the Prospectus or any Prospectussupplement, it will not contain any untrue statement of a material fact or omitto state any material fact required to be stated therein or necessary to makethe statements therein, in light of the circumstances under which they weremade, not misleading.
     (d) Use its best efforts to avoid the issuance of, or, if issued, obtainthe withdrawal of (i) any order suspending the effectiveness of theRegistration Statement, or (ii) any suspension of the qualification (orexemption from qualification) of any of the Registrable Securities for sale inany jurisdiction, at the earliest practicable moment.
     (e) Furnish to the Holder, without charge, at least one conformed copy ofeach Registration Statement and each amendment thereto, including financialstatements and schedules, all documents incorporated or deemed to beincorporated therein by reference, and all exhibits to the extent requested bysuch Holder (including those previously furnished or incorporated by reference)promptly after the filing of such documents with the Commission.
     (f) Promptly deliver to Holder, without charge, as many copies of theProspectus or Prospectuses (including each form of prospectus) and eachamendment or supplement thereto as such Holder may reasonably request; and theCompany hereby consents to the use of such Prospectus and each amendment orsupplement thereto by the selling Holder in connection with the offering andsale of the Registrable Securities covered by such Prospectus and any amendmentor supplement thereto.
     (g) If the Registration Statement refers to the Holder by name orotherwise as the holder of any securities of the Company, then such Holdershall have the right to require (if such reference to such Holder by name orotherwise is not required by the Securities Act or any similar Federal statutethen in force) the deletion of the reference to such Holder in any amendment orsupplement to the Registration Statement filed or prepared subsequent to thetime that such reference ceases to be required.
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     (h) Holder covenants and agrees that (i) it will not sell any RegistrableSecurities under the Registration Statement until it has received copies of theProspectus as then amended or supplemented as contemplated in Section 3(f) andnotice from the Company that such Registration Statement and any post-effectiveamendments thereto have become effective as contemplated by Section 3(c)(i);and (ii) it and its officers, directors or affiliates, if any, will comply withthe prospectus delivery requirements of the Securities Act as applicable to itin connection with sales of Registrable Securities pursuant to the RegistrationStatement.
     (i) If there is a significant business opportunity (including but notlimited to the acquisition or disposition of assets (other than in the ordinarycourse of business) or any merger, consolidation, tender offer or similartransaction) available to the Company which its Board of Directors reasonablydetermines not to be in the Company’s best interest to disclose, then theCompany may suspend the right of the Holder to sell Registrable Securitiesunder a Registration Statement for one period not to exceed 20 Business Daysduring the Effectiveness Period (the “Blackout Period”).
     (j) Use all reasonable efforts to cause the Common Stock, if the CommonStock is then listed on a securities exchange or included for quotation in arecognized trading market, to continue to be so listed or included for areasonable period of time after the offering.
     (k) Use all reasonable efforts to cause the Registrable Securities coveredby the Registration Statement to be registered with or approved by such otherUnited States or state governmental agencies or authorities as may be necessaryby virtue of the business and operations of the Company to enable the sellingHolders of Registrable Securities to consummate the disposition of suchRegistrable Securities.
Section 4. Holders’ Obligations. It shall be a condition precedent to theobligations of the Company to take any action pursuant to this Agreement withrespect to the Registrable Securities of any selling Holder of RegistrableSecurities that such selling Holder shall:
     4.1 Furnish to the Company such information regarding such SellingHolder, the number of the Registrable Securities owned by it, and the intendedmethod of disposition of such securities as shall be required to effect theregistration of such selling Holder’s Registrable Securities, and to cooperatewith the Company in preparing such registration.
Section 5. Expenses of Registration.
     5.1 The Company shall bear and pay all expenses and fees incurred inconnection with the Registration Statement pursuant to Section 2 for any Holder(which right may be Transferred to any Person to whom Registrable Securitiesare Transferred as permitted by Section 7), including registration,qualification and filing fees, exchange listing fees, printing expenses, escrowfees, fees and disbursements of counsel for the Company, blue sky fees andexpenses and the expenses of any special audits incident to or required by anysuch registration, but excluding underwriting discounts and commissionsrelating to Registrable Securities (which shall be paid by the Holders) andfees and expenses of counsel to the Holder.
Section 6. Indemnification; Contribution. If any Registrable Securities areincluded in a registration statement under this Agreement:
     6.1 To the extent permitted by applicable law, the Company shallindemnify and hold harmless each Holder, each Person, if any, who controls suchHolder within the meaning of the Securities Act, and each affiliate, officer,director, partner, agent and employee of such Holder and such controllingPerson,
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against any and all losses, claims, damages, liabilities and expenses (joint orseveral), including attorneys’ fees and disbursements and expenses ofinvestigation, incurred by such party pursuant to any actual or threatenedaction, suit, proceeding or investigation, or to which any of the foregoingPersons may become subject under the Securities Act, the Exchange Act or otherfederal or state laws, insofar as such losses, claims, damages, liabilities andexpenses arise out of or are based upon any of the following statements,omissions or violations (collectively a “Violation”):
          (a) Any untrue statement or alleged untrue statement of a materialfact contained in the Registration Statement, including any preliminaryProspectus or final Prospectus contained therein, or any amendments orsupplements thereto;
          (b) The omission or alleged omission to state therein a materialfact required to be stated therein, or necessary to make the statementstherein not misleading; or
          (c) Any violation or alleged violation by the Company of theSecurities Act, the Exchange Act, any applicable state securities law orany rule or regulation promulgated under the Securities Act, the ExchangeAct or any applicable state securities law;
          provided, however, that the indemnification required by this Section 6.1shall not apply to amounts paid in settlement of any such loss, claim, damage,liability or expense if such settlement is effected without the consent of theCompany (which consent shall not be unreasonably withheld), nor shall theCompany be liable in any such case for any such loss, claim, damage, liabilityor expense to the extent that it arises out of or is based upon a Violationthat occurs in reliance upon and in conformity with written informationfurnished to the Company by the indemnified party expressly for use inconnection with such registration; provided, further, that the indemnityagreement contained in this Section 6 shall not apply to any Holder to theextent that any such loss is based on or arises out of an untrue statement oralleged untrue statement of a material fact, or an omission or alleged omissionto state a material fact, contained in or omitted from any preliminaryprospectus if the final prospectus shall correct such untrue statement oralleged untrue statement, or such omission or alleged omission, and a copy ofthe final prospectus has not been sent or given to such person at or prior tothe confirmation of sale to such person if such Holder was under an obligationto deliver such final prospectus and failed to do so.
     6.2 To the extent permitted by applicable law, each Holder, severally andnot jointly, shall indemnify and hold harmless the Company, each of itsdirectors, each of its officers who shall have signed the RegistrationStatement, and each Person, if any, who controls the Company within the meaningof the Securities Act, against any and all losses, claims, damages, liabilitiesand expenses, including attorneys’ fees and disbursements and expenses ofinvestigation, incurred by such party pursuant to any actual or threatenedaction, suit, proceeding or investigation, or to which any of the foregoingPersons may otherwise become subject under the Securities Act, the Exchange Actor other federal or state laws, insofar as such losses, claims, damages,liabilities and expenses arise out of or are based upon any Violation, in eachcase to the extent (and only to the extent) that such Violation occurs inreliance upon and in conformity with written information furnished by suchHolder expressly for use in connection with such registration; provided,however, that the indemnification required by this Section 6.2 shall not applyto amounts paid in settlement of any such loss, claim, damage, liability orexpense if settlement is effected without the consent of the relevant Holder ofRegistrable Securities, which consent shall not be unreasonably withheld.Notwithstanding the foregoing, the liability of the Holder under this Section6.2 shall be limited in an amount equal to the net proceeds from the sale ofthe shares sold by such Holder, unless such liability arises out of or is basedon willful conduct or gross negligence by such Holder.
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     6.3 Promptly after receipt by an indemnified party under this Section 6of notice of the commencement of any action, suit, proceeding, investigation orthreat thereof made in writing for which such indemnified party may make aclaim under this Section 6, such indemnified party shall deliver to theindemnifying party a written notice of the commencement thereof and theindemnifying party shall have the right to participate in, and, to the extentthe indemnifying party so desires, jointly with any other indemnifying partysimilarly noticed, to assume the defense thereof with counsel mutuallysatisfactory to the parties; provided, however, that an indemnified party shallhave the right to retain its own counsel, with the fees and disbursements andexpenses to be paid by the indemnifying party, if representation of suchindemnified party by the counsel retained by the indemnifying party would beinappropriate due to actual or potential differing interests between suchindemnified party and any other party represented by such counsel in suchproceeding. The failure to deliver written notice to the indemnifying partywithin a reasonable time following the commencement of any such action, ifprejudicial to its ability to defend such action, shall relieve suchindemnifying party of any liability to the indemnified party under this Section6 but shall not relieve the indemnifying party of any liability that it mayhave to any indemnified party otherwise than pursuant to this Section 6. Anyfees and expenses incurred by the indemnified party (including any fees andexpenses incurred in connection with investigating or preparing to defend suchaction or proceeding) shall be paid to the indemnified party, as incurred,within thirty (30) days of written notice thereof to the indemnifying party(regardless of whether it is ultimately determined that an indemnified party isnot entitled to indemnification hereunder). Any such indemnified party shallhave the right to employ separate counsel in any such action, claim orproceeding and to participate in the defense thereof, but the fees and expensesof such counsel shall be the expenses of such indemnified party unless (i) theindemnifying party has agreed to pay such fees and expenses or (ii) theindemnifying party shall have failed to promptly assume the defense of suchaction, claim or proceeding or (iii) the named parties to any such action,claim or proceeding (including any impleaded parties) include both suchindemnified party and the indemnifying party, and such indemnified party shallhave been advised by counsel that there may be one or more legal defensesavailable to it which are different from or in addition to those available tothe indemnifying party and that the assertion of such defenses would create aconflict of interest such that counsel employed by the indemnifying party couldnot faithfully represent the indemnified party (in which case, if suchindemnified party notifies the indemnifying party in writing that it elects toemploy separate counsel at the expense of the indemnifying party, theindemnifying party shall not have the right to assume the defense of suchaction, claim or proceeding on behalf of such indemnified party, it beingunderstood, however, that the indemnifying party shall not, in connection withany one such action, claim or proceeding or separate but substantially similaror related actions, claims or proceedings in the same jurisdiction arising outof the same general allegations or circumstances, be liable for the reasonablefees and expenses of more than one separate firm of attorneys (together withappropriate local counsel) at any time for all such indemnified parties, unlessin the reasonable judgment of such indemnified party a conflict of interest mayexist between such indemnified party and any other of such indemnified partieswith respect to such action, claim or proceeding, in which event theindemnifying party shall be obligated to pay the fees and expenses of suchadditional counsel or counsels). No indemnifying party shall be liable to anindemnified party for any settlement of any action, proceeding or claim withoutthe written consent of the indemnifying party, which consent shall not beunreasonably withheld.
     6.4 If the indemnification required by this Section 6 from theindemnifying party is unavailable or insufficient to hold harmless anindemnified party hereunder in respect of any losses, claims, damages,liabilities or expenses referred to in this Section 6:
          (a) The indemnifying party, in lieu of indemnifying suchindemnified party, shall contribute to the amount paid or payable by suchindemnified party as a result of such losses, claims, damages,liabilities or expenses in such proportion as is appropriate to reflect(i) the
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relative benefits received by the indemnifying party or parties, on theone hand and the indemnified party on the other from the sale of theRegistrable Securities, or (ii) if the allocation provided by theforegoing clause (i) is not permitted by applicable law, not only therelative benefits referred to in clause (i) above but also the relativefault of the indemnifying party on the one hand and indemnified partieson the other in connection with the actions which resulted in suchlosses, claims, damages, liabilities or expenses, as well as any otherrelevant equitable considerations. The relative fault of suchindemnifying party and indemnified parties shall be determined byreference to, among other things, whether any Violation has beencommitted by, or relates to information supplied by, such indemnifyingparty or indemnified parties, and the parties’ relative intent,knowledge, access to information and opportunity to correct or preventsuch Violation. The amount paid or payable by a party as a result of thelosses, claims, damages, liabilities and expenses referred to above shallbe deemed to include, subject to the limitations set forth in Section 6.1and Section 6.2, any legal or other fees or expenses reasonably incurredby such party in connection with any investigation or proceeding.
          (b) The parties hereto agree that it would not be just andequitable if contribution pursuant to this Section 6.4 were determined bypro rata allocation or by any other method of allocation which does nottake into account the equitable considerations referred to in Section6.4(a). No Person guilty of fraudulent misrepresentation (within themeaning of Section 11(f) of the Securities Act) shall be entitled tocontribution from any Person who was not guilty of such fraudulentmisrepresentation.
          (c) Notwithstanding the provisions of this Section 6.4, a Holdershall not be required to contribute any amount or make any other paymentsunder this Agreement that in the aggregate exceed the net proceedsreceived by the Holder from the sales of the Registrable Securities ofthe Company.
     6.5 The obligations of the Company and the selling Holders of RegistrableSecurities under this Section 6 shall survive the completion of any offering ofRegistrable Securities pursuant to a registration statement under thisAgreement, and otherwise.
Section 7. Transfer of Registration Rights. The rights of a Holder hereundermay be Transferred in whole or in part to (i) any affiliate (as defined in Rule12b-2 under the Exchange Act) of a Holder or (ii) any other Person upon theprior written consent of the Company; provided, however, that any suchtransferee that is not a party to this Agreement shall have executed anddelivered to the Secretary of the Company a properly completed agreementsubstantially in the form of Exhibit B, and provided, further, that thetransferor shall have delivered to the Secretary of the Company, no later than15 days following the date of the Transfer, written notification of suchTransfer setting forth the name of the transferor, name and address of thetransferee and the number of Registrable Securities which shall have been soTransferred.
Section 8. Amendment, Modification and Waivers; Further Assurances.
          (a) This Agreement may be amended with the consent of the partieshereto and the Company may take any action herein prohibited, or omit toperform any act herein required to be performed by it, only if theCompany shall have obtained the written consent of the Holder.
          (b) No waiver of any terms or conditions of this Agreement shalloperate as a waiver of any other breach of such terms and conditions orany other term or condition, nor shall any failure to enforce anyprovision hereof operate as a waiver of such provision or of any otherprovision hereof. No written waiver hereunder, unless it by its own termsexplicitly provides to the
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contrary, shall be construed to effect a continuing waiver of theprovisions being waived and no such waiver in any instance shallconstitute a waiver in any other instance or for any other purpose orimpair the right of the party against whom such waiver is claimed in allother instances or for all other purposes to require full compliance withsuch provision.
          (c) Each of the parties hereto shall execute all such furtherinstruments and documents and take all such further action as any otherparty hereto may reasonably require in order to effectuate the terms andpurposes of this Agreement.
Section 9. Assignment; Benefit. This Agreement and all of the provisionshereof shall be binding upon and shall inure to the benefit of the partieshereto and their respective heirs, assigns, executors, administrators orsuccessors; provided, however, that except as specifically provided herein withrespect to certain matters, neither this Agreement nor any of the rights,interests or obligations hereunder shall be assigned or delegated by theCompany without the prior written consent of the Holder. A Holder may Transferits rights hereunder to a successor in interest to the Registrable Securitiesowned by such assignor as permitted by Section 7.
Section 10. Miscellaneous.
     10.1 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED INACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING REGARD TO THECONFLICT OF LAWS PRINCIPLES THEREOF. THE PARTIES HERETO WAIVE ALL RIGHT TOTRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDERTHIS AGREEMENT.
     10.2 Notices. All notices and other communications required or permittedhereunder shall be in writing and shall be deemed to have been sufficientlygiven (a) if sent by facsimile transmission, upon telephonic confirmation ofreceipt, (b) if sent by registered or certified mail, upon the sooner of theexpiration of five (5) days after deposit in the post office facilitiesproperly addressed with postage prepaid or acknowledgment of receipt, (c) ifpersonally delivered, when delivered to the party to whom notice is sent, or(d) if delivered by a recognized overnight courier, upon receipt evidencingproof of delivery, addressed to the appropriate party or parties, at theaddress of such party set forth below, (or at such other address as such partymay designate by written notice furnished to all other parties in accordanceherewith):
     (a) if to the Zurich:
James W. March