THIS SECURED DEBENTURE (THE “SECURITIES”) HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED SOLELY FOR INVESTMENT
PURPOSES AND NOT WITH A VIEW TOWARD RESALE 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 GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT
REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS.


SECURED
REDEEMABLE DEBENTURE


NATIONAL AUTOMATION SERVICES, INC.


March 26, 2008


	
 

	
 


	
No. NAS - 1

	
US$1,500,000





          This
Secured Redeemable Debenture (the “Debenture”) is issued on March 26,
2008 (the “Closing Date”) by National Automation Services, Inc. a
Colorado corporation (the “Company”), to Trafalgar Capital Specialized
Investment Fund, Luxembourg (together with its permitted successors and
assigns, the “Holder”) pursuant to exemptions from registration under
the Securities Act of 1933, as amended.


ARTICLE I.


          Section
1.01 Principal and Interest.
For value received, the Company hereby promises to pay to the order of the
Holder on September 26, 2010 in lawful money of the United States of America
and in immediately available funds the principal sum of One Million Five
Hundred Thousand U.S. Dollars (US$1,500,000) together
with interest on the unpaid principal of this Debenture at the rate of: (a) ten
percent (10%) per annum compounded monthly from the date hereof until repaid.
Interest shall be computed on the basis of a 360-day year and the actual days
elapsed and the Holder shall deduct the first two (2) interest payments at the
Closing (as defined in the Securities Purchase Agreement).


	
 

	
 


	
Section 1.02

	
[Reserved]


	
 

	
 


	
Section 1.03

	
[Reserved]


	
 

	
 


	
Section 1.04

	
[Reserved]










          Section
1.05 Mandatory Redemption.
The Company shall begin redeeming on
this Debenture monthly beginning on the four (4) month anniversary following
the First Closing by making equal payments over the remaining twenty six
(26) months by the Company making monthly
principal and interest payments at a fifteen percent (15%) redemption premium
on the principal redeemed each month. The Company shall have the option to
prepay the outstanding balance at any time with the fifteen percent (15%)
redemption premium.


          Section
1.06 Interest Payments. Holder
shall deduct the first two (2) interest payments at the First Closing and shall
deduct the next two (2) interest payments due on the date of the subsequent
Closings from the subsequent Closing on the then outstanding balance. At the
time such interest is payable, the Holder, in its sole discretion, may elect to
receive the interest in cash (via wire transfer or certified funds) or in the
form of Common Stock. In the event of default, as described in Article III
Section 3.01 hereunder, the Holder may elect that the interest be paid in cash
(via wire transfer or certified funds) or in the form of Common Stock. If paid
in the form of Common Stock, the amount of stock to be issued will be
calculated as follows: the value of the stock shall be the Closing Bid Price on
the date the interest payment is due. A number of shares of Common Stock with a
value equal to the amount of interest due shall be issued. No fractional shares
will be issued; therefore, in the event that the value of the Common Stock per
share does not equal the total interest due, the Company will pay the balance in
cash.


          Section
1.07 Paying Agent and Registrar.
Initially, the Company will act as paying agent and registrar. The
Company may change any paying agent, registrar, or Company-registrar by giving
the Holder not less than ten (10) business days’ written notice of its election
to do so, specifying the name, address, telephone number and facsimile number
of the paying agent or registrar. The Company may act in any such capacity.


          Section
1.08 Secured Nature of Debenture.
This Debenture is secured by all of the assets and property of the Company
and its subsdiaries as set forth on Exhibit A to the Security Agreement dated
the date hereof between the Company and the Holder (the “Security Agreement”).
As set forth in the Security Agreement, Holder’s security interest shall terminate upon the occurrence of an
Expiration Event as defined in the Security Agreement.


Section 1.08 Currency
Exchange Rate Protections. 


          (a)
“Closing Date Exchange Rate” means the Euro to US dollar spot exchange

rate as quoted in the London edition of the Financial Times on the Closing
Date.


          (b)
“Repayment Exchange Rate” means in relation to each date of a Conversion
Notice or date of a Redemption Notice, the Euro to US dollar spot exchange rate
as quoted by in the London edition of the Financial Times on such date.


          (c)
If on the date of any Conversion Notice or Redemption Notice, the
Repayment Exchange Rate is less than the Closing Date Exchange Rate then the
number of Shares to be issued shall be increased by the same percentage as
results from dividing the Closing Date Exchange Rate by the relevant Repayment
Exchange Rate. By way of example, if the number of Shares to be issued in
respect of a particular Conversion Notice or Redemption Notice would, but for
this Section 1.08, be 1,000 and if the Closing Date Exchange Rate is 1.80 and
the relevant Repayment Exchange Rate is 1.75, then 1,029 Shares will be issued
in relation to that Conversion Notice or Redemption Notice, as the case may be.


2






          (d)
If on the Repayment Date or any Interest Repayment Date, the Cash Payment Date
Exchange Rate, as defined below is less than the Closing Date Exchange Rate
then the amount of cash required to satisfy the amounts due at such time shall
be increased by the same percentage as results from dividing the Closing Date
Exchange Rate by the relevant Cash Payment Date Exchange Rate. “Cash Payment
Date Exchange Rate” means in relation to each Repayment Date or Interest
Repayment Date the Euro to US dollar spot exchange rate as quoted in the London
edition of the Financial Times on such date. By way of example, if the amount
of cash required to repay all amounts due on such date would, but for this
Section 1.08, be $1,000 and if the Closing Date Exchange Rate is 1.80 and the
relevant Repayment Date Exchange Rate is 1.75 then the amount of cash from the
Cash Payment required to repay all amounts due on such date will be $1,028.57.


ARTICLE
II.


          Section
2.01 Amendments and Waiver of
Default. The Debenture may not be amended without the written
consent of both the Holder and the Company. Notwithstanding the above, without
the consent of the Holder, the Debenture may be amended to cure any ambiguity,
defect or inconsistency, or to provide for assumption of the Company
obligations to the Holder.


ARTICLE
III.


          Section
3.01 Events of Default. An
Event of Default is defined as follows: (a) failure by the Company to pay
amounts due hereunder within fifteen (15) days of the date of maturity of this
Debenture, (b) after the Registration Statement required by the Warrants issued
to Holder by the Company has been declared effective, failure by the Company’s
transfer agent to issue freely tradeable Common Stock (including Common Stock
tradeable under Rule 144) to the Holder within five (5) days of the Company’s
receipt of a Notice of Exercise from Holder; (c) failure by the Company for ten
(10) days after notice to it to comply with any of its other agreements in the
Debenture; (d) events of bankruptcy or insolvency or (e) a breach by the
Company of its obligations under the Securities Purchase Agreement which is not
cured by the Company within ten (10) days after receipt of written notice
thereof. Upon the occurrence of an Event of Default, the Holder may, in its
sole discretion, accelerate full repayment of all debentures outstanding and
accrued interest thereon or may, notwithstanding any limitations contained in
this Debenture and/or the Securities Purchase Agreement dated the date hereof
between the Company and Trafalgar Capital Specialized Investment Fund,
Luxembourg (the “Securities Purchase Agreement”).


          Section
3.02 [Reserved]


3






ARTICLE
IV.


          Section
4.01  [Reserved]


ARTICLE V.


          Section
5.01 [Reserved]


          Section
5.02 Consent of Holder to Sell
Capital Stock, Incur Debt or Grant Security Interests. Except
for the Securities Purchase Agreement dated the date hereof between the Company
and Trafalgar Capital Specialized Investment Fund, Luxembourg, so long as any
of the principal of or interest on this Debenture remains unpaid, the Company
shall not, without the prior consent of the Holder, issue or sell (i) any
Common Stock or Preferred Stock without consideration or for a consideration
per share less than the bid price of the Common Stock determined immediately
prior to its issuance except for shares of Common Stock issued to Richardson
& Patel, LLP, (ii) issue or sell any Preferred Stock, warrant, option, right, contract, call, or other security or
instrument granting the holder thereof the right to acquire Common Stock
without consideration or for a consideration per share less than such Common
Stock’s bid price value determined immediately prior to its issuance, (iii)
enter into any security instrument granting the holder a security interest in
any of the assets of the Company, (iv) file any registration statement on Form
S-8 except for a registration statement for Richardson & Patel, LLP, or (v)
incur any additional debt without the Holder’s prior written consent with the
exception of equipment purchases and real estate acquisitions used in the
normal course of business.


ARTICLE VI.


          Section
6.01 Notice. Notices
regarding this Debenture shall be sent to the parties at the following
addresses, unless a party notifies the other parties, in writing, of a change
of address:


	
 

	
 


	
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) 564-5411


	
 

	
 


	
With a copy to:

	
Richardson & Patel, LLP

  10900 Wilshire Blvd., Suite 500 

  Los Angeles, CA 90024 

  Attention: Peter Hogan, Esq. 

  Telephone: (310)208-1182 

  Facsimile: (310)208-1154





4






	
If to the Holder:

	
Trafalgar Capital Specialized Investment Fund

  8-10 Rue Mathias Hardt 

  BP 3023

  L-1030 Luxembourg

  Attention:   Andrew Garai,
  Chairman of the Board of 

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

                    001-786-323-1651


	
 

	
 


	
With a 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





          Section
6.02 Governing Law. This
Debenture shall be deemed to be made under and shall be construed in accordance
with the laws of the State of Florida without giving effect to the principals
of conflict of laws thereof. Each of the parties consents to the jurisdiction
of the U.S. District Court sitting in the Southern District of the State of
Florida or the state courts of the State of Florida sitting in Broward County, Florida
in conniection with any dispute arising under this Debenture and hereby waives,
to the maximum extent permitted by law, any objection, including any objection
based on forum non conveniens to the bringing of any such proceeding in
such jurisdictions.


          Section
6.03 Severability. The
invalidity of any of the provisions of this Debenture shall not invalidate or
otherwise affect any of the other provisions of this Debenture, which shall
remain in full force and effect.


          Section
6.04 Entire Agreement and
Amendments. This Debenture represents the entire agreement
between the parties hereto with respect to the subject matter hereof and there
are no representations, warranties or commitments, except as set forth herein.
This Debenture may be amended only by an instrument in writing executed by the
parties hereto.


          Section
6.05 Counterparts. This
Debenture may be executed in multiple counterparts, each of which shall be an
original, but all of which shall be deemed to constitute on instrument.

5





IN
WITNESS WHEREOF, with the intent to be legally bound hereby, the Company as executed this
Debenture as of the date first written above,


	
 

	
 

	
 

	
 


	
 

	
NATIONAL
  AUTOMATION SERVICES, INC

	
 


	
 

	
By:

	


	
 


	
 

	
 

	


	
 


	
 

	
Name:

	
Bob Chance

	
 


	
 

	
Title:

	
President

	
 





6






EXHIBIT
“A”


[RESERVED]


A-1