EXHIBIT 10.1

Our Ref : IPH/CMB/OKH/AA/aas

PRIVATE & CONFIDENTIAL

Tor Minerals (M) Sdn Bhd
4 ½ Miles Lahat Road
P.O.Box 383
30200 Ipoh, Perak

15 December 2005

Dear Sirs

Banking Facilities

Customer No : 383-136280

We confirm having completed our review of your banking facility/facilities and are pleased to advise that we are agreeable to renewing the under mentioned facility/facilities for the purpose/s as stated for a further period subject to the terms and conditions outlined in the attached annexure.

This Letter of Offer supersedes our Letter of Offer dated 28 October 2005.

These facilities are subject to review at any time and, in any event by October 2006 , to our customary overriding right of withdrawal and repayment on demand; and subject to there being no breach of applicable guidelines as issued by Bank Negara Malaysia and/or the policies of the Bank in effect from time to time governing continued operations of current accounts that may subject the customer’s current account (regardless of whether any overdraft thereon has been granted or otherwise) to a right of closure.  We shall be obliged if you will note to send us two signed/certified copies of your next set of audited account (i.e. as at 31DEC2005) and that your holding company, TOR Minerals International, before that date.

**   USD1.0 million or equivalent to RM3.780 million whichever is lower.

*      Export Line interchangeable with Import Line but the total combined outstanding of Export Pre/Post Shipment Finance/BAE/IAE must not exceed RM8.0 million and total combined outstanding of Import BAI/IAP must not exceed RM3.780 million respectively at any one time.

#              Zero limit.

Note: Import Line of RM3.780 million will revert back to RM0.50 million upon utilization of the one-off purpose stated below.

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The bank shall have no obligation to monitor the usage of the facilities or ensure usage for their stated purposes and reserves the right to recall the facilities if not used for the purposes granted.

We wish to draw your attention to the attached terms and conditions dated 15 December 2005 which require your understanding and acceptance of the arrangement made.

Please confirm for your foreign currency borrowings (as computed on corporate group or single entity basis) that -

[     ]        where computed on corporate group basis, your foreign currency borrowings and your holding companies’ and subsidiaries’ (‘Group’) foreign currency borrowings; or

                [     ]        where computed on single entity basis, your foreign currency borrowings;

(as the case may be) from all sources (including from non-residents, offshore onshore banks and merchant banks) including those from us, do not in aggregate exceed the equivalent of RM50 million ⁺ at any one time in terms of ECM10 of  the Malaysian Exchange Control Notices. In the event you or a company in your Group decide to negotiate or seek additional foreign currency facilities from any other sources which may lead to such foreign currency facilities to your Group exceeding the equivalent of RM50 million ⁺ , you are required to inform us and also obtain any necessary approval from the relevant authority accordingly.

⁺      excluding trade financing facilities (e.g. letters of credit, loan against import, bankers acceptances, ECR, bills discounting facilities), trade guarantees, and foreign exchange lines.]

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It shall be your company’s sole responsibility to register any foreign currency facilities granted to you herein where the same is required to be registered with the Controller of Foreign Exchange, before drawdown in accordance with the Exchange Control Notices. We may require evidence of such registration prior to allowing drawdown.

[Where you are proposing to make any prepayments for any foreign currency facilities herein before their due date, it shall be your sole responsibility to register such prepayments with the Controller of Foreign Exchange in accordance with applicable Exchange Control Notices before effecting the payments. We may require evidence of such registration prior to allowing prepayment.]

Please confirm that all your forward exchange transactions shall be in compliance with Malaysian Exchange Control Regulations and supported by appropriate documentation, which may be required by the Bank prior to execution.

The accountholder hereby agrees that the facilities hereunder are subject to there being no breach of guidelines issued by Bank Negara Malaysia and/or policies of the Bank from time to time, and that the Bank reserves the right to recall the facilities granted hereunder in the event any of the accountholder’s current accounts are unsatisfactorily conducted as to render any of its current accounts maintained with any banks liable to closure under regulatory requirements and/or the prevailing policies of any of the banks with which such accounts are maintained, notwithstanding that the accountholder’s current account(s) with the Bank whether held solely or jointly with others has/have been conducted satisfactorily.  The Bank may rely on information furnished by the Credit Bureau established by Bank Negara Malaysia for information whether any of the customer’s current accounts have become liable to closure, and reliance by the Bank on such information shall not subject the Bank to any liability to us in the event of any inaccuracy of such information not known to the Bank.

Please arrange for the authorised signatories of your company, in accordance with the terms of the Board Resolution given to the bank, to sign and return to us this letter together with the required documents before 14 January 2006 to signify your understanding and acceptance of the terms and conditions under which these facilities are granted, after which date this offer will be deemed to have lapsed.

Please also ensure that the attached list of securities is checked and the correctness confirmed together with the acceptance of this offer.

In compliance with Bank Negara Malaysia’s directive, it is a term and condition of this offer that if the credit facilities are not drawn down after a period of three months from completion of documentation, and upon failure on your part to deliver your advice to the Bank in writing within 30 days from the expiry of the aforementioned three month period that the facilities are still required, we shall have the right to withdraw the facilities offered without further reference to you.

We are pleased to be of assistance to you and look forward to the development of a mutually beneficial and lasting relationship. However, should you have any query, please do not hesitate to contact our Encik Amran Ahmed  at telephone no 05-5226352.

Yours faithfully

for and on behalf of

HSBC Bank Malaysia Berhad

………………………………

Ahmad Haliman Abdul Halim

Manager Commercial Banking

We confirm acceptance of the above offer as stated in your Letter of Offer dated 15 December 2005 (Ref:IPH/CMB/OKH/AA/aas) and that the Bank's agreement to provide us with the abovementioned facilities will not contravene the provisions of Section 62 of the Banking and Financial Institutions act 1989.  We accept that the Bank reserves the right to recall the facilities in the event that the facilities extended to us is not in compliance with the aforementioned section of the Act.

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We further agree that your Letter of Offer embodies in writing all the terms for the Banking Facilities to be granted to us and hereby confirm that any warranties, promises, representations collateral agreements that may have been made or made to us, orally or otherwise by you in the course of the pre-contractual negotiations that have not now been included in your Letter of Offer shall hereafter be deemed by us to have lapsed and not legally binding upon you nor shall it be raised by us as a defence or to support any claim by us in any legal proceedings.

We confirm that all our forward foreign exchange transactions shall be in compliance with Malaysian Exchange Control Regulations and supported by appropriate documentation which may be required by the Bank prior to execution.

We acknowledge that we are entering into each FEX transaction in reliance only upon our own judgement and in accordance with Section 7 of IFEMA terms.

We agree that each party may electronically record all telephonic conversations and any such tape recordings may be submitted in evidence in any proceedings for any purpose relating to any FEX transaction.

We hereby agree that the facilities hereunder are subject to there being no breach of applicable guidelines as issued by Bank Negara Malaysia and/or the policies of the Bank in effect from time to time governing continued operations of current accounts that may subject the customer’s current account to a right of closure (whether by the Bank, or any other bank with which the customer maintains a current account, following its or their respective prevailing policies) and the Bank reserves the right to recall the facilities granted hereunder in such event notwithstanding that the accountholder’s current account(s) with the Bank whether held solely or jointly with others has/have been conducted satisfactorily.

At your request, we hereby irrevocably and unconditionally authorise you to debit our current account no 383-136280-001 maintained at your Ipoh branch with monthly interest and loan repayments due and payable to you, insurance premium, service charges and all other monies due and arising out of the facilities extended and/or security given.

We confirm our foreign currency borrowings (as computed on corporate group or single entity basis) —

[     ]        where computed on corporate group basis, our foreign currency borrowings and our holding companies’ and subsidiaries’ (‘Group’) foreign currency borrowings; or

                [     ]        where computed on single entity basis, our foreign currency borrowings;

(as the case may be) from all sources (including from non-residents, offshore onshore banks and merchant banks) including those from us, do not in aggregate exceed the equivalent of RM50 million ⁺ at any one time in terms of ECM10 of  the Malaysian Exchange Control Notices. In the event we or a company in our Group decide to negotiate or seek additional foreign currency facilities from any other sources which may lead to such foreign currency facilities to your Group exceeding the equivalent of RM50 million ⁺ , we shall inform you and also obtain any necessary approval from the relevant authority accordingly.

⁺                     excluding trade financing facilities (e.g. letters of credit, loan against import, bankers acceptances, ECR, bills discounting facilities), trade guarantees, and foreign exchange lines.]

It shall be our company’s sole responsibility to register any foreign currency facilities granted to us herein where the same is required to be registered with the Controller of Foreign Exchange, before drawdown in accordance with the Exchange Control Notices.

[Where we are proposing to make any prepayments for any foreign currency facilities herein before the due date, it shall be our sole responsibility to register such prepayments with the Controller of Foreign Exchange in accordance with applicable Exchange Control Notices before effecting the payments.]

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We accept and shall comply with the following covenants: -

1)     Trade debts due from the holding company/any related company must not exceed 25% of total annual turnover OR RM10.0 million whichever is lower at the close of every financial year i.e. 31DEC.

2)     To maintain a gearing of not more than 150% so long as the facilities remain.

In consideration of your agreeing to trade and pay on maturity of the HSBC Amanah Accepted Bills-i drawn on/accepted by you up to a maximum limit of RM8.0 million for IAE and RM3.780 million for IAP respectively against trade bills drawn by us or drawn on us, we hereby make the following undertaking and authorisations:-

1.     It is hereby agreed that in the event a pledge is not for any reason whatsoever created or perfected as herein stated, we shall nevertheless, and we hereby unconditionally agrees to the executed Trade Financing General Agreement/General Security Agreement Relating to Goods be deemed to have created a charge over the Documents and the Goods, in favour of the Bank, and the provisions herein relating to a pledge shall apply, mutatis mutandis, to a charge.

2.     We hereby unconditionally agree that the Bank shall not be deemed to have approved, ratified or accepted any act done by us in our capacity as agent of the Bank in the event the Bank shall be of the opinion, which opinion shall be final, that such act was done without proper authority and we shall indemnify the Bank, its officers and employees against or in respect of all liabilities, claims, losses, costs (including on solicitor-client basis) and damages of any kind which may be incurred by any of them and all actions or proceedings which may be brought by or against them in connection with the same or any matter related thereto.

3.     We hereby unconditionally agree that the Bank shall not be liable or responsible for any misrepresentations made or frauds or other acts of similar nature committed by us or any of our officers, employees or agents in our or their capacity as agent of the Bank and we shall indemnify the Bank, its officers and employees against or in respect of all liabilities, claims, losses, costs (including on a solicitor-client basis) and damages of any kind which may be incurred by any of them and all actions or proceedings which may be brought by or against them in connection with the same or any matter related thereto.

        Undertaking and authorisations of 1, 2 and 3 of above are deemed to be incorporated into the conventional Trade Financing General Agreement/General Security Agreement Relating to Goods.  Where its application to Islamic financing, clauses in the conventional Trade Financing General Agreement/General Security Agreement Relating to Goods that are contrary to Syariah does not apply.

4.     On the maturity date of each Amanah Accepted Bill drawn on/accepted by you, to debit our current account with the full amount of the selling price in respect of each such Amanah Accepted Bill, without any obligation on the Bank to give us notice of dishonour and without any reference to us.  If the credit balance in our current account shall be insufficient to cover the amount of any matured Amanah Accepted Bill drawn on/accepted by you, notwithstanding anything herein to the contrary, the Bank shall be entitled by notice in writing to us, to forthwith convert the amount of the selling price in respect of such matured Amanah Accepted Bill to be an amount outstanding as a principal

sum under the Bankers Acceptance Facility ("Converted Sum").  Upon such conversion, the Converted Sum shall be deemed to form part of the principal sum outstanding under the Bankers Acceptance Facility and accordingly to be secured by the existing securities listed in this Letter of Offer.

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5.     In addition to our authorisations and undertakings contained in this Letter of Offer and without affecting any other provision contained in this Letter of Offer, we unconditionally authorise the Bank, in the Bank's absolute discretion, to debit our current account or any other account held with the Bank without any reference to us, with the aggregate of  the amounts of the selling prices payable under the HSBC Amanah Accepted Bills-i Facility granted to us even before the respective maturity dates of such HSBC Amanah Accepted Bills-i and any costs or expenses arising therefrom ("Aggregate Selling Prices").  In such event if the credit balance in our current account shall be insufficient to cover the amount of the Aggregate Selling Prices and notwithstanding anything to the contrary herein contained, the Bank shall be entitled by notice in writing to us, to forthwith convert the amount of the Aggregate Selling Prices to the amount outstanding as a principal sum under the Clean Import Loan or Loan Against Export Facility ("Converted Sum") whichever is applicable.  Upon such conversion, the Converted Sum shall be deemed to form part of the principal sum outstanding under the Clean Import Loan or Loan Against Export Facility and accordingly be secured by the existing securities listed in this Letter of Offer.

6.     To dispose of the proceeds of the trade Bill(s) collected towards reimbursement of the HSBC Amanah Accepted Bills-i and to debit our account with any shortage however arising.

        Either

a)     agree to sell debt(s) represented by the trade Bill(s) to you and further irrevocably authorise you to dispose of the proceeds therefrom towards reimbursement of the HSBC Amanah Accepted Bills-i; OR

b)    undertake to pay to you the full amount of the relevant selling price immediately upon your notifying us to do so and in this respect we further irrevocably authorise you to debit our account accordingly,

in the event that proceeds of the relevant trade Bill shall not have been received by you on or before the maturity date of HSBC Amanah Accepted Bills-i.

7.     To indemnify you against any amount outstanding in the event that you fail to recover all or any part of the selling price payable from time to time under the facility granted to us.

8.     Notwithstanding the exercise of all or any of the above specifically authorised by us, you shall have the right to take legal action to recover any moneys due to you.

9.     All terms and conditions as contained in the Bank's legal documentation shall continue to apply.

We also confirm that the securities list attached to the letter of offer is correct.

….……………………………………………..

Authorised signatories and Company's Chop

Date of Acceptances :

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TERMS AND CONDITIONS (Annexure to Letter of Offer dated 15 December 2005)

Existing Security: -

1)     An "all monies" debenture stamped for RM10.0 million over all the fixed and floating assets of TOR Minerals (M) Sdn Bhd, that is to say a debenture to secure "all monies" in respect of general banking facilities owing from time to time including future advances, with an unlimited covenant to pay on the part of the company.

        This debenture and registered charge to rank pari passu with same taken by RHB Bank Bhd (formerly known as Development & Commercial Bank Berhad).

2)     A collateral charge over HS(D)KA 1376/75 and 1377/75 for Lot Nos. 70808 and 70809 Mukim of Ulu Kinta in the name of TOR Minerals (M) Sdn Bhd as the Chargor, that is to say a Charge to secure "all monies" in respect of general banking facilities owing from time to time including future advances, with an unlimited covenant to pay on the part of the Chargor.

3)     Letter of Undertaking not to declare to pay any dividend without the prior consent of the Bank.

4)     Letter of Awareness from TOR Minerals International Inc. (formerly known as Hitox Corporation of America).

The third-party security provider/guarantor shall undertake not to divest its shareholding or any part thereof in your company without first obtaining the Bank's consent.

5)     General Security Agreement Relating To Goods dated 22 MAY 1991.

6)     Letter of Undertaking not to lend to related companies.

7)     Letter of Undertaking to upstamp the debenture whenever required by the Bank.

8)     Co-Lender's Agreement between RHB & HSBC.  HSBC's RM10.0 million rank pari passu with RHB's RM15.0 million dated 25 April 1991.

9)     Security Sharing Agreement between RHB Bank, HSBC Bank Malaysia Berhad, RHB Labuan and HSBC Labuan.

If at any time the Bank shall consider that the security is insufficient you shall within 14 days from the date of a notice from the Bank provide such further security as the Bank shall require whether in cash or otherwise of such value and for such tenure as the Bank shall in its absolute discretion decide.

Covenant:-

1)     Trade debts due from the holding company/any related company must not exceed 25% of total annual turnover OR RM10.0 million whichever is lower at the close of every financial year i.e. 31DEC.

2)     The company to maintain a gearing of not more than 150% so long as the facilities remain.

Required Documents: -

1)     Submission of your audited accounts FYE 31DEC2005 and that your holding company, Tor Minerals International within 6 months from the close of financial year end.

2)     Original Purchase/Contract Agreement.

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Overdraft: -

Interest

Interest will be charged by us, at 1.25% per annum at daily rests above our base-lending rate (presently at 6.25% per annum). The effective rate is therefore presently 7.50% per annum subject to fluctuations at our absolute discretion and interest will be payable monthly to the debit of your current account.

In the event the approved limit is exceeded, additional interest at the Bank's discretion will be charged and debited to your current account.

Please note that this rate is applicable even after judgement in the event of any legal proceedings.

Commitment Fee

Under the Rules of the Association of Banks in Malaysia, a commitment fee of 1.0% per annum will be levied on the unutilised portion of the overdraft facility.

Bank Guarantee: -

Commission

Commission of not less than 0.10% per month subject to a minimum of RM100-00 shall be charged for the full liability period (inclusive of the claim period of the guarantee issued).

Where a Guarantee does not have a claim period, additional commission of not less than 0.10% per month shall be charged from the date of expiry to the date of return of the Guarantee or on receipt of notification from the beneficiary that the Bank is no longer liable under the Guarantee.

Commission shall be charged when a guarantee is issued and no refund is to be allowed under any condition whatsoever.

All Guarantees issued by us must bear an expiry date and we are at liberty to refuse to issue any particular guarantee and the facilities remain subject to our immediate right to settlement on demand, as stated in the terms of your Counter Indemnity in the event of any claims being made under the guarantee.

Should any one of our guarantee be called up, we would immediately debit your account with the amount and you would arrange to have funds available for this purpose.

This facility is subject to our right to call for cash cover/cash margin on demand for prospective and contingent liabilities under the guarantees/performance bonds issued/to be issued by us.

USD Term Loan: -

Interest 

Interest will be charged by us, at 1.00% per annum at daily rests above our one (1) month Funding Costs of the US Dollar.  The applicable rate of each drawdown shall be determined or revised and be payable at the commencement of each drawdown date until all monies payable hereunder are repaid in full.  Interest will be payable monthly (on 26 ^th day of the month or on such date as may be notified by the Bank from time to time) to the debit of your current account or to another account(s) to be opened by the Bank for the purpose.

If and whenever the rate of interest is varied, the Bank may at its absolute discretion make the necessary adjustment, arrangement upon such variations either by varying the amount of any instalments or varying the number of instalments.

Overdue Interest

In the event of late payment of principal and/or interest, additional interest on the amount overdue will be charged at an additional 1.0% per annum over the above interest rate, from the due date until the date of payment.

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All interest due shall be capitalised and added for all purposes to the principal sum and bear interest at the relevant applicable rate notwithstanding any demand by the bank and/or cessation of the banker and customer relationship for whatever reason.

Commitment Fee

A commitment fee of 1.0% per annum will be levied on the unutilized portion of the loan facility.

Repayment

By 35 equal monthly instalments of USD27,789-00 (excluding interest) and a final instalment of USD27,385-00 (excluding interest) commencing one month after full drawdown.

Prepayment of Loan

No premature settlement of the FCY Loan shall be normally permitted. If an early retirement of FCY Loan is made, an appropriate penalty charge will be levied to compensate us for any exchange differences/unwinding and administrative costs.

Interest would be calculated based on a 360 or 365 day year depending on the currency.

We reserve our overriding right to call for cash cover on demand to cover the shortfall in view of exchange rate factor/variations.

In the event of prepayment, an amount equivalent to the funding loss shall be imposed. If the making of a repayment leaves a residual balance, which is not in the Bank's opinion a marketable amount, the Bank may by notice in writing to you demand immediate repayment of such residue.

Drawdown Terms

Drawdown of loan must be in accordance with the claim schedule submitted against original/certified invoices and/or documentary evidences and subject to our receiving documentary evidence that you have settled the difference between the total investment/upgrading costs of Plant & Machineries and loan approved of USD1.0 million or equivalent to RM3.780 million whichever is lower.

Drawdown amount will be on 74% of the invoices/receipts on Documentary Credit issuance.

Utilisation

This loan must be fully drawndown no later than 14 August 2006 failing which any unutilized portion of the loan shall thereupon be automatically cancelled and an appropriate commitment fee will be levied on the undrawn portion to compensate us for any exchange differences/unwinding and administrative cost .

Documentary credits: -

DC's Opening Charges

At the prevailing rates as imposed by the Association of Banks in Malaysia, currently at 0.1% for each month or part thereof,  (minimum RM50.00).

Export Credit Refinancing Scheme (Pre/Post Shipment): -

Interest

Interest will be charged by us, at 1.0% above Exim Bank funding rate which is currently at 2.50% per annum.  The effective rate is therefore 3.50% per annum, subject to fluctuations at Exim Bank's discretion.

The procedure of ECR Scheme is subject to conditions and guidelines laid down from time to time by Exim Bank.

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Additional Interest on Overdue Bills

In the event of late payment of bills, additional interest on the amount overdue will be charged at additional 1.0% per annum over the prescribed interest rate, from the due date until date of payment.

All interest due shall be capitalised and added for all purposes to the principal sum and bear interest at the relevant applicable rate notwithstanding any demand by the bank and/or cessation of the banker and customer relationship for whatever reason.

Terms and Conditions For Bankers Acceptances: -

Commission

Bankers Acceptances commission to be charged at 1.0%.  

Interest

Interest will be charged at a rate quoted by Bank for the respective tenures at the time of financing.  Quotations are obtainable upon request.

Payment

Notwithstanding any other provision herein contained, the Bank reserves the right at its absolute discretion to debit the full amount of each Bill on its maturity date to your current account without further reference to you.

Enhanced Clause

Sales proceeds of all Bankers Acceptances financed must be credited to your current account to meet payment of maturing Bankers Acceptances.  Notwithstanding this, all Bankers Acceptances drawn must be paid on their respective maturity dates and if there is default in such payments, the matured Bankers Acceptance will be charged at:-

i)      the maximum interest margin plus penalty (if any) prescribed by Bank Negara Malaysia from time to time; or

ii)     the original discount rate plus a late payment fee of 1.0%; or

iii)    the prevailing Bankers Acceptance discounting rate plus a late payment fee of 1.0% effective on the day the Bankers Acceptance goes into past due; or

iv)   1.0% per annum over our prevailing base lending rate plus a late payment fee of 1.50%;

whichever is the highest, for the period overdue.

Other Conditions

The minimum Bill size for each trade transactions shall be RM50,000 or such other amount as advised by Bank Negara Malaysia or any other statutory bodies.  

Variation of Terms

Notwithstanding anything to the contrary contained herein, the Bank may at any time and in its absolute discretion without discharging in any way your liabilities hereunder and under the Security Documents, vary the terms herein including but not limited to the rate of interest, additional interest, commission, overdue interest, and other charges herein stated and the amount or form of the facilities granted so as to convert the existing facilities or cancel one or more facilities or create two or more from the facilities (provided always at the applicable rate of interest) and such variation etc. shall take effect upon notice being given by the Bank to you.

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Terms and Conditions For HSBC Amanah Accepted Bills-i: -

Commission

HSBC Amanah Accepted Bills-i commission will be charged at 1.0%.

Margin of Profit

Margin of profit will be charged at a rate quoted by the Bank for the respective tenures at the time of financing.  Quotations are obtainable upon request.

Other Conditions

The minimum Bill size for each trade transactions shall be RM50,000 or such other amount as advised by Bank Negara Malaysia.  

Enhance Clause

Sales proceeds of all HSBC Amanah Accepted Bills-i financed must be credited to your current account to meet payment of maturing HSBC Amanah Accepted Bills-i.

Payment

Notwithstanding any other provision herein contained, the Bank reserves the right at its absolute discretion to debit your current account with the full amount of the selling price in respect of each such Amanah Accepted Bill, without further reference to you.

Financing of Purchases/Imports

Purchases/Imports will be financed based on Murabahah concept.  Under this arrangement, you are appointed as the purchasing agent of the Bank.  The required raw materials/trading goods would be purchased by you on behalf of the Bank.  The Bank would then sell the raw materials/trading goods to you at a price, which will be inclusive of a profit margin and on deferred payment terms.  

Financing of Sales/Exports

Sales/Exports will be financed based on Bai Al-Dayn concept.  Under this arrangement, you will sell your debt receivables to the Bank at a price to be agreed upon between both parties.  The Bank's purchase price after deducting any charges payable to the Bank will be credited to your account.  

Variation of Terms

Notwithstanding anything to the contrary contained herein, the Bank may at any time and in its absolute discretion without affecting in any way your liabilities hereunder and under the Security Documents to vary and/or add to the terms herein by giving you notice in writing to that effect Provided Always that no such addition or variation shall have the effect of increasing the selling price or the commission rate or shortening the term of the Facility.

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Terms and Conditions For Clean Import Loan (CIL) and/or Loan Against Export (LAE): -

Payment

All CIL and/or LAE drawn must be paid immediately.

Overdue Interest

In the event of non payment of CIL and/or LAE, the following overdue interest will be charged:

i)      The maximum interest margin prescribed by Bank Negara Malaysia plus penalty of 1.0% over our base lending rate, per annum; or

ii)     The original discount rate plus penalty of 1.0%; or

iii)    the prevailing AAB discounting rate over penalty of 1.0% effective on the day the AAB goes into past due.

        whichever is the highest, for the period overdue.

Variation of Terms

Notwithstanding anything to the contrary contained herein, the Bank may at any time and in its absolute discretion without discharging in any way your liabilities hereunder and under the Security Documents, vary the terms herein including but not limited to the rate of interest, additional interest, commission, overdue interest, and other charges herein stated and the amount or form of the facilities granted so as to convert the existing facilities or cancel one or more facilities or create two or more from the facilities (provided always that the variation or conversion shall be at the applicable rate of interest) and such  variation etc. shall take effect upon notice being given by the Bank to you.

General Terms and Conditions: -

Utilisation

The procedure for accepting or discounting Bankers Acceptances/HSBC Amanah Accepted Bills-i will be subject to the conditions and guidelines laid down from time to time by Bank Negara Malaysia or other statutory bodies.

Total Gross Foreign Exchange Contract Limit (inclusive of mark-to-market losses

incurred from time to time)

The Bank reserves the right at its absolute discretion to decide whether or not any utilization of the Risk Weighted Foreign Exchange Contract Limit may be made and to specify conditions only upon compliance with which such utilization may be made.

The amount and value of any and each utilization of the Risk Weighted Foreign Exchange Contract Limit or their aggregate amount and value for the purpose of calculating the amount of any available limit of the Risk Weighted Foreign Exchange Contract Limit or call for cash cover shall be as calculated by the Bank, such calculation to be conclusive.

We reserve our overriding right to call for cash cover on demand if in the Bank's view a negative foreign exchange position requires such cover, and/or to close out any or all contracts outstanding at any time, without further reference to you and to demand settlement of the balance due to us.  The right to call for cash cover shall be in addition to and without prejudice to any relevant rights contained in the English Law IFEMA.

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Contracts covering foreign exchange transactions (or other treasury transactions) are governed by the conditions appearing on the reverse of the standard contract form.  These contract forms should be checked upon receipt, and the copy signed and returned to the Bank within 14 calendar days from date of contract.

FEX transactions shall be subject to Exchange Control Regulations as are applicable from time to time.  The terms applicable include (not exhaustive):

a)       the maturity date of forward contracts for the sale of any export proceeds must not be later than 6 months after the intended date of export;

b)       Forward contracts which are based on firm underlying commitments are to be for amounts and tenures corresponding with the committed payments or receipts, as the case may be;

c)       FEX transactions entered into on an anticipatory basis shall be for up to such capped amounts based on the value of payments and receipts of your company in the preceding 12 months.

The determination whether the tenure or amount of any FEX transaction is permitted under the Exchange Control Regulations shall be made by us in good faith, and shall be binding on you.  You agree that the Bank shall have no liability to you as a result of any determination so made.

All notices including the originals of contract confirmation for FEX transactions will be delivered by hand or sent by ordinary post; and all demands will be delivered by hand or sent by registered post (not being AR Registered post) to you; in both cases to the address given herein or last known to the Bank and shall be deemed received if delivered by hand at the time of delivery, if collected by hand at the time of collection and if sent by post three (3) days after posting thereof notwithstanding its subsequent return by the post office.

Where any foreign exchange transaction is required to be registered with the Controller of Foreign Exchange in accordance with Malaysian Exchange Control Regulations, you shall be fully responsible to register the same (and provide the Bank any evidence thereof if may require), unless the Bank has expressly agreed to submit the registration on your behalf.

In the absence of an executed agreement governing foreign exchange contracts, the latest published English law IFEMA terms shall apply and each utilization of the Risk Weighted Foreign Exchange Contract Limit (whether or not the relevant IFEMA Document has been signed) shall be deemed to be subject to and shall be subject to the English Law IFEMA terms unless the relevant confirmation specifies to the contrary.  In the event of any conflict between the terms of this facility letter and those of the English law IFEMA, the terms of the English Law IFEMA shall prevail save in respect of any provisions herein which are expressed to be additional to or in replacement for any relevant provisions in English Law IFEMA.  A copy of the latest published IFEMA terms is available on request.

All spot and/or forward foreign exchange contracts entered into between you and the Bank from time to time have been, are and shall be for genuine underlying trade transactions and other permitted purposes and not for speculative purposes.

Upon request, you shall provide the Bank with documentary evidence of firm underlying commitments to support the spot and/or forward foreign exchange contracts.  You acknowledge the Bank's right to cancel the spot and/or forward contracts immediately when the underlying contract covered by the spot and/or forward exchange contract does not materialise or if there is no documentary evidence or the trade is not genuine.  For anticipatory hedges, the Bank may required such evidence as it deems satisfactory prior to transacting.

Page 13 of 19

Without prejudice to anything herein contained, the Bank also reserves the right (and without further reference to you) to :

-       reduce the amount of the spot and/or forward contract when the amount of receipt/payment of the underlying transaction for firm hedges is reduced to less than the amount of the spot and/or forward contract;

-       adjust the maturity date of the spot and/or forward contract when the Bank is satisfied that the due or expected date of payment/receipt of the underlying transaction for firm hedges has changed provided always that the new maturity date does not exceed the period permitted under exchange control and other relevant rules/laws;

and any differences arising therefrom shall be payable by you notwithstanding that the day originally stipulated for settlement may not have arrived, for which the Bank is hereby authorized to set-off from or debit and/or combine, consolidate any account(s) standing in your name(s) held at any Branches of the Bank.

In the absence of an executed agreement governing foreign exchange contracts, the latest published English Law IFEMA terms shall apply and each utilization of the Risk Weighted Foreign Exchange Contract Line (whether or not the relevant IFEMA Document has been signed) shall be deemed to be subject to and shall be subject to the English Law IFEMA terms unless the relevant Confirmation/contract specifies to the contrary.

Spot and/or forward contracts are also governed by the conditions appearing on the reverse of the standard contract form.

In the event of any conflict between the terms of this facility letter, those of the English Law IFEMA and the standard contracts terms, the terms shall prevail in the following order :-

(a)   the terms of the latest published English law IFEMA (a copy is available on request)

(b)   the terms of this facility letter;  and lastly

(c)     the standard contract terms

Repayment: -

All interest due shall be capitalised and added for all purposes to the principal sum and shall bear interest at the relevant applicable rate notwithstanding any demand by the Bank and/or cessation of the banker and customer relationship for whatever reason and before as well as after judgement.

For purposes of ascertaining whether the limit of the principal intended to be secured by the aforesaid security has been exceeded or not, all accumulated and capitalised interest shall be deemed to be interest and not principal sum.

In accordance with normal banking practice and notwithstanding anything to the contrary herein-contained and prior to the time for annual review, these facilities are subject to our customary overriding right of withdrawal and repayment on demand.

Variation of Terms: -

Notwithstanding anything to the contrary contained herein, the Bank may at any time and in its absolute discretion without discharging in any way your liabilities hereunder and under the security documents to vary the terms herein including but not limited to the rate of interest, additional interest, commission overdue interest, and other charges herein stated; and the amount or form of the facilities granted so as to convert the existing facilities or cancel one or more facilities or create two or more from the facilities (provided always at the applicable rate of interest) and such as variation etc. shall take effect upon notice being given by the Bank to you.

Page 14 of 19

Events of Default: -

If there are circumstances likely to lead to events of default among other things due to irregularities in your financial affairs or your inability to meet your indebtedness to us, it is proposed that you contact us for an early appraisal of your commitment.

The events of default are more comprehensively dealt within the security documentation.

Without prejudice to our customary overriding right of repayment on demand, the facilities herein may be immediately suspended or terminated and these facilities or any part thereof may be withdrawn and all sums due hereunder shall be repayable on demand in the event: -

1)       You default in the payment of any instalments and/or interest or the conduct of your account has been unsatisfactorily; or

2)       You fail to observe or perform any covenants herein; or

3)       a petition is presented and not withdrawn or stayed by an order of Court within a period of 60 days of its presentment or an order is made or resolution passed for your winding-up, dissolution or liquidation; or

4)       you commence a meeting for the purpose of making or proposing and/or enter into any arrangement with or for the benefit of your creditors; or

5)       a receiver or other similar officer is appointed of the whole or any part of your assets or undertaking; or

6)       you shall cease or threaten to cease to carry on your business or to be unable to pay your debts or dispose or threaten to dispose of the whole or a substantial part of your undertaking or assets; or

7)       for any reason any guarantee or security given to us for the repayment of the facilities shall be terminated or shall lapse for any reason whatsoever or if the guarantor shall be in default under the terms of such guarantee or dies or become of unsound mind or is wound up or commits any act of bankruptcy; or

8)       any of your other indebtedness to us or any third party or parties becomes capable in accordance with the relevant terms thereof of being declared due prematurely by reason of your default or your failure to make any payment in respect thereof on the due date for each payment or if due on demand when demanded or the security for such indebtedness becomes enforceable.

9)       if, in the Bank's opinion, there is any change or threatened change in circumstances which would materially and adversely affect the company's business or financial condition or the Company's ability to perform its obligations under this letter of offer or any other agreement with the Bank, including any change or threatened change in its shareholders or directors, if a corporation;

10)    you breach any of the warranties/covenants contained herein and in the security documents; or

11)    any of your declaration, representation or warranty shall be untrue or incorrect; or

12)    If there is a change in the majority shareholding of the company.

13)    if, by reason of any change after the date of this letter of offer in applicable law, regulation or regulatory requirement or, in the interpretation or application thereof of any governmental or other authority charged with the administration thereof it shall become unlawful for the Bank to comply with its obligations herein or to continue to make available the facilities.

Page 15 of 19

Other Terms: -

1)       Availability of the facilities are subject to all legal/security documentation having been completed to the satisfaction of the Bank. If security documentation could not be perfected for whatever reason within 3 months acceptance date of this Letter of Offer, the Bank reserve the right to withdraw the facility offered without further reference to you.

2)       In compliance with Bank Negara Malaysia's directive, it is a term and condition of this offer that if the credit facilities are not drawn down after a period of three months from completion of documentation, and upon failure on your part to deliver your advice to the Bank in writing within 30 days from the expiry of the aforementioned three month period that the facilities are still required, the Bank shall have the right to withdraw the facilities offered without further reference to you.

3)     Any utilisation or drawdown hereunder shall be subject to the further condition precedent that, both at the time of the request for and at the time of the making of each disbursement all conditions herein contained have been fulfilled and no default has occurred and is continuing or would result from the proposed disbursement.

4)     Unless otherwise provided, a notice/demand by the Bank hereunder or under the terms of this Letter of Offer may be served by registered post (not being AR Registered post) and shall be deemed to have been duly served on the third day following the day of posting if addressed to you at your last known address notwithstanding its subsequent return by the post office.

5)       All legal expenses and all other charges and disbursements (including stamp duty and the Bank's solicitors' fees on a solicitor and client basis) incurred in connection with or incidental to the preparation and execution of the security documents and in the recovery of the abovementioned facility/facilities and enforcement of security shall be payable by you and if remaining unpaid shall be debited without further notice to your current account or a disbursement/suspense account opened by the Bank for the purpose.

6)     The Bank shall charge at its absolute discretion, fees as follows:-

Arrangement Fee of RM500-00 per deal;

        Temporary Facility Arrangement Fee of RM200-00 per deal;

        Facility Amendment Fees of RM500-00 per deal;

        Facility Management Fees of RM500-00 per deal;

        Customer-initiated Facility Restructuring/Adjustment Fee of RM500-00 per deal.

These charges shall be paid before any of the facilities are utilised and if remaining unpaid shall be debited without further notice to your current/disbursement/other account whether or not opened by the Bank for the purpose.  Notwithstanding the payment of these charges, the Bank reserves the absolute discretion whether to grant or otherwise any facility; amendment, renewal/review, restructuring/adjustment of facility and/or temporary excess or temporary drawing against uncleared effects, as the case may be.

7)     The property charged to us is to be insured against fire and other relevant risks for their full market value or replacement cost, whichever is the higher, with an insurance company acceptable to us with our interests as chargees noted therein for so long as the facilities exist.  The original copy of the policy(ies) and all future policy together with the premium receipt are to be forwarded to us upon issuance thereof. Interest in all existing and future insurance policies must be vested in the name of the Bank.

Should you default in taking the aforementioned policy(ies), it shall be lawful but not obligatory upon the Bank to take up such policy(ies).  All charges incurred shall be debited to your current account or to a disbursement/suspense account opened by the Bank for the purpose.

Page 16 of 19

8)     The assets (i.e. building, plant and machinery, stocks etc) over which you have created the aforementioned Debenture/Charge are to be adequately insured against fire and other relevant risks for their full value or replacement costs whichever is the higher with our interests as chargees noted therein for as long as the facilities exist.  The original copy of this policy and all future policies together with the premium receipts are to be forwarded to us before the expiry date.

9)     The Bank or its representatives shall be entitled to inspect and value the aforementioned property at least once every year and the costs in connection therewith will be debited to your current account or to another account opened by the Bank for the purpose.

        Without prejudice to anything contained herein, the Bank may at its absolute discretion vary the amount of the facilities if the value of the property charged as shown in the valuation report is less than the amount of the facilities, or any of your representations and warranties whether contained herein or otherwise shall be found to be untrue or incorrect.

10)    Inspection and valuation of the abovementioned property will be conducted at least once in every two years by us or by a firm of approved appraisers.  The costs in connection therewith will be for your account.

11)    The Bank further reserves the right to immediately recall the facilities granted herein if any of your other indebtedness to the Bank or to any third party or parties becomes capable in accordance with the relevant terms thereof of being declared due prematurely by reason of a default or your failure to make any payment in respect thereof on the due date of each payment or if due on demand when demanded or the security for such indebtedness becomes enforceable.

12)   The Third Party Security Provider/Guarantor shall undertake not to divest its shareholding or any part thereof in your company without first obtaining the Bank's consent.

13)   If the effect of any, or a change in any, law or regulation is to increase the cost to us of advancing, maintaining or funding these facilities or to reduce the effective return to us, we reserve the right to require payment on demand of such amounts as we consider necessary to compensate us therefore.

14)    The facilities granted do not contravene Section 62 of the Banking and Financial Institutions Act (BAFIA) 1989.

15)    The facilities are subject to review at any time and, and we shall be obliged if you will note to send us certified true copy of your latest set of audited accounts when called upon by us to do so from time to time.

16)    These facilities are subject to our right to call for cash cover/cash margin on demand for prospective and contingent liabilities under the documentary credit/guarantee issued/to be issued by us.

17)   Other terms and conditions as contained in the Bank's legal or security documentation/s shall apply in addition to any other terms and conditions that our solicitors will think fit to impose when formalising such documentation/s on our behalf. 

Page 17 of 19

18)   A certificate signed by an officer of the Bank as to any amount(s) payable hereunder shall be conclusive evidence save for manifest error. 

The facilities shall be binding and for the benefit of our successors and assignees whether these facilities are now or in the future provided by us, our successors or assignees or any other party on our behalf, but you may not assign your rights or obligations hereunder.

You have authorised us in our absolute discretion without further reference or notice to you to apply any credit balance you may from time to time have in account(s) held with us in reduction of any sum then due to us.

The Bank may at its absolute discretion at any time and without further notice to you combine, consolidate or merge all or any of your accounts with any liabilities to the Bank and may set off or transfer any sum outstanding to the credit of any such accounts at any branch of the Bank anywhere and in any currency exchanges as are appropriate to implement such set-off, in or towards the satisfaction of any of your liabilities to the Bank under the facilities.

Time is of the essence of the contract but no failure or delay on our part to exercise any power, right or remedy hereunder shall operate as a waiver thereof nor shall any single or any partial exercise or waiver of any such power, right or remedy preclude its further exercise or the exercise of any power, right or remedy.  The powers, rights and remedies hereby provided are cumulative and not exclusive of any powers, rights or remedies provided by law.

19)   Subject to the provision of the security documents (where applicable), if any amount received or recovered in respect of your liabilities hereunder or any part thereof is less than the amount then due, the Bank shall apply that amount to principal, interest, profit, fees or any other amount then due and payable hereunder in such proportions and order of priority and generally in such manner as the Bank may determine.

20)   If any one or more provisions of this Letter of Offer or any part thereof shall be declared or adjudged to be illegal, invalid or unenforceable under any applicable law such, illegality invalidity or unenforceability shall not vitiate any other provisions hereof which shall remain in full force, validity and effect.

21)    You irrevocably agree that information on your accounts, facilities, conduct thereof and related information thereto, and information on any prospective accounts, facilities and services which you may open with or obtain from the Bank from time to time (‘Information’), may be:

i)      disclosed to any person the Bank considers necessary for purposes related to the provision of the account or facilities, or the operating procedures of the Bank (which shall include any accounting, client relationship or risk management functions), including to any member of the HSBC Group, any service provider or other third party;

ii)     where relevant, disclosed or shared with any bureaus or agencies established or to be established by Bank Negara Malaysia (including the Central Credit Reference Information System – “CCRIS”) or by other regulatory authorities including the Association of Banks in Malaysia and any authority, central depository or depository agent in relation to the securities industry;

iii)    disclosed to any potential assignee, guarantors and/or security providers (prospective or otherwise) and any person the Bank believes in good faith to be tendering payment for monies on your behalf.”

Page 18 of 19

Such information may, where relevant, be used, stored, transferred, compiled, matched, obtained and/or exchanged by or with the aforementioned parties (‘Users’). Information shall be kept strictly confidential by the Users, save where disclosure is required under any laws or regulations to which a User is subject.

All information given by the Bank to any of the abovementioned persons is provided in good faith and for information purposes only and whilst every care is taken in compiling, collating or producing the information, the Bank and its officers shall not in any event be liable for any claim, loss, damage or liability howsoever arising (including direct or indirect, special, incidental, consequential or punitive damages or loss of profits or savings) to you or to any other persons whatsoever for the accuracy, completeness or authenticity of its contents or for the consequences of any reliance which may be placed on the information whether caused by any technical, hardware or software failure of any kind, interruption, error, omission, delay, viruses, act of God, act of war, strikes, industrial action or otherwise.

22)    Any notice demand or request may be given by ordinary or registered post (not being registered post) sent to you at its address herein stated or to your last known address and such notice shall be deemed to have been duly served three days after it is posted notwithstanding that it is returned by the postal authorities undelivered.

Notice as to variation of interest, commission, fees and all other bank charges may also be effected by a notification of the variation in the periodic statements furnished to you from time to time or by way of an unsigned notice or letter produced by the bank’s computer or by way of advertisement in any newspaper or by notification at any of the bank’s premises or in such manner as the bank deems fit and such variation shall take effect from the date stipulated therein.

23)    All monies received for the purpose of being applied in reduction of any monies owing to the Bank (whether from payments received or from the realisation of any security or otherwise) shall be treated as payments in gross and not as appropriated or attributed to any specific part or item of the monies owing to the Bank, even if appropriated thereto by any person otherwise purportedly entitled to so appropriate.

24)    Any monies received by the Bank in respect of the facilities hereunder or any security granted may be kept to the credit of a non-interest bearing suspense account for such terms as the Bank deems fit without any obligation in the meantime to apply the same or any part thereof towards settlement of any liabilities due to the bank. In the event of any liquidation or analogous thereto, the Bank may prove for and agree to accept any distributions in respect of the whole or any part of such money and liabilities in the same manner as if no security had been created.

25)    The Bank shall have the right to exercise any rights or remedies available to it under this letter of offer or pursuant to the credit facilities or otherwise (including pursuing any right of sale or possession) against you or any party providing security for the facilities concurrently or successively as it may consider appropriate.

26)    Any provision herein which is illegal or unenforceable shall not affect the validity and enforceability of the remaining provisions hereof.

~~~ END ~~~

 Page 19 of 20

Exhibit 10.2

PRIVATE & CONFIDENTIAL

Date:  23 November 2005

TOR Minerals (M) Sdn Bhd|
4½ Mile, Jalan Lahat,
30200 Ipoh,
Perak.

Attn :       Mr. Lee Hee Chew, Managing Director

Dear Sir / Madam,

Further to our Letter of Offer dated 25 October 2004, we, RHB Bank Berhad (“the Bank”) are pleased to inform you that the Bank has agreed to: -

(i)                   renew/extend your existing banking facilities to 31 October 2006;

(ii)                 incorporate a Revolving Credit facility as part of the existing Overdraft facility of RM1.0 million (i.e. an interchangeable Overdraft/Revolving Credit facility) with a combined limit of RM1.0 million;

(iii)                increase the Foreign Exchange Contract Line facility by additional RM10 million from RM15 million to RM25 million; and

(iv)               increase the maximum tenor of financing for the Multi-Trade Line facility up to 180 days from existing 150 days.

subject to the following terms and conditions: -

(hereinafter  referred to as “the Banking Facility” and where the Banking Facility comprises more than one banking facilities, the expression “Banking Facility” shall where the context requires refer collectively to all and individually to each of the respective banking facilities comprising the Banking Facility) 

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2.             PURPOSE

The Banking Facility shall be used for the purpose(s) as set out below and if you require to use the Banking Facility or any part thereof for any other purpose, you shall have to first obtain the Bank’s prior written consent:

2.1           Overdraft / Revolving Credit

            For working capital.

2.2           Letter of Credit / Trust Receipt / Bankers Acceptance / Bills Purchased / Export Credit Refinancing

            For trade financing.

2.3           Shipping Guarantee

For collection of goods pending receipt of shipping documents.

2.4           Bankers Guarantee

As security / tender deposit and performance bond favoring government / statutory bodies and private companies acceptable to the Bank.

2.5           Foreign Exchange Contract Line

To hedge against fluctuations in foreign exchange rates for trade related transactions and other transactions as approved by Bank Negara Malaysia. The Foreign Exchange Contracts concluded with the Bank include spot, value today, value tomorrow and forward foreign exchange contract.

3.             AVAILABILITY PERIOD

3.1       The granting of the Banking Facility to you is at all times subject to availability of funds.

4.               TENOR

4.1           The Banking Facility is subject to periodic review at the sole and absolute discretion of the Bank but notwithstanding such periodic review, the Banking Facility shall be repayable on demand. 

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5.             INTEREST RATE(S) / COMMISSION / BANKING CHARGES / COMMITMENT FEE / OTHER CHARGES

5.1       You shall pay interest, commission, discount charges and any other charges payable in relation to the Banking Facility at the following rates: -

[“BLR” means the Bank’s Base Lending Rate, which is currently at six point zero per centum (6.0%) per annum.]

5.2       Interest and commission at the aforesaid rates (“the Prescribed Rate” which expression shall refer to the respective interest rates and commission chargeable on the respective facilities comprised under the Banking Facility) shall be payable by you, as well after as before judgment or demand.

5.3       You shall pay the Bank a commitment fee of one per centum (1%) per annum or such other rate as the Bank may at its sole and absolute discretion stipulate from time to time: -

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5.3.1        on the portion of the Overdraft Facility as shall be unutilised by you up to the aggregate approved limit at any time and from time to time, commencing from the date when the Overdraft Facility is made available to you for utilization;

5.3.2        on the portion of the Revolving Credit Facility as shall be unutilised by you up to the aggregate approved limit at any time and from time to time commencing from the date when the Revolving Credit Facility is made available to you for utilization;

and the Bank shall be entitled to debit the commitment fee into your current or overdraft or any other account at the end of each month.

5.4       You shall pay the Bank an extension fee of RM1,000.00 within thirty (30) days, which fee shall be automatically debited from your current account upon acceptance of this Letter of Offer and will not be reimbursed even in the event that you cancel the Banking Facility.

6.             INCREASED RATE OF INTEREST ON DEFAULT/EXCESS AMOUNT

In addition and without prejudice to the rights and remedies of the Bank, if you shall default in the payment of any sums on their respective due dates you shall pay interest on such overdue sums at the rate of 3.5% per annum above the Bank’s Base Lending Rate or such other rate or rates as the Bank may, at its sole absolute discretion, at any time and from time to time, impose without notice to you, and such rate or rates of interest (“the Default Rate”) shall be payable by you, as well after as before judgment or demand, from the due date up to the date of actual repayment.

8.             SECURITY

The Banking Facility interest commissions and banking and/or other charges and expenses payable thereon or in connection therewith are to be secured by: -

8.1           Against the existing first legal charge over industrial property held under H.S. (D) Ka 1376/75, Lot 70808 and H.S. (D) Ka 1377/75. Lot 70809, both in Mukim of Ulu Kinta, District of Kinta, Perak.

8.2           Against the existing debenture over the fixed and floating assets of the company, both present and future.

8.3           Against the existing Letter of Support from Hitox Corporation of America, USA (presently  known as TOR Minerals International Inc., USA).

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9.             CONDITIONS FOR DRAWDOWN/UTILIZATION

9.1       In addition to the conditions precedent for drawdown as stipulated in the General Terms and Conditions annexed hereto, you shall also fulfill the following conditions precedent before you are allowed to drawdown on the Banking Facility:

NIL

9.2       If,

9.2.1            you shall fail to comply with any of the conditions precedent referred to in paragraph 9.1 above and/or in the General Terms and Conditions annexed hereto and/or any warranty or representation made by you to the Bank is incorrect, misleading or untrue; and/or

9.2.2        there has been a material adverse change in your condition, financial or otherwise after the date of this Letter of Offer;

you will not be entitled to utilise the Banking Facility and the Bank shall be entitled to cancel the Banking Facility hereby granted without any prior notice to you and you shall be liable to reimburse and/or indemnify the Bank for all costs and expenses (including legal costs and expenses) incurred by the Bank in connection with the approval and/or grant of the Banking Facility to you.

10.          OTHER TERMS AND CONDITIONS

10.1        The Banking Facility available to you at our Ipoh Branch is to be actively utilised. In addition, you are to maintain a satisfactory current account with us.

10.2        The Bank reserves the right to disallow the continued utilisation of the Banking Facility in the event that there are overdue payments.

10.3        If any of the provisions of this letter becomes invalid, illegal or unenforceable in respect of any law, the validity, legality or enforceability of the remaining provisions shall not in any way be affected or impaired.

11.5     any potential assignee or other person proposing to enter into any contractual arrangement which requires the disclosure of such information; and

11.6     companies which are or which in the future may be subsidiaries of the Bank PROVIDED that the Bank shall take all reasonable care to ensure that such information shall remain confidential within the Bank’s group of subsidiaries.

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12.          AMENDMENT AND/OR ADDITIONAL TERMS AND CONDITIONS

12.1     The Bank may at any time hereafter at your request or at the Bank’s absolute discretion grant additional banking facilities to you and/or convert and/or vary and/or substitute all or any of the Banking Facility hereby granted into another banking facility or facilities and, in any such event, the securities liabilities and/or obligations created pursuant to and by this Letter of Offer shall continue to be valid and binding for all purpose whatsoever up to the limit of the total banking facilities  advanced to you notwithstanding such addition or change before-mentioned but subject to such variations as shall be made known by the Bank to you and or implied by law or trade usage governing or applicable to the addition and/or  changes as aforesaid.

12.2     Notwithstanding any provisions to the contrary, the terms of this Letter of Offer may, at any time and from time to time, be varied or amended by the Bank at its absolute discretion with notice to you and thereupon such amendments and variations shall be deemed to become effective and the relevant provisions of this Letter of Offer shall be deemed to have been amended or varied accordingly and shall be read and construed as if such amendments and variations had been incorporated in and had formed part of this instrument at the time of execution hereof.

13 .           ANNEXURES

The terms and conditions set out in the Annexures I, IA, II, III, IV, V, VI, VII, VIII and IX hereto form an integral part of this Letter of Offer and in the event of any conflict or discrepancy between the terms and conditions in this Letter of Offer and the terms and conditions in the Annexures, the terms and conditions in this Letter of Offer shall prevail.

Except as specifically amended or varied hereby, all terms and condition in our previous Letter of Offer dated      25 October 2004 and in the security documents to secure the existing facilities shall remain in full force and effect and the Letter of Offer dated 25 October 2004 and security documents as amended or varied by this Letter shall from and after the date hereof be read as a single integrated document incorporating the amendment(s) or variation(s) effected hereby.  

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Please indicate your acceptance of the Banking Facility upon the terms and conditions herein by signing the duplicate of this letter and returning the same to the Bank within fourteen (14) days from the date hereof. In addition, you are required to execute such loan/security documents, which the Bank’s solicitors shall advise are necessary for the protection of the Bank’s interest.

We thank you for giving us the opportunity to be of service to you.

cc.  Mr. Lee Kee Wooi, Corporate Banking (Ipoh Region)

I/We, the undersigned hereby confirm that I/We have read the terms and conditions set out above and in the Annexures hereto and taken note of the same.  I/We hereby accept the Banking Facility upon the terms and conditions mentioned above and in the Annexures.  And, I/we hereby declare that I/we am/are not and none of our directors or managers are directly related as a spouse or child or parent to any of the directors officers or employees of the RHB Capital Berhad Group of Companies.

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RHB BANK BERHAD
(6171-M)

ANNEXURE I

 THE GENERAL TERMS AND CONDITIONS

1.             REPRESENTATIONS AND WARRANTIES

The Borrower hereby represents and warrants to the Bank that: -

1.1                 all acts, conditions, things, approvals, consents, authorizations and licences required to be done, fulfilled, performed or obtained to enable the Borrower to lawfully enter into and exercise its rights under and perform its obligations hereunder and any related documents executed by it have been done, fulfilled, performed or obtained and are in full force and effect;

1.2                 the Borrower’s acceptance of this Letter of Offer and the performance of the terms herein will not contravene any law, regulation, order or decree of any governmental authority, agency or court to which the Borrower is subject; and

1.3                 the Borrower is not in default under any agreement to which the Borrower is a party or by which the Borrower may be bound and no litigation arbitration or administrative proceedings are presently current or pending or threatened against the Borrower.  

2.             CONDITIONS PRECEDENT

2.1                 The Banking Facility will be made available for the Borrower’s utilisation upon the fulfillment of the following conditions precedent: -

2.1.1        all loan/security documents which are required herein and/or such other documents as may be required by the Bank and/or its solicitors shall have been executed by the Borrower and/or the relevant security parties, duly stamped and registered at such registries as the Bank may deem necessary or expedient within thirty (30) days from the date of the acceptance of the Letter of Offer or such other time as may be stipulated by the Bank;

2.1.2        the Bank shall have received copies of the following documents certified as true and correct by the Borrower’s secretary or director: -

(a)           all authorisations, licenses, approvals and consents which are necessary for the financing by the Bank hereunder, the carrying on of the Borrower’s business and the execution of the security documents (if any);

(b)           the Borrower’s Board of Directors' Resolution authorising the acceptance and the borrowing of the Banking Facility and/or the execution of the loan/security documents (if any);

(c)           a copy each of the Borrower’s (if applicable) certificate of incorporation and the Memorandum and Articles of Association and the Forms 24, 44, and 49 of the Companies Act 1965; and

(d)           specimen signatures, authenticated in such manner as the Bank may require, of the persons authorised to act on the Borrower’s behalf in respect of the transactions hereunder.

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2.1.3        the Borrower shall have paid all fees or charges payable or agreed to be paid by the Borrower to the Bank for or in connection with the Banking Facility including the preparation and perfection of the loan/security documents;

2.1.4        no Event of Default (as hereinafter stated) or no event which with the giving of notice or lapse of time or both would constitute an Event of Default shall have occurred or be continuing;

2.1.5        no extraordinary circumstances or change of law or other governmental action shall have occurred which makes it improbable that the Borrower will be able to observe or perform the covenants and obligations herein; and

2.1.6        the Bank's solicitors shall have made a search on the Borrower at the Companies Commission of Malaysia and the Director-General of Insolvency’s Office and the results thereof shall have been satisfactory to the Bank.

2.2           In the case where guarantee(s) and/or other security (“the Security Document”) is/are required by the Bank from third party(ies) (“the Security Party), the utilisation of the Banking Facility shall also be subject to the fulfillment of the following additional conditions precedent: -

                (a)           its Board of Directors’ Resolution authorising the execution of the Security Document;

(b)           a certified copy of its Certificate of Incorporation, Memorandum and Articles of Association and the Forms 24, 44, and 49 of the Companies Act 1965.

2.2.3        the Bank’s solicitors shall have made a search on the Security Party at the Companies Commission of Malaysia and/or the Director-General of Insolvency’s Office and the results thereof shall have been satisfactory to the Bank; and

2.2.4        all authorisations, approvals and consents which are necessary for the creation and delivery of the Security Document to the Bank hereunder, shall have been obtained and delivered to the Bank.

3.             AFFIRMATIVE COVENANTS

During the tenor of the Banking Facility the Borrower shall: -

3.1           furnish to the Bank all information reasonably required by the Bank in relation to the Borrower’s business and financial position;

3.2           keep full, proper and up-to-date accounts and furnish to the Bank within one hundred and eighty (180) days from the end of each of the Borrower’s financial year copies of the Borrower’s annual report together with the balance sheet and profit and loss account duly audited and certified by a qualified independent auditor; and

3.3           notify the Bank of the occurrence of an Event of Default stipulated hereunder or of any event which would constitute an event of default in relation to any of the Borrower’s other indebtedness.

4.             RESTRICTIVE COVENANTS

During the tenor of the Banking Facility the Borrower shall not, without the prior written consent of the Bank: -

4.1           add to, delete, vary or amend the Borrower’s Memorandum and Articles of Association in any manner which would be inconsistent with the terms of this Letter of Offer;

4.2           change the nature of the Borrower’s business;

4.3           sell, transfer, lease or otherwise dispose of a substantial part of the Borrower’s capital assets or undertake or permit any merger, consolidation or reorganisation;

3

4.4           enter into any transaction with any person firm or company except in the ordinary course of business and at arm's length commercial terms; and

4.5           decrease the Borrower’s authorised or issued capital or alter the structure thereof or the rights attached thereto.  

5.             VARIATION OF INTEREST RATES

5.1           The Bank shall be entitled at its sole and absolute discretion, without notice to the Borrower, vary at any time and from time to time the Base Lending Rate of the Bank and/or the margin of interest imposed above the Base Lending Rate and/or Cost of Funds of the Bank and/or commissions or other rates of interest chargeable PROVIDED THAT the Bank will endeavour to provide notice of such variation(s) in the following manner:

5.1.1        in respect of the Base Lending Rate of the Bank by displaying at the premises of the Bank a general notice of the change of the Base Lending Rate of the Bank addressed to the public generally and such display shall be deemed sufficient notice to the Borrower or by including a notice in the periodic statement of accounts sent to the Borrower or by any other modes deemed fit and proper by the Bank; and

5.1.2        in respect of the margin of interest imposed above the Base Lending Rate and/or Cost of Funds of the Bank and/or commissions by serving a notice in writing (which notice may be included in the periodic statements of account sent to the Borrower) on the Borrower of such change and such notice shall be deemed to have been sufficiently served on the Borrower if sent by ordinary mail to the Borrower’s usual or last known place of residence/business or to the address abovestated;

PROVIDED ALWAYS that the effective date of the change of the Base Lending Rate and/or margin of interest imposed above the Base Lending Rate and/or Cost of Funds and/or in the commissions or the other rates of interest chargeable shall be the date stipulated by the Bank at its sole absolute discretion.  And notwithstanding anything hereinbefore contained, any delay or failure on the part of the Bank to give notice in accordance with the provisions herein contained shall not absolve the Borrower from its obligation to pay the rate of interest and/or commissions determined by the Bank and such rate of interest so determined by the Bank shall be payable from such date as the Bank shall in its sole and absolute discretion stipulate.

5.2           The Bank shall be entitled at any time at its sole and absolute discretion with or without notice to the Borrower and without assigning any reason to change the fundamental basis of calculation of the Prescribed Rate (whether it be the Base Lending Rate, Cost of Funds or any other basis by whatsoever name called).

6.             CAPITALISATION OF INTEREST  

Interest commission and fees remaining unpaid at the time when it shall become due and payable and all costs charges expenses and other moneys due and payable shall be added to the principal amount advanced under the Banking Facility and thereafter be treated as principal and be chargeable with interest at such rate at which interest shall from time to time and at any time be payable under this Letter of Offer. For the purpose of ascertaining whether the limit of the Banking Facility intended to be advanced or secured has been exceeded or not, all accumulated and capitalised interest shall be deemed to be interest and not principal.

4

7.             EVENTS OF DEFAULT

All monies outstanding under the Banking Facility together with interest thereon and all other monies relating thereto shall become immediately repayable by the Borrower upon demand being made by the Bank or upon the occurrence of any of the following events: -

7.1           the Borrower defaults in the payment of any money payable to the Bank after the same shall have become due whether formally demanded or not;

7.2           the Borrower defaults under any other provision herein which is not capable of remedy or which, being capable of remedy, is not remedied within fourteen (14) days after being required to do so by the Bank;

7.3           any representation, warranty or condition made or implied by the Borrower herein is incorrect or misleading in any material respect;

7.4           any license, authorisation, approval, consent or permit which is required for the Borrower’s business or the performance of the Borrower’s obligations hereunder is revoked or withheld or modified or is otherwise not granted or fails to remain in full force and effect;

7.5           any of the Borrower’s indebtedness or the indebtedness of any of the Security Party becomes capable, in accordance with the relevant terms thereof, of being declared due prematurely by reason of a default by the Borrower or such Security Party of their respective obligations in respect of the same or the Borrower or any of the Security Party fail to make payment in respect thereof on the due date for such payment or if due on demand when demanded or the security for any such indebtedness becomes enforceable;

7.6           a petition be presented or an order be made or a resolution be passed for the Borrower’s winding-up or the winding up of any of the Security Party which is a body corporate;

7.7           a receiver and/or manager or liquidator is appointed to take possession of the Borrower’s properties or undertaking or the properties or undertaking of any of the Security Party which is a body corporate;

7.8           the Borrower or any of the Security Party which is a body corporate ceases or threatens to cease to carry on all or a substantial part of the Borrower’s business or  the Security Party’s business;

7.9           any judgment is obtained against the Borrower or any of the Security Party and no appeal against such judgment has been made to the appropriate appellate court within the time prescribed by law;

7.10         the Borrower or any of the Security Party who is an individual person commits any act of bankruptcy or becomes bankrupt or shall die or become insane;

7.11         if the Bank shall in its sole discretion consider that the Banking Facility or any of its security or its security position  in relation to the repayment of the Banking Facility to be in jeopardy; and

7.12         any other event or series of events whether related or not has or have occurred which in the opinion of the Bank (after discussion with the Borrower) could or might affect or prejudice the ability or willingness of the Borrower to comply with all or any of the Borrower’s obligations hereunder.

8.             ILLEGALITY

If the Bank determines that the introduction or variation of any law, regulation or official directive (whether or not having the force of law) or any change in the interpretation or application thereof makes it unlawful for the Bank to maintain, fund or give effect to its obligations hereunder, the Bank shall forthwith give notice of such determination to the Borrower whereupon the Banking Facility to such extent shall be cancelled and the Borrower will forthwith upon notice from the Bank repay all monies outstanding under the Banking Facility together with interest thereon and all other monies agreed to be paid by the Borrower hereunder.

5

9.             INCREASED COSTS

Where the Bank determines that, as a result of the introduction or variation of any law, order, regulation or official directive (whether or not having the force of law), or any change in the interpretation or application thereof by any competent authority, or compliance with any request (whether or not having the force of law) from Bank Negara Malaysia or other fiscal, monetary or other authority, the cost to the Bank of making available or continuing to make available the Banking Facility is increased or the amount of any sum received or receivable by the Bank in respect of the Bank making or continuing to make available the Banking Facility or the effective return to the Bank under the Banking Facility is reduced or the Bank is obliged to make any payment (except in respect of tax on the Bank’s overall net income) or forego any interest or other return on, or calculated by reference to, the amount of any sum received or receivable by the Bank from the Borrower under the Banking Facility, then the Bank shall notify the Borrower of the circumstances leading to the Bank’s determination and: -

9.1           the Borrower shall on demand pay to the Bank such reasonable amounts as the Bank may from time to time and at any time notify the Borrower to be necessary to compensate the Bank for such additional cost, reduction, payment or foregone interest or return provided that nothing  herein contained shall prevent the Borrower from taking all necessary steps to mitigate the effect of such increased cost; and

9.2           at any time thereafter, so long as the circumstances giving rise to the obligation to make the compensating payment continue, the Borrower may upon giving the Bank not less than thirty (30) days’ notice, cancel the Banking Facility.  

10.          MARKET DISRUPTION

If in the opinion of the Bank, there has, since the date of this offer, been a change in national or international monetary, financial, economic or political conditions or currency exchange rates or exchange control which would render the Banking Facility temporarily or permanently commercially impracticable or impossible, the Bank shall notify the Borrower thereof, and: -

10.1         whilst such circumstances exist, no utilisation of the Banking Facility will be allowed;

10.2         the Bank shall negotiate in good faith for an alternative basis acceptable to the Bank for continuing the Banking Facility; and

10.3         unless within thirty (30) days after the giving of such notice such circumstances cease to exist or an alternative basis acceptable to the Bank is arrived at, the Banking Facility shall be cancelled.  

11.          LEGAL AND INCIDENTAL EXPENSES

The Borrower shall pay all legal fees and incidental expenses in connection with the preparation, stamping and registration of any security documents required by the Bank hereunder even though the said documents are not executed by the Borrower for any reason whatsoever. If any money payable under the Banking Facility is required to be recovered through any process of law, the Borrower shall be liable to pay the Bank's solicitors' fees (on a solicitor and client basis) and any other fees and expenses incurred in respect of such recovery.

12.          WAIVER AND INDULGENCE

The terms and conditions herein may be waived by the Bank in whole or in part with or without conditions at the discretion of the Bank without prejudicing the rights of the Bank hereunder and any failure by the Bank to enforce any of the provisions hereunder or any forbearance delay or indulgence granted by the Bank to the Borrower shall not be construed as a waiver of the Bank’s rights hereunder.

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13.          BANKING AND FINANCIAL INSTITUTIONS ACT, 1989

The approval of the Banking Facility to the Borrower shall be upon the condition that the Bank will not breach or contravene any law legislation or regulation including, without limiting the generality of the foregoing, the provisions of Section 62 of the Banking And Financial Institutions Act, 1989 or any other provisions thereof. In the event any such relationship is established or discovered now or in the future the Bank reserves the right forthwith to terminate and recall the Banking Facility.

14.          DUTY TO VERIFY STATEMENTS OF ACCOUNTS/CERTIFICATE OF BANK

The Borrower shall verify all statements of accounts sent to the Borrower by the Bank and immediately revert to the Bank in the event of any discrepancy in such statements of accounts failing which they shall be deemed to be conclusive and binding against the Borrower. A statement by the Bank and signed by any of its officers as to what at any time is the amount outstanding and rate of interest chargeable shall, save for manifest errors be final and conclusive and shall not be questioned by the Borrower on any account whatsoever.  

15.          SET OFF/COMBINATION OR CONSOLIDATION OF ACCOUNTS

15.1         The Bank shall be entitled (but shall not be obliged) at any time and without notice to the Borrower to combine, consolidate or merge all or any of the Borrower’s accounts and liabilities with and to the Bank anywhere whether in or outside Malaysia, alone or jointly with any other person and may transfer or set off any sums in credit in such accounts in or towards satisfaction of any of the Borrower’s liabilities whether actual or contingent, primary or collateral notwithstanding that the credit balances on such accounts and the liabilities on any other accounts may not be expressed in the same currency and the Bank is hereby authorised to effect any necessary conversions at the Bank’s own rate of exchange then prevailing.

15.2         Without prejudice to the generality of the above, the Bank further reserves the right at any time and without notice to the Borrower to debit any of the Borrower’s accounts (whether in credit or debit) with the Bank for all payments due and payable by the Borrower howsoever to the Bank.  

16.          SUSPENSE ACCOUNT

Any money received by the Bank in respect of the Banking Facility may be kept to the credit of a suspense account for so long as the Bank thinks fit without any obligation in the meantime to apply the same or any part thereof in or towards settlement of any liabilities due by the Borrower to the Bank. 

xxxxxxxxx END OF ANNEXURE xxxxxxxxxx

7

RHB BANK BERHAD
(6171-M)

ANNEXURE IA

ADDITIONAL GENERAL TERMS AND CONDITIONS

1.             During the tenor of the Banking Facility the Borrower shall: -

(i)            permit at all times the Bank, its officers, servants and/or agents to inspect all records of the Borrower at any office, branch or place of business of the Borrower or elsewhere and all records kept by any other authorities or persons in so far as such records relate to or affect the businesses and the properties of the Borrower and for the purpose of such inspection, give to or procure for the Bank and any officer, servant and/or agent of the Bank such written authorisations as may be required by the Bank;

(ii)                 notify the Bank in the event the Borrower creates any form of charge, mortgage, debenture, pledge, lien, encumbrances or security interest of whatever nature or permit to exist any caveat or prohibitory order or both in respect of any of the Borrower’s properties;

(iii)                ensure that all loans or advances from its directors, shareholders and Related Corporation are subordinated to the Indebtedness;

(iv)               in the event the Borrower or any of its subsidiaries or related companies (present and future) (“the Borrower Group of Companies) requires any banking, financial, investment and/or advisory products or services (collectively “the Products”) which is offered by the RHB Capital Berhad Group of Companies in its normal course of business, the Borrower shall offer or cause the Borrower Group of Companies to offer the relevant RHB Capital Berhad Group of Companies the right of first refusal to provide the Products to the Borrower or the Borrower Group of Companies; and

(v)                 notify the Bank of any change in the Borrower’s Board of Directors or its management.

2.             During the tenor of the Banking Facility the Borrower will not, without the prior written consent of the Bank: -

(i)                   enter into any partnership, profit-sharing or royalty agreement whereby the Borrower’s income or profits are, or might be, shared with any other person, firm or company; 

(ii)                 enter into any management contract or similar arrangement whereby the Borrower’s business or operations are managed by any other person, firm or company;

(iii)                lend or make advances  to any person other than in the normal course of business;

(iv)               lend or make advances  to any person other than to its subsidiaries or related companies (both as defined in the Companies Act, 1965);

(v)                 create any form of charge, mortgage, debenture, pledge, lien, encumbrances  or security interest of whatever nature or permit to exist any caveat or prohibitory order or both in respect of any of the Borrower’s properties;

(vi)               declare and pay any dividend or other distribution whether of an income or capital nature (but such consent of the Bank will not be unreasonably withheld); and

(vii)              change the Borrower’s major or controlling shareholding or partnership structure.

xxxxxxxxx END OF ANNEXURE xxxxxxxxxx

2

RHB BANK BERHAD
(6171-M)

ANNEXURE II

  TERMS AND CONDITIONS RELATING TO OVERDRAFT FACILITY (“OD FACILITY”)

(i)            Utilisation of the OD Facility shall be in such manner as the Bank may from time to time prescribe and in accordance with the normal usages and practices of banking in Malaysia.

(ii)           The Borrower’s overdraft account must be operated actively and within the approved limit at all times and the Bank reserves the right to close the said account and to recall the OD Facility in the event the Borrower’s account is blacklisted under the Biro Maklumat Cek (BMC) guidelines.

xxxxxxxxx END OF ANNEXURE xxxxxxxxxx

2

RHB BANK BERHAD
(6171-M)

ANNEXURE III

TERMS AND CONDITIONS RELATING TO REVOLVING CREDIT FACILITY (“RC FACILITY”)

(i)            Subject to the availability of funds, each Drawing shall be made upon receipt by the Bank of a Drawdown Notice substantially in the form prescribed by the Bank in Schedule 1 below and shall be for one of the Interest Periods stated in the Letter of Offer. The Drawdown Notice must be received at least three (3) business days before the intended drawdown date.

(ii)           During the tenor of the RC Facility the Borrower may, by giving to the Bank a Rollover Notice in the form prescribed by the Bank in Schedule 2 below, request a rollover of a Drawing for the duration of a further Interest Period as provided in the Letter of Offer and the Bank may upon receipt of the Rollover Notice and subject to the availability of funds rollover such Drawing for the further Interest Period selected by the Borrower PROVIDED THAT: -

(a)           the Rollover Notice shall have been received by the Bank at least three (3) business days before the last day of the Interest Period for the Drawing requested to be rolled over;

(b)           all accrued interest on the said Drawing shall have been paid.

(iii)          Notwithstanding anything herein or in the Letter of Offer contained, the Bank reserves the right to limit the Interest Period of a Drawing or a rollover of a Drawing to such period as the Bank may determine and further in addition thereto the Bank shall be at liberty at its sole and absolute discretion without having to give any reasons therefor refuse to rollover a Drawing despite having received a Rollover Notice from the Borrower.

2

SCHEDULE 1

RC Facility Drawdown Notice

[To be typed onto the letter head of the Borrower]

To           :  RHB Bank Bhd

[Date      :                            ]

Revolving Credit (“RC”) Facility of [ RM                                        ]

We refer to the RC Facility constituted by a *facility agreement/your Letter of Offer dated                 
(the “Facility Agreement”) between (1) ourselves and (2) RHB Bank Berhad (as Lender).  Terms defined or used in the Facility Agreement have the same meanings herein.

We hereby:

(1)           give notice that we wish to make a RC Drawing of RM                                      on the RC Facility on                             having a maturity date [ insert the Interest Period] months after the date of the RC Drawing (the “Maturity Date”);

(2)                 request you to remit the RC Drawing to [ insert details of the relevant account of Borrower];

(3)                 confirm that no Event of Default or any potential Event of Default has occurred and no Event of Default or potential Event of Default would occur if this RC Drawing is made;

(4)                 confirm that there has been no material adverse change in our financial conditions since the date referred to in the Facility Agreement; and

(5)                 confirm that each of the warranties set out in the Facility Agreement remains accurate at the date of this RC Drawing as if given on that date by reference to the facts and circumstances then existing.

Yours faithfully

for and on behalf of

[Name of the Borrower]

By its Authorised Signatory

Name:

3

SCHEDULE 2

RC Facility Rollover Notice

[To be typed onto the letter head of the Borrower]

To           :  RHB Bank Bhd

[Date      :                            ]

Revolving Credit (“RC”) Facility of [ RM                                        ]

We refer to the RC Facility constituted by *a facility agreement/your Letter of Offer dated                 
(the “Facility Agreement”) between (1) ourselves and (2) RHB Bank Berhad (as Lender).  Terms defined or used in the Facility Agreement have the same meanings herein.

We hereby:

(1)            give notice that we wish to rollover a RC Drawing of Ringgit Malaysia ____________  (RM _______) on _____________, the Rollover is to have a maturity date [ insert the Interest Period] months after the date of the Rollover;

(2)           confirm that no Event of Default or any potential Event of Default has occurred and no Event of Default or potential Event of Default would occur if this Rollover is made;

(3)           confirm that there has been no material adverse change in our financial conditions since the date referred to in  the Facility Agreement; and

(4)           confirm that each of the warranties set out in the Facility Agreement remains accurate at the date of this RC Drawing as if given on that date by reference to the facts and circumstances then existing.

Yours faithfully

for and on behalf of

[Name of the Borrower]

By its Authorised Signatory

Name:

xxxxxxxxx END OF ANNEXURE xxxxxxxxxx

4

RHB BANK BERHAD
(6171-M)

ANNEXURE IV   

LETTER OF CREDIT FACILITY (“LC FACILITY”) AND TRUST RECEIPT FACILITY (“TR FACILITY”)

(i)                   The LC and/or TR Facility may be utilised by signing the Bank’s application form.

(ii)           No utilization of the LC and/or TR Facility will be permitted if, following such utilization, the aggregate of all the sums outstanding in respect of the LC and/or TR Facility and other trade facilities of which the LC and/or TR Facility forms a part would exceed the aggregate limit prescribed by the Bank or any sub-limit specifically imposed by the Bank for the LC and/or TR Facility unless the Bank shall agree to the contrary.

xxxxxxxxx END OF ANNEXURE xxxxxxxxxx

2

RHB BANK BERHAD
(6171-M)

ANNEXURE V

BANKERS ACCEPTANCE FACILITY (“BA FACILITY”)

(i)                   No Bankers Acceptance shall have a tenor of less than twenty-one (21) days or such other period as the Bank may specify from time to time or exceed the period as stated in the Letter of Offer.

(ii)                 The acceptance by the Bank of the Bankers Acceptance drawn by the Borrower is at the sole discretion of the Bank.

(iii)          No Bankers Acceptance shall be issued by the Bank if, following such issue, the aggregate of all the sums outstanding in respect of the BA Facility and other trade facilities of which the BA Facility forms a part thereof would exceed the aggregate limit prescribed by the Bank or any sub-limit specifically imposed by the Bank for the BA Facility unless the Bank shall agree otherwise.

xxxxxxxxx END OF ANNEXURE xxxxxxxxxx

2

RHB BANK BERHAD
(6171-M)

ANNEXURE VI

BANKERS GUARANTEE(“BG”) / SHIPPING GUARANTEE(“SG”) FACILITY

(i)                   Any shipping or bankers guarantee to be issued by the Bank shall be in such form and shall contain such terms as the Bank may at its sole and absolute discretion deem fit.

(ii)                 There shall be no refund by the Bank of any commission paid by the Borrower to the Bank upon any early cancellation or release or premature return of any shipping or bankers guarantee.

(iii)                No shipping or bankers guarantee shall be issued by the Bank if, following such issue, the aggregate of all the sums outstanding in respect of the SG Facility and/or the BG Facility and other trade facilities of which the SG Facility and/or the BG Facility forms a part thereof would exceed the aggregate limit prescribed by the Bank or any sub-limit specifically imposed by the Bank for the SG Facility and the BG Facility unless the Bank shall agree otherwise.

(iv)               In the event that the Bank shall be required to make any payment under or pursuant to or arising from any shipping or bankers guarantee issued by the Bank pursuant to the SG Facility or the BG Facility, the Borrower shall pay interest to the Bank at the applicable Default Rate (both before as well as after judgment or demand) on all moneys paid by the Bank commencing from the date such moneys are first paid out by the Bank up to the date of the Bank’s actual receipt of the full amount thereof from the Borrower.

xxxxxxxxx END OF ANNEXURE xxxxxxxxxx

2

RHB BANK BERHAD
(6171-M)

ANNEXURE VII

Bills Purchased FacilitY (“BP Facility’’)

(i)                   The Borrower may present foreign/domestic bills to the Bank for purchase and the Bank may as its sole and absolute discretion purchase such bills offered by the Borrower under the BP Facility.

(ii)                 Without prejudice and in addition to any rights or remedies which the Bank may be entitled to, the Bank may, at its sole and absolute discretion debit the Borrower’s current or overdraft account maintained with the Bank with the face value of the  bills purchased by the Bank under the BP Facility which has been returned to the Bank unpaid and the Borrower hereby irrevocably and unconditionally consents to the Bank so doing and such amounts debited shall become immediately due and payable and failing payment, interest at the applicable Default Rate, shall be charged from the due date until the date the Bank receives full payment (both before as well as after judgment or demand).

(iii)          The Borrower acknowledges and accepts that notwithstanding any other provision to the contrary, the Bank reserves the right not to accept any bill drawn or issued by the Borrower for payment under the BP Facility at the Bank’s sole and absolute discretion.

xxxxxxxxx END OF ANNEXURE xxxxxxxxxx

2

RHB BANK BERHAD
(6171-M)

ANNEXURE VIII

EXPORT CREDIT REFINANCING FACILITY (“ECR FACILITY”)

(i)            The Borrower may, subject to the provisions of this Letter of Offer, utilise the ECR Facility (Pre-Shipment/Post-Shipment) in such manner and upon such conditions as the Bank may from time to time prescribe.

(ii)           Notwithstanding the aforesaid utilisation of the ECR Facility is subject to EXIM Bank’s guidelines as amended from time to time.

(iii)          The Borrower shall not utilize the ECR Facility (Pre-Shipment/Post-Shipment) if upon such utilization, the aggregate of all the sums outstanding in respect of the ECR Facility (Pre-Shipment/Post-Shipment) and other trade facilities of which the ECR Facility (Pre-Shipment/Post-Shipment) forms a part thereof would exceed the aggregate limit prescribed by the Bank or any sub-limit specifically imposed by the Bank for the ECR Facility (Pre-Shipment/Post-Shipment) unless the Bank shall agree otherwise.

xxxxxxxxx END OF ANNEXURE xxxxxxxxxx

RHB BANK BERHAD
(6171-M)

ANNEXURE IX

TERMS AND CONDITIONS ON FOREIGN EXCHANGE DEALING & SETTLEMENT

1.0      DEFINITIONS

1.1           In these Terms and Conditions the following terms shall have the meaning assigned thereto as follows:-

1.1.1        “Acceptable Currency” means any currency at any relevant time acceptable to the Bank.

1.1.2            “Account” means that account or accounts opened by the Customer with the Bank, whether current or otherwise, and into which all amounts payable or receivable in respect of any Foreign Exchange Contract shall be credited or debited respectively.

1.1.3            “Contract Loss” means all losses, including but not limited to funding costs and loss of bargain suffered by the Bank, upon termination of any Foreign Exchange Contract.

1.1.4            “Cost of Funds” means the cost to the Bank of obtaining deposits from whatever sources to fund the Foreign Exchange Contract Line, plus the cost of maintaining statutory reserves and complying with liquidity and other requirements imposed from time to time and at any time by Bank Negara Malaysia or other appropriate authorities.

1.1.5            “Foreign Exchange Contract” means value today, value tomorrow, spot and forward foreign exchange contracts.

1.1.6            “Foreign Exchange Contract Line (FXCL)” is defined as a limit established by the Bank for a Customer to govern the outstanding amount of Spot and/or Forward Foreign Exchange contracts concluded with the Bank.

1.1.7            “Forward Foreign Exchange Contract” is defined as a contract for the purchase or sale of foreign currency for delivery after two (2) business days but not exceeding twelve (12) months delivery from the date of the deal, including outright forward contracts, swaps, futures, options, financial derivatives and any other arrangement to obtain a foreign currency, whether settlement is to be made in full or on a net basis.  Notwithstanding the aforementioned, the term “Forward Foreign Exchange Contract” shall also include foreign exchange contracts where the tenure exceeds twelve (12) months and is in compliance with ECM 2 of the Foreign Exchange Administration Rules of Malaysia (“ECM”) Notices.

1.1.8            “Maturity Date” means the date on which a Customer is contractually obliged to settle its obligations under a Foreign Exchange Contract.

1.1.9            “Historical Rate” means the buying/selling spot or forward rate then applicable for a sale/purchase contract quoted by the Bank as at the date of concluding such contract.

1.1.10         “Prevailing Market Rate” means, on any day, the prevailing buying/selling spot or forward rate for a sale/purchase contract quoted by the Bank on such day.

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1.1.11         “Rollover” means an extension of a Forward Foreign Exchange Contract to mature at another future date.

1.1.12         “Same Day Settlement” refers to the simultaneous settlement of Foreign Exchange Contract transactions on value date at different locations without taking into account of time zone differences.

1.1.13         “Settlement Limit” refers to the daily maximum Foreign Exchange Contract amount that the Bank is willing to settle with a Customer on any one business day.

1.1.14         “Spot Foreign Exchange Contract” is defined as a contract for the purchase or sale of foreign currency where delivery is two (2) business days from the date of the deal.

1.1.15         “Threshold Amount” means when a maturing Forward Foreign Exchange Contract is closed out on the relevant Maturity Date by using the Prevailing Market Rate, the difference between the amount which would have been payable for the Forward Foreign Exchange Contract had the same been closed out by using the Historical Rate and the amount payable for the Forward Foreign Exchange Contract calculated at the Prevailing Market Rate.

1.2           In these Terms and Conditions, unless there is something in the subject or context inconsistent with such construction or unless it is otherwise expressly provided, any reference to the singular shall include the plural and vice versa.

2.0      DOCUMENTARY REQUIREMENTS

2.1          To deal in Foreign Exchange Contracts, Customer must provide the Bank with its Directors’ Resolution confirming: -

2.1.1        that all verbal, fax or written instructions to the Bank on Foreign Exchange Contracts shall be valid and binding instructions to the Bank; and

2.1.2        the appointment of personnel (to be named therein) whose specimen signatures are to be provided therein, and who are thereby authorised to give instructions on Foreign Exchange Contracts, money market transactions, funds transfer and settlement (Note : The Bank must be notified immediately, in writing, of any changes to this list).

3.0      BUSINESS HOURS

3.1       Customer may deal in Foreign Exchange Contracts with the Bank within the Bank’s business hours in Kuala Lumpur (i.e. from 9.00 a.m. to 5.00 p.m.) on any day other than Saturdays, Sundays and public holidays in Kuala Lumpur (“Business Hours”).  The Bank reserves the right to vary the Business Hours at its absolute discretion without prior notice to the Customer.

4.0      COMPLIANCE WITH FOREIGN EXCHANGE ADMINISTRATION RULES OF MALAYSIA (ECM) NOTICES

4.1           Customer shall comply with requirements stipulated in the ECM Notices issued by Bank Negara Malaysia (“BNM”) from time to time, particularly ECM 2 as well as the ECM Notices pertaining to Rollover of Forward Foreign Exchange Contracts, and shall bear the consequence(s) arising thereof if there is a contravention. 

4.2           Prior to entering into a Foreign Exchange Contract and unless the Bank agrees otherwise, the Customer shall be required to furnish the Bank with evidence of its compliance with the ECM requirements and such documents shall include, but not be limited to, documents as shall be necessary to evidence a firm underlying commitment to transact in foreign currency funds, for any Foreign Exchange Contract that has been established.

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4.3       If Customer is exempted from the requirements specified in ECM Notices, Customer shall provide the Bank proof of such exemption from Bank Negara Malaysia prior to any dealing.

5.0      DEALING

5.1           Procedures

5.1.1            All Foreign Exchange Contract dealings between the Bank’s authorised dealer or officer and the Customer shall be conducted by telephone or such other mode as may be stipulated by the Bank.  An irrevocable and binding contract shall be deemed concluded once the terms of the Foreign Exchange Contract have been verbally agreed upon by the Customer or in the case of Foreign Exchange orders, once the Bank verbally confirms the status of fulfilled Foreign Exchange orders, and the Customer shall honour the deal on the relevant Maturity Date.

5.1.2            Pursuant to Clause 5.1.1 above, the Customer hereby acknowledges confirms and agrees that all verbal exchanges and confirmations with the Bank shall be recorded by the Bank and that such recordings shall be admissible in court as evidence of the Foreign Exchange order placed and/or Foreign Exchange Contract concluded in the manner set out above.  In the event of any dispute, the Bank shall be entitled to rely on the use of recorded conversation between the Customer and the Bank as evidence to substantiate its stand on the dispute.

5.1.3            The Bank will send a confirmation advice to the Customer (“Confirmation Advice”) by facsimile transmission or by post, on the Forward Foreign Exchange Contract concluded or upon the confirmation of fulfilled Foreign Exchange orders, in the manner set out in Clause 5.1.1 above, for the Customer’s acknowledgement.  The Customer’s acknowledgement of the Confirmation Advice on the copy thereof or any notification of any discrepancy in the Confirmation Advice (which shall be conveyed to the Bank in writing) must be faxed or sent by the Customer to the Bank’s Treasury Operations Department not later than 5 p.m. of the following day on which the Bank is open for business, failing which all the information contained in the Confirmation Advice shall be deemed to be correct and binding on the Customer.

5.1.4            It is hereby agreed between the parties that the Customer’s execution of the fax copy of the Confirmation Advice which is faxed back to the Bank shall be admissible in court as evidence of the acceptance of the same and shall be considered an original and primary document.  It is further agreed that a good transmission report generated by the facsimile of either party shall be deemed good service and simultaneous receipt thereof.

5.1.5            Any omission, failure and/or delay by the Bank or the Customer to follow the procedures set out in this Clause 5.1 shall not affect or prejudice the rights and remedies of the Bank under the contract concluded in the manner set out in Clause 5.1.1 above.

5.2       Independent Judgment

5.2.1        The Customer hereby acknowledges and confirms that each Foreign Exchange Contract has been or will be entered into in reliance only upon its own independent judgment

5.2.2        The Customer further agrees that it shall be solely and fully responsible for monitoring its position(s) at all times and the Bank shall not be held liable to the Customer for any loss, damage, expense or liability incurred by the Customer if the Bank does not notify the Customer of its current position(s) and/or of any loss or potential loss or reduction in value in any security or of any matter or thing whatsoever.

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5.3       Liability For Loss

The Bank shall not be held liable or responsible for any loss or damages (including without limitation loss of income, profits, direct or indirect, consequential or special damages), expenses or liabilities whatsoever and howsoever incurred or sustained by the Customer arising out of or in connection with the Customer’s dealing in Foreign Exchange Contract with the Bank.

6.0      ROLLOVER

6.1       Conditions

6.1.1            Any request for Rollover of a Forward Foreign Exchange Contract upon maturity must be received by the Bank’s authorised dealer or officer not later than 2.00 p.m. on the relevant Maturity Date, together with valid reasons to support such request for an extension. The Bank reserves the absolute right to refuse a Rollover without assigning any reason therefore.

6.1.2            The new Forward Foreign Exchange Contract shall be rolled over at the Prevailing Market Rate except where the Threshold Amount is RM10,000-00 or less , in which event, the Forward Foreign Exchange Contract may be rolled over at the Historical Rate.  Cash settlement shall not take place where Rollover is at the Historical Rate and the Customer hereby indemnifies the Bank against any losses (including but not limited to funding cost) arising from the difference in the exchange rates.

6.1.3            Where Rollover is at the Prevailing Market Rate, cash settlement of the Threshold Amount must be effected on the Maturity Date.

6.1.4            The Bank shall mark to market the Forward Foreign Exchange Contract from time to time to monitor the potential losses/gains of the Customer. If on Rollover the Customer incurs a loss, the loss will be debited to the Customer’s Account and the Customer agrees that the Bank’s determination/calculation in this matter shall be final and binding on the Customer.

7.0      PAYMENTS

7.1           All payments due to the Bank under these Terms and Conditions shall be in cleared funds and must be received by the Bank before the close of business of the Bank in Malaysia on the due date in the currency in which the advances by the Bank is denominated or such currency as specified by the Bank.  Payments due must be made in full and without any deduction, counterclaim, set-off or withholding, including but not limited to any taxes, charges, commissions (particularly in the case of outstation remittances) or duties payable, exchange costs/losses in respect thereof and/or any charges passed on to the Bank.

7.2       In the event any amount payable by the Customer under any Foreign Exchange Contract or these Terms and Conditions (including without limitation, any Contract Loss) has not been paid, the Bank shall be entitled on such date to debit the Account in such amount in the Acceptable Currency, at a rate of exchange to be determined by the Bank provided that no debiting shall be deemed to be a payment of the amount due (except to the extent of any amount in credit in the Account) or a waiver of any event of default to pay hereunder. The Customer hereby agrees and undertakes to maintain sufficient funds in the Account for the aforesaid purpose.

7.3       Where such debiting as provided for in Clause 7.2, results in the Account being overdrawn, the Customer shall pay interest on the overdrawn amount(s) at such rate of interest as may be determined by the Bank from time to time with respect to the overdrawn amounts. 

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8.0      CANCELLATION

8.1       The Bank reserves the right to cancel any Foreign Exchange Contract which in its opinion contravenes the provisions of ECM Notices. The Customer may also cancel a concluded Foreign Exchange Contract by giving written notice with reasons for such cancellation to the Bank. Such notice may be sent to the Bank via facsimile transmission. Any losses arising from such cancellation whether by the Bank or the Customer shall be borne solely by the Customer.

9.0      SETTLEMENT

9.1           The Bank may establish a Settlement Limit for Customer to govern all Foreign Exchange Contract dealings and Same Day Settlement shall be subject to the availability of the Customer’s Same Day Settlement Limit (if any). 

9.2           Complete settlement instructions in writing and duly signed by an authorised person of the Customer must be given to the Bank before the relevant cut-off time (as shall be notified by the Bank to the Customer).  Remittance of funds shall also be subject to prior receipt of cash settlement from the Customer under the relevant Foreign Exchange Contract before 12.00 p.m. on the Maturity Date or such other time as may be notified by the Bank from time to time, failing which the Bank shall not be obliged to effect any remittance in accordance with the settlement instructions.

9.3           If settlement instructions reach the Bank after the stipulated cut-off time, the Bank shall only remit funds on a best effort basis. The Bank shall not be responsible for and the Customer shall keep the Bank fully indemnified against all losses, costs expenses or interest charges (if any) arising out of or in connection with the same.

10.0    COST, EXPENSES AND INDEMNITY

10.1        The Customer shall on demand, pay to the Bank all costs losses and expenses incurred or to be incurred by the Bank in connection with the Foreign Exchange Contract Line and/or any Foreign Exchange Contract (including all legal fees on a solicitor-client basis, stamp, documentary and other duties and taxes and any penalty in respect thereof, where applicable), including the processing, implementation, completion and/or enforcement of the Bank’s rights thereunder.

10.2        The Customer hereby agrees to indemnify, defend and hold the Bank harmless against any and all claims demands suits actions judgments damages costs losses expenses (including legal fees and expenses on a solicitor and client basis) and other liabilities whatsoever and howsoever caused that may arise or be incurred by the Bank in connection with: -

10.2.1         the Customer’s default negligence failure or omission (including but not limited to the provision of inaccurate misleading erroneous and/or fraudulent information and/or instructions) in performing and observing any of its obligations under these Terms and Conditions and/or any Foreign Exchange Contract, in particular the Customer’s obligations to honour the Foreign Exchange Contract on the relevant Maturity Date and/or under Clause 9.3 herein;

11.0    REMEDIES

11.2     If performance by the Bank of any Foreign Exchange Contract shall be delayed beyond the control of the Bank, the time for performance by the Bank shall be extended by a period equal to that during which performance shall be so delayed.

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13.1     The Bank reserves the right to amend and/or waive any of these Terms and Conditions in part or in whole at any time and from time to time, at its absolute discretion or arising from new guidelines implemented by The Association of Banks in Malaysia and/or Bank Negara Malaysia.  Any waiver by the Bank shall be without prejudice to the right of the Bank to assert such Terms and Conditions in whole or in part at any time or from time to time thereafter.

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