Exhibit 10.8. Security Agreement between the Company and Fleet National Bank
Inventory and Accounts Receivable Security Agreement
(Short Form)
November 13, 1997
Date
To secure the due payment and performance of all of the liabilities and
obligations hereunder of the undersigned, herein called "Borrower", to Fleet
National Bank , hereinafter called "Bank", and all other liabilities and
obligations of Borrower to Bank of every name and nature whatsoever, direct or
indirect, absolute or contingent, now existing or hereafter arising or acquired,
including, without limitation, the due payment and performance of all
liabilities and obligations under any and all notes, all hereinafter called
"Obligations", the Borrower hereby grants to Bank a continuing security interest
in:
(a) All accounts, contracts, contract rights, notes, bills, drafts,
acceptances, general intangibles, (other than general intangibles which consist
of patents, trademarks, copyrights and other similar intellectual property)
choses in action, and all other debts, obligations and liabilities, in whatever
form, owing to Borrower from any person, firm or corporation, or any other legal
entity, whether now existing or hereafter arising, now or hereafter received by
or belonging or owing to Borrower, for goods sold by it or for services rendered
by it or however otherwise same may have been established or created, all
guarantees and securities therefor, all right, title and interest of Borrower in
the merchandise or services which gave rise thereto, including the rights of
reclamation and stoppage in transit, all rights of an unpaid seller of
merchandise or services, and in the proceeds thereof, including, without
limitation, all proceeds of credit, fire or other insurance, and any tax
refunds.
(b) All goods, merchandise, raw materials, goods and work in process,
finished goods and other tangible personal property, now owned or hereafter
acquired and held for sale or lease, or furnished or to be furnished under
contract of service, or used or consumed in Borrower's business and in the
products and proceeds thereof, including, without limitation, all proceeds of
fire or other insurance. This portion of the collateral being sometimes referred
to as "Inventory".
All of the accounts and other property as set forth in (a) above and inventory
as set forth in (b) above are hereinafter referred to collectively as
"Collateral".
The Collateral and all proceeds and products thereof shall be security for all
Obligations. Until all Obligations have been fully satisfied, Bank's security
interest in the Collateral and all proceeds and products thereof, shall continue
in full force and effect and Bank will at all times after the occurrence and
during the continuance of an Event of Default (as defined in the Letter
Agreement between Bank and Borrower) have the right to take physical possession
of the Inventory and to maintain such possession on Borrower's premises or to
remove the Inventory or any part thereof to such other places as Bank may
desire. If Bank exercises Bank's right to take possession of the Inventory,
Borrower shall, upon Bank's demand, assemble the Inventory and make it available
to Bank at a place reasonably convenient to Bank.
If Borrower shall fail to pay, when due, any of the Obligations or shall fail to
observe or perform any of the provisions of this Agreement or any other
agreement now or hereafter entered into between Bank and Borrower, Borrower
shall be in default hereunder. In the event of such default all Obligations of
Borrower to Bank shall, at the option of Bank, and without notice to or demand
upon Borrower become and be immediately due and payable and thereupon Bank may
exercise any and all rights and remedies of a secured party available under the
Uniform Commercial Code and all other applicable law.
Borrower represents, warrants and covenants that all inventory is and will be
owned by Borrower, free of all other liens and encumbrances, and shall be kept
by Borrower at 000 Xxxxx Xxxxxx, Xxxxxx, XX 00000 or at one of the other
locations shown on the Disclosure Schedules attached to the aforesaid Letter
Agreement and that Borrower shall not (without Bank's prior written approval)
remove the Inventory therefrom except for the purposes of sale in the ordinary
course of business.
Except for sales made in the ordinary course of business, Borrower shall not
sell, encumber, grant a security interest in or dispose of or permit the sale,
encumbrance or disposal of any Collateral without Bank's prior written consent.
A sale in the ordinary course of business shall not include a transfer in total
or partial satisfaction of a debt.
Borrower shall perform any and all steps requested by Bank to perfect Bank's
security interest in the Collateral, such as leasing warehouses to Bank or its
designee, placing and maintaining signs, appointing custodians, executing and
filing financing or continuation statements in form and substance satisfactory
to Bank. If any Inventory is in the possession or control of any of Borrower's
agents or processors, Borrower shall notify such agents or processors of Bank's
interest therein, and upon request instruct them to hold all such Inventory for
Bank's account and subject to Bank's instructions. A physical listing of all
Inventory, where located, shall be taken by Borrower whenever requested by Bank,
and a copy of each such physical listing shall be supplied to Bank. Bank may
examine and inspect the Inventory at any time.
Borrower agrees to keep all the Inventory insured with coverage and amounts not
less than that usually carried by one engaged in a like business and in any
event not less than that required by Bank with loss payable to the Bank and
Borrower, as their interests may appear, hereby appointing Bank as attorney for
Borrower in obtaining, adjusting, settling and cancelling such insurance and
endorsing any drafts. All premiums on such insurance shall be paid by Borrower
and the policies delivered to Bank. If Borrower fails to do so, Bank may procure
such insurance and charge the cost to Borrower's loan account. As further
assurance for the payment and performance of the Obligations, Borrower hereby
assigns to Bank all sums including returned or unearned premiums, which may
become payable under any policy of insurance on the Collateral and Borrower
hereby directs each insurance company issuing any such policy to make payment of
such sums directly to Bank.
If in the event of the sale of the Collateral the proceeds thereof are
insufficient to pay all amounts to which Bank is legally entitled, Borrower will
be liable for the deficiency, together with interest thereon and the reasonable
fees of any attorney employed by Bank to collect such deficiency.
Bank shall have the right to enforce any remedies hereunder alternatively,
successively or concurrently. A waiver of any default of Borrower shall not be a
waiver of any subsequent, similar or other default. No delay in the exercise of
any of Bank's rights or remedies hereunder shall constitute a waiver of such
right or remedy or of any other right or remedy.
This Agreement shall not be construed to be in limitation of or in substitution
for any other grant of security interest from Borrower to Bank made prior to or
contemporaneously herewith, and no other such grant of a security interest made
subsequent to or contemporaneously herewith shall be construed to be in
limitation of or in substitution for this Agreement unless expressly and
specifically provided therein.
This Agreement shall take effect as a sealed instrument, shall be governed by
and construed according to the laws of the Commonwealth of Massachusetts, shall
be binding upon the heirs, executors, administrators, successors and assigns of
Borrower and shall inure to the benefit of the successors and assigns of Bank.
Witnessed by: ZOOM TELEPHONICS, INC.
/s/ Xxxxxx X. Xxxxx
V.P. Finance & CFO, Borrower
By: /s/ Xxxxx Xxxxxxx
FLEET NATIONAL BANK Its President & CEO, Title
Address: 000 Xxxxx Xxxxxx
Number and Street
By: /s/ Xxxxxxxx Xxxxxxx
Its Vice President, High Technology Xxxxxx, XX 00000
----------------------------------
Division City, County and State
**or at one of the other locations shown on the Disclosure Schedules attached to
the aforesaid Letter Agreement.
