Letter of Offer

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: -

1.                    THE BANKING FACILITIES

The banking facilities granted or to be granted to you are as follows:

Facility	Limit/Existing Limit (RM)		Additional/ Reduction (RM)		Total/Revised Limit (RM)
Overdraft / Revolving Credit	1,000,000-00		-		1,000,000-00
Multi-Trade Line comprising Letter of Credit / Trust Receipt / Bankers Acceptance / Shipping Guarantee / Bills Purchased / Export Credit Refinancing (Tenor where applicable is up to 180 days)	9,300,000-00		-		9,300,000-00
Bankers Guarantee	1,200,000-00		-		1,200,000-00
Foreign Exchange Contract Line	15,000,000-00		+ 10,000,000-00		25,000,000-00
Total	26,500,000-00		+ 10,000,000-00		36,500,000-00

(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: -

Facility		Interest Rate
Overdraft	:	Interest at one point two five per centum (1.25%) per annum above the Bank’s BLR with monthly rests.
Revolving Credit	:	Interest at one point two five per centum (1.25%) per annum above the Bank’s Cost of Funds.  [Borrower may select the duration of the interest period (being one (1) or three (3) or six (6) months) (“the Interest Period”) for any drawings or rollovers made under the Revolving Credit Facility].
Letter of Credit	:	Commission at zero point one per centum (0.1%) on the amount of the Letter of Credit for each month (or part of a month) of validity of the credit subject to a minimum charge of RM50-00 for each Letter of Credit issued or at such other rate as may be stipulated by the Association of Banks in Malaysia from time to time.
Trust Receipt	:	Interest at one point two five per centum (1.25%) per annum above the Bank’s BLR.
Bankers Acceptance	:	Acceptance commission of one point zero per centum (1.00%) per annum above the Bank’s Cost of Funds.
Export Credit Refinancing (Pre & Post Shipment)	:	Interest at one point zero per centum (1.0%) per annum above the Funding Rate stipulated by Export-Import Bank of Malaysia Berhad (“EXIM Bank”).
Bills Purchased	:	Interest at one point two five per centum (1.25%) per annum above the Bank’s BLR for local currency bills and at the rate of one point two five per centum (1.25%) per annum above the Bank’s Effective Cost of Funds for foreign currency bills.
Shipping Guarantee	:	Commission at zero point one per centum (0.1%) on the amount of each guarantee subject to a minimum charge of RM50-00 for each guarantee issued. If the guarantee is not returned to the Bank within three (3) months from the issue date, an additional commission of zero point six per centum (0.6%) per annum on the amount of the guarantee shall be charged up to the date of return of the guarantee.
Bankers Guarantee	:	Commission at one point zero per centum (1.0%) per annum on the amount of the guarantee for the full liability period (inclusive of the claims period) subject to a minimum charge of RM100-00 for each Bankers Guarantee issued.

[“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.

7.              REPAYMENT

Notwithstanding any provisions to the contrary, the Banking Facility shall be payable on demand. Until a demand for repayment is made, you shall repay the Banking Facility as follows: -

Facility		Repayment Terms
Overdraft	:	Upon demand or expiry of tenor.
Revolving Credit	:	On the last day of each Interest Period.
Letters of Credit	:	Upon maturity of term of the respective Letters of Credit.
Trust Receipt	:	Upon maturity of term of the respective Trust Receipts.
Bankers Acceptance	:	Upon maturity of term of the respective Bankers Acceptances.
Export Credit Refinancing	:	Upon maturity of term of each drawing.
Foreign Currency Trade Financing	:	Upon maturing of term of each drawing.
Shipping Guarantee	:	On demand.
Bankers Guarantee	:	On demand.

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:

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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.          INFORMATION DISCLOSURE

The Bank shall have the right to provide any information on you and the Banking Facility to: -

11.1     Bank Negara Malaysia, and such other authorities as may be authorised by law to obtain such information;

11.2     companies within the RHB Capital Berhad Group of Companies;

11.3     any Security Party;

11.4     solicitors and/or other agents in connection with the preparation of any facility or security documents hereunder or any action or proceeding for the recovery of monies due and payable hereunder;

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.

Yours faithfully for RHB BANK BERHAD
Lim Kok Fuat Senior Relationship Manager Corporate 2 Corporate Banking Division		Ahmad Rizal Lope Zainal Abidin Vice President Head – Corporate 2 Corporate Banking Division

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.

Signed for and on behalf of TOR Minerals (M) Sdn Bhd
(Name:                                                       ) (Designation:                                           ) (NRIC No. :                                               )		(Name:                                                       ) (Designation:                                           ) (NRIC No. :                                               )

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RHB BANK BERHAD
(6171-M)

RHB Bank Berhad Ref.	:	IPH 900052
Date of Letter of Offer	:	23 November 2005
Borrower	:	TOR Minerals (M) Sdn Bhd

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: -

2.2.1        the Security Document shall have been duly perfected and forwarded to the Bank;

2.2.2        where the  Security Party is a body corporate, such Security Party shall have forwarded to the Bank copies of the following documents: -

                (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;

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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.

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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;

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