High Capital Funding, LLC
000 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 000,
Xxxxxxx, XX 00000
Tel 404/000-0000 Fax 404/000-0000
ValCom, Inc.00000 Xxxxxx Xxxx
Xxxxxx #0
Xxxxxxxx, XX 00000
Tel 000-000-0000 Fax 000-000-0000
Financing Agreement
June 6, 2002
1.Amount of Financing $1,000,000 (Purchase Amount).
2. Purchaser(s) High Capital Funding, LLC (HCF) and other
accredited investors (collectively Purchaser(s)),
and their transferees and assigns (Holder(s)).
3. Securities - Units Units (Units) consisting of ValCom, Inc. (VACM)
securities: one share of VACM Convertible
Preferred Stock (VACM Preferred Stock) and one
warrant (VACM Warrants). One share of VACM
Preferred Stock is convertible into one share of
VACM common stock. One VACM Warrant is
exercisable into one share of VACM Common Stock.
The per unit purchase price (Unit
Purchase Price) shall be $.80.
The VACM Preferred Stock shall have a zero
Preferred Stock coupon, shall be non-voting, shall be
non-redeemable, and shall contain customary anti-
dilution provisions. The VACM Preferred
Stock shall be convertible for ten years from the
Execution Date (as defined herein in Section 12)
into VACM common stock (VACM Conversion Shares).
The strike price of the VACM Warrants shall be
$.80 per share. The VACM Warrants shall be
Warrants exercisable for five years commencing from the
Execution Date and shall contain customary
anti-dilution provisions. The VACM Warrants shall
be exercisable for cash; provided however,
commencing one year from the Execution Date, the
VACM Warrants shall be "cashless exercise," at
the option of the Holder(s), unless the
underlying shares (VACM Warrants Shares) may be
sold without restriction pursuant to an effective
registration statement with current prospectus
available.
4. Number of Units The number of Units shall be the Purchase Amount
divided by the Unit Purchase Price.
5. Document Preparation Fee VACM shall pay to HCF a
document preparation fee of 50,000 VACM Warrants
(VACM Document Preparation Warrants). The VACM
common stock issuable upon exercise of the VACM
Document Preparation Warrants is the VACM
Document Preparation Warrants Shares.
6. Placement Agent VACM and HCF acknowledge that Bathgate Capital
Partners LLC has acted as the placement
agent (Placement Agent) in arranging this
transaction and that the Placement Agent shall be
compensated solely by VACM in accordance with
the terms of a separate agreement between
VACM and Placement Agent to consist of cash
compensation of 7% of the Purchase Amount, plus
warrants to purchase 10% of the VACM Units
purchased in the transaction at the Unit
Purchase Price (Placement Agent Warrants).
The VACM common stock issuable upon exercise of
the Placement Agent Warrants is the VACM
Placement Agent Warrants Shares.
7. Limitations (a) No Purchaser(s) or Holder(s) of VACM
Preferred Stock shall be permitted to convert
VACM Preferred Stock into VACM common stock to
the extent that, after giving effect to such
conversion, any such Purchasers(s) or Holder(s)
would be the beneficial owner of more than 5% of
the then outstanding VACM common stock. This
limitation shall not be deemed to prevent any
Purchaser(s) or Holder(s) from acquiring an
aggregate of more than 5% of VACM common stock,
so long as such Purchaser(s) or Holder(s) does
not beneficially own, or have the right to
beneficially own, more than 5% of VACM common
stock resulting from the conversion of VACM
Preferred Stock, at any given time. (b) No
Holder(s) of VACM Warrants or VACM
Document Preparation Warrants shall be permitted
to exercise such warrants if such Holder(s) is
the beneficial owner of any VACM Preferred Stock.
8. Escrow Xxxxx X. Xxxxxxxx, General Counsel of HCF, shall
act as Escrow Agent for the Purchase
Amount, the VACM Preferred Stock, the VACM
Conversion Shares, the VACM Warrants, the VACM
Document Preparation Warrants, the VACM Placement
Agent Warrants, the VACM Warrants Shares,
the VACM Document Preparation Warrants Shares and
the VACM Placement Agent Warrants Shares.
The address of the Escrow Agent is 000 Xxxxx
Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, XX 00000
(Tel 404/000-0000, Fax 404/000-0000).
9. Registration VACM shall file a registration
statement (HCF Registration Statement) for the
resale of all of the securities issued pursuant
to this Agreement on the earlier of (a) one week
following the effective date of the next
registration statement filed by VACM after June
6, 2002; or (b) October 15, 2002; and shall use
its best efforts to cause the HCF Registration
Statement to become effective as soon thereafter
as possible.
10. Accuracy of VACM SEC VACM represents and warrants that its filings
Filings with the SEC in the last two years are true
and complete and do not omit any material
information or fail to include any information
which is necessary to make the information set
forth therein not misleading, except for those
matters disclosed to representatives of
Purchaser(s) on June 1, 2002 which VACM plans to
include in its next SEC filing.
11. Key Man Insurance VACM shall obtain a Key Man
life insurance policy owned by HCF with HCF as
the beneficiary on the life of Xxxxx Xxxxxxxxxx,
in an amount not less than $2,000,000 for a
period of not less than ten years, with a level
premium throughout.
12. Execution Date. This Agreement shall not be valid
unless HCF and Escrow Agent have received a
facsimile copy of the Agreement signed by VACM by
June 17, 2002 and have each in turn signed the
Agreement within two business days of such
receipt. The date on which the last signature is
affixed shall be the "Execution Date."
13. Closing Schedule (a) Within three business days
following the Execution Date, Purchaser(s) shall
deposit the Purchase Amount with Escrow Agent (by
Fed Wire, ACH or Book Transfer).
(b) Within three business days following the
Execution Date, VACM shall deposit the following
items with Escrow Agent (VACM Escrow Deposit
Items):
(i) certificates for a sufficient number
of shares of VACM Preferred Stock, as a deposit
for delivery to Purchaser(s) and/or Holder(s) of
the VACM Preferred Stock (Escrow Preferred
Shares), registered in the name of Purchaser(s).
(ii) executed VACM Warrants, registered
in the name of Purchaser(s); executed VACM
Document Preparation Warrants, registered in the
name of HCF; and executed VACM Placement Agent
Warrants, registered in the name of Placement
Agent, or its assigns.
(iii) certificate(s) for a sufficient
number of shares of VACM common stock as a
deposit for delivery of the VACM Conversion
Shares (Escrow Conversion Shares) to Holder(s)
upon conversion of the VACM Preferred Stock,
registered in the name of Escrow Agent.
(iv) certificate(s) for a sufficient
number of shares of VACM common stock as a
deposit for delivery of the VACM Warrants Shares
to: Holder(s) upon exercise of the VACM Warrants;
HCF upon exercise of the Document Preparation
Warrants; and Placement Agent upon exercise of
the VACM Placement Agent Warrants. The VACM
Warrants Shares, the VACM Document Preparation
Warrants Shares, and the VACM Placement Agent
Warrants Shares (Escrow Warrants Shares) shall be
registered in the name of Escrow Agent.
(v) A binder for the Key Man life
insurance policy acceptable to HCF in its sole
judgment.
(c) Within two business days of the receipt of
the Purchase Amount from Purchaser(s) and the
VACM Escrow Deposit Items from VACM, Escrow Agent
shall deliver: the Purchase Amount to VACM; the
VACM Preferred Shares and the VACM Warrants to
Purchaser(s); the VACM Document Preparation
Warrants to HCF; and the VACM Placement Agent
Warrants to Placement Agent. The date upon which
the Escrow Agent wires the Purchase Amount to
VACM is the Closing Date.
(d) Upon conversion of any VACM Preferred Shares,
the Escrow Agent shall deliver the appropriate
number of Escrow Conversion Shares to the
converting person, and shall deliver the
certificates for the cancelled VACM Preferred
Shares to VACM.
(e) Upon exercise of any VACM Warrants, any VACM
Document Preparation Warrants and/or any VACM
Placement Agent Warrants, the Escrow Agent shall
deliver the appropriate number of Escrow Warrant
Shares to the exercising person. Within five
business days following the expiration of the
VACM Warrants, the VACM Document Preparation
Warrants and the VACM Placement Agent Warrants,
Escrow Agent shall return to VACM any excess
Escrow Warrants Shares.
(f) Within five business days following the tenth
anniversary of the Execution Date, Escrow Agent
shall return to VACM any excess Escrow Conversion
Shares.
(g) On the Closing Date the Purchaser(s) shall be
deemed to be the owners of the VACM Preferred
Shares and the VACM Warrants.
14. Binding Agreement The parties shall be legally
bound by the above terms and shall execute such
further documents as may be required to implement
the provisions of this Agreement. Facsimile
signatures shall be deemed to be original
signatures. This Agreement may be signed in two
or more counterparts.
ValCom, Inc.
By: Date:
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Xxxxx Xxxxxxxxxx, President &CEO
High Capital Funding, LLC
By: Date:
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Xxxx X. Xxxxxx, Chief Financial Officer
Escrow Agent
Date:
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Xxxxx X. Xxxxxxxx
