Schedule 1

 

1.

Notwithstanding the Direction to Assemble Collateral, the Secured Party hereby gives notice that it intends to take possession of the Collateral at 10:00 A.M. MDT on Monday, October 17, 2011; provided, however, that the Secured Party hereby expressly reserves the right to take possession of the Collateral prior to such date and time if, in the sole and exclusive discretion of the Secured Party, the Secured Party deems it necessary to take possession of the Collateral at such earlier time in order to protect or preserve the Collateral or the value thereof.  In connection therewith, the undersigned hereby expressly agree that on the above referenced date and time they will assemble the Collateral upon the business premises located at 4125 S. 6000 W., West Valley City, Utah 84128, or such other location as the Secured Party may hereafter direct, and that the appropriate personnel will be available to allow the Secured Party and/or its agents to enter the business premises to take possession of the Collateral and, if any of the Collateral is in the form of electronic or computer records or information, to provide the Secured Party and/or its agents with access to the undersigned’s computer systems to obtain the same.  Further, the undersigned hereby expressly agree that from and after October 17, 2011: (a) the Collateral, including any accounts receivable collections and other proceeds and products of the Collateral, is to be held in trust by the undersigned for the Secured Party; (b) the undersigned are to promptly remit any accounts receivable collections or other proceeds of the Collateral to the Secured Party in the same form received, with any necessary endorsements thereon; and (c) any failure of the undersigned to hold the Collateral in trust, including, without limitation, any use or sale of such Collateral, shall constitute conversion of the Secured Party’s Collateral for which the Secured Party will seek the appropriate remedies.

2.

To assist the Secured Party in taking possession of the Collateral on the above referenced date and time, the undersigned hereby expressly agree to provide the Secured Party and/or its agents with access to the business premises located at 4125 S. 6000 W., West Valley City, Utah 84128 and the undersigned’s computer systems at 10:00 A.M. MDT on Thursday, October 6, 2011 for the purposes of inspecting the Collateral.  In connection therewith, the undersigned expressly agree to provide the Secured Party and/or its agents with any and all information regarding the Collateral that the Secured Party and/or its agents may request, including, without limitation, the materials set forth on Schedule “1” attached hereto and incorporated herein by reference.

3.

At the Secured Party’s request, the undersigned agrees to cooperate with and assist the Secured Party, after it takes possession of the Collateral, in advising Secured Party respecting the preservation and protection of the value of the Collateral.

4.

The undersigned hereby expressly acknowledge and agree that (a) in accordance with the terms and conditions of the documents, instruments, and agreements evidencing the Financing Arrangements, the undersigned are unconditionally, collectively, jointly, and severally liable to the Secured Party for all amounts owed thereunder, without set off, counterclaim, defense, or offset, and (b) the Secured Party’s agreement to take possession of the Collateral at 10:00 A.M. MDT on Monday, October 17, 2011 set forth in Paragraph 1 hereof shall not in any way affect (i) the Secured Party’s rights and remedies under the documents, instruments, and agreements evidencing the Financing Arrangements, or applicable law, including, without limitation, the Secured Party’s right to foreclose its security interests in, or otherwise realize upon, the Collateral, (ii) the validity, enforceability, perfection, or priority of the security interests in the Collateral granted to the Secured Party by the undersigned, or (iii) the Secured Party’s right to send one or more further correspondence directing the undersigned to assemble the Collateral and/or Notifications of Disposition of Collateral at any time, and from time to time, as the Secured Party deems necessary or appropriate, in its sole and exclusive discretion, in connection with the exercise of its right to foreclose its security interests in, or otherwise realize upon, the Collateral.

5.

The undersigned hereby further expressly acknowledge and agree that (a) the Secured Party’s agreement to forbear under that certain Amended and Restated Forbearance Agreement and Amendment dated January 24, 2011 by and between the undersigned and the Secured Party has terminated, and the Secured Party has not subsequently agreed to any forbearance arrangement with the undersigned, or agreed to accept any payment or any payment plan in exchange for forbearance, and (b) the Secured Party’s agreement to take possession of the Collateral at 10:00 A.M. MDT on Monday, October 17, 2011 set forth in Paragraph 1 hereof is not intended to be, and shall not be construed as, (i) a cure or waive of any defaults, events of default, and/or termination events under the under the documents, instruments, and agreements evidencing the Financing Arrangements, whether now existing or hereafter arising, (ii) an agreement by the Secured Party to forbear from exercising any of its rights and remedies under the documents, instruments, and agreements evidencing the Financing Arrangements, and/or applicable law, or (iii) a waiver, modification, or amendment of the terms and conditions of the documents, instruments, and agreements evidencing the Financing Arrangements and/or the Secured Party’s rights and remedies thereunder.

6.

The Secured Party hereby expressly reserves all of its rights and remedies under the documents, instruments, and agreements evidencing the Financing Arrangements, and applicable law, including, without limitation, the right to foreclose its security interests in, or otherwise realize upon, the Collateral, and the right to send one or more further correspondence directing the undersigned to assemble the Collateral and/or Notifications of Disposition of Collateral at any time, and from time to time, as the Secured Party deems necessary or appropriate, in its sole and exclusive discretion, in connection therewith.

1.

Copies of all material contracts, licenses, permits, agreements, and the like;

2.

Identifying and descriptive information concerning intellectual property;

3.

Inventory aging reports with a listing of locations;

4.

Accounts receivable aging reports with a listing of account debtors;

5.

A listing of all equipment, furniture, and fixtures not leased to Katana Electronics, LLC;

6.

Descriptions of each of the business lines/divisions maintained; and

7.

Lists of key employees.