<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transitional period from ________________ to ________________
Commission File Number: 0-22077
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ERGOBILT, INC.
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(Exact name of registrant as specified in its charter)
Texas 75-2600529
------------------------------ ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification number)
9244 Markville Drive, Dallas, Texas 75243-4404
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(Address of principal executive offices) (Zip Code)
(972) 889-3742
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Registrant's telephone number including area code
5000 Quorum Drive, Suite 147, Dallas, Texas 75240
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(Former name, former address and former fiscal year, if
changed since last report)
Indicate by check mark whether the registrant (1) filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: $.0001 par value, 6,156,000
shares as of November 14, 1997
<PAGE> 2
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ErgoBilt, Inc.
- ----------------------
(Registrant)
/s/ Gerard Smith Date November 14, 1997
- ----------------------------------------------- -------------------
Gerard Smith, President, Chief
Executive Officer and Director
/s/ William B. Glenn Date November 14, 1997
- ----------------------------------------------- -------------------
William B. Glenn, Senior Vice
President and Chief Financial
Officer
(Principal Financial and Accounting Officer)
<PAGE> 3
Exhibits filed herewith.
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description
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<S> <C>
10.1 Comerica Bank - $975,000 Promissory Note
10.2 Comerica Bank - $375,000 Promissory Note
</TABLE>
<PAGE> 1
PROMISSORY NOTE
$975,000.00 DALLAS, TEXAS September 24, 1997
1. PROMISE TO PAY. FOR VALUE RECEIVED, the undersigned,
BODYBILT, INC., a Texas corporation (formerly known as BodyBilt Seating, Inc)
("Maker"), hereby promises to pay to the order of COMERICA BANK - TEXAS
("Payee"), at its offices at 1601 Elm Street, Dallas, Texas 75201, or such
other location as Payee may hereafter designate in writing, in lawful money of
the United States of America the principal sum of NINE HUNDRED SEVENTY-FIVE
THOUSAND AND NO/1OO DOLLARS ($975,000.00), together with interest on the unpaid
principal balance outstanding from time to time hereon from day to day at the
annual rate set forth below.
2. INTEREST RATE. The unpaid principal balance of this Note shall
accrue interest prior to maturity or default at a rate equal to the lesser of
(a) 9.20% per annum (the "Applicable Rate") or (b) the Maximum Rate
(hereinafter defined).
"Maximum Rate" means the maximum" lawful rate of interest permitted by
applicable usury laws now or hereafter enacted which interest rate shall change
when and as said laws change, to the extent permitted by law, effective on the
day such change in said laws becomes effective.
In determining the Maximum Rate, due regard shall be given to all
payments, fees, charges, deposits, balances and agreements which may constitute
interest or be deducted from principal when calculating interest. Computations
of interest on the unpaid principal balance of this Note, from time to time
outstanding, at the rate provided in this Note, shall be made on the basis of
the actual number of days elapsed. To the extent permitted by applicable law,
such interest shall be computed as if each year consisted of three hundred
sixty (360) days, but to the extent such computation of interest might cause
the rate of interest to exceed the Maximum Rate, such interest shall be
computed on the basis of a three hundred sixty-five (365) day or three hundred
sixty-six (366) day year, as the case may be.
3. PAYMENT. This Note is and shall be due and payable in sixty
(60) monthly installments. The first fifty-nine (59) installments are and
shall be in the amount of $10,005.44 including accrued interest each, and the
sixtieth (60th) and final installment is and shall be in an amount equal to the
balance of principal and accrued and unpaid interest then owing hereon. The
first (1st) installment is and shall be due and payable on November 1, 1997,
and the remaining installments are and shall be due and payable in consecutive
order on the first (1st) day of each and every succeeding calendar month
thereafter until all amounts called for hereunder have been paid in full, with
the final installment being due and payable on October 1, 2002.
All principal, interest and other sums payable under this Note shall
be paid, not later than 2:00 o'clock p.m. (Dallas, Texas time) on the day when
due, in immediately available funds in lawful money of the United States of
America. Any payment under this Note or under any other Loan Document (as
hereinafter defined) other than in the required amount in good, unrestricted
U.S. funds
PROMISSORY NOTE - PAGE 1
<PAGE> 2
immediately available to the Payee shall not, regardless of any receipt or
credit issued therefor, constitute payment until the required amount is
actually received by the Payee hereof in such funds and shall be made and
accepted subject to the condition that any check or draft may be handled for
collection in accordance with the practice of the collecting bank or banks.
4. EFFECT OF WEEKEND AND HOLIDAYS. If any installment of
principal or interest on this Note shall become due on a Saturday, Sunday or
any other day on which Payee is not open for business, such payment shall be
made on the next succeeding day on which Payee is open for business; and such
extension of time shall in such case be included in computing interest in
connection with such payment.
5. DEFAULT INTEREST RATE. All past due principal and interest on
this Note, whether due as the result of acceleration of maturity or otherwise,
shall bear interest at the Maximum Rate. In determining the maximum rate, due
regard shall be given to all payments, fees, charges, deposits, balances and
agreements which may constitute interest or be deducted from principal when
calculating interest.
6. PREPAYMENTS. On any interest payment date under this Note,
and upon five (5) days written notice to Payee, Maker may prepay this Note in
whole or in part in amounts of at least Fifty Thousand and No/100 Dollars
($50,000.00) upon payment to Payee of a premium (not to be applied to principal
or interest) in an amount equal to the sum of the discounted net present values
of the interest payments that would otherwise be payable on the principal
amount being prepaid after reducing each such interest payment by the amount of
interest that would be payable on its respective due date if the amount being
prepaid were reinvested at the Current Market Rate. For these purposes,
"Current Market Rate" shall mean a per annum interest rate equal to one-half
percent (1/2%) above the rate reasonably determined by Payee (based on
quotations from established dealers) to be in effect at the prepayment date in
the secondary market for United States Treasury Securities of a comparable
amount and with a comparable term to maturity. The discount rate for the above
computation shall be the Current Market Rate. A certificate shall be submitted
by Payee to Maker computing the prepayment premium and shall be presumed
correct absent manifest error.
The provisions of this Paragraph shall be subject to Paragraph 8 of
this Note so that to the extent the prepayment premium is considered interest
under applicable law, the provisions of such Paragraph 8 shall apply.
7. SECURITY FOR NOTE. This Note is secured, among other things,
by a Deed of Trust, Assignment, Security Agreement and Financing Statement
(herein called the "Deed of Trust") of even date herewith, pursuant to which
the Maker, conveyed to Gary W. Orr, as Trustee, certain property in Grimes
County, Texas, fully described therein (the "Property ).Payment of this Note is
unconditionally guaranteed by ErgoBilt, Inc., a Texas corporation.
PROMISSORY NOTE - PAGE 2
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This Note, the Deed of Trust, the Guaranty Agreement and any other
document now or hereafter securing, guaranteeing or executed in connection with
the loan evidenced by this Note are, as the same may be amended, restated,
modified or supplemented from time to time herein sometimes called individually
a "Loan Document" and together the "Loan Documents".
8. DEFAULT. If Maker fails to make any payment on this Note
either principal, interest or any installment thereof when due, or if default
occurs under the Deed of Trust or under any other Loan Document and such
default continues following the expiration of any applicable curative period,
then in any such event the Payee may, at its option, without notice or demand,
declare the entire unpaid principal balance of and accrued but unpaid interest
on the indebtedness evidenced by this Note immediately due and payable without
notice or demand, foreclose all liens and security interests securing the
payment hereof, offset against this Note any sum or sums owed by the Payee to
Maker (including any deposits, funds or other property of Maker held by Payee),
and/or exercise any or all other remedies available to the Payee, all at the
option of the Payee. Failure to exercise any such option shall not constitute
a waiver of the right of Payee to exercise the same at any later time or in the
event of any subsequent default. The acceptance by Payee of any payment
hereunder that is less than payment in full of all amounts due and payable at
the time of such payment shall not constitute a waiver of the right to exercise
any of the foregoing options at that time, or at any subsequent time, or
nullify any prior exercise of any such option, without the express written
consent of Payee.
9. USURY LIMITATIONS. It is the intent of Payee and Maker in the
execution of this Note and all other Loan Documents to contract in strict
compliance with applicable usury law. In furtherance thereof, Payee and Maker
stipulate and agree that none of the terms and provisions contained herein or
in any other Loan Document shall ever be construed to create a contract to pay,
for the use, forbearance or detention of money, interest at a rate in excess of
the Maximum Rate. Neither Maker nor any co-makers, endorsers, sureties,
guarantors or other parties now or hereafter becoming liable for payment of
this Note shall ever be required to pay interest or finance charges at a rate
in excess of the Maximum Rate, and the provisions of this Paragraph shall
control over all other provisions of this Note and any other Loan Document
which may be in apparent conflict herewith. Payee and any other holder of this
Note expressly disavow any intention to charge or collect excessive unearned
interest or finance charges in the event the maturity of this Note is
accelerated. If demand is made or if the maturity of this Note shall be
accelerated for any reason or if any of the principal of this Note is prepaid,
and as a result thereof the interest or finance charge received for the actual
period of existence of the loan evidenced by this Note exceeds the Maximum
Rate, the holder of this Note shall, at its option, either refund to Maker the
amount of such excess or credit the amount of such excess against the principal
balance of this Note then outstanding, and thereby shall render inapplicable
any and all penalties of any kind provided by applicable law as a result of
such excess interest. In the event that Payee or any other holder of this Note
shall collect monies and/or any other thing of value which are deemed to
constitute interest which would increase the effective interest rate on this
Note to a rate in excess of the Maximum Rate, all such sums deemed to
constitute interest in excess of the lawful rate shall, upon such
determination, at the option of the holder of this Note, be either immediately
returned to Maker or credited against the principal balance of this Note then
outstanding, in which event any and all penalties of any kind under
PROMISSORY NOTE - PAGE 3
<PAGE> 4
applicable law as a result of such excess interest shall be inapplicable. In
determining whether or not the interest paid or payable, under any specific
circumstance, exceeds the maximum amount permitted under applicable law, Payee
and Maker shall to the greatest extent permitted by applicable law, (i)
characterize any non-principal payment as an expense, fee or premium rather
than as interest, (ii) exclude voluntary prepayments and the effects thereof,
and (iii) amortize, prorate, allocate and spread the total amount of interest
throughout the entire contemplated term hereof in accordance with the amounts
outstanding from time to time thereunder and the Maximum Rate from time to time
in effect under applicable law in order to lawfully charge the maximum amount
of interest permitted under applicable law. By execution of this Note, Maker
acknowledges that it believes the loan evidenced hereby to be nonusurious and
agrees that if, at any time, Maker should have reason to believe that this Note
is in fact usurious, it will give the holder of this Note notice of such
condition and Maker agrees that said holder shall have ninety (90) days in
which to make appropriate refund or other adjustment in order to correct such
condition if in fact such exists. The term "applicable law" as used in this
Note shall mean the laws of the State of Texas or the laws of the United
States, whichever laws allow the greater rate of interest, as such laws now
exist or may be changed or amended or come into effect in the future.
The terms "Maximum Amount" or "Maximum Rate" as used herein include,
as to Article 5069-1.04 of the Revised Civil Statutes of the State of Texas
(and as same may be incorporated by reference in other statutes of the State of
Texas), but otherwise without limitation, that rate based upon the "Indicated
(Weekly) Rate Ceiling"; provided, however, that this designation shall not
preclude the rate of interest contracted for, charged or received hereunder or
otherwise in connection with this loan transaction from being governed by, or
construed in accordance with, any other state or federal law, and Payee has the
right from time to time to implement, withdraw, and reinstate any ceiling as an
alternative to the Indicated (Weekly) Rate Ceiling, including the right to
reinstate the Indicated (Weekly) Rate Ceiling.
10. WAIVERS. Maker and any sureties, guarantors, endorsers and
all other parties ever liable for payment of this Note jointly and severally
(a) waive demand, notice of intent to demand, presentment, notice of
nonpayment, notice of intent to accelerate, notice of acceleration, diligence
in collecting, grace, protest, notice of protest, notice of dishonor, notice of
application for or actual appointment of a receiver for the Property or any
other asset of Maker, bringing of suit, and diligence in taking any action to
collect any sums owing hereunder or in proceeding against any of the rights and
properties securing payment of the indebtedness evidenced by this Note, (b)
consent to all extensions without notice for any period or periods of time and
partial payments, before or after maturity, without prejudice to the Payee; (c)
agree to any substitution, subordination, exchange or release of any such
security or the release of any party primarily or secondarily liable hereon;
(d) agree that Payee shall not be required first to institute suit or exhaust
its remedies hereon against Maker or others liable or to become liable hereon
or to enforce its rights against them or any security here for; and (e) consent
to any extension or postponement of time of payment of this Note or to any
other indulgence with respect hereto without notice to any of them, and without
in any way affecting the personal liability of any party hereunder.
PROMISSORY NOTE - PAGE 4
<PAGE> 5
11. COLLECTION COSTS. If Payee retains an attorney in connection
with any default or at maturity or to collect, enforce or defend this Note or
any other Loan Document in any lawsuit or in probate, reorganization,
bankruptcy or other proceeding, then Maker agrees to pay to Payee, in addition
to principal and interest, all reasonable costs and expenses incurred by Payee
in trying to collect this Note or in any such suit or proceeding, including
reasonable attorneys' fees.
12. TERMINATION. This Note may not be terminated orally, but only
by a discharge in writing signed by the Payee at the time such discharge is
sought.
13. MULTIPLE MAKERS AND ENDORSERS. Should this Note be signed or
endorsed by more than one person and/or entity, all of the obligations herein
contained shall be considered the joint and several obligations of each maker
and endorser hereof.
14. APPLICABLE LAW. THIS NOTE AND ITS VALIDITY, ENFORCEMENT AND
INTERPRETATION, SHALL BE GOVERNED BY TEXAS LAW (WITHOUT REGARD TO ANY CONFLICT
OF LAW PRINCIPLES) AND APPLICABLE UNITED STATES FEDERAL LAW.
15. NOTICES. All notices or other communications required or
permitted to be given pursuant to this Note (except for notices of a
foreclosure sale which shall be given in the manner set forth in the applicable
paragraph of the Deed of Trust) shall be given in writing, sent by (a) personal
or hand delivery, or (b) expedited or overnight delivery service with proof of
delivery, or (c) United States mail, postage prepaid, registered or certified
mail, or (d) prepaid telegram, telex, telecopy or fax (provided that such
telegram, telex, telecopy or fax is confirmed by personal or hand delivery,
expedited or overnight delivery service or by mail in the manner previously
described), addressed as follows:
If to Maker, to: BodyBilt, Inc.
1 BodyBilt Place
Navasota, TX 77868
Attention: Mr. Gerald McMillan
If to Payee, to: Comerica Bank - Texas
1601 Elm Street
Dallas, TX 75201
Attention: Mr. Brian Foley
or to such other address or to the attention of such other person as hereafter
shall be designated by 30 days prior notice in writing from the applicable
party and sent in accordance herewith. Any such notice or communication shall
be deemed to have been given (i) at the time of the actual delivery of same to
the intended addressee or any party having actual or apparent authority (it
being agreed that any party accepting delivery at any of the addresses set
forth above shall be deemed to have apparent authority whether or not such
party is employed by the addressee) to accept delivery for such party, (ii) if
sent by mail, at the time of the deposit thereof in the United States mail, and
(iii)
PROMISSORY NOTE - PAGE 5
<PAGE> 6
if sent by telecopy or fax, at the time of the transmission of same to the
telecopy or fax number set forth above for such addressee. In the event any
notice or communication is given in more than one of the manners set forth
above (for example, by personal delivery and by fax), such notice or
communication shall, for purposes of notice hereunder, be deemed given at the
earliest such time. Notice given in any other manner shall be effective only
if and when received by the addressee.
16. BUSINESS PURPOSE. The loan evidenced by this Note is made
solely for business purposes and is not for personal, family, household or
agricultural purposes.
Time shall be of the essence in this Note with respect to all of Maker's
obligations hereunder.
THE LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the Maker has duly, executed this Note as of the
day and year above first written.
BODYBILT, INC., a Texas corporation
By: /s/ GERALD MCMILLAN
-------------------------------------
Printed Name: Gerald McMillan
Title: Chairman of the Board
PROMISSORY NOTE - PAGE 6
<PAGE> 1
PROMISSORY NOTE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
PRINCIPAL LOAN DATE MATURITY LOAN NO CALL COLLATERAL ACCOUNT OFFICER INITIAL
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$374,940.00 09-12-1997 10-01-2000 599 120 1442922487 43556
- -----------------------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit the applicability of this document
to any particular loan or item.
- -----------------------------------------------------------------------------------------------------------
BORROWER: ERGOBILT, INC. (TIN: 752600529) LENDER: COMERICA BANK - TEXAS
9244 MARKVILLE DRIVE CORPORATE-MIDDLE MARKET-NORTHWEST
DALLAS, TX 75243 P.O. BOX 650282
DALLAS, TX 75265-0282
===========================================================================================================
PRINCIPAL AMOUNT: $374,940.00 INITIAL RATE: 9.000% DATE OF NOTE: SEPTEMBER 12, 1997
</TABLE>
PROMISE TO PAY. ErgoBilt, Inc. ("Borrower") promises to pay to Comerica Bank -
Texas ("Lender). or order, in lawful money of the United States of America, the
principal amount of Three Hundred Seventy Four Thousand Nine Hundred Forty &
00/100 Dollars ($374,940.00), together with interest on the unpaid principal
balance from September 12, 1997, until maturity.
PAYMENT. Subject to any payment changes resulting from changes in the index,
Borrower will pay this loan on demand, or if no demand is made, in 35 principal
payments of 410,415.00 each and one final principal and interest payment of
$10,493.11. Borrower's first principal payment is due November 1, 1997, and all
subsequent principal payments are due on the same day of each month after that.
In addition borrower will pay regular monthly payments of all accrued unpaid
interest due as of each payment date. Borrower's first interest payment due
November 1, 1997 and all subsequent interest payments are due on the same day
of each moth after that. Borrower's final payment date, October 1, 2000, will
be for all principal and accrued interest not yet paid. The annual interest
rate for this Note is computed on a 365/360 basis that is, by applying the
ratio of the annual interest rate over a year of 360 days, multiplied by the
outstanding principal balance, multiplied by the actual number of days the
principal balance is outstanding, unless such calculation would result in a
usurious rate, in which case interest shall be calculated on a per diem basis
of a year of 365 or 366 days, as the case may be. Borrower will pay Lender at
Lender's address shown above or at such other place as Lender may designate in
writing. Unless otherwise agreed or required by applicable law, payments will
be applied first to accrued unpaid interest, then to principal, and any
remaining amount to any unpaid collection costs and late charges.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change
from time to time based on changes in an index which is Lender Prime Rate (the
"Index"). this is the rate Lender charges, would charge, on 90-day unsecured
loans to the most creditworthy corporate customer. This rate may or may not be
the lowest rate available from Lender at any given time. Lender will tell
Borrower the current index rate upon Borrower's request. Borrower understands
that Lender may make loans based on other rates as well. The interest rate
change will not occur more often than each day. THE INDEX CURRENTLY IS 8.500%
PER ANNUM. THE INTEREST RATE TO BE APPLIED PRIOR TO MATURITY TO THE UNPAID
PRINCIPAL BALANCE OF THE NOTE WILL BE AT A RATE OF 0.500 PERCENTAGE POINTS OVER
THE INDEX, RESULTING IN AN INITIAL RATE OF 9.000% PER ANNUM. NOTICE: Under no
circumstances will the interest rate on this Note be more than the maximum rate
allowed by applicable law. For purposes of this Note, the "maximum rate
allowed by applicable law: means the greater of (a) the maximum rate of
interest permitted under federal or other law applicable to the indebtedness
evidenced by this Note, or (b) the "Weekly Rate" as referred to in Section
303.201 of the Texas Finance Code and Articles 1D.002 and 1D.003 of the Texas
Credit title.
PREPAYMENT. Borrower may pay without penalty all or a portion of the amount
owed earlier than it is due. Early payments will not, unless agreed to by
Lender in writing, relieve Borrower of Borrower's obligation to continue to
make payments under the payment schedule. Rather, they will reduce the
principal balance due and may result in Borrower making fewer payments.
POST MATURITY RATE. The Post Maturity Rate on this Note is the maximum rate
allowed by applicable law. Borrower will pay interest on all sums due after
final maturity, whether by acceleration or otherwise, at that rate, with the
exception of any amounts added to the principal balance of this Note based on
Lender's payment of insurance premiums, which will continue to accrue interest
at the pre-maturity rate.
DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due. (b) Borrower breaks any promise
Borrower has made to Lender, or Borrower fails to comply with or to perform
when due any other term, obligation, covenant, or condition contained in this
Note or any agreement related to this Note, or in any other agreement or loan
Borrower has with Lender. (c) Any representation or statement made or furnished
to Lender by Borrower or on borrower's behalf is false or misleading in any
material respect either now or at the time made or furnished. (d) Borrower
becomes insolvent, a receiver is appointed for any part of Borrower's property,
Borrower makes an assignment for the benefit of creditors or any proceeding is
commenced either by Borrower or against Borrower under any bankruptcy or
insolvency laws. (e) Any creditor tries to take any of Borrower's property on
or in which Lender has a lien or security interest. This includes a garnishment
of any of Borrower's accounts with Lender. (f) Any guarantor dies or any of the
other events described in this default section occurs with respect to any
guarantor of this Note. (g) A material adverse change occurs in Borrower's
financial condition, or Lender believes the prospect of payment or performance
of the indebtedness is impaired. (h) Lender in good faith deems itself
insecure.
If any default, other than a default in payment, is curable, it may be cured
(and no event of default will have occurred) if Borrower, after receiving
written notice from Lender demanding cure of such default: (a) cures the
default within fifteen (15) days; or (b) if the cure requires more than fifteen
(15) days immediately initiate steps which Lender deems in Lender's sole
discretion to be sufficient to cure the default and thereafter continues and
completes all reasonable and necessary steps sufficient to produce compliance
as soon as reasonably practical.
LENDER'S RIGHTS. Upon default, Lender may declare the entire indebtedness,
including the unpaid principal balance on this Note, all accrued unpaid
interest, and all other amounts, costs and expenses for which Borrower is
responsible under this Note or any other agreement with lender pertaining to
this loan, immediately due, without notice, and then Borrower will pay that
amount. Lender may hire an attorney to help collect this Note if Borrower does
not pay, and Borrower will pay Lender's reasonable attorneys' fees. Borrower
also will pay Lender all other amounts actual incurred by Lender as court
costs, lawful fees for filing, recording, or releasing to any public office any
instrument securing this loan, the reasonable cost actually expended for
repossessing, storing, preparing for sale, and selling any security; and fees
for noting a lien on or transferring a certificate of title to any motor
vehicle offered as security for this loan, or premiums or identifiable charges
received in connection with the sale of authorized insurance. THIS NOTE HAS
BEEN DELIVERED TO LENDER AND ACCEPTED BY LENDER IN THE STATE OF TEXAS. IF THERE
IS A LAWSUIT, AND IF THE TRANSACTION EVIDENCED BY THIS NOTE OCCURRED IN DALLAS
COUNTY, BORROWER AGREES UPON LENDER'S REQUEST TO SUBMIT TO THE JURISDICTION OF
THE COURTS OF DALLAS COUNTY, THE STATE OF TEXAS. LENDER AND BORROWER HEREBY
WAIVE THE RIGHT TO ANY JURY TRIAL IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM
BROUGHT BY EITHER LENDER OR BORROWER AGAINST THE OTHER. (INITIAL HERE [/s/WBG
C/S]. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF TEXAS AND APPLICABLE FEDERAL LAWS.
RIGHT OF SETOFF. Borrower grants to Lender a contractual possessory security
interest in, and hereby assigns, conveys, delivers, pledges, and transfers to
Lender all Borrower's right, life and interest in and to, Borrower's accounts
with Lender (whether checking, savings, or some other account), including
without limitation all accounts held jointly with someone else and all accounts
Borrower may open in the future, excluding however all IRA and Keogh accounts,
and all trust accounts for which the grant of a security interest would be
prohibited by law. Borrower authorizes Lender, to the extent permitted by
applicable, law to charge or setoff all sums owing on this Note against any and
all such accounts.
GENERAL PROVISIONS. This Note is payable on demand. The inclusion of specific
default provisions or rights of Lender shall not preclude Lender's right to
declare payment of this Note on its demand. If any part of this Note cannot be
enforced, this fact will not affect the rest of the Note. In particular, this
section means (among other things) that Borrower does not agree or intend to
pay, and Lender does not agree or intend to contract for, charge, collect,
take, reserve or receive (collectively referred to herein as "charge or
collect"), any amount in the nature of interest or in the nature of a fee for
this loan, which would in any way or event (including demand, prepayment, or
acceleration) cause Lender to charge or collect more for this loan than the
maximum Lender would be permitted to charge or collect by federal law or the
law of the State of Texas (as applicable). Any such excess interest or
unauthorized fee shall, instead of anything stated to the contrary, be applied
first to reduce the principal balance of this loan, and when the principal has
been paid in full, be refunded to Borrower. The right to accelerate maturity of
sums due under this Note does not include the right to accelerate any interest
which has not otherwise accrued on the date of such acceleration, and Lender
does not intend to charge or collect any unearned interest in the event of
acceleration. All sums paid or agreed to be paid to Lender for the use,
forbearance or detention of sums due hereunder shall, to the extent
permitted by applicable law, be amortized, prorate, allocated and spread
throughout the full term of the loan evidence by this Note until payment in
full so that the rate or amount of interest on account of the loan evidenced
hereby does not exceed the applicable usury ceiling. Lender may delay or forgo
enforcing any of its rights or remedies under this Note without losing them.
Borrower and any other person who signs, guarantees or endorses this Note, to
the extent allowed by law, waive presentment, demand for payment, protest,
notice of dishonor, notice of intent to accelerate the maturity of this Note,
and notice of acceleration of the maturity of this Note. Upon any change in
the terms of this Note, and unless otherwise expressly stated in writing, no
party who signs this Note, whether as maker, guarantor, accommodation make or
endorser, shall be released from liability. All such parties agree that Lender
may renew or extend (repeatedly and for any length of time) this loan, or
release any party or guarantor or collateral; or impair, fail to realize upon
or perfect Lender's security interest in the collateral without the consent of
or notice to anyone. All such parties also agree that Lender may modify this
loan without the consent of or notice to anyone other than the party with whom
the modification is made.
<PAGE> 2
09-12-1997 PROMISSORY NOTE
LOAN NO (CONTINUED) PAGE
================================================================================
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO
THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETE COPY OF THE NOTE.
BORROWER:
ErgoBilt, Inc.
By: /s/ WILLIAM B. GLENN By: /s/ GERARD SMITH
--------------------------- ---------------------------
William B. Glenn, Secretary Gerard Smith, President
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