valcom_8k-ex1001.htm


    EXHIBIT
10.1

    
THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED FOR
SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES OR
AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.

     

     

    US
$100,000

     

    VALCOM,
INC.

    15%
SECURED CONVERTIBLE DEBENTURE SERIES A

    DUE
JANUARY 24, 2009

    


     

    FOR VALUE
RECEIVED, VALCOM, INC., a corporation organized and existing under the laws of
the State of Delaware (the "Company"), promises to pay to Able Income Fund, LLC,
the registered holder hereof (the "Holder"), the principal sum of One Hundred
Thousand and  00/100  Dollars (US $100,000) on January 24,
2009 (the “Maturity Date”) and to pay interest on the principal sum outstanding
on a monthly basis, with the first payment payable 30 days after the closing, at
the rate of 15% per annum, accruing from November 25, 2008, the date of initial
issuance of this Debenture (the “Issue Date”), (each, an “Interest Payment
Date”) Interest shall accrue daily from the later of the Issue Date or the
previous Interest Payment Date and shall be payable, subject to the other
provisions of this Debenture, in cash or in Common Stock. Additional provisions
regarding the payment of interest are provided in Section 4(D) below (the terms
of which shall govern as if this sentence were not included in this
Debenture).

     

    This
Debenture is subject to the following additional provisions:

     

    1.    The
Debentures will initially be issued in denominations determined by the Company,
but are exchangeable for an equal aggregate principal amount of Debentures of
different denominations, as requested by the Holder surrendering the
same.  No service charge will be made for such registration or
transfer or exchange.

     

    2.    The Company
shall be entitled to withhold from all payments of principal of, and interest
on, this Debenture any amounts required to be withheld under the applicable
provisions of the United States income tax laws or other applicable laws at the
time of such payments, and Holder shall execute and deliver all required
documentation in connection therewith.

     

    3.    This
Debenture has been issued subject to investment representations of the original
purchaser hereof and may be transferred or exchanged only in compliance with the
Securities Act of 1933, as amended (the "Act"), and other applicable state and
foreign securities laws and the terms of the Securities Purchase
Agreement.  In the event of any proposed transfer of this Debenture,
the Company may require, prior to issuance of a new Debenture in the name of
such other person, that it receive reasonable transfer documentation that is
sufficient to evidence that such proposed transfer complies with the Act and
other applicable state and foreign securities laws and the terms of the
Securities Purchase Agreement.  Prior to due presentment for transfer
of this Debenture, the Company and any agent of the Company may treat the person
in whose name this Debenture is duly registered on the Company's Debenture
Register as the owner hereof for the purpose of receiving payment as herein
provided and for all other purposes, whether or not this Debenture be overdue,
and neither the Company nor any such agent shall be affected by notice to the
contrary.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    4.    A.    (i)  At any
time on or after the Issue Date and prior to the time this Debenture is paid in
full in accordance with its terms (including, without limitation, after the
occurrence of an Event of Default, as defined below, or, if the Debenture is not
fully paid or converted after the Maturity Date), the Holder of this Debenture
is entitled, at its option, subject to the following provisions of this Section
4, to convert this Debenture at any time into shares of Common Stock, $0.001 par
value ("Common Stock"), of the Company at the Conversion Price (as defined
below).  Any such conversion is referred to as a
“Conversion.”

    


    (ii)  On
the Maturity Date the Company shall pay the principal and accrued interest
(through the actual date of payment) of any portion of this Debenture which is
then outstanding.

     

    (iii)  For
purposes of this Debenture, the following terms shall have the meanings
indicated below:

     

    “Conversion
Price” means the lower of (i) the VWAP for the three (3) Regular Trading Days
(which need not be consecutive) selected by the Holder from the 20 Trading Days
ending on the Trading Day immediately before the relevant Conversion Date,
multiplied by (ii) seventy percent (70%); or $0.10.

     

    “Regular
Trading Day,”  “Reporting Service,” “Trading Day,” and “VWAP” have the
meanings ascribed to them in the Securities Purchase Agreement.

     

    “Conversion
Date” means the date on which the Holder faxes or otherwise delivers a Notice of
Conversion to the Company so that it is received by the Company on or before
such specified date.

     

    “Conversion
Shares” has the meaning ascribed to in Section 4(H) hereof.

     

    B.    A Conversion
shall be effectuated by the Holder by faxing a notice of conversion (“Notice of
Conversion”) to the Company as provided in this paragraph.  The Notice
of Conversion shall be executed by the Holder of this Debenture and shall
evidence such Holder's intention to convert this Debenture or a specified
portion hereof in the form annexed hereto as Exhibit A.  Delivery of
the Notice of Conversion shall be accepted by the Company by hand, mail or
courier delivery at the address specified in said Exhibit A or at the facsimile
number specified in said Exhibit A (each of such address or facsimile number may
be changed by notice given to the Holder in the manner provided in the
Securities Purchase Agreement).  If so indicated on the first page of
this Debenture, a portion of the purchase price for this Debenture was
represented by the Specific Purchase Note. If the Specific Purchase Note was
issued, and it is subsequently paid or otherwise satisfied in full, the Company
will promptly acknowledge such payment or satisfaction in writing (but the
absence of such acknowledgment shall not affect the Holder’s rights hereunder).
Notwithstanding the foregoing, if the Specific Purchase Note was issued on the
Issue Date, this Debenture may be converted by way of a Conversion only after
such Specific Purchase Note has been paid or otherwise satisfied in
full.

        

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    C.    Notwithstanding any
other provision hereof or of any of the other Transaction Agreements, in no
event (except (i) as specifically provided herein as an exception to this
provision, or (ii) while there is outstanding a tender offer for any or all of
the shares of the Company’s Common Stock) shall the Holder be entitled to
convert any portion of this Debenture, or shall the Company have the obligation
to convert such Debenture (and the Company shall not have the right to pay
interest hereon in shares of Common Stock) to the extent that, after such
conversion or issuance of stock in payment of interest, the sum of (1) the
number of shares of Common Stock beneficially owned by the Holder and its
affiliates (other than shares of Common Stock which may be deemed beneficially
owned through the ownership of the unconverted portion of the Debentures or
other convertible securities or of the unexercised portion of warrants or other
rights to purchase Common Stock), and (2) the number of shares of Common Stock
issuable upon the conversion of the Debentures with respect to which the
determination of this proviso is being made, would result in beneficial
ownership by the Holder and its affiliates of more than 4.99% of the outstanding
shares of Common Stock (after taking into account the shares to be issued to the
Holder upon such conversion).  For purposes of the proviso to the
immediately preceding sentence, beneficial ownership shall be determined in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended, except as otherwise provided in clause (1) of such
sentence.  Nothing herein shall preclude the Holder from disposing of
a sufficient number of other shares of Common Stock beneficially owned by the
Holder so as to thereafter permit the continued conversion of this
Debenture.

     

    D.    (i)    Subject to
the terms of Section 4(C) and to the other terms of this Section
4(D),

     

    (x)
interest on the principal amount of this Debenture converted pursuant to a
Notice of Conversion, and

     

    (y) any
other amounts due to the Holder with respect to this Debenture or pursuant to
any other provision of any of the Transaction Agreements, including but not
necessarily limited to, Administrative Costs (collectively, “Other
Costs”),

    


    shall be
due and payable, at the option of the Holder, in cash or in shares of Common
Stock on the Interest Payment Date.

    


    (ii)    If the
interest payable in connection with a Conversion or if Other Costs are to be
paid in cash, the Company shall make such payment within three (3) Trading Days
after the Interest Payment Date (for interest) or of the demand for such Other
Costs by the Holder, as the case may be.

     

    (iii)    If interest
or Other Costs are to be paid in Common Stock,  the number of shares
of Common Stock to be received shall be determined by dividing the dollar amount
of the interest by the Conversion Price in effect on the relevant Interest
Payment Date or on the date of demand for such Other Costs by the Holder, as the
case may be.  For such purposes, the date of a demand for Other Costs
by the Holder shall be treated (with respect to the amount of such Other Costs)
as an Interest Payment Date.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    E.    The Company
shall have the right to prepay, at any time, any or all of the outstanding
principal and interest due pursuant to this Debenture, without the prior written
consent of the Holder.

     

    F.    (i) The
following provisions apply to the issuances of Common Stock in payment of the
amounts due under this Debenture, whether as principal or interest, as provided
in the preceding provisions of this Section 4.

     

    (ii)  No
fractional shares of Common Stock or scrip representing fractions of shares will
be issued on conversion, but the number of shares issuable shall be rounded to
the nearest whole share.

     

    (iii)  All
shares issuable with respect to a Conversion Date or Interest Payments Date
shall be deemed “Conversion Shares” for all purposes of this Debenture and the
other Transaction Agreements. Certificates representing the relevant Conversion
Shares (“Conversion Certificates”) will be delivered to the Holder at the
address specified in the relevant Notice of Conversion or demand for payment of
Other Costs (and if none, the Holder’s the Holder’s address for notices as
contemplated by the Securities Purchase Agreement, which address the Holder may
change from time to time in the manner provided therein), via express courier,
by electronic transfer or otherwise, within three (3) Trading Days (such third
Trading Day, the “Delivery Date”) after the relevant Conversion
Date.  The Holder shall be deemed to be the holder of the shares
issuable to it in accordance with the relevant provisions of this Debenture on
the Conversion Date or Interest Payment Date, as the case may be.

     

    G.    Except as may
specified in a specific provision of this Debenture, any payments under this
Debenture shall be applied in the following order of priority:
(i)  first to Other Costs, (ii) then to accrued but unpaid interest;
and (iii) then, to principal in the inverse order of maturity.

     

    5.    No provision
of this Debenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of, and interest on, this
Debenture at the time, place, and rate, and in the coin or currency or where
contemplated herein in shares of its Common Stock, as applicable, as herein
prescribed.  This Debenture and all other Debentures now or hereafter
issued of similar terms are direct obligations of the Company.

     

    6.    A.    Each Pledgor
(as defined in the Pledge Agreement)  is personally guarantying to the
Holder the timely and full fulfillment of all of the obligations of the Company
under this Debenture on the terms provided above and in the Guarantee, which has
been executed by such Pledgor in favor of, and delivered to, the
Holder.

     

    B.    The
obligations of the Company under this Debenture and of each respective Pledgor
under the Guarantee executed and delivered by such Pledgor are secured under the
terms of the Pledge Agreement, to which the Holder and the Pledgor are parties
(the "Pledge Agreement"), the terms of which are incorporated herein by
reference, by a pledge from each respective Pledgor of the number of shares of
the Company's Common Stock identified opposite such Pledgor’s name, of which
shares the relevant Pledgor is the record and beneficial owner. If the Holder
forecloses on any of the Pledged Shares, the obligations of the Company will be
reduced only to the extent of the proceeds actually realized from such
foreclosure, in the priority specified in Section 4(G) hereof.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    7.    Except as
provided in Sections 5 and 6 above or in a separate instrument signed by the
party to be charged therewith, no recourse shall be had for the payment of the
principal of, or the interest on, this Debenture, or for any claim based hereon,
or otherwise in respect hereof (including, but not limited to, a claim for Other
Costs), against any incorporator, shareholder, officer or director, as such,
past, present or future, of the Company or any successor corporation, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issue hereof, expressly waived
and released.

     

    8.    All payments
contemplated hereby to be made “in cash” shall be made in immediately available
good funds of United States of America currency by wire transfer to an account
designated in writing by the Holder to the Company (which account may be changed
by notice similarly given).  All payments of cash and each delivery of
shares of Common Stock issuable to the Holder as contemplated hereby shall be
made to the Holder at the address last appearing on the Debenture Register of
the Company as designated in writing by the Holder from time to time; except
that the Holder can designate, by notice to the Company, a different delivery
address for any one or more specific payments or deliveries.

     

    9.    If, for as
long as this Debenture remains outstanding, the Company enters into a merger
(other than where the Company is the surviving entity) or consolidation with
another corporation or other entity or a sale or transfer of all or
substantially all of the assets of the Company to another person (collectively,
a "Sale"), the Company will require, in the agreements reflecting such
transaction, that the surviving entity expressly assume the obligations of the
Company hereunder.  Notwithstanding the foregoing, if the Company
enters into a Sale and the holders of the Common Stock are entitled to receive
stock, securities or property in respect of or in exchange for Common Stock,
then as a condition of such Sale, the Company and any such successor, purchaser
or transferee will agree that the Debenture may thereafter be converted on the
terms and subject to the conditions set forth above into the kind and amount of
stock, securities or property receivable upon such merger, consolidation, sale
or transfer by a holder of the number of shares of Common Stock into which this
Debenture might have been converted immediately before such merger,
consolidation, sale or transfer, subject to adjustments which shall be as nearly
equivalent as may be practicable.  In the event of any such proposed
Sale, (i) the Holder hereof shall have the right to convert by delivering a
Notice of Conversion to the Company within fifteen (15) days of receipt of
notice of such Sale from the Company, except that Section 4(C) shall not apply
to such conversion.

     

    10.    If, at any
time while any portion of this Debenture remains outstanding, the Company spins
off or otherwise divests itself of a part of its business or operations or
disposes of all or of a part of its assets in a transaction (the “Spin Off”) in
which the Company, in addition to or in lieu of any other compensation received
and retained by the Company for such business, operations or assets, causes
securities of another entity (the “Spin Off Securities”) to be issued to
security holders of the Company, the Company shall cause (i) to be reserved Spin
Off Securities equal to the number thereof which would have been issued to the
Holder had all of the Holder’s Debentures outstanding on the record date (the
“Record Date”) for determining the amount and number of Spin Off Securities to
be issued to security holders of the Company (the “Outstanding Debentures”) been
converted as of the close of business on the Trading Day immediately before the
Record Date (the “Reserved Spin Off Shares”), and (ii) to be issued to the
Holder on the conversion of all or any of the Outstanding Debentures, such
amount of the Reserved Spin Off Shares equal to (x) the Reserved Spin Off Shares
multiplied by (y) a fraction, of which (I) the numerator is the principal amount
of the Outstanding Debentures then being converted, and (II) the denominator is
the principal amount of the Outstanding Debentures.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    11.    If, at any
time while any portion of this Debenture remains outstanding, the Company
effectuates a stock split or reverse stock split of its Common Stock or issues a
dividend on its Common Stock consisting of shares of Common Stock, the prices
used in determining the Conversion Price from dates prior to such action or and
any other fixed amounts calculated as contemplated hereby or by any of the other
Transaction Agreements shall be equitably adjusted to reflect such
action.

     

    12.    The Holder of
the Debenture, by acceptance hereof, agrees that this Debenture is being
acquired for investment and that such Holder will not offer, sell or otherwise
dispose of this Debenture or the shares of Common Stock issuable upon conversion
thereof except under circumstances which will not result in a violation of the
Act or any applicable state Blue Sky or foreign laws or similar laws relating to
the sale of securities.

     

    13.    A.    This
Debenture shall be governed by and construed in accordance with the laws of the
State of New York for contracts to be wholly performed in such state and without
giving effect to the principles thereof regarding the conflict of
laws.

     

    B.    In the event
of any litigation or dispute arising from this Debenture or any of the other
Transaction Agreements, the parties agrees that the party which is awarded the
most money shall be deemed the prevailing party for all purposes and such
prevailing party shall be entitled to an additional award from the other party
for the full amount of the attorneys’ fees and expenses paid or payable by such
prevailing party in connection with the litigation and/or dispute, without
reduction or apportionment based upon the individual claims or defenses giving
rise to such fees and expenses.  Nothing in this Section 13(B) shall
restrict or impair a court’s power to award fees and expenses to any party for
frivolous or bad faith pleading by the other party.

     

    C.    JURY TRIAL
WAIVER.  The Company and the Holder hereby waive a trial by
jury in any action, proceeding or counterclaim brought by either of the Parties
hereto against the other in respect of any matter arising out of or in
connection with this Debenture.

     

    14.    A.    The term
"Event of Default" means the occurrence of any one or more of the following
events:

    


    
      i.    The
Company shall default in the payment of principal or interest on this Debenture
when due and such default shall continue for a period of ten (10) Trading Days;
or

       

      ii.    There is
a Cancellation Date; or

       

      iii.    Any of
the representations or warranties made by the Company herein, or any of the
other Transaction Agreements or in any certificate or financial or other written
statements heretofore or hereafter furnished by the Company in connection with
the execution and delivery of this Debenture shall be false or misleading in any
material respect at the time made; or

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      iv.    The
Company shall fail to perform or observe, in any material respect, any covenant,
term, provision, condition, agreement or obligation of the Company under any of
the Transaction Agreements and such failure, if capable of being cured, shall
continue uncured for a period of ten (10) Trading Days after the Holder gives
the Company written notice thereof;

       

      v.    The
Company shall fail to maintain its status as a reporting company under the
federal securities laws; or

       

      vi.    The
Company shall fail to timely file all reports required to be filed by it with
the SEC pursuant to Section 12 or 15(d) of the 1934 Act, or otherwise required
by the 1934 Act; or

       

      vii.    The
Company shall have its Common Stock suspended from trading on the Principal
Trading Market for in excess of five (5) Trading Days or the Company’s Common
Stock is delisted from trading on the Principal Trading Market; or

       

      viii.    The
Company or any of its Subsidiaries shall (x) admit in writing its inability to
pay its debts generally as they mature; (y) make an assignment for the benefit
of creditors or commence proceedings for its dissolution; or (z) apply for or
consent to the appointment of a trustee, liquidator or receiver for its or for a
substantial part of its property or business; or

       

      ix.    A
trustee, liquidator or receiver shall be appointed for the Company or any of it
Subsidiaries or for a substantial part of such entity’s property or business
without its consent and shall not be discharged within sixty (60) days after
such appointment; or

       

      x.    Any
governmental agency or any court of competent jurisdiction at the instance of
any governmental agency shall assume custody or control of the whole or any
substantial portion of the properties or assets of the Company or any
of  its Subsidiaries and shall not be dismissed within sixty (60) days
thereafter; or

       

      xi.    Bankruptcy,
reorganization, insolvency or liquidation proceedings or other proceedings for
relief under any bankruptcy law or any law for the relief of debtors shall be
instituted by or against the Company or any of its Subsidiaries and, if
instituted against the Company or any such Subsidiary, shall not be dismissed
within sixty (60) days after such institution or the Company or such Subsidiary
shall by any action or answer approve of, consent to, or acquiesce in any such
proceedings or admit the material allegations of, or default in answering a
petition filed in any such proceeding; or

       

      xii.    Any money
judgment, writ or warrant of attachment, or similar process in excess of One
Hundred Thousand Dollars ($100,000) in the aggregate shall be entered or filed
against the Company or any of it Subsidiaries or any of such entity’s properties
or other assets and shall remain unpaid, unvacated, unbonded or unstayed for a
period of five (5) Trading Days; or

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      xiii.    The
Company or any of its Subsidiaries is, by the end of any relevant grace period,
in default in the payment of principal or interest as and when due and payable
under any one or more debt obligations of the Company and its Subsidiaries (or
any combination thereof) such that the aggregate amount of such defaults is in
excess of One Hundred Thousand Dollars ($100,000); or

       

      xiv.    The
average trading value over any consecutive ten (10) trading days shall be less
than $2,562.58 per trading day;  or

       

      xv.    It becomes
unlawful for the Company to perform its outstanding obligations under this
Debenture or any other Debenture issued pursuant to the Securities Purchase
Agreement; or

    

    


    


    B.    If an Event
of Default shall have occurred and is continuing, then,

     

    (i)
unless and until such Event of Default shall have been cured or waived in
writing by the Holder (which waiver shall not be deemed to be a waiver of any
subsequent default), at the option of the Holder and in the Holder’s sole
discretion, but without further notice from the Holder, the unpaid amount of
this Debenture, computed as of such date, will bear interest at the rate (the
“Default Rate”) equal to one percent (1.5%) per month or the highest rate
allowed by law, whichever is lower, from the date of the Event of Default to
until and including the date actually paid; and any partial payments shall be
applied as provided in Section 5 hereof; and

     

    (ii) at
any time thereafter, and in each and every such case, unless such Event of
Default shall have been cured or waived in writing by the Holder (which waiver
shall not be deemed to be a waiver of any subsequent default), at the option of
the Holder and in the Holder's sole discretion, the Holder may elect to redeem
all or part of the Unconverted Debenture (as defined below) on the terms
provided in Section 15 hereof.

    


    15.    A.    The Company
acknowledges that if there is an Event of Default, the Holder may require the
Company to immediately redeem all or any part of the outstanding portion of this
Debenture for an amount equal to the Redemption Amount (as defined
below).  The Redemption Amount shall be paid in cash by the Company to
the Holder.  As of the Redemption Due Date or, if earlier, the
Redemption Payment Date (as those terms are defined below), the Redemption
Amount shall be deemed applied, if so elected by the Holder, to any outstanding
balance due on the Specific Purchase Note and then to any outstanding balance on
any Purchase Note issued by the Holder, as designated by the Holder. Any portion
of the Redemption Amount which is not so applied shall be paid in cash to the
Holder and shall be applied in the priority provided in Section 4(I)
hereof.

     

    B.    For purposes
of this Debenture, the following terms shall have the meanings indicated
below:

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    “Unconverted
Debenture” means the principal amount of this Debenture which has not been
converted as of the relevant date.

     

    “Redemption
Payment Date” means the date on which the Company actually pays the Redemption
Amount.

     

    “Redemption
Amount” means the amount equal to the sum of (i) the Applicable Redemption
Percentage of the principal of an Unconverted Debenture which is being redeemed,
plus (ii) any accrued but unpaid interest thereon through and including the
Redemption Payment Date, plus (iii) all Other Costs.

     

    “Applicable
Redemption Percentage” means one hundred thirty percent (130%), unless the Event
of Default is one specified under Section 14(A)(viii) or (ix), in which event it
means one hundred fifty percent (150%).

    


    C.    The Holder of
an Unconverted Debenture may elect to redeem a portion of such Unconverted
Debenture without electing to redeem the balance of the Unconverted Debenture;
provided, however, that if the Holder gives a Redemption Notice (as defined
below) without specifying the amount of the Unconverted Debenture being
redeemed, such Redemption Notice shall be deemed to refer to the full principal
amount of the Unconverted Debenture.  The Holder’s option to redeem
all or part of the Unconverted Debenture shall be exercised by the Holder giving
written notice of the exercise of this provision by the Holder (a “Redemption
Notice”) at any time after a relevant Event of Default has occurred but before
such Event of Default is cured. The Redemption Notice shall specify (a) the date
(the “Redemption Due Date”) on which the Redemption Amount shall be paid, which
date shall be at least five (5) Trading Days after the date (a “Redemption
Notice Date”) on which the Holder Redemption Notice is given, and (b) the wire
instructions for the account to which the Redemption Amount is to be paid;
provided, however, that the Company shall have the right to accelerate the date
of such payment.

     

    D.    If all of the
Unconverted Debentures are being redeemed pursuant to this Section 5, then, upon
payment in full of the Redemption Amount for all of the Unconverted Debentures
in accordance with the provisions of this Section 5, the Holder shall deliver
the Debenture to the Company marked “paid in full”.

     

    E.    If the
Redemption Amount is not timely paid by the Company, the Redemption Amount shall
accrue interest at the Default Rate and the Holder may declare the Redemption
Amount, together with such interest, due under this Debenture immediately due
and payable, without presentment, demand, protest or notice of any kinds, all of
which are hereby expressly waived, anything herein or in any note or other
instruments contained to the contrary notwithstanding, and the Holder may
immediately enforce any and all of the Holder's rights and remedies provided
herein or any other rights or remedies afforded by law, including, but not
necessarily limited to, the equitable remedy of specific performance and
injunctive relief.

     

    16.    Nothing
contained in this Debenture shall be construed as conferring upon the Holder the
right to vote or to receive dividends or to consent or receive notice as a
shareholder in respect of any meeting of shareholders or any rights whatsoever
as a shareholder of the Company, unless and to the extent converted in
accordance with the terms hereof.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    17.    Any notice
required or permitted hereunder shall be given in manner provided in the Section
headed "NOTICES" in the Securities Purchase Agreement, the terms of which are
incorporated herein by reference.

     

    18.    The Company
may prepay the entire principal, along with any accrued interest, due under this
note at any time without penalty.

     

    IN
WITNESS WHEREOF, the Company has caused this instrument to be duly executed by
an officer thereunto duly authorized.

    


    Dated:
_________________, 20___

    


    
    

     

    
      	 	      
              VALCOM,
      INC.

               

              By:_______________________________________

               

               

              __________________________________________

              (Print
      Name)

               

              __________________________________________

              (Title)

            


    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
EXHIBIT
A

    


    VALCOM,
INC.

    NOTICE OF
CONVERSION

    OF

    15%
SECURED CONVERTIBLE DEBENTURE

    DUE
JANUARY 24, 2009

    


    (To be
Executed by the Registered Holder in Order to Convert the
Debenture)

    
    

     

    
      	TO:	VALCOM,
    INC.	VIA
      FAX:  702-382-2802
	 	      
              2113A
      Gulf Boulevard

              Indian
      Rocks, FL 33785

              Attn:
      Vince Vellardita, CEO

            	 


    

     

    FROM:
_________________________________________________________
(“Holder”)

    


    DATE:
_______________________________________________ (the “Conversion
Date”)

    


    
      	
              RE:

            	
              Conversion
      of $_________________ principal amount (the “Converted Debenture”) of the
      15% Convertible Debenture Due ______, (the “Debenture”) of VALCOM, INC.
      (the “Company”) into ______________________ shares (the “Principal
      Conversion Shares”) of Common Stock (defined
  below)

            


    

    


    
      	
              Note:
      Either the purchase price for this Debenture was paid for in full on or
      prior to the Issue Date or the Specific Purchase Note for this Debenture
      has been paid or otherwise satisfied in full prior to the issuance of this
      Notice of Conversion.

            


    

          

    The
captioned Holder hereby gives notice to the Company, pursuant to the Debenture
of VALCOM, INC. that the Holder elects to convert the Converted Debenture into
fully paid and non-assessable shares of Common Stock, $0.001 par value (the
“Common Stock”), of the Company as of the Conversion Date specified
above.  Said conversion shall be based on Conversion Price of
$________________.1

     

    _________________________

    
      1As
defined in the Debenture,

      


      ““Conversion Price” means the
lower of (i) the VWAP for the three (3) Regular Trading Days (which need not be
consecutive) selected by the Holder from the 20 Trading Days ending on the
Trading Day immediately before the relevant Conversion Date, multiplied by (ii)
seventy percent (70%); or $0.10.”

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    As
contemplated by the Debenture, the Company should also pay all accrued but
unpaid interest on the Converted Debenture to the Holder.  The Holder
elects that such accrued but unpaid interest should be paid

    


        in
______________ shares of Common Stock (“Interest Conversion Shares”),
representing such interest amount converted at the Conversion Price indicated
above, which Interest Conversion Shares should be delivered together with the
Principal Conversion Shares, or

     

        in cash,
which should be paid as provided in the Debenture by wire transfer as
follows:2

    


    ___________________________________

    


    ___________________________________

    


    ___________________________________

    


    Based on
this Conversion Price, the number of Principal Conversion Shares plus Interest
Conversion Shares (collectively, “Conversion Shares”) indicated above should be
issued in the following name(s):

    
    

     

    
      	 	Name and Record
      Address	Conversion
      Shares	 
	 	
              _______________________________

              _______________________________

              _______________________________

            	
              _______________

              _______________

              _______________

            	 


    

     

    It is the
intention of the Holder to comply with the provisions of Section 4(C) of the
Debenture regarding certain limits on the Holder's right to convert thereunder.
The Holder believe this conversion complies with the provisions of said Section
4(C). Nonetheless, to the extent that, pursuant to the conversion effected
hereby, the Holder would have more shares than permitted under said Section,
this notice should be amended and revised, ab initio, to refer to the conversion
which would result in the issuance of shares consistent with such provision. Any
conversion above such amount is hereby deemed void and revoked.

     

    
      _________________________

      The
Worksheet attached to this Notice of Conversion lists the 3 Regular Trading Days
used in determining the Conversion Price.

       

        2Information
should include the following:

        


        All
Wires:

        (1) Bank
Name

        (2) Bank Address (including street,
city, state)

        (3) ABA or Wire Routing
No.

        (4) Account Name

        (5) Account Number

        


        If Wire
is going to International (Non-US) Bank, all of the above plus:

        (6) SWIFT
Number

      

    

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    As
contemplated by the Debenture, this Notice of Conversion is being sent by
facsimile to the telecopier number and officer indicated above.

     

    If this
Notice of Conversion represents the full conversion of the outstanding balance
of the Converted Debenture, the Holder either (1) has previously surrendered the
Converted Debenture to the Company or (2) will surrender (or cause to be
surrendered) the Converted Debenture to the Company at the address indicated
above by express courier within five (5) Trading Days after delivery or
facsimile transmission of this Notice of Conversion.

     

    The
certificates representing the Conversion Shares should be transmitted by the
Company to the Holder

     

               via
express courier, or

     

               by
electronic transfer

    


    within
the time contemplated by the Debenture after receipt of this Notice of
Conversion (by facsimile transmission or otherwise) to:

    


    _____________________________________

    _____________________________________

    _____________________________________

    


     

    
      	 	      
              ____________________________________

              (Print
      name of Holder)

               

              By:
      _________________________________

              (Signature
      of Authorized Person)

               

              ____________________________________

              (Printed
      Name and Title)

            


    

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    
      
CONVERSION
PRICE WORKSHEET

    


    The
following information was used in determining the Conversion Price referred to
in this Notice of Conversion.

     

    
      	1.	Conversion
      Date:                                                      ___________________,
      20__
	 	 
	
              2.

            	
              The
      Holder selected the following three (3) Regular Trading Days (which need
      not be consecutive) out of the 20 Trading Days ending on the Trading Day
      before the Conversion Date:

            


    

    


    (1)                            /    /

    (2)                            /    /

    (3)                            /    /

    


    
      	
              3.

            	
              The
      VWAP for Regular Trading Days of the 3 Regular Trading Days specified
      above was $ .

            
	 	 
	4.	75%
      of amount specified in item 3 above is $  (= the
      Conversion Price).


    

     

     

     

     

    3