WARRANT


THE SECURITIES
REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE
BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR
ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS, OR AN OPINION OF COUNSEL IN A FORM REASONABLY SATISFACTORY TO
TIHE ISSUER THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE
STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.
NOTWITHSTANDING THE FOREGOING, THIS WARRANT MAY BE PLEDGED IN CONNECTION WITH
A BONA FIDE MARGIN ACCOUNT. 


NATIONAL AUTOMATION SERVICES, INC.


Warrant To Purchase Common Stock


	
 

	
 


	
Warrant No.:
  NAS - 1

	
Number of
  Shares: 150,000


	
 

	
 


	
Date of
  Issuance: March 26 2008

	
 





National
Automation Services, Inc. a Colorado corporation (the “Company”), hereby
certifies that, for Ten United States Dollars ($10.00) and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Trafalgar Capital Specialized Investment Fund, Luxembourg, (“Trafalgar”),
the registered holder hereof or its permitted assigns, is entitled, subject to
the terms set forth below, to purchase from the Company upon surrender of this
Warrant, at any time or times on or after the date hereof, but not after 11:59
P.M. Eastern Time on the Expiration Date (as defined herein) One Hundred Fifty
Thousand (150,000) fully paid and nonassessable shares of Common Stock (as
defined herein) of the Company (the “Warrant Shares”) at the exercise
price per share provided in Section l(b) below or as subsequently adjusted;
provided, however, that in no event shall the holder be entitled to exercise
this Warrant for a number of Warrant Shares in excess of that number of Warrant
Shares which, upon giving effect to such exercise, would cause the aggregate
number of shares of Common Stock beneficially owned by the holder and its
affiliates to exceed 4.99% of the outstanding shares of the Common Stock
following such exercise, except within sixty (60) days of the Expiration Date.
For purposes of the foregoing proviso, the aggregate number of shares of Common
Stock beneficially owned by the holder and its affiliates shall include the
number of shares of Common Stock issuable upon exercise of this Warrant with
respect to which the determination of such proviso is being made, but shall
exclude shares of Common Stock which would be issuable upon (i) exercise of the
remaining, unexercised Warrants beneficially owned by the holder and its
affiliates and (ii) exercise or conversion of the unexercised or unconverted
portion of any other securities of the Company beneficially owned by the holder
and its affiliates (including, without limitation, any convertible notes or
preferred stock) subject to a






limitation on
conversion or exercise analogous to the limitation contained herein. Except as
set forth in the preceding sentence, for purposes of this paragraph, beneficial
ownership shall be calculated in accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended. For purposes of this Warrant, in
determining the number of outstanding shares of Common Stock a holder may rely
on the number of outstanding shares of Common Stock as reflected in (1) the
Company’s most recent Form 10-QSB or Form 10-KSB, as the case may be, (2) a
more recent public announcement by the Company or (3) any other notice by the
Company or its transfer agent setting forth the number of shares of Common
Stock outstanding. Upon the written request of any holder, the Company shall
promptly, but in no event later than one (1) Business Day following the receipt
of such notice, confirm in writing to any such holder the number of shares of
Common Stock then outstanding. In any case, the number of outstanding shares of
Common Stock shall be determined after giving effect to the exercise of
Warrants (as defined below) by such holder and its affiliates since the date as
of which such number of outstanding shares of Common Stock was reported. 


          Section
1. 


               
(a) This Warrant is the common stock purchase warrant (the “Warrant”)
issued pursuant to a Securities Purchase Agreement dated March 26, 2008 by and
between the Company and Trafalgar (the “Purchase Agreement”). 


               
(b) Definitions. The following words and terms as used in this Warrant
shall have the following meanings: 


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


                    (ii)
“Business Day” means any day other than Saturday, Sunday or other day on
which commercial banks in the City of New York are authorized or required by
law to remain closed. 


                    (iii)
“Closing Bid Price” means the closing bid price of Common Stock as
quoted on the Principal Market (as reported by Bloomberg Financial Markets (“Bloomberg”)
through its “Volume at Price” function). 


                    (iv)
“Common Stock” means (i) the Company’s common stock, par value $0.001
per share, and (ii) any capital stock into which such Common Stock shall have
been changed or any capital stock resulting from a reclassification of such
Common Stock. 


                    (v)
“Excluded Securities” means, provided such security is issued at a price
which is greater than or equal to the arithmetic average of the Closing Bid
Prices of the Common Stock for the ten (10) consecutive trading days
immediately preceding the date of issuance except in the case of Richardson & Patel,
LLP, any of the following: (a) shares of Common Stock and options, warrants or
other rights to purchase Common Stock issued to employees, officers or
directors of, or consultants or advisors to the Corporation or any subsidiary
pursuant to restricted stock purchase agreements, stock option plans or similar


2





arrangements outstanding as
of the date of this Warrant (as adjusted for any stock dividend), stock split,
combination of shares, reorganization, recapitalization, reclassification or
other similar event. (a “Recapitalization”); (b) shares of Common Stock
issued upon the exercise or conversion of options or convertible securities
outstanding as of the date of this Warrant; (c) shares of Common Stock issued
or issuable pursuant to the acquisition of another corporation by the Company
by merger, purchase of substantially all of the assets or other reorganization
or to a joint venture agreement, provided, that such issuances are approved by
the Board of Directors; 


                    (vi)
“Expiration Date” means March 19, 2013 or, if such
date falls on a Saturday, Sunday or other day on which banks are required or
authorized to be closed in the City of New York or the State of New York or on
which trading does not take place on the Principal Exchange or automated
quotation system on which the Common Stock is traded (a “Holiday“), the next date that is not a Holiday. 




                    (vii) “Issuance
Date” means the date hereof. 


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


                    (ix)
“Other Securities” means (i) those options and warrants of the Company
issued prior to, and outstanding on, the Issuance Date of this Warrant, (ii)
the shares of Common Stock issuable on exercise of such options and warrants,
provided such options and warrants are not amended after the Issuance Date of
this Warrant and (iii) the shares of Common Stock issuable upon exercise of
this Warrant. 


                    (x)
“Person” means an individual, a limited liability company,
a partnership, a joint venture, a corporation, a trust, an unincorporated
organization and a government or any department or agency thereof. 


                    (xi)
“Principal Market” means the New York Stock Exchange, the American Stock
Exchange, the Nasdaq National Market, the Nasdaq SmallCap Market, whichever is
at the time this principal trading exchange or market for such security, or the
over- the-counter market on the electronic bulletin board for such security as
repotted by Bloomberg or, if no bid or sale information is reported for such
security by Bloomberg, then the average of the bid prices of each of the market
makers for such security as reported in the “pink sheets” by the National
Quotation Bureau, Inc. 


                    (xii)
“Securities Act” means the Securities Act of 1933, as amended. 


                    (xiii)
“Warrant” means this Warrant and all Warrants issued in
exchange, transfer or replacement thereof. 


                    (xiv)
“Warrant Exercise Price” shall be one tenth of one cent ($0.001) per
share or as subsequently adjusted as provided in Section 8 hereof. 


3






                    (xv)
“Warrant Shares” means the shares of Common Stock issuable at any time
upon exercise of this Warrant. 


               (c)
Other Definitional Provisions. 


                    (i)
Except as otherwise specified herein, all references herein (A) to the Company
shall be deemed to include the Company’s successors and (B) to any applicable
law defined or referred to herein shall be deemed references to such applicable
law as the name may have been or may be amended or supplemented from time to
time.


                    (ii)
When used in this Warrant, the words “herein”, “hereof”,
and “hereunder” and
words of similar import, shall refer to this Warrant as a whole and not to any
provision of this Warrant, and the words “Section”, “Schedule”, and
“Exhibit” shall refer to Sections of, and
Schedules and Exhibits to, this Warrant unless otherwise specified. 


                    (iii)
Whenever the context so requires, the neuter gender includes the masculine or
feminine, and the singular number includes the plural, and vice versa. 


          Section
2. Exercise of Warrant. Subject to the terms and conditions hereof, this
Warrant may be exercised by the holder hereof then registered on the books of
the Company, pro rata as hereinafter provided, at any time on any Business Day
on or after the opening of business on such Business Day, commencing with the
first day after the date hereof, and prior to 1159 P.M. Eastern Time on the
Expiration Date, by (i) delivery of a written notice, in the form of the
subscription notice attached as Exhibit A hereto (this “Exercise Notice”),
of such holder’s election to exercise this Warrant, which notice shall specify
the number of Warrant Shares to be purchased, (ii) payment to the Company of an
amount equal to the Warrant Exercise Price(s) applicable to the Warrant Shares
being purchased, multiplied by the number of Warrant Shares (at the applicable
Warrant Exercise Price) as to which this Warrant is being exercised (plus any
applicable issue or transfer taxes) (this “Aggreeate Exercise Price”):
(a) in cash or wire transfer of immediately available funds, (b) by delivery of
a written notice of Net Exercise, as set forth in the following paragraph and
(iii) the surrender of this Warrant (or an indemnification undertaking with
respect to this Warrant in the case of its loss, theft or destruction) to a
common carrier for overnight delivery to the Company as soon as practicable
following such date. In the event of any exercise of the rights represented by
this Warrant in compliance with this Section 2(a), the
Company shall on the fifth (5th) Business Day following the date of receipt of
the Exercise Notice, the Aggregate Exercise Price and this Warrant (or an
indemnification undertaking with respect to this Warrant in the case of its
loss, theft or destruction) and the receipt of the representations of the
holder specified in Section 6 hereof, if requested by the Company (the “Exercise
Delivery Documents”), and if the Common Stock is DTC eligible 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 The Depository
Trust Company; provided, however, if the holder who submitted the Exercise
Notice requested physical delivery of any or all of the Warrant Shares, or, if the common Stock is not DTC eligible then the Company shall, on or before the
fifth (5th) Business Day following receipt of the Exercise Delivery Documents,
issue and surrender to a common carrier for overnight delivery to the address
specified in the Exercise Notice, a certificate, registered in the name of the
holder, for the number of shares of Common Stock to which the holder shall be
entitled pursuant to such  


4






request. Upon delivery of
the Exercise Notice and Aggregate Exercise Price referred to in clause (ii)
above the holder of this Warrant shall be deemed for all corporate purposes to
have become the holder of record of the Warrant Shares with respect to which
this Warrant has been exercised. In the case of a dispute as to the
determination of the Warrant Exercise Price, the Closing Sale Price or the
arithmetic calculation of the Warrant Shares, the Company shall promptly issue
to the holder the number of Warrant Shares that is not disputed and shall
submit the disputed determinations or arithmetic calculations to the holder via
facsimile within one (1) Business Day of receipt of the holder’s Exercise
Notice. If the holder and the Company are unable to agree upon the
determination of the Warrant Exercise Price or arithmetic calculation of the
Warrant Shares within one (1) day of such disputed determination or arithmetic calculation being
submitted to the holder, then the Company shall immediately submit via
facsimile (i) the disputed determination of the Warrant Exercise Price or the
Closing Bid Price to an independent, reputable investment banking firm or (ii)
the disputed arithmetic calculation of the Warrant Shares to its independent,
outside accountant. The Company shall cause the investment banking firm or the
accountant, as the case may be, to perform the determinations or calculations
and notify the Company and the holder of the results no later than forty-eight
(48) hours from the time it receives the disputed determinations or
calculations. Such investment banking firm’s or accountant’s determination or
calculation, as the case may be, shall be deemed conclusive absent manifest
error. 


          If
the Company is in Default under any of the Transaction Documents or, following
the Required Effectiveness Date (as defined herein) an Exercise Notice is
delivered at a time when a registration statement permitting the Holder to
resell the Warrant Shares is not then effective or the prospectus forming a
part thereof is not then available to the Holder for the resale of the Warrant
Shares, then the Holder may notify the Company in an Exercise Notice of its
election to utilize cashless exercise, in which event the Company shall issue
to the Holder the number of Warrant Shares determined as follows: 


	
 

	
 


	
x=

	
     Y(A-B)


	


	



	


	
         A


	
 

	
 


	
Where X =

	
the number of shares of
  Common Stock to be issued to the holder


	
 

	
 


	
Y =

	
the number of shares of
  Common Stock purchasable under this Warrant or, if only a portion of this
  Warrant is being exercised, the portion of this Warrant being exercised (at
  the date of such calculation)


	
 

	
 


	
A =

	
the Fair Market Value of
  one share of the Company’s Common Stock  (at the date of such calculation)


	
 

	
 


	
B =

	
the Exercise Price per
  share (as adjusted to the date of such calculation).





5






               (a)
Unless the rights
represented by this Warrant shall have expired or shall have been fully
exercised, the Company shall, as soon as practicable and in no event later than
five (5) Business Days after any exercise and at its own expense, issue a new
Warrant identical in all respects to this Warrant exercised except it shall
represent rights to purchase the number of Warrant Shares purchasable
immediately prior to such exercise under this Warrant exercised, less the
number of Warrant Shares with respect to which such Warrant is exercised. 


               (b)
No fractional Warrant Shares are to be issued upon any pro rata exercise of
this Warrant, but rather the number of Warrant Shares issued upon such exercise
of this Warrant shall be rounded up or down to the nearest whole number. 


               (c)
If the Company or its Transfer Agent shall fail for any reason or for no reason
to issue to the holder within ten (10) days of receipt of the Exercise
Delivery Documents, a
certificate for the number of Warrant Shares to which the holder is entitled or
to credit the holder’s balance account with The Depository Trust Company for
such number of Warrant Shares to which the holder is entitled upon the holder’s
exercise of this Warrant, the Company shall, in addition to any other remedies
under this Warrant or otherwise available to such holder, pay as additional
damages in cash to such holder on each day the issuance of such certificate for
Warrant Shares is not timely effected an amount equal to 0.025% of the product
of (A) the sum of the number of Warrant Shares not issued to the holder on a
timely basis and to which the holder is entitled, and (B) the Closing Bid Price
of the Common Stock for the trading day immediately preceding the last possible
date which the Company could have issued such Common Stock to the holder
without violating this Section 2. 


               (d)
If within ten (10) days after the Company’s receipt of the Exercise Delivery
Documents, the Company fails to deliver a new Warrant to the holder for the
number of Warrant Shares to which such holder is entitled pursuant to Section 2
hereof, then, in addition to any other available remedies under this Warrant,
or otherwise available to such holder, the Company shall pay as additional
damages in cash to such holder on each day after such tenth (10th) day that such
delivery of such new Warrant is not timely effected in an amount equal to 0.25%
of the product of (A) the number of Warrant Shares represented by the portion
of this Warrant which is not being exercised and (B) the Closing Bid Price of
the Common Stock for the trading day immediately preceding the last possible
date which the Company could have issued such Warrant to the holder without
violating this Section 2.  


          Section
3. Covenants as to Common Stock. The Company hereby covenants and agrees
as follows: 


               (a)
This Warrant is, and any Warrants issued in substitution for or replacement of this
Warrant will upon issuance be, duly authorized and validly issued. 


               (b)
All Warrant Shares which may be issued upon the exercise of the rights
represented by this Warrant will, upon issuance, be validly issued, fully paid
and nonassessable and free from all taxes, liens and charges with respect to
the issue thereof. 


               (c)
If at any time after the date hereof the Company shall file a registration
statement, the Company shall include the Warrant Shares issuable to the holder,
pursuant to the terms of this Warrant and shall maintain, so long as any other
shares of Common Stock shall be so listed, such listing of all Warrant Shares
from time to time issuable upon the exercise of this Warrant; and the Company
shall so list on each national securities exchange or automated quotation
system, as the case may be, and shall maintain such listing of, any other 


6






shares of capital stock of
the Company issuable upon the exercise of this Warrant if and so long as any
shares of the same class shall be listed on such national securities exchange
or automated quotation system. 


               (d)
The Company will not, by amendment of its Articles of Incorporation or through
any reorganization, transfer of assets, consolidation, merger, dissolution,
issue or sale of securities, or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms to be observed or
performed by it hereunder, but will at all times in good faith assist in the
carrying out of all the provisions of this Warrant and in the taking of all
such action as may reasonably be requested by the holder of this Warrant in
order to protect the exercise privilege of the holder of this Warrant against
dilution or other impairment, consistent with the tenor and purpose of this
Warrant. The Company will not increase the par value of any shares of Common
Stock receivable upon the exercise of this Warrant above the Warrant Exercise
Price then in effect, and (ii) will take all such actions as may be necessary
or appropriate in order that the Company may validly and legally issue fully
paid and nonassessabie shares of Common Stock upon the exercise of this
Warrant. 


               (e)
This Warrant will be binding upon any entity succeeding to the Company by
merger, consolidation or acquisition of all or substantially all of the
Company’s assets. 


          Section 4.
Taxes. The Company shall pay any and all taxes,
except any applicable withholding, which may be payable with respect to the
issuance and delivery of Warrant Shares upon exercise of this Warrant. 


          Section
5. Warrant Holder Not Deemed a
Stockholder. Except as otherwise specifically provided herein, no holder, as
such, of this Warrant shall be entitled to vote or receive dividends or be
deemed the holder of shares of capital stock of the Company for any purpose,
nor shall anything contained in this Warrant be construed to confer upon the
holder hereof, as such, any of the rights of a stockholder of the Company or
any right to vote, give or withhold consent to any corporate action (whether
any reorganization, issue of stock, reclassification of stock, consolidation,
merger, conveyance or otherwise), receive notice of meetings, receive dividends
or subscription rights, or otherwise, prior to the issuance to the holder of
this Warrant of the Warrant Shares which he or she is then entitled to receive
upon the due exercise of this Warrant. In addition, nothing
contained in this Warrant shall be construed as imposing any liabilities on
such holder to purchase any securities (upon exercise of this Warrant or
otherwise) or as a stockholder of the Company, whether such liabilities are
asserted by the Company or by creditors of the Company. Notwithstanding this
Section 5, the Company will
provide the holder of this Warrant with copies of the same notices and other
information given to the stockholders of the Company generally,
contemporaneously with the giving thereof to the stockholders.  


          Section
6. Representations of Holder. The holder of this Warrant, by the
acceptance hereof, represents that it is acquiring this Warrant and the Warrant
Shares for its own account for investment only and not with a view towards, or
for resale in connection with, the public sale or
distribution of this Warrant or the Warrant Shares, except pursuant to sales
registered or exempted under the Securities Act; provided, however, that by
making the 


7






representations herein, the
holder does not agree to hold this Warrant or any of the Warrant Shares for any
minimum or other specific term and reserves the right to dispose of this
Warrant and the Warrant Shares at any time in accordance with or pursuant to a
registration statement or an exemption under the Securities Act. The holder
of this Warrant further represents, by acceptance hereof, that, as of this date,
such holder is an “accredited investor” as such term is defined in Rule
50l(a)(l) of Regulation D promulgated by the Securities and Exchange Commission
under the Securities Act (an “Accredited investor”). Upon exercise of this
Warrant the holder shall, if requested by the Company, confirm in writing, in a
form satisfactory to the Company, that the Warrant Shares so purchased are
being acquired solely for the holder’s own account and not as a nominee for any
other party, for investment, and not with a view toward distribution or
resale and that such holder is an Accredited Investor. If such holder cannot
make such representations because they would be factually incorrect, it shall
be a condition to such holder’s exercise of this Warrant that the Company
receive such other representations as the Company considers reasonably
necessary to assure the Company that the issuance of its securities upon
exercise of this Warrant shall not violate any United States or state
securities laws.  


          Section
7. Ownership and Transfer. 


               (a)
The Company shall maintain at its principal executive offices (or such other
office or agency of the Company as it may designate by notice to the holder
hereof), a register for this Warrant, in which the Company shall record the
name and address of the person in whose name this Warrant has been issued, as
well as the name and address of each transferee. The Company may treat the
person in whose name any Warrant is registered on the register as the owner
and holder thereof for all purposes, notwithstanding any notice to the
contrary, but in all events recognizing any transfers made in accordance with
the terms of this Warrant. 


          Section
8. Adjustment of Warrant Exercise Price and Number of Shares. The
Warrant Exercise Price and the number of shares of Common Stock issuable upon
exercise of this Warrant shall be adjusted from time to time as follows: 


               (a)
Adjustment of Warrant Exercise Price and Number of Shares upon Issuance of
Common Stock. If and whenever on or after the Issuance Date of this Warrant,
the Company issues or sells, or is deemed to have issued or sold, any shares of
Common Stock (other than (i) Excluded Securities and (ii) shares of Common
Stock which are issued or deemed to have been issued by the Company in
connection with an Approved Stock Plan or upon exercise or conversion of this
Other Securities) for a consideration per share less than a price (the
“Applicable Price”) equal to the Warrant Exercise Price in effect immediately
prior to such issuance or sale, then immediately after such issue or sale the
Warrant Exercise Price then in effect shall be reduced to an amount equal to
eighty-five percent (85%) of such consideration per share. Upon each such
adjustment of the Warrant Exercise Price hereunder, the number of Warrant
Shares issuable upon exercise of this Warrant shall be adjusted to the number
of shares determined by multiplying the Warrant Exercise Price in effect immediately
prior to such adjustment by the number of Warrant Shares issuable upon exercise
of this Warrant immediately prior to such adjustment and dividing the product
thereof by the Warrant Exercise Price resulting from such adjustment.  


8






               (b)
Effect on Warrant Exercise Price of Certain Events. For purposes of determining
the adjusted Warrant Exercise Price under Section 8(a) above, the following
shall be applicable:  


                    (i)
Issuance of Options. If after the date hereof, the Company in any manner
grants any Options (other than Excluded Issuances) 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 of any convertible securities issuable
upon exercise of any 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 8(b)(i), the lowest price
per share for which one share of Common Stock is issuable upon exercise of such
Options or upon conversion or exchange of such Convertible Securities 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 granting or sale of the Option, upon exercise of the Option or upon
conversion or exchange of any convertible security issuable upon exercise of
such Option. No further adjustment of the Warrant Exercise Price shall be made
upon the actual issuance of such Conmon 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 of such convertible securities. 


                    (ii)
Issuance of Convertible Securities. If the Company in any manner issues or sells any convertible securities
(other than Excluded Issuances) and the lowest price per share for which one
share of Common Stock is issuable upon the conversion or exchange 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 8(b)(ii), the lowest price per share
for which one share of Common Stock is issuable upon such conversion or
exchange shall be equal to the sum of the lowest amounts of consideration (if
any) received or receivable by the Company with respect to one share of Common
Stock upon the issuance or sale of the convertible security and upon conversion
or exchange of such convertible security. No further adjustment of the Warrant
Exercise Price shall be made upon the actual issuance of such Common Stock upon
conversion or exchange 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 Warrant Exercise Price had been or are to be made pursuant to
other provisions of this Section 8(b), no further adjustment of the Warrant
Exercise Price shall be  made by reason of such issue or sale. 


                    (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 or exchange of any convertible securities, or the rate at
which any convertible securities are convertible into or exchangeable for
Common Stock changes at any time, the Warrant Exercise Price in effect at the
time of such change shall be adjusted to the Warrant Exercise 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 and the number of Warrant Shares issuable upon exercise of this Warrant shall
be correspondingly readjusted. For


9






purposes of this Section
8(b)(iii), if the terms of any Option or convertible security that was
outstanding as of the Issuance Date of this Warrant 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 pursuant to this Section 8(b) shall be made
if such adjustment would result in an increase of the Warrant Exercise Price
then in effect. 


               (c)
Effect on Warrant Exercise Price of Certain Events. For purposes of
determining the adjusted Warrant Exercise Price under Sections 8(a) and 8(b),
this following shall be applicable: 



                    (i)
Calculation of Consideration Received. 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 therefore will be deemed to be the net
amount received by the Company therefore. If any Common Stock, Options or
convertible securities are issued or sold for a consideration other than cash,
the amount of such consideration received by the Company will be the fair
value of such consideration, except where such consideration consists of
marketable securities, in which case the amount of consideration received by
the Company will be the market price of such securities on the date of receipt
of such securities. 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
therefore 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 holders of Warrants representing at least
two-thirds (b) of the Warrant Shares issuable upon exercise of the Warrants
then outstanding. 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
holders of Warrants representing at least two-thirds (b) of the Warrant Shares
issuable upon exercise of the Warrants then outstanding. The determination of
such appraiser shall be final and binding upon all parties and the fees and
expenses of such appraiser shall be borne jointly by the Company and the
holders of Warrants.  


                    (ii)
Integrated Transactions. 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 a consideration of $.01. 


                    (iii)
Treasury Shares. The number of shares of Common Stock outstanding at any
given time does not include shares owned or held by or for the account of the
Company, and the disposition of any shares so owned or held will be considered
an issue or sale of Common Stock. 


                    (iv) Record Date.
If the Company takes a record of the holders of Common Stock
for the purpose of entitling them (I) to receive a dividend or other
distribution 


10






payable in Common Stock,
Options or in convertible securities or (2) 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 shares of 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. 


               (d)
Adjustment of Warrant Exercise Price upon Subdivision or Combination of
Common Stock. If the Company at any time after the date of issuance of this
Warrant subdivides (by any stock split, stock dividend, recapitalization or
otherwise) one or more classes of its outstanding shares of Common Stock into a
greater number of shares, any Warrant Exercise Price in effect immediately
prior to such subdivision will be proportionately reduced and the number of
shares of Common Stock obtainable upon exercise of this Warrant will be
proportionately increased. If the Company at any time after the date of
issuance of this Warrant combines (by combination, reverse stock split or
otherwise) one or more classes of its outstanding shares of Common Stock into a
smaller number of shares, any Warrant Exercise Price in effect immediately
prior to such combination will be proportionately increased and the number of
Warrant Shares issuable upon exercise of this Warrant will be proportionately
decreased. Any adjustment under this Section 8(d) shall become effective at the
close of business on the date the subdivision or combination becomes effective.



               (e)
Distribution of Assets. If the Company shall
declare or make any dividend, or other distribution, of its assets (or rights
to acquire its assets) to holders of Common Stock, by way of return of capital
or otherwise (including, without limitation, any distribution of cash, stock or
other securities, property or options by way of a dividend, spin off,
reclassification, corporate rearrangement or other similar transaction) (a
“Distribution”), at any time after the issuance of this Warrant, then, in each
such case:  


                    (i)
any Warrant Exercise Price in effect immediately prior to the close of business
on the record date fixed for the determination of holders of Common Stock
entitled to receive the Distribution shall be reduced, effective as of the
close of business on such record date, to a price determined by multiplying
such Warrant Exercise Price by a fraction of which (A) the numerator shall be the Closing Sale Price of the Common Stock on
the trading day immediately preceding such record date minus the value of the
Distribution (as determined in good faith by the Company’s Board of Directors)
applicable to one share of common Stock, and (B) the denominator shall be the
Closing Sale Price of the Common Stock on the trading day immediately preceding
such record date; and 


                    (ii)
either (A) the number of Warrant Shares obtainable upon exercise of this
Warrant shall be increased to a number of shares equal to the number of shares
of Common Stock obtainable immediately prior to the close of business on the
record date fixed for the determination of holders of Common Stock entitled to
receive the Distribution multiplied by the reciprocal of the fraction set forth
in the immediately preceding clause (i), or (B) in the event
that the Distribution is of common stock of a company whose common stock is
traded on a national securities exchange or a national automated quotation
system, then the holder of this Warrant shall receive an additional warrant to
purchase Common Stock, the terms of which shall be identical to those of this
Warrant, except that such warrant shall be exercisable into the amount of the
assets that would have been payable to the holder of this Warrant pursuant to
the 


11






Distribution had the holder
exercised this Warrant immediately prior to such record date and with an
exercise price equal to the amount by which the exercise price of this Warrant
was decreased with respect to the Distribution pursuant to the terms of the
immediately preceding clause (i). 


               (f) Certain
Events. If
any event occurs of the type contemplated by the provisions of this Section 8
but not expressly provided for by such provisions (including, without
limitation, the granting of stock appreciation rights, phantom stock rights or
other rights with equity features), then the Company’s Board of Directors will make an appropriate adjustment in the Warrant
Exercise
Price and the number of shares of Common Stock obtainable upon exercise of this
Warrant so as to protect the rights of the holders of the Warrants; provided,
except as set forth in section 8(d), that no such adjustment pursuant to this
Section 8(f) will increase the Warrant Exercise Price or decrease the number of
shares of Common Stock obtainable as otherwise determined pursuant to this
Section 8.  


               (g)
Notices. 


                    (i)
Immediately upon any adjustment of the Warrant Exercise Price, the Company will
give written notice thereof to the holder of this Warrant, setting forth in
reasonable detail, and certifying, the calculation of such adjustment. 


                    (ii)
The Company will give written notice to the holder of this Warrant at least ten
(10) days prior to the date on which this Company closes its books or takes a
record (A) with respect to any dividend or distribution
upon the Common Stock, (B) with respect to any pro rata subscription offer to
holders of Common Stock or (C) for determining rights to vote with respect to
any Organic Change (as defined below), dissolution or liquidation, provided
that such information shall be made known to the public prior to or in
conjunction with such notice being provided to such holder. 


                    (iii)
The Company will also give written notice to the holder of this Warrant at
least ten (10) days prior to the date on which any Organic Change, dissolution
or liquidation will take place, provided that such information shall have been
made known to the public. 


          Section
9. Purchase Rights; Reorganization,
Reclassification, Consolidation, Merger or sale.


               (a)
In addition to any adjustments pursuant to Section 8 above, 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 of this Warrant will be entitled to
acquire, upon the terms applicable to such Purchase Rights, the aggregate
Purchase Rights which such holder could have acquired if such holder had held
the number of shares of Common Stock acquirable upon complete exercise of this
Warrant 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. 


12






               (b)
Any recapitalization, reorganization, reclassification, consolidation, merger,
sale of all or substantially all of the Company’s assets to another Person or
other transaction in each case which is effected in such a way that holders of
Common Stock are entitled to receive (either directly or upon subsequent liquidation)
stock, securities or assets with respect to or in exchange for Common Stock is
referred to herein as an “Organic Change” Prior to the consummation of any
Organic Change following which the Company is not surviving entity, the Company
will secure from the Person purchasing such assets or the successor resulting
from such Organic Change (in each case, the “Acquiring Entity”) a written
agreement (in form and substance satisfactory to the holders of Warrants
representing at least two-thirds of the Warrant Shares issuable upon exercise
of the Warrants then outstanding) to deliver to each holder of Warrants in
exchange for such Warrants, a security of the Acquiring Entity evidenced by a
written instrument substantially similar in form and substance to this Warrant
and satisfactory to the holders of the Warrants (including an adjusted warrant
exercise price equal to the value for the Common Stock reflected by the terms
of such consolidation, merger or sale, and exercisable for a corresponding
number of shares of Common Stock acquirable and receivable upon exercise of the
Warrants without regard to any limitations on exercise, if the value so
reflected is less than any Applicable Warrant Exercise Price immediately prior
to such consolidation, merger or sale). Prior to the consummation of any other
Organic Change, the Company shall make appropriate provision (in form and
substance satisfactory to the holders of Warrants representing a majority of
the Warrant Shares issuable upon exercise of the Warrants then outstanding) to
insure that each of the holders of the Warrants will thereafter have the right
to acquire and receive in lieu of or in addition to (as the case may be) the
Warrant Shares immediately theretofore issuable and receivable upon the
exercise of such holder’s Warrants (without regard to any limitations on
exercise), such shares of stock, securities or assets that would have been
issued or payable in such Organic Change with respect to or in exchange for the
number of Warrant Shares which would have been issuable and receivable upon the
exercise of such holder’s Warrant as of the date of such Organic Change
(without taking into account any limitations or restrictions on the
exercisability of this Warrant).  


          Section
10. Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant is
lost, stolen, mutilated or destroyed, the Company shall promptly, on receipt of
an indemnification undertaking (or, in the case of a mutilated Warrant, the Warrant), issue a new Warrant of like
denomination and tenor as this Warrant so lost, stolen, mutilated or destroyed.



          Section
11. Notice. Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this
Warrant must be in writing and will be deemed to have been delivered: (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by facsimile
(provided confirmation of receipt is received by the sending party transmission
is mechanically or electronically generated and kept on file by the sending
party); or (iii) one Business 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: 


13






	
 

	
 


	
If to Trafalgar:

	
Trafalgar Capital
  Specialized Investment Fund


	
 

	
8-10 Rue Mathias Hardt


	
 

	
BP 3023


	
 

	
L-1030 Luxembourg


	
 

	
Attention: Andrew Garai,
  Chairman of the Board of


	
 

	
                 Trafalgar Capital Sarl,
  General Partner


	
 

	
Facsimile: 011-44-207-405-0161 and


	
 

	
                 001-786-323-1651


	
 

	
 


	
 

	
 


	
With Copy to:

	
James G. Dodrill II, P.A.


	
 

	
5800 Hamilton Way


	
 

	
Boca Raton, FL 33496


	
 

	
Attention: James Dodrill,
  Esq.


	
 

	
Telephone: (561) 862-0529


	
 

	
Facsimile: (561) 892-7787


	
 

	
 


	
If to the Company, to:

	
National Automation
  Services, Inc.


	
 

	
2053 Pabco


	
 

	
Henderson, NV 89011


	
 

	
Attention: Mr. Bob Chance,
  President


	
 

	
Telephone: (702) 642-7720


	
 

	
Facsimile: (702) 564-541 1


	
 

	
 


	
With a copy to:

	
Richardson & Patel, LLP


	
 

	
10900 Wilshire Boulevard,
  Suite 500


	
 

	
Los Angeles, California
  90024


	
 

	
Attention: Peter Hogan,
  Esq.


	
 

	
Telephone: 310-208-1182


	
 

	
Facsimile: 310-208-1154





If to a holder of this
Warrant, to it at the address and facsimile number set forth on Exhibit C hereto, with copies to such holder’s representatives
as set forth on
Exhibit C, or at such other address and facsimile as shall be delivered to the
Company upon the issuance or transfer of this Warrant. Each party shall provide
five days’ prior written notice to the other patty of any change in address or
facsimile number. Written confirmation of receipt (A) given by the recipient of
such notice, consent, facsimile, waiver or other communication, or (B) 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.  


          Section
12. Date. The date of this Warrant is set forth on page 1 hereof. This Warrant, in all events, shall be
wholly void and of no effect after the close of business on the Expiration
Date, except that notwithstanding any other provisions hereof, the provisions
of Section 8(b) shall continue in full force and effect after such date as to
any Warrant Shares or other securities issued upon the exercise of this
Warrant. 


14






          Section
13. Amendment and Waiver. Except as otherwise provided herein, the
provisions of the Warrants may be amended and the Company may take any action
herein prohibited, or omit to perform any act herein required to be performed
by it, only if the Company has obtained the written consent of the holders of
Warrants representing at least two-thirds of the Warrant Shares issuable upon
exercise of the Warrants then outstanding; provided that, except for Section
8(d), no such action may increase the warrant Exercise Price or decrease the
number of shares or class of stock obtainable upon exercise of any Warrant
without the written consent of the holder of such Warrant. 


          Section
14. Descriptive Headings; Governing Law. The descriptive headings of the
several sections and paragraphs of this Warrant are inserted for convenience
only and do not constitute a part of this Warrant. The corporate laws of the
State of Florida shall govern all issues concerning the relative rights of the
Company and its stockholders. All other questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by
the internal laws of the State of Florida without giving effect to any choice
of law or conflict of law provision or rule (whether of the State of Florida or
any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of Florida Each party hereby irrevocably
submits to the exclusive jurisdiction of the state courts sitting in Broward
County, Florida and the United States District Court for the Southern District
of Florida for the adjudication of any dispute hereunder or in connection
herewith or therewith, or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or
proceeding is brought in an inconvenient forum or that the venue of such suit,
action or proceeding is improper. Each party hereby irrevocably waives personal
service of process and consents to
process being served in any such
suit, action or proceeding by mailing a copy thereof to such patty at the
address for such notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. 


          Section
15. Waiver of Jury Trial. AS A MATERIAL INDUCEMENT FOR EACH PARTY HERETO
TO ENTER INTO THIS WARRANT, THE PARTIES HERETO HEREBY WAIVE ANY RIGHT TO TRIAL
BY JURY IN ANY LEGAL PROCEEDING RELATED IN ANY WAY TO THIS WARRANT AND/OR ANY
AND ALL OF THE OTHER DOCUMENTS ASSOCIATED WITH THIS TRANSACTION. 


          Section
16. Registration Right. The Company hereby grants the holder of this Warrant
one “demand registration right” through which the holder has the right to
demand that the Company register all shares of Common Stock into which this
Warrant or any other Warrant held by the holder is exercisable (the
“Registration Right”). Upon the holder of this Warrant delivering written
notice of its desire to exercise such Registration Right, the Company shall
file with the Securities and Exchange Commission (“SEC”) a registration
statement on Form S-l or SB-2 (or, if the Company is then eligible, on Form
S-3) for the registration for the resale by all holders of this Warrant all
shares of Common Stock into which this Warrant or any other Warrant held by the
holder is exercisable. This Company shall use its best efforts to: (i) file
such registration statement within thirty (30) days of its receipt of the
written notice from holder, (ii) 


15






have such registration statement declared
effective within ninety (90) days of its receipt of such written notice (the “Required Effectivenesss Data”) and
(iii) to insure that the Registration
Statement and any subsequent Registration
Statement remains in effect untill the earlier of: (A) the date on which all of the shares underlying this
Warrant or any Warrant held by the holder have been sold and (b) the date on
which all shares underlying this Warrant or any Warrant held by the holder may be sold in any ninety (90) day
period under Rule 144 as determined by councel to the Company pursuant to a written opinion letter
to such effect delivered to the holder and based on such representation
as may be reasonably requested.


          Prior to
the filing of the Registration Statement with the SEC, the Company shall
furnish a copy to
the Registration Statement to the holder and James G. Dodrill II, P.A. for
their review and comment. The Investors
and James G. Dodrill II, P.A. shall furnish comments on the Initial Registration Statement to the Company by the later of;
(a) seventy-two (72) hours of the receipt thereof from the Company and (b) the close of the second business day following
receipt thereof from the Company.


          IN
WITINESS WHEREOF,
the company has caused this Warrant to be signed as of the date first set
forth above.


	
 

	
 

	
 

	
 


	
 

	
 

	
NATIONAL AUTOMATION SERVICES, INC.


	
 


	
 

	
 

	
By:  

	



	
 

	
 

	
 

	



	
 

	
 

	
Name:  Bab Chance


	
 

	
 

	
Title:    CEO





16






EXHIBIT A TO WARRANT


EXERCISE NOTICE


TO BE EXECUTED
BY THE REGISTERED HOLDER TO EXERCISE THIS WARRANT


          The
undersigned holder hereby exercises the right to purchase
_________________________of the shares of Common Stock (“Warrant Shares”) of
National Automation Services, Inc. a _________________corporation (the “Company”), evidenced by the attached Warrant (the
“Warrant”). Capitalized terms used herein and not
otherwise defined shall have the respective meanings set forth in the Warrant.  


          1.
Form of Warrant Exercise
Price. The Holder intends that payment of the Warrant Exercise Price shall be
made as a “Cash Exercise” with respect to _______________________Warrant
Shares.  


          2.
Payment of Warrant
Exercise Price. The holder shall pay the sum of $ ____________________to the Company in accordance with the terms
of the Warrant.  


          3.
Delivery of Warrant
Shares. The Company shall deliver to the holder ___________________ Warrant
Shares in accordance with the terms of the Warrant.  


Date: ________________ _______


Name of Registered Holder 


	
 

	
 


	
By:

	
 


	
 

	



	
Name:

	
 


	
 

	



	
Title:

	
 


	
 

	






A-1






EXHIBIT B TO WARRANT


FORM OF WARRANT POWER


FOR VALUE RECEIVED, the undersigned does hereby assign and
transfer to,___________________ federal identification No. ____________________, a warrant to purchase ____________e capital stock of
National
Automation Services, Inc. a corporation, represented by warrant certificate
no. _______, standing _____________in the name of the undersigned on the books of
said corporation. The undersigned does hereby irrevocably constitute and
appoint ____________, attorney to
transfer the warrants of said corporation, with full power of substitution in
the premises. 


	
 

	
 

	
 

	
 


	
Dated:

	
 

	
 

	
 


	


	
 

	
 

	



	
 

	
 

	
By:

	
 


	
 

	
 

	
 

	



	
 

	
 

	
Name:

	
 


	
 

	
 

	
 

	



	
 

	
 

	
Title:

	
 


	
 

	
 

	
 

	



	
 

	
 

	
 

	
 





B-1