Unassociated Document


    
      
        

      

      SECURITY
        AGREEMENT

      


      


      This
        Security Agreement (as amended, modified or otherwise supplemented from time
        to
time,
        this "Security
        Agreement"), dated
        as
        of February [3], 2006, is executed by David Weiker, Sr., an individual (together
        with its successors and assigns, "Investor"), in
        favor
        of Robert Simpson ("Secured
        Party").

      


      RECITALS

      


      A.   Investor
        has executed an interest bearing secured promissory note, (as amended,
modified
        or otherwise supplemented from time to time, (the "Note")
        in an
        aggregate principal amount
        of
        $450,000 in favor of Secured Party.

      


      B.    In
        order
        to induce Secured Party to extend the credit evidenced by the Note, Investor
        has
        agreed to enter into this Security Agreement and to grant to Secured Party,
        the
        security interest in the Collateral described below.

      


      AGREEMENT

      


      NOW,
        THEREFORE, in consideration of the above recitals and for other good and
        valuable consideration, the receipt and adequacy of which are hereby
        acknowledged, Investor hereby agrees with Secured Party as follows:

      


      1.   Definitions
        and Interpretation.
        When
        used in this Security Agreement, the following terms have the following
        respective meanings:

      


      "Collateral"
        has
        the
        meaning given to that term in Section 2 hereof.

      


      "Obligations"
        means
        all
        loans, advances, debts, liabilities and obligations, howsoever arising,
        owed by Investor to Secured Party of every kind and description (whether
        or not
        evidenced by any note or instrument and whether or not for the payment of
        money), now existing or hereafter arising under or pursuant to the terms
        of the
        Note and the other Transaction Documents, including, all interest, fees,
        charges, expenses, attorneys' fees and costs and accountants' fees and costs
        chargeable to and payable by Investor hereunder and thereunder, in each case,
        whether direct or indirect, absolute or contingent, due or to become due,
        and
        whether or not arising after the commencement of a proceeding under Title
        11 of
        the United States Code (11 U.S.C. Section 101 et seq.), as amended from time
        to
        time (including post-petition interest) and whether or not allowed or
allowable
        as a claim in any such proceeding.

      


      "UCC"
        means
        the Uniform Commercial Code as in effect in the State of California from
        time
        to time.


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      All
        capitalized terms not otherwise defined herein shall have the respective
        meanings given in
        the
        Note. Unless otherwise defined herein, all terms defined in the UCC have
        the
        respective meanings given to those terms in the UCC.

      


      2.   Grant
        of Security Interest.
        As
        security for the Obligations, Investor hereby pledges to Secured
        Party and grants to Secured Party a security interest of first priority in
        all
        right, title and interests of Investor in and to the property described in
        Attachment
        1
        hereto,
        whether now existing or
        hereafter from time to time acquired (collectively, the "Collateral").

      


      3.   General
        Representations and Warranties.
        Investor
        represents and warrants to Secured Party
        that (a) Investor is the owner of the Collateral (or, in the case of
        after-acquired Collateral, at the
        time
        Investor acquires rights in the Collateral, will be the owner thereof) and
        that
        no other Person has
        (or,
        in the case of after-acquired Collateral, at the time Investor acquires rights
        therein, will have) any right, title, claim or interest (by way of Lien or
        otherwise) in, against or to the Collateral, other than Permitted Liens;
        (b)
        upon the filing of UCC-1 financing statements in the appropriate filing offices,
        Secured Party has (or in the case of after-acquired Collateral, at the time
        Investor acquires rights therein, will have) a first priority perfected security
        interest in the Collateral to the extent that a security interest in the
        Collateral can be perfected by such filing, except for Permitted Liens; (c)
        all
        Inventory has been (or, in the case of hereafter produced Inventory, will
        be)
        produced in compliance with applicable laws, including the Fair Labor Standards
        Act; (d) all accounts receivable and payment intangibles are genuine and
        enforceable against the party obligated to pay the same; (e) the originals
        of
        all documents evidencing all accounts receivable and payment intangibles
        of Investor and the only original books of account and records of Investor
        relating thereto are,
        and
        will continue to be, kept at address of the Investor set forth in Section
        11 of
        this Security Agreement.

      


      4.   Covenants
        Relating to Collateral.
        Investor
        hereby agrees (a) to perform all acts that may be necessary to maintain,
        preserve, protect and perfect the Collateral, the Lien granted to Secured
        Party
        therein and the perfection and priority of such Lien, except for Permitted
        Liens; (b) not to use or
        permit
        any Collateral to be used (i) in violation in any material respect of any
        applicable law, rule or
        regulation, or (ii) in violation of any policy of insurance covering the
        Collateral; (c) to pay promptly
        when due all taxes and other governmental charges, all Liens and all other
        charges now or hereafter
        imposed upon or affecting any Collateral; (d) without 30 days' written notice
        to
        Secured Party, (i) not to change Investor's name or place of business (or,
        if
        Investor has more than one place of business, its chief executive office),
        or
        the office in which Investor's records relating to accounts receivable and
        payment intangibles are kept, (ii) not to change Investor's state of
        incorporation, (iii) not to keep Collateral consisting of chattel paper at
        any
        location other than its chief executive office set forth in item 1 of Schedule
        A
        hereto, and (iv) not to keep Collateral consisting of equipment or inventory
        at
        any location other than the locations set forth in item 4 of Schedule
        A
        hereto,
        (f) to procure,
        execute and deliver from time to time any endorsements, assignments, financing
        statements and other writings reasonably deemed necessary or appropriate
        by
        Secured Party to perfect, maintain and protect its Lien hereunder and the
        priority thereof and to deliver promptly to upon the request of Secured
        Party all originals of Collateral consisting of instruments; (g) to appear
        in
        and defend any action or proceeding which may affect its title to or Secured
        Party's interest in the Collateral; (h) if Secured Party gives value to enable
        Investor to acquire rights in or the use of any Collateral, to use such
        value for such purpose; (i) to keep separate, accurate and complete records
        of
        the Collateral and

       

      
        
          
          

        

        
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      to
        provide Secured Party with such records and such other reports and information
        relating to the Collateral as Secured Party may reasonably request from time
        to
        time; (j) not to surrender or lose possession of (other than to Secured Party),
        sell, encumber, lease, rent, or otherwise dispose of or transfer any Collateral
        or right or interest therein, and to keep the Collateral free of all Liens
        except Permitted Liens; providedthat
        Investor
        may sell, lease, transfer, license or otherwise dispose of any of
        the
        Collateral in the ordinary course of business consisting of (i) the sale
        of
        inventory, (ii) sales of worn-out
        or obsolete equipment, and (iii) non-exclusive licenses and similar arrangements
        for the use of the property of Investor; (k) if requested by Secured Party,
        to
        type, print or stamp conspicuously on the face of all original copies of
        all
        Collateral consisting of chattel paper a legend satisfactory to Secured Party
        indicating that such chattel paper is subject to the security interest granted
        hereby; (1) to collect, enforce and receive delivery of the accounts receivable
        and payment intangibles
        in accordance with past practice until otherwise notified by Secured Party;
        (m)
        to comply with
        all
        material requirements of law relating to the production, possession, operation,
        maintenance and control of the Collateral (including the Fair Labor Standards
        Act) and (n) to permit Secured Party and its representatives the right, at
        any
        time during normal business hours, upon reasonable prior notice, to visit
        and
        inspect the properties of Investor and its corporate, financial and operating
        records,
        and make abstracts therefrom, and to discuss Investor's affairs, finances
        and
        accounts with its
        directors, officers and independent public accountants.

      


      5.   Authorized
        Action by Secured Party.
        Investor
        hereby irrevocably appoints Secured Party as its attorney-in-fact (which
        appointment is coupled with an interest) and agrees that Secured Party may
        perform (but Secured Party shall not be obligated to and shall incur no
        liability to Investor or any
        third
        party for failure so to do) any act which Investor is obligated by this Security
        Agreement to perform,
        and to exercise such rights and powers as Investor might exercise with respect
        to the Collateral, including the right to (a) collect by legal proceedings
        or
        otherwise and endorse, receive and receipt for all dividends, interest,
        payments, proceeds and other sums and property now or hereafter payable on
        or on
        account of the Collateral; (b) enter into any extension, reorganization,
        deposit,
        merger, consolidation or other agreement pertaining to, or deposit, surrender,
        accept, hold or apply
        other property in exchange for the Collateral; (c) make any compromise or
        settlement, and take
        any
        action it deems advisable, with respect to the Collateral; (d) insure, process
        and preserve the Collateral; (e) pay any indebtedness of Investor relating
        to
        the Collateral; and (f) file UCC financing statements
        and execute other documents, instruments and agreements required hereunder;
        provided,
        however,
        that
        Secured Party shall not exercise any such powers granted pursuant to subsections
        (a) through
        (e) prior to the occurrence of an Event of Default and shall only exercise
        such
        powers during the
        continuance of an Event of Default. Investor agrees to reimburse Secured
        Party
        upon demand for
        any
        reasonable costs and expenses, including attorneys' fees, Secured Party may
        incur while acting as Investor's attorney-in-fact hereunder, all of which
        costs
        and expenses are included in the Obligations. It is further agreed and
        understood between the parties hereto that such care as Secured Party
        gives to the safekeeping of its own property of like kind shall constitute
        reasonable care of the Collateral
        when in Secured Party's possession; provided,
        however,
        that
        Secured Party shall not be required
        to make any presentment, demand or protest, or give any notice and need not
        take
        any action to preserve any rights against any prior party or any other person
        in
        connection with the Obligations or with respect to the Collateral.

      


      6.   Litigation
        and Other Proceedings

       

      
        
          
          

        

        
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      (a)  Upon
        the occurrence and during the continuation of an Event of Default, Secured
        Party
        shall have the right but not the obligation to bring suit or institute
        proceedings in the name of Investor
        or Secured Party to enforce any rights in the Collateral, including any license
        thereunder, in which event Investor shall at the request of Secured Party
        do any
        and all lawful acts and execute any and
        all
        documents reasonably required by Secured Party in aid of such enforcement.
        If
        Secured Party
        elects not to bring suit to enforce any right under the Collateral, including
        any license thereunder, Investor agrees to use all reasonable measures, whether
        by suit, proceeding or other action, to cause to cease any infringement of
        any
        right under the Collateral by any Person and for that purpose agrees to
        diligently maintain any action, suit or proceeding against any Person so
        infringing necessary to prevent such infringement.

      


      7. Default
        and Remedies.

      


      (a)  Default.
        Investor
        shall be deemed in default under this Security Agreement upon the occurrence
        and
        during the continuance of an Event of Default (as defined in the
        Note).

      


      (b)  Remedies.
        Upon the
        occurrence and during the continuance of any such Event of Default,
        Secured Party shall have the rights and remedies provided for in the Note
        and
        the rights of a secured creditor under the UCC, all rights granted by this
        Security Agreement and by law, including
        the right to: (a) require Investor to assemble the Collateral and make it
        available to Secured
        Party at a place to be designated by Secured Party; and (b) prior to the
        disposition of the Collateral, store, process, repair or recondition it or
        otherwise prepare it for disposition in any manner
        and to the extent Secured Party deems appropriate. Investor hereby agrees
        that
        ten (10) days' notice of any intended sale or disposition of any Collateral
        is
        reasonable. In furtherance of Secured Party's rights hereunder, Investor
        hereby
        grants to Secured Party an irrevocable, non- exclusive
        license, exercisable without royalty or other payment by Secured Party, and
        only
        in connection with the exercise of remedies hereunder, to use, license or
        sublicense any patent, trademark, trade name, copyright or other intellectual
        property in which Investor now or hereafter has any right, title or interest
        together with the right of access to all media in which any of the foregoing
        may be recorded or stored.

      


      (c)  Application
        of Collateral Proceeds.
        The
        proceeds and/or avails of the Collateral, or any part thereof, and the proceeds
        and the avails of any remedy hereunder (as well as any other amounts of any
        kind
        held by Secured Party at the time of, or received by Secured Party after,
        the
        occurrence of an Event of Default) shall be paid to and applied as
        follows:

      


      (i)    First,
        to the
        payment of reasonable costs and expenses, including all amounts expended
        to
        preserve the value of the Collateral, of foreclosure or suit, if any, and
        of
        such sale and the exercise of any other rights or remedies, and of all proper
        fees, expenses, liability and advances,
        including reasonable legal expenses and attorneys' fees, incurred or made
        hereunder by Secured
        Party;

      


      (ii)   Second,
        to the
        payment to Secured Party of the amount then owing or unpaid
        to
        Secured Party (to be applied first to accrued interest and second to outstanding
        principal);

      



      
        
          
          

        

        
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      (iii)   Third,
        to the
        payment of other amounts then payable to Secured Party under any of the
        Transaction Documents; and

      


      (iv)   Fourth,
        to the
        payment of the surplus, if any, to Investor, its successors and assigns,
        or to
        whomsoever may be lawfully entitled to receive the same.

      


      8.   Miscellaneous.

      


      (a)  Notices.
        Except
        as otherwise provided herein, all notices, requests, demands, consents,
        instructions or other communications to or upon Investor or Secured Party
        under
        this Security
        Agreement shall be in writing and faxed, mailed or delivered to each party
        to
        the facsimile number
        or
        its address set forth below (or to such other facsimile number or address
        as the
        recipient of any notice shall have notified the other in writing). All such
        notices and communications shall be effective
        (a) when sent by Federal Express or other overnight service of recognized
        standing, on the business
        day following the deposit with such service; (b) when mailed, by registered
        or
        certified mail,
        first class postage prepaid and addressed as aforesaid through the United
        States
        Postal Service, upon
        receipt; (c) when delivered by hand, upon delivery; and (d) when faxed, upon
        confirmation of receipt.

      


      
        	
                Secured
                  Party:

              	 	 	 
	 	
                Robert
                  Simpson

              	 
	 	
                1549
                  N. Leroy Street, Suite D-200

              	 
	 	
                Fenton,
                  MI 48430

              	 
	 	
                Telephone:
                  

              	
                (810)
                  714-2938

              	 
	 	
                Facsimile:

              	 
	 
	 	 	 	 
	
                with
                  a copy to:

              	 	 	 
	 	
                Martin
                  J. Waters

              	 
	 	
                12235
                  El Camino Real

              	 
	 	
                Suite
                  200

              	 
	 	
                San
                  Diego, CA 92130-3002

              	 
	 	
                Telephone:

              	
                858-350-2300

              	 
	 	
                Facsimile:
                  

              	
                858-350-2399

              	 
	 	 	 	 
	
                Investor:

              	 	 	 
	 	
                David
                  Weiker, Sr.

              	 
	 	 
	 
	 	 
	 
	 	
                Telephone:

              	 
	 
	 	
                Facsimile:

              	 
	 
	 	 	 	 
	
                with
                  a copy to:

              	  	 
	 	 
	 
	 	 
	 
	 	 
	 
	 	
                Telephone:

              	 
	 
	 	
                Facsimile:

              	 
	 


      

       

      
        
          
          

        

        
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      (b)  Termination
        of Security Interest.
        Upon the
        payment in full of all Obligations, the security
        interest granted herein shall terminate and all rights to the Collateral
        shall
        revert to Investor. Upon
        such
        termination Secured Party hereby authorizes Investor to file any UCC termination
        statements necessary to effect such termination and Secured Party will, at
        Investor's expense, execute
        and deliver to Investor any additional documents or instruments as Investor
        shall reasonably request
        to evidence such termination.

      


      (c)  Nonwaiver.
        No
        failure or delay on Secured Party 's part in exercising any right hereunder
        shall operate as a waiver thereof or of any other right nor shall any single
        or
        partial exercise of any such right preclude any other further exercise thereof
        or of any other right.

      


      (d)  Amendments
        and Waivers.
        This
        Security Agreement may not be amended or modified,
        nor may any of its terms be waived, except by written instruments signed
        by
        Investor and Secured
        Party. Each waiver or consent under any provision hereof shall be effective
        only
        in the specific
        instances for the purpose for which given.

      


      (e)  Assignments.
        This
        Security Agreement shall be binding upon and inure to the benefit
        of Secured Party and Investor and their respective successors and assigns;
        provided,
        however,
        that
        Investor may not sell, assign or delegate rights and obligations hereunder
        without the prior
        written consent of Secured Party.

      


      (f)  Cumulative
        Rights, etc.
        The
        rights, powers and remedies of Secured Party under this Security Agreement
        shall
        be in addition to all rights, powers and remedies given to Secured Party
        by
        virtue of any applicable law, rule or regulation of any governmental authority,
        any Transaction Document or any other agreement, all of which rights, powers,
        and remedies shall be cumulative and may be exercised successively or
        concurrently without impairing Secured Party's rights hereunder. Investor
        waives
        any right to require Secured Party to proceed against any person or entity
        or to
        exhaust any Collateral or to pursue any remedy in Secured Party's
        power.

      


      (g)  Payments
        Free of Taxes, Etc.
        All
        payments made by Investor under the Transaction
        Documents shall be made by Investor free and clear of and without deduction
        for
        any and all present and future taxes, levies, charges, deductions and
        withholdings. In addition, Investor shall
        pay
        upon demand any stamp or other taxes, levies or charges of any jurisdiction
        with
        respect to the
        execution, delivery, registration, performance and enforcement of this Security
        Agreement. Upon
        request by Secured Party, Investor shall furnish evidence satisfactory to
        Secured Party that all requisite
        authorizations and approvals by, and notices to and filings with, governmental
        authorities and regulatory bodies have been obtained and made and that all
        requisite taxes, levies and charges have
        been
        paid.

      


      (h)  Partial
        Invalidity.
        If at
        any time any provision of this Security Agreement is or becomes
        illegal, invalid or unenforceable in any respect under the law or any
        jurisdiction, neither the legality,
        validity or enforceability of the remaining provisions of this Security
        Agreement nor the legality, validity or enforceability of such provision
        under
        the law of any other jurisdiction shall in any
        way
        be affected or impaired thereby.

       

      
        
          
          

        

        
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      (i)  Expenses.
        Investor
        shall pay on demand all reasonable fees and expenses, including
        reasonable attorneys' fees and expenses, incurred by Secured Party in connection
        with custody,
        preservation or sale of, or other realization on, any of the Collateral or
        the
        enforcement or attempt
        to enforce any of the Obligations which is not performed as and when required
        by
        this Security
        Agreement.

      


      (j)  Construction.
        Each of
        this Security Agreement and the other Transaction Documents
        is the result of negotiations among, and has been reviewed by, Investor,
        Secured
        Party and
        their
        respective counsel. Accordingly, this Security Agreement and the other
        Transaction Documents
        shall be deemed to be the product of all parties hereto, and no ambiguity
        shall
        be construed
        in favor of or against Investor or Secured Party.

      


      (k)  Entire
        Agreement.
        This
        Security Agreement taken together with the other Transaction
        Documents constitute and contain the entire agreement of Investor and Secured
        Party and
        supersede any and all prior agreements, negotiations, correspondence,
        understandings and communications
        among the parties, whether written or oral, respecting the subject matter
        hereof.

      


      (l)  Other
        Interpretive Provisions.
        References in this Security Agreement and each of the
        other
        Transaction Documents to any document, instrument or agreement (a) includes
        all
        exhibits, schedules
        and other attachments thereto, (b) includes all documents, instruments or
        agreements issued or executed in replacement thereof, and (c) means such
        document, instrument or agreement, or replacement or predecessor thereto,
        as
        amended, modified and supplemented from time to time and
        in
        effect at any given time. The words "hereof," "herein" and "hereunder" and
        words
        of similar import
        when used in this Security Agreement or any other Transaction Document refer
        to
        this Security Agreement or such other Transaction Document, as the case may
        be,
        as a whole and not to any
        particular provision of this Security Agreement or such other Transaction
        Document, as the case may
        be.
        The words "include" and "including" and words of similar import when used
        in
        this Security
        Agreement or any other Transaction Document shall not be construed to be
        limiting or exclusive.

      


      (m)  Governing
        Law. This Security Agreement shall be governed by and construed in
        accordance with the laws of the State of [Florida]
        without
        reference to conflicts of law rules (except to the extent governed by the
        UCC).

      


      (n)  Counterparts.
        This
        Security Agreement may be executed in any number of counterparts,
        each of which shall be an original, but all of which together shall be deemed
        to
        constitute one instrument.

      


      [The
        remainder of this page is intentionally left blank]

       

      
        
          
          

        

        
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      IN
        WITNESS WHEREOF, Investor has caused this Security Agreement to be executed
        as
        of the
        day
        and year first above written.

      


      
        	 	 	 	
                /s/
                  David Weiker, Sr

              
	 	 	 	
                DAVID
                  WEIKER, SR.

              
	 	 	 	 
	
                AGREED:

              	 
	 	 	 	 
	
                ROBERT
                  SIMPSON,

              	 
	
                as
                  Secured Party

              	 
	 	 	 	 
	
                By: 
                  

              	/s/
                Robert C. Simpson	 
	
                Name:

              	
                Robert
                  C. Simpson

              	 
	
                Title:

              	
                President
                  - COO

              	 


      

      


      


      [Signature
        page to Security Agreement]


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      ATTACHMENT
        1

       

      TO
        SECURITY AGREEMENT

      


      All
        right, title, interest, claims and demands of Investor in and to the following
        property:

      


      (i)    Ten
        million (10,000,000) shares of Class C Preferred Stock par value .001
per
        share
        of Zann Corp. having a purchase price and initial value of $500,000;
        and

      


      (ii)   Any
        and
        all claims, rights and interests in any of the above and all substitutions
        for, additions and accessions to and proceeds thereof, including, without
        limitation, insurance, condemnation,
        requisition or similar payments and the proceeds thereof.

      



      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

        SCHEDULE
          A

        TO
          SECURITY AGREEMENT

        


        INVESTOR
          PROFILE

         

        

          
            	
                  	1.	
                    Name.   
                      The
                      legal name of Investor is:

                  


          

           

          David
            Weiker, Sr.

           

          
            	 	
                    2.

                  	
                    Place
                      of Business.    
                      Investor
                      has the following places of
                      business:

                  


          

          


          
            	
                    Address

                  	 	
                    Owner
                      of Location

                  	 	
                    Brief
                      Description

                    of
                      Assets and Value

                  


          

           

          
 

           

          3.    Existing
            Security Interests. The
            Collateral is subject to the following security interest of Persons
            other than the Secured Party:

          


          
            	
                    Assets

                  	 	
                    Name
                      of Secured Party

                  


          

           

          
 

          4.    Tax
            Assessments. The
            following tax assessments to which investor or any of his assets or property
            are subject are currently outstanding and unpaid:

          


          
            	
                    Assessing
                      Authority

                  	 	
                    Amount
                      and Description

                  


          

           

          
 

          5.    Guaranties. Investor
            has directly or indirectly guaranteed the following obligations of third
            parties:

          


          
            	
                    Amount

                  	 	
                    Investor

                  


          

          

            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

              

            



          6.    Securities;
            Instruments. The
            following is a complete list of all stocks, bonds, debentures, Note and
            other
            securities and investment property owned by Investor (provide
            name of issuer, whether certificated
            or uncertificated, certificate no. (if applicable), number of
            shares):

          


          7.    Bank
            Accounts; Securities Accounts: The
            following is a complete list of all bank accounts and securities accounts
            maintained by Investor (provide
            name and address of depository bank (or brokerage firm), type of account
            and
            account number):