SECURITY
AGREEMENT


          THIS
SECURITY AGREEMENT (the “Agreement”), is entered into and
made effective as of March 26, 2008, by and between NATIONAL AUTOMATION SERVICES, INC. (the “Company”), and the
BUYER(S) listed on Schedule I attached to
the Securities Purchase Agreement dated the date hereof (the “Secured Party”).


          WHEREAS, the Company shall issue and sell to the
Secured
Party, as provided in the Securities Purchase Agreement dated the date
hereof, and the Secured Party shall purchase up to Ten Million Dollars ($
10,000,000) of secured redeemable debentures (the “Redeemable Debentures”) in
the respective amounts set forth opposite each Buyer(s) name on Schedule I
attached to the Securities Purchase Agreement;


          WHEREAS,
to induce the Secured Party to enter into the transaction contemplated by the
Securities Purchase Agreement, the Secured Redeemable Debenture, the Warrant
and the Escrow Agreement (collectively referred to as the “Transaction
Documents”), the Company hereby grants to the
Secured Party a first priority security interest in and to the pledged property
identified on Exhibit “A” hereto (collectively referred to as the
“Pledged Property”) until the satisfaction of the Obligations, as defined
herein below. 


          NOW,
THEREFORE, in consideration of the premises and the mutual
covenants herein contained, and for other good and valuable consideration, the
adequacy and receipt of which are hereby acknowledged, the parties hereto
hereby agree as follows:


ARTICLE
1.

DEFINITIONS AND INTERPRETATIONS


          Section
1.1. Recitals. 


          The
above recitals are true and correct and are incorporated herein, in their
entirety, by this reference.


          Section
1.2. Interpretations. 


          Nothing
herein expressed or implied is intended or shall be construed to confer upon
any person other than the Secured Party any right, remedy or claim under or by
reason hereof.


          Section
1.3. Obligations Secured. 


          The
obligations secured hereby are any and all obligations of the Company to the
Secured Party now existing or hereinafter incurred to the Secured Party,
whether oral or written and whether arising before, on or after the date hereof
including, without limitation, those obligations of the Company to the Secured
Party under the Securities Purchase Agreement and the Secured Redeemable
Debenture and any other amounts now or hereafter owed to the Secured Party by
the Company thereunder or hereunder (collectively, the “Obligations”).






ARTICLE 2.
PLEDGED
PROPERTY, ADMINISTRATION OF COLLATERAL 

AND TERMINATION OF SECURITY INTEREST


          Section
2.1. Grant of Security Interest.


          1.  Company
hereby pledges to the Secured Party and creates in the Secured Party for its
benefit a security interest for such time until the Obligations are paid in
full, in and to all of in the property described in “Exhibit A” hereto,
whether now existing or hereafter from time to time acquired (collectively, the
“Pledged Property.”).


               (a)
Simultaneously with the execution and delivery of this Agreement, the Company
shall make, execute, acknowledge, file, record and deliver to the Secured Party
any documents reasonably requested by the Secured Party to perfect its security
interest in the Pledged Property. Simultaneously with the execution and
delivery of this Agreement, the Company shall make, execute, acknowledge and
deliver to the Secured Party such documents and instruments, including, without
limitation, financing statements, certificates, affidavits and forms as may, in
the Secured Party’s reasonable judgment, be necessary to effectuate, complete
or perfect, or to continue and preserve, the security interest of the Secured
Party in the Pledged Property, and the Secured Party shall hold such documents
and instruments as secured party, subject to the terms and conditions contained
herein.


          Section
2.2. Rights; Interests; Etc.


               (a)
So long as no Event of Default (as
hereinafter defined) shall have occurred
and be continuing:


                    (i)
the Company shall be entitled to exercise any and all rights pertaining to the
Pledged Property or any part thereof for any purpose not inconsistent with the
terms hereof; and


                    (ii)
the Company shall be entitled to receive and retain any and all payments paid
or made in respect of the Pledged Property.


               (b)
Upon the occurrence and during the continuance of an Event of Default:


                    (i)
All rights of the Company to exercise the rights which it would otherwise be
entitled to exercise pursuant to Section 2.2(a)(i) hereof and to receive
payments which it would otherwise be authorized to receive and retain pursuant
to Section 2.2(a)(ii) hereof shall be suspended, and all such rights shall
thereupon become vested in the Secured Party who shall thereupon have the sole
right to exercise such rights and to receive and hold as Pledged Property such
payments; provided, however, that
if the Secured Party shall become entitled and shall elect to exercise its
right to realize on the Pledged Property pursuant to Article 5 hereof, then all
cash sums received by the Secured Party, or held by Company for the benefit of
the Secured Party and paid over pursuant to Section 2.2(b)(ii) hereof, shall be
applied against any outstanding Obligations; and


2






                    (ii)
All interest, dividends, income and other payments and distributions which are
received by the Company contrary to the provisions of Section 2.2(b)(i) hereof
shall be received in trust for the benefit of the Secured Party, shall be
segregated from other property of the Company and shall be forthwith paid over
to the Secured Party; or


                    (iii)
The Secured Party in its sole discretion shall be authorized to sell any or all of the Pledged Property at public or
private sale in order to recoup all of the outstanding principal plus accrued
interest owed pursuant to the Redeemable Debenture as described herein


          (c)
Each of the following events, subject to the lapse of applicable cure periods,
shall constitute a default under this Agreement (each an “Event of Default”): 


                    (i)
any default, whether in whole or in part, shall occur in the payment to the
Secured Party of principal, interest or other item comprising the Obligations
as and when due or with respect to any other debt or obligation of the Company
to a party other than the Secured Party;


                    (ii)
any default, whether in whole or in part, shall occur in the due observance or
performance of any obligations or other covenants, terms or provisions to be
performed under this Agreement or the Transaction Documents;


                    (iii)
the Company shall: (1) make a general assignment for the benefit of its
creditors; (2) apply for or consent to the appointment of a receiver, trustee,
assignee, custodian, sequestrator, liquidator or similar official for itself or
any of its assets and properties; (3) commence
a voluntary case for relief as a debtor under the United States Bankruptcy
Code; (4) file with or otherwise
submit to any governmental authority any petition, answer or other document
seeking: (A) reorganization, (B) an arrangement with creditors or (C) to take
advantage of any other present or future applicable law respecting bankruptcy,
reorganization, insolvency, readjustment of debts, relief of debtors,
dissolution or liquidation; (5) file or otherwise submit any answer or other
document admitting or failing to contest the material allegations of a petition
or other document filed or otherwise submitted against it in any of the
proceedings set forth in this Section 2.2(c)(iii) under any such applicable
law, or (6) be adjudicated a bankrupt or insolvent by a court of competent
jurisdiction; or


                    (iv)
any case, proceeding or other action shall be commenced against the Company for
the purpose of effecting, or an order, judgment or decree shall be entered by
any court of competent jurisdiction approving (in whole or in part) anything
specified in Section 2.2(c)(iii) hereof, or any receiver, trustee, assignee,
custodian, sequestrator, liquidator or other official shall be appointed with
respect to the Company, or shall be appointed to take or shall otherwise
acquire possession or control of all or a substantial part of the assets and
properties of the Company, and any of the foregoing shall continue unstayed and
in effect for any period of thirty (30) days.


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ARTICLE
3.

ATTORNEY-IN-FACT: PERFORMANCE


          Section
3.1. Secured Party Appointed Attorney-In-Fact.


          Upon
the occurrence of an Event of Default, the Company hereby appoints the Secured
Party as its attorney-in-fact, with full authority in the place and stead of
the Company and in the name of the Company or otherwise, from time to time in
the Secured Party’s discretion to take any action and to execute any instrument
which the Secured Party may reasonably deem necessary
to accomplish the purposes of this Agreement, including, without limitation, to
receive and collect all instruments made payable to the Company
representing any payments in respect of the Pledged Property or any part
thereof and to give full discharge for the same. The Secured Party may demand,
collect, receipt for, settle, compromise, adjust, sue for, foreclose, or
realize on the Pledged Property as and when the Secured Party may determine. To
facilitate collection, the Secured Party
may notify account debtors and obligors on any Pledged Property or Pledged Property
to make payments directly to the Secured Party.


          Section
3.2. Secured Party May Perform.


          If the Company fails to perform any agreement
contained herein, the Secured Party, at its option, may itself perform, or
cause performance of, such agreement, and the expenses of the Secured Party
incurred in connection therewith shall be included in the Obligations secured
hereby and payable by the Company under Section 8.3.


ARTICLE
4.

REPRESENTATIONS AND WARRANTIES 


          Section
4.1. Authorization; Enforceability.


          Each
of the parties hereto represents and warrants that it has taken all action necessary
to authorize the execution, delivery and performance of this Agreement and the
transactions contemplated hereby; and upon execution and delivery, this
Agreement shall constitute a valid and binding obligation of the respective
party, subject to applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws affecting creditors’ rights or by the principles governing the
availability of equitable remedies.


          Section
4.2. Ownership of Pledged Property.


          The
Company warrants and represents that it is the legal and beneficial owner of
the Pledged Property free and clear of any lien, security interest, option or
other charge or encumbrance except for the security interest created by this
Agreement and for the Permitted Liens. For purposes hereof, “Permitted Liens”
shall mean (i) liens for taxes or other governmental charges which are not yet
delinquent or are being contested in good faith by appropriate proceedings,
(ii) liens for carriers, contractors, warehousemen, mechanics, materialmen,
laborers, employees, suppliers or other similar persons arising by operation of
law and incurred in the ordinary course of business for sums not yet delinquent
or being contested in good faith, (iii) liens relating to deposits made in the ordinary
course of business in connection


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with workers’ compensation, unemployment insurance and
other types of social security or to secure the performance of leases, trade
contracts or other similar agreements; and (iv) in the case of real property, any
matters, restrictions, covenants, conditions, limitations, rights, rights of
way, encumbrances, encroachments, reservations, easements, agreements and other
matters of record, such state of facts of which an accurate survey or
inspection of the property would reveal and do not materially interfere with
the use or value of the property.


ARTICLE
5.

DEFAULT; REMEDIES; SUBSTITUTE COLLATERAL


          Section
5.1. Default and Remedies.


               (a)
If an Event of Default described in Section 2.2(c)(i) or (ii) occurs,
then in each such case the Secured Party may declare the Obligations to be due
and payable immediately, by a notice in writing to the Company, and upon any
such declaration, the Obligations shall become immediately due and payable. If
an Event of Default described in Sections 2.2(c)(iii) or (iv) occurs and is
continuing for the period set forth therein, then the Obligations shall
automatically become immediately due and payable without declaration or other
act on the part of the Secured Party.


               (b)
Upon the occurrence of an Event of
Default, the Secured Party shall: (i) be entitled to receive all
distributions with respect to the Pledged Collateral, (ii) to cause the Pledged
Property to be transferred into the name of the Secured Party or its nominee,
(iii) to dispose of the Pledged Property, and (iv) to realize upon any and all
rights in the Pledged Property then held by the Secured Party as provided
herein.


          Section
5.2. Method of Realizing Upon the Pledged Property: Other Remedies.


          Upon
the occurrence of an Event of Default, in addition to any rights and remedies
available at law or in equity, the following provisions shall govern the
Secured Party’s right to realize upon the Pledged Property:


               (a)
Any item of the Pledged Property may be sold for cash or other value in any
number of lots at brokers board, public auction or private sale and may be sold
without demand, advertisement or notice (except that the Secured Party shall
give the Company ten (10) days’ prior written notice of the time and place or
of the time after which a private sale may be made (the “Sale Notice”)), which
notice period is hereby agreed to be commercially reasonable. At any sale or
sales of the Pledged Property, the Company may bid for and purchase the whole
or any part of the Pledged Property and, upon compliance with the terms of such
sale, may hold, exploit and dispose of the same without further accountability
to the Secured Party. The Company will execute and deliver, or cause to be
executed and delivered, such instruments, documents, assignments, waivers,
certificates, and affidavits and supply or cause to be supplied such further
information and take such further action as the Secured Party reasonably shall
require in connection with any such sale.


5






               (b)
Any cash being held by the Secured
Party as Pledged Property and all cash
proceeds received by the Secured Party in respect of, sale of,
collection from, or other realization
upon all or any part of the Pledged Property shall be applied as follows:


                    (i)
to the payment of all amounts due the Secured Party for the expenses
reimbursable to it hereunder or owed to it pursuant to Section 8.3 hereof;


                    (ii)
to the payment of the Obligations then due and unpaid.


                    (iii)
the balance, if any, to the person or persons entitled thereto, including,
without limitation, the Company.


               (c)
In addition to all of the rights and remedies which the Secured Party
may have pursuant to this Agreement, the Secured Party shall have all of the
rights and remedies provided by law, including, without limitation, those under
the Uniform Commercial Code.


               (d)
If the Company fails to pay such amounts due upon the occurrence of an
Event of Default which is continuing, then the Secured Party may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company and collect the monies adjudged or decreed to be payable in
the manner provided by law out of the property of Company, wherever situated.


               (e)
The Company agrees that it shall be liable for any reasonable fees,
expenses and costs incurred by the Secured Party in connection with
enforcement, collection and preservation of the Transaction Documents,
including, without limitation, reasonable legal fees and expenses, and such
amounts shall be deemed included as Obligations secured hereby and payable as
set forth in Section 8.3 hereof.


          Section
5.3. Proofs of Claim.


          In
case of the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relating to the Company or the property of the Company or of such
other obligor or its creditors, the Secured Party (irrespective of whether the
Obligations shall then be due and payable as therein expressed or by declaration or otherwise and irrespective
of whether the Secured Party shall have made any demand on the Company
for the payment of the Obligations), shall be entitled and empowered, by
intervention in such proceeding or otherwise:


                    (i)
to file and prove a claim for the whole amount of the Obligations and to file
such other papers or documents as may be necessary or advisable in order to
have the claims of the Secured Party (including any claim for the reasonable
legal fees and expenses and other expenses paid or incurred by the Secured
Party permitted hereunder and of the Secured Party allowed in such judicial
proceeding), and


                    (ii)
to collect and receive any monies or other property payable or deliverable on
any such claims and to distribute the same; and any custodian, receiver,
assignee, trustee, liquidator, sequestrator or other similar official in any
such judicial proceeding is hereby


6






authorized by the Secured Party to make such payments
to the Secured Party and, in the event that the Secured Party shall consent to
the making of such payments directed to the Secured Party, to pay to the
Secured Party any amounts for expenses due it hereunder.


          Section
5.4. Duties Regarding Pledged Property.


          The
Secured Party shall have no duty as to the collection or protection of the
Pledged Property or any income thereon or as to the preservation of any rights
pertaining thereto, beyond the safe custody and reasonable care of any of the
Pledged Property actually in the Secured Party’s possession.


ARTICLE
6.

AFFIRMATIVE COVENANTS


          The
Company covenants and agrees that, from the date hereof and until the
Obligations have been fully paid and
satisfied, unless the Secured Party shall consent otherwise in writing (as provided
in Section 8.4 hereof):


          Section
6.1. Existence, Properties, Etc.


               (a)
The Company shall do, or cause to be
done, all things, or proceed with due diligence with any actions or
courses of action, that may be reasonably necessary (i) to maintain Company’s
due organization, valid existence and good standing under the laws of its state
of incorporation, and (ii) to preserve and keep in full force and effect all
qualifications, licenses and registrations in those jurisdictions in which the failure
to do so could have a Material Adverse Effect (as defined below); and (b) the
Company shall not do, or cause to be done, any act impairing the Company’s
corporate power or authority (i) to carry on the Company’s business as now
conducted, and (ii) to execute or deliver this Agreement or any other document
delivered in connection herewith, including, without limitation, any UCC-1
Financing Statements required by the
Secured Party to which it is or will be a party, or perform any of its
obligations hereunder or thereunder. For purpose of this Agreement, the
term “Material Adverse Effect” shall mean any material and adverse
affect, whether individually or in the aggregate, upon (a) the Company’s
assets, business, operations, properties or condition, financial or otherwise
or results of operations of the Company, taken as a whole, excluding any
change, event, circumstance or effect that is caused by changes in general
economic conditions or changes generally affecting the industry in which the
Company operates (provided that such changes do not affect the Company in a
materially disproportionate manner); or (b) the Company’s ability to make
payment as and when due of all or any part of the Obligations; or (c) the
Pledged Property.


          Section
6.2 Accounts and Reports.


          The
Company shall maintain a standard system of accounting in accordance with
generally accepted accounting principles consistently applied and provide, at
its sole expense, to the Secured Party the following:


               (b)
as soon as available, a copy of any
notice or other communication alleging
any nonpayment or other material breach or default, or any foreclosure
or other action respecting


7






any material portion of its assets and properties,
received respecting any of the indebtedness of the Company in excess of $25,000
(other than the Obligations), or any demand or other request for payment under
any guaranty, assumption, purchase agreement or similar agreement or
arrangement respecting the indebtedness or obligations of others in excess of
$25,000, including any received from any
person acting on behalf of the Secured Party or beneficiary thereof, except for
supplier requests in the normal course of business for payment of past due
accounts payable invoices so long as such past due amounts do not exceed in the
aggregate $50,000 at any time; and


               (c)
within fifteen (15) days after the making of each submission or filing, a copy
of any report, financial statement, notice or other document, whether periodic
or otherwise, submitted to the shareholders
of the Company, or submitted to or filed by the Company with any governmental
authority involving or affecting (i) the Company that could have a Material
Adverse Effect; (ii) the Obligations; or (iii) any part of the Pledged
Property.


          Section
6.2. Maintenance of Books and Records; Inspection.


          The
Company shall maintain its books, accounts and records in accordance with
United States generally accepted accounting principles consistently applied, and
permit the Secured Party, its officers and employees and any professionals
designated by the Secured Party in writing, during business hours and upon
reasonable notice to visit and inspect any of its properties (including but not
limited to the Pledged Property), corporate books and financial records, and to
discuss its accounts, affairs and finances with any employee, officer or
director thereof.


          Section
6.3. Maintenance and Insurance.


               (a)
The Company shall maintain or cause to be maintained, at its own
expense, all of its assets and properties in good working order and condition,
making all necessary repairs thereto and renewals and replacements thereof.


               (b)
The Company shall maintain or cause to be maintained, at its own
expense, insurance in form, substance and amounts (including deductibles),
which the Company deems reasonably necessary to the Company’s business, (i)
adequate to insure all assets and properties of the Company, which assets and
properties are of a character usually insured by persons engaged in the same or
similar business against loss or damage resulting from fire or other risks
included in an extended coverage policy; (ii) against public liability and
other tort claims that may be incurred by the Company; (iii) as may be required
by the Transaction Documents and/or applicable law and (iv) as may be
reasonably requested by Secured Party, all with adequate, financially sound and
reputable insurers.


          Section
6.4. Contracts and Other Collateral.


          The
Company shall perform all of its obligations under or with respect to each
instrument, receivable, contract and other intangible included in the Pledged
Property to which the Company is now or hereafter will be party on a timely
basis and in the manner therein required, including, without limitation, this
Agreement.


8






          Section
6.5. Defense of Collateral, Etc.


          The
Company shall defend and enforce its right, title and interest in and to any
part of: (a) the Pledged Property; and (b) if not included within the Pledged
Property, those assets and properties whose loss could have a Material Adverse
Effect, the Company shall defend the Secured Party’s right, title and interest
in and to each and every part of the Pledged Property, each against all manner of claims and demands on a timely basis to the
full extent permitted by applicable law.


          Section
6.6. Payment of Debts,
Taxes, Etc.


          The
Company shall pay, or cause to be paid, all of its indebtedness and other
liabilities and perform, or cause to be performed, all of its obligations in
accordance with the respective terms thereof, and pay and discharge, or cause
to be paid or discharged, all taxes, assessments and other governmental charges
and levies imposed upon it (other than those being contested by the Company in
good faith), upon any of its assets and properties on or before the last day on
which the same may be paid without penalty,
as well as pay all other lawful claims (whether for services, labor, materials,
supplies or otherwise) as and when due


          Section
6.7. Taxes and Assessments; Tax Indemnity.


          The
Company shall (a) file all tax returns and appropriate schedules thereto that
are required to be filed under applicable law, prior to the date of
delinquency, (b) pay and discharge all taxes, assessments and governmental
charges or levies imposed upon the Company, upon its income and profits or upon
any properties belonging to it, prior to the date on which penalties attach
thereto, and (c) pay all taxes, assessments and governmental charges or levies
that, if unpaid, might become a lien or charge upon any of its properties; provided, however, that the Company in
good faith may contest any such tax, assessment, governmental charge or levy described in the foregoing clauses (b) and (c) so
long as appropriate reserves are maintained with respect thereto.


          Section
6.8. Compliance with Law and Other Agreements.


          The
Company shall maintain its business operations and property owned or used in
connection therewith in compliance with (a) all applicable federal, state and
local laws, regulations and ordinances governing such business operations and
the use and ownership of such property, and (b) all agreements, licenses, franchises,
indentures and mortgages to which the Company is a party or by which the
Company or any of its properties is bound. Without limiting the foregoing, the
Company shall pay all of its indebtedness promptly in accordance with the terms
thereof.


          Section
6.9. Notice of Default.


          The
Company shall give written notice to the Secured Party of the occurrence of any
default or Event of Default under this Agreement or the Transaction Documents,
promptly upon the occurrence thereof.


9






          Section
6.10. Notice of Litigation.


          The
Company shall give notice, in writing, to the Secured Party of (a) any actions,
suits or proceedings wherein the amount at issue is in excess of $50,000,
instituted by any persons against the Company, or affecting any of the assets
of the Company, and (b) any dispute, not resolved within fifteen (15) days of
the commencement thereof, between the Company on the one hand and any governmental or regulatory body on the other hand,
which might reasonably be expected to have a Material Adverse Effect on
the business operations or financial condition of the Company.


ARTICLE
7.

NEGATIVE COVENANTS


          The
Company covenants and agrees that, from the date hereof until the Obligations
have been fully paid and satisfied, the Company shall not, unless the Secured
Party shall consent otherwise in writing:


          Section
7.1. Indebtedness.


          Other
than in the ordinary course of business consistent with past practice, the
Company shall not directly or indirectly permit, create, incur, assume, permit
to exist, increase, renew or extend on or after the date hereof any
indebtedness on its part, including commitments, contingencies and credit
availabilities, or apply for or offer or agree to do any of the foregoing.


          Section
7.2. Liens and Encumbrances.


          Except
for Permitted Liens and for transfers in the ordinary course of business, and
except for such assignment, transfer, pledge, mortgage, security interest or
other lien or encumbrance as is outstanding on the date of this Agreement, the
Company shall not directly or indirectly make, create, incur, assume or permit
to exist any assignment, transfer, pledge, mortgage, security interest or other
lien or encumbrance of any nature in, to or against any part of the Pledged
Property or of the Company’s capital stock, or offer or agree to do so, or own
or acquire or agree to acquire any asset or property of any character subject
to any of the foregoing encumbrances (including any conditional sale contract
or other title retention agreement), or assign, pledge or in any way transfer
or encumber its right to receive any income or other distribution or proceeds
from any part of the Pledged Property; or enter into any sale-leaseback financing respecting any part of the Pledged
Property as lessee, or cause or assist the inception or continuation of
any of the foregoing.


          Section
7.3. Certificate of Incorporation, By-Laws, Mergers, Consolidations,
Acquisitions and Sales.


          Other
than in the ordinary course of business, without the prior express written
consent of the Secured Party, the Company shall not: (a) Amend its Articles of
Incorporation or By-Laws; (b) issue
or sell its stock, stock options, bonds, notes or other corporate securities or
obligations; (c) be a party to any
merger, consolidation or corporate reorganization, (d) purchase or otherwise
acquire all or substantially all of the assets or stock of, or any partnership
or joint venture interest


10






in, any other person, firm or entity, (e) sell,
transfer, convey, grant a security interest in (except for Permitted Liens) or
lease all or any substantial part of its assets, nor (f) create any new
subsidiaries nor convey any of its assets to any subsidiary.


          Section
7.4. Management, Ownership.


          The
Company shall not materially change its ownership, executive staff or
management without the prior written consent of the Secured Party. The
ownership, executive staff and management of the Company are material factors
in the Secured Party’s willingness to institute and maintain a lending
relationship with the Company.


          Section
7.5. Dividends, Etc.


          The
Company shall not declare or pay any dividend of any kind, in cash or in
property, on any class of its capital stock, nor purchase, redeem, retire or
otherwise acquire for value any shares of such stock, nor make any distribution
of any kind in respect thereof, nor make any return of capital to shareholders,
nor make any payments in respect of any pension, profit sharing, retirement,
stock option, stock bonus, incentive compensation or similar plan (except as
required or permitted hereunder), without the prior written consent of the
Secured Party.


          Section
7.6. Guaranties; Loans.


          Other
than in the ordinary course of business, and except for such guarantees or
liabilities as are outstanding on the date of this Agreement, the Company shall
not guarantee nor be liable in any manner, whether directly or indirectly, or
become contingently liable after the date of this Agreement in connection with
the obligations or indebtedness of any person or persons, except for (i) the
indebtedness currently secured by the liens identified on the Pledged Property
identified on Exhibit A hereto and (ii) the endorsement of negotiable
instruments payable to the Company for deposit or collection in the ordinary
course of business. The Company shall not make any loan, advance or extension
of credit to any person other than in the normal course of its business.


          Section
7.7. Debt.


          Other
than in the ordinary course of business, and except for such indebtedness as is
outstanding on the date of this Agreement, without the prior written approval
of Trafalgar, the Company shall not create, incur, assume or suffer to exist
any additional indebtedness of any description whatsoever in an aggregate
amount in excess of $50,000 (excluding any indebtedness of the Company to the
Secured Party, trade accounts payable and accrued expenses incurred in the
ordinary course of business and the endorsement of negotiable instruments
payable to the Company, respectively for deposit or collection in the ordinary
course of business).


          Section
7.8. Conduct of Business.


          The
Company will continue to engage in a business of the general type as conducted
by it on the date of this Agreement.


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          Section
7.9. Places of Business.


          The
location of the Company’s chief place of business is at the address set forth
in Section 8.1 hereof. The Company shall not change the location of its chief
place of business, chief executive office or any place of business disclosed to
the Secured Party or move any of the Pledged Property from its current location
without thirty (30) days’ prior written notice to the Secured Party in each
instance.


ARTICLE 8.

MISCELLANEOUS


          Section
8.1. Notices.


          All
notices or other communications required or permitted to be given pursuant to
this Agreement shall be in writing and shall be considered as duly given
on: (a) the date of delivery, if delivered in person, by nationally recognized
overnight delivery service or (b) five (5) days after mailing if mailed from within the continental United States by
certified mail, return receipt requested to the party entitled to receive
the same:


	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 


	
 

	
If to the Secured Party:

	
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 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





12






	
 

	
 

	
 


	
 

	
And if to the Company: 

	
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 Boulevard,
  Suite 500


	
 

	
 

	
Los Angeles, CA 90024


	
 

	
 

	
 


	
 

	
 

	
Attn: Peter Hogan


	
 

	
 

	
Telephone: (310) 208-1181


	
 

	
 

	
Facsimile: (310) 208-1154





          Any
party may change its address by giving notice to the other party stating its
new address. Commencing on the tenth (10th) day after the giving of
such notice, such newly designated address shall be such party’s address for
the purpose of all notices or other communications required or permitted to be
given pursuant to this Agreement.


          Section
8.2. Severability.


          If
any provision of this Agreement shall be held invalid or unenforceable, such
invalidity or unenforceability shall attach only to such provision and shall
not in any manner affect or render invalid or unenforceable any other severable
provision of this Agreement, and this Agreement shall be carried out as if any
such invalid or unenforceable provision were not contained herein.


          Section
8.3. Expenses.


          In
the event of an Event of Default, the Company will pay to the Secured Party the
amount of any and all reasonable expenses, including the reasonable fees and
expenses of its counsel, which the Secured Party may incur in connection with:
(i) the custody or preservation of, or the sale, collection from, or other realization
upon, any of the Pledged Property; (ii) the exercise or enforcement of any of
the rights of the Secured Party hereunder or (iii) the failure by the Company
to perform or observe any of the provisions hereof.


          Section
8.4. Waivers, Amendments, Etc.


          The
Secured Party’s delay or failure at any time or times hereafter to require
strict performance by Company of any undertakings, agreements or covenants
shall not waiver, affect, or diminish any
right of the Secured Party under this Agreement to demand strict compliance and
performance herewith. Any waiver by the Secured Party of any Event of
Default shall not waive or affect any other
Event of Default, whether such Event of Default is prior or subsequent thereto and
whether of the same or a different type. None of the undertakings, agreements
and covenants of the Company contained in this Agreement, and no Event of
Default, shall be deemed to have been waived by the Secured Party, nor may this
Agreement be amended,


13






changed or modified, unless such
waiver, amendment, change or modification is evidenced by an instrument
in writing specifying such waiver, amendment, change or modification and signed
by the Secured Party.


          Section
8.5. Continuing Security Interest.


          This
Agreement shall create a continuing security interest in the Pledged Property
and shall: (i) remain in full force and effect until payment in full of the
Obligations (whether by payment of cash, redemption or conversion); and (ii) be
binding upon the Company and its successors and heirs and (iii) inure to the
benefit of the Secured Party and its successors and assigns. Upon the payment
or satisfaction in full of the Obligations, the Company shall be entitled to
the return, at its expense, of such of the Pledged Property as shall not have
been sold in accordance with Section 5.2 hereof or otherwise applied pursuant
to the terms hereof. Upon payment in full
of all Obligations, the Secured Party shall execute and deliver to the Company
all instruments and other documents as may be necessary or proper to
release the lien on and security interest in the Pledged Property which has
been granted hereunder.


          Section
8.6. Independent Representation.


          Each
party hereto acknowledges and agrees that it has received or has had the
opportunity to receive independent legal counsel of its own choice and that it
has been sufficiently apprised of its rights and responsibilities with regard
to the substance of this Agreement.


          Section
8.7. Applicable Law: Jurisdiction.


          This
Agreement shall be governed by and interpreted in accordance with the laws of
the State of Florida without regard to the principles of conflict of laws. The
parties further agree that any action between them shall be heard in Florida
and expressly consent to the jurisdiction and venue of the Florida State Court
sitting in Broward County, Florida or the United States District Court for the
Southern District of Florida, for the adjudication of any civil action asserted
pursuant to this Paragraph.


          Section
8.8. Waiver of jury Trial.


          AS
A FURTHER INDUCEMENT FOR THE SECURED PARTY TO ENTER INTO THIS AGREEMENT AND TO
MAKE THE FINANCIAL ACCOMMODATIONS TO THE COMPANY, THE COMPANY HEREBY WAIVES ANY
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATED IN ANY WAY TO THIS
AGREEMENT AND/OR ANY AND ALL OTHER DOCUMENTS RELATED TO THIS TRANSACTION.


          Section
8.9. Entire Agreement.


          This
Agreement constitutes the entire agreement among the parties and supersedes any
prior agreement or understanding among them with respect to the subject matter
hereof.


14






[REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK] 


15






          IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
first above written. 


	
 

	
 

	
 

	
 


	
 

	
COMPANY:


	
 

	
NATIONAL
  AUTOMATION SERVICES,


	
 

	
INC.


	
 

	
 


	
 

	
By:

	
 


	
 

	
 

	



	
 

	
Name: Bob Chance 


	
 

	
Title:   President


	
 

	
 

	
 

	
 


	
 

	
SECURED
  PARTY:


	
 

	
TRAFALGAR
  CAPITAL SPECIALIZED


	
 

	
INVESTMENT
  FUND, LUXEMBOURG


	
 

	
By:

	
 

	
Trafalgar Capital Sarl  


	
 

	
Its:

	
 

	
General Partner 


	
 

	
 

	
 

	
 


	
 

	
By: 

	



	
 

	
 

	



	
 

	
Name:   ANDREW GARAI


	
 

	
Title:     CHAIRMAN
  OF THE BOARD





16






          IN
WITNESS WHEREOF, the
parties hereto have executed this Agreement as of the date first above written.


	
 

	
 

	
 

	
 


	
 

	
COMPANY:


	
 

	
NATIONAL
  AUTOMATION SERVICES,


	
 

	
INC.


	
 

	
 


	
 

	
By: 

	



	
 

	
 

	



	
 

	
Name:   Bob Chance 


	
 

	
Titlle:    President


	
 

	
 


	
 

	
SECURED
  PARTY:


	
 

	
TRAFALGAR
  CAPITAL SPECIALIZED


	
 

	
INVESTMENT
  FUND, LUXEMBOURG


	
 

	
 


	
 

	
By:

	
Trafalgar Cupital Sarl 


	
 

	
Its:

	
General Partner 


	
 

	
 

	
 


	
 

	
By: 

	
 


	
 

	
 

	



	
 

	
Name:


	
 

	
Title:   Portfolio Manager





17






EXHIBIT A 

DEFINITION OF PLEDGED PROPERTY


          For
the purpose of securing prompt and complete payment and performance by the
Company of all of the Obligations, the
Company unconditionally and irrevocably hereby grants to the Secured Party a continuing
security interest in and to, and lien upon, all of the Company’s and its
current subsidiary’s, Intuitive System Solutions, Inc., a Nevada corporation,
assets, including specifically the following Pledged Property of the Company:


               (a)
all goods of the Company,
including, without limitation, machinery, equipment, furniture, furnishings, fixtures, signs, lights, tools, parts, supplies
and motor vehicles of every kind and description, now or hereafter owned
by the Company or in which the Company may have or may hereafter acquire any
interest, and ail replacements, additions, accessions, substitutions and
proceeds thereof, arising from the sale or disposition thereof, and where
applicable, the proceeds of insurance and of any tort claims involving any of the
foregoing;


               (b)
all
inventory of the Company, including, but not limited to, all goods,
wares, merchandise, parts, supplies, finished products, other tangible
personal property, including such inventory as is temporarily out of Company’s
custody or possession and including any returns upon any accounts or other
proceeds, including insurance proceeds, resulting from the sale or disposition
of any of the foregoing;


               (c)
all contract
rights and general intangibles of the Company, including, without limitation,
goodwill, trademarks, trade styles, trade names, leasehold interests,
partnership or joint venture interests, patents and patent applications,
copyrights, deposit accounts whether now owned or hereafter created;


               (d)
all
documents, warehouse receipts, instruments and chattel paper of the Company whether now owned or hereafter created;


               (e)
all accounts
and other receivables, instruments or other forms of obligations and rights
to payment of the Company (herein collectively referred to as “Accounts”),
together with the proceeds thereof, all goods represented by such Accounts and all such
goods that may be returned by the Company’s customers, and all proceeds
of any insurance thereon, and all guarantees, securities and liens which the
Company may hold for the payment of any such Accounts including, without
limitation, all rights of stoppage in transit, replevin and reclamation and as
an unpaid vendor and/or lienor, all of which the Company represents and
warrants will be bona fide and existing obligations of its respective
customers, arising out of the sale of goods by the Company in the ordinary
course of business; 


               (f)
to
the extent assignable, all of the Company’s rights under all
present and future authorizations, permits, licenses and franchises
issued or granted in connection with the operations of any of its facilities;


               (g)
all products and proceeds
(including, without limitation, insurance proceeds) from the above-described
Pledged Property; and


               (h)
all equity interests, securities or other instruments in other companies,
including, without limitation, any subsidiaries, investments or other entities
(whether or not controlled).


A-l