Document:

SUBSCRIPTION
AGREEMENT

     

    THIS SUBSCRIPTION 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
Professional Capital Partners, Ltd., a British Virgin Islands company (the
“Subscriber”).

     

    WHEREAS, the Issuers and the
Subscriber are executing and delivering this Agreement in reliance upon an
exemption from securities registration afforded by the provisions of Section
4(2), Section 4(6) and/or Regulation D (“Regulation D”) as promulgated
by the United States Securities and Exchange Commission (the “Commission”) under the
Securities Act of 1933, as amended (the “1933 Act”);

     

    WHEREAS, the parties desire
that, upon the terms and subject to the conditions contained herein, the Issuers
shall issue and sell to the Subscriber, as provided herein, and the Subscriber
shall purchase (i) Eighty Five Thousand Dollars ($85,000) (the “Purchase Price”) of principal
amount of a promissory note of the Issuers (“Note”), a form of which is
annexed hereto as Exhibit A and (ii) a right (the “Right”) to receive $85,000 of
that amount of securities offered in a bona fide third party sale by the Issuers
(or a Public Company (as defined below) of its equity securities (including
equity or debt securities directly or indirectly convertible or exchangeable for
equity securities), alone or with any debt securities in which the aggregate
gross proceeds (in either cash or conversion of outstanding indebtedness or a
combination thereof) received by the Issuers (or, if after a the Reorganization,
the Public Company) equals or exceeds $1 million before deduction of any
commissions or expenses (the “Subsequent Equity
Financing”). For the avoidance of doubt, if the Subsequent Equity
Financing is for units (“Units”) consisting of common
stock and warrant with a purchase price per Unit equal to $1.00 per Unit, than
Subscriber would receive 85,000 Units with no additional consideration due
Issuers (or, if after a the Reorganization, the Public Company) from Subscriber
at time of issuance. The Note and the Right are collectively referred to herein
as the “Securities”;

     

    WHEREAS, the Issuers desire to
obtain funds from Subscriber in order to provide working capital, to and further
the operations of the Issuers, including the consummation of a Reorganization
(as defined below);

     

    WHEREAS, to secure payment for
the Note, concurrent with the Closing Date, the Issuers will grant Subscriber a
first lien security interest in all of their assets pursuant to a security
agreement and an intellectual property security agreement substantially in the
forms attached hereto as Exhibit B and Exhibit C (the “Security
Agreements”)

     

    NOW, THEREFORE, in
consideration of the mutual covenants and other agreements contained in this
Agreement the Issuers and the Subscriber hereby agree as follows:

     

    1.           Definitions. For
purposes of this Agreement, the following definitions shall apply and shall be
equally applicable to both the singular and plural forms of the defined
terms:

    

    (a)          “Affiliate” of any person or
entity means any other person or entity directly or indirectly controlling,
controlled by or under direct or indirect common control with such person or
entity. For purposes of this definition, “control” means the power to direct the
management

    

    (b)          “Material Adverse Effect”
shall mean a material adverse effect on the financial condition,
results of operations, properties or business of the Issuers taken as a
whole.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (c)          “Public Company” shall mean is
a publicly-held company subject to reporting obligations
pursuant to Section 13 of the Securities Exchange Act of 1934 (the “1934 Act”) and has a class of
common shares registered pursuant to Section 12(g) of the 1934 Act (i) who
issues securities to the holders of outstanding limited liability company
interests of the Issuers in connection with (A) a merger, acquisition, or
consolidation of the Issuers into or with such company (or an Affiliate
thereof), or (ii) a sale, lease, license (on an exclusive basis) or transfer by
the Issuers of all or substantially all of their assets to such company (or an
Affiliate thereof) and (ii) whose business operations were dormant immediately
before such merger, acquisition, consolidation, sale, lease, license or
transfer.

    

    (d)          “Reorganization” shall mean
the merger, acquisition, or consolidation of the Issuers into or with the Public
Company (or an Affiliate thereof), or any sale, lease, license (on an exclusive
basis) or transfer by the Issuers of all or substantially all of their assets to
the Public Company (or an affiliate thereof), in each case which results in (a)
the exchange of all limited liability company interests of the Issuers for
common stock of the Public Company; (b) the conversion or exchange of the Right
into in Right in the Public Company, (c) the members of the Issuers (including
holders of any convertible securities in the Issuers on a fully diluted as
converted basis) immediately prior to the transaction, own at least seventy-five
percent (75%) of the then outstanding shares of capital stock (on a fully
diluted, as-if converted basis) of the Public Company immediately after the
transaction

    

    (e)          “Transaction Documents” shall
mean this Agreement, the Note, the Security Agreements and any other agreements
delivered together with this Agreement or in connection herewith.

     

    2.           Conditions To
Closing. Subject to the satisfaction or waiver of the terms and
conditions of this Agreement, on the Closing Date, the Subscriber shall purchase
and the Issuers shall sell to the Subscriber a (i) Note in the principal amount
designated on the signature page hereto and (ii) a Right. The aggregate amount
of the Note to be purchased by the Subscriber on the Closing Date shall, in the
aggregate, be equal to the Purchase Price.

     

    3.           Closing Date. The
“Closing Date” shall be
the date that subscriber funds representing the net amount due the Issuers from
the Purchase Price is transmitted by wire transfer or otherwise to or for the
benefit of the Issuers. The consummation of the transactions contemplated herein
for the Closing shall take place at the offices of Indeglia & Carney, P.C.,
1900 Main Street, Suite 300, Irvine, CA 92614, upon the satisfaction of all
conditions to Closing set forth in this Agreement.

     

    4.           Subscriber’s
Representations and Warranties. The Subscriber hereby represents and
warrants to and agrees with the Issuers that:

    

    (a)           Organization and Standing of
the Subscriber. The Subscriber is a corporation, partnership or other
entity duly incorporated or organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or
organization.

    

    (b)           Authorization and
Power. The Subscriber has the requisite power and authority to enter into
and perform this Agreement and to purchase the Securities being sold to it
hereunder. The execution, delivery and performance of this Agreement by the
Subscriber and the consummation by it of the transactions contemplated hereby
and thereby have been duly authorized by all necessary corporate or partnership
action, and no further consent or authorization of the Subscriber or its Board
of Directors, stockholders, partners, members, as the case may be, is required.
This Agreement has been duly authorized, executed and delivered by the
Subscriber and constitutes, or shall constitute when executed and delivered, a
valid and binding obligation of the Subscriber enforceable against the
Subscriber in accordance with the terms thereof subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors’ rights generally and
to general principles of equity.

     

    
      
         

      

      
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    (c)           No Conflicts. The
execution, delivery and performance of this Agreement and the consummation by
the Subscriber of the transactions contemplated hereby or relating hereto do not
and will not (i) result in a violation of the Subscriber’s charter documents or
bylaws or other organizational documents or (ii) conflict with, or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of any agreement, indenture or instrument or
obligation to which the Subscriber is a party or by which its properties or
assets are bound, or result in a violation of any law, rule, or regulation, or
any order, judgment or decree of any court or governmental agency applicable to
the Subscriber or its properties (except for such conflicts, defaults and
violations as would not, individually or in the aggregate, have a material
adverse effect on the Subscriber). The Subscriber is not required to obtain any
consent, authorization or order of, or make any filing or registration with, any
court or governmental agency in order for it to execute, deliver or perform any
of its obligations under this Agreement or to purchase the Securities in
accordance with the terms hereof, provided that for purposes of the
representation made in this sentence, the Subscriber is assuming and relying
upon the accuracy of the relevant representations and agreements of the Issuers
herein.

    

    (d)           Information on
Issuers. The Subscriber has received and had the opportunity to review
all documents and any other information requested from the Issuers, has been
given full and complete access to information regarding the Issuers, and has
utilized such access to the Subscriber’s satisfaction for the purpose of
obtaining such information regarding the Issuers as the Subscriber has
reasonably requested; and, particularly, the Subscriber has been given
reasonable opportunity to ask questions of, and receive answers from,
representatives of the Issuers concerning the terms and conditions of the
offering of the Securities and to obtain any additional information, to the
extent reasonably available.

    

    (e)           Information on
Subscriber. The Subscriber is an “accredited investor”, as such term is
defined in Regulation D promulgated by the Commission under the 1933 Act, is
experienced in investments and business matters, has made investments of a
speculative nature and has purchased securities of United States publicly-owned
companies in private placements in the past and, with its representatives, has
such knowledge and experience in financial, tax and other business matters as to
enable the Subscriber to utilize the information made available by the Issuers
to evaluate the merits and risks of and to make an informed investment decision
with respect to the proposed purchase. The Subscriber has the authority and is
duly and legally qualified to purchase and own the Securities. The Subscriber is
able to bear the risk of such investment for an indefinite period and to afford
a complete loss thereof. The information set forth on the signature page hereto
regarding the Subscriber is accurate.

    

    (f)           Purchase
of Securities. On the Closing Date, the Subscriber will purchase the Note and
the Right as principal for its own account for investment only and not with a
view toward, or for resale in connection with, the public sale or any
distribution thereof.

    

    (g)           Compliance with Securities
Act. The Subscriber understands and agrees that the Securities have not
been registered under the 1933 Act or any applicable state securities laws, by
reason of their issuance in a transaction that does not require registration
under the 1933 Act (based in part on the accuracy of the representations and
warranties of Subscriber contained herein), and that such Securities must be
held indefinitely unless a subsequent disposition is registered under the 1933
Act or any applicable state securities laws or is exempt from such
registration.

    

    (h)           Note Legend. The Note
shall bear the following legend:

    

    “THIS
NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS
NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT OR AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUERS THAT SUCH REGISTRATION
IS NOT REQUIRED.”

    
      
         

      

      
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    (i)           Communication of
Offer. The offer to sell the Securities was directly communicated to the
Subscriber by the Issuers. At no time was the Subscriber presented with or
solicited by any leaflet, newspaper or magazine article, radio or television
advertisement, or any other form of general advertising or solicited or invited
to attend a promotional meeting otherwise than in connection and concurrently
with such communicated offer.

    

    (j)           Restricted
Securities. Subscriber understands that the Securities have not been
registered under the 1933 Act and the Subscriber will not sell, offer to sell,
assign, pledge, hypothecate or otherwise transfer the Note unless pursuant to an
effective registration statement under the 1933 Act. Notwithstanding anything to
the contrary contained in this Agreement, the Subscriber may transfer (without
restriction and without the need for an opinion of counsel) the Securities to
its Affiliates (as defined below) provided that each such Affiliate is an
“accredited investor” under Regulation D and such Affiliate agrees to be bound
by the terms and conditions of this Agreement.

    

    (k)           No Governmental
Review. The Subscriber understands that no United States federal or state
agency or any other governmental or state agency has passed on or made
recommendations or endorsement of the Securities or the suitability of the
investment in the Notes nor have such authorities passed upon or endorsed the
merits of the offering of the Notes.

    

    (l)           Correctness
of Representations. The Subscriber represents as to the Subscriber that the
foregoing representations and warranties are true and correct as of the date
hereof.

    

    5.           Issuers Representations and
Warranties. Each Issuer represents and warrants to and agrees with the
Subscriber, on a joint and several basis, that except as otherwise qualified in
the Transaction Documents:

     

    (a)          Due Incorporation.
Issuer is a limited liability duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has the
requisite limited liability power to own its properties and to carry on its
business. Issuer is duly qualified as a foreign entity to do business and is in
good standing in each jurisdiction where the nature of the business conducted or
property owned by it makes such qualification necessary, other than those
jurisdictions in which the failure to so qualify would not have a Material
Adverse Effect.

     

    (b)          Outstanding Membership
Interest. All issued and outstanding limited liability company units of
each Issuer has been duly authorized and validly issued and are fully paid and
nonassessable and have been issued in compliance with all federal and applicable
state securities laws.

     

    (c)          Authority;
Enforceability. The Transaction Documents have been duly authorized,
executed and delivered by each Issuer, as applicable, and are valid and binding
agreements enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors’ rights generally and
to general principles of equity. Issuer has full corporate power and authority
necessary to enter into and deliver the Transaction Documents and to perform its
obligations thereunder.

     

    (d)          Consents. No consent,
approval, authorization or order of any court, governmental agency or body or
arbitrator having jurisdiction over Issuer, nor either Issuer’s members is
required for the execution by the Issuers of the Transaction Documents and
compliance and performance by Issuer of its obligations under the Transaction
Documents, including, without limitation, the issuance and sale of the
Securities.

    
      
         

      

      
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    (e)           No Violation or
Conflict. Assuming the representations and warranties of the Subscriber
in Section 4 are true and correct, neither the issuance and sale of the
Securities nor the performance of Issuer’s obligations under this Agreement and
all other agreements entered into by the Issuers relating thereto by the Issuers
will violate, conflict with, result in a breach of, or constitute a default (or
an event which with the giving of notice or the lapse of time or both would be
reasonably likely to constitute a default in any material respect) of a material
nature under (A) the articles or certificate of incorporation, charter or bylaws
of Issuer, (B) any decree, judgment, order, law, treaty, rule, regulation or
determination applicable to the Issuers of any court, governmental agency or
body, or arbitrator having jurisdiction over Issuer or over the properties or
assets of Issuer or any of its Affiliates, or (C) the terms of any bond,
debenture, note or any other evidence of indebtedness, or any agreement, stock
option or other similar plan, indenture, lease, mortgage, deed of trust or other
instrument to which the Issuers or any of its Affiliates is a party, by which
Issuer or any of its Affiliates is bound, or to which any of the properties of
Issuer or any of its Affiliates is subject, except, in the case of (C), the
violation, conflict, breach, or default of which would not have a Material
Adverse Effect and which would not serve as a basis for any rescission of the
issuance of the Securities.

     

    (f)           The Securities. The
Securities, and any other securities issuable upon conversion or exercise
thereof, upon issuance:

    

    (i)           are,
or will be, free and clear of any security interests, liens, claims or other
encumbrances, subject to restrictions upon transfer under the 1933 Act and any
applicable state securities laws;

    

    (ii)           have
been duly and validly authorized;

    

    (iii)           will
not have been issued or sold in violation of any preemptive or other similar
rights of the holders of any securities of the Issuers; and

    

    (iv)           will
not result in a violation of Section 5 under the 1933 Act.

     

    (g)           Litigation. There is
no pending or, to the best knowledge of the Issuers, threatened action, suit,
proceeding or investigation before any court, governmental agency or body, or
arbitrator having jurisdiction over the Issuers that would affect the execution
by Issuer or the performance by the Issuers of its obligations under the
Transaction Documents.

     

    (h)           Defaults. Issuer is
not in violation of its articles of organization or operating agreement. Issuer
is (i) not in default under or in violation of any other material agreement or
instrument to which it is a party or by which it or any of its properties are
bound or affected, which default or violation would have a Material Adverse
Effect, (ii) not in default with respect to any order of any court, arbitrator
or governmental body or subject to or party to any order of any court or
governmental authority arising out of any action, suit or proceeding under any
statute or other law respecting antitrust, monopoly, restraint of trade, unfair
competition or similar matters, or (iii) not in violation of any statute, rule
or regulation of any governmental authority which violation would have a
Material Adverse Effect.

     

    (i)           No General
Solicitation. Neither Issuer, nor to its knowledge, any person acting on
its or their behalf, has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D under the 1933 Act) in
connection with the offer or sale of the Securities.

     

    6.           Regulation D
Offering. The offer and issuance of the Securities to the Subscriber is
being made pursuant to the exemption from the registration provisions of the
1933 Act afforded by Section 4(2) or Section 4(6) of the 1933 Act and/or Rule
506 of Regulation D promulgated thereunder.

     

    7.           Assumption of Right by
Public Company. In connection with the consummation of a Reorganization,
the Issuers shall cause the Right to be specifically assumed by the Public
Company at the closing thereof under the operative documents providing for such
Reorganization.

    
      
         

      

      
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    8.           Miscellaneous.

     

    (a)          Notices. All notices,
demands, requests, consents, approvals, and other communications required or
permitted hereunder shall be in writing and, unless otherwise specified herein,
shall be (i) personally served, (ii) deposited in the mail, registered or
certified, return receipt requested, postage prepaid, (iii) delivered by
reputable air courier service with charges prepaid, or (iv) transmitted by hand
delivery, telegram, or facsimile, addressed as set forth below or to such other
address as such party shall have specified most recently by written notice. Any
notice or other communication required or permitted to be given hereunder shall
be deemed effective (a) upon hand delivery or delivery by facsimile, with
accurate confirmation generated by the transmitting facsimile machine, at the
address or number designated below (if delivered on a business day during normal
business hours where such notice is to be received), or the first business day
following such delivery (if delivered other than on a business day during normal
business hours where such notice is to be received) or (b) on the second
business day following the date of mailing by express courier service, fully
prepaid, addressed to such address, or upon actual receipt of such mailing,
whichever shall first occur. The addresses for such communications shall be: (i)
if to the Issuers, to: (A) Phreadz USA, Inc., 63 Main Street, Flemington, NJ,
08822 Attention: Nicholas Thompson, (B) Universal Database of Music USA, Inc.,
63 Main Street, Flemington, NJ, 08822 Attention: Nicholas Thompson, and (ii) if
to the Subscriber, to: the one or more addresses and telecopier numbers
indicated on the signature pages hereto.

     

    (b)          Entire Agreement;
Assignment. This Agreement and other documents delivered in connection
herewith represent the entire agreement between the parties hereto with respect
to the subject matter hereof and may be amended only by a writing executed by
both parties. Neither the Issuers nor the Subscriber have relied on any
representations not contained or referred to in this Agreement and the documents
delivered herewith. No right or obligation of the Issuers shall be assigned
without prior notice to and the written consent of the Subscriber.

     

    (c)          Counterparts/Execution.
This Agreement may be executed in any number of counterparts and by the
different signatories hereto on separate counterparts, each of which, when so
executed, shall be deemed an original, but all such counterparts shall
constitute but one and the same instrument. This Agreement may be executed by
facsimile signature and delivered by facsimile transmission.

     

    (d)          Law Governing this
Agreement. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard to conflicts of
laws principles that would result in the application of the substantive laws of
another jurisdiction. Any action brought by either party against the other
concerning the transactions contemplated by this Agreement shall be brought only
in the Supreme Court of New York, New York County, or in the United States
District Court for the Southern District of New York. The parties and the individuals
executing this Agreement and other agreements referred to herein or delivered in
connection herewith on behalf of the Issuers agree to submit to the jurisdiction
of such courts and waive trial by jury. The prevailing party shall be
entitled to recover from the other party its reasonable attorney’s fees and
costs. In the event that any provision of this Agreement or any other agreement
delivered in connection herewith is invalid or unenforceable under any
applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any such provision which
may prove invalid or unenforceable under any law shall not affect the validity
or enforceability of any other provision of any agreement.

    
      
         

      

      
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    (e)           Specific Enforcement,
Consent to Jurisdiction. The Issuers and Subscriber acknowledge and agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to one or more preliminary and final injunctions to prevent or cure
breaches of the provisions of this Agreement and to enforce specifically the
terms and provisions hereof, this being in addition to any other remedy to which
any of them may be entitled by law or equity. Subject to Section 7(d) hereof,
each of the Issuers, Subscriber and any signator hereto in his personal capacity
hereby waives, and agrees not to assert in any such suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction in New York of
such court, that the suit, action or proceeding is brought in an inconvenient
forum or that the venue of the suit, action or proceeding is improper. Nothing
in this Section shall affect or limit any right to serve process in any other
manner permitted by law.

     

    [THIS
SPACE INTENTIONALLY LEFT BLANK]

    
      
         

      

      
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    SIGNATURE PAGE TO
SUBSCRIPTION AGREEMENT (A)

     

    Please
acknowledge your acceptance of the foregoing Subscription Agreement by signing
and returning a copy to the undersigned whereupon it shall become a binding
agreement between us.

     

    
      
        	 
      	
                ISSUERS:

              
	 
      	 
      
	 
      	
                PHREADZ
      USA, LLC

              
	 
      	
                a
      Nevada limited liability company

              
	 
      	 
      
	 
      	
                By:

              	
                  

              	 
      
	 
      	 
      	
                Name:

              	 
      
	 
      	 
      	
                Title:

              	 
      
	 
      	 
      
	 
      	
                Dated:
      March 23, 2010

              
	 
      	 
      
	 
      	
                UNIVERSAL
      DATABASE OF MUSIC USA, LLC

              
	 
      	
                a
      Nevada limited liability company

              
	 
      	 
      
	 
      	
                By:

              	
                  

              	 
      
	 
      	 
      	
                Name:

              	 
      
	 
      	 
      	
                Title:

              	 
      
	 
      	
                Dated:
      March 23, 2010

              

      

    

     

    
      
         

      

      
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                        SUBSCRIBER

                      	 
      	
                        NOTE PRINCIAL

                      
	 
      	 
      	 
      
	
                        PROFESSIONAL
      CAPITAL PARTNERS, LTD., a British Virgin Islands company

                         

                        By:
      PCPM GP, LLC, its general partner By:

                      	 
      	
                        $85,000

                      
	
                        Name:

                        Title:

                         

                        Address:

                         

                        1400
      Old Country Road

                        Westbury,
      New York 11590

                        Facsimile:
      (516) 228-8083

                         

                        with
      a copy (by facsimile only) to:

                         

                        Indeglia
      & Carney, P.C.,

                        1900
      Main Street, Suite 300

                        Irvine,
      CA 92614

                        Attention:
      Marc A. Indeglia, Esq.

                        Facsimile:
      (949) 861-3324

                      	 
      

              

            

          

        

      

    

     

    
      
         

      

      
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    LIST OF EXHIBITS AND
SCHEDULES

     

    Exhibit
A              Form
of Note

     

    Exhibit
B              
Security Agreement

     

    Exhibit
C              
Intellectual Property Security Agreement

    
      
         

      

      
        10SECURITY
AGREEMENT

    

    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 Note 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.           Certain Definitions.
As used in this Agreement, the following terms shall have the meanings set forth
in this Section 1. Terms used but not otherwise defined in this Agreement that
are defined in Article 9 of the UCC (such as “general intangibles”
and “proceeds”)
shall have the respective meanings given such terms in Article 9 of the
UCC.

    

    (a)           “Collateral” means the
collateral in which the Secured Party is granted a security interest by this
Agreement and which shall include the following, whether presently owned or
existing or hereafter acquired or coming into existence, and all additions and
accessions thereto and all substitutions and replacements thereof, and all
proceeds, products and accounts thereof, including, without limitation, all
proceeds from the sale or transfer of the Collateral and of insurance covering
the same and of any tort claims in connection therewith:

    

    (i)           All
Goods of the Issuers, including, without limitations, all machinery, equipment,
computers, motor vehicles, trucks, tanks, boats, ships, appliances, furniture,
special and general tools, fixtures, test and quality control devices and other
equipment of every kind and nature and wherever situated, together with all
documents of title and documents representing the same, all additions and
accessions thereto, replacements therefor, all parts therefor, and all
substitutes for any of the foregoing and all other items used and useful in
connection with the Issuers’ businesses and all improvements thereto
(collectively, the “Equipment”);
and

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    (ii)           All
Inventory of the Issuers; and

    

    (iii)           All
of the Issuers’ contract rights and general intangibles, including, without
limitation, all partnership interests, stock or other securities, licenses,
distribution and other agreements, computer software development rights, leases,
franchises, customer lists, quality control procedures, grants and rights,
goodwill, trademarks, service marks, trade styles, trade names, patents, patent
applications, copyrights, deposit accounts, and income tax refunds
(collectively, the “General
Intangibles”); and

    

    (iv)           All
Receivables of the Issuers including all insurance proceeds, and rights to
refunds or indemnification whatsoever owing, together with all instruments, all
documents of title representing any of the foregoing, all rights in any
merchandising, goods, equipment, motor vehicles and trucks which any of the same
may represent, and all right, title, security and guaranties with respect to
each Receivable, including any right of stoppage in transit; and

    

    (v)           All
of the Issuers’ documents, instruments and chattel paper, files, records, books
of account, business papers, computer programs and the products and proceeds of
all of the foregoing Collateral set forth in clauses (i)-(iv)
above.

    

    (b)           “Issuers” shall mean,
collectively, the Issuers and all of the subsidiaries of Issuers, a list of
which is contained in Schedule A, attached hereto.

    

    (c)           “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.

    

    (d)           “UCC” means the
Uniform Commercial Code, as currently in effect in the State of New
York.

    

    2.           Grant of Security
Interest. As an inducement for PCP to purchase the Note and procure
consent of the Other Noteholders to allow for such issuance and 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, pledge, grant and hypothecate 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 Collateral (the “Security
Interest”).

    

    3.           Representations, Warranties,
Covenants and Agreements of the Issuers. Each Issuer represents and
warrants to, and covenants and agrees with, the Secured Party as
follows:

    

    (a)           Issuer
has the requisite limited liability company power and authority to enter into
this Agreement and otherwise to carry out its obligations thereunder. The
execution, delivery and perfounance 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.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    (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 Collateral is stored or
located, except as set forth on Schedule A attached
hereto;

    

    (c)           Issuer
is the sole owner of the Collateral (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 Collateral. 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 Collateral. 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).

    

    (d)           No
part of the Collateral has been judged invalid or unenforceable. No written
claim has been received that any Collateral or Issuer’s use of any Collateral
violates the rights of any third party. There has been no adverse decision to
Issuer’s claim of ownership rights in or exclusive rights to use the Collateral
in any jurisdiction or to Issuer’s right to keep and maintain such Collateral in
full force and effect, and there is no proceeding involving said rights pending
or, to the best knowledge of Issuer, threatened before any court, judicial body,
administrative or regulatory agency, arbitrator or other governmental
authority.

    

    (e)           Issuer
shall at all times maintain its books of account and records relating to the
Collateral at its principal place of business and its Collateral at the
locations set forth on Schedule A attached hereto and may not relocate such
books of account and records or tangible Collateral 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 appropriate financing statements and other
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 Collateral.

    

    (f)           This
Agreement creates in favor of the Secured Party a valid security interest in the
Collateral securing the payment and performance of the Obligations and, upon
making the filings described in the immediately following sentence, a perfected
first priority security interest in such Collateral. Except for the filing of
financing statements on Form-1 under the UCC with the jurisdictions indicated on
Schedule B, attached hereto, no authorization or approval of or filing with or
notice to any governmental authority or regulatory body is required either (i)
for the grant by Issuer of, or the effectiveness of, the Security Interest
granted hereby or for the execution, delivery and performance of this Agreement
by Issuer or (ii) for the perfection of or exercise by the Secured Party of its
rights and remedies hereunder.

    

    (g)           On
the date of execution of this Agreement, Issuer will deliver to the Secured
Party one or more executed UCC financing statements on Form-1 with respect to
the Security Interest for filing with the jurisdictions indicated on Schedule B,
attached hereto and in such other jurisdictions as may be requested by the
Secured Party.

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    

    (h)           The
execution, delivery and perfoiinance 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.

    

    (i)           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 Collateral 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 Collateral for the account of the Secured Party. At
the request of the Secured Party, Issuer will sign and deliver to the Secured
Party at any time or from time to time one or more financing statements pursuant
to the UCC (or any other applicable statute) in form reasonably satisfactory to
the Secured Party and will pay the cost of filing the same in all public offices
wherever filing is, or is deemed by the Secured Party to be, necessary or
desirable to effect the rights and obligations provided for herein. Without
limiting the generality of the foregoing, Issuer shall pay all fees, taxes and
other amounts necessary to maintain the Collateral 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.

    

    (j)           Issuer
will not transfer, pledge, hypothecate, encumber, license (except for
non-exclusive licenses granted and sales made by issuer in the ordinary course
of business), sell or otherwise dispose of any of the Collateral without the
prior written consent of the Secured Party.

    

    (k)           Issuer
shall keep and preserve its Equipment, Inventory and other tangible Collateral
in good condition, repair and order and shall not operate or locate any such
Collateral (or cause to be operated or located) in any area excluded from
insurance coverage.

    

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

    

    (m)           Issuer
shall promptly execute and deliver to the Secured Party such further deeds,
mortgages, assignments, security agreements, financing statements or other
instruments, documents, certificates and assurances and take such further action
as the Secured Party may from time to time request and may in its sole
discretion deem necessary to perfect, protect or enforce its security interest
in the Collateral including, without limitation, the execution and delivery of a
separate security agreement with respect to Issuer’s intellectual property
(“Intellectual
Property Security Agreement”) in which the Secured Party has been granted
a security interest hereunder, substantially in a form acceptable to the Secured
Party, which Intellectual Property Security Agreement, other than as stated
therein, shall be subject to all of the terms and conditions
hereof.

    

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

    

    (o)           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 Collateral.

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    

    (p)           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 Collateral and of any other information received by Issuer that may
materially affect the value of the Collateral, the Security Interest or the
rights and remedies of the Secured Party hereunder.

    

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

    

    (r)           Schedule A attached
hereto contains a list of all of the subsidiaries 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
Note;

    

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

    

    (c)           The
failure by Issuers to observe or perform any of its obligations hereunder or in
the Intellectual Property Security Agreement for ten (10) days after receipt by
Issuers 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 Collateral 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 Collateral and, for
that purpose, enter, with the aid and assistance of any person, any premises
where the Collateral, or any part thereof, is or may be placed and remove the
same, and Issuers shall assemble the Collateral and make it available to the
Secured Party at places which the Secured Party shall reasonably select, whether
at the Issuers’ premises or elsewhere, and make available to the Secured Party,
without rent, all of the Issuers’ respective premises and facilities for the
purpose of the Secured Party taking possession of, removing or putting the
Collateral in saleable or disposable form.

    

    (b)           The
Secured Party shall have the right to operate the business of the Issuers using
the Collateral and shall have the right to assign, sell, lease or otherwise
dispose of and deliver all or any part of the Collateral, 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 Collateral, the Secured Party may, unless
prohibited by applicable law which cannot be waived, purchase all or any part of
the Collateral being sold, free from and discharged of all trusts, claims, right
of redemption and equities of the Issuers, which are hereby waived and
released.

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    7.           Applications of
Proceeds. The proceeds of any such sale, lease or other disposition of
the Collateral 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 Collateral, 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 Collateral, 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 Collateral, the proceeds thereof are insufficient to pay all amounts to
which the Secured Party is legally entitled, the 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, the
Issuers waive all claims, damages and demands against the Secured Party arising
out of the repossession, removal, retention or sale of the Collateral, unless
due to the gross negligence or willful misconduct of the Secured
Party.

    

    8.           Costs and Expenses.
The 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 Collateral 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 Collateral, 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
Collateral. The Issuers assume all liabilities and responsibility in
connection with all Collateral, 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
Collateral or its unavailability for any reason.

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    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 Collateral, or any release or amendment or waiver of or consent to
departure from any other collateral 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 Collateral; 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 Collateral 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 Collateral 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 has 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 Collateral 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 Collateral; (iii) to pay or discharge taxes, liens,
security interests or other encumbrances at any time levied or placed on or
threatened against the Collateral; (iv) to demand, collect, receipt for,
compromise, settle and sue for monies due in respect of the Collateral; and (v)
generally, to do, at the option of the Secured Party, and at such Issuer’s
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
Collateral and the Security Interest granted therein in order to effect the
intent of this Agreement, the Note and the Subscription Agreement, all as fully
and effectually as such Issuer might or could do; and such 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 B, 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 Collateral.

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    (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
Collateral 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 Issuers:

            	
              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 Collateral 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 the 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.

    

    (b)           All
of the rights and remedies of the Secured Party with respect to the Collateral,
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.

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    (c)           This
Agreement constitutes 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 Collateral 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.

    

    (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.

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    (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]

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the parties hereto have caused this Security 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 8HP

                
	 
      	
                  England

                
	 
      	
                  Facsimile:

                
	 
      	 
      
	 
      	
                    

                
	 
      	
                  Mary
      Goldberg

                
	 
      	
                  Address:

                
	 
      	
                  Facsimile:

                
	 
      	 
      
	 
      	
                    

                
	 
      	
                  Mercado
      De Expect

                
	 
      	 
      
	 
      	
                  Address:

                
	 
      	
                  Facsimile:

                

        

      

    

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    
      
        	 
      	
                  

              
	 
      	
                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:

              

      

    

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    SCHEDULE
A

    Principal Place of Business
of the Issuers:

     

    Locations Where Collateral
is Located or Stored:

     

    List of Subsidiaries of the
Issuers:

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    SCHEDULE
B

     

    Jurisdictions:

     

    
      
         

      

      
        14

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