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Unassociated Document

    NEITHER
THIS DEBENTURE NOR THE SECURITIES INTO WHICH THIS DEBENTURE IS CONVERTIBLE HAVE
BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE.  THESE SECURITIES HAVE BEEN SOLD IN RELIANCE
UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS.

     

    BBM
HOLDINGS, INC.

     

    Secured
Convertible Non-Recourse Debenture

     

    
      	
              Issuance
      Date:  March 19, 2009

            	
              Original
      Principal
      Amount:                                                                $500,000

            
	
              No.
      BBMO-1

            	 
      

    

    

    FOR VALUE RECEIVED, BBM
HOLDINGS, INC., a Utah corporation (the "Company"), hereby
promises to pay to the order of YA GLOBAL INVESTMENTS, L.P. or registered
assigns (the "Holder") the amount
set out above as the Original Principal Amount (as reduced pursuant to the terms
hereof pursuant to redemption, conversion or otherwise, the "Principal") when due,
whether upon the Maturity Date (as defined below), on any Installment Date with
respect to the Installment Amount due on such Installment Date (each, as defined
herein), acceleration, redemption or otherwise (in each case in accordance with
the terms hereof) and to pay interest ("Interest") on any
outstanding Principal at the applicable Interest Rate from the date set out
above as the Issuance Date (the "Issuance Date") until
the same becomes due and payable, whether on any Installment Date or the
Maturity Date or acceleration, conversion, redemption or otherwise (in each case
in accordance with the terms hereof).  This Secured Convertible
Non-Recourse Debenture (including all Secured Convertible Non-Recourse
Debentures issued in exchange, transfer or replacement hereof, this "Debenture") is one of
an issue of Secured Convertible Non-Recourse Debentures in aggregate principal
amount of $500,000 issued pursuant to the Securities Purchase Agreement
(collectively, the "Debentures" and such
other Senior Convertible Debentures, the "Other
Debentures").  Certain capitalized terms used herein are
defined in Section 13.

     

    (1) GENERAL
TERMS

     

    (a) Interest.  Interest
shall accrue on the outstanding principal balance hereof at an annual rate equal
to eleven percent (11%) (“Interest
Rate”).  Interest shall be calculated on the basis of a 365-day
year and the actual number of days elapsed, to the extent permitted by
applicable law.  Interest hereunder shall be paid on the Maturity Date
(or sooner as provided herein) to the Holder or its assignee in whose name this
Debenture is registered on the records of the Company regarding registration and
transfers of Debentures in cash.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (b) Payments.  On
each Installment Date, the Company shall pay to the Holder an amount equal to
the Installment Amount due on such Installment Date as follows:

     

    
      
        	Installment
      Date	 	Installment
      Amount	 
	
                December
      15, 2009

              	 	$	180,000	 
	
                March
      30, 2010

              	 	$	25,000	 
	
                June
      30, 2010

              	 	$	25,000	 
	
                September
      30, 2010

              	 	$	25,000	 
	
                December
      30, 2010

              	 	$	25,000	 
	
                March
      30, 2011

              	 	$	25,000	 

      

    

     

    The
amount of any Installment Amount due after January 1, 2010 shall be reduced by
the amount of any Mandatory Redemptions.  On the Maturity Date, the
Company shall pay to the Holder an amount in cash representing all outstanding
Principal, accrued and unpaid Interest.  The "Maturity Date" shall
be June [__], 2011.  All money paid towards the satisfaction of this
Debenture shall be applied first towards the satisfaction of accrued interest
and then towards the satisfaction of Principal. Other than as specifically
permitted by this Debenture, the Company may not prepay or redeem any portion of
the outstanding Principal without the prior written consent of the
Holder.

     

    (c) Company
Redemption.

     

    (i) The
Company at its option shall have the right to redeem (“Optional Redemption”)
a portion or all amounts outstanding under this Debenture in addition to any
Installment Amount prior to the Maturity Date provided the Company provides the
Holder with 30 days’ prior written notice of an Optional
Redemption.  Upon such Optional Redemption, the Company shall pay an
amount equal to the Principal amount being redeemed plus a redemption premium
(“Redemption
Premium”) equal to ten percent (10%) of the Principal amount being
redeemed, and accrued Interest thereon.  In order to make a redemption
pursuant to this Section, the Company shall first provide written notice to the
Holder of its intention to make a redemption (the “Redemption Notice”)
setting forth the amount of Principal it desires to redeem.  After
receipt of the Redemption Notice and before the expiration of the notice period,
the Holder may elect to convert all or any portion of this Debenture, subject to
the limitations set forth herein.

     

    (ii) The
Company shall be required to redeem (a “Mandatory
Redemption”) an amount equal to twenty five percent (25%) of any Future
Capital Raise. The Redemption Premium and the 30 days’ prior written notice
shall not apply to any Mandatory Redemption.

     

    (d) Security.  The
full obligations of the Company under this Debenture are secured by a pledge of
the Purchased Assets pursuant to (i) the security agreement of even date
herewith between the Company and the Holder (the “Security Agreement”)
and (ii) a patent security agreement of even date herewith between the Company
and the Holder (the “Patent Security
Agreement” and together with the Security Agreement collectively the
“Security
Documents”).  The Holder’s recovery against the Company for
failure to pay any amount owing hereunder when due shall be limited solely to
the Purchased Assets or other collateral pledged to the Holder, it being further
understood and agreed that the obligations of the Company under this Debenture
are solely non-recourse in nature.

     

    
      
        
        

      

      
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    (2) EVENTS OF
DEFAULT.

     

    (a) An “Event of Default”,
wherever used herein, means any one of the following events (whatever the reason
and whether it shall be voluntary or involuntary or effected by operation of law
or pursuant to any judgment, decree or order of any court, or any order, rule or
regulation of any administrative or governmental body):

     

    (i) the
Company's failure to pay to the Holder any amount of Principal, Interest, or
other amounts when and as due under this Debenture (including, without
limitation, the Company's failure to pay any redemption payments or amounts
hereunder) or any other Transaction Document;

     

    (ii) The
Company or any subsidiary of the Company shall commence, or there shall be
commenced against the Company or any subsidiary of the Company under any
applicable bankruptcy or insolvency laws as now or hereafter in effect or any
successor thereto, or the Company or any subsidiary of the Company commences any
other proceeding under any reorganization, arrangement, adjustment of debt,
relief of debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to the Company or any
subsidiary of the Company or there is commenced against the Company or any
subsidiary of the Company any such bankruptcy, insolvency or other proceeding
which remains undismissed for a period of 61 days; or the Company or any
subsidiary of the Company is adjudicated insolvent or bankrupt; or any order of
relief or other order approving any such case or proceeding is entered; or the
Company or any subsidiary of the Company suffers any appointment of any
custodian, private or court appointed receiver or the like for it or any
substantial part of its property which continues undischarged or unstayed for a
period of sixty one (61) days; or the Company or any subsidiary of the Company
makes a general assignment for the benefit of creditors; or the Company or any
subsidiary of the Company shall fail to pay, or shall state that it is unable to
pay, or shall be unable to pay, its debts generally as they become due; or the
Company or any subsidiary of the Company shall call a meeting of its creditors
with a view to arranging a composition, adjustment or restructuring of its
debts; or the Company or any subsidiary of the Company shall by any act or
failure to act expressly indicate its consent to, approval of or acquiescence in
any of the foregoing; or any corporate or other action is taken by the Company
or any subsidiary of the Company for the purpose of effecting any of the
foregoing;

     

    (iii) The
Common Stock shall cease to be quoted or listed for trading for five (5) Trading
Days on any of the following: (a) the American Stock Exchange, (b) New York
Stock Exchange, (c) the Nasdaq Global Market, (d) the Nasdaq Capital Market, or
(e) the Nasdaq OTC Bulletin Board (“OTCBB”) (each, a “Primary
Market”);

     

    
      
        
        

      

      
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    (iv) The
Company shall be a party to any Change of Control Transaction unless in
connection with such Change of Control Transaction this Debenture is
retired;

     

    (v) the
Company's (A) failure to cure a Conversion Failure by delivery of the required
number of shares of Common Stock within five (5) Business Days after the
applicable Conversion Failure or (B) notice, written or oral, to any holder of
the Debentures, including by way of public announcement, at any time, of its
intention not to comply with a request for conversion of any Debentures into
shares of Common Stock that is tendered in accordance with the provisions of the
Debentures, other than pursuant to Section 3(c);

     

    (vi) The
Company shall fail for any reason to deliver the payment in cash pursuant to a
Buy-In (as defined below) within three (3) Business Days after such payment is
due;

     

    (vii) The
Company shall fail to observe or perform any other covenant, agreement or
warranty contained in, or otherwise commit any breach or default of any
provision of this Debenture (except as may be covered by Section 2(a)(i) through
2(a)(vi) hereof) or any Transaction Document which is not cured within the time
prescribed.

     

    (b) During
the time that any portion of this Debenture is outstanding, if any Event of
Default has occurred, the full unpaid Principal amount of this Debenture,
together with interest and other amounts owing in respect thereof, to the date
of acceleration shall become, at the Holder's election, immediately due and
payable in cash.  The Holder need not provide and the Company hereby
waives any presentment, demand, protest or other notice of any kind, (other than
required notice of conversion) and the Holder may immediately and without
expiration of any grace period enforce any and all of its rights and remedies
hereunder and all other remedies available to it under applicable law. Such
declaration may be rescinded and annulled by Holder at any time prior to payment
hereunder. No such rescission or annulment shall affect any subsequent Event of
Default or impair any right consequent thereon.

     

    (3) CONVERSION OF
DEBENTURE. This Debenture shall be convertible into shares of the
Company's Common Stock, on the terms and conditions set forth in this Section
3.

     

    (a) Conversion
Right.  Subject to the provisions of Section 3(c), at any time
or times on or after the Issuance Date, the Holder shall be entitled to convert
any portion of the outstanding and unpaid Conversion Amount (as defined below)
into fully paid and nonassessable shares of Common Stock in accordance with
Section 3(b), at the Conversion Rate (as defined below).  The number
of shares of Common Stock issuable upon conversion of any Conversion Amount
pursuant to this Section 3(a) shall be determined by dividing (x) such
Conversion Amount by (y) the Conversion Price (the "Conversion
Rate").  The Company shall not issue any fraction of a share of
Common Stock upon any conversion.  If the issuance would result in the
issuance of a fraction of a share of Common Stock, the Company shall round such
fraction of a share of Common Stock down to the nearest whole share, without any
obligation to pay the value of such fraction.  The Company shall pay
any and all transfer, stamp and similar taxes that may be payable with respect
to the issuance and delivery of Common Stock upon conversion of any Conversion
Amount.

     

    
      
        
        

      

      
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    (i) "Conversion Amount"
means the portion of the Principal and accrued Interest to be converted,
redeemed or otherwise with respect to which this determination is being
made.

     

    (ii) "Conversion Price"
means, as of any Conversion Date (as defined below) or other date of
determination, $0.40, subject to adjustment as provided herein.

     

    (b) Mechanics of
Conversion.

     

    (i) Optional
Conversion.  To convert any Conversion Amount into shares of
Common Stock on any date (a "Conversion Date"),
the Holder shall (A) transmit by facsimile (or otherwise deliver), for receipt
on or prior to 11:59 p.m., New York Time, on such date, a copy of an executed
notice of conversion in the form attached hereto as Exhibit I (the "Conversion Notice")
to the Company and (B) if required by Section 3(b)(iv), surrender this Debenture
to a nationally recognized overnight delivery service for delivery to the
Company (or an indemnification undertaking reasonably satisfactory to the
Company with respect to this Debenture in the case of its loss, theft or
destruction).  On or before the third Business Day following the date
of receipt of a Conversion Notice (the "Share Delivery
Date"), the Company shall (X) if legends are not required to be placed on
certificates of Common Stock pursuant to the Securities Purchase Agreement and
provided that the Transfer Agent is participating in the Depository Trust
Company's ("DTC") Fast Automated
Securities Transfer Program, credit such aggregate number of shares of Common
Stock to which the Holder shall be entitled to the Holder's or its designee's
balance account with DTC through its Deposit Withdrawal Agent Commission system
or (Y) if the Transfer Agent is not participating in the DTC Fast Automated
Securities Transfer Program, issue and deliver to the address as specified in
the Conversion Notice, a certificate, registered in the name of the Holder or
its designee, for the number of shares of Common Stock to which the Holder shall
be entitled which certificates shall not bear any restrictive legends unless
required pursuant the Securities Purchase Agreement.  If this
Debenture is physically surrendered for conversion and the outstanding Principal
of this Debenture is greater than the Principal portion of the Conversion Amount
being converted, then the Company shall as soon as practicable and in no event
later than three (3) Business Days after receipt of this Debenture and at its
own expense, issue and deliver to the holder a new Debenture representing the
outstanding Principal not converted.  The Person or Persons entitled
to receive the shares of Common Stock issuable upon a conversion of this
Debenture shall be treated for all purposes as the record holder or holders of
such shares of Common Stock upon the transmission of a Conversion
Notice.

     

    (ii) Company's Failure to Timely
Convert.  If within three (3) Trading Days after the Company's
receipt of the facsimile copy of a Conversion Notice the Company shall fail to
issue and deliver a certificate to the Holder or credit the Holder's balance
account with DTC for the number of shares of Common Stock to which the Holder is
entitled upon such holder's conversion of any Conversion Amount (a "Conversion Failure"),
and if on or after such Trading Day the Holder purchases (in an open market
transaction or otherwise) Common Stock to deliver in satisfaction of a sale by
the Holder of Common Stock issuable upon such conversion that the Holder
anticipated receiving from the Company (a "Buy-In"), then the
Company shall, within three (3) Business Days after the Holder's request and in
the Holder's discretion, either (i) pay cash to the Holder in an amount equal to
the Holder's total purchase price (including brokerage commissions and other out
of pocket expenses, if any) for the shares of Common Stock so purchased (the
"Buy-In
Price"), at which point the Company's obligation to deliver such
certificate (and to issue such Common Stock) shall terminate, or (ii) promptly
honor its obligation to deliver to the Holder a certificate or certificates
representing such Common Stock and pay cash to the Holder in an amount equal to
the excess (if any) of the Buy-In Price over the product of (A) such number of
shares of Common Stock, times (B) the Closing Bid Price on the Conversion
Date.

     

    
      
        
        

      

      
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    (iii) Book-Entry.
Notwithstanding anything to the contrary set forth herein, upon conversion of
any portion of this Debenture in accordance with the terms hereof, the Holder
shall not be required to physically surrender this Debenture to the Company
unless (A) the full Conversion Amount represented by this Debenture is being
converted or (B) the Holder has provided the Company with prior written notice
(which notice may be included in a Conversion Notice) requesting reissuance of
this Debenture upon physical surrender of this Debenture.  The Holder
and the Company shall maintain records showing the Principal and Interest
converted and the dates of such conversions or shall use such other method,
reasonably satisfactory to the Holder and the Company, so as not to require
physical surrender of this Debenture upon conversion.

     

    (c) Limitations on
Conversions.

     

    (i) Beneficial
Ownership.  The Company shall not effect any conversions of
this Debenture and the Holder shall not have the right to convert any portion of
this Debenture or receive shares of Common Stock as payment of interest
hereunder to the extent that after giving effect to such conversion or receipt
of such interest payment, the Holder, together with any affiliate thereof, would
beneficially own (as determined in accordance with Section 13(d) of the Exchange
Act and the rules promulgated thereunder) in excess of 4.99% of the number of
shares of Common Stock outstanding immediately after giving effect to such
conversion or receipt of shares as payment of
interest.    If the Holder has delivered a Conversion Notice
for a principal amount of this Debenture that, without regard to any other
shares that the Holder or its affiliates may beneficially own, would result in
the issuance in excess of the permitted amount hereunder, the Company shall
notify the Holder of this fact and shall honor the conversion for the maximum
principal amount permitted to be converted on such Conversion Date in accordance
with Section 3(a) and, any principal amount tendered for conversion in excess of
the permitted amount hereunder shall remain outstanding under this Debenture.
The provisions of this Section may be waived by a Holder (but only as to itself
and not to any other Holder) upon not less than 65 days prior notice to the
Company. Other Holders shall be unaffected by any such waiver.

     

    (d) Other
Provisions.

     

    (i) All
calculations under this Section 4 shall be rounded to the nearest $0.0001 or
whole share.

     

    
      
        
        

      

      
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    (ii) Nothing
herein shall limit a Holder's right to pursue actual damages or declare an Event
of Default pursuant to Section 2 herein for the Company 's failure to deliver
certificates representing shares of Common Stock upon conversion within the
period specified herein and such Holder shall have the right to pursue all
remedies available to it at law or in equity including, without limitation, a
decree of specific performance and/or injunctive relief, in each case without
the need to post a bond or provide other security. The exercise of any such
rights shall not prohibit the Holder from seeking to enforce damages pursuant to
any other Section hereof or under applicable law.

     

    (4) Adjustments to Conversion
Price

     

    (a) Adjustment of Conversion
Price upon Issuance of Common Stock.  If the Company, at any
time while this Debenture is outstanding, issues or sells, or in accordance with
this Section 4(a) is deemed to have issued or sold, any shares of Common Stock,
excluding shares of Common Stock deemed to have been issued or sold by the
Company in connection with any Excluded Securities, for a consideration per
share (the “New
Issuance Price”) less than a price equal to the $0.18, as adjusted for
stock splits and stock combinations (such price the "Applicable Price")
(the foregoing a "Dilutive Issuance"),
then immediately after such Dilutive Issuance the Conversion Price then in
effect shall be reduced to an amount equal to the New Issuance
Price.  If Options or Convertible Securities are issued as part of
units with Common Stock or as equity incentives, as long as the price per share
of Common Stock included in the unit are at $0.18 or higher, the issuance of
such units or equity incentives shall not be deemed to be Dilutive Issuances and
shall not result in an adjustment under this Section 4(a).  For
purposes of determining the adjusted Conversion Price under this Section 4(a),
the following shall be applicable:

     

    (i) Issuance of
Options.  If the Company in any manner grants or sells any
Options and the lowest price per share for which one share of Common Stock is
issuable upon the exercise of any such Option or upon conversion or exchange or
exercise of any Convertible Securities issuable upon exercise of such Option is
less than the Applicable Price, then such share of Common Stock shall be deemed
to be outstanding and to have been issued and sold by the Company at the time of
the granting or sale of such Option for such price per share.  For
purposes of this Section, the "lowest price per share for which one share of
Common Stock is issuable upon the exercise of any such Option or upon conversion
or exchange or exercise of any Convertible Securities issuable upon exercise of
such Option" shall be equal to the sum of the lowest amounts of consideration
(if any) received or receivable by the Company with respect to any one share of
Common Stock upon granting or sale of the Option, upon exercise of the Option
and upon conversion or exchange or exercise of any Convertible Security issuable
upon exercise of such Option.  No further adjustment of the Conversion
Price shall be made upon the actual issuance of such share of Common Stock or of
such Convertible Securities upon the exercise of such Options or upon the actual
issuance of such Common Stock upon conversion or exchange or exercise of such
Convertible Securities.

     

    (ii) Issuance of Convertible
Securities.  If the Company in any manner issues or sells any
Convertible Securities and the lowest price per share for which one share of
Common Stock is issuable upon such conversion or exchange or exercise thereof is
less than the Applicable Price, then such share of Common Stock shall be deemed
to be outstanding and to have been issued and sold by the Company at the time of
the issuance or sale of such Convertible Securities for such price per
share.  For the purposes of this Section, the "lowest price per share
for which one share of Common Stock is issuable upon such conversion or exchange
or exercise" shall be equal to the sum of the lowest amounts of consideration
(if any) received or receivable by the Company with respect to any one share of
Common Stock upon the issuance or sale of the Convertible Security and upon the
conversion or exchange or exercise of such Convertible Security.  No
further adjustment of the Conversion Price shall be made upon the actual
issuance of such share of Common Stock upon conversion or exchange or exercise
of such Convertible Securities, and if any such issue or sale of such
Convertible Securities is made upon exercise of any Options for which adjustment
of the Conversion Price had been or are to be made pursuant to other provisions
of this Section, no further adjustment of the Conversion Price shall be made by
reason of such issue or sale.

     

    
      
        
        

      

      
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    (iii) Change in Option Price or
Rate of Conversion.  If the purchase price provided for in any
Options, the additional consideration, if any, payable upon the issue,
conversion, exchange or exercise of any Convertible Securities, or the rate at
which any Convertible Securities are convertible into or exchangeable or
exercisable for Common Stock changes at any time, the Conversion Price in effect
at the time of such change shall be adjusted to the Conversion Price which would
have been in effect at such time had such Options or Convertible Securities
provided for such changed purchase price, additional consideration or changed
conversion rate, as the case may be, at the time initially granted, issued or
sold.  For purposes of this Section, if the terms of any Option or
Convertible Security that was outstanding as of the Issuance Date are changed in
the manner described in the immediately preceding sentence, then such Option or
Convertible Security and the Common Stock deemed issuable upon exercise,
conversion or exchange thereof shall be deemed to have been issued as of the
date of such change.  No adjustment shall be made if such adjustment
would result in an increase of the Conversion Price then in effect.

     

    (iv) Calculation of Consideration
Received.  In case any Option is issued in connection with the
issue or sale of other securities of the Company, together comprising one
integrated transaction in which no specific consideration is allocated to such
Options by the parties thereto, the Options will be deemed to have been issued
for no consideration.  If any Common Stock, Options or Convertible
Securities are issued or sold or deemed to have been issued or sold for cash,
the consideration received therefor will be deemed to be the gross amount raised
by the Company.  If any Common Stock, Options or Convertible
Securities are issued or sold for a consideration other than cash, the amount of
the consideration other than cash received by the Company will be the fair value
of such consideration, except where such consideration consists of securities,
in which case the amount of consideration received by the Company will be the
Closing Bid Price of such securities on the date of receipt.  If any
Common Stock, Options or Convertible Securities are issued to the owners of the
non-surviving entity in connection with any merger in which the Company is the
surviving entity, the amount of consideration therefor will be deemed to be the
fair value of such portion of the net assets and business of the non-surviving
entity as is attributable to such Common Stock, Options or Convertible
Securities, as the case may be.  The fair value of any consideration
other than cash or securities will be determined jointly by the Company and the
Holder.  If such parties are unable to reach agreement within ten (10)
days after the occurrence of an event requiring valuation (the "Valuation Event"),
the fair value of such consideration will be determined within five (5) Business
Days after the tenth (10th) day
following the Valuation Event by an independent, reputable appraiser jointly
selected by the Company and the Holder.  The determination of such
appraiser shall be deemed binding upon all parties absent manifest error and the
fees and expenses of such appraiser shall be borne by the Company.

     

    
      
        
        

      

      
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    (v) Record
Date.  If the Company takes a record of the holders of Common
Stock for the purpose of entitling them (A) to receive a dividend or other
distribution payable in Common Stock, Options or in Convertible Securities or
(B) to subscribe for or purchase Common Stock, Options or Convertible
Securities, then such record date will be deemed to be the date of the issue or
sale of the Common Stock deemed to have been issued or sold upon the declaration
of such dividend or the making of such other distribution or the date of the
granting of such right of subscription or purchase, as the case may
be.

     

    (b) Adjustment of Conversion
Price upon Subdivision or Combination of Common Stock.  If the
Company, at any time while this Debenture is outstanding, shall (a) pay a
stock dividend or otherwise make a distribution or distributions on shares of
its Common Stock or any other equity or equity equivalent securities payable in
shares of Common Stock, (b) subdivide outstanding shares of Common Stock into a
larger number of shares, (c) combine (including by way of reverse stock split)
outstanding shares of Common Stock into a smaller number of shares, or (d) issue
by reclassification of shares of the Common Stock any shares of capital stock of
the Company, then the Conversion Price shall be multiplied by a fraction of
which the numerator shall be the number of shares of Common Stock (excluding
treasury shares, if any) outstanding before such event and of which the
denominator shall be the number of shares of Common Stock outstanding after such
event. Any adjustment made pursuant to this Section shall become effective
immediately after the record date for the determination of stockholders entitled
to receive such dividend or distribution and shall become effective immediately
after the effective date in the case of a subdivision, combination or
re-classification.

     

    (c) Purchase
Rights.  If at any time the Company grants, issues or sells any
Options, Convertible Securities or rights to purchase stock, warrants,
securities or other property pro rata to the record holders of any class of
Common Stock (the "Purchase Rights"),
then the Holder will be entitled to acquire, upon the terms applicable to such
Purchase Rights, the aggregate Purchase Rights which the Holder could have
acquired if the Holder had held the number of shares of Common Stock acquirable
upon complete conversion of this Debenture (without taking into account any
limitations or restrictions on the convertibility of this Debenture) immediately
before the date on which a record is taken for the grant, issuance or sale of
such Purchase Rights, or, if no such record is taken, the date as of which the
record holders of Common Stock are to be determined for the grant, issue or sale
of such Purchase Rights.

     

    (d) Other
Events.  If any event occurs of the type contemplated by the
provisions of this Section 4 but not expressly provided for by such provisions,
then the Company's Board of Directors will make an appropriate adjustment in the
Conversion Price so as to protect the rights of the Holder under this Debenture;
provided that no such adjustment will increase the Conversion Price as otherwise
determined pursuant to this Section 4.

     

    (e) Other Corporate
Events.  In addition to and not in substitution for any other
rights hereunder, prior to the consummation of any merger, consolidation or
similar significant corporate restructuring or reorganization pursuant to which
holders of shares of Common Stock are entitled to receive securities or other
assets with respect to or in exchange for shares of Common Stock (a "Corporate Event"),
the Company shall make appropriate provision to insure that the Holder will
thereafter have the right to receive upon a conversion of this Debenture, at the
Holder's option, (i) in addition to the shares of Common Stock receivable upon
such conversion, such securities or other assets to which the Holder would have
been entitled with respect to such shares of Common Stock had such shares of
Common Stock been held by the Holder upon the consummation of such Corporate
Event (without taking into account any limitations or restrictions on the
convertibility of this Debenture) or (ii) in lieu of the shares of Common Stock
otherwise receivable upon such conversion, such securities or other assets
received by the holders of shares of Common Stock in connection with the
consummation of such Corporate Event in such amounts as the Holder would have
been entitled to receive had this Debenture initially been issued with
conversion rights for the form of such consideration (as opposed to shares of
Common Stock) at a conversion rate for such consideration commensurate with the
Conversion Rate.  Provision made pursuant to the preceding sentence
shall be in a form and substance satisfactory to the Required
Holders.  The provisions of this Section shall apply similarly and
equally to successive Corporate Events and shall be applied without regard to
any limitations on the conversion or redemption of this Debenture.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (f) Whenever
the Conversion Price is adjusted pursuant to Section 4 hereof, the Company shall
promptly mail to the Holder a notice setting forth the Conversion Price after
such adjustment and setting forth a brief statement of the facts requiring such
adjustment.

     

    (g) In case
of any (1) merger or consolidation of the Company or any subsidiary of the
Company with or into another Person, or (2) sale by the Company or any
subsidiary of the Company of more than one-half of the assets of the Company in
one or a series of related transactions, a Holder shall have the right to (A)
exercise any rights under Section 2(b), (B) convert the aggregate amount of this
Debenture then outstanding into the shares of stock and other securities, cash
and property receivable upon or deemed to be held by holders of Common Stock
following such merger, consolidation or sale, and such Holder shall be entitled
upon such event or series of related events to receive such amount of
securities, cash and property as the shares of Common Stock into which such
aggregate principal amount of this Debenture could have been converted
immediately prior to such merger, consolidation or sales would have been
entitled, or (C) in the case of a merger or consolidation, require the surviving
entity to issue to the Holder a convertible debenture with a principal amount
equal to the aggregate principal amount of this Debenture then held by such
Holder, plus all accrued and unpaid interest and other amounts owing thereon,
which such newly issued convertible Debenture shall have terms identical
(including with respect to conversion) to the terms of this Debenture, and shall
be entitled to all of the rights and privileges of the Holder of this Debenture
set forth herein and the agreements pursuant to which this Debentures were
issued. In the case of clause (C), the conversion price applicable for the newly
issued shares of convertible preferred stock or convertible debentures shall be
based upon the amount of securities, cash and property that each share of Common
Stock would receive in such transaction and the Conversion Price in effect
immediately prior to the effectiveness or closing date for such transaction. The
terms of any such merger, sale or consolidation shall include such terms so as
to continue to give the Holder the right to receive the securities, cash and
property set forth in this Section upon any conversion or redemption following
such event. This provision shall similarly apply to successive such
events.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (5) REISSUANCE OF THIS
DEBENTURE.

     

    (a) Transfer.  If
this Debenture is to be transferred, the Holder shall surrender this Debenture
to the Company, whereupon the Company will, subject to the satisfaction of the
transfer provisions of the Securities Purchase Agreement, forthwith issue and
deliver upon the order of the Holder a new Debenture (in accordance with Section
5(d)), registered in the name of the registered transferee or assignee,
representing the outstanding Principal being transferred by the Holder and, if
less then the entire outstanding Principal is being transferred, a new Debenture
(in accordance with Section 5(d)) to the Holder representing the outstanding
Principal not being transferred.  The Holder and any assignee, by
acceptance of this Debenture, acknowledge and agree that, following conversion
or redemption of any portion of this Debenture, the outstanding Principal
represented by this Debenture may be less than the Principal stated on the face
of this Debenture.

     

    (b) Lost, Stolen or Mutilated
Debenture.  Upon receipt by the Company of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Debenture, and, in the case of loss, theft or destruction, of any
indemnification undertaking by the Holder to the Company in customary form and,
in the case of mutilation, upon surrender and cancellation of this Debenture,
the Company shall execute and deliver to the Holder a new Debenture (in
accordance with Section 5(d)) representing the outstanding
Principal.

     

    (c) Debenture Exchangeable for
Different Denominations.  This Debenture is exchangeable, upon
the surrender hereof by the Holder at the principal office of the Company, for a
new Debenture or Debentures (in accordance with Section 5(d)) representing in
the aggregate the outstanding Principal of this Debenture, and each such new
Debenture will represent such portion of such outstanding Principal as is
designated by the Holder at the time of such surrender.

     

    (d) Issuance of New
Debentures.  Whenever the Company is required to issue a new
Debenture pursuant to the terms of this Debenture, such new Debenture (i) shall
be of like tenor with this Debenture, (ii) shall represent, as indicated on the
face of such new Debenture, the Principal remaining outstanding (or in the case
of a new Debenture being issued pursuant to Section 5(a) or Section 5(c), the
Principal designated by the Holder which, when added to the principal
represented by the other new Debentures issued in connection with such issuance,
does not exceed the Principal remaining outstanding under this Debenture
immediately prior to such issuance of new Debentures), (iii) shall have an
issuance date, as indicated on the face of such new Debenture, which is the same
as the Issuance Date of this Debenture, (iv) shall have the same rights and
conditions as this Debenture, and (v) shall represent accrued and unpaid
Interest from the Issuance Date.

     

    (6) NOTICES. Any
notices, consents, waivers or other communications required or permitted to be
given under the terms hereof must be in writing and will be deemed to have been
delivered:  delivered (i) upon receipt, when delivered personally;
(ii) upon confirmation of receipt, when sent by facsimile; (iii) three (3) days
after being sent by U.S. certified mail, return receipt requested, or (iv) one
(1) day after deposit with a nationally recognized overnight delivery service,
in each case properly addressed to the party to receive the same.  The
addresses and facsimile numbers for such communications shall be:

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    
      	
              If
      to the Company, to:

            	 	
              BBM
      Holdings, Inc.

            
	 
      	 	
              1245
      Brickyard Road, Suite 590

            
	 
      	 	
              Salt
      Lake City, Utah 84106

            
	 
      	 	
              Attention:  Andrew
      Limpert, Chief Executive Officer

            
	 
      	 	
              Telephone: 801-433-2000

            
	 
      	 	
              Facsimile: 801-433-2222

            
	 
      	 	 
      
	
              With
      a copy to:

            	 	
              James
      Kardon

            
	 
      	 	
              Hahn
      & Hessen LLP

            
	 
      	 	
              488
      Madison Ave,  14th Floor

            
	 
      	 	
              New
      York, NY 10022

            
	 
      	 	
              Telephone: (212)
      478-7250

            
	 
      	 	
              Facsimile: (212)
      478-7400

            

    

    

    
      	
              If
      to the Holder:

            	 	
              YA
      Global Investments, LP

            
	 
      	 	
              101
      Hudson Street, Suite 3700

            
	 
      	 	
              Jersey
      City, NJ  07303

            
	 
      	 	
              Attention: Mark
      Angelo

            
	 
      	 	
              Telephone: (201)
      985-8300

            
	 
      	 	 
      
	
              With
      a copy to:

            	 	
              David
      Gonzalez, Esq.

            
	 
      	 	
              101
      Hudson Street – Suite 3700

            
	 
      	 	
              Jersey
      City, NJ 07302

            
	 
      	 	
              Telephone: (201)
      985-8300

            
	 
      	 	
              Facsimile: (201)
      985-8266

            
	 
      	 	 
      

    

    

    or at
such other address and/or facsimile number and/or to the attention of such other
person as the recipient party has specified by written notice given to each
other party three (3) Business Days prior to the effectiveness of such
change.  Written confirmation of receipt (i) given by the recipient of
such notice, consent, waiver or other communication, (ii) mechanically or
electronically generated by the sender's facsimile machine containing the time,
date, recipient facsimile number and an image of the first page of such
transmission or (iii) provided by a nationally recognized overnight delivery
service, shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.

     

    (7) This
Debenture shall not entitle the Holder to any of the rights of a stockholder of
the Company, including without limitation, the right to vote, to receive
dividends and other distributions, or to receive any notice of, or to attend,
meetings of stockholders or any other proceedings of the Company, unless and to
the extent converted into shares of Common Stock in accordance with the terms
hereof.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    (8) This
Debenture shall be governed by and construed in accordance with the laws of the
State of New Jersey, without giving effect to conflicts of laws
thereof.  Each of the parties consents to the jurisdiction of the
Superior Courts of the State of New Jersey sitting in Hudson County, New Jersey
and the U.S. District Court for the District of New Jersey sitting in
Newark, New Jersey in connection with any dispute arising under this Debenture
and hereby waives, to the maximum extent permitted by law, any objection,
including any objection based on forum non conveniens to the bringing of any
such proceeding in such jurisdictions.

     

    (9) If the
Company fails to strictly comply with the terms of this Debenture, then the
Company shall reimburse the Holder promptly for all fees, costs and expenses,
including, without limitation, attorneys’ fees and expenses incurred by the
Holder in any action in connection with this Debenture, including, without
limitation, those incurred: (i) during any workout, attempted workout, and/or in
connection with the rendering of legal advice as to the Holder’s rights,
remedies and obligations, (ii) collecting any sums which become due to the
Holder, (iii) defending or prosecuting any proceeding or any counterclaim to any
proceeding or appeal; or (iv) the protection, preservation or enforcement of any
rights or remedies of the Holder.

     

    (10) Any
waiver by the Holder of a breach of any provision of this Debenture shall not
operate as or be construed to be a waiver of any other breach of such provision
or of any breach of any other provision of this Debenture. The failure of the
Holder to insist upon strict adherence to any term of this Debenture on one or
more occasions shall not be considered a waiver or deprive that party of the
right thereafter to insist upon strict adherence to that term or any other term
of this Debenture. Any waiver must be in writing.

     

    (11) If any
provision of this Debenture is invalid, illegal or unenforceable, the balance of
this Debenture shall remain in effect, and if any provision is inapplicable to
any person or circumstance, it shall nevertheless remain applicable to all other
persons and circumstances. If it shall be found that any interest or other
amount deemed interest due hereunder shall violate applicable laws governing
usury, the applicable rate of interest due hereunder shall automatically be
lowered to equal the maximum permitted rate of interest. The Company covenants
(to the extent that it may lawfully do so) that it shall not at any time insist
upon, plead, or in any manner whatsoever claim or take the benefit or advantage
of, any stay, extension or usury law or other law which would prohibit or
forgive the Company from paying all or any portion of the principal of or
interest on this Debenture as contemplated herein, wherever enacted, now or at
any time hereafter in force, or which may affect the covenants or the
performance of this indenture, and the Company (to the extent it may lawfully do
so) hereby expressly waives all benefits or advantage of any such law, and
covenants that it will not, by resort to any such law, hinder, delay or impeded
the execution of any power herein granted to the Holder, but will suffer and
permit the execution of every such as though no such law has been
enacted.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    (12) THE
PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF
THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION
DOCUMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL
OR WRITTEN) OR ACTIONS OF ANY PARTY.  THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE PARTIES’ ACCEPTANCE OF THIS AGREEMENT.

     

    (13) CERTAIN
DEFINITIONS For purposes of this Debenture, the following terms
shall have the following meanings:

     

    (a) “Approved Stock Plan”
means a stock option plan that has been approved by the Board of Directors of
the Company, pursuant to which the Company’s securities may be issued only to
any employee, officer, or director for services provided to the
Company.

     

    (b) "Bloomberg" means
Bloomberg Financial Markets.

     

    (c) “Business Day” means
any day except Saturday, Sunday and any day which shall be a federal legal
holiday in the United States or a day on which banking institutions are
authorized or required by law or other government action to close.

     

    (d) “Change of Control
Transaction” means the occurrence of (a) an acquisition after the date
hereof by an individual or legal entity or “group” (as described in Rule
13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether
through legal or beneficial ownership of capital stock of the Company, by
contract or otherwise) of in excess of fifty percent (50%) of the voting
securities of the Company (except that the acquisition of voting securities by
the Holder or any other current holder of convertible securities of the Company
shall not constitute a Change of Control Transaction for purposes hereof), (b) a
replacement at one time or over time of more than one-half of the members of the
board of directors of the Company which is not approved by a majority of those
individuals who are members of the board of directors on the date hereof (or by
those individuals who are serving as members of the board of directors on any
date whose nomination to the board of directors was approved by a majority of
the members of the board of directors who are members on the date hereof), (c)
the merger, consolidation or sale of fifty percent (50%) or more of the assets
of the Company or any subsidiary of the Company in one or a series of related
transactions with or into another entity, or (d) the execution by the Company of
an agreement to which the Company is a party or by which it is bound, providing
for any of the events set forth above in (a), (b) or (c).

     

    (e) “Convertible
Securities” means any stock or securities (other than Options) directly
or indirectly convertible into or exercisable or exchangeable for Common
Stock.

     

    (f) “Commission” means the
Securities and Exchange Commission.

     

    (g) “Common Stock” means
the common stock, no par value, of the Company and stock of any other class into
which such shares may hereafter be changed or reclassified.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    (h) “Exchange Act” means
the Securities Exchange Act of 1934, as amended.

     

    (i) “Excluded Securities”
means: (i) securities issued or deemed to have been issued as full or partial
consideration in connection with a strategic merger, acquisition, consolidation
or purchase of substantially all of the securities or assets of a corporation or
other entity, (ii) securities issued or deemed to have been issued in connection
with strategic license agreements and other partnering arrangements so long as
such issuances are not for the purpose of raising capital and which holders of
such securities or debt are not at any time granted registration rights, (iii)
securities issued or deemed to have been issued by the Company pursuant to an
Approved Stock Plan, (iv) shares of Common Stock issued or deemed to be issued
by the Company upon the conversion, exchange or exercise of any right, option,
obligation or security outstanding on the date prior to date of the Securities
Purchase Agreement, provided that the terms of such right, option, obligation or
security are not amended or otherwise modified on or after the date of the
Securities Purchase Agreement, and provided that the conversion price, exchange
price, exercise price or other purchase price is not reduced, adjusted or
otherwise modified and the number of shares of Common Stock issued or issuable
is not increased (whether by operation of, or in accordance with, the relevant
governing documents or otherwise) on or after the date of the Securities
Purchase Agreement, and (v) the shares of Common Stock issued or deemed to
be issued by the Company upon conversion of this Debenture.

     

    (j) “Future Capital Raise”
shall mean any capital raised by the Company after March 10, 2009, whether
through the issuance of equity or debt, in excess of $800,000.

     

    (k) “Options” means any
rights, warrants or options to subscribe for or purchase shares of Common Stock
or Convertible Securities.

     

    (l) “Original Issue Date”
means the date of the first issuance of this Debenture regardless of the number
of transfers and regardless of the number of instruments, which may be issued to
evidence such Debenture.

     

    (m) “Person” means a
corporation, an association, a partnership, organization, a business, an
individual, a government or political subdivision thereof or a governmental
agency.

     

    (n) “Purchased Assets”
shall have the meaning ascribed to it in the Securities Purchase
Agreement.

     

    (o) “Securities Act” means
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.

     

    (p) “Securities Purchase
Agreement” means the Securities Purchase Agreement dated March [___],
2008 between the Company and the Holder.

     

    (q) “Trading Day” means a
day on which the shares of Common Stock are quoted on the OTCBB or quoted or
traded on such Primary Market on which the shares of Common Stock are then
quoted or listed; provided, that in the event that the shares of Common Stock
are not listed or quoted, then Trading Day shall mean a Business
Day.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    (r) “Transaction
Documents” means the Securities Purchase Agreement or any other agreement
delivered in connection with the Securities Purchase Agreement, including,
without limitation, the Security Documents.

     

    (s) “Underlying Shares”
means the shares of Common Stock issuable upon conversion of this Debenture or
as payment of interest in accordance with the terms hereof.

     

    (t) “Underlying Shares
Registration Statement” means a registration statement meeting the
requirements set forth in the Registration Rights Agreement, covering among
other things the resale of the Underlying Shares and naming the Holder as a
“selling stockholder” thereunder.

     

    (u) "Volume Weighted Average
Price" means, for any security as of any date, the daily dollar
volume-weighted average price for such security as reported by Bloomberg through
its “Historical Price Table Screen (HP)” with Market: Weighted Ave function
selected, or, if no dollar volume-weighted average price is reported for such
security by Bloomberg, the average of the highest closing bid price and the
lowest closing ask price of any of the market makers for such security as
reported in the "pink sheets" by Pink Sheets LLC.

     

     [Signature
Page Follows]

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    IN WITNESS WHEREOF, the
Company has caused this Secured Convertible Debenture to be duly executed by a
duly authorized officer as of the date set forth above.

     

    
      
        	 	
                COMPANY:

              	 
	 	
                BBM
      HOLDINGS, INC.

              	 
	 	 	 	 
	
              	
                By:
      

              	
              	 
	 	 	Name:	 
	 	 	Title:	 
	 	 	 	 

      

    

    

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
I

    CONVERSION
NOTICE

     

    (To
be executed by the Holder in order to Convert the Debenture)

    

    
      	
              TO:

            

    

    

    The
undersigned hereby irrevocably elects to convert $___________________ of the
principal amount of Debenture No.BBMO-1-___ into Shares of Common Stock of BBM HOLDINGS, INC., according
to the conditions stated therein, as of the Conversion Date written
below.

     

    
      	
              Conversion
      Date:

            	___________________________________________________
	
              Conversion
      Amount to be converted:

            	
              $                                                                                     

            
	
              Conversion
      Price:

            	
              $                                                                                     

            
	
              Number
      of shares of Common Stock to be issued:

            	___________________________________________________
	
              Amount
      of Debenture Unconverted:

            	
              $                                                                                     

            
	 
      	 
      
	
              Please
      issue the shares of Common Stock in the following name and to the
      following address:

            

    

     

    
      	
              Issue
      to:

            	 
      
	 
      	 
      
	
              Authorized
      Signature:

            	___________________________________________________
	
              Name:

            	___________________________________________________
	
              Title:

            	___________________________________________________
	
              Broker
      DTC Participant Code:

            	 
      
	
              Account
      Number:

            	 
      

    

    

    
      
        
        

      

      
        18Unassociated Document

    DEMAND PROMISSORY
NOTE

    

    
      	
              $________.00

            	
              As
      of March 16, 2009

            

    

    

    FOR VALUE
RECEIVED, BBM Holdings, Inc., a corporation organized and existing under the
laws of the State of Utah,  hereby promises to pay to the order of
AIGH Investment Partners, LLC, a limited liability company organized and
existing under the laws of the State of Delaware, the sum of ______ THOUSAND
DOLLARS ($__,000.00), with interest at the rate of eight percent (8%) per annum
upon the unpaid balance from time to time outstanding from the date set forth
above, same being payable in lawful money of the United States of
America.

     

    This Note
shall be paid in full upon written demand therefor made by the holder thereof.
The principal of and accrued interest on this Note may be prepaid in whole or in
part at any time and from time to time without penalty or
premium.  Any payments not made when due shall be subject to interest
at the rate of 15 percent (15%) per annum upon the unpaid balance from time to
time outstanding from the date set forth above.  Notwithstanding
anything set forth herein to the contrary, in no event shall the interest
payable hereunder be higher than the maximum amount permitted under applicable
law.

     

    The
undersigned agrees to pay all filing fees and similar charges and all costs
incurred by the holder hereof in collecting or securing or attempting to collect
or secure this Note, including reasonable attorney's fees. The undersigned shall
be responsible for the payment of any documentary stamp taxes which may now or
hereafter apply to this Note.

     

    In any
action or proceeding brought in connection with this Note, the undersigned
hereby: (a) waives demand, presentment, protest, notice of dishonor, suit
against or joinder of any other person, and all other requirements necessary to
charge or hold the undersigned liable with respect to the loan evidenced hereby;
(b) submits to the jurisdiction of the state and federal courts in the State of
New York for purposes of any such action or proceeding; and (c) agrees that the
venue of any such action or proceeding may be laid in New York County, New York
and waives any claim that the same is an inconvenient forum. No provision of
this Note shall limit the holder's right to serve legal process in any other
manner permitted by law or to bring any such action or proceeding in any other
competent jurisdiction. This Note shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York.

     

    
      
        	 	MAKER:	 
	 	 	 
	 	BBM HOLDINGS,
      INC.	 
	 	 	 	 
	
              	
                By:

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