EXHIBIT 10.20

 

AMENDED RENEWAL

PROMISSORY NOTE

(this “Note”)

 

$24,507,856.12   Date: October 31, 2003

 

FOR VALUE RECEIVED, the undersigned, TreeCon Resources, Inc. formerly known as
Overhill Corporation and before that as Polyphase Corporation (the “Borrower”),
promises to pay the order of Harold Estes (“Lender”), at Lufkin, Texas, the
principal sum of Twenty-Four Million Five Hundred Seven Thousand Eight Hundred
Fifty-Six Dollars and Twelve Cents ($24,507,856.12), upon the following terms:

 

1. Interest. The unpaid principal balance hereof shall be due and payable on the
Maturity Date (as hereafter defined), with interest thereon at the rate of five
percent (5%) per annum. Notwithstanding anything to the contrary contained
herein, past due principal and interest shall bear interest at the rate of
interest equal to the lesser of (a) eighteen percent (18%) per annum or (b) the
Maximum Lawful Rate. Interest shall be calculated at a daily rate equal to
1/366th of the applicable annual percentage rate. The “Maximum Lawful Rate”
shall mean the maximum rate of interest from time to time permitted under
federal or state laws now or hereafter applicable to this Note, after taking
into account, to the extent required by applicable law, any and all relevant
changes and calculations.

 

2. Payment of Principal and Interest. The entire unpaid principal amount of this
Note shall be due and payable on October 31, 2004 (the “Maturity Date”).
Quarterly payments shall be made on this Note beginning on December 31, 2003 and
continuing on each successive March 31, June 30 and September 30, in an amount
equal to any amount loaned, dividended, advanced or transferred by the Company
(as defined in Paragraph 4 below) during such quarter to Borrower in connection
with, in any manner related to, or for the purpose of payment of federal, state,
county, city, local or foreign taxes by Borrower. Unless otherwise agreed by
Borrower and Lender the amount of any such payment shall first be applied to
accrued interest and then principal.

 

If any installment of principal on this Note shall become due on a Saturday,
Sunday or other day on which national banks are not open for business, such
payment shall be due on the next succeeding business day. Unless otherwise
agreed by Borrower and Lender each payment hereunder (including any prepayment)
received by Lender shall be applied first to the payment of accrued interest due
hereunder, if any and then to the reduction of the unpaid principal balance
hereof. After the occurrence and during the continuation of any event of default
(as hereinafter defined), any payment hereunder received by Lender may be
applied in any manner as Lender determines, in his sole discretion.

 

3. Prepayment. The Borrower may, at its option upon five business days notice,
prepay the outstanding amount of this Note, in whole or in part, with accrued
interest but without any premium or other prepayment fee.

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4. Security. The indebtedness evidenced hereby is secured by: (1) that certain
Pledge Agreement dated June 24, 1994, as amended, between Borrower, as pledgor,
and Lender, as secured party (the “Pledge Agreement”), whereby Borrower grants
to Lender a first and prior lien and security interest in and upon the Pledge
Stock (as defined in the Pledge Agreement) and (ii) that certain Security
Agreement, as amended, dated June 24, 1994 between Texas Timberjack, Inc., a
Texas corporation, as debtor (the “Company”), and Lender, as secured party (the
“Security Agreement”), whereby the Company grants to Lender a lien and security
interest in and upon all of the Assets (as defined in the Security Agreement) of
the Company.

 

5. Events of Default: Remedies. Each of the following shall constitute an event
of default hereunder:

 

  a. Borrower’s failure to make any payment hereunder when due;

 

  b. Borrower’s default under the terms and conditions of the Pledge Agreement;

 

  c. The Company’s default under the terms and conditions of the Security
Agreement;

 

  d. A decree or order by a court of competent jurisdiction shall have been
entered either: (i) adjudging Borrower or the Company a bankrupt or insolvent,
or (ii) approving a petition seeking reorganization or arrangement of the
Borrower under state or federal law, or (iii) appointing for the Borrower or the
Company a receiver, liquidator or trustee or assignee in bankruptcy or
insolvency or any receiver of all or any substantial portion of its property,
and such decree or order shall continue in force for a period of more than
thirty days; or

 

  e. The Borrower or the Company shall institute any proceeding to be
adjudicated a voluntary bankrupt, or shall consent to the filing of a bankruptcy
or reorganization petition against it, or shall consent to the appointment of a
receiver, liquidator, or trustee or assignee in bankruptcy or insolvency or any
receiver of all or any substantial portion of its property, or Borrower makes a
general assignment for the benefit of creditors or admits in writing its
inability to pay its debts as they become due.

 

Upon the occurrence of any event of default, this Note, without notice or demand
by Lender, shall become immediately due and payable. Upon the occurrence of an
event of default Lender will be entitled to any and all remedies described in
the Pledge Agreement and/or the Security Agreement, which remedies are
incorporated herein for all purposed, and all other remedies available at law or
in equity.

 

6. Cumulative Rights. No delay on the part of the holder of this Note in the
exercise of any power or right under this Note or any other agreement,
instrument or document executed pursuant hereto or in connection herewith shall
operate as a waiver thereof, nor shall a single or partial exercise of any other
power or right. Enforcement by the holder of this Note of any security for the
payment hereof shall not constitute any election by it of remedies so as to
preclude the exercise of any other remedy available to it.

 

7. Waiver. Borrower and each surety, endorser, guarantor and other party ever

 

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liable for payment of any part hereof jointly and severally waive presentment
and demand for payment, protest, notice of intention to accelerate, notice of
acceleration and notice of protest and nonpayment, and agree that their
liability on this Note shall not be affected by, and hereby consent to any
renewal or extension in the time of payment hereof, any indulgences or any
release or change on any security for the payment of this Note.

 

8. Usury. Regardless of any provisions contained in this Note or in any other
documents and instruments referred to herein, Lender shall never be deemed to
have contracted for or be entitled to receive, collect, or apply as interest on
this Note any amount in excess of the Maximum Lawful Rate, and in the event
Lender ever receives, collects or applies as interest any such excess, such
amount which would be excessive interest shall be applied to the reduction of
the unpaid, principal balance of this Note, and, if the principal balance of
this note is paid in full, any remaining excess shall forthwith be paid to
Borrower. In determining whether or not the interest paid or payable under any
specific contingency exceeds the Maximum Lawful Rate, Borrower and Lender shall,
to the maximum extent permitted under applicable law, (i) characterize any
non-principal payment as an expense, fee or premium, rather than as interest;
and (ii) exclude voluntary prepayments and the effect thereof; and (iii)
amortize, prorate, allocate, and spread, in equal parts, the total amount of
interest throughout the entire contemplated term of this Note so that the
interest rate is uniform throughout the term of this Note; provided that if this
Note is paid and performed in full prior to the end of the full contemplated
term thereof, and if the interest received during the actual period of existence
thereof exceeds the Maximum Lawful Rate, the holder of this Note shall refund to
Borrower the amount of such excess or credit the amount of such excess against
the principal amount due thereunder, and in such event, no holder of this Note
shall be subject to any penalties provided by any laws for contracting for,
charging for, or receiving interest in excess of the Maximum Lawful Rate.

 

If at any time and from time to time Lender is prevented from collecting the
rate of interest and the fees specified in this Note, by applicable law or
governmental regulation, it shall be entitled to recoup the amount it would have
otherwise been able to collect when such recoupment will not violate such
applicable law or governmental regulation. Such recoupment shall be accomplished
by the Borrower paying interest at the Maximum Lawful Rate until such time as
Lender shall have fully recouped the interest it would have otherwise been able
to collect from Borrower in the absence of such applicable law or governmental
regulation. During any such period of recoupment, interest collected by Lender
shall first be credited to payment of current interest due at the rate specified
in this Note, then any remaining interest collected shall be applied to
recoupment. When Lender shall have recouped all such interest, the interest rate
payable by Borrower shall revert to the rate specified in this Note. In no
event, however, shall the interest rate charged hereunder ever exceed the
maximum rate of interest permitted by applicable law.

 

9. Governing Law. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF TEXAS AND THE APPLICABLE LAWS OF THE UNITED STATES
OF AMERICA. THIS NOTE IS PERFORMABLE IN ANGELINA COUNTY, TEXAS, AND BORROWER
WAIVES THE RIGHT TO BE SUED HEREON ELSEWHERE. COURTS WITHIN THE STATE OF TEXAS
SHALL HAVE JURISDICTION OVER ANY AND ALL DISPUTES BETWEEN LENDER

 

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AND BORROWER, WHETHER AT LAW OR IN EQUITY, INCLUDING, BUT NOT LIMITED TO, ANY
AND ALL DISPUTES ARISING OUT OF OR RELATING TO THIS NOTE OR ANY OTHER AGREEMENT,
INSTRUMENT OR DOCUMENT EXECUTED IN CONNECTION HEREWITH; AND VENUE IN ANY SUCH
DISPUTE SHALL BE IN LUFKIN, TEXAS.

 

10. Attorney’s Fees. If this Note is not paid at maturity whether by
acceleration or otherwise or is placed in the hands of an attorney for
collection, or suit is filed hereon, or proceedings are had in probate,
bankruptcy, receivership, reorganization, arrangement or other legal proceedings
for collection thereof, Borrower agrees to pay Lender its collection costs,
including a reasonable amount as attorney’s fees, but in no event to exceed the
maximum amount permitted by law.

 

11. Severability. If any portion of this Note is declared invalid, for any
reason, such declaration shall not affect the validity of any remaining portion,
which remaining portion shall remain in force and effect as if this Note had
been executed with the invalid portion thereof eliminated.

 

12. Headings. The headings used herein are for convenience only, have no
substantive content, may not thoroughly describe the contents of the paragraphs
which they head and shall not be used in construing this Note.

 

13. Business Purpose. The indebtedness represented by this Note (and any
predecessor indebtedness extended and renewed hereby) was and is for business
purposes only and not for any personal, family or household purposes.

 

14. Modification, Extension and Renewal. The Note is given as a modification,
extension and renewal of a series of notes beginning with that one certain
promissory note dated June 24, 1994 in the original amount of Ten Million and
No/100 Dollars (10,000,000.00) given by Borrower to Lender (the “Original
Note”). Borrower acknowledges that the Original Note and all of the
aforementioned renewal notes have matured, and that Borrower has no claims or
rights of offsets against Lender. The collateral given under the Pledge
Agreement and the Security Agreement is not being released or modified.

 

15. Notices. All notices and other communications hereunder shall be in writing
and shall be deemed given if delivered personally or by facsimile transmission,
telexed or mailed by registered or certified mail (return receipt requested),
postage prepaid, to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):

 

Borrower:

 

TreeCon Resources, Inc.

4800 Broadway, Suite A

Addison, Texas 75001

Attn: Michael Boatman

 

Lender:

 

Harold Estes

 

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Route 15, Box 9475

Lufkin, Texas 75091

Fax No. (409) 639-3673

 

16. Releases. In consideration of Lender’s renewing the indebtedness represented
by this Note, and certain other good and valuable consideration, Borrower hereby
expressly acknowledges and agrees that it has no setoffs, counterclaims,
adjustments, recoupments, defenses, claims or actions of any character, whether
contingent, non-contingent, liquidated, fixed, matured, unmatured disputed,
undisputed, legal, equitable, secured or unsecured, known or unknown, against
Lender. To the extent Borrower may possess any such setoffs, counterclaims,
adjustments, recoupments, claims, actions, grounds or causes, it hereby waives,
and hereby releases Lender from any and all of such setoffs, counterclaims,
adjustments, recoupments, claims, actions, grounds and causes, such waiver and
release being with full knowledge and understanding of the circumstances and
effects of such waiver and release and after having consulted counsel with
respect thereto.

 

IN WITNESS WHEREOF, Borrower has duly executed this note as of the day and year
above first written.

 

BORROWER:

 

TREECON RESOURCES, INC.

By:   /s/    Mike S. Boatman             Mike S. Boatman, President

 

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