Remington Partners, Inc. Loan and Security Agreement

Exhibit 10.1

LOAN AND SECURITY AGREEMENT  -.L

^{Remington Partners, Inc.}

Loan and Security Agreement

Borrower:

LAMPLIGHTER STUDIOS, Inc.

 a California Corporation

Address:

Date:

January 9, 2009

THIS LOAN AND SECURITY AGREEMENT is entered into on the above date between REMINGTON PARTNERS, INC. (“REMINGTON”), whose address is 919 Sir Francis Drake Blvd., Suite 202, Kentfield, CA 94904 and the borrower named above (“Borrower”), whose chief executive office is located at the above address (“Borrower’s Address”).  The Schedule to this Agreement (the “Schedule”) being signed concurrently is an integral part of this Agreement.  (Definitions of certain terms used in this Agreement are set forth in Section 8 below.)

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1.

LOANS.

1.1  Loans.  REMINGTON will make loans to Borrower (the “Loans”), in amounts determined by REMINGTON in its sole dis­cretion, up to the amounts (the “Credit Limit”) shown on the Schedule, provided no Default or Event of Default has occurred and is continuing.  If at any time or for any reason the total of all outstanding Loans and all other Obligations ex­ceeds the Credit Limit, Borrower shall immediately pay the amount of the excess to REMINGTON, with­out notice or demand.      

1.2  Interest; Commission.  Borrower shall pay REMINGTON commission or interest on all Loans and all other monetary Obligations as set forth on the Schedule, except where expressly set forth to the contrary in this Agreement or in another written agreement signed by REMINGTON and Borrower.  Commission or interest (as the case may be) shall be payable monthly, on the last day of the month.  Commission or interest (as the case may be) may, in REMINGTON’s discre­tion, be charged to Borrower’s loan account, and the same shall thereafter bear interest at the Applicable Rate.

1.3  Fees.  Borrower shall pay REMINGTON the fees and commissions shown on the Schedule, which are in addition to all interest and other sums payable to REMINGTON and are not refundable.

2.  SECURITY INTEREST.

2.1  Security Interest.   To secure the payment and per­formance of all of the Obligations when due, Borrower hereby grants to REMINGTON a security interest in all of Borrower's interest in the following, whether now owned or hereafter acquired, and wherever located (collectively, the "Collateral"):  

All accounts, contract rights, instruments, documents, chattel paper, general intangibles (including but not limited to trademarks, tradenames, patents, copyrights and all other forms of intellectual property and goodwill attendant thereto, and tax refunds), returned and repossessed goods and all rights as a seller of goods; all collateral securing any of the foregoing; all deposit accounts, special and general, whether on deposit with Secured Party or others;

All inventory wherever located; all present and future claims against any supplier of any of the foregoing, including claims for defective goods or overpayments to or undershipments by suppliers; all proceeds arising from the lease or rental of any of the foregoing;  

All equipment and fixtures, NONE OF WHICH THE DEBTOR IS AUTHORIZED TO SELL, LEASE OR OTHERWISE DISPOSE OF WITHOUT THE WRITTEN CONSENT OF SECURED PARTY.  All warranty and other claims against any vendor or lessor of any of the foregoing;

All cash and non-cash proceeds of any of the foregoing, in whatever form (including proceeds in the form of inventory, equipment or any other form of personal property), including proceeds of proceeds;

All investment property.

3.  REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BORROWER.

In order to induce REMINGTON to enter into this Agreement and to make Loans, Borrower represents and warrants to REMINGTON as follows, and Borrower covenants that the fol­lowing representations will continue to be true, and that Borrower will at all times comply with all of the following covenants:

3.1  Corporate Existence and Authority.  Borrower, if a corporation, is and will continue to be, duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation.  Borrower is and will con­tinue to be qualified and licensed to do business in all ju­risdictions in which any failure to do so would have a ma­terial adverse effect on Borrower.  The execution, delivery and performance by Borrower of this Agreement, and all other documents contemplated hereby (i) have been duly and validly authorized, (ii) are enforceable against Borrower in accordance with their terms, (iii) do not violate Borrower’s articles or certificate of incorporation, or Borrower’s by-laws, or any law or any material agreement or instru­ment which is binding upon Borrower or its property, and (iv) do not constitute grounds for acceleration of any material indebtedness or obligation under any material agreement or instru­ment which is binding upon Borrower or its property.

3.2  Name; Trade Names and Styles.  The name of Borrower set forth in the heading to this Agreement is its correct name.  Listed on the Schedule are all prior names of Borrower and all of Borrower’s present and prior trade names.  Borrower shall give REMINGTON 30 days' prior written notice before changing its name or doing business under any other name.  Borrower has complied, and will in the future comply, with all laws relating to the conduct of business under a fictitious business name.

3.3  Place of Business; Location of Collateral.  The ad­dress set forth in the heading to this Agreement is Borrower's chief executive office.  In addition, Borrower has places of business and Collateral is located only at the locations set forth on the Schedule.  Borrower will give REMINGTON at least 30 days prior written notice before opening any additional place of business, changing its chief execu­tive office, or moving any of the Collateral to a location other than Borrower’s Address or one of the locations set forth on the Schedule.

3.4  Title to Collateral.  Borrower is now, and will at all times in the future be, the sole owner of all the Collateral. The Collateral now is and will remain free and clear of any and all liens, charges, security interests, encumbrances and adverse claims, except for the security interest in favor of REMINGTON and purchase money security interests.  REMINGTON now has, and will continue to have, a first-priority perfected and enforceable security in­terest in all of the Collateral and Borrower will at all times defend REMINGTON and the Collateral against all claims of others.  None of the Collateral now is or will be affixed to any real property in such a manner, or with such intent, as to become a fixture.  Borrower will keep in full force and effect, and will comply with all the terms of, any lease of real property where any of the Collateral now or in the future may be located.

3.5  Maintenance of Collateral.  Borrower will maintain the Collateral in good working condition, ordinary wear and tear excepted, and Borrower will not use the Collateral for any unlawful purpose.  Borrower will immediately advise REMINGTON in writing of any material loss or damage to the Collateral.

3.6  Books and Records.  Borrower has maintained and will maintain at Borrower's Address complete and accurate books and records, comprising an accounting system in ac­cordance with generally accepted accounting principles.

3.7  Financial Condition, Statements and Reports.  All financial statements now or in the future delivered to REMINGTON have been, and will be, prepared in conformity with generally accepted accounting principles and now and in the future will completely and fairly reflect the fi­nancial condition of Borrower, at the times and for the pe­riods therein stated.  Between the last date covered by any such statement provided to REMINGTON and the date hereof, there has been no material adverse change in the financial condition or business of Borrower.  Borrower is now and will continue to be solvent.     

3.8  Tax Returns and Payments; Pension Contributions.  Borrower has timely filed, and will timely file, all tax returns and reports required by applicable law, and Borrower has timely paid, and will timely pay, all applicable taxes, as­sessments, deposits and contributions now or in the future owed by Borrower.    

3.9  Compliance with Law.  Borrower has complied, and will comply, in all material respects, with all provisions of all applicable laws and regulations, including, but not limited to, those relating to Borrower's ownership of real or personal prop­erty, the conduct and licensing of Borrower's business, and all environmental matters.  All proceeds of all Loans shall be used solely for lawful business purposes.

3.10  Litigation.  Except as disclosed in the Schedule, there is no claim, suit, litigation, proceeding or investiga­tion pending or threat­ened against or affecting Borrower involving more than $10,000.  Borrower will promptly inform REMINGTON in writing of any claim, proceeding, litigation or investigation in the future threatened or instituted by or against Borrower involving any claim of $10,000 or more.

4.  RECEIVABLES.

4.1  Representations Relating to Receivables.   Borrower represents and warrants to REMINGTON as follows:  Each Receivable with respect to which Loans are requested by Borrower shall, on the date each Loan is requested and made, represent an undisputed, bona fide, existing, un­conditional obligation of the Account Debtor created by the sale, delivery, and acceptance of goods or the rendition of services, in the ordinary course of Borrower's business.

4.2  Representations Relating to Documents and Legal Compliance.   Borrower represents and warrants to REMINGTON as follows:  All statements made and all unpaid balances appearing in all invoices, instruments and other documents evidencing the Receivables are and shall be true and cor­rect and all such invoices, instruments and other docu­ments and all of Borrower's books and records are and shall be genuine and in all respects what they purport to be, and all signatories and endorsers have the capacity to contract.  All sales and other transactions underlying or giving rise to each Receivable shall comply with all applicable laws and governmental rules and regulations.  All signatures and endorsements on all documents, instru­ments, and agreements relating to all Receivables are and shall be genuine, and all such documents, instruments and agreements are and shall be legally enforceable in accor­dance with their terms.

4.3  Borrower shall prepare all invoices to Borrower’s customers and deliver copies of said invoices to REMINGTON. All proceeds from said invoices are to be remitted by the Account Debtor directly to REMINGTON. Results of audits shall determine if this arrangement will remain in place as REMINGTON in its sole discretion shall make said determination.

4.4  Schedules and Documents relating to Receivables.   Borrower shall deliver to REMINGTON transaction reports and loan requests, schedules and assignments of all Receivables, all on REMINGTON's standard forms; but Borrower's failure to execute and deliver the same shall not affect or limit REMINGTON's security interest and other rights in all of Borrower's Receivables, nor shall REMINGTON's failure to ad­vance or lend against a specific Receivable affect or limit REMINGTON's security interest and other rights therein.  Together with each such schedule and assignment, or later if requested by REMINGTON, Borrower shall furnish REMINGTON with copies (or, at REMINGTON's request, originals) of all contracts, orders, invoices, and other similar documents, and all original shipping instructions, delivery receipts, bills of lading, and other evidence of delivery, for any goods the sale or disposition of which gave rise to such Receivables, and Borrower warrants the genuineness of all of the fore­going.  Borrower shall also furnish to REMINGTON an aged ac­counts receivable trial balance in such form and at such intervals as REMINGTON shall request.  In addition, Borrower shall deliver to REMINGTON the originals of all instruments, chattel paper, security agreements, guarantees and other documents and property evidencing or securing any Receivables, immediately upon receipt thereof and in the same form as received, with all necessary endorsements.  

4.5  Collection of Receivables.   Borrower shall have the right to make collection calls and send communications regarding the collection of Receivables to Account Debtors, but all such calls and communications shall direct that all payments on Receivables are to be sent directly to REMINGTON.  Without limiting the obligation of the Borrower to direct that all payments on Receivables be sent directly to REMINGTON, if Borrower receives any payment on Receivables, Borrower shall hold all such payments and all proceeds of Receivables in trust, as a trustee and fiduciary for REMINGTON, Borrower shall deliver all such payments and proceeds to REMINGTON, within one business day after receipt of the same, in their original form, duly endorsed, to be applied to the Obligations in such order as REMINGTON shall determine.

4.6  Disputes.  Borrower shall notify REMINGTON promptly of all disputes or claims relating to Receivables on the regular reports to REMINGTON.  Borrower shall not forgive, or settle any Receivable for less than payment in full, or agree to do any of the foregoing, without REMINGTON’s prior written consent.  

4.7  Returns.  Provided no Event of Default has oc­curred and is continuing, if any Account Debtor returns any Inventory to Borrower in the ordinary course of its business, Borrower shall promptly determine the reason for such return and promptly issue a credit memorandum to the Account Debtor in the appropriate amount (sending a copy to REMINGTON).  In the event any attempted return oc­curs after the occurrence of any Event of Default, Borrower shall (i) not accept any return without REMINGTON’s prior written consent, (ii) hold the returned Inventory in trust for REMINGTON, (iii) segregate all returned Inventory from all of Borrower’s other property, (iv) conspicuously label the returned Inventory as REMINGTON's property, and (v) immediately notify REMINGTON of the return of any Inventory, specifying the reason for such return, the loca­tion and condition of the returned Inventory, and on REMINGTON's request deliver such returned Inventory to REMINGTON.  

4.8  Verification.  REMINGTON may, from time to time, verify directly with the respective Account Debtors the validity, amount and other matters relating to the Receivables, by means of mail, telephone or otherwise, either in the name of Borrower or REMINGTON or such other name as REMINGTON may choose, and REMINGTON or its designee may, at any time, notify Account Debtors that it has a security interest in the Receivables.      

4.9  No Liability.   REMINGTON shall not under any circum­stances be responsible or liable for any shortage or dis­crepancy in, damage to, or loss or destruction of, any goods, the sale or other disposition of which gives rise to a Receivable, or for any failure to send out any invoice, or for any error, act, omission, or delay of any kind occurring in the settlement, failure to settle, collection or failure to collect any Receivable, or for settling any Receivable in good faith for less than the full amount thereof, nor shall REMINGTON be deemed to be responsible for any of Borrower's obligations under any contract or agreement giving rise to a Receivable.

5.  ADDITIONAL DUTIES OF THE BORROWER.

5.1  Insurance.  Intentionally omitted

5.2  Reports.  Borrower, at its expense, shall provide REMINGTON with the written reports set forth in the Schedule, and such other written reports with respect to Borrower, as REMINGTON shall from time to time reasonably specify, including without limitation accounts payable agings, aged by invoice date, and outstanding or held check registers, and inventory reports, all in such form and with such detail as REMINGTON shall specify.

5.3  Access to Collateral, Books and Records.  At rea­sonable times, and on one Business Day’s notice, REMINGTON, or its agents, shall have the right to inspect the Collateral, and the right to audit and copy Borrower's books and records.  The foregoing inspections and audits shall be at Borrower’s expense and the charge therefor shall be $750 per person per day (or such higher amount as shall repre­sent REMINGTON’s then current standard charge for the same), plus reasonable out-of-pockets expenses.      

5.4  Remittance of Proceeds.   All proceeds arising from the sale or other disposition of any Collateral shall be delivered, in kind, by Borrower to REMINGTON in the original form in which re­ceived by Borrower not later than the following business day after receipt by Borrower, to be applied to the Obligations in such order as REMINGTON shall determine.  Borrower shall not commingle proceeds of Collateral with any of Borrower's other funds or property, and shall hold such proceeds separate and apart from such other funds and property and in an express trust for REMINGTON.  Nothing in this Section limits the restrictions on disposi­tion of Collateral set forth elsewhere in this Agreement.

5.5  Negative Covenants.  Except as may be permitted in the Schedule, Borrower shall not, without REMINGTON's prior written consent, do any of the following:  (i) merge or con­solidate with another corporation or entity; (ii) acquire any assets, except in the ordinary course of business; (iii) enter into any other transaction outside the ordinary course of business; (iv) sell or transfer any Collateral, except that, provided no Default or Event of Default has occurred and is continuing, Borrower may sell finished Inventory in the ordinary course of Borrower's business; (v) store any Inventory or other Collateral with any ware­houseman or other third party; (vi) sell any Inventory on a sale-or-return, guaranteed sale, consignment, or other con­tingent basis; (vii) make any loans of any money or other assets, or purchase the stock or other securities of, or make any other investment in, any other Person; (viii) incur any debts, outside the ordinary course of business, which would have a material, adverse effect on Borrower or on the prospect of repayment of the Obligations; (ix) guarantee or otherwise become liable with respect to the obligations of another party or entity; (x) pay or declare any dividends on Borrower's stock (except for dividends payable solely in stock of Borrower); (xi) redeem, retire, purchase or otherwise acquire, directly or indirectly, any of Borrower's stock; (xii) make any change in Borrower's capital structure which would have a material adverse effect on Borrower or on the prospect of repayment of the Obligations; or (xiii) dissolve or elect to dissolve; or (xiv) agree to do any of the foregoing.

5.6  Litigation Cooperation.  Should any third-party suit or proceeding be instituted by or against REMINGTON with re­spect to any Collateral or in any manner relating to Borrower, Borrower shall, without expense to REMINGTON, make available Borrower and its officers, employees and agents, and Borrower's books and records, without charge, to the extent that REMINGTON may deem them reasonably necessary in order to prosecute or defend any such suit or proceeding.

5.7

Notification of Changes.   Borrower will promptly notify REMINGTON in writing of any change in its officers or directors, the opening of any new bank account or other Deposit Account, and any material adverse change in the business or financial affairs of Borrower.

5.8  Further Assurances.  Borrower agrees, at its ex­pense, on request by REMINGTON, to execute all documents and take all actions, as REMINGTON may deem reasonably neces­sary or useful in order to perfect and maintain REMINGTON's perfected security interest in the Collateral, and in order to fully consummate the transactions contemplated by this Agreement.

5.9   Indemnity .  Borrower hereby agrees to indemnify REMINGTON and hold REMINGTON harmless from and against any and all claims, debts, liabilities, demands, obligations, actions, causes of action, penalties, costs and expenses (including attor­neys' fees), of every nature, character and description, which REMINGTON may sustain or incur based upon or arising out of any of the Obligations, any actual or alleged failur