EXHIBIT 10.24
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PROMISSORY JUDGMENT NOTE
$2,300,000 October 1, 1996
FOR VALUE RECEIVED AND INTENDING TO BE LEGALLY BOUND HEREBY,
allegheny capital growth limited partnership, a Delaware limited
partnership (the "Undersigned"), promises to pay to the order of
ACTION INDUSTRIES, INC., a Pennsylvania corporation (together with
its successors and assigns, "Action"), at the offices of Action
located at Action Industrial Park, 460 Nixon Road, Cheswick,
Pennsylvania 15024, or at such other place as Action may from time
to time designate in writing, the principal amount of TWO MILLION
THREE HUNDRED THOUSAND AND 00/100 DOLLARS ($2,300,000), together
with interest thereon at the rate specified herein.
1. This Note is the "New Note" referred to in, is subject to
the terms of and is entitled to the benefits of that certain
Settlement Agreement between the parties of even date herewith (the
"Settlement Agreement"), the terms of which are incorporated herein
by reference. Capitalized terms used herein and not otherwise
defined shall have the meanings assigned to those terms in the
Settlement Agreement.
2. This Note shall not bear interest prior to the second
anniversary of the Effective Date. Thereafter, this Note shall
bear interest at the rate of 6% per annum, which interest shall be
payable monthly in arrears commencing on the last day of the month
in which the second anniversary of the Effective Date occurs and
continuing on the last day of each month thereafter and on the
Maturity Date (defined below).
3. No repayment of the principal amount hereof shall be
required prior to the "Maturity Date," defined as the earliest to
occur of (a) the seventh anniversary of the date hereof, (b) the
date when the Property or a majority interest in the Undersigned is
sold to an unaffiliated third party (it being specifically
understood that family members of John Karlton to the third degree
of consanguinity and trusts created for his or their benefit are
not unaffiliated third parties) or (c) the date when a refinancing
of the indebtedness secured by the Property (a "Refinancing"),
other than a First Refinancing (defined below), occurs. All
outstanding principal, accrued interest and other amounts due
hereunder shall be due and payable on the Maturity Date.
4. If the Undersigned obtains a loan which refinances the
mortgage loan currently owed to Metropolitan Life Insurance Company
("Metropolitan") which is secured by the Property (the "First
Refinancing"), then such loan shall not have an original principal
amount in excess of $10,800,000. An extension of the current
Metropolitan loan shall not be considered to be the First
Refinancing unless the principal amount of such loan is increased
in connection with such extension; provided, that the inclusion of
any fees, outstanding interest or similar amounts in the principal
amount of such loan as a condition to such extension shall not
constitute an increase in the principal amount of such loan for the
purposes of this sentence.
5. Payments due under this Note and the obligations of the
Undersigned hereunder are subject to setoff and deduction in
accordance with the terms of the Settlement Agreement.
6. In the event of any litigation or arbitration between the
Undersigned and Action, the prevailing party shall be entitled to
recover from the other its reasonable costs and expenses (including
reasonable attorneys' fees and court costs) incurred in connection
with such litigation or arbitration. Subject to the foregoing, the
Undersigned agrees to pay, in addition to all other sums due
hereunder, the reasonable costs and expenses incurred by Action in
connection with all actions taken to collect this Note, whether by
legal proceedings or otherwise, including without limitation
reasonable legal fees and court costs.
7. All payments due hereunder which are not paid when due
shall bear interest at the rate of 8% per annum.
8. Payments under this Note, including amounts designated as
payments of interest or as prepayments, shall be applied by Action
first to lawful charges (including without limitation costs and
expenses due hereunder), then to interest accrued and then to
principal. The principal amount outstanding hereunder from time to
time may be prepaid, in whole or in part and at the option of the
Undersigned, without penalty or other restriction.
9. Upon the occurrence of any of the events described below
and so long as no Event of Default (as defined in the New Lease)
which has been determined to have occurred under the New Lease has
not been remedied, whether directly by Action or by the Partnership
having the opportunity to exercise offset rights under the
Settlement Agreement (each, an "Event of Default"), Action may,
upon written notice to the Undersigned, declare this Note and all
sums due hereunder to be immediately due and payable, whereupon
such amounts shall be immediately due and payable without
presentment, demand, protest or other formalities of any kind, all
of which are expressly waived by the Undersigned (except that upon
the occurrence of any of the events described in clause (g) below,
this Note and all sums due hereunder shall be immediately due and
payable and without presentment, demand, protest or other formality
of any kind, all of which are expressly waived by the Undersigned):
(a) The Undersigned shall fail to make any payment of
principal, interest or any other sums owing hereunder when due and
such failure shall continue for more than ten (10) days after
written notice thereof from Action to the Undersigned;
(b) The Undersigned shall (i) default (as principal or
as guarantor or other surety) in the payment or performance of any
obligation for Indebtedness (as that term is defined in Section
8(f) of the Settlement Agreement) other than the Supplemental Note
beyond any period of grace with respect thereto and (ii) in the
case of the Indebtedness secured by a first mortgage lien on the
Property from time to time only, the mortgagee commences to
exercise any of its remedies with respect thereto; provided,
however, that this Event of Default shall be deemed cured as and to
the extent that the holder of such Indebtedness shall either waive
the declaration of such default and reinstate the obligation or
obligations or deem the obligation or obligations satisfied; and
further provided, that notwithstanding any such default, Action
will forbear from exercising its remedies hereunder for so long as
the holders of all such Indebtedness so forbear, but if any of such
holders charge interest at a penalty rate during the period of such
forbearance then interest shall accrue hereunder during the period
of such forbearance at the rate specified in Paragraph 7 above;
(c) The Undersigned shall create, or permit to be
created, voluntarily, involuntarily, by operation of law or
otherwise, any mortgage, security interest or other lien of any
kind upon any of its assets or properties, including without
limitation upon the Property, the EWI Lease or the New Lease,
except for (i) mortgages, security interests and assignments of
leases and rents that secure the current Metropolitan loan or the
loan obtained as a result of the First Refinancing (which shall in
no event shall have a principal amount in excess of $10,800,000)
and (ii) liens which are not voluntarily created or assented to by
the Partnership and which are removed, bonded over or, in the case
of materialmen's and mechanics' liens only, adequately reserved
against within 30 days after written notice therof from Action to
the Undersigned; provided, that the Undersigned shall not be deemed
to be in default under this subparagraph if (A) such lien was
created by an act or omission of a tenant of the Property and (B)
the Undersigned is actively and in good faith pursuing its remedies
against such tenant to have such lien removed or bonded over;
(d) One or more judgments for the payment of money or in
mortgage foreclosure shall have been entered against the
Undersigned, which judgment or judgments exceed $50,000 in the
aggregate, and such judgment or judgments shall have remained
undischarged and unstayed for a period of twenty consecutive days;
(e) Subject to applicable notice and grace periods
contained therein, if any, the Undersigned shall breach any
obligation incurred or covenant made in Section 8(f) the Settlement
Agreement and such default shall not be cured within 30 days after
written notice of a default under such Section 8(f) is given by
Action to the Undersigned, except that a default under this
subsection shall be deemed to be cured whenever the Partnership
provides the information required by such Section 8(f);
(f) The Undersigned shall sell (or otherwise transfer or
convey) any portion of the Property; or
(g) A proceeding shall have been instituted in respect
of the Undersigned:
(i) seeking to have an order for relief entered in
respect of the Undersigned, or seeking a declaration or entailing
a finding that the Undersigned is insolvent or a similar
declaration or finding, or seeking dissolution, winding-up, charter
revocation or forfeiture, liquidation, reorganization, arrangement,
adjustment, composition or other similar relief with respect to the
Undersigned, its assets or its debts under any law relating to
bankruptcy, insolvency, relief of debtors or protection of
creditors, termination of legal entities or any other similar law
now or hereafter in effect; or
(ii) seeking appointment of a receiver, trustee,
custodian, liquidator, assignee, sequestrator or other similar
official for the Undersigned or for all or any substantial party of
its property and such proceeding shall result in the entry, making
or grant of any such order for relief, declaration, finding, relief
or appointment, or such proceeding shall remain undismissed and
unstayed for a period of ninety consecutive days;
provided, that any such proceeding shall not constitute a default
under this subsection if Action institutes, or joins with any other
creditor in instituting, such proceeding.
10. The successors and assigns of the Undersigned shall be
bound by the terms hereof; the rights and privileges of Action
under this Note shall inure to the benefit of its successors and
assigns; the Undersigned may not assign or delegate its rights or
obligations hereunder without the prior written consent of the
holder hereof. This Note shall be governed by the laws of the
Commonwealth of Pennsylvania. Except as expressly provided to the
contrary herein, all persons now or at any time liable for payment
of this Note hereby waive presentment, demand, dishonor, protest,
notice of protest, notice of default and notice of dishonor, and
any other notice or demand of any kind from Action. The
Undersigned expressly consents to any and all extensions and
renewals of this Note, in whole, or in part, and to all delays in
time of payment or other performance under this Note which Action
may grant at any time and from time to time without limitation and
without any notice or further consent of the Undersigned. Action
hereby reserves all rights against the Undersigned.
11. The remedies of Action, as provided herein or by law,
shall be cumulative and concurrent and may be pursued singularly,
successively or together, at the sole discretion of Action, and may
be exercised as often as the occasion therefor shall arise.
12. POWER TO CONFESS JUDGMENT: AT ANY TIME AFTER AN EVENT OF
DEFAULT DESCRIBED IN PARAGRAPH 9(a) HAS OCCURRED, THE UNDERSIGNED
HEREBY IRREVOCABLY AUTHORIZES AND EMPOWERS THE PROTHONOTARY OR ANY
ATTORNEY OF ANY COURT OF RECORD WITHIN THE UNITED STATES OR
ELSEWHERE, INCLUDING THE COURT OF COMMON PLEAS OF ALLEGHENY COUNTY,
PENNSYLVANIA, TO APPEAR FOR THE UNDERSIGNED, AND WITH OR WITHOUT
DECLARATION FILED, CONFESS JUDGMENT AGAINST THE UNDERSIGNED IN
FAVOR OF THE HOLDER HEREOF, AS OF ANY TERM, FOR THE UNPAID BALANCE
HEREOF, WHETHER BY ACCELERATION OR OTHERWISE WITH COSTS OF SUIT AND
AN ATTORNEY'S COMMISSION OF $15,000 WITH RELEASE OF ERRORS. THE
UNDERSIGNED HEREBY WAIVES ALL LAWS EXEMPTING REAL OR PERSONAL
PROPERTY FROM EXECUTION, TO THE EXTENT THAT SUCH LAWS MAY LAWFULLY
BE WAIVED BY THE UNDERSIGNED. NO SINGLE EXERCISE OF THE FOREGOING
POWER TO CONFESS JUDGMENT SHALL BE DEEMED TO EXHAUST THE POWER,
WHETHER OR NOT ANY SUCH EXERCISE SHALL BE HELD BY ANY COURT TO BE
INVALID, VOIDABLE OR VOID, BUT THE POWER SHALL CONTINUE
UNDIMINISHED AND IT MAY BE EXERCISED FROM TIME TO TIME AS OFTEN AS
THE HOLDER HEREOF SHALL ELECT, UNTIL SUCH TIME AS HOLDER SHALL HAVE
RECEIVED PAYMENT IN FULL OF THE DEBT EVIDENCED HEREBY.
BY SIGNING THIS INSTRUMENT, THE UNDERSIGNED HEREBY
ACKNOWLEDGES THAT THIS NOTE IS GIVEN IN CONNECTION WITH A
COMMERCIAL TRANSACTION AND THAT IT HAS READ, UNDERSTOOD AND
VOLUNTARILY AGREES TO THE PROVISIONS CONTAINED HEREIN, INCLUDING
THE CONFESSION OF JUDGMENT PROVISION WHICH MAY RESULT IN A COURT
JUDGMENT AGAINST THE UNDERSIGNED WITHOUT PRIOR NOTICE OR HEARING
AND SUBJECT TO ANY OFFSET RIGHTS OF THE UNDERSIGNED.
13. Action agrees that if, in connection with the enforcement
of its rights under this Note, it obtains a lien against the
Property, it will release such lien if (a) the Property is sold to
EWI or its permitted assigns pursuant to the option, and at the
option price, currently set forth in the EWI Lease and (b) Action
receives all proceeds from such sale which are payable to the
Landlord under the EWI Lease (but in no event more than are
necessary to satisfy this Note and the Supplemental Note in full).
14. If at any time Action receives a bona fide offer to purchase
this Note which it intends to accept, it shall give the Undersigned
notice of such offer (an "Offer Notice"), which notice shall set
forth the terms of such offer and the proposed purchaser. The
Undersigned shall have a period of 10 days after its receipt of an
Offer Notice to elect to purchase this Note on the same terms and
conditions as set forth in the Offer Notice (except the puchase
price shall be paid in cash) by giving notice to Action to such
effect. Notwithstanding the foregoing, if the purchase price for
this Note is payable in installments in whole or in part, then the
Undersigned may either (a) pay the purchase price in cash, in which
case the purchase price (or such portion thereof) shall be
discounted to present value using the interest rate (if any) to be
paid by such proposed purchaser or (b) pay the purchase price in
installments, but only if it also delivers to Action an irrevocable
letter of credit securing its obligation to pay the balance of the
purchase price. If the Undersigned so elects to purchase this
Note, then the closing of such transaction shall occur not later
than the date when the closing with the proposed purchaser was to
have occurred, as specified in the Offer Notice. If the
Undersigned does not so elect to purchase this Note then, during
the 90-day period commencing 10 days after the Undersigned's
receipt of the Offer Notice, Action shall have the right to sell
this Note to the purchaser identified in, and on terms and
conditions substantially as specified in, the Offer Notice. If
such a sale does not occur within such time period then it shall
once again be subject to the terms of this Section. The foregoing
rights of the Undersigned shall not be applicable in the case of a
sale or other transfer of this Note to any person who controls, is
controlled by or is under common control with Action or to any
puchaser of all or substantially all of the assets of Action;
provided, that the foregoing rights shall suvive any such sale or
transfer and the transferee shall be bound thereby.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, and intending to be legally bound hereby,
the Undersigned has caused this note to be executed and delivered
as of the day and year first above written.
ALLEGHENY CAPITAL GROWTH
LIMITED PARTNERSHIP
By: Third Pennsylvania
Holding Corporation, its
General Partner
By: JOHN KARLTON
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Name: JOHN KARLTON
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Title: PRESIDENT
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