INTELLECTUAL PROPERTY SECURITY AGREEMENT

INTELLECTUAL PROPERTY SECURITY AGREEMENT (this “Agreement”) dated as of March
23, 2010, by and among Phreadz USA, LLC, a Nevada limited liability company
(“Phreadz”), Universal Database of Music USA, LLC, a Nevada limited liability
company (“UDM”, together with Phreadz, the “Issuers”), and the secured parties
signatory hereto and their respective endorsees, transferees (collectively, the
“Secured Party”).

WITNESSETH:

WHEREAS, pursuant to a Subscription Agreement (the “Subscription Agreement”),
dated the date hereof, between Issuer and Professional Capital Partners, Ltd., a
British Virgin Islands company (“PCP”), the Issuers agreed to issue to PCP and
PCP has agreed to purchase from Issuers an 8% Secured Promissory Note, due on
the earlier to occur of (A) the initial closing of a Subsequent Equity Financing
(as defined in the Subscription Agreement or (B) June 30, 2010 (the “Note”);

WHEREAS, the Issuers have previously issued promissory notes in the aggregate
principal amount of $875,000 (the “Prior Notes”, together with the Note, the
“Notes”) to the signatories hereto other than PCP (the “Other Noteholders”);

WHEREAS, in order to induce the PCP to purchase the Note and procure consent of
the Other Noteholders to allow for such issuance (which consent is deemed hereby
granted by their signature hereto), the Issuers have agreed to execute and
deliver to the Secured Party this Agreement for the benefit of the Secured Party
and to grant to it a first priority security interest in certain Intellectual
Property (defined below) of the Issuers to secure the prompt payment,
performance and discharge in full of all of the Issuers’ obligations under the
Notes and the Subscription Agreement.

NOW, THEREFORE, in consideration of the agreements herein contained and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto hereby agree as follows:

1.           Defined Terms. Unless otherwise defined herein, terms which are
defined in the Subscription Agreement and used herein are so used as so defined;
and the following telins shall have the following meanings:

“Software Intellectual Property” shall mean:

(a)           all software programs (including all source code, object code and
all related applications and data files), whether now owned, upgraded, enhanced,
licensed or leased or hereafter acquired by each Issuer, above;

(b)          all computers and electronic data processing hardware and firmware
associated therewith;

(c)           all documentation (including flow charts, logic diagrams, manuals,
guides and specifications) with respect to such software, hardware and firmware
described in the preceding clauses (a) and (b); and

(d)          all rights with respect to all of the foregoing, including, without
limitation, any and all upgrades, modifications, copyrights, licenses, options,
warranties, service contracts, program services, test rights, maintenance
rights, support rights, improvement rights, renewal rights and indemnifications
and substitutions, replacements, additions, or model conversions of any of the
foregoing.

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“Copyrights” shall mean (a) all copyrights, registrations and applications for
registration, issued or filed, including any reissues, extensions or renewals
thereof, by or with the United States Copyright Office or any similar office or
agency of the United States, any state thereof, or any other country or
political subdivision thereof, or otherwise, including, all rights in and to the
material constituting the subject matter thereof, including, without limitation,
any referred to in Schedule B hereto, and (b) any rights in any material which
is copyrightable or which is protected by common law, United States copyright
laws or similar laws or any law of any State, including, without limitation, any
thereof referred to in Schedule B hereto.

“Copyright License” shall mean any agreement, written or oral, providing for a
grant by the Issuers of any right in any Copyright, including, without
limitation, any thereof referred to in Schedule B hereto.

“Intellectual Property” shall means, collectively, the Software Intellectual
Property, Copyrights, Copyright Licenses, Patents, Patent Licenses, Trademarks,
Trademark Licenses and Trade Secrets.

“Obligations” means all of the Issuers’ obligations under this Agreement, the
Notes and the Subscription Agreement, in each case, whether now or hereafter
existing, voluntary or involuntary, direct or indirect, absolute or contingent,
liquidated or unliquidated, whether or not jointly owed with others, and whether
or not from time to time decreased or extinguished and later decreased, created
or incurred, and all or any portion of such obligations or liabilities that are
paid, to the extent all or any part of such payment is avoided or recovered
directly or indirectly from the Secured Party as a preference, fraudulent
transfer or otherwise as such obligations may be amended, supplemented,
converted, extended or modified from time to time.
“Patents” shall mean (a) all letters patent of the United States or any other
country or any political subdivision thereof, and all reissues and extensions
thereof, including, without limitation, any thereof referred to in Schedule B
hereto, and (b) all applications for letters patent of the United States and all
divisions, continuations and continuations-in-part thereof or any other country
or any political subdivision, including, without limitation, any thereof
referred to in Schedule B hereto.

“Patent License” shall mean all agreements, whether written or oral, providing
for the grant by the Issuers of any right to manufacture, use or sell any
invention covered by a Patent, including, without limitation, any thereof
referred to in Schedule B hereto.

“Security Agreement” shall mean the Security Agreement, dated the date hereof
between the Issuers and the Secured Party.

“Trademarks” shall mean (a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles, service
marks, logos and other source or business identifiers, and the goodwill
associated therewith, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any state thereof or any other
country or any political subdivision thereof, or otherwise, including, without
limitation, any thereof referred to in Schedule B hereto, and (b) all reissues,
extensions or renewals thereof.

“Trademark License” shall mean any agreement, written or oral, providing for the
grant by the Issuers of any right to use any Trademark, including, without
limitation, any thereof referred to in Schedule B hereto.

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“Trade Secrets” shall mean common law and statutory trade secrets and all other
confidential or proprietary or useful information and all know-how obtained by
or used in or contemplated at any time for use in the business of the Issuers
(all of the foregoing being collectively called a “Trade Secret”), whether or
not such Trade Secret has been reduced to a writing or other tangible form,
including all documents and things embodying, incorporating or referring in any
way to such Trade Secret, all Trade Secret licenses, including each Trade Secret
license referred to in Schedule B hereto, and including the right to sue for and
to enjoin and to collect damages for the actual or threatened misappropriation
of any Trade Secret and for the breach or enforcement of any such Trade Secret
license.

2.           Grant of Security Interest. In accordance with Section 3(m) of the
Security Agreement, to secure the complete and timely payment, performance and
discharge in full, as the case may be, of all of the Obligations, the Issuers
hereby, unconditionally and irrevocably, pledges, grants and hypothecates to the
Secured Party, a continuing security interest in, a continuing first lien upon,
an unqualified right to possession and disposition of and a right of set-off
against, in each case to the fullest extent permitted by law, all of the
Issuers’ right, title and interest of whatsoever kind and nature in and to the
Intellectual Property (the “Security Interest”).

3.           Representations and Warranties. Each Issuer hereby represents and
warrants, and covenants and agrees with, the Secured Party as follows:

(a)           Issuer has the requisite limited liability power and authority to
enter into this Agreement and otherwise to carry out its obligations thereunder.
The execution, delivery and perfolluance by Issuer of this Agreement and the
filings contemplated therein have been duly authorized by all necessary action
on the part of Issuer and no further action is required by Issuer. This
Agreement constitutes a legal, valid and binding obligation of Issuer
enforceable in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditor’s rights generally.

(b)           Issuer represents and warrants that it has no place of business or
offices where its respective books of account and records are kept (other than
temporarily at the offices of its attorneys or accountants) or places where the
Intellectual Property is stored or located, except as set forth on Schedule A
attached hereto;

(c)           Issuer is the sole owner of the Intellectual Property (except for
non-exclusive licenses granted by Issuer in the ordinary course of business),
free and clear of any liens, security interests, encumbrances, rights or claims,
and is fully authorized to grant the Security Interest in and to pledge the
Intellectual Property. There is not on file in any governmental or regulatory
authority, agency or recording office an effective financing statement, security
agreement, license or transfer or any notice of any of the foregoing (other than
those that have been filed in favor of the Secured Party pursuant to this
Agreement) covering or affecting any of the Intellectual Property. So long as
this Agreement shall be in effect, Issuer shall not execute and shall not
knowingly permit to be on file in any such office or agency any such financing
statement or other document or instrument (except to the extent filed or
recorded in favor of the Secured Party pursuant to the terms of this Agreement).

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(d)           Issuer shall at all times maintain its books of account and
records relating to the Intellectual Property at its principal place of business
and its Intellectual Property at the locations set forth on Schedule A attached
hereto and may not relocate such books of account and records unless it delivers
to the Secured Party at least 30 days prior to such relocation (i) written
notice of such relocation and the new location thereof (which must be within the
United States) and (ii) evidence that the necessary documents have been filed
and recorded and other steps have been taken to perfect the Security Interest to
create in favor of the Secured Party valid, perfected and continuing first
priority liens in the Intellectual Property to the extent they can be perfected
through such filings.

(e)           This Agreement creates in favor of the Secured Party a valid
security interest in the Intellectual Property securing the payment and
performance of the Obligations and, upon making the filings required hereunder,
a perfected first priority security interest in such Intellectual Property to
the extent that it can be perfected through such filings.

(f)           Upon request of the Secured Party, Issuer shall execute and
deliver any and all agreements, instruments, documents, and papers as the
Secured Party may request to evidence the Secured Party’s security interest in
the Intellectual Property and the goodwill and general intangibles of Issuer
relating thereto or represented thereby, and Issuer hereby appoints the Secured
Party its attorney-in-fact to execute and file all such writings for the
foregoing purposes, all acts of such attorney being hereby ratified and
confirmed; such power being coupled with an interest is irrevocable until the
Obligations have been fully satisfied and are paid in full.

(g)           The execution, delivery and performance of this Agreement does not
conflict with or cause a breach or default, or an event that with or without the
passage of time or notice, shall constitute a breach or default, under any
agreement to which Issuer is a party or by which Issuer is bound. No consent
(including, without limitation, from members or creditors of Issuer) is required
for Issuer to enter into and perform its obligations hereunder.

(h)          Issuer shall at all times maintain the liens and Security Interest
provided for hereunder as valid and perfected first priority liens and security
interests in the Intellectual Property to the extent they can be perfected by
filing in favor of the Secured Party until this Agreement and the Security
Interest hereunder shall terminate pursuant to Section 11. Issuer hereby agrees
to defend the same against any and all persons. Issuer shall safeguard and
protect all Intellectual Property for the account of the Secured Party. Without
limiting the generality of the foregoing, Issuer shall pay all fees, taxes and
other amounts necessary to maintain the Intellectual Property and the Security
Interest hereunder, and Issuer shall obtain and furnish to the Secured Party
from time to time, upon demand, such releases and/or subordinations of claims
and liens which may be required to maintain the priority of the Security
Interest hereunder.

(i)           Issuer will not transfer, pledge, hypothecate, encumber, license
(except for non-exclusive licenses granted by Issuer in the ordinary course of
business), sell or otherwise dispose of any of the Intellectual Property without
the prior written consent of the Secured Party, which consent will not be
unreasonably withheld.

(j)           Issuer shall, within ten (10) days of obtaining knowledge thereof,
advise the Secured Party promptly, in sufficient detail, of any substantial
change in the Intellectual Property, and of the occurrence of any event which
would have a material adverse effect on the value of the Intellectual Property
or on the Secured Party’s security interest therein.

(k)          Issuer shall permit the Secured Party and its representatives and
agents to inspect the Intellectual Property at any time, and to make copies of
records pertaining to the Intellectual Property as may be requested by the
Secured Party from time to time.

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(l)           Issuer will take all steps reasonably necessary to diligently
pursue and seek to preserve, enforce and collect any rights, claims, causes of
action and accounts receivable in respect of the Intellectual Property.

(m)         Issuer shall promptly notify the Secured Party in sufficient detail
upon becoming aware of any attachment, garnishment, execution or other legal
process levied against any Intellectual Property and of any other information
received by Issuer that may materially affect the value of the Intellectual
Property, the Security Interest or the rights and remedies of the Secured Party
hereunder.

(n)          All information heretofore, herein or hereafter supplied to the
Secured Party by or on behalf of Issuer with respect to the Intellectual
Property is accurate and complete in all material respects as of the date
furnished.

(o)          Schedule A attached hereto contains a list of all of the
subsidiaries of Issuer.

(p)          Schedule B attached hereto includes all Licenses, and all Patents
and Patent Licenses, if any, owned by Issuer in its own name as of the date
hereof. Schedule B hereto includes all Trademarks and Trademark Licenses, if
any, owned by Issuer in its own name as of the date hereof. Schedule B hereto
includes all Copyrights and Copyright Licenses, if any, owned by Issuer in its
own name as of the date hereof. Schedule B hereto includes all Trade Secrets and
Trade Secret Licenses, if any, owned by Issuer as of the date hereof. Each
License, Patent, Trademark, Copyright and Trade Secret is valid, subsisting,
unexpired, enforceable and has not been abandoned. Except as set forth in
Schedule B, none of such Licenses, Patents, Trademarks, Copyrights and Trade
Secrets is the subject of any licensing or franchise agreement. No holding,
decision or judgment has been rendered by any Governmental Body which would
limit, cancel or question the validity of any License, Patent, Trademark,
Copyright and Trade Secrets Except as set forth in Schedule B, no action or
proceeding is pending (i) seeking to limit, cancel or question the validity of
any License, Patent, Trademark, Copyright or Trade Secret, or (ii) which, if
adversely determined, would have a material adverse effect on the value of any
License, Patent, Trademark, Copyright or Trade Secret. Issuer has used and will
continue to use for the duration of this Agreement, proper statutory notice in
connection with its use of the Patents, Trademarks and Copyrights and consistent
standards of quality in products leased or sold under the Patents, Trademarks
and Copyrights.

(q)          With respect to any Intellectual Property:

 
(i)
such Intellectual Property is subsisting and has not been adjudged invalid or
unenforceable, in whole or in part;

 
(ii)
such Intellectual Property is valid and enforceable;

 
(iii)
Issuer has made all necessary filings and recordations to protect its interest
in such Intellectual Property, including, without limitation, recordations of
all of its interests in the Patents, Patent Licenses, Trademarks and Trademark
Licenses in the United States Patent and Trademark Office and in corresponding
offices throughout the world and its claims to the Copyrights and Copyright
Licenses in the United States Copyright Office and in corresponding offices
throughout the world;

 
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(iv)
other than as set forth in Schedule B, Issuer is the exclusive owner of the
entire and unencumbered right, title and interest in and to such Intellectual
Property and no claim has been made that the use of such Intellectual Property
infringes on the asserted rights of any third party; and

 
 
(v)
Issuer has performed and will continue to perform all acts and has paid all
required fees and taxes to maintain each and every item of Intellectual Property
in full force and effect throughout the world, as applicable.

(r)           Except with respect to any Trademark or Copyright that Issuer
shall reasonably determine is of negligible economic value to Issuer, Issuer
shall:

(i)           maintain each Trademark and Copyright in full force free from any
claim of abandonment for non-use, maintain as in the past the quality of
products and services offered under such Trademark or Copyright; employ such
Trademark or Copyright with the appropriate notice of registration; not adopt or
use any mark which is confusingly similar or a colorable imitation of such
Trademark or Copyright unless the Secured Party shall obtain a perfected
security interest in such mark pursuant to this Agreement; and not (and not
permit any licensee or sublicensee thereof to) do any act or knowingly omit to
do any act whereby any Trademark or Copyright may become invalidated;

(ii)           not, except with respect to any Patent that it shall reasonably
determine is of negligible economic value to it, do any act, or omit to do any
act, whereby any Patent may become abandoned or dedicated; and

(iii)           notify the Secured Party immediately if it knows, or has reason
to know, that any application or registration relating to any Patent, Trademark
or Copyright may become abandoned or dedicated, or of any adverse determination
or development (including, without limitation, the institution of, or any such
determination or development in, any proceeding in the United States Patent and
Trademark Office, United States Copyright Office or any court or tribunal in any
country) regarding its ownership of any Patent, Trademark or Copyright or its
right to register the same or to keep and maintain the same.

(s)           Whenever Issuer, either by itself or through any agent, employee,
licensee or designee, shall file an application for the registration of any
Patent, Trademark or Copyright with the United States Patent and Trademark
Office, United States Copyright Office or any similar office or agency in any
other country or any political subdivision thereof or acquire rights to any new
Patent, Trademark or Copyright whether or not registered, report such filing to
the Secured Party within five business days after the last day of the fiscal
quarter in which such filing occurs.

(t)           Issuer shall take all reasonable and necessary steps, including,
without limitation, in any proceeding before the United States Patent and
Trademark Office, United States Copyright Office or any similar office or agency
in any other country or any political subdivision thereof, to maintain and
pursue each application (and to obtain the relevant registration) and to
maintain each registration of the Patents, Trademarks and Copyrights, including,
without limitation, filing of applications for renewal, affidavits of use and
affidavits of incontestability.

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(u)           In the event that any Patent, Trademark or Copyright included in
the Intellectual Property is infringed, misappropriated or diluted by a third
party, promptly notify the Secured Party after it learns thereof and shall,
unless it shall reasonably determine that such Patent, Trademark or Copyright is
of negligible economic value to it, which determination it shall promptly report
to the Secured Party, promptly sue for infringement, misappropriation or
dilution, to seek injunctive relief where appropriate and to recover any and all
damages for such infringement, misappropriation or dilution, or take such other
actions as it shall reasonably deem appropriate under the circumstances to
protect such Patent, Trademark or Copyright. If an Issuer lacks the financial
resources to comply with this Section 3(t), such Issuer shall so notify the
Secured Party and shall cooperate fully with any enforcement action undertaken
by the Secured Party on behalf of Issuer.
 
4.           Defaults. The following events shall be “Events of Default”:

(a)           The occurrence of an Event of Default (as defined in the Notes)
under the Notes;

(b)           Any representation or warranty of an Issuer in this Agreement or
in the Security Agreement shall prove to have been incorrect in any material
respect when made;

(c)           The failure by an Issuer to observe or perform any of its
obligations hereunder or in the Security Agreement for ten (10) days after
receipt by Issuer of notice of such failure from the Secured Party.

5.           Duty To Hold In Trust. Upon the occurrence of any Event of Default
and at any time thereafter, Issuers shall, upon receipt by it of any revenue,
income or other sums subject to the Security Interest, whether payable pursuant
to the Note or otherwise, or of any check, draft, note, trade acceptance or
other instrument evidencing an obligation to pay any such sum, hold the same in
trust for the Secured Party and shall forthwith endorse and transfer any such
sums or instruments, or both, to the Secured Party for application to the
satisfaction of the Obligations.

6.           Rights and Remedies Upon Default. Upon occurrence of any Event of
Default and at any time thereafter, the Secured Party shall have the right to
exercise all of the remedies conferred hereunder and under the Note, and the
Secured Party shall have all the rights and remedies of a secured party under
the UCC and/or any other applicable law (including the Uniform Commercial Code
of any jurisdiction in which any Intellectual Property is then located). Without
limitation, the Secured Party shall have the following rights and powers:

(a)           The Secured Party shall have the right to take possession of the
Intellectual Property and, for that purpose, enter, with the aid and assistance
of any person, any premises where the Intellectual Property, or any part
thereof, is or may be placed and remove the same, and the Issuers shall assemble
the Intellectual Property and make it available to the Secured Party at places
which the Secured Party shall reasonably select, whether at the Issuer’s
premises or elsewhere, and make available to the Secured Party, without rent,
all of the Issuer’s respective premises and facilities for the purpose of the
Secured Party taking possession of, removing or putting the Intellectual
Property in saleable or disposable form.

(b)           The Secured Party shall have the right to operate the business of
the Issuers using the Intellectual Property and shall have the right to assign,
sell, lease or otherwise dispose of and deliver all or any part of the
Intellectual Property, at public or private sale or otherwise, either with or
without special conditions or stipulations, for cash or on credit or for future
delivery, in such parcel or parcels and at such time or times and at such place
or places, and upon such terms and conditions as the Secured Party may deem
commercially reasonable, all without (except as shall be required by applicable
statute and cannot be waived) advertisement or demand upon or notice to the
Issuers or right of redemption of the Issuers, which are hereby expressly
waived. Upon each such sale, lease, assignment or other transfer of Intellectual
Property, the Secured Party may, unless prohibited by applicable law which
cannot be waived, purchase all or any part of the Intellectual Property being
sold, free from and discharged of all trusts, claims, right of redemption and
equities of the Issuers, which are hereby waived and released.

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7.           Applications of Proceeds. The proceeds of any such sale, lease or
other disposition of the Intellectual Property hereunder shall be applied first,
to the expenses of retaking, holding, storing, processing and preparing for
sale, selling, and the like (including, without limitation, any taxes, fees and
other costs incurred in connection therewith) of the Intellectual Property, to
the reasonable attorneys’ fees and expenses incurred by the Secured Party in
enforcing its rights hereunder and in connection with collecting, storing and
disposing of the Intellectual Property, and then to satisfaction of the
Obligations, and to the payment of any other amounts required by applicable law,
after which the Secured Party shall pay to the Issuers any surplus proceeds. If,
upon the sale, license or other disposition of the Intellectual Property, the
proceeds thereof are insufficient to pay all amounts to which the Secured Party
is legally entitled, Issuers will be liable for the deficiency, together with
interest thereon, at the rate of 15% per annum (the “Default Rate”), and the
reasonable fees of any attorneys employed by the Secured Party to collect such
deficiency. To the extent permitted by applicable law, Issuers waive all claims,
damages and demands against the Secured Party arising out of the repossession,
removal, retention or sale of the Intellectual Property, unless due to the gross
negligence or willful misconduct of the Secured Party.

8.           Costs and Expenses. Issuers agree to pay all out-of-pocket fees,
costs and expenses incurred in connection with any filing required hereunder,
including without limitation, any financing statements, continuation statements,
partial releases and/or termination statements related thereto or any expenses
of any searches reasonably required by the Secured Party. The Issuers shall also
pay all other claims and charges which in the reasonable opinion of the Secured
Party might prejudice, imperil or otherwise affect the Intellectual Property or
the Security Interest therein. The Issuers will also, upon demand, pay to the
Secured Party the amount of any and all reasonable expenses, including the
reasonable fees and expenses of its counsel and of any experts and agents, which
the Secured Party may incur in connection with (i) the enforcement of this
Agreement, (ii) the custody or preservation of or the sale of, collection from,
or other realization upon, any of the Intellectual Property, or (iii) the
exercise or enforcement of any of the rights of the Secured Party under the
Note. Until so paid, any fees payable hereunder shall be added to the principal
amount of the Note and shall bear interest at the Default Rate.

9.           Responsibility for Intellectual Property. The Issuers assumes all
liabilities and responsibility in connection with all Intellectual Property, and
the obligations of the Issuers hereunder or under the Note and the Transaction
Documents shall in no way be affected or diminished by reason of the loss,
destruction, damage or theft of any of the Intellectual Property or its
unavailability for any reason.

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10.         Security Interest Absolute. All rights of the Secured Party and all
Obligations of the Issuers hereunder, shall be absolute and unconditional,
irrespective of: (a) any lack of validity or enforceability of this Agreement,
the Note, the Subscription Agreement or any agreement entered into in connection
with the foregoing, or any portion hereof or thereof; (b) any change in the
time, manner or place of payment or performance of, or in any other term of, all
or any of the Obligations, or any other amendment or waiver of or any consent to
any departure from the Note, the Subscription Agreement or any other agreement
entered into in connection with the foregoing; (c) any exchange, release or
nonperfection of any of the Intellectual Property, or any release or amendment
or waiver of or consent to departure from any other Intellectual Property for,
or any guaranty, or any other security, for all or any of the Obligations; (d)
any action by the Secured Party to obtain, adjust, settle and cancel in its sole
discretion any insurance claims or matters made or arising in connection with
the Intellectual Property; or (e) any other circumstance which might otherwise
constitute any legal or equitable defense available to the Issuers, or a
discharge of all or any part of the Security Interest granted hereby. Until the
Obligations shall have been paid and performed in full, the rights of the
Secured Party shall continue even if the Obligations are barred for any reason,
including, without limitation, the running of the statute of limitations or
bankruptcy. The Issuers expressly waive presentment, protest, notice of protest,
demand, notice of nonpayment and demand for performance. In the event that at
any time any transfer of any Intellectual Property or any payment received by
the Secured Party hereunder shall be deemed by final order of a court of
competent jurisdiction to have been a voidable preference or fraudulent
conveyance under the bankruptcy or insolvency laws of the United States, or
shall be deemed to be otherwise due to any party other than the Secured Party,
then, in any such event, the Issuers’ obligations hereunder shall survive
cancellation of this Agreement, and shall not be discharged or satisfied by any
prior payment thereof and/or cancellation of this Agreement, but shall remain a
valid and binding obligation enforceable in accordance with the terms and
provisions hereof. The Issuers waive all right to require the Secured Party to
proceed against any other person or to apply any Intellectual Property which the
Secured Party may hold at any time, or to marshal assets, or to pursue any other
remedy. The Issuers waive any defense arising by reason of the application of
the statute of limitations to any obligation secured hereby.

11.         Term of Agreement. This Agreement and the Security Interest shall
terminate on the date on which all payments under the Note have been made in
full and all other Obligations have been paid or discharged. Upon such
termination, the Secured Party, at the request and at the expense of the
Issuers, will join in executing any termination statement with respect to any
financing statement executed and filed pursuant to this Agreement.

12.         Power of Attorney; Further Assurances.

(a)           Each Issuer authorizes the Secured Party, and does hereby make,
constitute and appoint it, and its respective officers, agents, successors or
assigns with full power of substitution, as such Issuer’s true and lawful
attorney-in-fact, with power, in its own name or in the name of such Issuer, to,
after the occurrence and during the continuance of an Event of Default, (i)
endorse any notes, checks, drafts, money orders, or other instruments of payment
(including payments payable under or in respect of any policy of insurance) in
respect of the Intellectual Property that may come into possession of the
Secured Party; (ii) to sign and endorse any UCC financing statement or any
invoice, freight or express bill, bill of lading, storage or warehouse receipts,
drafts against debtors, assignments, verifications and notices in connection
with accounts, and other documents relating to the Intellectual Property; (iii)
to pay or discharge taxes, liens, security interests or other encumbrances at
any time levied or placed on or threatened against the Intellectual Property;
(iv) to demand, collect, receipt for, compromise, settle and sue for monies due
in respect of the Intellectual Property; and (v) generally, to do, at the option
of the Secured Party, and at the Issuers’ expense, at any time, or from time to
time, all acts and things which the Secured Party deems necessary to protect,
preserve and realize upon the Intellectual Property and the Security Interest
granted therein in order to effect the intent of this Agreement, the Note, the
Subscription Agreement, all as fully and effectually as the Issuers might or
could do; and each Issuer hereby ratifies all that said attorney shall lawfully
do or cause to be done by virtue hereof. This power of attorney is coupled with
an interest and shall be irrevocable for the term of this Agreement and
thereafter as long as any of the Obligations shall be outstanding.

(b)           On a continuing basis, the Issuers will make, execute,
acknowledge, deliver, file and record, as the case may be, in the proper filing
and recording places in any jurisdiction, including, without limitation, the
jurisdictions indicated on Schedule  C, attached hereto, all such instruments,
and take all such action as may reasonably be deemed necessary or advisable, or
as reasonably requested by the Secured Party, to perfect the Security Interest
granted hereunder and otherwise to carry out the intent and purposes of this
Agreement, or for assuring and confirming to the Secured Party the grant or
perfection of a security interest in all the Intellectual Property.

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(c)           Each Issuer hereby irrevocably appoints the Secured Party as the
Issuer’s attorney-in-fact, with full authority in the place and stead of such
Issuer and in the name of such Issuer, from time to time in the Secured Party’s
discretion, to take any action and to execute any instrument which the Secured
Party may deem necessary or advisable to accomplish the purposes of this
Agreement, including the filing, in its sole discretion, of one or more
financing or continuation statements and amendments thereto, relative to any of
the Intellectual Property without the signature of such Issuer where permitted
by law.

13.         Notices. All notices, requests, demands and other communications
hereunder shall be in writing, with copies to all the other parties hereto, and
shall be deemed to have been duly given when (i) if delivered by hand, upon
receipt, (ii) if sent by facsimile, upon receipt of proof of sending thereof,
(iii) if sent by nationally recognized overnight delivery service (receipt
requested), the next business day or (iv) if mailed by first-class registered or
certified mail, return receipt requested, postage prepaid, four days after
posting in the U.S. mails, in each case if delivered to the following addresses:
 
If to the Issuer:
Phreadz USA, LLC
   
Universal Database of Music, LLC
   
63 Main Street
   
Flemington, NJ 08822
   
Attention: Nicholas Thompson
   
 
Telephone: (908) 796-0258
   
Facsimile: (619) 934-9253

If to the Secured Party:
to the address set forth under their name on the signature pages hereto

 
With a copy to:
Indeglia & Carney, P.C.
 
1900 Main Street, Suite 300
 
Irvine, CA 92614
 
Attention: Marc A. Indeglia, Esq.
 
Telephone: (949) 861-3321
 
Facsimile: (949) 861-3324

14.         Other Security. To the extent that the Obligations are now or
hereafter secured by property other than the Intellectual Property or by the
guarantee, endorsement or property of any other person, firm, corporation or
other entity, then the Secured Party shall have the right, in its sole
discretion, to pursue, relinquish, subordinate, modify or take any other action
with respect thereto, without in any way modifying or affecting any of the
Secured Party’s rights and remedies hereunder.

15.         Miscellaneous.

(a)           No course of dealing between Issuers and the Secured Party, nor
any failure to exercise, nor any delay in exercising, on the part of the Secured
Party, any right, power or privilege hereunder or under the Note shall operate
as a waiver thereof; nor shall any single or partial exercise of any right,
power or privilege hereunder or thereunder preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.

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(b)           All of the rights and remedies of the Secured Party with respect
to the Intellectual Property, whether established hereby or by the Note or by
any other agreements, instruments or documents or by law shall be cumulative and
may be exercised singly or concurrently.

(c)           This Agreement and the Security Agreement constitute the entire
agreement of the parties with respect to the subject matter hereof and is
intended to supersede all prior negotiations, understandings and agreements with
respect thereto. Except as specifically set forth in this Agreement, no
provision of this Agreement may be modified or amended except by a written
agreement specifically referring to this Agreement and signed by the parties
hereto.

(d)           In the event that any provision of this Agreement is held to be
invalid, prohibited or unenforceable in any jurisdiction for any reason, unless
such provision is narrowed by judicial construction, this Agreement shall, as to
such jurisdiction, be construed as if such invalid, prohibited or unenforceable
provision had been more narrowly drawn so as not to be invalid, prohibited or
unenforceable. If, notwithstanding the foregoing, any provision of this
Agreement is held to be invalid, prohibited or unenforceable in any
jurisdiction, such provision, as to such jurisdiction, shall be ineffective to
the extent of such invalidity, prohibition or unenforceability without
invalidating the remaining portion of such provision or the other provisions of
this Agreement and without affecting the validity or enforceability of such
provision or the other provisions of this Agreement in any other jurisdiction.

(e)           No waiver of any breach or default or any right under this
Agreement shall be considered valid unless in writing and signed by the party
giving such waiver, and no such waiver shall be deemed a waiver of any
subsequent breach or default or right, whether of the same or similar nature or
otherwise.

(f)           This Agreement shall be binding upon and inure to the benefit of
each party hereto and its successors and assigns.

(g)           Each party shall take such further action and execute and deliver
such further documents as may be necessary or appropriate in order to carry out
the provisions and purposes of this Agreement.

(h)           This Agreement shall be construed in accordance with the laws of
the State of New York, except to the extent the validity, perfection or
enforcement of a security interest hereunder in respect of any particular
Intellectual Property which are governed by a jurisdiction other than the State
of New York in which case such law shall govern. Each of the parties hereto
irrevocably submit to the exclusive jurisdiction of any New York State or United
States Federal court sitting in Manhattan county over any action or proceeding
arising out of or relating to this Agreement, and the parties hereto hereby
irrevocably agree that all claims in respect of such action or proceeding may be
heard and determined in such New York State or Federal court. The parties hereto
agree that a final judgment in any such action or proceeding shall be conclusive
and may be enforced in other jurisdictions by suit on the judgment or in any
other manner provided by law. The parties hereto further waive any objection to
venue in the State of New York and any objection to an action or proceeding in
the State of New York on the basis of forum non conveniens.

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(i)           EACH PARTY HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO
A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY
DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATER OF
THIS AGREEMENT, INCLUDING WITHOUT LIMITATION CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY
HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT FOR EACH PARTY TO
ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH PARTY HAS ALREADY RELIED ON THIS
WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH PARTY WILL CONTINUE TO RELY
ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH PARTY FURTHER WARRANTS AND
REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT
SUCH PARTY HAS KNOWINGLY AND VOLUNTARILY WAIVES ITS RIGHTS TO A JURY TRIAL
FOLLOWING SUCH CONSULTATION. THIS WAIVER IS IRREVOCABLE, MEANING THAT,
NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS AND SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. IN THE EVENT OF A
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.

(j)           This Agreement may be executed in any number of counterparts, each
of which when so executed shall be deemed to be an original and, all of which
taken together shall constitute one and the same Agreement. In the event that
any signature is delivered by facsimile transmission, such signature shall
create a valid binding obligation of the party executing (or on whose behalf
such signature is executed) the same with the same force and effect as if such
facsimile signature were the original thereof.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed on the day and year first above written.
 

 
ISSUERS:
       
PHREADZ USA, LLC
       
By:
   
Name:
   
Title:
         
UNIVERSAL DATABASE OF MUSIC USA, LLC
       
By:
    
Name:
   
Title:
         
SECURED PARTY
       
PROFESSIONAL CAPITAL PARTNERS, LTD. By:
PCPM GP, LLC, its general partner
       
By:
   
Name:
   
Title:
         
Address: 1400 Old Country Road, Westbury NY 11590
Facsimile: 516-228-8083
           
Cecil Bernard
       
Address: 53 Danson Road, Bexleyheath, Kent, DA6 SHP
England
 
Facsimile:
           
Mary Goldberg
       
Address:
 
Facsimile:

 
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Mercado De Expect
             
Address:
Facsimile:
                     
Ingrid Coffin
             
Address:
Facsimile:
                     
Louis J. Macaluso
             
Address: 757 Norman Place, Westfield, NJ 07090
     
Facsimile:
                     
Dennis Josifovich
             
Address: 7 Rhone Court, Grand Junction, CO 81507
     
Facsimile:
                     
David Kelley
     
Address:
     
Facsimile:
 

 
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SCHEDULE A

Principal Place of Business of the Issuers:

 
Locations Where Intellectual Property is Located or Stored:

 
List of Subsidiaries of the Issuers:

 
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SCHEDULE B
 
A.
Licenses, Patents and Patent Licenses

Patent
Application or Registration No.
Country
Registration or
Filing Date

B.
Trademarks and Trademark Licenses

Patent
Application or Registration No.
Country
Registration or
Filing Date

C.
Copyrights and Copyright Licenses

Patent
Application or Registration No.
Country
Registration or
Filing Date

D.
Trade Secrets and Trade Secret Licenses

Patent
Application or Registration No.
Country
Registration or
Filing Date

 
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SCHEDULE C

Jurisdictions:

 
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