SECURITIES AND EXCHANGE COMMISSION

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DRjBx7eUxTo4/+YKE7cWEjC7vKYsPv/jsaxOhnhb8kuXcWLMAJKnHo2TZ5MOrWR3 awYlrdYVpT+Tpkfam9DLOg== 0000842295-03-000041.txt : 20031218 0000842295-03-000041.hdr.sgml : 20031218 20031218124101 ACCESSION NUMBER: 0000842295-03-000041 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 20031218 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20031218 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TOR MINERALS INTERNATIONAL INC CENTRAL INDEX KEY: 0000842295 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL INORGANIC CHEMICALS [2810] IRS NUMBER: 742081929 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-17321 FILM NUMBER: 031061723 BUSINESS ADDRESS: STREET 1: 722 BURLESON CITY: CORPUS CHRISTI STATE: TX ZIP: 78402 BUSINESS PHONE: 3618825175 MAIL ADDRESS: STREET 1: 722 BURLESON CITY: CORPUS CHRISTI STATE: TX ZIP: 78402 FORMER COMPANY: FORMER CONFORMED NAME: HITOX CORPORATION OF AMERICA DATE OF NAME CHANGE: 19920703 8-K 1 x8kdec18.htm TOR MINERALS INTERNATIONAL, INC. - 8-K SECURITIES AND EXCHANGE COMMISSION UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

___________

FORM 8-K

___________

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): December 12, 2003

Commission file Number: 0-17321

___________

TOR MINERALS INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

_________

Delaware
(State or other jurisdiction of corporation)

74-2081929
(I.R.S. Employer Identification No.)

722 Burleson
Corpus Christi, Texas 78402
(Address of principal executive offices and zip code)

(361) 883-5591
(Registrant's telephone number, including area code)
___________

ITEM 5. OTHER EVENTS

The Registrant files herewith the Exhibit listed in Item 7 below.

ITEM 7. EXHIBITS

The following exhibit is furnished in accordance with 601 of Regulation S-K:

Exhibit No.	Description
10.1	Loan Agreement with Paulson Ranch, dated December 12, 2003
10.2	Loan Agreement with D & C H Trust, dated December 12, 2003
10.3	Loan Agreement with Douglas MacDonald Hartman Family Irrevocable Trust, dated December 12, 2003
10.4	Promissory Note with Paulson Ranch, dated December 12, 2003
10.5	Promissory Note with D & C H Trust, dated December 12, 2003
10.6	Promissory Note with Douglas MacDonald Hartman Family Irrevocable Trust, dated December 12, 2003
10.7	Security Agreement with Paulson Ranch, D &C H Trust, and Douglas MacDonald Hartman Family Irrevocable Trust, dated December 12, 2003

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	TOR MINERALS INTERNATIONAL, INC. _____________________ (Registrant)


Date: December 18, 2003	RICHARD BOWERS
	Richard Bowers President and CEO

Date: December 18, 2003	LAWRENCE W. HAAS
	Lawrence W. Haas Treasurer and CFO

EX-10 3 exhibit10-1.htm LOAN AGREEMENT - PAULSON RANCH, DECEMBER 12, 2003 3: [RELN] EXHIBIT 10.1

LOAN AGREEMENT

Date: December 12, 2003

Borrower: TOR Minerals International, Inc.

722 Burleson

Corpus Christi, Texas 78402

Lender: Paulson Ranch, Ltd.

3 Ocean Park Drive

Corpus Christi, Texas 78404

Amount: $500,000.00 (US)

1. Loan. Lender agrees to make the loan provided above in the form of a Promissory Note executed of even date herewith. Principal and accrued interest shall be due and payable as provided in the Note.

2. Collateral. The loan will be secured by subordinated liens and security interests covering the personal property owned by Borrower pursuant to a Security Agreement of even date herewith. Lender acknowledges that the liens and security interests provided shall be secondary and inferior to the liens securing the indebtedness payable to Bank of America, N.A. and the liens securing the indebtedness in the original principal sum of $600,000.00 payable to the order of Paulson Ranch, Ltd. as evidenced by a Promissory Note dated on or about April 5, 2001. The liens and security interests provided in said Security Agreement shall proportionately and ratably secure the loan together with two other Promissory Notes by Borrower of even date, without preference or priority given to any single Note.

3. Borrower's Representations and Warranties. To induce the Lender to make the Loan provided hereunder, the Borrower represents and warrants to the Lender that the following representations and warranties are accurate as of the date of this Loan Agreement.

(a) The Borrower is duly organized and existing in good standing under the laws of the state of its incorporation, is duly qualified to transact business and is in good standing in all states and other jurisdictions in which failure to qualify would have a Material Adverse Effect upon such Borrower, and has the corporate power and authority to own its properties and assets and to transact the business in which it is engaged, and is or will be qualified in those states and other jurisdictions wherein it proposes to transact material business operations in the future.

(b) The Borrower has the corporate power and requisite authority to execute, deliver and perform the Loan Documents to be executed by the Borrower. The Borrower is duly authorized to, and has taken all corporate action necessary to authorize such to, execute, deliver and perform the Loan Documents executed by Borrower. The Borrower is and will continue to be duly authorized to perform the Loan Documents executed by it.

(c) Neither the execution and delivery of the Loan Documents, nor the consummation of any of the transactions therein contemplated, nor compliance with the terms and provisions thereof, will contravene or materially conflict with any provision of law, statute or regulation to which Borrower is subject, or any judgment, license, order or permit applicable to Borrower, or any indenture, loan agreement, mortgage, deed of trust, or other agreement or instrument to which Borrower is a party or by which Borrower may be bound, or to which Borrower may be subject, or violate any provision of the charter or bylaws of Borrower. No consent, approval, authorization or order of any court or governmental authority or third party is required in connection with the execution and delivery of the Loan Documents by Borrower, or to consummate the transactions contemplated hereby or thereby.

(d) The Loan Documents have been duly executed and delivered by the Borrower and are the legal and binding obligations of the Borrower, enforceable in accordance with their respective terms, except as limited by any applicable bankruptcy, insolvency or similar laws now or hereafter in effect affecting creditors' rights generally.

(e) To the best of our knowledge and belief after current investigation, there is no material fact that Borrower has not disclosed to Lender which could have a material adverse effect on the properties, business, prospects or condition (financial or otherwise) of Borrower. Neither the financial statements, nor any business plan, offering memorandum or prospectus, certificate or statement delivered herewith or heretofore by Borrower to Lender in connection with negotiations of this Loan Agreement, contains any untrue statement of a material fact or omits to state any material fact necessary to keep the statements contained herein or therein from being misleading.

(f) No event has occurred and is continuing with constitutes an event of default under the Note or this Agreement.

(g) There are no actions, suits, investigations, arbitrations or administrative proceedings pending, or to the knowledge of Borrower threatened, against Borrower, and there has been no change in the status of any of the actions, suits, investigations, litigation or proceedings disclosed to Lender which could have a materially adverse affect on Borrower or on any transactions contemplated by any Loan Document.

(h) To the best knowledge of the Borrower, it is not a party to, or bound by, any contract or agreement, the faithful performance of which is so onerous so as to create or to likely create a material adverse effect on the business, operations or financial condition of the Borrower.

(i) All tax returns to be filed by the Borrower in any jurisdiction have been filed (or are subject to valid extensions of time to file as approved by the relevant taxing authority or authorities) and all taxes (including mortgage recording taxes), assessments, fees and other governmental charges upon Borrower or upon any of its properties, income or franchises have been paid.

(j) To the best knowledge of the Borrower is in compliance with all laws, rules, regulations, orders and decrees which are applicable to it, or its properties by reason of any governmental authority which are material to the conduct of the business of Borrower, or any of their properties.

(k) To the best knowledge of the Borrower, all properties of Borrower are in compliance with all federal state or local environmental protection laws, statutes and regulations which are material to the conduct of the business of Borrower, or its properties, and Borrower is currently in compliance with all material reporting requirements, rules, and regulations which are applicable to Borrower or its properties, by reason of such governmental environmental protective agencies.

(l) Neither the business nor the properties of Borrower is currently affected by any environmental hazard, fire, explosion, accident, strike, lockout or other labor dispute, drought, storm, hail, earthquake, embargo, act of God or other casualty (whether or not covered by insurance), which could have a material adverse effect.

(m) Borrower is not an "investment company" as defined in Section 3 of the 1940 Act or a company that would be an investment company except for the exclusions from the definition of an investment company in Section 3(c) of the 1940 Act, and Borrower is not controlled by such a company.

(n) Borrower is, and after consummation of this Loan Agreement and giving effect to all Indebtedness incurred and transactions contemplated in connection herewith will be, solvent.

(o) All representations and warranties by the Borrower and all of its subsidiaries, if any, shall survive the loan closing, any investigation at any time made by or on behalf of the Lender shall not diminish Lender's right to rely on the Borrower's representations and warranties as herein set forth.

4. Payment of Taxes and Other Indebtedness. Borrower shall, and shall cause its subsidiaries, if any, to pay and discharge (a) all taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits, or upon any property belonging to it, before delinquent, (b) all lawful claims (including claims for labor, materials and supplies), which, if unpaid might give rise to a Lien upon any of its property, and (c) all of its other indebtedness, except as prohibited hereunder; provided, however, that each Borrower and its subsidiaries, if any, shall not be required to pay any such tax assessment, charge or levy if and so long as the amount, applicability or validity thereof shall currently be contested in good faith by appropriate proceedings and appropriate accruals and reserves therefor have been established in accordance with United States of America generally accepted accounting principles.

5. Maintenance of Existence and Rights: Conduct of Business. Borrower shall, and shall cause its subsidiaries, if any, to preserve and maintain its corporate existence and all of its rights, privileges and franchises necessary or desirable in the normal conduct of its business, and conduct its business in an orderly and efficient manner consistent with good business practices and in accordance with all valid regulations and orders of any governmental authority. Borrower shall keep its principle place of business within the United States.

6. Notice of Default. Borrower shall furnish to Lender, immediately upon becoming aware of the existence of any condition or event which constitutes a default or would with the passage of time become a default or an event of default, written notice specifying the nature and period of existence thereof and the action which each Borrower is taking or proposes to take with respect thereto.

7. Other Notices. Borrower shall promptly notify Lender of (a) any material adverse change in its financial condition or its business, (b) any default under any material agreement, contract or other instrument to which it is a party or by which any of its properties are bound, or any acceleration of the maturity of any Indebtedness owing by Borrower or its subsidiaries, if any, (c) any material adverse claim against or affecting Borrower or its subsidiaries, if any, or any of its properties, and (d) the commencement of, and any materials determination in, any litigation with any third party or any proceeding before any governmental authority, the negative result of which has an adverse material affect on Borrower or its subsidiaries.

8. Compliance with Material Agreements. Borrower shall, and shall cause its subsidiaries, if any, to comply in all material respects with all material agreements, indentures, mortgages or documents binding on it or affecting its properties or business.

9. Operations and Properties. Borrower shall, and shall cause its subsidiaries, if any, to act prudently and in accordance with customary industry standards in managing or operating its assets, properties, business and investments. Borrower shall, and shall cause its subsidiaries, if any, to keep in good working order and condition, ordinary wear and tear excepted, all of its assets and properties which are necessary to the conduct of its business.

10. Books and Records. Borrower shall, and shall cause its subsidiaries, if any, to maintain complete and accurate books and records of its transactions in accordance with good accounting practices. Borrower shall give each duly authorized representative of Lender access during all normal business hours and permit such representative to examine, copy or make excerpts from, any and all books, records and documents, in the possession of Borrower and its subsidiaries and relating to its affairs, and to inspect any of the properties of Borrower and its subsidiaries, if any. Borrower shall make a copy of this Loan Agreement, along with any waivers, consents, modification or amendments, available for review at its principal office by Lender or Lender's representatives.

11. Financial Reports. Borrower agrees to furnish to Lender monthly financial statements, and Borrower further agrees to provide to Lender an audited year-end financial statement within 90 days of the end of each fiscal year.

12. Compliance with Law. Borrower shall, and shall cause its subsidiaries, if any, to comply with all applicable laws, rules, regulations, and all orders of any governmental authority applicable to it or any of its property, business operations or transactions, a breach of which could have a material adverse effect.

13. Insurance. Borrower shall, and shall cause its subsidiaries, if any, to maintain such worker's compensation insurance, liability insurance and insurance on its properties, assets and business, now owned or hereafter acquired, against such casualties, risks and contingencies, and in such types and amounts, as are consistent with customary practices and standards of companies engaged in similar businesses.

14. Authorizations and Approvals. Borrower shall, and shall cause its subsidiaries, if any, to promptly obtain, from time to time at its own expense, all such governmental licenses, authorizations, consents, permits and approvals as may be required to enable to comply with its obligations hereunder and under the Note.

15. Further Assurances. Borrower shall, and shall cause its subsidiaries, if any, to make, execute or endorse, and acknowledge and deliver or file or cause the same to be done, all such notices, certifications and additional agreements, undertakings, transfers, assignments, or other assurances, and take any and all such other action, as Lender may, from time to time, deem reasonably necessary or proper in connection with any of the Loan Documents, of the obligations of Borrower or its subsidiaries, if any, thereunder, which Lender may request from time to time.

16. Confidentiality. All financial reports or information which are furnished to Lender, or its director designee or other representatives, pursuant to this Loan Agreement shall be treated as confidential unless and to the extent that such information has been otherwise disclosed by the Borrower, but nothing herein contained shall limit or impair Lender's right to disclose such reports to any appropriate governmental authority, or to use such information to the extent pertinent to an evaluation of the Obligation, or to enforce compliance with the terms and conditions of this Loan Agreement, or to take any lawful action which Lender deem necessary to protect its interests under this Loan Agreement.

17. Insolvency. In the event Borrower shall become insolvent or file for bankruptcy, then, at the option of Lender, this loan shall mature and become due and payable without demand, grace, notice, presentment for payment, notice of acceleration, or any other notice, all of which are hereby waived by Borrower.

18. Governing Law. This Agreement shall be governed by the laws of the State of Texas and the United States and shall be performable in Nueces County, Texas. Exclusive venue for any disputes shall be in Nueces County, Texas.

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

PAULSON RANCH, LTD. TOR MINERALS INTERNATIONAL, INC.

By: Paulson Ranch Management, LLC

By: ________________________________ By:

Bernard A. Paulson Richard L. Bowers

Member Its President and CEO

EX-10 4 exhibit10-2.htm LOAN AGREEMENT - D & C H TRUST, DECEMBER 12, 2003 3: [RELN] EXHIBIT 10.2

LOAN AGREEMENT

Date: December 12, 2003

Borrower: TOR Minerals International, Inc.

722 Burleson

Corpus Christi, Texas 78402

Lender: D & C H Trust

c/o David A. Hartman

Hartman & Associates

10711 Burnet #330

Austin, Texas 78758

Amount: $250,000.00 (US)

2. Collateral. The loan will be secured by subordinated liens and security interests covering the personal property owned by Borrower pursuant to a Security Agreement of even date herewith. Lender acknowledges that the liens and security interests provided shall be secondary and inferior to the liens securing the indebtedness payable to Bank of America, N.A. and the liens securing the indebtedness in the original principal sum of $600,000.00 payable to the order of Paulson Ranch, Ltd. as evidenced by a Promissory Note dated on or about April 5, 2001. The liens and security interests provided in the Security Agreement shall proportionately and ratably secure the loan together with two other Promissory Notes by Borrower of even date, without preference or priority given to any single Note.

(f) No event has occurred and is continuing with constitutes an event of default under the Note or this Agreement.

(n) Borrower is, and after consummation of this Loan Agreement and giving effect to all Indebtedness incurred and transactions contemplated in connection herewith will be, solvent.

D & C H TRUST TOR MINERALS INTERNATIONAL, INC.

By: ________________________________ By:

David A. Hartman Richard L. Bowers

Its Trustee Its President and CEO

EX-10 5 exhibit10-3.htm LOAN AGREEMENT - DOUGLAS MACDONALD HARTMAN FAMILY IRROVACABLE TRUST, DECEMBER 12, 2003 3: [RELN] EXHIBIT 10.3

LOAN AGREEMENT

Date: December 12, 2003

Borrower: TOR Minerals International, Inc.

722 Burleson

Corpus Christi, Texas 78402

Lender: Douglas MacDonald Hartman Family Irrevocable Trust

c/o Douglas M. Hartman

Hartman & Associates

10711 Burnet #330

Austin, Texas 78758

Amount: $250,000.00 (US)

2. Collateral. The loan will be secured by subordinated liens and security interests covering the personal property owned by Borrower pursuant to a Security Agreement of even date herewith. Lender acknowledges that the liens and security interests provided shall be secondary and inferior to the liens securing the indebtedness payable to Bank of America, N.A. and the liens securing the indebtedness in the original principal sum of $600,000.00 payable to the order of Paulson Ranch, Ltd. as evidenced by a Promissory Note dated on or about April 5, 2001. The liens and security interests provided in the Security Agreement shall proportionately and ratably secure the loan together with two other Promissory Notes by Borrower of even date, without preference or priority given to any single Note.

(f) No event has occurred and is continuing with constitutes an event of default under the Note or this Agreement.

(n) Borrower is, and after consummation of this Loan Agreement and giving effect to all Indebtedness incurred and transactions contemplated in connection herewith will be, solvent.

DOUGLAS MACDONALD HARTMAN TOR MINERALS INTERNATIONAL, INC.

FAMILY IRREVOCABLE TRUST

By: ________________________________ By:

Douglas M. Hartman Richard L. Bowers

Its Trustee Its President and CEO

EX-10 6 exhibit10-4.htm PROMISSORY NOTE - PAULSON RANCH, DECEMBER 12, 2003 3: PROMISSORY NOTE EXHIBIT 10.4

PROMISSORY NOTE

$500,000.00

December 12, 2003

FOR VALUE RECEIVED, the undersigned, TOR MINERALS INTERNATIONAL, INC. (herein referred to as "TOR"), of 722 Burleson, Corpus Christi, Texas 78403, hereby promises and agrees to pay to the order of PAULSON RANCH, LTD. (herein referred to as "Paulson"), at its place of business, 3 Ocean Park Drive, Corpus Christi, Texas 78404, or at such other location as the holder hereof many at any time or from time to time designate in writing, the principal sum of FIVE HUNDRED THOUSAND and no/100 DOLLARS ($500,000.00) together with interest on the unpaid principal balance hereon outstanding from time to time prior to maturity at a rate which is the lesser from time to time of: (i) a variable rate which is four percent (4.0%) per annum ABOVE THE REFERENCE RATE as such varies from time to time, such variable rate to change at the same time and with changes in the said Reference Rate; or (ii) the maximum legal rate which may be lawfully contracted for, charged or received hereon from time to tim e under applicable law; or (iii) 17.5% per annum.

As used herein, the "Reference Rate" shall mean the Wall Street Journal Prime Rate as reported in the Money Rates section of the Wall Street Journal which is based on the base rate on corporate loans at large U.S. money center commercial banks. If the Wall Street Journal Prime Rate ceases to be made available by the publisher, or any successor to the publisher, the interest rate will be determined by using a comparable index. If more than one Wall Street Journal Prime Rate is quoted, the higher rate shall apply. The Wall Street Journal Prime Rate is a reference rate and does not necessarily represent the lowest or best rate actually charged to any customer.

Principal shall be due and payable on or before February 15, 2005 (the "maturity date"). Accrued interest shall be due and payable on a monthly basis commencing January 15, 2004, and on the same day of each succeeding month thereafter, and at maturity.

Late Charge. If any payment required under this Note is not paid within ten (10) days of the day such payment becomes due and payable, then TOR shall pay to Paulson, subject to the provisions of this Note limiting the amount of interest, the payment of a late charge (the "Late Charge") to compensate Paulson for the loss of use of funds and for the administrative expenses and costs of handling such delinquent payment equal to a one-time charge of five percent (5%) of the amount of such payment that was not timely paid (but such Late Charge together with all interest payable hereon shall not exceed the maximum lawful rate). Paulson is not obligated to accept any past due payment that is not accompanied by a Late Charge, but may accept such payment without waiving its rights to collect the Late Charge. In no event shall a Late Charge be payable by reason of the acceleration of the indebtedness evidenced by this Note; therefore, a Late Charge would only be due and payable with respect t o payments under this Note which become delinquent prior to the acceleration of the indebtedness evidenced hereby.

The undersigned may prepay, upon obtaining the consent of the holder hereof, part or all of the principal of this Note prior to maturity, with interest to date of prepayment, without penalty. Any and all amounts so prepaid shall be applied first to unpaid accrued interest to the date of such prepayment and then to the reduction of the principal of this Note in the inverse order of maturity.

This Note is being made pursuant to a Loan Agreement of even date and is secured by a Security Agreement of event date herewith providing subordinated liens and security interests covering certain collateral owned by Maker.

If default shall be made in the payment of any principal or interest hereunder when the same shall become due and payable, or in the event of failure to keep and perform any of the covenants or agreements contained in the documents securing payment hereof or otherwise executed in connection herewith, then, at the option of the holder hereof, without notice the whole of the unpaid principal sum and accrued interest on this Note and all other sums payable under this Note shall be immediately due and payable.

The holder of the Note may extend time of payment, either before of after maturity, accept partial payment, accept security, exchange, or release security, or accept additional security, without thereby changing or releasing the liability of the undersigned or any other parties now or hereafter liable hereon all of whom hereby waive presentment, protest, and demand, notice of protest, demand, and dishonor, notice of nonpayment, and diligence in collecting or bring suit against any party hereto.

Notwithstanding any provision of this Note, the total liability for payment of interest shall not exceed the applicable limits of the statutes of the State of Texas, and all such provisions of this Note shall be deemed to be hereby modified accordingly. All parties to this Note intend to comply with applicable usury law. All existing and future agreements regarding the debt evidenced by this Note are hereby limited and controlled by the provisions of this Section. In no event (including but not limited to prepayment, default, demand for payment, or acceleration of maturity) shall the interest taken, reserved, contracted for, charged or received under this Note or under any of the other documents executed in connection therewith or otherwise, exceed the maximum nonusurious amount permitted by applicable law (the "Maximum Amount"). If, from any possible construction of any document, interest would otherwise be payable in excess of the Maximum Amount, then ipso facto, such document shall be r eformed and the interest payable reduced to the Maximum Amount, without necessity of execution of any amendment or new document. If the holder hereof ever receives interest in an amount which apart from this provision would exceed the Maximum Amount, the excess shall, without penalty, be applied to the unpaid principal of this Note in inverse order of maturity of installments and not to the payment of interest, or be refunded to the payor if the principal is paid in full. The holder hereof does not intend to charge or receive unearned interest on acceleration. All interest paid or agreed to be paid to the holder hereof shall be spread throughout the full term (including any renewal or extension) of the debt so that the amount of interest does not exceed the Maximum Amount.

If more than one person or entity executes this Note as TOR, all of said parties shall be jointly and severally liable for payment of the indebtedness evidenced hereby. TOR and all sureties, endorsers, guarantors and any other party now or hereafter liable for the payment of this Note in whole or in part, hereby severally (i) waive demand, presentment for payment, notice of dishonor and of nonpayment, protest, notice of protest, notice of intent to accelerate, notice of acceleration and all other notices (except any notices which are specifically required by this Note), filing of suit and diligence in collecting this Note or enforcing any of the security herefor; (ii) agree to any substitution, subordination, exchange or release of any such security or the release of any party primarily or secondarily liable hereon; (iii) agree that the holder hereof shall not be required first to institute suit or exhaust its remedies hereon against TOR or others liable or to become liable hereon or to en force its rights against them or any security herefor; (iv) consent to any extensions or postponements of time of payment of this Note for any period or periods of time and to any partial payments, before or after maturity, and to any other indulgences with respect hereto, without notice thereof to any of them; and (v) submit (and waive all rights to object) to non-exclusive personal jurisdiction in the State of Texas, and venue in the county in which payment is to be made as specified on the first page of this Note, for the enforcement of any and all obligations under Note.

In the event this Note is placed in the hands of an attorney for collection or suit is filed hereon or if proceedings are had in bankruptcy, receivership, reorganization or other legal or judicial proceedings for the collection hereof, the undersigned hereby agrees to pay fifteen percent (15%) additional on the principal and interest then due hereon as attorney's fees.

This Note, the loan evidenced hereby and all agreements between Paulson and TOR relating to the loan evidenced hereby shall be deemed contracts made under the laws of the State of Texas and for all purposes shall be interpreted under such laws. THIS NOTE, AND ITS VALIDITY, ENFORCEMENT AND INTERPRETATION, SHALL BE GOVERNED BY TEXAS LAW (WITHOUT REGARD TO ANY CONFLICT OF LAWS PRINCIPLES) AND APPLICABLE UNITED STATES FEDERAL LAW. VENUE FOR ENFORCEMENT OF THIS NOTE AND ALL OBLIGATIONS OF TOR HEREUNDER IS SET AND AGREED IN NUECES COUNTY, TEXAS FOR ALL PURPOSES.

NOTICE TO BORROWER: THIS LOAN IS PAYABLE IN FULL ON THE MATURITY DATE. YOU MUST REPAY THE ENTIRE PRINCIPAL BALANCE OF THE LOAN AND UNPAID ACCRUED INTEREST THEN DUE. THE LENDER IS UNDER NO OBLIGATION TO REFINANCE THE LOAN AT THAT TIME. YOU WILL THEREFORE BE REQUIRED TO MAKE PAYMENT OUT OF OTHER ASSETS YOU MAY OWN, OR YOU WILL HAVE TO FIND A LENDER WILLING TO LEND YOU THE MONEY AT PREVAILING MARKET RATES, WHICH MAY BE CONSIDERABLY HIGHER OR LOWER THAN THE INTEREST RATE ON THIS LOAN. IF YOU REFINANCE THIS LOAN AT MATURITY, YOU MAY HAVE TO PAY SOME OR ALL CLOSING COSTS NORMALLY ASSOCIATED WITH A NEW LOAN EVEN IF YOU OBTAIN REFINANCING FROM THE SAME LENDER.

NOTICE TO BORROWER: UNDER TEXAS LAW, IF YOU CONSENT TO THIS AGREEMENT, YOU MAY BE SUBJECT TO A FUTURE RATE AS HIGH AS 17.5 PERCENT PER YEAR.

TOR MINERALS INTERNATIONAL, INC.

By: ________________________________

Richard L. Bowers

Its President and CEO

EX-10 7 exhibit10-5.htm PROMISSORY NOTE - D & C H TRUST, DECEMBER 12, 2003 PROMISSORY NOTE EXHIBIT 10.5

PROMISSORY NOTE

$250,000.00

December 12, 2003

FOR VALUE RECEIVED, the undersigned, TOR MINERALS INTERNATIONAL, INC. (herein referred to as "TOR"), of 722 Burleson, Corpus Christi, Texas 78403, hereby promises and agrees to pay to the order of D & C H TRUST (herein referred to as "Trust"), at its place of business, c/o David A. Hartman, Hartman & Associates, 10711 Burnet #330, Austin, Texas 78758, or at such other location as the holder hereof many at any time or from time to time designate in writing, the principal sum of TWO HUNDRED FIFTY THOUSAND and no/100 DOLLARS ($250,000.00) together with interest on the unpaid principal balance hereon outstanding from time to time prior to maturity at a rate which is the lesser from time to time of: (i) a variable rate which is four percent (4.0%) per annum ABOVE THE REFERENCE RATE as such varies from time to time, such variable rate to change at the same time and with changes in the said Reference Rate; or (ii) the maximum legal rate which may be lawfully contracted for, cha rged or received hereon from time to time under applicable law; or (iii) 17.5% per annum.

Late Charge. If any payment required under this Note is not paid within ten (10) days of the day such payment becomes due and payable, then TOR shall pay to Trust, subject to the provisions of this Note limiting the amount of interest, the payment of a late charge (the "Late Charge") to compensate Trust for the loss of use of funds and for the administrative expenses and costs of handling such delinquent payment equal to a one-time charge of five percent (5%) of the amount of such payment that was not timely paid (but such Late Charge together with all interest payable hereon shall not exceed the maximum lawful rate). Trust is not obligated to accept any past due payment that is not accompanied by a Late Charge, but may accept such payment without waiving its rights to collect the Late Charge. In no event shall a Late Charge be payable by reason of the acceleration of the indebtedness evidenced by this Note; therefore, a Late Charge would only be due and payable with respect to paym ents under this Note which become delinquent prior to the acceleration of the indebtedness evidenced hereby.

This Note, the loan evidenced hereby and all agreements between Trust and TOR relating to the loan evidenced hereby shall be deemed contracts made under the laws of the State of Texas and for all purposes shall be interpreted under such laws. THIS NOTE, AND ITS VALIDITY, ENFORCEMENT AND INTERPRETATION, SHALL BE GOVERNED BY TEXAS LAW (WITHOUT REGARD TO ANY CONFLICT OF LAWS PRINCIPLES) AND APPLICABLE UNITED STATES FEDERAL LAW. VENUE FOR ENFORCEMENT OF THIS NOTE AND ALL OBLIGATIONS OF TOR HEREUNDER IS SET AND AGREED IN NUECES COUNTY, TEXAS FOR ALL PURPOSES.

NOTICE TO BORROWER: UNDER TEXAS LAW, IF YOU CONSENT TO THIS AGREEMENT, YOU MAY BE SUBJECT TO A FUTURE RATE AS HIGH AS 17.5 PERCENT PER YEAR.

TOR MINERALS INTERNATIONAL, INC.

By: ________________________________

Richard L. Bowers

Its President and CEO

EX-10 8 exhibit10-6.htm PROMISSORY NOTE - DOUGLAS MACDONALD HARTMAN FAMILY IRROVACABLE TRUST, DECEMBER 12, 2003 PROMISSORY NOTE EXHIBIT 10.6

PROMISSORY NOTE

$250,000.00

December 12, 2003

FOR VALUE RECEIVED, the undersigned, TOR MINERALS INTERNATIONAL, INC. (herein referred to as "TOR"), of 722 Burleson, Corpus Christi, Texas 78403, hereby promises and agrees to pay to the order of DOUGLAS MACDONALD HARTMAN FAMILY IRREVOCABLE TRUST (herein referred to as "Trust"), at its place of business, c/o Douglas M. Hartman, Hartman & Associates, 10711 Burnet #330, Austin, Texas 78758, or at such other location as the holder hereof many at any time or from time to time designate in writing, the principal sum of TWO HUNDRED FIFTY THOUSAND and no/100 DOLLARS ($250,000.00) together with interest on the unpaid principal balance hereon outstanding from time to time prior to maturity at a rate which is the lesser from time to time of: (i) a variable rate which is four percent (4.0%) per annum ABOVE THE REFERENCE RATE as such varies from time to time, such variable rate to change at the same time and with changes in the said Reference Rate; or (ii) the maximum legal rate which may be lawfully contracted for, charged or received hereon from time to time under applicable law; or (iii) 17.5% per annum.

NOTICE TO BORROWER: UNDER TEXAS LAW, IF YOU CONSENT TO THIS AGREEMENT, YOU MAY BE SUBJECT TO A FUTURE RATE AS HIGH AS 17.5 PERCENT PER YEAR.

TOR MINERALS INTERNATIONAL, INC.

By: ________________________________

Richard L. Bowers

Its President and CEO

EX-9 9 exhibit10-7.htm SECURITY AGREEMENT - PAULSON RANCH, D & C H TRUST, AND DOUGLAS MACDONALD HARTMAN FAMILY IRREVOCABLE TRUST, DECEMBER 12, 2003 3: exhibit10-2 EXHIBIT 10.7

SECURITY AGREEMENT

Part I. Preamble

Section 1.01. Security Agreement. This Security Agreement (the "Agreement"), dated as of the latest execution date inserted below, is by and among TOR MINERALS INTERNATIONAL, INC., a Delaware corporation (the "Debtor") and PAULSON RANCH, LTD., D & C H TRUST, and DOUGLAS MACDONALD HARTMAN FAMILY IRREVOCABLE TRUST (collectively, the "Secured Party").

Part II. Security Interest

Section 2.01. Grant of Security Interest. Debtor hereby grants to Secured Party a security interest in the Collateral described in Part III below to secure performance and payment of all obligations and indebtedness of the Debtor to Secured Party arising under or pursuant to the following three promissory notes, whether joint or several, whether absolute or contingent, whether due or to become due, whether arising prior to, contemporaneous with, or after this Agreement, and whether evidenced by or accruing under this Agreement, and all renewals, modifications, extensions, increases and rearrangements thereof or of any part thereof, (herein collectively referred to as the "Indebtedness"):

Promissory Note in the original sum of $500,000.00 payable to Paulson Ranch, Ltd.;

Promissory Note in the original sum of $250,000.00 payable to D & C H Trust; and

Promissory Note in the original sum of $250,000.00 payable to Douglas MacDonald Hartman Family Irrevocable Trust.

The liens and security interests provided herein shall proportionately and ratably secure the above Promissory Notes, without preference or priority given to any single Note described above. Any default under any Promissory Note shall be deemed a default hereunder.

Section 2.02. Enforcement of Security Interest. The security interests governed by this Agreement shall be enforceable by the joint actions of the parties comprising the Secured Party, the interests of the respective parties comprising the Secured Party shall be at parity with each other, and such parties shall jointly participate in all decisions concerning the enforcement hereof.

Section 2.03. Continuing Force of Security Interest. The security interests governed by this Agreement shall secure any future renewals, extensions, amendments or replacements of the Indebtedness.

Section 2.04. Lien Priority on Collateral. The liens on the assets of Debtor shall be subordinate to the following liens: the liens securing the indebtedness payable to Bank of America, N.A. and the liens securing the indebtedness in the original principal sum of $600,000.00 payable to the order of Paulson Ranch, Ltd. as evidenced by a Promissory Note dated on or about April 5, 2001.

Part III. Collateral

Section 3.01. Collateral. To secure the payment when due of any and all Indebtedness, Debtor hereby grants to the Secured Party a security interest in and to all assets of Debtor, whether now owned by Debtor or hereafter acquired, whether now existing, or whether arising or created hereafter (herein collectively referred to as the "Collateral") including but not limited to the following:

(1) All goods, equipment, machinery, furnishings, furniture, appliances, accessories, leasehold improvements, chattels, tools, parts, inventory, signs, displays, fixtures and other items of personal property owned by Debtor;

(2) All trade names, trademarks, copyrights, franchises, franchise rights, licenses, general intangibles, and permits owned by, held by or accruing to the benefit of Debtor;

(3) All accessions, accessories, and appurtenances to any of the Collateral;

(4) All improvements, extensions, alterations, substitutions, replacements, renewals, and rights belonging or in any way appertaining to all or any part of the Collateral or acquired for use in connection therewith;

(5) All right, title, and interest of Debtor to and under all leases or agreements now existing or hereafter entered into for the use, occupancy, or sale of the whole or any part of the Collateral;

(6) All proceeds payable or to be payable under each policy of insurance relating to the whole or any part of the Collateral;

(7) All proceeds arising from the taking, conveyance, or sale of all or any part of the Collateral (or any interest therein or right accruing thereto) as a result of (or in lieu or anticipation of) any public or quasi-public use under any law or the exercise of the right of appropriation, confiscation, condemnation, or eminent domain; and

(8) Without limiting any other description of the Collateral, all rights, rents, revenues, income, issues, benefits, leases, contract rights, general intangibles, chattel paper, money, instruments, documents, files, computerized or other records, books, ledger sheets, executory contract rights, rights as an unpaid vendor (including the rights to stop goods in transit, to replevy, and to reclaim), tenements, hereditaments, and appurtenances now or hereafter owned by Debtor and appertaining to, generated from, arising out of, or belonging to any of the Collateral, and all products and proceeds thereof.

Section 3.02. After-Acquired Collateral. All property acquired by Debtor after the date of this Agreement that by the terms hereof is required or intended to be subjected to the security interest granted or renewed by this Agreement will, immediately upon the acquisition thereof and without further mortgage, conveyance, or assignment, become subject to the lien of this Agreement as fully as though now owned by Debtor and specifically described herein. Nevertheless, Debtor will do all such further acts and will execute, acknowledge, and deliver all such further conveyances, mortgages, financing statements, and assurances as Secured Party reasonably requires for accomplishing the purposes of this Agreement, including delivery of Collateral to Secured Party's possession if required below.

Section 3.03. Proceeds of Collateral. The inclusion of proceeds as part of the Collateral does not authorize Debtor to sell any of the Collateral without Secured Party's prior written consent, except for inventory sold in the ordinary course of Debtor's business.

Section 3.04. Disposition or Replacement of Collateral. Debtor shall not sell, lease, rent or otherwise dispose of any item of the Collateral without Secured Party's prior written consent, except for inventory sold in the ordinary course of Debtor's business, unless Debtor replaces such item of Collateral with other Collateral of equal or greater value. Debtor may, without Secured Party's consent, dispose of Collateral which has no value due to obsolescence.

Part IV. Debtor's Payment Obligations

Section 4.01. Promise To Pay. Debtor will pay Secured Party, in accordance with the terms of such Indebtedness and the terms of this Agreement, all sums that may become due pursuant to the Indebtedness and all renewals, rearrangements, increases, decreases, or extensions of any such Indebtedness. Debtor will pay Secured Party on demand the entire unpaid indebtedness, whether created or incurred pursuant to this Agreement or otherwise, on any default under Part VI below.

Section 4.02. Indebtedness. The Indebtedness includes (but is not limited to):

(1) All indebtedness arising pursuant to any loan agreement, promissory note, financing arrangement, or document between Debtor and Secured Party;

(2) All other obligations of Debtor to Secured Party, whether now existing or later arising, whether joint or several, whether direct or indirect, whether absolute or contingent, and whether due or to become due, and however created (whether by promissory note, endorsement, guaranty, overdraft, letter of credit, reimbursement agreement, financing agreement, financing arrangement, or otherwise);

(3) All renewals, extensions, increases, decreases, or rearrangements of all or any part of the foregoing indebtedness or obligations;

(4) Secured Party's court costs and reasonable attorneys' fees if all or any of the Indebtedness is not paid on demand when due or if this Agreement is enforced by suit or through probate, bankruptcy, or other judicial proceedings; and

(5) Any and all advancements made under this Agreement or otherwise by the Secured Party on behalf of Debtor or to protect, secure, insure or otherwise affect the Collateral, or any part thereof.

Section 4.03. Proceeds of Collateral. Debtor will account fully and faithfully to Secured Party for proceeds from disposition of the Collateral in any manner and will pay or turn over promptly (in the form received by Debtor, whether cash, negotiable instruments, drafts, assigned accounts, chattel paper, or otherwise) all proceeds from each sale, to be applied to the Indebtedness, subject to final payment or collection if other than cash. Application of such proceeds to the Indebtedness will be in the sole discretion of Secured Party, provided such application of proceeds is made by Secured Party in a reasonable manner. Nothing herein is intended to nor shall it be construed to require Secured Party to accept any item other than cash in payment of the Indebtedness.

Section 4.04. Secured Party's Expenses. Debtor will be liable for, and will pay Secured Party on demand, all expenses (including reasonable attorney's fees and other legal costs incurred or paid by Secured Party in exercising or protecting its interests, rights, and remedies under this Agreement or the obligations secured hereby), plus interest thereon after demand at the lower of (1) eighteen percent (18%) per year or (2) the highest rate of non-usurious interest then allowed by law.

Part V. Representations, Warranties, and Agreements

Section 5.01. No Prior Lien. Debtor represents and warrants to Secured Party that, except as set forth in paragraph 2.03 hereof, and except as set forth below, no financing statement, collateral transfer or assignment, or any other instrument of encumbrance covering all or any part of the Collateral or its proceeds is on file in any public office and there is no lien, security interest, or encumbrance in or on the Collateral.

Section 5.02. Location of Collateral. At Secured Party's request, Secured Party will retain possession of all instruments and chattel paper wholly or partly owned by Debtor, and Debtor will deliver all such Collateral to Secured Party immediately upon acquiring rights in it. All other types of the Collateral will be kept, at Debtor's risk of loss, at the address shown for the real property. Secured Party may inspect the Collateral at any time. Except as may be required in the ordinary course of Debtor's business, no Collateral will be removed from such locations (except vehicles or inventory sold in the ordinary course of Debtor's business) unless Debtor notifies Secured Party in writing and Secured Party consents in writing in advance of its removal to another location.

Section 5.03. Use of Collateral. Until default, Debtors may use the Collateral in any lawful manner not inconsistent with this Agreement or with the terms or conditions of any policy of insurance thereon. Secured Party's security interest will attach to all proceeds of sales and other dispositions of the Collateral. Debtor will not sell, lend, rent, lease, encumber, or otherwise dispose of the Collateral or any interest therein except as authorized in this Agreement or in writing in advance by Secured Party or as may be required in the ordinary course of Debtor's business.

Section 5.04. Taxes, Liens, Etcetera. Debtor will pay prior to delinquency all taxes, charges, liens, and assessments against all or any of the Collateral (provided, priority and equal liens described in paragraph 2.03 above are allowed and permitted). Should Debtor fail to do so, Secured Party at its option may pay any of them and will be the sole judge of the legality or validity thereof and the amount necessary to discharge the same. Such payment will become part of the Indebtedness and will be paid to Secured Party by Debtor immediately and without demand, with interest thereon, at the rate stated above, from the date incurred by Secured Party until the date reimbursed. Debtor will defend the Collateral and its proceeds against the claims and demands of all persons.

Section 5.05. Insurance. Debtor will maintain insurance at all times with respect to all tangible Collateral against risk of fire, risk of theft, and such other risks as Secured Party may require, including extended coverage. Such insurance policies as they relate to assets of the Company located in the United States will contain a standard mortgagee's endorsement providing for payment to Secured Party of any loss of or damage to the Collateral in accordance with Secured Party's lien priority. All policies of insurance on United States based assets will provide that the insurer will give Secured Party written notice of cancellation at least thirty days before canceling such insurance or before such insurance expires. Debtor will furnish Secured Party evidence of compliance with the foregoing insurance provisions at any time Secured Party may request it. Secured Party may act as attorney-in-fact for Debtor or either of them in obtaining , adjusting, settling, and canceling such insurance and in endorsing any draft drawn by insurers of the Collateral. Secured Party may apply any proceeds of such insurance that it may receive in payment on account of the Indebtedness, whether due or not.

Section 5.06. Protection of Security Interest. At its own expense, Debtor will do, make, procure, execute, and deliver all acts, things, writings, and assurances as Secured Party may at any time request to protect, assure, or enforce Secured Party's interests, rights, and remedies created by, provided in, or emanating from this Agreement; provided, Secured Party will pay its own legal fees incurred in connection with negotiating and documenting this transaction. Debtor will sign and execute any financing statement or other writing, will procure any document, and will pay all connected costs necessary to protect the security interest under this Agreement against the rights or interests of third persons.

Section 5.07. Proceeds of Collateral. Debtor will at all times keep the proceeds of the Collateral separate and distinct from other property of Debtor and will keep accurate and complete records of the Collateral and its proceeds.

Section 5.08. Title to Collateral. Debtor represents and warrants to Secured Party (1) that Debtor has good and marketable title to the Collateral as its respective interest may appear and (2) that Debtor has the right to transfer all interest therein.

Section 5.09. Security Agreement As Financing Statement. Secured Party may file this Agreement with the Texas Secretary of State or any other public official or in any public record. A carbon, photographic, or other reproduction of this Agreement or of any financing statement covering all or any part of the Collateral will be sufficient as a financing statement.

Section 5.10. Waiver of Notice. Except as otherwise provided in this Agreement or by law, Debtor hereby waives demand, protest, notice of intent to accelerate, notice of acceleration, notice of any action taken by Secured Party in connection with the Indebtedness, and all other notices.

Section 5.11. Action Affecting Indebtedness or Collateral. No renewal, extension (whether an extension of the time of payment or otherwise), increase, decrease, rearrangement, or modification of all or any of the Indebtedness, no release of Debtor as to all or any of the indebtedness, and no delay or omission in exercising any right or power with respect to all or any of the Indebtedness or with respect hereto will in any manner impair or affect Secured Party's rights hereunder. Debtor hereby consents to (1) any indulgence of Secured Party, (2) any substitution for, exchange of, or release of the Collateral, in whole or in part, and (3) the addition or release of any person liable on the Indebtedness or the Collateral.

Part VI. Events of Default

Section 6.01. Events of Default. Debtor will be in default under this Agreement upon the happening of any condition or event stated below (herein called an "Event of Default"):

(1) Debtor fails to pay any of the Indebtedness when due;

(2) Debtor defaults in the punctual performance of any obligation, covenant, term, or provision contained or referred to in this Agreement or in any note secured hereby or in any other note, obligation, undertaking, agreement or instrument between Debtor and Secured Party;

(3) Any warranty, representation, or statement contained in this Agreement or made or furnished to Secured Party by or on behalf of Debtor in connection with this Agreement or to induce Secured Party to make a loan to Debtors proves to have been false in any material respect when made or furnished;

(4) There occurs any loss, theft, substantial damage, destruction, sale (except as authorized in this Agreement), or encumbrance (except as authorized in this Agreement) to or of any material portion of the Collateral or the making of any levy, seizure, or attachment thereof or thereon;

(5) An "Event of Default" occurs as defined in any loan agreement, note, security agreement, deed of trust, assignment or other agreement or document affecting Debtor.

Part VII. Secured Party's Rights and Remedies Regardless of Default

Section 7.01. Assignment of Secured Party's Rights. Secured Party may from time to time assign this Agreement, Secured Party's rights hereunder, or all or any part of the Indebtedness. In any such case, the assignee will be entitled to all rights, privileges, and remedies granted to Secured Party by this Agreement, and Debtor will not assert against the assignee any claim or defense it may have against Secured Party, except those granted in this Agreement.

Section 7.02. Inspection of Collateral. Secured Party may enter upon Debtor's premises at any reasonable time to inspect the Collateral and Debtor's books and records pertaining to the Collateral, and Debtor will assist Secured Party in making any such inspection.

Section 7.03. Protection and Preservation of Collateral. At its option, Secured Party (1) may discharge taxes, liens, security interests, or other encumbrances at any time levied or placed on the Collateral; (2) may pay for the insurance on the Collateral; and (3) may pay for the maintenance and preservation of the Collateral. Debtor will be jointly and severally liable, and will reimburse Secured Party on demand, for any payment made or expense incurred by Secured Party pursuant to the foregoing authorization, plus interest thereon at the rate stated in Section 4.04 above.

Part VIII. Secured Party's Rights and Remedies In Event of Default

Section 8.01. Acceleration, Repossession, and Sale. On the occurrence of an Event of Default or at any time thereafter, Secured Party may, at its option, declare all or any part of the Indebtedness to be immediately due and payable and will have the rights and remedies of a secured party under the Texas Business and Commerce Code, including (but not necessarily limited to) the right to take possession of and sell, lease, or otherwise dispose of any or all of the Collateral in a commercially reasonable manner. For that purpose Secured Party may enter upon any premises where the Collateral or any part thereof may be situated and may remove the Collateral therefrom.

Section 8.02. Accounts. On the occurrence of an Event of Default or at any time thereafter, Secured Party may take possession of all books, records, and accounts relating to or constituting the Collateral and, without interference from Debtor, may exercise any and all rights that Debtor has with respect to the management, possession, protection, or preservation of the accounts, including the right to collect such accounts and apply the proceeds thereof to the Indebtedness. Such rights include (but are not necessarily limited to) the right to notify the account debtors to make payment directly to Secured Party, the right to take control of all proceeds of any such accounts, and the right to compromise such accounts. Until such time as Secured Party elects to exercise such rights, Debtor is authorized, as Secured Party's agents, to collect and enforce such accounts. At any time that Secured Party may request, whether before default or afterward, Debtor will promptly provide Secured Party with a compl ete list of all accounts receivable, including as to each account the full name and address of the account debtor, the amount of the account, the date it was incurred and its due date, and the numbers of all invoices substantiating the account. Debtor and its representatives and agents will continue to have the right (at all reasonable times, as many times as Debtor desires, and at any location designated by Secured Party) to inspect and copy any and all books, records, and accounts of which Secured Party takes possession and any and all books, records, and accounts created by or coming into the possession, custody, or control of Secured Party.

Section 8.03. Assembly of Collateral. Secured Party may require Debtor to assemble all or any of the Collateral and make it available to Secured Party at a place to be designated by Secured Party that is reasonably convenient to the parties.

Section 8.04. Notice of Sale. On the occurrence of an Event of Default or at any time thereafter, Secured Party may, in its discretion, sell for cash and assign and deliver all or any of the Collateral then covered by this Agreement in a commercially reasonable manner at public or private sale without notice or advertisement other than as required by the Texas Business and Commerce Code or may cause all or a part of the Collateral to be sold at judicial sale after judgment in any court of competent jurisdiction. Unless the Collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, Secured Party will send Debtor reasonable notice of (1) the time and place of any public sale thereof or (2) the time after which any private sale or other disposition thereof is to be made. The requirement of sending reasonable notice will be met if such notice is mailed, postage prepaid, to Debtor at the mailing address stated herein at least ten calendar days before the time of the sale or disposition.

Section 8.05. Expenses of Repossession or Sale. Expenses of retaking, holding, preparing for sale, selling, or the like will include Secured Party's reasonable attorney's fees and legal expenses. Debtor will be liable for, and on demand will pay, such expenses plus interest thereon at the rate stated in Section 4.04 above. Debtor will remain liable for any deficiency remaining on the Indebtedness after disposition of the Collateral.

Section 8.06. Power of Attorney. Secured Party is hereby authorized to, and may execute, sign, endorse, transfer, or deliver, in the name of Debtor, all notes, checks, drafts, or other instruments for the payment of money and all receipts, certificates of origin, applications for certificates of title, or any other documents necessary to evidence, perfect, or realize upon the security interest and obligations created by this Agreement. Debtor does further hereby grant and give to Secured Party the right and authority to and does hereby appoint Secured Party as its attorney in fact to execute, sign, deliver or otherwise note any and all liens arising hereunder on any and certificates of title or other certificates or documents of title notating liens of lender thereon all in the name of Debtor. All of the powers, rights and authorities granted hereunder are coupled with an interest and are irrevocable.

Section 8.07. Compromise and Settlement. On the occurrence of an Event of Default or at any time thereafter, Secured Party may demand, sue for, collect, or make any compromise or settlement with reference to the Collateral as Secured Party chooses in its sole discretion.

Section 8.08. Notice and Cure. Debtor's failure to pay any installment of interest on or principal of, any of the Indebtedness or any fee, expense or other payment required hereunder or under the Indebtedness, shall only be deemed a default if not paid within ten days of the date such sums are due. All remedies due to any other default shall be postponed, and Debtor shall have thirty (30) days after written notice thereof is provided to the Debtor to cure any such default.

Part IX. Additional Agreements

Section 9.01. Gender and Number. In this Agreement any gender will be construed as any other gender, and any number (singular or plural) as any other number, as the context may require.

Section 9.02. Parties Bound. "Secured Party" and "Debtor," as used in this Agreement, include any heir, personal representative, successor, representative, receiver, trustee, custodian, or assign of any of such parties.

Section 9.03. Captions. The part and section captions appearing in this Agreement are for convenience only and will not be given any substantive meaning or significance whatever in construing the terms and provisions of this Agreement.

Section 9.04. Other Defined Terms. Any term that is used in this Agreement that is defined in Chapters 1-9 of the Texas Business and Commerce Code (the Texas enactment of the Uniform Commercial Code) is used with the meaning as defined in such chapters.

Section 9.05 Governing Law Venue. This Agreement will be governed by the law of the State of Texas in force as of the effective date of this Agreement. The obligations of Debtor to pay the Indebtedness and otherwise performance obligations are made and performable in Corpus Christi, Nueces County, Texas and venue is laid in Corpus Christi, Nueces County, Texas for all purposes.

Section 9.06. Cumulation of Remedies. Secured Party's remedies under this Agreement are cumulative. The exercise of any one or more of the remedies provided in this Agreement will not be construed as waiving any other remedy of Secured Party. Secured Party may exercise any two or more remedies (whether existing under this Agreement, by law, or otherwise) simultaneously or sequentially.

Section 9.07. Severability. If any one or more of the provisions contained in this Agreement is for any reason held invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability will not affect any other provision of this Agreement.

Section 9.08. Additional Benefits. The liens, rights, remedies and interests hereunder made are given and the obligation and indebtedness hereby secured are in addition to and in furtherance of and not in lieu of extinguishment of all rights, remedies, interests, liens and obligations of or given by Debtor to or for the benefit of Secured Party; however, the same may have arisen or been created. This agreement is not intended to and shall not be construed to waive or release any lien claim or obligation presently existing against Debtor or any other party.

Section 9.09. Counterparts. This Security Agreement may be executed in multiple counterparts which together shall constitute one Security Agreement.

EXECUTED by Debtor on December 12, 2003.

TOR MINERALS INTERNATIONAL, INC.

By: ________________________________

Richard L. Bowers

Its President and CEO

ATTACHMENT PAGE

SECURITY AGREEMENT

DEBTOR: Tor Minerals International, Inc.

SECURED PARTY: Paulson Ranch, Ltd., D & C H Trust, and Douglas MacDonald Hartman Family Irrevocable Trust

APPROVED BY SECURED PARTY:

PAULSON RANCH, LTD.

By: Paulson Ranch Management, LLC

Its General Partner

By:

Bernard A. Paulson, Member

ATTACHMENT PAGE

SECURITY AGREEMENT

DEBTOR: Tor Minerals International, Inc.

SECURED PARTY: Paulson Ranch, Ltd., D & C H Trust, and Douglas MacDonald Hartman Family Irrevocable Trust

APPROVED BY SECURED PARTY:

D & C H TRUST

By:

David A. Hartman, Trustee

ATTACHMENT PAGE

SECURITY AGREEMENT

DEBTOR: Tor Minerals International, Inc.

SECURED PARTY: Paulson Ranch, Ltd., D & C H Trust, and Douglas MacDonald Hartman Family Irrevocable Trust

APPROVED BY SECURED PARTY:

DOUGLAS MACDONALD HARTMAN

FAMILY IRREVOCABLE TRUST

By:

Douglas M. Hartman, Trustee

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