Document:

ex10_66.htm

Exhibit 10.66

 

Security Agreement

This Security Agreement made as of the day of April 14, 2011 by and between Versant Funding LLC, a Delaware Limited Liability Company, having an office at 2200 Fletcher Avenue, 5th Floor, Fort Lee, New Jersey 07024 ("Versant") and National Automation Services, Inc., a Nevada corporation, having a place of business at 2470 Saint Rose Parkway, Suite 314, Henderson, Nevada 89074 (the "Company").

WHEREAS:

 

A. The Company and Versant have entered or are about to enter into a Factoring Agreement, of even date herewith (the "Factoring Agreement")  and intend, from time to time after the date hereof, to enter into one or more Purchase and Sale Agreements (the "Account Agreements")  pursuant to which Versant will purchase certain accounts receivable billed to customers of the Company (such accounts receivable, together with the proceeds thereof, being hereinafter referred to as the "Accounts Receivable") on the basis of, and in reliance upon, the representations, warranties and covenants of the Company contained in the Account Agreements (the "Representations").

 

B. It is a condition precedent to the obligation of Versant to enter into the Factoring Agreement and the Account Agreements and to purchase Accounts Receivable pursuant thereto that the Company shall have entered into this Security Agreement for the purpose of securing the performance of the Representations.

 

NOW, THEREFORE, to induce Versant to enter into the Factoring Agreement and the Account Agreements and to purchase Accounts Receivable pursuant thereto, and in consideration thereof and for ten dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which being hereby acknowledged, the parties hereto agree as follows:

 

1. Security Interest. The Company hereby grants to Versant and its successors and assigns, a security interest (the "Security Interest") in all of the following property now owned or at any time hereafter acquired by the Company or in which the Company now has or at any time hereafter may acquire any right, title or interest: Accounts (whether or not purchased by Versant pursuant to an Account Agreement), Chattel Paper, Inventory, Equipment, Instruments, Investment Property, General Intangibles, Documents, Contract Rights and proceeds and products of the foregoing (including, without limitation, proceeds of insurance)(the "Collateral"). Any term used in the Uniform Commercial Code ("UCC") and not defined in this Security Agreement shall have the meaning given to the term in the UCC or in the Factoring Agreement.

 

2. Obligations. This Security Agreement and the Security Interest shall secure the following obligations (the "Obligations"):

 

(a) Any and all obligations of the Company under the Account Agreements (but not the payment of the Accounts Receivable purchased pursuant thereto) or under any other agreement or instrument executed and delivered pursuant thereto; and

 

(b) Any and all other liabilities and obligations of every kind and nature whatsoever of the Company to Versant, whether such liabilities and obligations be direct or indirect, absolute or contingent, secured or unsecured, now existing or hereafter arising or acquired, due or to become due.

3. Financing Statements and Other Action. The Company will do all lawful acts which Versant deems necessary or desirable to protect the Security Interest or otherwise to carry out the provisions of this Security Agreement, including, but not limited to the procurement of waivers and disclaimers of interest in the Collateral by the owners of any real estate on which the Collateral is located. The Company irrevocably appoints Versant as its attorney-in-fact, coupled with an interest, during the term of this Security Agreement to do all acts which it may be required to do under this Security Agreement.

 

4. Authorization to File Financing Statements.

 

(a) The Company hereby irrevocably authorizes Versant at any time and from time to time to file in any Uniform Commercial Code jurisdiction any initial financing statements and amendments thereto that:

 

(i) indicate the Collateral as all assets of the Company or words of similar effect, regardless of whether any particular asset comprised in the Collateral falls within the scope of Article 9 of the UCC, or as being of an equal or lesser scope or with greater detail;

 

  

  

  

(ii) contain any other information required by part 5 of Article 9 of the UCC for the sufficiency or filing office acceptance of any financing statement or amendment, including (x) whether the Company is an organization, the type of organization, and any organization identification number issued to the Company and, (y) in the case of a financing statement filed as a fixture filing or indicating Collateral as as-extracted collateral or timber to be cut, a sufficient description of real property to which the Collateral relates;

 

(iii) contain a notification that the Company has granted a negative pledge to Versant, and that any subsequent lien or may be tortiously interfering with Versant's  rights; and

 

(iv) advises third parties that any notification of the Company's Account Debtors will interfere with Versant's  collection rights.

 

(b) The Company agrees to furnish any of the foregoing information to Versant promptly upon request.

 

(c) The Company ratifies its authorization for Versant to have filed any like initial financing statements or amendments thereto if filed prior to the date hereof.

 

(d) Versant may add any supplemental language to any such financing statement as Versant may determine to be necessary or helpful in acquiring or preserving rights against third parties.

 

5. Encumbrances. The Company warrants that it has title to the Collateral purportedly owned by it and that there are no sums owed or claims, liens, security interests or other encumbrances against the Collateral other than as set forth in Exhibit A attached hereto and made a part hereof. The Company will notify Versant of any lien, security interest or other encumbrance against the Collateral securing any obligation of the Company, will defend the Collateral against any claim, lien, security interest or other encumbrance adverse to Versant, except for liens having priority there over as set forth on Exhibit A, attached hereto and made a part hereof, and will not create, incur, assume, or suffer to exist any lien, security interest or other encumbrances against the Collateral, whether now owned or hereafter acquired, except:

 

(a) liens in favor of Versant and such other liens as are set forth on Exhibit A attached hereto and made a part hereof;

 

(b) liens for taxes or assessments or other government charges or levies if not yet due and payable or, if due and payable, if they are being contested in good faith by appropriate proceedings and for which appropriate reserves have previously been delivered by the Company to Versant;

 

(c) liens imposed by law, such as mechanics',  material men's, landlords',  warehousemen's, and carriers' liens, and other similar liens, securing obligations incurred in the ordinary course of business, which are not past due for more than 30 days or which are being contested in good faith by appropriate proceedings, and for which appropriate reserves have been previously delivered to Versant;

 

(d) liens, deposits, or pledges to secure the performance of bids, tenders, contracts (other than contracts for the payment of money), leases, public statutory obligations, surety, stay, appeal, indemnity, performance, or other similar bonds or other similar obligations arising in the ordinary course of business;

 

(e) judgments and other similar liens arising in connection with court proceedings, provided that the execution or other enforcement of such liens is effectively stayed and the claims secured thereby are being actively contested in good faith and by appropriate proceedings;

 

(f) easements, right-of-way restrictions, and other similar encumbrances which, in the aggregate, do not materially interfere with the occupation, use, and enjoyment by the Company of the property or assets encumbered thereby in the normal course of its business or materially impair the value of the property subject thereto; and

(g) purchase-money liens on any property hereafter acquired or the assumption of any lien on property existing at the time of such acquisition (and not created in contemplation of such acquisition), or a lien incurred in connection with any conditional sale or other title retention agreement or a capital lease; provided that:

 

(i) any property subject to any of the foregoing is acquired by the Company in the ordinary course of its business and the lien on any such property attaches to such asset concurrently or within 90 days after the acquisition thereof;

 

  

  

  

(ii) the obligation secured by any lien so created, assumed, or existing shall not exceed 100% of the lesser ofthe cost or the fair market value as of the time of acquisition of the property covered thereby to the Company; and

 

(iii) each such lien shall attach only to the property so acquired and fixed improvements thereon.

 

6. Maintenance of Collateral. The Company shall preserve the Collateral for the benefit of Versant. Without limiting the generality of the foregoing, the Company shall:

 

(a) make all such repairs, replacements, additions and improvements to its equipment as in its judgment are necessary to permit such business to be properly and advantageously conducted at all times;

(b) maintain and preserve its inventory except as sold in the ordinary course of business;

 

(c) preserve all beneficial contract rights to the extent commercially reasonable;

(d) in conjunction with, and at the direction of, Versant, take commercially reasonable steps to collect all Accounts; and

 

(e) pay all taxes, assessments or other charges on the Collateral when due, unless the amount or validity of such taxes, assessments or charges is being contested in good faith by appropriate proceedings and reserves with respect thereto in conformity with generally accepted accounting principles have been provided on the books of the Company.

 

Nothing contained herein shall be construed to prohibit the Company from buying and selling equipment and inventory in the ordinary course of business; provided, however, that the Company will not sell equipment where either the adjusted basis of such equipment determined in accordance with generally accepted accounting principles or the sales price of such equipment exceeds, for any 12 month period, $5,000 in any individual transaction or $20,000 in the aggregate.

 

7. Additional Provisions Concerning the Collateral.

(a) The Company irrevocably appoints Versant as its attorney-in-fact (such power of attorney being coupled with an interest) and proxy, with full authority in the place and stead of the Company and in its name or otherwise, from time to time in Versant's discretion, to take any action or execute any instrument which Versant may deem necessary or advisable to accomplish the purposes of this Security Agreement, including, without limitation: (i) to obtain and adjust insurance required to be paid to Versant pursuant to Section 8 hereof; (ii) to ask, demand, collect, sue for, recover, compound, receive, and give acquittance and receipts for moneys due and to become due under or in respect of any of the Collateral; (iii) to receive, endorse, and collect any checks, drafts or other instruments, documents, and chattel paper in connection with clause (i) or clause (ii) above; (iv) to sign the Company's name on any invoice or bill of lading relating to any Account, on drafts against customers, on schedules and assignment of Accounts, on notices of assignments, financing statements and other public records, on verification of Accounts and on notices to customers (including notices directing customers to make payment directly to Versant); (v) if a Default (as hereinafter defined) has occurred and is continuing, to notify the postal authorities to change the address for delivery of its mail to an address designated by Versant, to receive, open and process all mail addressed to the Company, to send requests for verification of Accounts to customers; and (vi) to file any claims or take any action or institute any proceeding which Versant may deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce the rights of Versant with respect to any of the Collateral. The Company ratifies and approves all acts of such attorney; and so long as such attorney acts in good faith and without gross negligence, such attorney shall have no liability to the Company for any act or omission there as.

(b) If the Company fails to perform any agreement contained herein, Versant may itself perform, or cause performance of, such agreement or obligation, and the costs and expenses of Versant incurred in connection therewith shall be payable by the Company and shall be fully secured hereby.

(c) The powers conferred upon Versant hereunder are solely to protect its interest in the Collateral and shall not impose any duty upon Versant to exercise any such powers. Except for the safe custody of any Collateral in its possession and the accounting for moneys actually received by Versant hereunder, Versant shall have no duty as to any Collateral or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral.

  

  

  

 

(d) Anything herein to the contrary notwithstanding, (i) the Company shall remain liable under any contracts and agreements relating to the Collateral, to the extent set forth therein, to perform all of its obligations thereunder to the same extent as if this Security Agreement had not been executed; (ii) the exercise by Versant of any of its rights hereunder shall not release the Company from any of its obligations under the contracts and agreements relating to the Collateral; and (iii) Versant shall not have any obligation or liability by reason of this Security Agreement under any contracts and agreements relating to the Collateral, nor shall Versant be obligated to perform any of the obligations or duties ofthe Company thereunder or to take any action to collect or enforce any claim for payment assigned hereunder.

8. Insurance.

The Company shall maintain insurance covering the Collateral with financially sound and reputable insurers satisfactory to Versant against such risks as are customarily insured by a business in the same or similar industry and similarly situated for an amount not less than the full replacement value of such Collateral. All such insurance policies covering property on and after the date such property becomes subject to the Security Interest shall name Versant on a Lender's Loss Payable Endorsement. At the request of Versant, all insurance policies covering property subject to the Security Interest shall be delivered to and held by Versant. If, while any Obligations are outstanding, any proceeds in excess of $5,000 with respect to any casualty loss are paid to Versant under such policies on account of such casualty loss, and there is no breach by the Company of any representations, or default by the Company in the performance of any covenant herein or in the Factoring Agreement contained (any of the foregoing being hereinafter referred to as an "Event of Default") which is continuing, Versant will pay over such proceeds in whole or in part to the Company, for the purpose of repairing or replacing the Collateral destroyed or damaged, any such repaired or replaced Collateral being secured hereby. If an Event of Default has occurred and is continuing, Versant may apply the proceeds in its discretion to any of the Obligations. All proceeds less than or equal to $5,000 with respect to any casualty loss shall be paid to the Company, to be used by the Company to replace or repair the Collateral destroyed or damaged, except that if an Event of Default shall have occurred, then Versant shall apply the proceeds in its discretion to any of the Obligations. Versant is hereby appointed during the term of this Agreement as irrevocable attorney-in-fact to collect the proceeds of such insurance, to settle any claims with the insurers in the event of loss or damage, to endorse settlement drafts and, upon an Event of Default under this Agreement, to cancel, assign or surrender any insurance policies.

 

9. Fixtures. It is the intention of the parties hereto that none of the equipment, machinery or other property securing the Obligations hereunder shall become or constitute fixtures.

10. Default. (a) (i) If breach or default shall be made in the due performance or observance of any provision of this Security Agreement and such breach or default shall continue for a period of 5 days after written notice thereof shall have been received by the Company from Versant; or (ii) an Event of Default, as defined in Section 8, shall have occurred and shall continue for a period of 5 days after written notice thereof shall have been received by the Company from Versant (each of the foregoing being hereinafter referred to as a "Default"),  then upon the occurrence of any such Default or at any time or times thereafter, unless such Default shall have been cured within any applicable grace period, or waived in writing by Versant, Versant shall have all of the rights and remedies of a secured party under the Uniform Commercial Code and shall have full power and authority to sell or otherwise dispose of the Collateral or any part thereof. Any such sale or other disposition, subject to the provisions of applicable law, may be by public or private proceedings and may be made by one or more contracts, as a unit or in parcels, at such time and place, by such method, in such manner and on such terms as Versant may determine. Except as required by law, such sale or other disposition may be made without advertisement or notice of any kind or to any third party or third person. In the event any consent, approval or authorization of any governmental agency shall be necessary to effectuate any such sale or sales, the Company shall execute, as necessary, all applications or other instruments as may be required.

 

(b) Upon the occurrence of a Default and at any time or times thereafter, subject to the provisions of applicable law, Versant may commence proceedings in any court of competent jurisdiction for the appointment of a receiver (which term shall include a receiver-manager) of the Collateral or of any part thereof or may by instrument in writing appoint any person to be receiver of the Collateral or any part thereof and may remove any receiver so appointed by Versant and appoint another in his stead; and any such receiver appointed by instrument in writing shall have the power (i) to take possession of the Collateral or any part thereof, (ii) to carry on the business of the Company, (iii) to borrow money on the security of the Collateral in priority to this Security Agreement required for the maintenance, preservation or protection of the Collateral or any part thereof or for the carrying on of the business of the Company, and (iv) to sell, lease or otherwise dispose of the whole or any part of the Collateral at public auction, by public tender or by private sale, either for cash or upon credit, at such time and upon such terms and conditions as the receiver may determine; provided that any such receiver shall be deemed the agent of the Company and Versant shall not be in any way responsible for any misconduct or negligence of any such receiver except for willful misconduct or gross negligence.

 

  

  

  

11. Standards for Exercising Remedies. To the extent that applicable law imposes duties on Versant to exercise remedies in a commercially reasonable manner, the Company acknowledges and agrees that it is not commercially unreasonable for Versant:

 

(a) to not incur expenses to prepare Collateral for disposition or otherwise to complete raw material or work in process into finished goods or other finished products for disposition;

 

(b) to fail to obtain third party consents for access to Collateral to be disposed of, or to obtain or, if not required by other law, to fail to obtain governmental or third party consents for the collection or disposition of Collateral to be collected or disposed of;

 

(c) to fail to exercise collection remedies against Account Debtors or other persons obligated on Collateral or to remove liens or encumbrances on any adverse claims against Collateral;

 

(d) to exercise collection remedies against Account Debtors and other persons obligated on Collateral directly or through the use of collection agencies and other collection specialists;

(e) to advertise dispositions of Collateral through publications or media of general circulation, whether or not the Collateral is of a specialized nature;

(f) to hire one or more professional auctioneers to assist in the disposition of Collateral, whether or not the collateral is of a specialized nature;

 

(g) to dispose of Collateral by using Internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capability of doing so, or that match buyers and sellers of assets;

(h) to dispose of assets in wholesale rather than retail markets;

(i) to disclaim all disposition warranties; or

(j) to purchase insurance or credit enhancements to insure Versant against risks of loss, collection or disposition of Collateral or to provide to Versant a guaranteed return from the collection or disposition of Collateral.

The Company acknowledges that the purpose of this Section 11 is to provide non-exhaustive indications of what actions or omissions by Versant would not be commercially unreasonable in Versant's exercise of remedies against the Collateral and that other actions or omissions by Versant shall not be deemed commercially unreasonable solely on account of not being indicated in this Section 11. Without limitation upon the foregoing, nothing contained herein shall be construed to grant any rights to the Company or to impose any duties on Versant that would not have been granted or imposed by this Security Agreement or by applicable law in the absence of this Section 11.

12. Payment of Taxes, Charges. Versant, at its option, after notice to the Company, may discharge any taxes, charges, assessments, security interests, liens or other encumbrances (except those permitted by Section 5 of this Security Agreement) upon the Collateral or otherwise protect the value thereof. All such expenditures incurred by Versant shall become payable by the Company to Versant upon demand, shall bear interest at the rate of 18% per annum from the date incurred to the date of payment, and shall be secured by the Collateral.

13. Duties with Respect to Collateral. Versant shall have no duty to the Company with respect to the Collateral other than the duty to use reasonable care in the safe custody of any of the Collateral in its possession. Without limiting the generality of the foregoing, Versant, although it may do so at its option, shall be under no obligation to the Company to take any steps necessary to preserve rights in the Collateral against other parties.

14. Proceeds and Expenses of Dispositions. The Company shall pay to Versant on demand any and all expenses, including reasonable attorneys' fees and disbursements, incurred or paid by Versant in protecting, preserving or enforcing its rights under or in respect of any of the Obligations or any of the Collateral. After deducting all of said expenses, the residue of any proceeds of collection or sale of the Collateral shall, to the extent actually received in cash, be applied to the payment of the Obligations in such order or preference as Versant may determine, and notwithstanding contrary instructions received by Versant from the Company or any other third party.

 

  

  

  

 

15. No Lien Termination without Release.  In recognition of Versant's right to have its attorneys'  fees and other expenses incurred in connection with this Security Agreement secured by the Collateral, notwithstanding payment in full of all Obligations by the Company, Versant shall not be required to terminate any Uniform Commercial Code Financing Statements filed in its favor against the Company relating to the Collateral unless and until the Company and all entities which are secondarily liable on the Obligations have executed and delivered to Versant a general release, covering claims both known and unknown, in a form reasonably satisfactory to Versant. Company understands that this provision constitutes a waiver of its rights under §9-513 of the UCC.

16. Waivers. To the extent permitted by law, the Company hereby waives demand for payment, notice of dishonor or protest and all other notices of any kind in connection with the obligations except notices required hereby, by law or by any other agreement between the Company and Versant. Versant may release, supersede, exchange or modify any Collateral or security which it may from time to time hold and may release, surrender or modify the liability of any third party without giving notice hereunder to the Company. Such modifications, changes, renewals, releases or other actions shall in no way affect any of the Obligations or the Company’s obligations hereunder.

 

17. Transfer Expenses. The Company will pay, indemnify and hold harmless Versant from and against all costs and expenses (including taxes, if any) arising out of or incurred in connection with any transfer of Collateral into or out of the name of Versant and all reasonable costs and expenses, including reasonable legal fees, of Versant arising out of or incurred in connection with this Security Agreement; provided, however, that the Company shall not be responsible for expenses arising out of or incurred as a result of willful misconduct by Versant.

18. Modification. This Agreement may not be modified or amended without the prior written consent of each of the parties hereto.

 

19. Notices. Except as otherwise provided in this Security Agreement, all notices and other communications hereunder shall be deemed to have been sufficiently given when mailed, postage prepaid, by certified or registered mail, sent by courier or telefaxed, return receipt requested, or confirmation of receipt requested in the case of a telefax, and the sender shall have received such return receipt or confirmation, such notices or communications to be, addressed as follows:

 

	
To Versant:

	
Versant Funding LLC

	  	
2200 Fletcher Avenue, 5th floor

	  	
Fort Lee, New Jersey

	  	
Attn: Mark D Weinberg, Esq.

	  	
Fax: (201) 482-0283

	  	  
	

To Company:                                       

	
National Automation Services, Inc.

	  	

2470 Saint Rose Parkway, Suite 314

	  	

Henderson, Nevada 89074

	  	

Attn: Robert Chance

	 	
Fax: (480) 892-1085

 

or at such other address or telefax number, as the case may be, as the party to whom such notice or demand is directed may have designated in writing to the other party hereto by notice as provided in this Section 19. Each of the parties hereto shall have the right to rely on as an original any notice given hereunder by telefax as aforesaid.

 

20. Rights; Merger. No course of dealing between the Company and Versant, nor any delay in exercising, on the part of Versant, any right, power or privilege hereunder, shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies hereunder are cumulative and are in addition to, and not exclusive of, any rights or remedies provided by law or in equity, including, without limitation, the rights and remedies of a secured party under the Code. It is understood and agreed that all understandings and agreements heretofore had between the parties, if any, with respect to the subject matter hereof are merged into this Security Agreement, which alone fully and completely expresses their agreement.

 

21. Governing Law, Binding Effect.  This Security Agreement and the rights and obligations of the parties hereunder shall be construed in accordance with and governed by the laws of the State of New Jersey. This Security Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, including any other holder or holders of any obligations and may be executed in two or more counterparts, each of which shall together constitute one and the same agreement.

 

  

  

  

 

22. Severability.  The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision hereof.

 

IN WITNESS WHEREOF, the parties hereto have executed this Security Agreement as of the day and year first above written.

 

 

	
For:

	
National Automation Services, Inc.

	  	  
	
By:

	
/s/ Robert Chance

	  	
Robert Chance, President  & CEO

	  	  
	  	  
	
For:

	
Versant Funding, LLC

	  	  
	
By:

	
/s/ Mark Weinberg

	  	
Mark D Weinberg, Chief Executive Officer

 

 

 

  

  

  

 

Performance Guaranty

 

This Performance Guaranty made as of the 14 day of April, 2011 by and between Versant Funding LLC, a Delaware Limited Liability Company, having an office at 2200 Fletcher Avenue, 51 Floor, Fort Lee, New Jersey 07024 ("Versant") and Robert Chance ("Guarantor").

WHEREAS:

A. National Automation Services, Inc. (the "Company") and Versant have or are about to enter into a Factoring Agreement, of even date herewith (the "Factoring  Agreement") and, from time to time after the date hereof, intend to enter into Purchase and Sale Agreements (collectively, the "Account Agreements"), pursuant to which Versant will purchase certain accounts receivable billed to customers of the Company ("Accounts Receivable") on the basis of, and in reliance upon, the representations, warranties and covenants of the Company contained in the Account Agreements (collectively, the "Representations").

 

B. Guarantor is the President  & CEO of the Company and owns 2.43% of the issued and outstanding shares of the Company.

 

C. It is a condition precedent to the obligation of Versant to enter into the Factoring Agreement and the Account Agreements and to purchase Accounts Receivable pursuant thereto that Guarantor shall have entered into this Performance Guaranty for the purpose of guaranteeing performance by the Company of the Representations.

 

NOW, THEREFORE, in order to induce Versant to enter into the Factoring Agreement and the Account Agreements and to purchase Accounts Receivable pursuant thereto, and for ten dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which being hereby acknowledged, Guarantor hereby agrees as follows:

 

1. Guaranteed Obligations. Guarantor hereby irrevocably and unconditionally guarantees (a) the due and punctual performance by the Company of the Representations, (b) the payment (and not merely the collectability) of any loss, liability or expense incurred by Versant in the event any one or more of the Representations  is untrue in any respect or fail to be performed, and (c) the payment (and not merely the collectability) of any other obligation owed by the Company to Versant of any nature that arises hereafter: (i) under the Factoring Agreement or any Account Agreement; (ii) pursuant to any modification or amendment thereof; or (iii) pursuant to any new, amended, modified or superseding Factoring Agreement executed hereafter by Versant and the Company (the "Guaranteed  Obligations"). This Performance Guaranty is a continuing guaranty of the Guaranteed Obligations for the duration of the term of any such Factoring Agreement and Account Agreements and shall be fully enforceable until each of the Guaranteed Obligations has been fully and completely satisfied. If the Company, or any of its successors and assigns, shall fail to perform all or any of the Representations and/or fail to duly and punctually pay the amounts set forth in subdivisions (a), (b), and (c) above, or any of them, Guarantor shall forthwith pay the same on demand.

 

2. Demand by Versant. The liabilities and obligations of Guarantor hereunder in respect of the Guaranteed Obligations shall become due and payable by Guarantor to Versant immediately after demand hereunder is made upon Guarantor by Versant in writing. Any such demand may be delivered concurrently with any notice of default. Versant shall be entitled to exercise its rights hereunder one or more times and no failure to exercise any such rights shall constitute a waiver thereof or of the right thereafter to seek payment hereunder on account thereof or otherwise.

 

3. Primary Obligation. The liability of Guarantor hereunder shall be primary, direct and immediate, and not conditional or contingent upon pursuit by Versant of any remedies it may have against the Company or any other party with respect to the Guaranteed Obligations. Any one or more successive and/or concurrent actions may be brought against Guarantor either in the same action or proceeding, if any, brought against the Company, or in separate actions, as Versant in its sole discretion may deem advisable.

 

4. Subrogation. Guarantor shall become subrogated to the rights of Versant against the Company for any amounts actually paid by Guarantor to Versant hereunder only upon the payment or discharge in full of all of the Guaranteed Obligations. Such rights of subrogation shall be shared with other guarantors, if any, pari passu and in proportion to the payments any such guarantors have made to Versant under any like performance guaranty. Versant shall be entitled to exercise any and all remedies to which it may be entitled against any collateral pledged by the Company as if no such rights of subrogation exist.

 

  

  

  

 

5. Waiver of Demands, Notices, Diligence. Guarantor hereby consents, to the extent permitted by applicable law, to all the terms and conditions of the Guaranteed Obligations and waives (a) demand for payment of the Guaranteed Obligations or of any claim therefore; (b) notice of the occurrence of a default or of an event of default of any of the Guaranteed Obligations; (c) protest of the nonpayment of any of the Guaranteed Obligations; (d) notice of presentment, demand and protest; (e) notice of acceptance of any guaranty herein provided for or of the terms and provisions thereof or hereof by Versant; (f) notice of any indulgences or extensions granted to the Company or to any other person or entity which shall have succeeded to or assumed the obligations of the Company; (g) any requirement of diligence or promptness on Versant's  part in the enforcement of any of its rights hereunder; (h) any enforcement of any of the Guaranteed Obligations; (i) any right which Guarantor might have to require Versant to proceed against any other guarantor of the Guaranteed Obligations or to realize on any collateral security therefore; and G) any and all notices of every kind and description which may be required to be given by any statute or rule of law in any jurisdiction. The waivers hereinabove set forth shall be effective in all events and shall survive any liquidation, merger or consolidation of the Company or if the Company otherwise ceases to exist.

 

6. Obligations of Guarantor. The obligations of Guarantor under this Guaranty shall be unconditional, irrespective of the validity, regularity or enforceability of any of the Guaranteed Obligations. Such obligations shall not be affected by any action taken under any Guaranteed Obligations in the exercise of any right or remedy therein conferred; by any failure or omission on Versant's  part to enforce any right granted there under or hereunder or any remedy conferred thereby or hereby; by any waiver of any term, covenant, agreement or condition of any of the Guaranteed Obligations or this Guaranty; by any release of any security or any other guaranty at any time existing for the benefit of Versant; by the merger or consolidation of the Company, or by any sale, lease or transfer by the Company to any person or entity of any or all of its properties; by any action of Versant granting indulgence or extension to or waiving or acquiescing in any default by the Company or by an successor to the Company or by any other person or entity which shall have assumed its obligations; by reason of any disability or other defense of the Company or of any successor to the Company; by any modification, or amendment of any agreement between the Company and Versant, or by the execution of any new, amended, modified or superseding Factoring Agreement between Versant and the Company or by any circumstance whatsoever (with or without notice to or knowledge of Guarantor) which may or might in any manner or to any extent vary or increase the risk of the Guarantor hereunder, it being the purpose and intent of Guarantor that the obligations of Guarantor shall be absolute and unconditional under any and all circumstances and shall not be discharged except by payment or performance as provided herein, and then only to the extent of such payment or performance.

7. Notices. All notices, demands, requests and other communications  required or permitted hereunder shall be deemed to have been sufficiently given or made if in writing and delivered by hand personally to, or mailed by registered or certified mail, return receipt requested, or by overnight courier, or telefaxed with confirmation of receipt requested, to:

 

	
To Versant:

	
Versant Funding LLC

	  	
2200 Fletcher Avenue, 5th floor

	  	
Fort Lee, New Jersey

	  	
Attn: Mark D Weinberg, Esq.

	  	
Fax: (201) 482-0283

	  	  
	
To Guarantor:                                    

	
Robert Chance

	  	
384 Desert Cove

	  	
Henderson, Nevada 89012

	  	
Fax: (480) 892-1085

or at such other address as the party to whom such notice or demand is directed may have designated in writing to the other parties hereto by notice as provided in this section.

 

8. Survival of Guaranty. This Performance Guaranty shall inure to the benefit of and be binding upon Guarantor and Versant and their respective heirs, successors and assigns, including any subsequent holder or holders of any Guaranteed Obligations, and the term "Versant" shall include any such holder or holders whenever the context permits. Guarantor hereby expressly consents and agrees that this Performance Guaranty shall continue in full force and effect notwithstanding: (a) the modification, amendment or change in any way, of the terms and conditions of the relationship between Versant and the Company; (b) any increase or change in Guarantor's risk resulting from any such modification, amendment or change in any of the terms and conditions of the relationship between Versant and the Company and/or (c) the execution of a new or superseding Factoring Agreement between Versant and the Company.

 

9. Independent Obligation. Versant may proceed against Guarantor under this Performance Guaranty without first proceeding against the Company, against any other guarantor or any other person or any security held by Versant and without pursuing any other remedy.

 

  

  

  

 

10. Counterparts. This Performance Guaranty may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which when so executed and delivered shall be an original, but all of the counterparts shall together constitute one and the same instrument.

 

11. Successors, Governing Law, Consent to Jurisdiction, Waiver of Service, Waiver of Jury Trial. This Performance Guaranty shall inure to the benefit of and be binding upon the successors and assigns of the parties hereto. This Performance Guaranty shall be governed by and construed in accordance with the laws ofthe State of New Jersey applicable to agreements made and to be performed exclusively within such state. The parties hereto mutually agree that any legal action relating to or arising from this Performance Guaranty or relating in any way to the factoring relationship between Versant and the Seller and Guarantor(s), shall be maintained only in (a) the Superior Court of the State of New Jersey, County of Bergen, (b) the federal courts in and for the District of New Jersey, Newark vicinage, (c) the Supreme Court of the State of New York, County of New York, or (d) the federal courts in and for the Southern District of New York (the "Courts of Jurisdiction"), and the parties hereto expressly consent and agree, and waive any objection, to the jurisdiction of the Courts of Jurisdiction over any such legal action, and over the parties hereto, and to the laying of venue in any of the Courts of Jurisdiction. The parties expressly agree that no legal action may be maintained between or among the parties hereto other than in the Courts of Jurisdiction, however, nothing in this paragraph shall be construed to limit the rights of the parties to domesticate, or otherwise pursue, any judgment obtained in the Courts of Jurisdiction in any other court, state, territory or nation. Furthermore, the parties hereto expressly agree to waive all otherwise applicable statutes, rules, or other requirements relating to the service of legal process, including, but not limited to, the service of a summons and/or complaint, and hereby agree to accept service of process in any such legal action pursuant solely to the notice provisions contained herein. Any such service of legal process made pursuant to the notice provisions hereof shall be deemed to be good and valid service, without regard for any contrary or inconsistent statute, rule or provision. The parties hereto do hereby waive any and all right to a trial by jury in an action or proceeding arising out of this Performance Guaranty or any of the Factoring Documents.

 

IN WITNESS WHEREOF, the Guarantor has executed this Performance Guaranty as of the day and year first above written.

 

	
For:

	
GUARANTOR

	  	  
	
By:

	
/s/ Robert Chance

	  	
Robert Chance, Individually

 

  

  

  

 

Factoring Agreement

 

This Factoring Agreement made as of the 14 day of April, 2011 by and between Versant Funding LLC, a Delaware Limited Liability Company, having an office at 2200 Fletcher Avenue, 51 Floor, Fort Lee, New Jersey 07024 ("Versant") and Robert Chance ("Guarantor").

 

WHEREAS:

 

A. Seller has requested that Versant purchase from Seller, from time to time, all of Seller's right, title and interest in and to certain accounts receivable due to Seller from its customers; and

 

B. Versant has agreed to purchase certain of such accounts receivable from Seller, from time to time, upon the terms and subject to the conditions set forth in this Factoring Agreement.

 

NOW, THEREFORE, in order to induce Versant to purchase such accounts receivable, and for ten dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which being hereby acknowledged, the parties hereto agree as follows:

 

1. Sale and Purchase of Accounts Receivable. Seller will tender to Versant certain of Seller's  invoices to be rendered to Seller's  customers ("Account Debtors") with respect to goods sold and delivered to, or services performed for, such Account Debtors by Seller (individually, an "Account Receivable" and collectively, the "Accounts Receivable"). Such invoices shall be forwarded by Versant to the respective Account Debtors, in accordance with the standard billing procedures of Versant, together with or after notice from Seller and/or Versant to such Account Debtors of the irrevocable assignment to Versant of payment there under. Versant will conduct such examination and verification of the invoices so tendered, and such credit investigation of such Account Debtors, as Versant considers necessary or desirable, and will notify Seller as to which of the individual Accounts Receivable so tendered, if any, Versant elects to purchase. Versant shall at all times have the absolute right in its sole discretion to reject any or all of the Accounts Receivable, whether or not Versant has previously purchased Accounts Receivable from Seller or previously purchased Accounts Receivable of any particular Account Debtor.

 

2. Account Agreements. The Accounts Receivable that Versant elects to purchase from Seller shall be purchased upon the terms and subject to the conditions of separate Purchase and Sale Agreements, between Seller and Versant, the form of which has heretofore been provided to Seller (the "Account Agreements"). Versant shall advance against the Purchase Price (as defined in the Account Agreements) for the Accounts Receivable Versant elects to purchase pursuant to the provisions hereof, Seventy-Five (75%) Percent of the face amount of such Accounts Receivable purchased. Versant shall pay the balance of the Purchase Price, as calculated pursuant to the applicable Account Agreement, pursuant to the further provisions of this Section 2. For the purposes hereof, the term "Schedule Closure Date" shall mean, with respect to each of the schedules or batches of Accounts Receivable purchased pursuant to each Account Agreement (a "Schedule"), the date with respect to each Schedule on which the applicable Account Debtors have either paid all such Accounts Receivable in the Schedule or, a Chargeback (as defined in the Account Agreements) has been taken there against; provided, however, that Seller may, at its election, repurchase any such Accounts Receivable from Versant, for a price equal to the face amount of such Account Receivable, in which event such Account Receivable shall be deemed duly paid for the purposes of determining the Schedule Closure Date. Notwithstanding anything to the contrary herein contained, the Accounts Receivable purchased by Versant pursuant to an Account Agreement, may be aggregated and administered as a single Account Receivable, or as several discreet Accounts Receivable, in the discretion of Versant (each, an "Aggregate Receivable" or Schedule as previously defined). Periodically, from and after each Schedule Closure Date, the balance of the Purchase Price, if any, payable in respect of the Accounts Receivable purchased pursuant to each Account Agreement (the "Purchase Price Balance") shall be aggregated with the Purchase Price Balance, if any, from all other Schedules in respect of which there has occurred other Schedule closures (the "Aggregate Purchase Price Balance"), and Versant shall credit to Seller's  reserve account, the positive amount, if any, of such Aggregate Purchase Price Balance. Chargebacks from all Account Agreements shall be debited against the Seller's  reserve account and the net credit balance, if any, shall be rebated to the Seller in accordance with Versant's  standard rebate practices. Capitalized terms not herein defined shall have the respective meanings attributed thereto in the Account Agreement. In the event of any conflict between the provisions of an Account Agreement and this Factoring Agreement, the provisions of this Factoring Agreement shall govern and control. Notwithstanding the first sentence of this Section 2, if either Seller or Versant shall fail to execute an Account Agreement with respect to a particular Account Receivable tendered by Seller to Versant, and Versant shall nevertheless pay an Advance Amount to Seller for such Account Receivable, Versant shall be presumed conclusively to have purchased, and Seller shall be presumed conclusively to have sold, such Account Receivable pursuant to an Account Agreement, and such Account Receivable shall be governed by the terms and conditions (including, without limitation, Seller's  representations, warranties and covenants to Versant contained therein) set forth in the Account Agreement in the form heretofore provided to Seller.

 

  

  

  

 

3. Conditions Precedent. Versant shall not be required to purchase any Accounts Receivable pursuant to an Account Agreement unless and until each of the following conditions shall have been satisfied:

 

(a) Versant and Seller shall have entered into a Security Agreement in the form heretofore provided to Seller (the "Security Agreement"), to secure the performance by Seller of certain representations, warranties and covenants set forth in the Account Agreements (the "Representations") (but not the payment of the Accounts Receivable purchased thereby);

(b) Robert Chance shall have executed and delivered to Versant a Performance Guaranty in the form heretofore provided to Seller (the "Performance  Guaranty"), to guarantee Seller's  performance of the Representations (but not the payment of the Accounts Receivable purchased thereby);

 

(c) Seller shall have authorized Versant to file Uniform Commercial Code financing statements with the appropriate filing officer or officers in each jurisdiction where, in the reasonable opinion of Versant, such filing is necessary or desirable to perfect the security interests granted pursuant to the Security Agreement and to provide notice of the factoring arrangement; and

 

(d) Seller shall have executed and delivered to Versant an Account Agreement in the form heretofore provided to Seller, together with the schedule of proposed Accounts Receivable attached thereto as Schedule A, which Schedule A shall be duly executed and dated by Seller.

 

Versant's  failure to require the satisfaction of any one or more of these conditions precedent shall not be deemed a waiver thereof, nor shall such failure in any way alter, modify or vitiate Seller's  obligations hereunder or any guarantor's obligations under the respective Performance Guaranties.

 

4. Cross-Collateralization. If a Default (as defined in the Security Agreement) shall have occurred, Versant shall have the right, which may be exercised in its sole and absolute discretion at any time and from time to time during the continuance of such Default, to apply all amounts collected with respect to Accounts Receivable, as follows, before any payment from such collections shall be made to Seller: (i) first, against the unreimbursed balance of the Advance Amounts made by Versant to Seller with respect to Accounts Receivable purchased from Seller under one or more Account Agreements; (ii) next, to the payment of all fees and expense reimbursements (as described in the Account Agreements) accrued with respect to Accounts Receivable purchased by Versant from Seller, whether or not such fees have become due and payable pursuant to the terms of the Account Agreements; and (iii) the balance, if any, to the payment of any and all other liabilities and obligations of Seller to Versant pursuant to this Factoring Agreement, the Security Agreement, the Account Agreements and any other agreement entered into between Versant and Seller concurrently or in connection herewith.

 

5. Collection of Accounts Receivable. Seller will instruct all of the Account Debtors obligated with respect to the Accounts Receivable assigned to Versant to mail or deliver payments on such Accounts Receivable directly to Versant at its address herein above set forth or at such other address as Versant may specify in a written notice to Seller. Such instructions shall not be rescinded or modified without Versant's prior written consent. If, despite such instructions, Seller shall receive any collections or other proceeds of the Accounts Receivable assigned to Versant, Seller shall as soon as practicable, but in no event later than two (2) business days after such receipt, deliver such payments, in the exact form received, to Versant. Failure to deliver such payments to Versant as provided herein shall be deemed a default under the Factoring Agreement and under the Security Agreement and shall, in addition to any and all other amounts due, cause Seller to be obligated to pay to Versant, a charge of fifteen (15%) percent of the amount of any such payment which has been received by Seller and not delivered in kind to Versant as provided herein. All payments received by Versant shall be applied as provided in Section 4 above. Versant shall have no liability to Seller for any mistake in the application of any payment received with respect to any Account Receivable, provided Versant shall have acted in good faith and without gross negligence in respect thereof.

 

  

  

  

 

6. Payment of Expenses and Taxes.  Seller will (a) pay or reimburse Versant for all of Versant's out-of­ pocket costs and expenses incurred in connection with the preparation and execution of, and any amendment, supplement or modification to this Factoring Agreement, the Security Agreement, any of the Account Agreements and any other documents prepared in connection herewith or therewith, and the consummation of the transactions contemplated hereby and thereby, including, without limitation, the fees and disbursements of counsel to Versant (whether or not such counsel is affiliated with Versant); (b) pay or reimburse Versant for all its costs and expenses incurred in connection with the enforcement or preservation of any rights under this Factoring Agreement, the Security Agreement, the Account Agreements and such other documents, and the verification of the Accounts Receivable and the creditworthiness of the Account Debtors, including, without limitation, fees and disbursements of counsel to Versant (whether or not such counsel is affiliated with Versant); (c) pay, indemnify, and hold harmless from and against any and all recording and filing fees and any and all liabilities with respect to, or resulting from, any delay in paying, stamp, excise and other taxes, if any, which may be payable or determined to be payable in connection with the execution and delivery of, or consummation of, any of the transactions contemplated by, or any amendment, supplement or modification of, or any waiver or consent under or in respect of this Factoring Agreement, the Security Agreement, the Account Agreements and any such other documents; and (d) pay, indemnify, and hold Versant harmless from and against any and all other liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement and performance of this Factoring Agreement, the Security Agreement, the Account Agreements and such other documents (all of the foregoing being hereinafter collectively referred to as the "indemnified  liabilities"); provided, however, that Seller shall have no obligation hereunder to Versant with respect to indemnified liabilities arising from (i) the gross negligence or willful misconduct of Versant, (ii) salaries and other amounts payable by Versant to its employees in the ordinary course of business or (iii) expenses incurred by Versant (other than those specifically enumerated in clauses (a), (b) and (c) above) in the ordinary course of business in connection with the performance of its obligations hereunder. In recognition of Versant's right to have its attorneys' fees and other expenses incurred in connection with this Factoring Agreement secured by the collateral pledged by Seller pursuant to the Security Agreement, notwithstanding payment in full of all obligations by Seller, Versant shall not be required to record any terminations or satisfactions of any of Versant's  liens on the collateral unless and until Seller has executed and delivered to Versant, a general release in a form reasonably satisfactory to Versant. Seller understands that this provision constitutes a waiver of its rights under section 9-513 of the Uniform Commercial Code. The agreements in this Section 6 shall survive the termination of this Factoring Agreement.

 

7. Amendments.  The provisions of this Factoring Agreement may be modified or amended only by a written instrument duly executed on behalf of Versant and Seller by their respective duly authorized representatives and no such amendment or modification hereof will in any way release or diminish any guarantor's obligations under the respective Performance Guaranties.

 

8. Termination. This Factoring Agreement shall begin on the date hereof and, unless sooner terminated as herein provided, terminate at 11:59 p.m. on the day immediately preceding the second year anniversary of the date hereof (the "Scheduled Term"), except that the Representations, warranties and covenants of Seller and the remedies of Versant for a breach of such Representations, warranties and/or covenants shall survive the termination of this Factoring Agreement. Such termination shall not affect the rights of Versant in enforcing its remedies against Seller or any collateral upon any default by Seller hereunder or upon a Default under the Security Agreement. This Factoring Agreement shall be deemed automatically renewed from year to year (the "Rescheduled  Term") unless Seller shall deliver written notice of cancellation to Versant at least 60 days but not more than 90 days prior to the expiration date then in effect hereunder.

 

9. Fee. The fee to be earned by Versant for the purchase of Accounts Receivable from Seller as set forth in the Fee and Reimbursements Schedule attached to the Account Agreements (the "Fee") has been established after negotiation between the parties based upon the delivery by Seller of not less than $200,000.00  per quarter of approved Accounts Receivable for each of the first two (2) quarters that this Factoring Agreement is in effect and $250,000.00  per month of approved Accounts Receivable for each month thereafter (the "Committed  Base Sales Amount") to Versant during each 90 day period of the first 180 days that this Factoring Agreement is in effect and during each 30 day period thereafter (a "Term Period") of the Scheduled Term or Rescheduled Term as applicable.  Seller expressly acknowledges that Versant has agreed to the Fee in reliance upon Seller's  agreement during each Term Period to deliver at least the Committed Base Sales Amount and that Versant would have required an increased Fee in the event a lesser volume of approved Accounts Receivable had been agreed upon in any Term Period. Consequently, if the aggregate amount of approved Accounts Receivable delivered by Seller to Versant during any Term Period, whether by reason of Seller's  premature termination, reduced level of sales, or otherwise, shall be less than the Committed Base Sales Amount, then Seller shall pay to Versant an adjustment fee on account of such Term Period equal to (a) the product of(i) the actual aggregate fees earned by Versant from the purchase of Accounts Receivable from Seller for the applicable Term Period (or then expired portion thereof) (the "Partial Fee") and (ii) a fraction, the numerator of which is the Committed Base Sales Amount and the denominator of which is the actual aggregate amount of Accounts Receivable theretofore delivered by Seller in such Term Period, less (b) the Partial Fee, provided, however if, in any Term Period, Seller shall deliver no Accounts Receivable to Versant, then Seller shall pay to Versant in respect of such Term Period an adjustment fee equal to the product of (c) the Committed Base Sales Amount and (d) a fraction, the numerator of which is the aggregate Fees theretofore earned by Versant pursuant to this Factoring Agreement and the denominator of which is the actual aggregate amount of Accounts Receivable theretofore purchased by Versant pursuant to this Factoring Agreement (the "No Delivery Fee"). If Seller shall deliver no Accounts Receivable whatsoever to Versant under this Factoring Agreement, then Seller shall pay to Versant an adjustment fee equal to the product of (e) the minimum Discount as set forth in the Fee and Reimbursement Schedule of the Purchase and Sale Agreement and (f) the total amount of Accounts Receivable committed by Seller to be delivered to Versant under this Factoring Agreement (also a ''No Delivery Fee"). Notwithstanding anything to the contrary herein contained, this Factoring Agreement may be terminated by Versant, in Versant's sole discretion on three (3) days written notice to Seller if, for a period of forty five (45) days, Seller shall deliver no Accounts Receivable to Versant for purchase as herein provided (a "No Delivery Termination"). Upon any such No Delivery Termination, Seller shall pay to Versant the No Delivery Fee calculated as above-provided, for each and every unexpired Term Period remaining in the Scheduled Term or Rescheduled Term, as applicable.

 

  

  

  

10. Notices. All notices and other communications hereunder shall be deemed to have been sufficiently given when mailed, postage prepaid, by certified or registered mail, sent by courier or telefaxed, return receipt requested, or confirmation of receipt requested in the case of a telefax, and the sender shall have received such return receipt or confirmation, addressed to the party intended to receive the same at the address herein above set forth. Each of the parties hereto shall have the right to rely on as an original any notice given hereunder by telefax as aforesaid.

 

11. Successors, Governing Law, Consent to Jurisdiction, Waiver of Service, Jury Trial Waiver. This Factoring Agreement shall inure to the benefit of and be binding upon the successors and assigns of the parties hereto, except that this Factoring Agreement may not be assigned by Seller without the prior written consent of Versant. This Factoring Agreement shall be governed by and construed in accordance with the laws of the State of New Jersey applicable to agreements made and to be performed exclusively within such state. The parties hereto mutually agree that any legal action relating to or arising from the Factoring Agreement, the Security Agreement, the Account Agreements or the Performance Guaranty (or Guaranties), if any, or relating in any way to the factoring relationship between Versant and the Seller and Guarantor(s), shall be maintained only in (a) the Superior Court of the State of New Jersey, County of Bergen, (b) the federal courts in and for the District of New Jersey, Newark vicinage, (c) the Supreme Court of the State of New York, County of New York, or (d) the federal courts in and for the Southern District of New York (the "Courts of Jurisdiction"), and the parties hereto expressly consent and agree, and waive any objection, to the jurisdiction of the Courts of Jurisdiction over any such legal action, and over the parties hereto, and to the laying of venue in any of the Courts of Jurisdiction. The parties expressly agree that no legal action may be maintained between or among the parties hereto other than in the Courts of Jurisdiction, however, nothing in this paragraph shall be construed to limit the rights of the parties to domesticate, or otherwise pursue, any judgment obtained in the Courts of Jurisdiction in any other court, state, territory or nation. Furthermore, the parties hereto expressly agree to waive all otherwise applicable statutes, rules, or other requirements relating to the service of legal process, including, but not limited to, the service of a summons and/or complaint, and hereby agree to accept service of process in any such legal action pursuant solely to the notice provisions contained herein. Any such service of legal process made pursuant to the notice provisions hereof shall be deemed to be good and valid service, without regard for any contrary or inconsistent statute, rule or provision. The parties hereto do hereby waive any and all right to a trial by jury in any action or proceeding arising out of this Factoring Agreement or any of the other Factoring Documents.

 

12. Nonconforming Receivables. If any one or more of the Accounts Receivable is not paid by the Account Debtor(s) within 100 days from the invoice date of such Account Receivable and such failure to pay is not the result of the insolvency or other financial inability to pay of the Account Debtor or, if any Account Debtor asserts that it is entitled to a deduction or otherwise asserts a dispute, contingency, set-off or counterclaim with respect to any Account Receivable, Seller shall reimburse Versant on demand for the Advance Amount (as defined in the Account Agreement) with respect to such Account Receivable.  Seller shall be obligated to pay and Versant shall have the right to retain all applicable fees earned by Versant with respect to the Account Receivable notwithstanding Seller’s obligation to reimburse Versant as set forth in this section 12.  For the purposes hereof, (i) any failure of an Account Debtor to pay all or any portion of an invoice shall be deemed to have been for other than the insolvency or financial inability to pay of such Account Debtor unless Seller provides evidence to the contrary acceptable to Seller, and even if Seller provides such evidence under clause (i) above, any failure of an Account Debtor to pay all or part of an invoice shall be deemed to have been for a reason other than the insolvency or financial inability of such Account Debtor if such Account Debtor has asserted any defense, dispute, contingency, deduction, or set off, regardless of the financial condition of such Account Debtor and therefore shall be presumed to be the result of a breach by the Seller of one or more of the Representations set forth in section 2 of the Account Agreement.

 

  

  

  

 

13. Bankruptcy. The parties expressly agree that in the event Seller voluntarily files for protection pursuant to any provision of the United States Bankruptcy Code or, in the event an involuntary petition in bankruptcy is filed against the Seller, (a) this Factoring Agreement shall automatically terminate upon such filing, and (b) Seller's obligations under this Factoring Agreement, the Security Agreement, the Account Agreements and the Performance Guaranties, if any, shall be automatically accelerated and all sums due under any provision of the aforementioned documents shall be immediately due and payable. Following either of the aforementioned bankruptcy filings, Versant may elect to offer financing to the debtor-in­ possession, but nothing in this paragraph shall obligate Versant to offer or provide such financing.

 

14. Merger. It is understood and agreed that all understandings and agreements heretofore had between the parties, if any, with respect to the subject matter hereof are merged into this Factoring Agreement and the related Account Agreements, Security Agreement and Performance Guaranties (collectively the "Factoring Documents") which alone fully and completely express their agreement.

 

15. Audit. Versant shall be entitled in its sole discretion, upon at least two (2) business days’ notice to Seller, to conduct or cause to be conducted an audit of Seller's books and records and Seller hereby agrees to make available all invoices, bills, bank books and account statements, cancelled checks, accounts receivable and payable ledgers, tax returns and like financial information, and otherwise fully to cooperate with Versant or its designated representative, in connection therewith. Seller shall pay upon demand as set forth in the Account Agreement(s) the cost of not more than two (2) such audits performed in any twelve (12) month period; provided, however, that if there shall occur a Default and this Agreement shall not be terminated by Versant, Seller shall thereafter pay the cost of any and all such audits conducted or caused to be conducted by Versant.

 

16. No Waiver. No course of dealing between Versant and Seller, nor any failure or delay by Versant to exercise any right, power or remedy under this Factoring Agreement or under any of the other Factoring Documents shall operate as a waiver thereof; nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy hereunder.  The rights and remedies provided in the Factoring Documents are cumulative and are not exclusive of any other rights, powers or remedies now or hereafter existing at law or in equity or otherwise.

 

17. Headings. The section headings set forth in bold type throughout the Factoring Documents are included in the Factoring Documents for the convenience of reference only and shall not constitute a part of the Factoring Documents for any other purpose.

 

IN WITNESS WHEREOF, the parties hereto have executed this Factoring Agreement as of the day and year first above written.

	
For:

	
National Automation Services, Inc.

	  	  
	
By:

	
/s/ Robert Chance

	  	
Robert Chance, President  & CEO

	  	  
	  	  
	
For:

	
Versant Funding, LLC

	  	  
	
By:

	
/s/ Mark Weinberg

	  	
Mark D Weinberg, Chief Executive Officerex10_67.htm

Exhibit 10.67

 

SECURITY AND COLLATERAL AGENT AGREEMENT

This SECURITY AND COLLATERAL AGENT AGREEMENT ("Security Agreement") dated as of April 29, 2011 by and among NATIONAL  AUTOMATION  SERVICES,  INC.,  a Nevada corporation ("Company") and the TRIPOD  GROUP,  LLC, a Wisconsin limited liability company ("Purchaser") and Sam Eisenberg ("Collateral Agent").

WHEREAS, the Purchaser is the beneficial and record owner of 2,000,000 of the shares of the Company's common stock (the "Collateral Shares") to be held as security under this Security and Collateral Agent Agreement in order for the Collateral Shares to be made available for conversion by Purchaser under the Company's 6% Convertible Redeemable Promissory Note due April 29, 2012 (the "Debenture") as well as to secure payment obligations under the Debenture;

WHEREAS, the Company has agreed to execute this Security Agreement and to deliver the Collateral Shares as security for its performance under the Debenture; and

WHEREAS,  the Company is willing to deposit the Collateral Shares with the Collateral Agent, and the parties have agreed to enter into this Security Agreement whereby the Collateral Agent shall take custody of the Collateral Shares on behalf of the Purchaser; and

WHEREAS,  in the event that Purchaser exercises its rights of conversion under the Debenture, the Collateral Shares shall be made available for such purpose under this Security Agreement.

NOW THEREFORE, in consideration of the respective premises, mutual covenants and agreements of the parties hereto, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

	
1.  

	
Company  hereby  creates  and  grants  to  Purchaser  a  security  interest  in  the Collateral Shares.   The Collateral Shares shall be delivered to Collateral  Agent on behalf of Purchaser    and  the  proceeds of  any sale  or  license  thereof (the  "Collateral")  to secure  the payment and performance of the obligations of Debtor to Purchaser.

	
2.  

	
Appointment of Collateral Agent. Collateral Agent is hereby appointed as Collateral Agent and the Collateral Agent hereby accepts such appointment. The Collateral Agent shall act in accordance with the instructions set forth in this Security Agreement and any further instructions given to it by written instrument signed by Company and Purchaser.

	
3.  

	
Collateral Shares Delivery and Application

(a)       On the date hereof the Company shall deposit the Collateral Shares issued in the name of the Purchaser with the Collateral Agent, which shall not contain any restrictive legend of any nature (provided an opinion has been delivered by the Purchaser's counsel sufficient to cause the removal of any legend attached to the Collateral Shares).

(b)       The Collateral Agent shall act solely as a stakeholder with respect to the Collateral Shares.  Accordingly, the Collateral Agent shall not have the power to vote the Collateral Shares, nor shall the Collateral Agent have any beneficial interest in the Collateral Shares.

(c)       The Collateral Shares shall be deposited by the Collateral Agent in an account which the Collateral Agent maintains at a registered brokerage firm ("Brokerage Firm") that is separate from any other accounts that Collateral Agent may have at that firm.

 

  

  

  

 

(d)       Each notice of conversion of the Debenture (a "Notice of Conversion") shall be simultaneously sent by facsimile or other electronic communication to the Company, as required by the terms of such debenture and to the Collateral Agent.  In the event there are any errors or discrepancies in the Notice of Conversion, the Company and the Purchaser will cooperate fully in resolving such errors.   Upon Collateral Agent's  receipt of a copy of a Notice of Conversion and, provided that Collateral Agent has not received a notice from the Company indicating any errors or discrepancies in the Notice of Conversion, and, provided that Collateral Agent has not received a notice from the Company indicating any errors or discrepancies in the Notice of Conversion (in which event  the  Collateral Agent will  promptly  notify Purchaser of  such  notice and will  use reasonable efforts assist the Company and  Purchaser in resolving the issue), (i)  the number of Collateral Shares set forth in the Notice of Conversion shall become the property of the Purchaser and may be sold by the Purchaser. Until such Notice of Conversion is received, Purchaser shall have absolutely no right, title or interest in any of the Collateral Shares which are the subject of the Notice of Conversion unless there is a Default or Event of Default (as defined in the Debenture). Notwithstanding the foregoing, the Collateral Agent may provide the Company's transfer agent as well as its own Brokerage Firm an initial conversion notice necessary to allow it to deposit the shares.   Such notice shall have no effect on the number of shares converted by the Purchaser or otherwise have any effect on the parties.

 

(e)       Purchaser shall have the right under this Security Agreement to send Notices of Conversion for the Debenture, and in any order selected by the Purchaser in its sole and absolute discretion, subject to the tenns of the Debentures.

(f)       In the event there are Collateral Shares remaining in the account of the Collateral Agent following the final conversion of the Debenture, they shall be returned to the Company.

	
4.  

	
Default

(a)        If Purchaser sends the Collateral Agent a Notice of Default under the Debenture, or if, for any reason, the Company is unable, fails or refuses to deliver common stock to Purchaser as required under the Debenture, the Collateral Agent shall then release all the Collateral Shares to the Purchaser.

(b)       Collateral Agent is specifically authorized to rely upon the validity and effectiveness of any Notice of Default, received by the Collateral Agent.

(c)        Upon payment in full by the Company of the Debenture, or upon conversion of all such debentures into Conversion Shares (as such term is defined in the Debenture), any remaining Collateral Shares shall be delivered by the Collateral Agent to the Company, and upon such delivery, none of the parties to this Security Agreement shall have any further obligations to the others.   In the event that the Collateral Shares are delivered to the Purchaser upon an Event of Default, the Collateral Agent shall have no further obligations under this Security Agreement.

	
5.  

	
Intentionally Left Blank.

	
6.  

	
Concerning the Collateral Agent.  To induce the Collateral Agent to act hereunder, it is further agreed by the undersigned that:

(a)       This Security Agreement expressly sets forth all the duties of the Collateral Agent with respect to any and all matters pertinent hereto.  No implied duties or obligations shall, on the pmt of the Collateral Agent, be read into this Security Agreement. The Collateral Agent shall not be bound by the provisions of any agreement among the other parties hereto except this Security Agreement.

(b)       The Collateral Agent shall not be liable for any action or failure to act in its capacity as Collateral Agent hereunder unless such action or failure to act shall constitute willful misconduct on the part of the Collateral Agent.

(c)       The Collateral Agent shall  be entitled to rely upon any order, judgment, certification, demand, notice, instrument or other writing delivered to it hereunder without being required to determine the authenticity or the correctness of any fact stated therein or the proprietary or validity of the service thereof.  The Collateral Agent may act in reliance upon any instrument or signature believed by it to be genuine and may assume, unless he has actual knowledge to the contrary, that any person purp01ting to give notice or receipt or advice or make any statement or execute any document in connection with the provisions hereof has been duly authorized to do so.

 

  

  

  

 

(d)       The Collateral Agent may act pursuant to the advice of counsel with respect to any matter relating to this Security Agreement and shall not be liable for any action taken or omitted in accordance with such advice, except as provided in paragraph 5(b) above.

(e)        The  Collateral  Agent  does  not  have  and  shall  not  have  any  interest whatsoever in the Collateral Shares or any other propetty deposited hereunder but is serving as escrow holder only and  having only possession thereof with no rights as a shareholder of the Company, and is not charged with any duty or responsibility to determine the validity or enforceability of any such documents. Furthermore, the Collateral Agent shall have no right to vote the Collateral Shares or have any other pecuniary rights in the Collateral Shares or have control of, direct or indirect, or role in the Company's corporate governance or otherwise.

(f)        The Collateral Agent (and any successor Collateral Agent) may at any time resign as such by delivering the Collateral Shares to any successor Collateral Agent, jointly designated  by  the  other  parties  hereto  in  writing,  or  to  any court  of  competent  jurisdiction, whereupon the Collateral Agent shall be discharged of and from any and all further obligations arising in connection with this Security Agreement thereafter.  The resignation of the Collateral Agent will take effect on the earlier of (a) the appointment of a successor (including a court of competent jurisdiction) or (b) the day which is 30 days after the date of delivery of its written notice of resignation to the other patties hereto.   If at that time the Collateral Agent has not received a designation of a successor Collateral Agent, the Collateral Agent's sole responsibility after that time shall be to safe keep the Collateral Shares and not make delivery or disposition thereof until receipt of a designation of successor Collateral Agent or a joint written disposition instruction by the other parties hereto or a final order of a court of competent jurisdiction.

(g)       In the event of any disagreement among the parties hereto resulting in adverse claims or demands being made in connection with the Collateral Shares, or in the event that the Collateral Agent otherwise determines that the Collateral Shares should be retained, then the Collateral Agent may retain the Collateral Shares until the Collateral Agent shall have received (i) a final non appealable order of a court of competent jurisdiction directing delivery of the Collateral Shares or (ii) a written agreement executed by the other parties hereto directing delivery of the Collateral Shares, in which case the Collateral Agent shall promptly deliver the Collateral Shares in accordance with such order or agreement.   Any court order referred to in (i) above shall be accompanied by a legal opinion by counsel for the presenting patty reasonably satisfactory to the Collateral Agent to the effect that said court order is final and non-appealable. The Collateral Agent shall act on such court order and legal opinion without further question.

(h)       This Security Agreement shall be binding upon and inure solely to the benefit of the patties hereto and their respective successors (including successors by way of merger) and assigns, heirs, administrators and representatives, and shall not be enforceable by or inure to the benefit of any third party except as provided in paragraph (g) with respect to a resignation by the Collateral Agent.

(i)        This Security Agreement may be modified by a writing signed by all the parties hereto, and no waiver hereunder shall be effective unless in writing signed by the party to be charged.

	
7.  

	
Governing Law.  This Security Agreement shall be governed in all respects by the laws of the State of New York. The parties agree to submit to the jurisdiction and venue of any state or federal court in New York having subject matter jurisdiction over the matter.  Service may be made by certified mail, return receipt requested, to the patties at the addresses set forth in paragraph 8 below, but the patties shall not be precluded from making service in any other manner permitted by law.

	
8.  

	
Notices. All notices, requests, consents and other communications hereunder shall be in writing, shall be delivered by hand or sent by U.S. Express Mail, FedEx or some other reliable overnight courier service for next day delivery or via fax or electronic delivery.  Each such notice or other communication  shall, for all purposes of this Security  Agreement, be treated  as effective or having  been  given  when  delivered  if delivered  personally,  or,  if sent  by overnight  express  mail service,  I  day after the same has been deposited with the U.S. Postal Service, FedEx or the overnight courier.

	
9. 

	
Counterparts. This Security Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, and a ll such counterparts shall constitute one Agreement. Delivery of an executed counterpart of a signature page to this Agreement by facsimile transmission or e-mail in pdf format shall be effective as delivery of a manually executed counterpart. Any party so delivering this Agreement shall promptly deliver a manually executed counterpart, provided that any failure to do so shall not affect the validity of the counterpart executed by facsimile or e-mail transmission.

 

  

  

  

 

	
10.  

	
Fees.  Purchaser shall pay all reasonable fees and expenses of the Collateral Agent.

IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement to be duly executed and delivered, as of the day and year first above written.

COMPANY

By: /s/ Robert Chance

Robert W. Chance

President and CEO

National Automation Services Inc.

PURCHASER

By: /s/ Sam Eisenberg

Sam Eisenberg

Collateral Agent

TriPod Group, LLC

 

 

 

 

 

 

  

  

  

 

THE SECURITIES OFFERED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED WITH THE UNITED STATES SECURITIESAND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY SECTION 3(b) OF THE SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER (THE "1933 ACT)

US $15,000.00

National Automation Services, Inc. 6%

CONVERIBLE REDEEMABLE NOTE DUE April 29, 2012

FOR VALUE RECEIVED, The Company promises to pay to the order of The Tripod Group, LLC and its authorized successors and permitted assigns ("Holder"), the aggregate principal face amount of Fifteen Thousand dollars exactly (U.S. $15,000.00) on April 29, 2012 ("Maturity Date") and to pay interest on the principal amount outstanding hereunder at the rate of 6% per annum commencing on April 29, 2011.  The parties agree that this note is issued for payment of fourteen thousand two hundred and fifty dollars from the Holder and reflects and original issue discount of &750.00.  Interest will be paid to the Holder in whose name this Note is registered on the records of the Company regarding registration and transfers of this Note. The principal of, and interest on, this Note are payable at 250 E. Wisconsin Avenue, Milwaukee, WI 53202 initially, and if changed, last appearing on the records of the Company as designated in writing by the Holder hereof from time to time. The Company will pay each interest payment and the outstanding principal due upon this Note before or on the Maturity Date, less any amounts required by law to be deducted or withheld, to the Holder of this Note by check or wire transfer addressed to such Holder at the last address appearing on the records of the Company. The forwarding of such check or wire transfer shall constitute a payment of outstanding principal hereunder and shall satisfy and discharge the liability for principal on this Note to the extent of the sum represented by such check or wire transfer.  Interest shall be payable in Common Stock (as defined below) pursuant to paragraph 4(b) herein.

This Note is subject to the following additional provisions:

	
1.  

	
This Note is exchangeable for an equal aggregate principal amount of Notes of different authorized denominations, as requested by the Holder surrendering the same. No service charge will be made for such registration or transfer or exchange, except that Holder shall pay any tax or other governmental charges payable in connection therewith.

	
2.  

	
The Company shall be entitled to withhold from all payments any amounts required to be withheld under applicable laws.

	
3.  

	
This Note may be transferred or exchanged only in compliance with the Securities Act of 1933, as amended ("Act") and applicable state securities laws and only to an accredited investor who resides in Wisconsin.  Any attempted transfer to a non-qualifying party shall be treated by the Company as void.  Prior to due presentment for transfer of this Note, the Company and any agent of the Company may treat the person in whose name this Note is duly registered on the Company's records as the owner hereof for all other purposes, whether or not this Note be overdue, and neither the Company nor any such agent shall be affected or bound by notice to the contrary.  Any Holder of this Note electing to exercise the right of conversion set forth in Section 4(a) hereof, in addition to the requirements set forth in Section 4(a), and any prospective transferee of this Note, also is required to give the Company written confirmation that this Note is being converted ("Notice of Conversion") in the form annexed hereto as Exhibit A. The date of receipt (including receipt by telecopy) of such Notice of Conversion shall be the Conversion Date.

 

  

  

  

 

	
a)  

	
The Holder of this Note is entitled, at its option, at any time after October 29, 2011, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company's common stock (the "Common Stock") without restrictive legend of any nature, at a conversion price ("Conversion Price") for each share of Common Stock equal to 60% of the lowest closing bid price of the Common Stock as reported on the National Quotations Bureau Pink Sheets on which the Company's shares are traded or any ex­ change upon which the Common Stock may be traded in the future ("Exchange") for any of the four trading days including the day upon which a Notice of Conversion is received by the Company, provided such Notice of Conversion is delivered by fax or other electronic communications to the Company between the hours of 4 P.M. Eastern Standard or Daylight Savings Time and 8 P.M. Eastern Standard or Daylight Savings Time, or the trading day on which a Notice of Conversion is received by the Company provided such Notice of Conversion is delivered by fax or other form of electronic communication to the Company between the hours of 4 P.M. Eastern Standard or Daylight Savings Time and 8 P.M. Eastern Standard or Daylight Savings Time. Such conversion shall be effectuated by the Company delivering the shares of Common Stock to the Holder within 3 business days of receipt by the Company of the Notice of Conversion.  Once the Holder has received such shares of Common Stock, the Holder shall surrender this Note to the Company, executed by the Holder evidencing such Holder's intention to convert this Note or a specified portion hereof; and accompanied by proper assignment hereof in blank.  Accrued but unpaid interest shall be subject to conversion.  No fractional shares or scrip representing fractions of shares will be issued on conversion, but the number of shares issuable shall be rounded to the nearest whole share.

	
b)  

	
Interest on any unpaid principal balance of this Note shall be paid at the rate of 6% per annum.   Interest shall be paid by the Company in Common Stock ("Interest Shares"). The Holder may, at any time, send in a Notice of Conversion to the Company for Interest Shares based on the formula provided in Section 4(a) above. The dollar amount converted into Interest Shares shall be all or a portion of the accrued interest calculated on the unpaid principal balance of this Note to the date of such notice.

	
c)  

	
At any time the Company shall have the option to redeem this Note and pay to the Holder 150% of the unpaid principal amount of this Note, in full. The Company shall give the Holder 5 days written notice and the Holder during such 5 days shall have the option to conve1i this Note or any part thereof into shares of Common Stock at the Conversion Price set forth in paragraph 4(a) of this Note.

	
d)  

	
Upon (i) a transfer of all or substantially all of the assets of the Company to any person in a single transaction or series of related transactions, (ii) a reclassification, capital reorganization or other change or exchange of outstanding shares of the Common Stock, or (iii) any consolidation or merger of the Company with or into another person or entity in which the Company is not the surviving entity (other than a merger which is effected solely to change the jurisdiction of incorporation of the Company and results in a reclassification, conversion or ex­ change of outstanding shares of Common Stock solely into shares of Common Stock) (each of items (i), (ii) and (iii) being referred to as a "Sale Event"), then, in each case, the Company shall, upon request of the Holder, redeem this Note in cash for 150% of the principal amount, plus accrued but unpaid interest through the date of redemption, or at the election of the Holder, such Holder may convert the unpaid principal amount of this Note (together with the amount of accrued but unpaid interest) into shares of Common Stock immediately prior to such Sale Event at the Conversion Price.

	
e)  

	
In case of any Sale Event in connection  with which this Note is not re- deemed or converted, the Company shall cause effective provision to be made so that the Holder of this Note shall have the right thereafter, by converting this Note, to purchase or convert this Note into the kind and number of shares of stock or other securities or property (including cash) receivable  upon such reclassification,  capital reorganization  or other change, consolidation  or merger by a holder of the number of shares of Common Stock that could have been purchased upon exercise of the Note and at the same Conversion Price, as defined in this Note, immediately prior  to such  Sale  Event.  The foregoing provisions shall similarly apply to successive Sale Events. If the consideration received by the holders of Common Stock is other than cash, the value shall be as determined by the Board of Directors of the Company or successor person or entity acting in good faith.

	
4.  

	
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 form, herein prescribed.

 

  

  

  

 

	
5.  

	
The Company hereby expressly waives demand and presentment for payment, notice of non-payment, protest, notice of protest, notice of dishonor, notice of acceleration or intent to accelerate, and diligence in taking any action to collect amounts called for hereunder and shall be directly and primarily liable for the payment of all sums owing and to be owing hereto.

	
6.  

	
The Company agrees to pay all costs and expenses, including reasonable attorneys' fees and expenses, which may be incurred by the Holder in collecting any amount due under this Note.

	
7.  

	
 If one or more of the following described "Events of Default" shall occur:

(a)       The Company shall default in the payment of principal or interest on this Note or any other note issued to the Holder by the Company; or

(b)       Any of the representations or warranties made by the Company herein or in any certificate or financial or other written statements heretofore or hereafter furnished by or on behalf of the Company in connection with the execution and delivery of this Note shall be false or misleading in any respect; or

(c)       The Company shall fail to perform or observe, in any respect, any covenant, term, provision, condition, agreement or obligation of the Company under this Note; or

(d)      The Company shall (I) become insolvent; (2) admit in writing its inability to pay its debts generally as they mature; (3) make an assignment for the benefit of creditors or commence proceedings for its dissolution; (4) apply for or consent to the appointment of a trustee, liquidator or receiver for its or for a substantial pmt of its property or business; (5) file a petition for  bankruptcy relief, consent to the filing of such petition or have filed against it an involuntary petition for bankruptcy relief, all under federal or state laws as applicable; or

(e)       A trustee, liquidator or receiver shall be appointed for the Company or for a substantial part of its property or business without its consent and shall not be discharged with­ in thirty (30) days after such appointment; or

(f)        Any governmental agency or any court of competent jurisdiction at the in- stance of any governmental agency shall assume custody or control of the whole or any substantial portion of the properties or assets of the Company; or                     ·

(g)       One or more money judgments, writs or warrants of attachment, or similar process, in excess of ten thousand dollars ($!0,000)  in the aggregate, shall be entered or filed against the Company or any of its properties or other assets and shall remain unpaid, unvacated, unbonded or unstayed for a period of fifteen (15) days or in any event later than five (5) days prior to the date of any proposed sale thereunder; or

(h)       Bankruptcy, reorganization, insolvency or liquidation proceedings, or oth- er proceedings for relief under any bankruptcy law or any law for the relief of debtors shall be instituted voluntarily by or involuntarily against the Company; or

(i)       The Company shall have its Common Stock delisted from an exchange (including the OTCBB exchange) or, if the Common Stock trades on an exchange, then trading in the Common Stock shall be suspended for more than l 0 consecutive days;

(i) If a majority of the members of the Board of Directors of the Company on the date hereof are no longer serving as members of the Board; or

(ii)The Company shall not deliver to the Holder the Common Stock pursuant to paragraph 4 herein without restrictive legend within 5 business days of its receipt of a Notice of Conversion.

 

  

  

  

 

	
8.  

	
Then, or at any time thereafter, unless cured, and in each and every such case, unless such Event of Default shall have been waived in writing by the Holder (which waiver shall not be deemed to be a waiver of any subsequent default) at the option of the Holder and in the Holder's sole discretion, the Holder may consider this Note immediately due and payable, without presentment, demand, protest or (further) notice of any kind (other than notice of acceleration), all of which are hereby expressly waived, anything herein or in any note or other instruments contained to the contrary notwithstanding, and the Holder may immediately, and without expiration of any period of grace, enforce any and all of the Holder's rights and remedies provided herein or any other rights or remedies afforded by law.  Upon an Event of Default, interest shall be accrued at a default interest rate of 24% per annum or, if such rate is usurious or not permitted by current law, then at the highest rate of interest permitted by law. If the Holder shall commence an action or proceeding to enforce any provisions of this Note, including without limitation engaging an attorney, then the Holder shall be reimbursed by the Company for its attorneys' fees and other costs and expenses incurred in the investigation, prepa­ ration and prosecution of such action or proceeding. The principal executive officers of the Company shall be personally responsible for all such fees and expenses.

	
9.  

	
In case any provision of this Note is held by a court of competent jurisdiction to be excessive in scope or otherwise invalid or unenforceable, such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent possible, and the validity and enforceability of the remaining provisions of this Note will not in any way be affected or impaired thereby.

	
10.  

	
Neither this Note nor any term hereof may be amended, waived, dis- charged or terminated other than by a written instrument signed by the Company and the Holder.

	
11.  

	
The Company represents that it is not a "shell" issuer and has never been a "shell" issuer or that if it previously has been a "shell" issuer that at least 12 months have passed since the Company has reported form 10 type information indicating it is no longer a "shell issu­ er.  Further. The Company will instruct its counsel to either (i) write a 144- 3(a)(9) opinion to al­ low for salability of the conversion shares or (ii) accept such opinion from Holder's counsel.

	
12.  

	
This Note shall be governed by and construed in accordance with the laws of New York applicable to contracts made and wholly to be performed within the State of New York and shall be binding upon the successors and assigns of each party hereto. The Holder and the Company hereby mutually waive trial by jury and consent to exclusive jurisdiction and venue in the courts of the State of New York.  This Agreement may be executed in counterparts, and the facsimile transmission of an executed counterpart to this Agreement shall be effective as an original.

IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement to be duly executed and delivered, as of the day and year first above written.

COMPANY

Date: 5/2/2011

By: /s/ Robert Chance

Robert W. Chance

President and CEO

National Automation Services Inc.

 

  

  

  

 

THE SECURITIES OFFERED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR HE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY SECTION 3(b) OF THE SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER (THE "1933 ACT)

 

 

	
ORIGINALLY ISSUED APRIL 1, 2009

RE-ISSUED IN PART APRIL 29, 2011

	 US $15,000.00

 

National Automation Services, Inc. 6%

CONVERIBLE REDEEMABLE NOTE DUE April 29, 2012

WHEREAS, National Automation Services, Inc. (the "Company") had previously entered into a $86,000 note with Robert O'Conner on April 1, 2009; and

WHEREAS, on April l, 20 11, Robert O'Conner had assigned a fifteen thousand dollar

($15,000) portion of that promissory note to the Tripod Group, LLC; and

WHEREAS, the Company and the Tripod Group, LLC desire to amend and restate the note clarify the conversion price of the Note and make certain other changes;

NOW THEREFORE, the parties agree as follows:

FOR VALUE RECEIVED, The Company promises to pay to the order of The Tripod Group, LLC and its authorized successors and permitted assigns ("Holder"), the aggregate principal face amount of Fifteen Thousand dollars exactly (U.S. $15,000.00) on April 29, 2012 ("Maturity Date") and to pay interest on the principal amount outstanding hereunder at the rate of 6% per annum commencing on April 29, 2011.  The parties agree that this note is issued for payment of fourteen thousand two hundred and fifty dollars from the Holder and reflects and original issue discount of &750.00.  Interest will be paid to the Holder in whose name this Note is registered on the records of the Company regarding registration and transfers of this Note. The principal of, and interest on, this Note are payable at 250 E. Wisconsin Avenue, Milwaukee, WI 53202 initially, and if changed, last appearing on the records of the Company as designated in writing by the Holder hereof from time to time. The Company will pay each interest payment and the outstanding principal due upon this Note before or on the Maturity Date, less any amounts required by law to be deducted or withheld, to the Holder of this Note by check or wire transfer addressed to such Holder at the last address appearing on the records of the Company. The forwarding of such check or wire transfer shall constitute a payment of outstanding principal hereunder and shall satisfy and discharge the liability for principal on this Note to the extent of the sum represented by such check or wire transfer.  Interest shall be payable in Common Stock (as defined below) pursuant to paragraph 4(b) herein.

This Note is subject to the following additional provisions:

	
1.  

	
This Note is exchangeable for an equal aggregate principal amount of Notes of different authorized denominations, as requested by the Holder surrendering the same. No service charge will be made for such registration or transfer or exchange, except that Holder shall pay any tax or other governmental charges payable in connection therewith.

	
2.  

	
The Company shall be entitled to withhold from all payments any amounts required to be withheld under applicable laws.

	
3.  

	
This Note may be transferred or exchanged only in compliance with the Securities Act of 1933, as amended ("Act") and applicable state securities laws and only to an accredited investor who resides in Wisconsin.  Any attempted transfer to a non-qualifying party shall be treated by the Company as void.  Prior to due presentment for transfer of this Note, the Company and any agent of the Company may treat the person in whose name this Note is duly registered on the Company's records as the owner hereof for all other purposes, whether or not this Note be overdue, and neither the Company nor any such agent shall be affected or bound by notice to the contrary.  Any Holder of this Note electing to exercise the right of conversion set forth in Section 4(a) hereof, in addition to the requirements set forth in Section 4(a), and any prospective transferee of this Note, also is required to give the Company written confirmation that this Note is being converted ("Notice of Conversion") in the form annexed hereto as Exhibit A. The date of receipt (including receipt by telecopy) of such Notice of Conversion shall be the Conversion Date.

 

  

  

  

 

	
f)  

	
The Holder of this Note is entitled, at its option, at any time after October 29, 2011, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company's common stock (the "Common Stock") without restrictive legend of any nature, at a conversion price ("Conversion Price") for each share of Common Stock equal to 60% of the lowest closing bid price of the Common Stock as reported on the National Quotations Bureau Pink Sheets on which the Company's shares are traded or any ex­ change upon which the Common Stock may be traded in the future ("Exchange") for any of the four trading days including the day upon which a Notice of Conversion is received by the Company, provided such Notice of Conversion is delivered by fax or other electronic communications to the Company between the hours of 4 P.M. Eastern Standard or Daylight Savings Time and 8 P.M. Eastern Standard or Daylight Savings Time, or the trading day on which a Notice of Conversion is received by the Company provided such Notice of Conversion is delivered by fax or other form of electronic communication to the Company between the hours of 4 P.M. Eastern Standard or Daylight Savings Time and 8 P.M. Eastern Standard or Daylight Savings Time. Such conversion shall be effectuated by the Company delivering the shares of Common Stock to the Holder within 3 business days of receipt by the Company of the Notice of Conversion.  Once the Holder has received such shares of Common Stock, the Holder shall surrender this Note to the Company, executed by the Holder evidencing such Holder's intention to convert this Note or a specified portion hereof; and accompanied by proper assignment hereof in blank.  Accrued but unpaid interest shall be subject to conversion.  No fractional shares or scrip representing fractions of shares will be issued on conversion, but the number of shares issuable shall be rounded to the nearest whole share.

	
g)  

	
Interest on any unpaid principal balance of this Note shall be paid at the rate of 6% per annum.   Interest shall be paid by the Company in Common Stock ("Interest Shares"). The Holder may, at any time, send in a Notice of Conversion to the Company for Interest Shares based on the formula provided in Section 4(a) above. The dollar amount converted into Interest Shares shall be all or a portion of the accrued interest calculated on the unpaid principal balance of this Note to the date of such notice.

	
h)  

	
At any time the Company shall have the option to redeem this Note and pay to the Holder 150% of the unpaid principal amount of this Note, in full. The Company shall give the Holder 5 days written notice and the Holder during such 5 days shall have the option to conve1i this Note or any part thereof into shares of Common Stock at the Conversion Price set forth in paragraph 4(a) of this Note.

	
i)  

	
Upon (i) a transfer of all or substantially all of the assets of the Company to any person in a single transaction or series of related transactions, (ii) a reclassification, capital reorganization or other change or exchange of outstanding shares of the Common Stock, or (iii) any consolidation or merger of the Company with or into another person or entity in which the Company is not the surviving entity (other than a merger which is effected solely to change the jurisdiction of incorporation of the Company and results in a reclassification, conversion or ex­ change of outstanding shares of Common Stock solely into shares of Common Stock) (each of items (i), (ii) and (iii) being referred to as a "Sale Event"), then, in each case, the Company shall, upon request of the Holder, redeem this Note in cash for 150% of the principal amount, plus accrued but unpaid interest through the date of redemption, or at the election of the Holder, such Holder may convert the unpaid principal amount of this Note (together with the amount of accrued but unpaid interest) into shares of Common Stock immediately prior to such Sale Event at the Conversion Price.

	
j)  

	
In case of any Sale Event in connection  with which this Note is not re- deemed or converted, the Company shall cause effective provision to be made so that the Holder of this Note shall have the right thereafter, by converting this Note, to purchase or convert this Note into the kind and number of shares of stock or other securities or property (including cash) receivable  upon such reclassification,  capital reorganization  or other change, consolidation  or merger by a holder of the number of shares of Common Stock that could have been purchased upon exercise of the Note and at the same Conversion Price, as defined in this Note, immediately prior  to such  Sale  Event.  The foregoing provisions shall similarly apply to successive Sale Events. If the consideration received by the holders of Common Stock is other than cash, the value shall be as determined by the Board of Directors of the Company or successor person or entity acting in good faith.

 

  

  

  

 

	
4.  

	
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 form, herein prescribed.

	
5.  

	
The Company hereby expressly waives demand and presentment for payment, notice of non-payment, protest, notice of protest, notice of dishonor, notice of acceleration or intent to accelerate, and diligence in taking any action to collect amounts called for hereunder and shall be directly and primarily liable for the payment of all sums owing and to be owing hereto.

	
6.  

	
The Company agrees to pay all costs and expenses, including reasonable attorneys' fees and expenses, which may be incurred by the Holder in collecting any amount due under this Note.

	
7.  

	
 If one or more of the following described "Events of Default" shall occur:

(a)       The Company shall default in the payment of principal or interest on this Note or any other note issued to the Holder by the Company; or

(b)       Any of the representations or warranties made by the Company herein or in any certificate or financial or other written statements heretofore or hereafter furnished by or on behalf of the Company in connection with the execution and delivery of this Note shall be false or misleading in any respect; or

(c)       The Company shall fail to perform or observe, in any respect, any covenant, term, provision, condition, agreement or obligation of the Company under this Note; or

(d)      The Company shall (I) become insolvent; (2) admit in writing its inability to pay its debts generally as they mature; (3) make an assignment for the benefit of creditors or commence proceedings for its dissolution; (4) apply for or consent to the appointment of a trustee, liquidator or receiver for its or for a substantial pmt of its property or business; (5) file a petition for  bankruptcy relief, consent to the filing of such petition or have filed against it an involuntary petition for bankruptcy relief, all under federal or state laws as applicable; or

(e)       A trustee, liquidator or receiver shall be appointed for the Company or for a substantial part of its property or business without its consent and shall not be discharged with­ in thirty (30) days after such appointment; or

(f)        Any governmental agency or any court of competent jurisdiction at the in- stance of any governmental agency shall assume custody or control of the whole or any substantial portion of the properties or assets of the Company; or                     ·

(g)       One or more money judgments, writs or warrants of attachment, or similar process, in excess of ten thousand dollars ($10,000)  in the aggregate, shall be entered or filed against the Company or any of its properties or other assets and shall remain unpaid, unvacated, unbonded or unstayed for a period of fifteen (15) days or in any event later than five (5) days prior to the date of any proposed sale thereunder; or

 

  

  

  

 

(h)       Bankruptcy, reorganization, insolvency or liquidation proceedings, or oth- er proceedings for relief under any bankruptcy law or any law for the relief of debtors shall be instituted voluntarily by or involuntarily against the Company; or

(i)       The Company shall have its Common Stock delisted from an exchange (including the OTCBB exchange) or, if the Common Stock trades on an exchange, then trading in the Common Stock shall be suspended for more than l 0 consecutive days;

(i) If a majority of the members of the Board of Directors of the Company on the date hereof are no longer serving as members of the Board; or

(ii)The Company shall not deliver to the Holder the Common Stock pursuant to paragraph 4 herein without restrictive legend within 5 business days of its receipt of a Notice of Conversion.

	
8.  

	
Then, or at any time thereafter, unless cured, and in each and every such case, unless such Event of Default shall have been waived in writing by the Holder (which waiver shall not be deemed to be a waiver of any subsequent default) at the option of the Holder and in the Holder's sole discretion, the Holder may consider this Note immediately due and payable, without presentment, demand, protest or (further) notice of any kind (other than notice of acceleration), all of which are hereby expressly waived, anything herein or in any note or other instruments contained to the contrary notwithstanding, and the Holder may immediately, and without expiration of any period of grace, enforce any and all of the Holder's rights and remedies provided herein or any other rights or remedies afforded by law.  Upon an Event of Default, interest shall be accrued at a default interest rate of 24% per annum or, if such rate is usurious or not permitted by current law, then at the highest rate of interest permitted by law. If the Holder shall commence an action or proceeding to enforce any provisions of this Note, including without limitation engaging an attorney, then the Holder shall be reimbursed by the Company for its attorneys' fees and other costs and expenses incurred in the investigation, prepa­ ration and prosecution of such action or proceeding. The principal executive officers of the Company shall be personally responsible for all such fees and expenses.

	
9.  

	
In case any provision of this Note is held by a court of competent jurisdiction to be excessive in scope or otherwise invalid or unenforceable, such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent possible, and the validity and enforceability of the remaining provisions of this Note will not in any way be affected or impaired thereby.

	
10.  

	
Neither this Note nor any term hereof may be amended, waived, dis- charged or terminated other than by a written instrument signed by the Company and the Holder.

	
11.  

	
The Company represents that it is not a "shell" issuer and has never been a "shell" issuer or that if it previously has been a "shell" issuer that at least 12 months have passed since the Company has reported form 10 type information indicating it is no longer a "shell issu­ er.  Further. The Company will instruct its counsel to either (i) write a 144- 3(a)(9) opinion to al­ low for salability of the conversion shares or (ii) accept such opinion from Holder's counsel.

	
12.  

	
This Note shall be governed by and construed in accordance with the laws of New York applicable to contracts made and wholly to be performed within the State of New York and shall be binding upon the successors and assigns of each party hereto. The Holder and the Company hereby mutually waive trial by jury and consent to exclusive jurisdiction and venue in the courts of the State of New York.  This Agreement may be executed in counterparts, and the facsimile transmission of an executed counterpart to this Agreement shall be effective as an original.

	
13.  

	
The Company   will issue   instructions   to   its transfer   agent to issue 2,000,000 of the outstanding shares of the Company in the name of the Holder so that the holder may self-escrow its conversions.  The Holder will send the Company a notice of conversion upon every conversion showing the amount of principal and interest paid down and the number of shares converted as a result.   Any shares remaining after the amounts due under this Note has been fully converted will be returned to the Company. The Holder may need to send its broker an initial conversion notice for the total amount of the shares being escrowed so they may be deposited this initial conversion notice shall have no effect upon the actual shares being converted.

  

  

  

IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement to be duly executed and delivered, as of the day and year first above written.

COMPANY

Date: 5/2/2011

By: /s/ Robert Chance

Robert W. Chance

President and CEO

National Automation Services Inc.

 

 

 

 

 

 

 

  

  

  

UNANIMOUS CONSENT IN LIEU OF A SPECIAL MEETING OF DIRECTORS OF

NATIONAL AUTOMATION SERVICES, INC.

The undersigned, being all of the directors of NATIONAL AUTOMATION SERVICES, INC. a corporation of the State of Nevada, (the "Corporation"), do hereby authorize and approve the actions set forth in the following resolutions without the formality of convening a meeting, and do hereby consent to the following actions of this Corporation, which actions are hereby deemed affective as of the date hereof:

RESOLVED: that the officers of this Corporation are authorized and directed to amend a portion of a $86,000 promissory note originally issued to Robert 0' Conner on April 1.

2009, and subsequently assigned, in the amount of $15,000.00 to the Tripod Group, LLC, a Wisconsin limited Liability Company to provide conversion features at a 40% discount to market for such note as well as 6% interest.

RESOLVED: That the officers of this Corporation are authorized and directed to issue a $15,000 promissory note to  the  Tripod Group, LLC, a  Wisconsin Limited liability Company to provide conversion features at a 40% discount to market for such note as well as 6% interest.

FURTHER RESOLVED: That the officers of this corporation are directed to enter into a security agreement with the Tripod Group, LLC and Sam Eisenberg and to deposit 2 million of the Company's outstanding shares of Common Stock into collateral as security for the proceeds due under the note as well as to facilitate conversions.

FURTHER RESOLVE: That each of the officers of the Corporation be. and they hereby are authorized and empowered to execute and deliver such documents, instruments and papers and to take any and all other action as they or any of them may deem necessary or appropriate of the purpose of carrying out the intent of the foregoing resolutions and the transactions contemplated thereby; and that the authority of such officers to execute and deliver any such documents. Instruments and papers and to take any such other action shall be conclusively evidenced by their execution and delivery thereof or their taking thereof.

The undersigned, by affixing their signatures hereto, do hereby consent to. Authorize and approve the foregoing actions in their capacity as a majority of the direction of NATIONAL AUTOMATION SERVICES, INC.

Date: 4/29/2011

By: /s/ Robert Chance

Robert W. Chance

President and CEO

National Automation Services Inc.

By: /s/ Robert O Connor

Robert O’ Connor

Board of Directors

National Automation Services Inc.

  

  

  

NOTE ASSIGNMENT AGREEMENT

This Note Assignment Agreement ("Agreement") is entered into this 29th day of April, 2011, by and between The Tripod Group, LLC ("Purchaser") and Robert O'Conner ("Seiler").

WHEREAS, seller is the holder of a $36,000 promissory note issued by National Automation Services, Inc. on April 29, 2009 (the "Note"); and

 

WHEREAS, Purchaser desires to purchase a portion of the Note with" face value of $15,000 from Seller;

and

WHEREAS, Seller desires to sell a portion of the Note with a face value of $15,000 to Purchaser; NOW THEREFORE, THE PARTIES AGREE AS FOLLOWS:

	
1.  

	
Sale of Portion of Note.  The Seller hereby assigns and Sells, and the Purchaser hereby receives, a portion  of the  Note equal to $15,000.00  (the  "Fractional  Portion") for a  purchase  price of $15,000.00  less  legal  fees  of  $750.00.    The  Purchaser  shall cause  to  be  wired  a  total  of $14,250.00 as follows:

Recipient Name: Robert O’ Connor

Address: 330 Primrose Road, Burlingham CA 94010

Bank Name: Wells Fargo Bank

Routing number: (left intentionally blank)

	
2.  

	
Seller Representations and Warranties.  In consideration of the sale of the  Fractional Portion, Seller hereby represents and warrants to Purchaser as follows:

	
a.  

	
Seller has not sold the Fractional Portion to any other party and has the full legal right to assign the Fractional Portion to the Seller.

	
b.  

	
Seller is not an "affiliate" of National Automation Services, Inc. as that term Is defined under the Securities Act of 1933, as amended and  has not been an "affiliate" for the previous 90 days.

	
3.  

	
Seller Covenants. Seller will execute any additional documents  necessary for the conveyance of the  Fractional Portion  to  the  Purchaser  and/or  for the  Purchaser  to  be able to  convert  the Fractional Portion into shares of National Automation Services, Inc. Cornmon Stock.

By: /s/ Robert O Connor

Robert O’ Connor

Note Holder

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