Document:

Unassociated Document

Exhibit 10.38

 

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of this 1st day of January, 2011, between Tara Minerals Corp.  a Nevada corporation (the "Company"), and  David S. Barefoot, an individual (the "Executive"),

RECITALS

WHEREAS, the Executive is desirous of being employed by the Company.

NOW, THEREFORE, in consideration of the mutual agreements herein made, the Company and the Executive do hereby agree as follows:

1. Recitals.  The above recitals are true, correct, and are herein incorporated by reference.

2. Employment.    Subject to the terms and conditions of this Agreement, the Company hereby employs the Executive for the Term (as hereinafter defined), as its Chief Operating Officer. The Executive hereby accepts such employment, upon the terms and conditions hereinafter set forth. The Executive will report to the Company’s Board of Directors. It is understood that the Executive has been, and will continue to be, engaged in other business activities, and will manage his own time to fulfill the executive responsibility.

 

3. Duties During Employment Period.  During the "Term" (including any renewals thereof) as defined in Section 5 of this Agreement, the Executive shall:

A. Diligently devote the Executive's time and efforts to the business affairs of the Company and subsidiaries.  The Executive shall have such duties and powers that are commensurate and consistent with those of a Chief Operating Officer, subject to the authority and directions of the Company's Chief Executive Officer and Board of Directors; and

B. Devote attention and render services to the Company and shall be employed by the Company according to the terms and conditions of this Agreement.

4. Compensation and Benefits

A. Salary.  The Executive shall be paid a base salary (the "Base Salary"), payable monthly, in arrears, at an annual rate of $ 136,000.00    .

B. Bonus.  As additional compensation, the Executive shall be entitled to receive a bonus ("Bonus") for each fiscal year during the Term, and each Renewal Term, in the amount as to be determined by the Company’s Board of Directors.

 

C. Employee Benefits.  The Executive shall be entitled to participate in all benefit programs of the Company currently existing, or hereafter made available to executives and/or other executive employees, including, but not limited to, pension and other retirement plans, including any 401K Plan, group life insurance, dental, hospitalization, surgical and major medical coverage, sick leave, salary continuation, and holidays, long-term disability, and other fringe benefits.

  

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Should the Company decide not to provide, or is unable to obtain group plans, the Company will reimburse the Employee for individual health, dental and optical insurance in an amount not less than $ 1,000.00   per month.

 

D. Vacation.  During each year of the Term, and each year of any Renewal Term, the Executive shall be entitled to     5      weeks of vacation time to be utilized or paid for each year, or accrue and carry over into the following year; provided, however, that the Executive shall evidence reasonable judgment with regard to appropriate vacation scheduling.

E. Business Expense Reimbursement.  The Executive shall be entitled to receive proper reimbursement for all reasonable, out-of-pocket expenses incurred directly by the Executive (in accordance with the policies and procedures established by the Company for its executive officers), not less than $1,000.00, including first class accommodations in performing services hereunder.

F. Cellular Telephone. The Company shall provide the Executive with a cellular telephone and a GSM phone that operates in the countries served by the Company, and the Company shall also be responsible for all costs and expenses in connection with such telephones, including, but not limited to, monthly service charges and maintenance, usage charges and long distance, whether these be incurred for personal or Company business.

G. Stock.  The Executive shall receive options as may be determined, from time to time, by the Company’s Board of Directors. The Executive shall have the right to sell or transfer any or all of the options, or the shares issuable upon the exercise of the options.

H. Insurance and Disability Payments.  The Company agrees to obtain at its sole expense, and for the benefit of the Executive's heirs, life insurance policies on the Executive in the amount of no less than ten (10) times Executive's current rate of salary.  Furthermore, the Company agrees to provide, at its sole expense, a disability policy for the Executive which shall provide for payments equal to one hundred percent (100%) of Executive's current salary.

I. Computers. Executive will be provided with a fixed location computer to be selected by the Executive to be used by the Executive at the location selected by Executive. The Company will also provide Executive with a laptop computer to his specification.  Executive will have the option to return such computers to the Company upon Executive's employment termination, or at his option, he may retain such computers for his personal benefit upon his departure from the Company.

5. Term. The term of employment hereunder will commence on the Effective Date and end ___3____ from such Effective Date (the “Term"), unless terminated pursuant to Section 6, of this Agreement, provided that the Executive and the Company may, upon mutual written consent, renew this Agreement for such duration as may be mutually agreed upon by the parties ("Renewal Term"). For purposes of this Agreement, “Effective Date” shall mean January 1, 2011.

  

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6. Termination of Employment.  

A. Death.  In the event of the death of the Executive during the Term or Renewal Term of this Agreement, salary shall be paid to the Executive's designated beneficiary, or, in the absence of such designation, to the estate or other legal representative of the Executive for a period of 1 year from and after the date of death.  The Company shall also be obligated to pay to the Executive's estate or heirs, as the case may be, any accrued or bonus authorized by a resolution of the Company’s directors. Other death benefits will be paid in accordance with the terms of the Company's benefit programs and plans pertaining to the Company’s employees generally.

B. Disability.

1. In the event of the Executive's disability, as hereinafter defined, the Executive shall be entitled to receive the Executive's salary for a period, at the annual rate in effect immediately prior to the commencement of disability, for 1 year from the date on which the disability has deemed to occur as hereinafter provided below.  Any amounts provided for in this Section 6B shall be offset by any other disability benefits provided to the Executive by the Company, including the benefits contemplated by Section 4H

2. "Disability," for the purposes of this Agreement, shall be deemed to have occurred in the event   i) the Executive is unable by reason of sickness or accident to perform the Executive's duties under this Agreement for a cumulative total of twelve (12) weeks within any one calendar year; or

ii) the Executive is unable to perform Executive's duties for ninety (90) consecutive days; or

iii) the Executive has a guardian appointed by a court of competent jurisdiction.  Termination due to disability shall be deemed to have occurred upon the first day of the month following the determination of disability as defined above.

Anything herein to the contrary notwithstanding, if, following a termination of employment hereunder due to disability as provided above, the Executive becomes re-employed by a third party, whether as an executive or as a consultant, any salary, annual incentive payments or other benefits earned by the Executive from such employment shall offset any salary continuation due to the Executive hereunder commencing with the date of re-employment.

C. Termination by the Company for Cause

1. Nothing herein shall prevent the Company from terminating employment for "Cause" as hereinafter defined.  If terminated for Cause, the Executive shall receive salary only for the period ending with the date of such termination as provided in this Section 6C.  Any rights and benefits the Executive may have in respect of any other compensation shall end on the date the Employee is terminated for Cause.

2. "Cause" shall mean:

(a) committing or participating in an injurious act of fraud, gross neglect, intentional misrepresentation, or embezzlement against the Company; or

(b) committing or participating in any other injurious act or omission wantonly or willfully against the Company, monetarily or otherwise.

 

  

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(c)  commission of a felony or a crime of moral turpitude.

(d)  the refusal to follow the lawful instructions of the Company’s Board of Directors.

(e)  any material breach by the Employee of this Agreement.

D. Termination Other than for Cause.

The foregoing notwithstanding, the Company may terminate the Executive's employment for whatever reason it deems appropriate; provided, however, that in the event such termination is not based on Cause, as provided in Section 6C above, or if Executive's employment is terminated under Sections 6F or 6G hereof, the Company shall continue to be obligated to pay to Executive all salary through the Term, or Renewal Term if any, of this Agreement and any bonuses authorized by a resolution of the Company’s directors and all stock options granted to the executive shall be immediately exercisable .

E. Voluntary Termination.

 In the event the Executive terminates the Executive's employment on the Executive's own volition (except as provided in Section 6F and/or Section 6G) prior to the expiration of the Term or Renewal Term of this Agreement), such termination shall constitute a voluntary termination and in such event the Executive shall be limited to the same rights and benefits as provided in Section 6C.

F. Constructive Termination of Employment.

  A termination by the Company without Cause under Section 6D shall be deemed to have occurred upon the occurrence of one or more of the following events without the express written consent of the Executive:

1. a significant change in the nature or scope of the authorities, powers, functions, duties or responsibilities attached to Executive's position as described in Section 3;

2. a change in Executive's principal office to a location more than 60 miles from the Executive’s place of employment on the Effective Date.

3. A material breach of this Agreement by the Company;

4. A material reduction of the Executive's benefits under any employee benefit plan, program or arrangement (for Executive individually or as part of a group) of the Company, which reduction shall not apply to similarly situated employees of the Company; or

G. Termination Following a Change of Control.

1. In the event that a "Change in Control," as hereinafter defined, shall occur at any time during the Term or Renewal Term hereof, the Executive shall have the right to terminate the Executive's employment under this Agreement upon thirty (30) days written notice given at any time within one (1) year after the occurrence of such event.

2. For purposes of this Agreement, a "Change in Control" of the Company shall mean a change in control:

a)  the occurrence of any of the following:

i) any person, group or organization, other than the Executive, is or becomes the beneficial owner, directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the combined voting power of the Company's outstanding securities then having the right to vote at elections of directors; or

 

  

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ii) the individuals who at the Effective Date of this Agreement constitute the Board of Directors cease for any reason to constitute a majority thereof unless the election, or nomination for election, of each new director was approved by the Executive; or

iii) the business or over fifty percent (50%) of the business revenues of the Company for which the Executive's services are principally performed is/ are sold or otherwise disposed of by the Company (including the stock of a subsidiary of the Company).

Anything herein to the contrary notwithstanding, this Section 6G2 will not apply where the Executive gives the Executive's explicit written waiver stating that for purposes of this Section 6G2 a Change in Control shall not be deemed to have occurred.  The Executive's participation in any negotiations or other matters in relation to a Change in Control shall in no way constitute such a waiver which can only be given by an explicit written waiver as provided in the preceding sentence.

7. Non-Disclosure of Confidential Information, Non-Compete.

A. Executive acknowledges that the Company's trade secrets, private or secret processes, as they exist from time to time, business records and plans, inventions, acquisition strategy, price structure and pricing, discounts, costs, computer programs and listings, source code and/or subject code, copyright, trademark, proprietary information, formulae, protocols, forms, procedures, methods for operating the Company's business, acquisitions, practices, plans and information pertaining to the Company’s properties, and other information of a confidential nature not known publicly (collectively, the "Confidential Information") are valuable, special and unique assets of the Company, access to and knowledge of which have been gained by the Executive by virtue of Executive's association with the Company.  In light of the highly competitive nature of the industry in which the Company's business is conducted, Executive agrees that all Confidential Information, heretofore or in the future obtained by Executive as a result of Executive's association with the Company, shall be considered confidential.

B. The Executive agrees that the Executive shall:

1) hold in confidence and not disclose or make available to any third party any such Confidential Information obtained directly or constructively from the Company, unless so authorized in writing by the Company;

2) exercise all reasonable efforts to prevent third parties from gaining access to the Confidential Information;

3) take such protective measures as may be reasonably necessary to preserve the confidentiality of the Confidential Information.

C. Excluded from the Confidential Information, and therefore not subject to the provisions of this Agreement, shall be any information which the Executive can show:

1) at the time of disclosure, is in the public domain; or

2) after the disclosure, enters the public domain by way of printed publication through no fault of the Executive; or

3) was in his possession at the time of disclosure and which was not acquired directly or indirectly from the Company; or

4) was acquired, after disclosure, from a third party who did not receive it from the Company, and who had the right to disclose the information without any obligation to hold such information confidential.

D. Upon written request of the Company, Executive shall return to the Company all written materials containing Confidential Information.

 

  

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E. Executive agrees that he will not, during the term of this Agreement and for a period of     3     months    from and after the date of termination of this Agreement, directly or indirectly, (i) knowingly acquire or own in any manner any interest in any entity which competes for properties with the Company, or any of its subsidiaries or affiliates, (ii) be employed by or serve as an employee, agent, officer, or director of, or as a consultant to, any entity which competes for properties with the Company or its subsidiaries or affiliates, or (iii) acquire, directly or through an entity affiliated with the Executive, an interest in any property which is located within    2.486   miles or    4    Kilometers of any property owned by the Company or which is under consideration by the Company.  The foregoing provisions of this Section 7E shall not prevent the Executive from acquiring and owning not more than 5% of the equity securities of any entity whose securities are listed for trading on a national securities exchange or are regularly traded in the over-the-counter securities market.

8. Covenants as Essential Elements of this Agreements; Survival of Covenants.

It is understood by and between the parties hereto that the foregoing covenants by Executive contained in Section 7 of this Agreement shall be construed to be agreements independent of any other element of Executive's relationship with the Company.  The existence of any other claim or cause of action, whether predicated on any other provision in this Agreement, or otherwise, as a result of the relationship between the parties, shall not constitute a defense to the enforcement of the covenants in Section 7 of this Agreement against Executive.

9. Remedies and Enforcement.

A. Executive acknowledges and agrees that the Company's remedy at law for a breach of any of the provisions of Section 7 herein would be inadequate and the breach shall be per se deemed as causing irreparable harm to the Company.  In recognition of this fact, in the event of a breach by Executive of any of the provisions of Section 7, Executive agrees that, in addition to any remedy at law available to the Company, including, but not limited to monetary damages, the Company, without posting any bond, shall be entitled to obtain equitable relief in the form of specific performance, temporary restraining order, temporary or permanent injunction or any other equitable remedy which may then be available to the Company.

B. It is further expressly understood and agreed that the provisions of this Agreement shall apply whether this Agreement is terminated by Company or Executive or upon its expiration or termination.

C. Nothing herein contained shall be construed as prohibiting Company or Executive from pursuing any other remedies available to it/ him for any breach or default of this Agreement.

10. Arbitration-Attorneys' Fees.

Any claims or disputes in any way involving this Agreement will be settled through binding arbitration in Chicago, Illinois in accordance with the Commercial Arbitration Rules of the American Arbitration Association. In connection with any such arbitration proceeding, or any litigation arising out of the enforcement of this Agreement or for its interpretation, the prevailing party shall be entitled to recover its costs, including reasonable attorneys' fees,  The Company will advance to the Executive of $10,000.00, if the Company commences an arbitration or legal proceeding as a result of this Agreement to cover Executive's legal costs and will continue to fund Executive's legal defense fees to the extent required to defend against the Company's actions. In addition, the Company agrees to pay for any and all legal work or representation required to defend and or settle any claims made by or against Executive as a result of his employment with the Company, while this Agreement is in effect or any time thereafter.

  

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11. Freedom to Contract.

The Executive represents and warrants that the Executive has the right to negotiate and enter into this Agreement, and that this Agreement does not breach, interfere with or conflict with any other existing contractual agreement

12. Effect on Prior Agreements.

This Agreement supersedes any and all prior oral or written agreements, concerning the subject matter hereof, in their entirety between the parties, which shall be void and of no further force and effect after the date of this Agreement.

13. Notices.

 All notices, requests, consents and other communications, required or permitted to be given hereunder, shall be in writing and shall be deemed to have been duly given if delivered personally or sent by prepaid electronic transmission or mailed first class, postage prepaid, by registered or certified mail or delivered by an overnight courier service (notices sent by electronic transmission, mail or courier service shall be deemed to have been given on the date sent), as follows (or to such other address as either party shall designate by notice in writing to the other):

 

If to the Company:

Tara Minerals Corp.

2162 Acorn Court

Wheaton, IL 60187

If to the Executive:

 

David Barefoot

240 Columbus Cr.

Longwood, FL 32750

14. Waiver.  

Unless agreed in writing, the failure of either party, at any time, to require performance by the other of any provision hereunder shall not affect its rights thereafter to enforce the same, nor shall a waiver by either party of any breach of any provision hereof be taken or held to be a waiver of any other preceding or succeeding breach of any term or provision of this Agreement.  No extension of time for the performance of any obligation or act shall be deemed to be an extension of time for the performance of any other obligation or act hereunder.

 

15. Complete Agreement.

This Agreement contains the entire agreement between the parties hereto with respect to the contents hereof and supersedes all prior agreements and understandings between the parties with respect to such matters, whether written or oral.  Neither this Agreement nor any term or provision hereof may be changed, waived, discharged or amended in any manner other than by an instrument in writing, signed by the party against which the enforcement of the change, waiver, discharge or amendment is sought.

 

  

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16. Counterparts.

This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which shall constitute one agreement.

17. Binding Effect/Assignment.

This Agreement shall be binding upon the parties hereto, their heirs, legal representatives, successors and assigns.  This Agreement shall not be assignable by the Executive but shall be assignable by the Company in connection with the sale, transfer or other disposition of its business or to any of the Company's affiliates controlled by or under common control with the Company, with the written approval of Executive.

18. Governing Law, Venue, Waiver of Jury Trial.

The parties agree that this Agreement shall be deemed made and entered into in the State of Nevada and shall be governed and construed under and in accordance with the laws of the State of Nevada without giving effect to any principles of conflicts of law.  Company and Executive acknowledge and agree that  the Judicial Circuit, shall be the exclusive venue and proper forum in which to adjudicate any case or controversy arising either, directly or indirectly, under or in connection with this Agreement in these courts, they will not contest or challenge the jurisdiction or venue of these courts. The parties further agree and hereby waive and release any right to a trial by jury in any action arising out of the interpretation, enforcement or breach of this Agreement.

19. Headings.

The headings of the sections are for convenience only and shall not control or affect the meaning or construction or limit the scope or intent of any of the provisions of this Agreement.

20. Survival.

Any termination of this Agreement shall not affect the ongoing provisions of this Agreement which shall survive such termination in accordance with their terms.

21. Severabililty.

Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

 

22. Construction.

This Agreement shall be constructed within the fair meaning of each of its terms and not against the party drafting the document.

  

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23. Service Restriction.

Nothing in this Agreement will prevent or restrict Executive from serving on the Board of Directors of any public or private companies and receive compensation from such service.

THE PARTIES TO THIS AGREEMENT HAVE READ THIS AGREEMENT, UNDERSTAND ITS TERMS AND CONDITIONS, HAVE HAD THE OPPORTUNITY TO CONSULT WITH INDEPENDENT COUNSEL OF THEIR OWN CHOICE AND AGREE TO BE BOUND BY ITS TERMS AND CONDITIONS.

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

 

	 	TARA MINERALS CORP.	 
	 	 	 	 
	 	 	 	 
	 	By 	 	 
	 	Authorized Officer	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 
	 	David Barefoot	 

 

 

9ex10_61.htm

Exhibit 10.61

 

NEITHER THIS NOTE NOR THE SECURITIES INTO WHICH IT IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER SECTION 3(b), 4(2) OR 4(6) OF THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED, TRANSFERRED, ASSIGNED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION OR EXCLUSION FROM THE REGISTRATION REQUIREMENTS THEREUNDER AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS.

May 23, 2011                                                                                                           

REMEDY OF CONVERTIBLE NOTE DEFAULT

THE ORIGINAL NOTES subject to this AGREEMENT are the Notes issued by National Automation Services, Inc., a corporation organized and existing under the laws of the State of Nevada (the “Company”), to Donovan Enterprises, Inc. & George Donovan (Holder), designated as Company’s 20% Convertible Notes (the “Notes”), issued on October 15, 2010 (the “Original Issuance Date”) and due in six months from the Original Issuance Date on April 15, 2011 (the “Original Due Date” or “Maturity Date”), in an aggregate principal amount of Two Hundred Thousand Dollars (US $200,000.00).   Said Notes are hereinafter referred to as “Notes of Oct 15.”

Holder and the Company mutually agree to extend the terms of the Notes of Oct 15 for six months from the original maturity date of April 15, 2011 to a “New Maturity Date” of October 15, 2011, and to keep intact all binding obligations of such Notes of Oct 15 from their original content and date, with only the following two modifications in consideration for Holder granting this extension to the New Maturity Date:

1) Conversion and Sale of Stock: In accordance with the conversion provisions of Section 2. (a) of the Notes of Oct 15 and as an accommodation by Holder to Company, Holder will exercise one half of Holder’s stock conversion rights provided under the original Notes of Oct 15.  Conversion price will be set at $0.025 per share instead of $0.05 per share as originally agreed in consideration for the Original Notes.

2) New Notes: With one half of the conversion of the Original Notes the Company will Capitalize the interest accrued under the Original Notes and apply the balance to the new principal balance as follows:

	
  

	
a)

	
$150,000 Original Note of October 15, 2010 to George Donovan as of May 23, 2011 accrued interest balance of $ 36,000 for a total note balance of $186,000. One half of the balance of principle and interest will be converted into the Company’s common stock in the amount of $93,000. The remaining balance of $93,000 will be issued with a new addendum note. The new balance of $93,000 will accrue interest at 20% over the next 6 months where upon October 15, 2011 the note will become due.

 

  

  

  

 

	
  

	
b)

	
$50,000 Original Note of October 15, 2010 to George Donovan as of May 23, 2011 accrued interest balance of $ 12,000 for a total note balance of $62,000. One half of the balance of principle and interest will be converted into the Company’s common stock in the amount of $31,000. The remaining balance of $31,000 will be issued with a new addendum note. The new balance of $31,000 will accrue interest at 20% over the next 6 months where upon October 15, 2011 the note will become due.

 

 

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed by an officer thereunto duly authorized as of the date first above indicated.

 

 

 

	 	
NATIONAL AUTOMATION SERVICES, INC.

	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	
By: 

	/s/ Robert Chance	 
	 	 	Name: Robert W. Chance - CEO	 
	 	 	 	 
	 	 	 	 

Acceptance:

 

	 	 	 
	
By: 

	/s/ George Donovan	 
	 	Donovan Enterprises, Inc.	 
	 	George Donovan, its 	 	 

 

	 	 	 
	
By: 

	/s/ George Donovan	 
	 	George Donovan, its 	 	 

 

  

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NEITHER THIS NOTE NOR THE SECURITIES INTO WHICH IT IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER SECTION 3(b), 4(2) OR 4(6) OF THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED, TRANSFERRED, ASSIGNED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION OR EXCLUSION FROM THE REGISTRATION REQUIREMENTS THEREUNDER AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS.

 

	No. CE-2      	 $31,000.00

 

20% CONVERTIBLE NOTE DUE SIX MONTHS FROM THE ORIGINAL ISSUANCE DATE

THIS NOTE is a duly authorized note issued by National Automation Services, Inc., a corporation organized and existing under the laws of the State of Nevada (the “Company”), designated as its 20% Convertible Notes (the “Notes”) due in six months from the Original Issuance Date (the “Maturity Date”), issued on May 23, 2011 (the “Original Issuance Date”) in an aggregate principal amount of Thirty One Thousand Dollars (US $31,000.00).

FOR VALUE RECEIVED, the Company promises to pay to Donovan Enterprises (the “Holder”) the principal sum of $31,000, on or prior to the Maturity Date and to pay interest to the Holder on the principal sum at a flat rate of 20% of the principal amount of the Note (40% per annum).  Interest shall accrue daily commencing on the Original Issuance Date until payment in full of the principal sum, together with all accrued and unpaid interest, has been made.  If at any time after the Original Issuance Date an Event of Default has occurred, the Holder shall be entitled to remedies under Section 2 hereof.  Company is accepting all or part of the Offering in $25,000.00 increments and above at Holder’s discretion.  This is not a Public Offering and is for accredited investors only.

This Note is subject to the following additional provisions:

Section 1.     Events of Default and Remedies.

I.           “Event of Default,” when used herein, means any one of the following events (whatever the reason and whether any such event shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):

(a)       any default in the payment of the principal of or interest on this Note as and when the same shall become due and payable either at the Maturity Date, by acceleration, conversion, or otherwise;

 

  

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(b)      the Company shall fail to observe or perform any other covenant, agreement or warranty contained in, or otherwise commit any breach of, this Note, and such failure or breach shall not have been remedied within three (3) Business Days of its receipt of notice of such failure or breach;

(c)       the Company shall commence a voluntary case under the United States Bankruptcy Code as now or hereafter in effect or any successor thereto (the “Bankruptcy Code”); or an involuntary case is commenced against the Company under the Bankruptcy Code and the petition is not controverted within thirty (30) days, or is not dismissed within sixty (60) days, after commencement of the case; or a “custodian” (as defined in the Bankruptcy Code) is appointed for, or takes charge of, all or any substantial part of the property of the Company or the Company commences any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect relating to the Company or there is commenced against the Company any such proceeding which remains undismissed for a period of sixty (60) days; or the Company is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or the Company suffers any appointment of any custodian or the like for it or any substantial part of its property which continues undischarged or unstayed for a period of thirty (30) days; or the Company makes a general assignment for the benefit of creditors; or the Company shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay, its debts generally as they become due; or the Company shall call a meeting of its creditors with a view to arranging a composition or adjustment of its debts; or the Company shall by any act or failure to act indicate its consent to, approval of or acquiescence in any of the foregoing; or any corporate or other action is taken by the Company for the purpose of effecting any of the foregoing;

II.           i)          If any Event of Default occurs and continues, then the Holder may, by notice to the Company, accelerate all of the payments due under this Note by declaring all amounts so due under this Note, whereupon the same shall become immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are waived by the Company, notwithstanding anything contained herein to the contrary, and the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law.  Such declaration may be rescinded and annulled by the Holder at any time prior to payment hereunder.  No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon.  This shall include, but not be limited to the right to temporary, preliminary and permanent injunctive relief without the requirement of posting any bond or undertaking.

(b)      The Holder may thereupon proceed to protect and enforce its rights either by suit in equity and/or by action at law or by other appropriate proceedings whether for the specific performance (to the extent permitted by law) of any covenant or agreement contained in this Note or in aid of the exercise of any power granted in this Note, and proceed to enforce the payment of this Note.

 

  

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(c)       Except as expressly provided for herein, the Company specifically (i) waives all rights it may have (A) to notice of nonpayment, notice of default, demand, presentment, protest and notice of protest with respect to any of the obligations hereunder or the shares of Common Stock and (B) notice of acceptance hereof or of any other action taken in reliance hereon, notice and opportunity to be heard before the exercise by the Holder of the remedies of self-help, set-off, or other summary procedures and all other demands and notices of any type or description except for cure periods; and (ii) releases the Holder, its officers, directors, agents, employees and attorneys from all claims for loss or damage caused by any act or failure to act on the part of the Holder, its officers, attorneys, agents, directors and employees except for gross negligence or willful misconduct.

 

(d)      As a non-exclusive remedy, upon the occurrence of an Event of Default, the Holder may convert the remaining principal amount of the Notes and accrued interest thereon at the Fixed Conversion Price upon giving a Notice of Conversion to the Company.  Except as otherwise provided herein, the Company shall not have the right to object to the conversion and it shall release the shares of Common Stock so elected.

Section 2.     Conversion.

(a)           The unpaid principal amount of this Note plus all accrued interest thereon shall be convertible into shares of Common Stock at the Conversion Price of $.025 per share, at the option of the Holder, in whole subject to certain timing restrictions described below. Shares issued upon Conversion shall be Restricted Stock subject to a mandatory holding period of six (6) months as promulgated by the SEC. The date on which such conversion is to be effected (the “Conversion Date”) shall be as set forth in Section 2(g). The Holder shall effect conversions by surrendering the Note to be converted to the Company, together with the form of notice attached hereto as Appendix I (“Notice of Conversion”).  Each Notice of Conversion shall specify the amount of principal and accrued interest to be converted. Each Notice of Conversion, once given, shall be irrevocable.  If the Holder is converting less than the entire principal amount represented by this Note, the Company shall deliver to the Holder a new Note for such principal amount as has not been converted within ten (10) Business Days of the Conversion Date.  Upon conversion in full of the Note or upon payment in full on or before the Maturity Date, the Purchaser shall return the Note to the Company for cancellation.

(b)           The Company shall use reasonable efforts to deliver to the Holder not later than ten (10) Business Days after the Conversion Date, (i) a certificate or certificates representing the number of shares of Common Stock being acquired upon the conversion of this Note, and once this Note so converted in part shall have been surrendered to the Company, the Company shall deliver to the Holder a Note in the principal amount, if any, of this Note not then converted; provided, however, that the Company shall not be obligated to issue certificates evidencing the shares of Common Stock issuable upon conversion of this Note until this Note is either delivered for conversion to the Company or the Holder notifies the Company that this Note has been lost, stolen or destroyed and provides an affidavit of loss and an agreement reasonably acceptable to the Company indemnifying the Company from any loss incurred by it in connection with such loss, theft or destruction.

 

  

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(c)           The Company covenants and agrees that it shall, at all times, reserve and keep available out of its authorized and unissued Common Stock solely for the purpose of issuance upon conversion of this Note as herein provided, free from preemptive rights or any other actual contingent purchase rights of persons other than the Holder of this Note, such number of shares of Common Stock as shall be issuable upon the conversion of the aggregate principal amount of the outstanding Notes.  The Company covenants that all shares of Common Stock that shall be so issuable shall, upon issuance, be duly and validly authorized and issued and fully paid and non-assessable.

(d)           No fractional shares of Common Stock shall be issuable upon a conversion hereunder and the number of shares to be issued shall be rounded up or down to the nearest whole share.

(e)           The issuance of a certificate or certificates for shares of Common Stock upon conversion of this Note shall be made without charge to the Holder for any documentary stamp or similar taxes that may be payable in respect of the issuance or delivery of such certificate, provided that the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the Holder and the Company shall not be required to issue or deliver such certificates unless or until the person or persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid.

(f)           The Note converted into Common Stock shall be canceled upon conversion.

(g)           Each Notice of Conversion shall be given to the Company pursuant to Section 8 and shall be affected on the Business Day on which it is deemed so given if given no later than 5:00 p.m. Nevada time on such Day.  In the event that the Notice of Conversion is deemed given to the Company after 5:00 p.m. Nevada time on any Business Day or at any time on a day that is not a Business Day, Notice of Conversion will be affected on the following Business Day.

Absolute Payment Obligation; Limitation on Prepayment.  Except as expressly provided herein, no provision of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, and interest on, this Note at the time, place, and rate, and in the coin or currency, herein prescribed.  This Note is a direct obligation of the Company.  This Note ranks pari passu with all other Notes now or hereafter issued under the terms set forth herein.

Section 3.                     No Rights as a Stockholder.  This Note shall not entitle the Holder to any of the rights of a stockholder of the Company, including without limitation, the right to vote, to receive dividends and other distributions, or to receive any notice of, or to attend, meetings of stockholders or any other proceedings of the Company, unless and to the extent converted into shares of Common Stock in accordance with the terms hereof.

Section 4.                     Loss, Theft, Mutilation or Destruction.  If this Note shall be mutilated, lost, stolen or destroyed, the Company shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed Note, a new Note for the principal amount of this Note so mutilated, lost, stolen or destroyed but only upon receipt of an affidavit of such loss, theft or destruction of such Note, and, if requested by the Company, an agreement to indemnify the Company in form reasonably acceptable to the Company.

 

  

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Section 5.                     Payment Dates.  Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next following Business Day.

Section 6.                     Notices.  All notices, requests and other communications hereunder must be in writing and will be deemed to have been duly given only if delivered personally against written receipt, by facsimile transmission against facsimile confirmation, or mailed by recognized overnight courier prepaid, to the parties at the following addresses or facsimile numbers:

 

	
  

	
If to the Company:

	
National Automation Services, Inc.

	
  

	 	
P.O. Box 531744

	
  

	 	
Henderson, NV  89053

	
  

	 	
Attn:  Robert W. Chance, President & CEO

	
  

	 	
Fax:   (480) 892-1085

 

	
  

	
If to the Holder:

	
Donovan Enterprises

 

All such notices, requests and other communications will (a) if delivered personally to the address as provided in this Section 8, be deemed given upon delivery, (b) if delivered by facsimile transmission to the facsimile number as provided for in this Section 8, be deemed given upon facsimile confirmation, (c) if delivered by overnight courier to the address as provided in this Section 8, be deemed given on the earlier of the first Business Day following the date sent by such overnight courier or upon receipt and (d) if by electronic mail, when directed to an electronic mail address provided for in this Section 8, be deemed given upon delivery (in each case regardless of whether such notice, request or other communication is received by any other Person to whom a copy of such notice is to be delivered pursuant to this Section 8). Any party from time to time may change its address, facsimile number, email address or other information for the purpose of notices to that party by giving notice specifying such change to the other party hereto.

Section 7.                      Waiver.  Any waiver by the Company or the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Note.  The failure of the Company or the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note.  Any waiver must be in writing.

  

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Section 8.                     Invalidity.  If any provision of this Note is held to be invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any provision is held to be inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances.

Section 9.                     Rules of Construction. By its acceptance of this Note, Holder acknowledges and agrees that he has been represented by counsel during the negotiation and execution of this Note, and therefore he waives the application of any law, regulation, holding or rule of construction providing that ambiguities in an agreement or other document will be construed against the party drafting such agreement or document.

Section 10.                   Governing Law.  This Note shall be construed and enforced in accordance with and governed by the internal laws of the State of Nevada, without regard to its principles of conflicts of laws.

Section 11.                   Consent to Jurisdiction; Service of Process.  The Company and Holder, by his acceptance of this Note, each irrevocably consents and agrees that any proceeding commenced by it arising out of or relating to this Note shall be brought only in the applicable court in the State of Nevada, and each (i) irrevocably accepts and submits to the jurisdiction of such court in personam, (ii) irrevocably and unconditionally waives any objection to the laying of venue in such court, (iii) irrevocably and unconditionally waives and agrees not to plead or assert the claim that any such court is not a convenient forum with respect to any such proceeding or other similar defense or doctrine, and (iv) agrees that process in any such proceeding may be served on any party in the manner provided herein for the giving of notices or in any other manner provided by applicable law.

Section 12.                   Waiver of Jury Trial. The Company and Holder, by his acceptance of this Note, each irrevocably waives any and all right to trial by jury in any proceeding arising out of or related to this Note.

Section 13.                   Transfer; Assignment.  This Note is not transferable, negotiable or assignable by Holder except pursuant to the laws of descent and distribution.

Section 14.                   Headings.  Headings are for convenience of reference only and shall not limit or otherwise affect or be used in the construction of any of the terms or provisions hereof.

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed by an officer thereunto duly authorized as of the date first above indicated.                   

 

	 	
NATIONAL AUTOMATION SERVICES, INC.

	 
	 	 	 	 
	 	
By: 

	
/s/ Robert W Chance

	 
	 	 	
Name: Robert W. Chance

	 
	 	 	
Title: President & Chief Executive Officer

	 

 

 

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