The annual meeting of stockholders of Tor Minerals International, Inc., a Delaware corporation, will be held at the Omni Marina Hotel, 707 N. Shoreline, Corpus Christi, Texas in the Padre Ballrooms B & C,, on Friday, May 14, 2004, at 9:00 a.m., local time, for the following purposes:

The board of directors has established the close of business on March 19, 2004, as the record date for determining stockholders entitled to notice of and to vote at the meeting.

This proxy statement and accompanying proxy is furnished by TOR Minerals International, Inc. in connection with the solicitation of proxies by the board of directors to be used at the annual meeting of stockholders to be held at 9:00 a.m. (local time) on May 14, 2004, at the Omni Marina Hotel, 707 N. Shoreline, Corpus Christi, Texas, and at any adjournment thereof. This proxy statement and the enclosed proxy were mailed on or about April 6, 2004.

Our company will bear the cost of soliciting the proxies. In addition to being solicited by mail, proxies may be solicited by personal interview, telephone and telegram by directors, officers and employees of our company. Our company expects to reimburse brokers or other persons for their reasonable out-of-pocket expenses in forwarding proxy material to the beneficial owner.

Any proxy may be revoked at any time prior to its exercise by written notice to the Secretary of our company, by submission of another proxy having a later date or by voting in person at the meeting. No notice of revocation or later dated proxy, however, will be effective until received by our company at or prior to the annual meeting. Properly executed proxies in the accompanying form, received in due time and not previously revoked, will be voted at the annual meeting or any adjournment thereof as specified therein by the person giving the proxy, but if no specification is made, the shares represented by the proxy will be voted in favor of the proposals shown thereon.

Only stockholders of record at the close of business on March 19, 2004 will be entitled to notice of and to vote at the annual meeting. There were outstanding at the close of business on March 19, 2004 7,701,353 shares of our company’s common stock, each of which is entitled to one vote per share in person or by proxy. The common stock is the only class of capital stock outstanding and entitled to vote at the annual meeting. The holders of a majority of the total shares of common stock issued and outstanding and entitled to vote at the meeting, whether present in person or represented by proxy, will constitute a quorum for the transaction of business at the annual meeting. A quorum being present at the annual meeting, the affirmative note of the holders of a plurality of the shares of common stock voting at the meeting is required for the election of directors pursuant to Proposal 1, the affirmative note of the holders of at least a majority of the issued and outstanding shares of common stock of the company is required to amend the Certificate of Incorporation pursuant to Proposal 2, and the affirmative vote of at least a majority of the shares present, in person or by proxy, at the annual meeting is required with regard to Proposals 3 and 4. Neither our company’s Certificate of Incorporation nor our by-laws provide for cumulative voting rights. Abstentions and broker non-votes are each counted to determine the number of shares present at the meeting, and thus, are counted in establishing a quorum. Broker non-votes will not be counted in determining the number of shares voted for or against the proposed matters, and therefore will not affect the outcome of the vote other than with regard to Proposal 2, where they will count as a vote against the Proposal. Abstentions on a particular item (other than the election of directors) will be counted as present and entitled to vote for purposes of any item on which the abstention is noted, thus having the effect of a "no" vote as to that proposal. With regard to the election of directors, votes may be cast in favor of or withheld from each nominee; votes that are withheld will be excluded entirely from the vote and will have no effect.

The following table sets forth information with respect to those persons known to the Company who, as of March 19, 2004, own or may be deemed to own beneficially more than five percent of the Common Stock of the Company.

(See following footnotes)

Our company’s by-laws provide that the board of directors shall consist of not more than nine members. At the annual meeting, nine directors are to be elected to the board of directors, each to hold office until the 2005 annual meeting or until his successor is elected and qualified. The persons named as proxies in the enclosed proxy card, who have been designated by the board of directors, unless otherwise instructed in such proxy, intend to vote the shares represented by the proxy for the election of the nominees listed in the table below for the office of director of our company. The nominees have been proposed by the board of directors. If any such nominee should become unavailable for election, the persons named as proxies intend to vote for such substitute nominee as may be proposed by the board of directors, unless otherwise instructed in such proxy. No circumstances are now known, however, that would prevent any of the nominees from serving and the nominees have agreed to serve if elected.

The information appearing below with respect to the business experience during the past five years of each nominee for director, directorships held and age has been furnished by each director as of February 13, 2004. All of the nominees are presently directors of our company.

The following information regarding the principal occupations and other employment of the nominees during the past five years and their directorships in certain companies is as reported by the respective nominees:

Richard L. Bowers, age 61, has served as a director of our company since 1999, and was elected president and chief executive officer of our company in May 2001. In 1995, Mr. Bowers was elected director of Environmental Analytics, Inc., a Houston, Texas based environmental services business, of which Mr. Bowers is also an owner.

John J. Buckley, CPA, MBA, age 48, was appointed to the board by a majority of independent directors in March, 2004. Mr. Buckley was elected general partner of Buckley and Associates, L.L.P. in 1991. Mr. Buckley is currently a director of American Bank, a Corpus Christi, Texas based bank since 2000. From 1994-1999, he served on the board of the Young Men’s Christian Association, and, from 1993 to 1999, he served on the board of Paloma Broadcasting local owners of rights to Fox Broadcasting and Telemundo.

W. Craig Epperson, age 61, has served as a director of our company since 1999. Mr. Epperson became president and managing partner of Crane Inspection & Certification Bureau LLC in 1999. He was elected executive vice president and co-owner of The Automation Group, Inc., a Houston, Texas based energy services business as well as president and co-owner of Compass Staffing, Inc. in 1997.

David A. Hartman, age 67, has served as a director of our company since 2001. Mr. Hartman is Chairman and CEO of the Hartman Foundation Inc. and Hartman & Associates, Inc. since 1999 and 1988 respectively. Mr. Hartman also serves as a director of several foundations and private companies. The D and CH Trust acquired 500,000 convertible debentures and 100,000 shares of common stock in our company’s private placement on April 5, 2001. Pursuant to a written agreement, The D and CH Trust was permitted to designate one person as a director of our company, and Mr. Hartman was selected. For further discussion on this transaction, see the section titled "Certain Transactions" on page 19. David A. Hartman is the father of Douglas M. Hartman.

Douglas M. Hartman, MBA, age 36, has served as a director of our company since 2001. Mr. Hartman has served as president and chief operating officer of Hartman Foundation Inc. and Hartman & Associates, Inc. since 1999. He also served as vice president of Hartland Bank, N.A., from 1995-1999. The Douglas MacDonald Hartman Family Irrevocable Trust acquired 500,000 convertible debentures and 100,000 shares of common stock in our company’s private placement on April 5, 2001. Pursuant to a written agreement, The Douglas MacDonald Hartman Family Irrevocable Trust was permitted to designate one person as a director of our company, and Mr. Hartman was selected. For further discussion on this transaction, see the section titled "Certain Transactions" on page 20.

Si Boon Lim, age 37, has served as a director of our company since 2000. Mr. Lim also has served as director of TOR Minerals (M) Sdn. Bhd. since 1999, director of Megamin Ventures Sdn. Bhd. since 2000. Mr. Lim also serves on the board of a number of private companies.

Thomas W. Pauken, Esq, age 60, has served as a director of our company since 1999. Mr. Pauken has been chairman of the board of Tutogen Medical, Inc. since June 2000, and has served as trustee of Capital Partners II, Ltd. Liquidating Trust (successor in interest to Renaissance Capital Partners II, Ltd.) since 1998. Mr. Pauken has been President of TWP, Inc. since 1990.

Bernard A. Paulson, age 75, has served as a director of our company since 1992. Mr. Paulson has served as chairman of the board of our company since May 2001. Since 1996, Mr. Paulson has served as chairman of The Automation Group, Inc. In 1999, Mr. Paulson was elected director, Orion Refining Corporation. From 1981 to 1988, Mr. Paulson served as president of Koch Refining Company.

Chin-Yong Tan, Ph.D., age 39, has served as a director of our company since 2001. Dr. Tan has also served as director of Revox Electronics Sdn. Bhd. and Revox (Asia) Pte. Ltd. since 1998, served as a director of AUZ Corporation Sdn Bhd Property Development since 2002, and has served as a director to TOR Minerals (M) Sdn. Bhd. since 2001. Dr. Tan has served as a director of Meru Valley Resort Bhd. since 1999, and also serves on the board of a number of private companies.

During the year ended December 31, 2003, there were four regularly scheduled meetings of the board of directors. No incumbent director, except Mr. Buckley, attended fewer than 100% of the aggregate of all meetings of the board of directors and of the committees of the board of directors on which such director served. The board of directors has no formal policy regarding director attendance at the annual meeting; however, the 2003 annual meeting of shareholders was attended by all of the company’s directors, which includes all of the nominee directors.

The board of directors consists of a majority of independent directors as such term is defined in the Nasdaq Stock Market Marketplace Rules. The board of directors has determined that Messrs. Buckley, Epperson, David Hartman, Douglas Hartman, Lim, Pauken, Paulson and Tan are independent.

Non-employee members of the board of directors are compensated by our company for board meetings attended in the amount of $1,000, and a quarterly retainer of $1,500 with the chairman receiving an additional $500 per quarter. All directors are reimbursed for their reasonable travel expenses incurred in attending meetings of the board of directors or any committee of the board of directors or otherwise in connection with their service as a director. Additionally, compensation of $500 is paid to the non-employee directors for each committee meeting attended.

Our 2000 Incentive Plan provides that each non-employee director of our company on the first business date after each annual meeting of stockholders of our company, beginning with the 2000 annual meeting of stockholders, will automatically be granted a non-qualified option for 2,500 shares of common stock under the 2000 Incentive Plan; however, in lieu of the 2,500 shares, the non-employee directors were granted 10,000 shares in 2003. Each option so granted to a non-employee director has an exercise price per share equal to the fair market value of the common stock on the date of grant of such option. Each such option will be fully exercisable at the date of grant and will expire upon the tenth anniversary. On May 23, 2003, Messrs. Epperson, Hartman, Hartman, Lim, Pauken, Paulson and Tan were each granted options to purchase 10,000 shares at the per share exercise price of $2.21, none of which were exercised during fiscal 2003.

Employee directors receive no additional compensation for service on the board of directors or on committees of the board of directors.

Officers, directors and greater than ten-percent stockholders are required by Securities and Exchange Commission regulations to furnish our company with copies of all Section 16(a) forms they file. Based solely on its review of the copies of such forms received by it, or written representations from certain reporting persons, our company believes that during the fiscal year ended December 3l, 2003, all filing requirements applicable to its officers, directors and greater than ten-percent beneficial owners were complied with.

The board of directors has three standing committees: an Audit Committee, Compensation and Incentive Plan Committee and an Executive Committee.

The following is the report of the Audit Committee with respect to our company’s audited financial statements for the fiscal year ended December 31, 2003, which include the consolidated balance sheets of our company as of December 31, 2003 and 2002, and the related consolidated statements of operations, stockholders’ equity (deficit) and cash flows for each of the two years in the period ended December 31, 2003, and the notes thereto. The information contained in this report shall not be deemed to be "soliciting material" or to be filed with the Securities and Exchange Commission, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that our company specifically incorporates it by reference in such filing.

The Audit Committee has reviewed and discussed our company’s audited financial statements with management.

The Audit Committee held four meetings in conjunction with the full board of directors during our company’s fiscal year ended December 31, 2003. The Audit Committee has discussed with Ernst & Young LLP, our company’s independent accountants, the matters required to be discussed by SAS 61 (Codification of Statements on Accounting Standards) that includes, among other items, matters related to the conduct of the audit of our company’s financial statements.

The Audit Committee has also received written disclosures and the letter from Ernst & Young LLP required by Independent Standards Board Standard No. 1 (that relates to the accountant’s independence from our company and our related entities) and has discussed with Ernst & Young LLP their independence from our company.

Based on the review and discussions referred to above, and subject to ratification by the stockholders, the Audit Committee recommended to the board of directors that Ernst & Young LLP be reappointed as independent auditors for the year 2004 and that our company’s audited financial statements be included in our company’s annual report on Form 10-KSB for the fiscal year ended December 31, 2003.

SUBMITTED BY THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS

Fees for professional services provided during the years ended December 31, 2003 and 2002, were $156,600 and $125,300, respectively. Audit fees consist primarily of the audit and quarterly reviews of the consolidated financial statements, consents, assistance with and review of documents filed with the SEC, work performed by tax professionals in connection with the audit and quarterly reviews, and accounting and financial reporting consultations and research work necessary to comply with generally accepted auditing standards.

There were no other fees during fiscal years 2003 and 2002.

The Audit Committee has pre-approved audit related and non-audit services not prohibited by law to be performed by the company’s independent auditors and associated fees up to a maximum non-audit service of $25,000. The term of the pre-approval is 12 months from the date of pre-approval, unless the Audit Committee considers a different period and states otherwise. The Audit Committee has delegated to the Chairman of the Audit Committee the authority to pre-approve a service not included in the general pre-approval and any proposed services exceeding pre-approved cost levels or budgeted amounts, provided that the Chairman shall report any decisions to pre-approve such audit related or non-audit services and fees to the full Audit Committee at its next regular meeting.

The Compensation and Incentive Plan Committee is composed entirely of disinterested non-employee directors consisting of Messrs. David Hartman, Pauken (Chairman) and Lim. The Compensation and Incentive Plan Committee met four times in 2003.

The Compensation and Incentive Plan Committee formulates and presents to the board of directors recommendations as to the base salaries for all officers of our company. The Compensation and Incentive Plan Committee specifically reviews, approves, and establishes the compensation for the President and Chief Executive Officer. This committee is authorized to select persons to receive awards under our company’s 2000 Incentive Plan, to determine the terms and provisions of the awards, if any, the amount of the awards, and otherwise administer our company’s 2000 Incentive Plan to the full extent provided in such Plan.

At the September 4, 2002 board meeting, Bernard A. Paulson, Chairman, appointed an Executive Committee composed of Messrs. Richard Bowers, David Hartman, chairman, Bernard Paulson, Thomas Pauken and Dr. Tan Chin Yong to advise the president and chief executive officer in matters of capital debt, contract negotiations and other situations that may arise. The committee did not meet in 2003.

The company does not have a standing nominating committee or a committee performing similar functions. The board of directors believes that it is appropriate for the company not to have such a committee because director nominees have historically been selected by the board of directors, eight members of which are considered independent. In accordance with the Nasdaq Stock Market Marketplace rules, a majority of the company’s independent directors will recommend director nominees for the board’s selection. Because the company does not maintain a standing nominating committee, it has no written charter; however, the company has adopted the nomination policy described in this section by board resolution.

The board of directors has no minimum qualifications that nominees must meet in order to be considered. In the fulfillment of their responsibilities to identify and recommend to the board of directors individuals qualified to become board members, the independent directors will take into account all factors they consider appropriate, which may include experience, accomplishments, education, understanding of the business and the industry in which it operates, specific skills, general business acumen and the highest personal and professional integrity. Generally, the independent directors will first consider current board members because they meet the criteria listed above and possess an in depth knowledge of the company, its history, strengths, weaknesses, goals and objectives. This level of knowledge has proven very valuable to the company. All nominees to the board were approved by a majority of the company’s independent directors.

The independent directors will consider stockholder recommendations for candidates to serve on the board of directors. In order to provide the independent directors time to evaluate candidates prior to submission to the stockholders for vote at the Annual Meeting, stockholders desiring to recommend a candidate must submit a recommendation to the Secretary of the company at the company’s corporate office by February 14, 2005. The recommendation must contain the following: (i) the name and address of the stockholder who intends to make the nomination and of the person or persons to be nominated; (ii) a representation that the stockholder is a holder of record of stock of the company entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (iii) a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the stockholder; (iv) such other information regarding each nominee proposed by such stockholder as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission, had the nominee been nominated, or intended to be nominated, by a majority of independent directors and (v) the consent of each nominee to serve as a director of the company if so elected.

The board of directors has adopted a formal policy by which stockholders may communicate with members of the board of directors by mail addressed to an individual member of the board, to the full board, or to a particular committee of the board, at the following address: c/o Corporate Secretary, TOR Minerals, Inc. 722 Burleson Street, P.O. Box 2544, Corpus Christi, Texas 78403. This information is also available on the company’s website at www.torminerals.com.

The company has adopted a Code of Ethics and Business Conduct that applies to all directors and employees, including the company’s principal executive officer, principal financial officer, principal accounting officer or controller and persons performing similar functions. The Code of Ethics and Business Conduct may be found on our website at www.torminerals.com.

The following table sets forth information concerning cash compensation paid by the Company to the President and Chief Executive Officer, the Executive Vice President, the Senior Vice President and Vice President:

The following table sets forth the number of shares of our company’s common stock beneficially owned by each director and nominee for director and each named executive officer of our company, and all directors and executive officers of our company as a group as of March 19, 2004.

Our Certificate of Incorporation currently provides that 10 million shares of common stock are authorized to be issued. The board of directors has unanimously approved and adopted, subject to stockholder approval, an amendment to the Certificate of Incorporation that increases the number of authorized shares of common stock from 10 million shares to 20 million shares. The text of the proposed Certificate of Amendment is attached to this Proxy Statement as Exhibit B.

As of March 19, 2004, there were 7,701,353 outstanding shares of common stock. We also reserve shares of common stock for issuance upon conversion of outstanding preferred stock, under outstanding options and pursuant to previously adopted stock option plans. Based on the foregoing, 168,000 shares of common stock were reserved for issuance upon conversion of outstanding preferred stock, under outstanding options and pursuant to previously adopted stock option plans. On a fully diluted basis, 8,051,617 shares of common stock would be outstanding as of March 19, 2004. As a result, we have 1,230,000 additional shares of common stock available for issuance under our Certificate of Incorporation.

The authorization of an additional 10 million shares of common stock as contemplated by the proposed amendment to the Certificate of Incorporation would give the board of directors the express authority, without further action by our stockholders, to issue these shares of common stock from time to time as the board of directors deems necessary or advisable. Our board of directors believes that having available additional authorized, but unissued, shares of common stock is necessary considering the number of shares of common stock issuable upon conversion of outstanding preferred stock and exercise of outstanding warrants and options and for potential future actions involving the issuance of capital stock for business and financial purposes. We currently have no specific plans to issue the additional shares of common stock that would be authorized by this proposal. The additional shares may be used, without further stockholder approval, except as may be required for various purposes, including raising capital, funding acquisitions providing equity incentives to employees, officers or directors, and permitting stock splits in the form of stock dividends.

Although the proposed increase in our authorized common stock could be construed as having anti-takeover effects, neither the board of directors nor our management views this proposal in that perspective. Nevertheless, we could use the additional shares to frustrate persons seeking to effect a takeover or otherwise gain control of us by, for example, privately placing shares to purchasers who might side with the board of directors in opposing a hostile takeover bid. We are not aware of any hostile takeover bid at this time. Shares of common stock could also be issued to a holder that would cause that holder to have sufficient voting power to assure that any proposal to amend or repeal our Certificate of Incorporation would not receive the requisite vote required. The use of our common stock in these manners could render it more difficult or discourage an attempt to acquire control of us, if any transactions were opposed by the board of directors.

The additional shares of our common stock will have rights identical to the currently outstanding common stock. The shares of common stock have no preemptive rights or other rights to subscribe for additional shares. Adoption of the proposed amendment to our Certificate of Incorporation and any issuance of our common stock would not affect the rights of the holders of currently outstanding common stock, except for effects incidental to increasing the outstanding number of shares of common stock, such as dilution of earnings per share and voting rights of current holders of common stock.

If this proposal is approved by the stockholders, the amendment to our Certificate of Incorporation will become effective when we file the Certificate of Amendment with the Secretary of State of the State of Delaware. If this proposal is approved by the stockholders, we anticipate that we will file the Certificate of Amendment shortly after our Annual Meeting of Stockholders.

The affirmative vote of the holders of a majority of the outstanding shares of our common stock is necessary for approval of the amendment to our Certificate of Incorporation. Therefore, abstentions and broker non-votes effectively count as votes against this proposal.

The affirmative vote of the holders of a majority of the outstanding shares of our common stock is necessary for approval of the amendment to our Certificate of Incorporation. Therefore, abstentions and broker non-votes effectively count as votes against this proposal.

In order to attract and retain employees and directors for the company, the board of directors has adopted, and the company’s stockholders have previously approved, the 2000 Incentive Plan (the "Incentive Plan") (see Appendix B) pursuant to which an aggregate of 750,000 shares of common stock may be issued upon the exercise options granted under the Incentive Plan. As of March 19, 2004, a total of 679,100 options had been granted under the Incentive Plan, meaning that only 70,900 remained available for grant.

The Board of Directors has authorized an amendment to the Incentive Plan, subject to stockholder approval, to increase the number of shares of the company’s common stock available for issuance under the Incentive Plan from 750,000 to 1,050,000 shares.

The purpose of the Incentive Plan is to advance the interests of the company and its stockholders by providing an additional incentive to enable the company and its subsidiaries to attract and retain qualified and competent employees and directors, upon whose efforts and judgment the company’s success is largely dependent. To this end, the Incentive Plan provides a means for providing for or increasing the company’s employees and directors’ proprietary interests in the company, thereby achieving a greater commonality of interest with other stockholders and providing an additional incentive to employees and directors to achieve the company’s plans and objectives. Any employee who is regularly employed full-time by the company or its subsidiaries and the company’s directors will be eligible for selection to receive an award under the Incentive Plan; in addition, non-employee directors will automatically receive stock options under the Incentive Plan. As of March 19, 2004, approximately 44 employees were eligible to participate in the Incentive Plan. The maximum number of shares of the company’s common stock that may be sold or issued under the Incentive Plan is subject to certain adjustments upon recapitalization, stock splits and combinations, merger, stock dividend and similar events.

The Incentive Plan is administered by the Compensation and Incentive Plan Committee (the "Incentive Plan Committee"). The Incentive Plan Committee will consist of two or more members of the Board, each of whom is a non-employee director and considered independent under the Nasdaq Stock Market Marketplace rules. Subject to the provisions of the Incentive Plan, the Incentive Plan Committee has full and final authority to select, from among the persons eligible to participate in the Incentive Plan, the persons to whom awards will be granted thereunder, to grant such awards, to determine the terms and provisions of such awards, to impose conditions and requirements of such awards, to grant additional discretionary options to persons to whom awards have been granted thereunder and to determine the number of shares to be sold or issued pursuant thereto.

In granting awards, the Incentive Plan Committee will take into consideration the contribution the eligible persons have made or may be reasonably expected to make to the success of the company and such other factors as the Incentive Plan Committee shall determine. The Incentive Plan Committee will have the authority to consult with and receive recommendations from officers and other personnel of the company with regard to these matters. The Incentive Plan Committee may, from time to time in granting awards under the Incentive Plan, prescribe terms and conditions concerning the award as it deems appropriate, such as relating an award to the achievement of specific goals established by the Incentive Plan Committee or to the continued employment of a recipient of an award.

The Incentive Plan will authorize the Incentive Plan Committee to confer a benefit upon a person eligible to participate therein generally based upon the company’s common stock. In general, awards to eligible persons under the Incentive Plan are not restricted to any specified form or structure. They may include stock options, stock appreciation rights (giving the holder the right to receive upon exercise a cash payment in an amount equal to the difference between the fair market value of a share of common stock on the date of exercise and the exercise price), limited stock appreciation rights (giving the holder the right to receive upon exercise a cash payment in an amount equal to the difference in the per share price paid in an applicable tender offer or exchange offer for the company and the exercise price per share), restricted stock and performance shares and awards (generally granting stock and non-stock based compensation contingent upon the company’s achievement of financial performance goals established by the Incentive Plan Committee). An award may consist of one such arrangement or benefit or two or more of them in tandem or in the alternative. Some permissible features of awards to eligible persons under the Incentive Plan are:

The Incentive Plan also provides for the automatic acceleration of the vesting schedules of awards granted under the Incentive Plan and the automatic termination of conditions and restrictions relating to awards granted under the Incentive Plan in the event of a Change in Control or a Potential Change in Control, which generally mean a merger, consolidation, reorganization, liquidation or dissolution of the company, the sale of all or substantially all of the assets of the company, or any transaction or series of transactions within a 60-day period or occurring pursuant to a plan, which has the effect of the stockholders of the company ceasing to own 51% of the common stock of the company or its successor. The amount of the award that will be accelerated is limited to the portion that can be accelerated without causing the holder to have an "excess parachute payment" as determined under the Internal Revenue Code of 1986.

Awards may not be granted under the Incentive Plan after the tenth anniversary of the adoption of the Incentive Plan, February 21, 2010.

The Board of Directors, or the Incentive Plan Committee (subject to the prior written authorization of the Board of Directors), may from time to time amend the Incentive Plan or any award granted thereunder; provided, however, that (except in certain permitted circumstances where the Incentive Plan Committee believes an adjustment is appropriate by reason of a corporate transaction involving the company) no such amendment may, without approval by the stockholders of the company, (a) increase the number of shares covered by the Incentive Plan or change the class of persons eligible to participate in the Incentive Plan, (b) permit the granting of awards which expire beyond ten years from the date of the grant, or (c) extend the termination date of the Incentive Plan; and provided, further, that no amendment or suspension of the Incentive Plan or any award issued thereunder shall, except as specifically permitted in any award, substantially impair any award previously granted to any recipient without his or her consent, except the Incentive Plan Committee may accelerate the date on which all or a portion of an otherwise unexercisable option may be exercised.

To further align the interests of the non-employee directors of the company with those of the company’s stockholders, in addition to discretionary grants which the Incentive Plan Committee may make to eligible persons, including the company’s directors, the Incentive Plan provides that each director of the company who is not an employee of the company or any of its subsidiaries on the first business date after each annual meeting of stockholders of the company, will automatically be granted an option for 2,500 shares of common stock under the Incentive Plan. In addition, the Incentive Plan provides that each director who first becomes a non-employee director on a date other than that of an annual meeting of stockholders of the company shall on such date automatically be granted a fully exercisable option for 2,500 shares of common stock under the Incentive Plan (except that if there remains fewer than four calendar quarters between the date of such election and the scheduled date of the next annual meeting of stockholders of the company, the number of shares covered by the option will be proportionately reduced based on the number of remaining calendar quarters). In addition, the Incentive Plan Committee may grant additional options to non-employee directors. Generally, the terms and conditions of such discretionary options will be the same as are described for employees. The remainder of this discussion of Non-Employee Director Options relates to the automatically granted options.

Each option granted to a non-employee director will have an exercise price per share equal to the greater of (a) the fair market value of one share of common stock on the date of grant of such option, or (b) the par value of such share. Each such option will be fully exercisable at the date of grant and will expire upon the tenth anniversary of the date of grant.

If the optionee ceases to be a non-employee director, the unexercised portion of the option shall terminate thirty days after the date of cessation as a non-employee director other than cessation by reason of disability, death or for cause, but no later than the termination date of the option. Should such an optionee die during this thirty day period, the option may be exercised for a period of up to six months after his death, but not later than the termination date of the option.

If the optionee ceases to be a non-employee director because of his disability (as defined in the Incentive Plan), the unexercised portion of the option will terminate on the earlier of one year from his ceasing to be a non-employee director or the termination date of the option. Should such optionee die during this period, the option will remain exercisable for up to six months from his death, but not later than the termination date of the option. If such optionee ceases to be a non-employee director due to his death while serving as a non-employee director, the unexercised portion of the option will terminate within one year of his death, but no later than the termination date of the option. If such optionee ceases to be a non-employee director for cause (which is generally defined in the Incentive Plan as willful misconduct or gross negligence, as determined by the Incentive Plan Committee in its sole discretion), the unexercised portion of an option will immediately terminate.

Payment of the exercise price of any option automatically granted to non-employee directors under the Incentive Plan may be made in cash, by delivery of previously owned shares of company common stock or by instructing the Incentive Plan Committee to withhold some of the shares issuable under the option, concurrently with the exercise of the option.

Any option granted to non-employee directors under the Incentive Plan will be nontransferable by the optionee other than by will or the laws of descent and distribution, and will be exercisable during the optionee’s lifetime only by the optionee or his or her guardian or legal representative.

The options so granted to the non-employee directors will not qualify for treatment as incentive stock options. See "Tax Treatment," below.

Tax Treatment

The following is a brief description of the federal income tax treatment which will generally apply to awards made under the Incentive Plan, based on federal income tax laws in effect on the date hereof. The exact federal income tax treatment of awards will depend on the specific nature of any such award. Such an award may, depending on the conditions applicable to the award, be taxable as an option, an award of restricted or unrestricted stock, an award which is payable in cash, or otherwise.

Options may be granted to employees of the Company pursuant to the Incentive Plan that are intended to qualify as incentive stock options under the provisions of Section 422A of the Internal Revenue Code (the "Code") ("Incentive Options"). Generally, the optionee is not taxed and the company is not entitled to a deduction on the grant or the exercise of an Incentive Option. However, if the optionee sells the shares acquired upon exercise of an Incentive Option at any time within (a) one year after the date of transfer of shares to the optionee pursuant to the exercise of such Incentive Option or (b) two years after the date of grant of such Incentive Option, then the Optionee will recognize ordinary income in an amount equal to the excess, if any, of the lesser of the sale price or the fair market value on the date of exercise over the exercise price of such Incentive Option and the company will generally be entitled to a deduction in an amount equal to the amount of ordinary income recognized by such optionee.

The grant of an option that does not qualify for treatment as an Incentive Option is generally not a taxable event for the optionee. Upon exercise of the option, the optionee will generally recognize ordinary income in an amount equal to the excess of the fair market value of the stock acquired upon exercise (determined as of the date of the exercise) over the exercise price of such option, and the company will be entitled to a deduction equal to such amount.

Awards to employees under the Incentive Plan may also include stock sales or other grants of stock. Stock issued pursuant to these awards may be subject to certain restrictions. Generally, the sale or grant of stock will be a taxable event if such stock is not subject to a substantial risk of forfeiture and is freely transferable for purposes of Code Section 83. In that case, the recipient will recognize ordinary income and the company will be entitled to a deduction equal to the difference between the fair market value of such stock on the date of grant and the amount paid, if any, for such stock. Persons who are subject to Section 16(b) of the Securities Exchange Act of 1934 and do not make an election under Code Section 83(b) to recognize income on the date the stock is issued will recognize income at the expiration of the six month period based on the fair market value of the stock at that time. Stock which is subject to restrictions that constitute a substantial risk of forfeiture or which is not transferable within the meaning of Section 83 of the Code will give rise to taxable ordinary income (and a deduction to the company) when the restrictions lapse or the stock becomes transferable, unless the recipient elects under Code Section 83(b) to recognize income as of the date of transfer. The amount of taxable income recognized at the time the restrictions lapse or the stock becomes transferable will be the excess of the fair market value of the stock (determined as of the date the restrictions lapse) over the amount, if any, paid for such stock.

Under the terms of the Incentive Plan, awards may be granted to employees that are payable in cash. Generally, a participant will recognize ordinary income and the company will be entitled to a deduction with respect to such cash awards when such participant actually or constructively receives the cash.

Awards may be granted to employees under the Incentive Plan that do not fall clearly into the categories descried above. The federal income tax treatment of these awards will depend upon the specific terms of such awards. Generally, the company will be required to withhold applicable taxes with respect to any ordinary income recognized by an employee in connection with awards made under the Incentive Plan.

The terms of the agreements pursuant to which specific awards are made to eligible persons under the Incentive Plan will provide for accelerated vesting of an award in connection with a change in ownership or control of the Company. In that event, certain amounts with respect to such awards may be characterized as "parachute payments" under Section 280G of the Code. Pursuant to these provisions, an employee will be subject to a 20% excise tax on any "excess parachute payment" and the company will be denied any deduction with respect to such excess parachute payment. The Incentive Plan specifically provides that the portion of an award that is accelerated is limited to an amount that can be accelerated without causing the employee to receive an excess parachute payment. Finally, it is the present intention that the Incentive Plan be operated in a manner that satisfies Section 162(m) of the Code, so that the income of the recipient allocable to an Award will be fully deductible.

Under current accounting principles, if an option is granted under the Incentive Plan with an exercise price that is less than the fair market value of the optioned shares on the date of grant, then there will be a charge against the income of the company in order to reflect compensation expense. A similar result would obtain in the case of the award of restricted stock.

Upon the grant of other types of awards, especially those requiring the company to make cash payments, such as an SAR, the Company will be required to recognize the initial cash obligation, and any subsequent increases or decreases in such cash obligation, as an expense, or income, of the Company for financial purposes. Thus, awards under the Incentive Plan may result in a reduction of the company ’s earnings per share.

The company currently anticipates that it will, as a general matter, grant options on an annual basis. However, future option grant recipients, and future option grant levels, other than to non-employee directors, have not been determined. Therefore, the number, amount and type of awards to be received by or allocated to eligible persons in the future under the Incentive Plan cannot be determined at this time. The company has not approved any awards under the Incentive Plan that are conditioned upon stockholder approval of the proposed plan amendment. On February 27, 2004, the closing price of the company’s common stock was $8.56.

The following table provides information as of December 31, 2003 regarding compensation plans (including individual compensation arrangements) under which equity securities of the company are authorized for issuance.

Our company raised $3,010,000 on April 5, 2001 through a private placement of common stock and convertible debentures. The proceeds of the private placement were used to partially finance our purchase of designated assets of Terminor Processing & Trade BV, Ceramic Design International Holding BV and Thermal Insulation Manufacturers BV. In the private placement, our company issued 301,000 shares of its common stock and $2,709,000 principal amount of convertible debentures. Each purchaser in the private placement acquired a combination of common stock and convertible debentures. The terms of the private placement were agreed to in arms length negotiations with two lead investors who had no previous investment in or relationship to our company, but invested approximately two-thirds of the total amount raised. Additional outside investors and five directors, Bernard A. Paulson, Thomas W. Pauken, Richard L. Bowers, Chris McGougan and W. Craig Epperson, of our company purchased the remaining one-third of the common stock and convertible debentures on the same terms as those agreed to with the lead investors as set forth below.

The common stock was priced in the private placement at $1.00 per share, a price slightly above the previous closing price, and the convertible debentures were convertible at $1.80 per share of common stock. The debentures bear no interest for two years, are secured by security interests in substantially all of our company’s assets, and will be automatically converted into five year secured term notes bearing interest at the rate of 10% per annum, unless the holders of the debentures elect to convert them into common stock at the $1.80 per share conversion rate. All debentures have been converted.

The lead investors are affiliates of Hartman & Associates, Inc. of Austin, Texas. Under the terms of their investments, Hartman & Associates was permitted to designate two persons as directors of our company. David A. Hartman and his son, Douglas M. Hartman, were so designated, and joined our company’s board of directors at a subsequent board meeting.

On January 15, 2004, our Company raised $1,000,000 through the placement of convertible preferred stock and $2,500,000 in cash on January 16, 2004 through a private placement of common stock. The proceeds of the private placement will be used for the expansion of manufacturing facilities, to improve operational efficiencies and working capital purposes. In the private placement, our company issued 526,316 shares of its common stock to existing shareholders and new institutional holders at $4.75. In this connection, our company entered into a Common Stock Purchase Agreement whereby we agreed to prepare and file with the Securities and Exchange Commission a registration statement with respect to the sale of the shares from the private placement.

Terms of the convertible preferred stock were agreed to in arms length negotiations with the investors. The 200,000 shares of convertible preferred stock have a six percent coupon rate, and each preferred share is convertible into 0.84 shares of common stock and is redeemable at the option of the Company after two years.

Upon the recommendation of the Audit Committee, the board of directors has approved the retention of Ernst & Young LLP, certified public accountants, to serve as independent auditors of our company for the year ending December 31, 2004, subject to ratification of such approval by our company’s stockholders. Although stockholder ratification is not required for the selection of Ernst & Young, and although such ratification will not obligate the company to continue the services of such firm, the board of directors is submitting the selection for ratification with a view towards soliciting the stockholders’ opinion thereof, which may be taken into consideration in future deliberations. If the appointment is not ratified, the board of directors must then determine whether to appoint other auditors before the end of the current fiscal year, and in such case, stockholders’ opinions would be taken into consideration. Ernst & Young LLP served as independent auditors for our company for the year ended December 31, 2003. Representatives will be present at the annual meeting with the opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions from stockholders.

Pursuant to various rules promulgated by the Securities and Exchange Commission, a stockholder that seeks to include a proposal in our company’s proxy statement and form of proxy card for the 2005 annual meeting of the stockholders of our company must timely submit such proposal in accordance with Securities and Exchange Commission Rule 14a-8 to our company, addressed to Elizabeth K. Morgan, 722 Burleson Street, Post Office Box 2544, Corpus Christi, Texas 78403 no later than December 6, 2004 . Any stockholder proposal that is not submitted for inclusion in our company’s proxy statement but is instead sought to be presented at the 2005 Annual Meeting must be delivered to or mailed and received by the Secretary at our principal executive office no later than February 28, 2005. The company’s proxies will vote the shares represented by the proxies held by them in accordance with their judgment on such matters if (i) the proposal is received outside of the timeframe outlined above or (ii) the company receives timely notice of such proposal and advises its stockholders in its 2005 Proxy Statement about the nature of the matter and how management intends to vote.

With respect to business to be brought before the annual meeting, our company has not received any notices from stockholders that our company is required to include in this proxy statement.

Purpose

The role of the Audit Committee is to oversee the accounting and financial reporting processes of the Company and the audits of the financial statements of the Company.

The Audit Committee shall also prepare the report required by the rules of the Securities and Exchange Commission (the "SEC") to be included in the Company’s annual proxy statement.

The Audit Committee shall consist of three or more members of the Board of Directors (the "Board"), each of whom is determined by the Board to be "independent" under Section 10A(m)(3) of the Securities Exchange Act of 1934 (the "Exchange Act"), the rules of the Nasdaq Stock Market and the rules and regulations of the SEC.

All members of the Audit Committee must be able to read and understand financial statements at the time of their appointment. At least one member of the Audit Committee must be a "Financial Expert" as such term is defined by the rules of the Nasdaq Stock Market and the rules and regulations of the SEC.

The members of the Audit Committee shall be appointed by the Board and shall serve until such member’s successor is duly elected and qualified or until such member’s earlier resignation or removal. The members of the Audit Committee may be removed, with or without cause, by a majority vote of the Board.

Unless a Chairperson is elected by the full Board, the members of the Audit Committee shall designate a Chairperson by the majority vote of the full Audit Committee membership. The Chairperson will chair all regular sessions of the Audit Committee and set the agenda for Audit Committee meetings.

In fulfilling its responsibilities, the Audit Committee shall be entitled to delegate any or all of its responsibilities to a subcommittee of the Audit Committee.

The Audit Committee shall meet as often as it determines but no less than once per quarter, either in person or telephonically, and at such times and places as the Audit Committee shall determine. The Audit Committee should meet regularly with each of management, the principal internal auditor of the Company and the outside auditing firm in separate executive sessions to discuss any matters that the Audit Committee or either of these groups believes should be discussed privately. In addition, the Audit Committee or its chairperson should meet with the independent auditors and management quarterly to review the Company’s financial statements.

The Audit Committee shall be directly responsible, in its capacity as a committee of the Board, for the appointment, compensation, retention and oversight of the outside auditing firm. In this regard, the Audit Committee shall have the sole authority to (A) appoint and retain, (B) determine the funding for, and (C) when appropriate, terminate, the outside auditing firm, which shall report directly to the Audit Committee. The Audit Committee will be responsible for resolving any disputes between the independent accountants and the Company’s management.

To fulfill its responsibilities and duties the Audit Committee shall:

A.Financial Reporting Processes and Documents/Reports Review

B.Independent Accountants

C. Outside Advisors.

The Audit Committee shall have the authority to retain such outside counsel, accountants, experts and other advisors as it determines appropriate to assist the Audit Committee in the performance of its duties. The Audit Committee shall have sole authority to approve related fees and retention terms.

D. Ethical and Legal Compliance

The Audit Committee shall report its actions and any recommendations to the Board after each Audit Committee meeting and shall conduct and present to the Board an annual performance evaluation of the Committee. The Audit Committee shall review at least annually the adequacy of this Charter and recommend any proposed changes to the Board for approval.

While the Audit Committee has the responsibilities and powers set forth in this Charter, it is not the duty of the Audit Committee to plan or conduct audits or to determine that the Company’s financial statements and disclosures are complete and accurate and are in accordance with generally accepted accounting principles and applicable rules and regulations. These are the responsibilities of management and the outside auditor.

This Charter will be made available in accordance with applicable rules and regulations.

March 5, 2004

The undersigned stockholder(s) of TOR MINERALS INTERNATIONAL, INC., hereby constitutes and appoints RICHARD L. BOWERS and LAWRENCE W. HAAS or either of them, the true and lawful attorney-in-fact for the undersigned, with full powers of substitution, and hereby authorizes them to represent and to vote, as designated below, the common stock held of record by the undersigned on March 19, 2004 at the annual meeting of stockholders of our company to be held in the Padre Ballroom B & C at the Omni Marina Hotel, Corpus Christi, Texas, at 9:00 a.m. local time, May 14, 2004 and at any adjournment(s) thereof in the transaction of the following business: