Document:

Exhibit 10.3

	
Exhibit 10.3

__________________

Stock Option Agreement (as modified May 5, 2005)

	
To:
____________,

On
__________________, you were awarded an option to purchase __________  shares (this “Option”) of the common stock $.01 par value per share (the “Shares”) of Linens ‘n Things, Inc. (the “Company”) pursuant to the Company’s Shareholder Approved Plan (the “Plan”). It is the Company’s philosophy that an enhanced sense of ownership by employees is an important element of our long-term success. This stock option grant allows you to share in the continued success of the Company under the Plan.

By signing a copy of this Stock Option Agreement (this “Agreement”), you hereby agree to the following terms and conditions:

1.      Incorporation by Reference of Plan. The provisions of the Plan are incorporated by reference herein and shall govern as to all matters not expressly provided for in this Agreement. Terms not defined in this Agreement have the meanings set forth in the Plan. In the event of any conflict between the terms of this Agreement and the Plan, the terms of the Plan shall govern.

2.      Option Exercise Price. The option exercise price of the
_______________ shares awarded to you is $ _____ per share, based on the “Fair Market Value*” as of
_______________.

 

	
 	
3.      	
Vesting. Options as follows:
_____________________________________________
  

	 
	
 	
4.      	
Vesting on Death or Retirement.
	 
	 	 	
(a)      	
Upon your death,

(i)     this Option shall vest and may be exercised, only for a period of one year after the date of your death, and

(ii)    all Option Shares, whenever acquired, may be sold or disposed of without regard to the schedule contained in Section 3 of this Agreement after the date of your death.

(b)    Upon your “Retirement,” you will continue to be entitled to exercise this Option and to sell or dispose of Option Shares in accordance with the same schedule as provided in Section 3, as if you continued to be an employee of the Company. For the purposes of this Agreement, “Retirement” shall mean termination of employment with the Company at or after the earlier of (i) age 55 and 15 years of service with the Company or (ii) age 60.

 

5.     Termination of Employment. Upon the termination of your employment by the Company by reason other than by your death or Retirement, you will be entitled to sell or dispose of only the percentage of Option Shares which you had the right to sell or dispose of under Section 3 as of your termination date. In addition, the following restrictions shall apply:

(a)     If your employment by the Company is terminated by the Company for “Cause” (as defined below), or if you resign from your employment with the Company (other than for “Good Reason” as defined in and if expressly permitted by any employment agreement between you and the Company), no portion of this Option shall be further exercisable on or after such termination date.

(b)    If your employment is terminated by the Company for any reason other than “Cause”, or if you terminate your employment for “Good Reason” as defined in and if expressly permitted by any employment agreement between you and the Company, this Option shall continue to be outstanding for a period of 90 days following such termination date.

(c)     For the purposes of the Agreement, “Cause” shall
mean **[(i) engaging in gross misconduct, fraud, dishonesty, gross negligence or
gross insubordination, (ii) willful misconduct, (iii) an indictment (or similar criminal proceeding) being brought against you for the alleged commission of felony, (iv) becoming subject to a judgment, order, consent decree, consent order, ruling or finding in connection with any federal or state government proceeding, including without limitation, an enforcement, cease and desist, inquiry or other proceeding before the Securities and Exchange Commission, in which you are sanctioned (whether or not denying or admitting the underlying violation or liability) for any violation of the securities laws and/or enjoined from any future violation of the securities laws; or (v) ]**
**[“cause” as defined in your employment agreement with the Company, if applicable.]**

For purposes of this Agreement and for purposes of any other prior or future award agreement providing for the grant of stock options or restricted stock units or other equity awards by the Company, termination of employment by the Company for any reason other than “Cause” includes any Constructive Termination Without Cause if and to the extent defined in and permitted by any employment agreement between you and the Company [as well as any termination of employment by you in the period following a Change in Control if and to the extent expressly permitted in any employment agreement between you and the Company]. “Good Reason” means a Constructive Termination Without Cause is and as defined in any employment agreement between you and the Company.

6.     Expiration of Options. Notwithstanding anything to the contrary set forth in Sections 3, 4, 5 of this Agreement, under no circumstances shall this Option be exercisable after
__________ or such shorter period as is prescribed in the Plan or this Agreement.

7.      Designated Beneficiary. You may designate a Beneficiary who will have the right to exercise this Option after your death according to the terms and conditions of this Agreement and the Plan. The form which may be used for this purpose is attached to this Agreement. If you do not designate a Beneficiary by completing the attached form and returning it to the Company, the Company will automatically provide such right to exercise to your estate.

 

	
            8.
 	
            Exercise. This Option shall be exercised by notice to the Company, accompanied by
 
	
             
	
            (i)
 	
            full payment in cash or check, or
 	
             

	
            (ii)
 	
            an election to exercise this Option by means of a “cashless exercise,” so long as you have the right at the time to sell and dispose of the Option Shares which are the subject of such cashless existence. The procedure and form for any such permitted “cashless exercise” will be provided to you. However, any “cashless exercise” is subject to the insider trading rules under the federal securities laws.
 

You are prohibited by the federal securities laws from selling or otherwise trading in any of the Company’s common stock at a time when you are in possession of material information which has not been publicly disclosed. You also agree that you will be subject to the Company’s “black-out” policy and to the Company’s “blackout” periods during the term of your employment with the Company and for three (3) months following any termination of employment for any reason.

9.      Rights as a Shareholder. You shall have no rights as a shareholder with respect to any shares which may be purchased by exercise of this Option unless and until a certificate representing such shares is duly issued and delivered to you. No adjustment shall be made for dividends or other rights for which the record date is prior to the date such stock certificate is issued except as may be determined in accordance with Section 12(c) of the Plan.

10.    Withholding Taxes. The Company’s obligation to deliver shares upon the exercise of this Option shall be subject to your satisfaction of all applicable federal, state and local income tax, employment tax and withholding requirements.

	
            11.
 	
            
Restrictions on Transfer; Restrictive Legends, Stop-Transfer Orders.
 

(a)     This Option shall not be transferred, assigned, pledged or hypothecated and shall not be subject to execution, attachment or similar process. In the event the terms of this paragraph are not complied with by you or if this Option is subject to execution, attachment or similar process, this Option shall immediately become null and void.

In addition, during any such period as Option Shares may not be sold or otherwise disposed of under this Agreement, those Option Shares shall not be sold, transferred, assigned, pledged, hypothecated or otherwise disposed of. In the event the terms of this paragraph are not complied with or if any such Option Shares so restricted are subject to execution, attachment or similar process, any such transfer shall be null and void.

(b)    You understand and agree that the Company shall cause the legends set forth below or legends substantially equivalent thereto, to be placed upon any certificate(s) evidencing ownership of the Option Shares together with any other legends that may be required by the Company or by applicable state or federal securities laws:

 

	
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER, AS SET FORTH IN THE STOCK OPTION AGREEMENT BETWEEN THE ISSUER AND
__________, DATED __________, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER RESTRICTIONS ARE BINDING ON TRANSFEREES OF THESE SHARES.

 

(c)     Stop-Transfer Notices. You agree that, in order to ensure compliance with the restrictions referred to herein, the Company may issue appropriate “stop transfer” instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records.

12.    Anti-Dilution Provisions. If prior to expiration of this Option, there shall occur any change in the outstanding shares of the Company’s common stock by reason of any stock dividend, stock split, combination or exchange of such shares of common stock, merger, consolidation, recapitalization, reorganization, liquidation, dissolution, or similar event, and as often as the same shall occur, then the kind and number of shares subject to this Option, or the purchase price per share of such common stock, or both, may be adjusted by the Compensation Committee of the Board of Directors (the “Committee”) in such manner as it may deem equitable, the determination of which shall be binding and conclusive. Failure of the Committee to provide for any such adjustment shall be conclusive evidence
that no adjustment is required.

13.    Acceptance of Provisions. The execution of this Agreement by you shall constitute your acceptance of and agreement to all of the terms and conditions of the Plan and this Agreement.

14.    Change in Control. Option Shares may be sold or disposed of at and following the consummation of a Change in Control (as such term is defined in the Plan).

15.    Confidentiality and Restrictive Covenant Provisions. In consideration of the grant of stock options to you and the compensation now and hereafter paid to you, you hereby acknowledge and agree as follows:

	
            (a)
 	
            
Confidentiality
 

	
            (i)
 	
            You are aware that the Company owns proprietary and confidential information and materials covering or related to the Company’s finances, business and operations which from time to time may be disclosed to you or to which you may obtain access or develop or create on behalf of the Company. Such information and materials may include, but are not limited to, sales information, plans and projections, trade secrets, marketing plans, product plans, margin information, vendor compensation, store plans and information, pricing techniques and plans, training programs, strategies, statistical data, forecasts, replenishment programs and systems and other information concerning the Company and its past, present or future operations, financing, sales, marketing or business (collectively “Confidential Information”).
Confidential Information does not include information which is or becomes known generally by the public other than through your breach of this Agreement. You acknowledge the confidential and secret character of the Confidential Information and agree that the Confidential Information is the sole, exclusive and extremely valuable property of the Company which gives the Company an advantage over its competitors and is critical to the success of the Company and its business.
 

 

	
            (ii)
 	
            All Confidential Information is the property of the Company and neither your employment nor the disclosure of such information to you should be construed to grant any right, license or authorization to you to use the Confidential Information except in connection with the performance by you of the services for which  you are employed by the Company. You will not during your employment by the Company or at any time thereafter exploit, reproduce or use for yourself or any third parties, or divulge or convey to any third parties, any Confidential Information except to the extent that Confidential Information shall be required to be used and/or divulged in order to enable you to perform in the ordinary course the services for which you are then currently employed by the Company.
 
	
            (iii)
 	
            You will comply with all regulations established by the Company to maintain the confidentiality of the Confidential Information and will not remove Confidential Information from your place of employment without the express consent of the Company.
 
	
            (iv)
 	
            On termination of your employment with the Company or at any other time as the Company may request, you shall end all use of any Confidential Information and return to the Company all originals and copies of any Confidential Information then in or thereafter coming into your possession (in whatever form and however such Confidential Information might be obtained or recorded). You shall not thereafter retain a copy of any such Confidential Information.
 

 

	
            (b)
 	
            
Restrictive Covenant
 

	
            (i)
 	
            During your employment by the Company and for a period of two (2) years thereafter (the “Restriction Period”), you will not, alone or with others, directly or indirectly, induce or attempt to induce any person who, during the term of your employment with the Company, was an employee or representative of the Company, to terminate his or her employment or relationship with the Company or to violate the terms of any agreement between such employee or representative and the Company, or hire or attempt to hire any employee of the Company within one hundred eighty (180) after the termination of such employee’s relationship with the Company.
 
	
            (ii)
 	
            During your employment by the Company and for a period of two (2) years thereafter, you will not accept any employment or related position, or act as a consultant (either directly or indirectly) with the following competitors of the Company:
__________. In the case of a termination of employment by the Company for any other reason than by “Cause” (as defined in Section 5(c)), the Restriction Period shall terminate immediately upon the employee’s termination of employment.
 
	
             	
            For purposes of any prior award agreement providing for the grant of stock options, restricted stock units or other equity awards by the Company, the “Restriction Period” for any restrictive covenant included in such equity award agreement shall terminate immediately upon the employee’s termination of employment by the Company for any reason other than “Cause” (as such term is defined in Section 5(c) above).

 

	
            (iii)
 	
            You agree that the above restrictions are reasonable and necessary in light of your position and responsibilities with the Company.
 

 

	
            
(c)
 	
            
Remedies
 

	
            (i)
 	
            You acknowledge that the Company will not have an adequate remedy at law for your breach of any provision of this Section 15. You consent to the entry of injunctive or other appropriate equitable relief against you with respect to any such breach (without proof of monetary or immediate damage and without any bond or other security being required), in addition to any other remedies which might be available to the Company at law or in equity.
 

 

	
            (ii)
 	
            Upon your breach of this Section 15, (a) all outstanding options granted to you to purchase common stock of the Company, whether granted pursuant to this Agreement or any earlier agreement regardless of whether vested or not vested in whole or in part, shall be cancelled and/or (b) if such conduct or activity occurs within two years following the exercise of any such option, you shall be required to repay to the Company any gain realized upon the exercise of such option (with such gain valued as of the date of exercise). Any repayment obligation may be satisfied in the Company’s common stock or cash or a combination thereof (based upon the fair market value of common stock on the day prior to the date of payment) and the Committee or the Board is hereby permitted and expressly authorized by you to offset against any future
payments owed by the Company or of its subsidiaries to you (including any salary, bonus, severance or other compensation) to satisfy the repayment obligation. The determination of whether you have breached this Section 15 shall be determined by the Committee or the Board in good faith. This Section 15 shall have no application following a termination of employment following a Change in Control (as defined in the Plan).
 
	
            (iii)
 	
            You agree to reimburse the Company for all costs and expenses (including, without limitation, court costs and the reasonable fees and expenses of attorneys) incurred by the Company in connection with any action by the Company seeking to enforce this Section 15 if and to the extent the Company is determined by a court of competent jurisdiction to have prevailed on the merits in such action.
 

 

 

	
             	
            For purposes of any prior award agreement providing for the grant of stock options, restricted stock units or other equity awards by the Company, the condition to such reimbursement of costs and expenses that the Company must have been determined by a court of competent jurisdiction to have prevailed on the merits on such action shall also apply to all such prior equity award agreements.
	
            (iv)
 	
            If any court of competent jurisdiction determines that any provision of this Section 15, as written, is too broad in scope or duration to be enforceable, such provision should be narrowed in scope and duration to the extent (and only to such extent) necessary to make such provision enforceable. The invalidity or unenforceability of any provision or provisions of this Section 15 shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.
 

16.    Venue and Jurisdiction; Waiver of Jury Trial. Any claim brought by you arising out of or in connection with this Agreement or the Plan (as incorporated herein by reference), the subject matter thereof, or the performance or non-performance of any obligation thereunder (other than a counterclaim maintained by you in an action originally brought by the Company), shall be brought in either the state or federal courts located in the State of New Jersey. You hereby irrevocably submit to the jurisdiction of each of the state or federal courts located in the State of New Jersey for the purposes of any suit, civil action or other proceeding (“Suit”) arising out of or in connection with this Agreement or the Plan, the subject matter thereof, or the performance or non-performance of any obligation
thereunder. You hereby waive and agree not to assert by way of motion, as a defense or otherwise in any such Suit, any claim that you are not subject to the jurisdiction of the state or federal courts located in the State of New Jersey, that such Suit is brought in an inconvenient forum, or that the venue of such Suit is improper. You hereby consent to service of process by first-class mail with respect to any action brought by the Company against you arising out of or in connection with this Agreement or the Plan.

 

YOU HEREBY WAIVE ANY TRIAL BY JURY WITH RESPECT TO ANY CLAIM ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR THE PLAN, THE SUBJECT MATTER THEREOF, OR THE PERFORMANCE OR NON-PERFORMANCE OF ANY OBLIGATION THEREUNDER.

17.    Miscellaneous. This Agreement and the Plan contain a complete statement of all the arrangements between the parties with respect to their subject matter, and this Agreement cannot be changed except in a writing executed by both parties. However, if and to the extent that the terms of any employment agreement between you and the Company as then in effect modify this Agreement, then while such employment agreement is then in effect, the terms of such employment agreement shall control as between the employment agreement and this Agreement. This 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 in New Jersey. The headings in this Agreement are solely for the convenience of reference and shall
not affect its meaning or interpretation.

Please indicate your acceptance of the foregoing terms and conditions by signing a copy of this Agreement and returning it to the Company to the attention of the Compensation Department.

 

	
Linens ’n Things, Inc.

	
 	
Employee:

	

	
By:________________________ 
	
 	
________________________ 
	
	
	
 
	
    Name: Brian D. Silva 
	
 	
 

	
    Title:   Senior Vice President, Human 
	
 	
 

	
              Resources, Administration 
	
 	
 

	
              and Corporate Secretary 
	
 	
 

	
 

	
Date: ______________________ 
	
 	
Date: ______________________ 

 

STOCK OPTION PLAN 

 

DESIGNATED BENEFICIARY FORM 

 

 

I,_____________________________ , hereby appoint the following individual to act as my designated “Beneficiary*” pursuant to Linens ‘n Things, Inc. Shareholder Approved Plan (the “Plan”), and also applicable to any other stock plans maintained by the Company.

______________________________________
 (Name of Designated Beneficiary) 

______________________________________
 (Street Address) 

______________________________________
 (City, State and Zip Code) 

______________________________________
 (Telephone Number) 

______________________________________
 (Social Security Number) 

I understand that after my death, the above-named individual may exercise Options granted to me under the Plans only to the extent that such Options are exercisable according to the terms and conditions of the Plans and all previously issued Linens ‘n Things, Inc. Stock Option Agreements.

	

______________________

(Date)   

	
 	

______________________

(Signature of Employee) 

 

	
            * To designate more than one beneficiary, copy this page and fill out one page for each beneficiary. Next to the name of each beneficiary, note the percentage of the options, which such beneficiary will be entitled to exercise.EXHIBIT  4.24

                            FORM  OF  DEBENTURE

THE  SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND ARE BEING OFFERED AND SOLD
IN  RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SUCH LAWS.  THE
SECURITIES ARE SUBJECT TO RESTRICTIONS OF TRANSFERABILITY AND RESALE AND MAY NOT
BE  TRANSFERRED  OR  RESOLD  EXCEPT  AS  PERMITTED  UNDER  SUCH LAWS PURSUANT TO
REGISTRATION  OR  AN EXEMPTION THEREFROM.  THE SECURITIES HAVE NOT BEEN APPROVED
OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY OTHER REGULATORY
AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE
MERITS  OF  THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THE OFFERING MATERIALS.
ANY  REPRESENTATION  TO  THE  CONTRARY  IS  UNLAWFUL.

FACE  AMOUNT                                     $150,000
PRICE                                               $125,000
INTEREST  RATE                                     8%  per  year
DEBENTURE  NUMBER                                January-2005-101
ISSUANCE  DATE                                     January  6,  2005
MATURITY  DATE                                     January  6,  2010

     FOR  VALUE  RECEIVED,  Network  Installation Corpa Nevada corporation (the
"Company"),  hereby  promises  to  pay  DUTCHESS PRIVATE EQUITIES FUND, II, L.P.
(the  "Holder")  on January 6, 2010, (the "Maturity Date"), the principal amount
of  One  Hundred and Fifty-Thousand Dollars ($150,000) U.S., and to pay interest
on the principal amount hereof, in such amounts, at such times and on such terms
and  conditions  as  are  specified  herein.

Article  1          Interest

     The  Company  shall  pay  interest  on  the unpaid principal amount of this
Debenture (the "Debenture") each month until the principal amount hereof is paid
in  full  or has been converted. The Debentures shall pay eight percent (8%) per
annum  and  is due every thirty (30) days from the date specified in Article 1a,
in cash, to the Holder. The closing shall be deemed to have occurred on the date
the funds (less escrow fees, attorney fees and those amounts payable pursuant to
the  terms  sheet)  are  received  by  the  Company  (the  "Closing  Date"). The
Debentures are subject to automatic conversion at the end of five (5) years from
the  date  of  issuance  at  which  time  all  Debentures  outstanding  will  be
automatically  converted  based  upon  the  formula  set  forth  in Section 3.2.

Article  2          Method  of  Payment

     This  Debenture  must be surrendered to the Company in order for the Holder
to  receive  payment of the principal amount hereof.  The Company shall have the
option  of  paying  the  interest  on  this  Debenture  in United States dollars
pursuant  to  Article 1 hereof.  The Company may draw a check for the payment of
interest  to  the  order  of  the  Holder  of  this Debenture and mail it to the
Holder's  address  as  follows:

Dutchess  Private  Equities  Fund,  II,  L.P.
312  Stuart  Street,  Third  Floor
Boston,  Massachusetts  02116

Interest and principal payments shall be subject to withholding under applicable
United  States  Federal  Internal  Revenue  Service  Regulations.

Article  3          Conversion

Section  3.1     Conversion  Privilege

(a)     The  Holder  of  this  Debenture shall have the right to convert it into
shares  of  Common  Stock  at  any time following the Closing Date and  which is
before  the  close  of  business  on  the  Maturity Date, except as set forth in
Section  3.1(c)  below.  The  number of shares of Common Stock issuable upon the
conversion  of this Debenture is determined pursuant to Section 4.2 and rounding
the  result  to  the  nearest  whole  share.

(b)     This Debenture may not be converted, whether in whole or in part, except
     in  accordance  with  Article  3.

(c)     In the event all or any portion of this Debenture remains outstanding on
     the  Maturity  Date,  the  unconverted  portion  of  such  Debenture  will
automatically  be  converted  into  shares  of  Common Stock on such date in the
manner  set  forth  in  Section  3.2.

Section  3.2     Conversion  Procedure.

(a)     Conversion  Procedures.  The  face  amount  of  this  Debenture  may  be
converted,  in  whole  or  in  part,  any time following the Closing Date.  Such
conversion shall be effectuated by surrendering to the Company, or its attorney,
     this Debenture to be converted together with a facsimile or original of the
signed  Notice  of  Conversion which evidences Holder's intention to convert the
Debenture  indicated.  The  date  on which the Notice of Conversion is effective
("Conversion  Date")  shall  be  deemed  to  be the date on which the Holder has
delivered  to  the  Company  a  facsimile  or  original  of the signed Notice of
Conversion, as long as the original Debenture(s) to be converted are received by
the  Company  within  five  (5) business days thereafter.  At such time that the
original  Debenture  has  been submitted to the Company, the Holder can elect to
whether  a  reissuance of the debenture is warranted, or whether the Company can
retain  the  Debenture  as to a continual conversion by Holder.  Notwithstanding
the  above,  any Notice of Conversion received by 4:00 P.M. EST, shall be deemed
to  have  been  received  the  previous  business  day.  Receipt  being  via  a
confirmation  of  time  of  facsimile  of  the  Holder.

(b)     Common Stock to be Issued.     Upon the conversion of any Debentures and
     upon  receipt  by the Company or its attorney of a facsimile or original of
Holder's  signed  Notice  of  Conversion the Company shall instruct its transfer
agent  to  issue  stock certificates without restrictive legend or stop transfer
instructions,  if  at  that  time  the  Registration Statement has been declared
effective  (or  with proper restrictive legend if the Registration Statement has
not  as  yet  been declared effective), in such denominations to be specified at
conversion  representing the number of shares of Common Stock issuable upon such
conversion,  as  applicable.   The  Company  shall  act  as  Registrar and shall
maintain an appropriate ledger containing the necessary information with respect
to  each  Debenture. The Company warrants that no instructions, other than these
instructions,  have  been  given or will be given to the transfer agent and that
the  Common  Stock  shall otherwise be freely resold, except as may be set forth
herein.

(c)     Conversion  Rate.  Holder is entitled to convert the face amount of this
Debenture,  plus  accrued  interest,  anytime following the Closing Date, at the
lesser  of  (i)  75%  of  the  lowest  closing bid price during the fifteen (15)
trading  days  prior  to  the Conversion Date or (ii) 100% of the average of the
closing  bid  prices  for the twenty (20) trading days immediately preceding the
Closing  Date  ("Fixed  Conversion  Price"),  each  being  referred  to  as  the
"Conversion  Price".  No  fractional  shares  or scrip representing fractions of
shares  will be issued on conversion, but the number of shares issuable shall be
rounded  up  or  down,  as  the  case  may  be,  to  the  nearest  whole  share.

(d)     Nothing  contained  in  this  Debenture  shall be deemed to establish or
require the payment of interest to the Holder at a rate in excess of the maximum
     rate  permitted  by  governing law.  In the event that the rate of interest
required  to  be  paid  exceeds the maximum rate permitted by governing law, the
rate  of  interest required to be paid thereunder shall be automatically reduced
to  the  maximum rate permitted under the governing law and such excess shall be
returned  with  reasonable  promptness  by  the  Holder  to  the  Company.

(e)     It  shall  be the Company's responsibility to take all necessary actions
and  to  bear  all  such  costs  to  issue  the Common Stock as provided herein,
including  the  responsibility and cost for delivery of an opinion letter to the
transfer  agent,  if  so  required.  The person in whose name the certificate of
Common  Stock is to be registered shall be treated as a shareholder of record on
and  after  the conversion date. Upon surrender of any Debentures that are to be
converted  in  part, the Company shall issue to the Holder a new Debenture equal
to  the  unconverted  amount,  if  so  requested  in  writing  by  Holder.

(f)     Within  three  (3)  business  days  after  receipt  of the documentation
referred to above in Section 3.2(a), the Company shall deliver a certificate, in
     accordance  with  Section  3.2(c)  for the number of shares of Common Stock
issuable  upon  the conversion.  In the event the Company does not make delivery
of  the  Common  Stock,  as instructed by Holder, within three (3) business days
after  the  Conversion  Date, then in such event the Company shall pay to Holder
one percent (1%) in cash, of the dollar value of the Debentures being converted,
compounded  daily, per each day after the third (3rd) business day following the
Conversion  Date  that  the  Common  Stock  is  not  delivered to the Purchaser.

                The  Company acknowledges that its failure to deliver the Common
Stock  within  three  (3) business days after the Conversion Date will cause the
Holder  to  suffer  damages  in  an  amount that will be difficult to ascertain.
Accordingly,  the  parties  agree  that  it  is  appropriate  to include in this
Debenture a provision for liquidated damages.  The parties acknowledge and agree
that  the  liquidated damages provision set forth in this section represents the
parties' good faith effort to quantify such damages and, as such, agree that the
form  and  amount  of  such  liquidated  damages  are  reasonable  and  will not
constitute  a  penalty.  The payment of liquidated damages shall not relieve the
Company  from  its obligations to deliver the Common Stock pursuant to the terms
of  this  Debenture.

              To  the extent that the failure of the Company to issue the Common
Stock pursuant to this Section 3.2(f) is due to the unavailability of authorized
but unissued shares of Common Stock, the provisions of this Section 3.2(f) shall
not  apply  but  instead  the  provisions  of  Section  3.2(g)  shall  apply.

              The  Company  shall  make any payments incurred under this Section
3.2(f)  in  immediately  available funds within three (3) business days from the
date the Common Stock is fully delivered.  Nothing herein shall limit a Holder's
right  to  pursue  actual  damages  or  cancel  the conversion for the Company's
failure  to  issue  and  deliver  Common  Stock  to  the Holder within three (3)
business  days  after  the  Conversion  Date.

(g)     The  Company  shall  at  all  times reserve (or make alternative written
arrangements  for  reservation or contribution of shares) and have available all
Common  Stock  necessary  to meet conversion of the Debentures by all Holders of
the entire amount of Debentures then outstanding. If, at any time Holder submits
     a  Notice of Conversion and the Company does not have sufficient authorized
but  unissued  shares  of Common Stock (or alternative shares of Common Stock as
may  be  contributed by Stockholders) available to effect, in full, a conversion
of  the  Debentures  (a  "Conversion  Default",  the  date of such default being
referred to herein as the "Conversion Default Date"), the Company shall issue to
the Holder all of the shares of Common Stock which are available, and the Notice
of  Conversion  as to any Debentures requested to be converted but not converted
(the  "Unconverted Debentures"), may be deemed null and void upon written notice
sent  by  the  Holder  to the Company.  The Company shall provide notice of such
Conversion  Default  ("Notice of Conversion Default") to all existing Holders of
outstanding  Debentures,  by  facsimile,  within  three (3) business day of such
default  (with  the original delivered by overnight or two day courier), and the
Holder  shall  give notice to the Company by facsimile within five business days
of  receipt  of  the  original  Notice  of Conversion Default (with the original
delivered  by overnight or two day courier) of its election to either nullify or
confirm  the  Notice  of  Conversion.

     The Company agrees to pay to all Holders of outstanding Debentures payments
for  a  Conversion  Default  ("Conversion  Default  Payments")  in the amount of
(N/365)  x (.24) x the initial issuance price of the outstanding and/or tendered
but  not  converted  Debentures held by each Holder where N = the number of days
from the Conversion Default Date to the date (the "Authorization Date") that the
Company  authorizes  a  sufficient  number  of  shares of Common Stock to effect
conversion  of  all  remaining  Debentures.  The  Company  shall  send  notice
("Authorization  Notice")  to  each  Holder  of  outstanding  Debentures  that
additional  shares  of Common Stock have been authorized, the Authorization Date
and  the  amount  of Holder's accrued  Conversion Default Payments.  The accrued
Conversion  Default  shall  be  paid in cash or shall be convertible into Common
Stock  at  the  Conversion  Rate,  upon written notice sent by the Holder to the
Company, which Conversion Default shall be payable as follows:  (i) in the event
Holder  elects to take such payment in cash, cash payments shall be made to such
Holder  of  outstanding  Debentures  by  the fifth day of the following calendar
month,  or  (ii)  in  the event Holder elects to take such payment in stock, the
Holder  may  convert  such  payment amount into Common Stock  at  the conversion
rate  set  forth in Section 3.2(c) at any time after the 5th day of the calendar
month  following the month in which the Authorization Notice was received, until
the  expiration  of  the  mandatory  four  (4)  year  conversion  period.
     The  Company  acknowledges that its failure to maintain a sufficient number
of authorized but unissued shares of Common Stock to effect in full a conversion
of the Debentures will cause the Holder to suffer damages in an amount that will
be  difficult  to  ascertain.  Accordingly,  the  parties  agree  that  it  is
appropriate  to  include  in  this Agreement a provision for liquidated damages.
The  parties  acknowledge  and  agree  that the liquidated damages provision set
forth in this section represents the parties' good faith effort to quantify such
damages  and, as such, agree that the form and amount of such liquidated damages
are  reasonable  and  will  not constitute a penalty.  The payment of liquidated
damages shall not relieve the Company from its obligations to deliver the Common
Stock  pursuant  to the terms of this Debenture.  Nothing herein shall limit the
Holder's  right to pursue actual damages for the Company's failure to maintain a
sufficient  number  of  authorized  shares  of  Common  Stock.

(h)     If,  by  the  third  (3rd) business day after the Conversion Date of any
portion  of  the  Debentures to be converted (the "Delivery Date"), the transfer
agent  fails  for  any reason to deliver the Common Stock upon conversion by the
Holder  and  after  such  Delivery Date, the Holder purchases, in an open market
transaction  or otherwise, shares of Common Stock (the "Covering Shares") solely
in  order  to  make  delivery  in  satisfaction of a sale of Common Stock by the
Holder (the "Sold Shares"), which delivery such Holder anticipated to make using
     the  Common  Stock issuable upon conversion (a "Buy-In"), the Company shall
pay  to  the  Holder, in addition to any other amounts due to Holder pursuant to
this  Debenture,  and  not  in  lieu  thereof,  the Buy-In Adjustment Amount (as
defined  below).  The  "Buy  In  Adjustment  Amount"  is the amount equal to the
excess,  if  any,  of (x) the Holder's total purchase price (including brokerage
commissions,  if  any)  for the Covering Shares over (y) the net proceeds (after
brokerage  commissions, if any) received by the Holder from the sale of the Sold
Shares.  The  Company  shall  pay  the Buy-In Adjustment Amount to the Holder in
immediately  available  funds within five (5) business days of written demand by
the  Holder.  By  way of illustration and not in limitation of the foregoing, if
the  Holder  purchases  shares  of  Common  Stock  having a total purchase price
(including  brokerage  commissions) of $11,000 to cover a Buy-In with respect to
shares  of  Common  Stock  it  sold  for  net  proceeds  of  $10,000, the Buy-In
Adjustment  Amount  which the Company will be required to pay to the Holder will
be  $1,000.

(i)     Prospectus and Other Documents. The Company shall furnish to Holder such
     number  of  prospectuses and other documents incidental to the registration
of the shares of Common Stock underlying the Debentures, including any amendment
of  or  supplements  thereto.

(j)     Limitation  on Issuance of Shares. If the Company's Common Stock becomes
listed  on  the Nasdaq SmallCap Market after the issuance of the Debentures, the
Company  may  be limited in the number of shares of Common Stock it may issue by
virtue  of  (X)  the number of authorized shares or (Y) the applicable rules and
regulations  of  the  principal  securities  market on which the Common Stock is
listed  or  traded,  including,  but  not  necessarily  limited  to, NASDAQ Rule
4310(c)(25)(H)(i)  or  Rule  4460(i)(1), as may be applicable (collectively, the
"Cap  Regulations").  Without  limiting  the  other  provisions thereof, (i) the
Company  will  take  all steps reasonably necessary to be in a position to issue
shares of Common Stock on conversion of the Debentures without violating the Cap
     Regulations  and  (ii)  if,  despite  taking  such steps, the Company still
cannot  issue such shares of Common Stock without violating the Cap Regulations,
the  holder  of  a  Debenture  which  cannot  be  converted as result of the Cap
Regulations  (each  such  Debenture,  an "Unconverted Debenture") shall have the
right  to  elect  either  of  the  following  remedies:

     (x)  if  permitted  by  the  Cap  Regulations, require the Company to issue
shares  of Common Stock in accordance with such holder's Notice of Conversion at
a  conversion  purchase  price equal to the average of the closing bid price per
share  of  Common  Stock  for  any five (5) consecutive trading days (subject to
certain  equitable  adjustments for certain events occurring during such period)
during the sixty (60) trading days immediately preceding the Conversion Date; or

     (y)  require the Company to redeem each Unconverted Debenture for an amount
(the  "Redemption Amount"), payable in cash, equal to the sum of (i) one hundred
thirty-three  percent  (133%) of the principal of an Unconverted Debenture, plus
(ii) any accrued but unpaid interest thereon through and including the date (the
"Redemption  Date")  on  which  the  Redemption  Amount  is  paid to the holder.

     A  holder  of  an Unconverted Debenture may elect one of the above remedies
with  respect  to  a  portion of such Unconverted Debenture and the other remedy
with  respect  to  other  portions of the Unconverted Debenture.  The Debentures
shall  contain  provisions  substantially  consistent with the above terms, with
such additional provisions as may be consented to by the Holder.  The provisions
of  this section are not intended to limit the scope of the provisions otherwise
included  in  the  Debentures.

(k)     Limitation  on  Amount  of  Conversion  and  Ownership.  Notwithstanding
anything  to  the  contrary  in  this Debenture, in no event shall the Holder be
entitled  to convert that amount of Debenture, and in no event shall the Company
permit  that  amount of conversion, into that number of shares, which when added
to  the sum of the number of shares of Common Stock beneficially owned, (as such
term  is  defined  under Section 13(d) and Rule 13d-3 of the Securities Exchange
Act  of  1934, as may be amended, (the "1934 Act")), by the Holder, would exceed
4.99%  of  the  number  of  shares of Common Stock outstanding on the Conversion
Date,  as  determined  in  accordance with Rule 13d-1(j) of the 1934 Act. In the
event  that  the  number  of shares of Common Stock outstanding as determined in
accordance  with  Section  13(d)  of the 1934 Act is different on any Conversion
Date  than it was on the Closing Date, then the number of shares of Common Stock
outstanding  on  such  Conversion  Date shall govern for purposes of determining
whether the Holder would be acquiring beneficial ownership of more than 4.99% of
     the  number  of shares of Common Stock outstanding on such Conversion Date.

(l)     Legend.  The  Holder acknowledges that each certificate representing the
Debentures,  and the Common Stock unless registered pursuant to the Registration
Rights  Agreement,  shall  be  stamped  or  otherwise  imprinted  with  a legend
substantially  in  the  following  form:

THE  SECURITIES  EVIDENCED  BY  THIS  CERTIFICATE  MAY  NOT  BE OFFERED OR SOLD,
TRANSFERRED,  PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT (i) PURSUANT
TO  AN  EFFECTIVE  REGISTRATION  STATEMENT  UNDER THE SECURITIES ACT OF 1933, AS
AMENDED,  (ii)  TO THE EXTENT APPLICABLE, RULE 144 UNDER THE ACT (OR ANY SIMILAR
RULE  UNDER  SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) IF AN
EXEMPTION  FROM  REGISTRATION  UNDER  SUCH  ACT  IS  AVAILABLE.

     (m)  Prior  to  conversion  of  all  the  Debentures,  if  at  any time the
conversion  of  all  the Debentures and exercise of all the Warrants outstanding
would  result  in  an  insufficient  number of authorized shares of Common Stock
being  available  to  cover all the conversions, then in such event, the Company
will  move  to  call and hold a shareholder's meeting or have shareholder action
with  written  consent  of  the proper number of shareholders within thirty (30)
days  of  such  event, or such greater period of time if statutorily required or
reasonably necessary as regards standard brokerage house and/or SEC requirements
and/or  procedures,  for  the purpose of authorizing additional shares of Common
Stock  to  facilitate  the  conversions.   In  such  an  event management of the
Company  shall  recommend  to  all shareholders to vote their shares in favor of
increasing  the  authorized  number of shares of Common Stock. Management of the
Company  shall vote all of its shares of Common Stock in favor of increasing the
number  of  shares  of authorized Common Stock.  Company represents and warrants
that  under  no  circumstances will it deny or prevent Holder's right to convert
the  Debentures  as  permitted under the terms of this Subscription Agreement or
the  Registration  Rights  Agreement.  Nothing  in  this Section shall limit the
obligation of the Company to make the payments set forth in Section 3.2(g).  The
Holder,  at  their  option,  may  request  the  company  to  authorize and issue
additional  shares  if  the  Holder feels it is necessary for conversions in the
future  In  the event the Company's shareholder's meeting does not result in the
necessary authorization, the Company shall redeem the outstanding Debentures for
an  amount  equal  to (x) the sum of the principal of the outstanding Debentures
plus  accrued  interest  thereon  multiplied  by  (y)  133%.

Section  3.3     Fractional  Shares.  The  Company  shall  not  issue fractional
shares of Common Stock, or scrip representing fractions of such shares, upon the
     conversion of this Debenture.  Instead, the Company shall round up or down,
as  the  case  may  be,  to  the  nearest  whole  share.

Section  3.4     Taxes  on  Conversion.  The  Company shall pay any documentary,
stamp  or  similar  issue  or  transfer tax due on the issue of shares of Common
Stock  upon the conversion of this Debenture.  However, the Holder shall pay any
such  tax  which  is  due because the shares are issued in a name other than its
name.

Section  3.5     Company to Reserve Stock.  The Company shall reserve the number
of  shares  of Common Stock required pursuant to and upon the terms set forth in
the  Subscription  Agreement  to  permit  the conversion of this Debenture.  All
shares of Common Stock which may be issued upon the conversion hereof shall upon
     issuance be validly issued,  fully paid and nonassessable and free from all
taxes,  liens  and  charges  with  respect  to  the  issuance  thereof.

Section  3.6     Restrictions  on  Sale.  This Debenture has not been registered
under  the  Securities  Act of 1933, as amended, (the "Act") and is being issued
under Section 4(2) of the Act and Rule 506 of Regulation D promulgated under the
     Act.  This  Debenture  and  the  Common  Stock issuable upon the conversion
thereof may only be sold pursuant to registration under or an exemption from the
Act.

Section  3.7     Mergers,  Etc.  If  the  Company  merges  or  consolidates with
another corporation or sells or transfers all or substantially all of its assets
     to  another  person  and  the  holders  of the Common Stock are entitled to
receive  stock,  securities  or property in respect of or in exchange for Common
Stock,  then  as a condition of such merger, consolidation, sale or transfer, it
may thereafter be converted on the terms and subject to the conditions set forth
above  into the kind and amount of stock, securities or property receivable upon
such merger, consolidation, sale or transfer by a holder of the number of shares
of  Common Stock into which this Debenture might have been converted immediately
before  such  merger,  consolidation,  sale  or transfer, subject to adjustments
which  shall  be  as  nearly  equivalent  as  may  be practicable to adjustments
provided  for  in  this  Article  3.

Section  3.8     Company  Mandatory Redemption. The Company, at its sole option,
shall have the right to exercise a "Mandatory Redemption" to redeem, in whole or
     in  part,  the outstanding amount of the Debenture, as follows: The Company
must  notify  the  Holder  in  writing,  via  facsimile transmission, that it is
exercising its right of Mandatory Redemption.  The Company shall not be entitled
to  exercise  a  Mandatory  Redemption  of  any  amount  being converted once it
receives  a  Notice  of  Conversion,  unless  it  is  for  the balance remaining
unconverted  on  the Debenture. In the event the Company exercises such right of
Mandatory  Redemption  the Company shall pay the Holder in U.S. currency 130% of
that  portion  of the Debenture being redeemed, plus accrued but unpaid interest
and  liquidated  damages,  if  any.  The  redemption amount shall be paid to the
Holder  within  five  (5)  calendar days of the date the Holder receives written
notice  from  the  Company of the Mandatory Redemption notice and if not paid in
such time the Company shall not be entitled to any further Mandatory Redemption.
The  Holder  at  its  sole  option  retains  the  right to decline any Mandatory
Redemption  from  the  company.

Article  4          Mergers
     The  Company  shall  not  consolidate  or  merge  into,  or transfer all or
substantially  all  of  its assets to, any person, unless such person assumes in
writing  the  obligations  of  the  Company under this Debenture and immediately
after  such transaction no Event of Default exists.  Any reference herein to the
Company  shall  refer  to  such  surviving  or  transferee  corporation  and the
obligations  of  the  Company  shall  terminate  upon  such  written assumption.

Article  5        Reports
     The  Company  will mail to the Holder hereof at its address as shown on the
Register  a  copy  of any annual, quarterly or current report that it files with
the  Securities  and Exchange Commission promptly after the filing thereof and a
copy  of  any annual, quarterly or other report or proxy statement that it gives
to  its  shareholders  generally at the time such report or statement is sent to
shareholders.

Article  6          Defaults  and  Remedies

Section  6.1     Events  of  Default.  An  "Event  of Default" occurs if (a) the
Company  does  not  make  the  payment  of  the  principal  of this Debenture by
conversion into Common Stock within ten (10) business days of the Maturity Date,
     upon  redemption  or  otherwise,  (b)  the Company does not make a payment,
other  than  a  payment  of  principal,  for a period of three (3) business days
thereafter,  (c) any of the Company's representations or warranties contained in
the Subscription Agreement or this Debenture were false when made or the Company
fails  to  comply with any of its other agreements in the Subscription Agreement
or this Debenture and such failure continues for the period and after the notice
specified  below,  (d)  the  Company  pursuant  to  or within the meaning of any
Bankruptcy  Law  (as hereinafter defined):  (i) commences a voluntary case; (ii)
consents  to the entry of an order for relief against it in an involuntary case;
(iii)  consents to the appointment of a Custodian (as hereinafter defined) of it
or  for  all  or  substantially  all  of  its  property  or (iv) makes a general
assignment  for  the  benefit  of  its  creditors  or  (v)  a court of competent
jurisdiction  enters  an  order or decree under any Bankruptcy Law that:  (A) is
for  relief against the Company in an involuntary case; (B) appoints a Custodian
of the Company or for all or substantially all of its property or (C) orders the
liquidation  of  the  Company,  and  the order or decree remains unstayed and in
effect for sixty (60) calendar days, (e) the Company's Common Stock is suspended
or  no  longer  listed  on  any  recognized  exchange  including  electronic
over-the-counter  bulletin  board  for in excess of five (5) consecutive trading
days.  As  used in this Section 7.1, the term "Bankruptcy Law" means Title 11 of
the  United  States  Code  or any similar federal or state law for the relief of
debtors.  The term "Custodian" means any receiver, trustee, assignee, liquidator
or  similar official under any Bankruptcy Law.  A default under clause (c) above
is  not  an  Event of Default until the holders of at least 25% of the aggregate
principal  amount  of  the  Debentures  outstanding  notify  the Company of such
default  and the Company does not cure it within thirty (30) business days after
the  receipt  of  such notice, unless the Company commences to cure such default
within  such  period, which must specify the default, demand that it be remedied
and  state that it is a "Notice of Default". Prior to the expiration of the time
for  curing  a  default as set forth in the preceding sentence, the holders of a
majority in aggregate principal amount of the Debentures at the time outstanding
(exclusive  of  Debentures  then  owned  by  the  Company  or  any subsidiary or
affiliate)  may,  on  behalf  of the holders of all of the Debentures, waive any
past Event of Default hereunder (or any past event which, with the lapse of time
or  notice  and  lapse of time designated in subsection (a), would constitute an
Event  of  Default  hereunder)  and  its  consequences,  except a default in the
payment of the principal of or interest on any of the Debentures. In the case of
any  such  waiver, such default or Event of Default shall be deemed to have been
cured for every purpose of this Debenture and the Company and the holders of the
Debentures  shall  be  restored  to their former positions and rights hereunder,
respectively; but no such waiver shall extend to any subsequent or other default
or  impair  any  right  consequent  thereon.

Section  6.2     Acceleration.  If an Event of Default occurs and is continuing,
the  Holder  hereof by notice to the Company may declare the remaining principal
amount  of this Debenture, together with all accrued interest and any liquidated
damages,  to be due and payable.  Upon such declaration, the remaining principal
amount  shall  be  due  and  payable  immediately.

Section  6.3     Seniority,  No  indebtedness  of  the Company is senior to this
Debenture in right of payment, whether with respect to interest, damages or upon
     liquidation  or  dissolution  or  otherwise.

Article  7          Registered  Debentures

Section  7.1     Record Ownership.  The Company, or its attorney, shall maintain
a register of the holders of the Debentures (the "Register") showing their names
     and  addresses  and  the serial numbers and principal amounts of Debentures
issued to them.  The Register may be maintained in electronic, magnetic or other
computerized form.  The Company may treat the person named as the Holder of this
Debenture  in  the Register as the sole owner of this Debenture.   The Holder of
this  Debenture  is  the  person  exclusively  entitled  to  receive payments of
interest  on  this  Debenture,  receive  notifications  with  respect  to  this
Debenture, convert it into Common Stock and otherwise exercise all of the rights
and  powers  as  the  absolute  owner  hereof.

Section  7.2     Worn  or  Lost  Debentures.  If  this  Debenture  becomes worn,
defaced  or  mutilated  but  is still substantially intact and recognizable, the
Company  or  its  agent  may  issue  a  new  Debenture  in  lieu hereof upon its
surrender.   Where  the  Holder  of this Debenture claims that the Debenture has
been  lost,  destroyed  or  wrongfully  taken,  the  Company  shall  issue a new
Debenture  in  place  of  the  original  Debenture  if the Holder so requests by
written  notice  to  the  Company  actually received by the Company before it is
notified  that  the Debenture has been acquired by a bona fide purchaser and the
Holder  has delivered to the Company an indemnity bond in such amount and issued
by  such  surety as the Company deems satisfactory together with an affidavit of
the Holder setting forth the facts concerning such loss, destruction or wrongful
     taking  and  such  other  information  in  such  form  with  such  proof or
verification  as  the  Company  may  request.

Article  8          Notice.

     Any  notices,  consents,  waivers  or  other  communications  required  or
permitted  to  be given under the terms of this Debenture must be in writing and
will  be  deemed  to  have  been  delivered  (i)  upon  receipt,  when delivered
personally;  (ii)  upon receipt, when sent by facsimile (provided a confirmation
of  transmission is mechanically or electronically generated and kept on file by
the  sending  party);  or  (iii)  one  (1)  day  after deposit with a nationally
recognized  overnight  delivery  service, in each case properly addressed to the
party  to  receive  the  same.  The  addresses  and  facsimile  numbers for such
communications  shall  be:

If  to  the  Company:
     Michael  Cummings,  CEO
     Network  Installations  Corp
     15235  Alton  Parkway,  Suite  200
     Irvine,  CA  92618
     Telephone:  949-753-7551
     Facsimile:  949-753-7499

If  to  the  Holder:

     At  the  address  listed  in  the  Questionnaire.

     Each  party  shall provide five (5) business days prior notice to the other
party  of  any  change  in  address,  phone  number  or  facsimile  number.

Article  9          Time
     Where  this  Debenture  authorizes  or requires the payment of money or the
performance  of  a  condition  or obligation on a Saturday or Sunday or a public
holiday,  or authorizes or requires the payment of money or the performance of a
condition or obligation within, before or after a period of time computed from a
certain date, and such period of time ends on a Saturday or a Sunday or a public
holiday,  such  payment  may be made or condition or obligation performed on the
next  succeeding  business day, and if the period ends at a specified hour, such
payment  may  be made or condition performed, at or before the same hour of such
next  succeeding  business  day,  with  the  same force and effect as if made or
performed  in  accordance  with  the  terms of this Debenture.  A "business day"
shall  mean  a day on which the banks in New York are not required or allowed to
be  closed.

Article  10          No  Assignment
     This  Debenture  shall  not  be  assignable.

Article  11          Rules  of  Construction.
     In  this  Debenture,  unless  the  context otherwise requires, words in the
singular  number include the plural, and in the plural include the singular, and
words  of the masculine gender include the feminine and the neuter, and when the
sense  so  indicates,  words  of the neuter gender may refer to any gender.  The
numbers  and  titles  of  sections  contained  in the Debenture are inserted for
convenience  of  reference  only, and they neither form a part of this Debenture
nor are they to be used in the construction or interpretation hereof.  Wherever,
in  this  Debenture, a determination of the Company is required or allowed, such
determination  shall  be  made  by  a  majority of the Board of Directors of the
Company and if it is made in good faith, it shall be conclusive and binding upon
the  Company  and  the  Holder  of  this  Debenture.

Article  12          Governing  Law
     The validity, terms, performance and enforcement of this Debenture shall be
governed  and construed by the provisions hereof and in accordance with the laws
of  the  Commonwealth  of  Massachusetts  applicable  to  agreements  that  are
negotiated,  executed,  delivered  and  performed  solely in the Commonwealth of
Massachusetts.

Article  13          Litigation

DISPUTES  SUBJECT  TO  ARBITRATION  GOVERNED  BY  MASSACHUSETTS  LAW
--------------------------------------------------------------------

     All  disputes  arising  under  this  agreement  shall  be  governed  by and
interpreted  in  accordance  with the laws of the Commonwealth of Massachusetts,
without regard to principles of conflict of laws.  The parties to this agreement
will  submit all disputes arising under this agreement to arbitration in Boston,
Massachusetts before a single arbitrator of the American Arbitration Association
("AAA").  The  arbitrator  shall  be selected by application of the rules of the
AAA, or by mutual agreement of the parties, except that such arbitrator shall be
an  attorney  admitted to practice law in the Commonwealth of Massachusetts.  No
party  to  this agreement will challenge the jurisdiction or venue provisions as
provided  in  this  section.

Article  14     Investor  Warrants

     As  an  additional  inducement to Holder, the Company shall issue a warrant
for  One  Hundred  and Fifty-Three thousand (150,000) shares of its common stock
exercisable  at  $1.83  to  Holder  hereto  attached in schedule A.  Any partial
amount  invested  shall  be  pro-rated on the basis of the investment by Holder.
These  shares  shall  have  piggyback  registration  rights.

     IN  WITNESS WHEREOF, the Company has duly executed this Debenture as of the
date  first  written  above.

NETWORK  INSTALLATIONS  CORP.

By  Name:/s/ Michael Cummings
Michael  Cummings
Title:  CEO

                              DUTCHESS  PRIVATE  EQUITIES  FUND,  II,  L.P.
                              BY  ITS  GENERAL  PARTNER  DUTCHESS
                              CAPITAL  MANAGEMENT,  LLC

                         By:  /s/ Douglas Leighton
                        Name:  Douglas  H.  Leighton
                         Title:  A  Managing  Member

                                        S

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