EXHIBIT 10.2
SUBSCRIPTION AGREEMENT
TOR Minerals
International, Inc.
722 Burleson Street
Corpus Christi, Texas 78402
Dear Mr.
Paulson:
The undersigned (the "Subscriber") understands that TOR Minerals
International, Inc., a Delaware corporation (the "Company"), in
connection with the proposed extension and refinancing of its
credit arrangements with Bank of America, N.A. (the "Bank")
described in Section 6(b)(iii) below, is offering for sale units
(the "Units"), each consisting of an aggregate principal amount of
$25,000 of its 6% Convertible Subordination Debentures due May 4,
2016 (the "Debentures").
The Company will pay interest on the Debentures at the per annum
rate of 6%, which will be quarterly on August 4, November 4,
February 4 and May 4 of each year, commencing on August 4,
2009. The Company will make annual payments of principal
beginning May 4, 2012 in the amount of one-sixteenth of the
original principal amount of the Debentures, with the remaining
outstanding principal balance and all accrued and unpaid interest
to be paid on May 4, 2016, the maturity date of the
Debentures. The Company may prepay the Debentures, in whole
or in part, upon 30 days prior notice to the holders thereof if
certain conditions are satisfied. The Debentures comprising a
Unit are convertible into 47,170 shares (the "Debenture Shares") of
the Company's common stock, par value $.25 per share (the "Common
Stock"), subject to adjustments for certain events, at an initial
conversion price of $0.53 per share. The initial conversion
price is determined based on the greater of (i) the consolidated
closing bid price of the Common Stock on the NASDAQ Capital Market
on the trading day immediately preceding the date of the Debentures
plus $0.125, and (ii) $0.53.
In addition, the Company will also issue to the Subscriber of a
Unit warrants (the "Warrants," and together with the Debentures,
the "Securities") to purchase 47,170 shares of Common Stock
("Warrant Shares," and together with the shares issuable upon
conversion of the Debentures, the "Shares"), subject to adjustments
for certain events, at an initial exercise price of $0.53 per
share. The initial exercise price is determined based on the
greater of (i) the consolidated closing bid price of the Common
Stock on the NASDAQ Capital Market on the trading day immediately
preceding the date of the Warrants, and (ii) $0.53.
The Subscriber understands that the offering of the Units (the
"Offering") is being made without registration of the Units under
the Securities Act of 1933, as amended (the "Securities Act"), or
any securities, "blue sky" or other similar laws of any state
("State Securities Laws").
Section 1.
Subscription . Subject to the terms and
conditions hereof, the Subscriber hereby subscribes for and agrees
to purchase the number of Units set forth on Appendix A hereto for
the aggregate purchase price set forth thereon upon acceptance of
this Subscription Agreement by the Company. The Subscriber
hereby agrees that this Subscription Agreement shall be irrevocable
and shall survive the death, dissolution or legal incapacity of the
Subscriber.
Section 2. Payment for
Units . The undersigned has enclosed herewith the
consideration ("Purchase Price") required to purchase the number of
Units subscribed for hereunder. Payment of the Purchase Price
is being made by delivery to the Company of a wire transfer or
check made payable to the Company in the amount shown on Appendix A
hereto in consideration for the Units subscribed.
Section 3. Funds
. If the conditions of the Closing as specified in
Section 4 hereof are not timely satisfied (or waived), this
subscription shall be void and all funds received from Subscriber,
together with any interest earned thereon, shall be promptly
returned to Subscriber.
Section 4. Acceptance
of Subscription . The Subscriber understands and
acknowledges that (a) the Company has the unconditional right,
exercisable in its sole and absolute discretion, to accept or
reject this Subscription Agreement, in whole or in part, (b) the
subscription shall not be valid unless and until accepted by the
Company, (c) this Subscription Agreement shall be deemed to be
accepted by the Company only when it is signed by an authorized
officer of the Company on behalf of the Company, (d)
notwithstanding anything in this Subscription Agreement to the
contrary, the Company shall have no obligation to issue the Units
to any person to whom the issuance of the Units would constitute a
violation of the Securities Act or any State Securities Laws, and
(e) the Company will not accept any subscriptions following the
refinancing of the credit arrangements with the Bank, as determined
in the sole discretion of the Company. The Company will
deliver instruments representing the Units purchased by the
Subscriber to the Subscriber promptly after closing.
Section 5.
Representations and Warranties of the Company .
As of the date hereof, the Company represents and warrants
that:
(a) The Company is duly
incorporated, validly existing and in good standing under the laws
of its state of incorporation, with full power and authority to
conduct its business as it is currently being conducted and to own
its assets. The Company is duly qualified to do business, and
will be in good standing as a foreign corporation authorized to do
business, in all jurisdictions in which a failure to so qualify
would have a material adverse effect on the business condition
(financial or otherwise), earnings, properties, or results of
operations of the Company, taken as a whole.
(b) The Shares underlying
the Warrants, when issued upon exercise of the Warrants in
accordance with the terms thereof, will have been duly authorized
and, when issued and paid for in accordance with the terms set
forth herein, will be duly issued, fully paid and nonassessable
obligations of the Company.
(c) The Shares underlying
the Debentures, when issued upon conversion of the Debentures in
accordance with the terms thereof, will have been duly authorized
and, when issued and paid for in accordance with the terms set
forth herein, will be duly issued, fully paid and nonassessable
obligations of the Company.
Section 6.
Representations and Warranties of the Subscriber .
The Subscriber hereby represents and warrants to and
covenants with the Company and to each officer, director and agent
of the Company as follows:
(a) General .
(i) The Subscriber
has all requisite authority to enter into this Subscription
Agreement and to perform all of the obligations required to be
performed by the Subscriber hereunder.
(ii) The Subscriber is
the sole party in interest and is not acquiring the Units as an
agent or otherwise for any other person.
(b) Information
Concerning the Company .
(i) The Subscriber
is familiar with the financial condition and proposed business,
properties, operations and prospects of the Company and its
subsidiaries, and, at a reasonable time prior to the execution of
this Subscription Agreement, has been afforded the opportunity to
ask questions of and received satisfactory answers from the
Company's officers and directors, or other persons acting on the
Company's behalf, concerning the financial condition and proposed
business, properties, operations and prospects of the Company and
concerning the terms and conditions of the offering of the Units
and has asked such questions as it desires to ask and all such
questions have been answered to the full satisfaction of the
Subscriber.
(ii) The Subscriber
understands that, unless the Subscriber notifies the Company in
writing to the contrary before the Closing, all the representations
and warranties contained in this Subscription Agreement will be
deemed to have been reaffirmed and confirmed as of the Closing,
taking into account all information received by the Subscriber.
(iii) The Subscriber
understands that the purchase of the Units involves various risks,
including, the risk that he, she or it may lose his, her or its
entire investment in the Company. In particular, the
Subscriber is aware that (A) the Bank, the Company's principal
lender for its U.S. operations, has notified the Company of its
decision to terminate its credit agreement with the Company and
require the Company to pay off all of its outstanding debt to the
Bank, (B) the Company does not have the cash resources to discharge
this indebtedness as required nor does the Company have an
alternative financing source to enable it to refinance this
indebtedness, and (C) this Offering is a condition of the Bank for
an extension of the maturity of this indebtedness.
(iv) No representations or
warranties have been made to the Subscriber by the Company as to
the tax consequences of this investment, or as to profits, losses
or cash flow which may be received or sustained as a result of this
investment.
(v) All documents,
records and books pertaining to a proposed investment in the Units
which the Subscriber has requested have been made available to the
Subscriber.
(c) Status of the
Subscriber .
(i) The Subscriber
represents that the Subscriber is (CHECK EACH CATEGORY OF
"ACCREDITED INVESTOR" BELOW, IF ANY, WHICH IS APPLICABLE TO THE
SUBSCRIBER):
( X) A. a natural person
whose individual net worth, or joint net worth with that person's
spouse, at the time of his or her purchase exceeds $1,000,000;
( ) B. a
natural person who had an individual income in excess of $200,000
in each of the two most recent years or joint income with that
person's spouse in excess of $300,000 in each of those years and
has a reasonable expectation of reaching the same income level in
the current year;
( ) C. a bank
as defined in Section 3(a)(2) of the Securities Act or a savings
and loan association or other institution as defined in Section
3(a)(5)(A) of the Securities Act, whether acting in its individual
or fiduciary capacity; a broker or dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934; an insurance
