NETWORK INSTALLATION CORP.

(Exact name of registrant as specified in its charter)

Nevada

000-25499

88-0390360

(State or other jurisdiction
of incorporation)

(Commission
File Number)

(IRS Employer
Identification No.)

5625 Arville, Suite E
Las Vegas, Nevada                                           89118

(Address of principal executive offices)            (Zip Code)

(702) 889-8777

(Registrant's telephone number, including area code)

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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

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Soliciting material pursuant to Rule 14a-12(b) under the Exchange Act (17 CFR 240.14a-12(b))

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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Pursuant to the terms of the Restructuring Agreement, which is effective June 30, 2006:

•

All of the Company’s outstanding loans from Dutchess pursuant to certain loan documents between the Company and Dutchess from and after 2003 (the “Loan Documents”) totaling approximately $7,300,000 in face amount with approximately $500,000 of accrued interest as of June 30, 2006 are superceded by a Promissory Note (the “New Note”) dated August 1, 2006 by the Company in favor of Dutchess in the principal amount of $6,254,960;

•

The New Note bears interest at a rate of 7% per annum and is secured by all the assets of the Company. Payments on the New Note are to be made as follows:

Month

Monthly Payment Amount

August 1, 2006-December 1, 2006

$15,000

January 1, 2007 – September 1, 2007

$50,000

October 1, 2007-June 1, 2008

$75,000

July 1, 2008 - March 1, 2009

$100,000

April 1, 2009-December 1, 2009

$125,000

January 1, 2010 – September 1, 2010

$150,000

October 1, 2010 – June 1, 2011

$175,000

•

All convertible debentures and warrants issued to Dutchess pursuant to the terms of the Loan Documents were cancelled and are required to be surrendered to the Company. This included warrants to purchase approximately 5,729,000 shares of NWKI common stock;

•

The Company is prohibited from granting a lien against or security interest in any of the assets of the Company that are subject to any lien or security interest of Dutchess without Dutchess’ prior written consent;

•

The Company is prohibited from borrowing money or selling stock of NWKI, which borrowing or sale either alone or aggregated during any 6-month period exceeds $250,000, without Dutchess’ prior written consent;

•

If the Company borrows funds or raises capital from the sale of the stock of NWKI from a person other than Dutchess and the proceeds from such financing exceed $3,500,000, the Company is required to pay Dutchess 50% of the proceeds from such financing that exceed $3,500,000 up to the unpaid balance of the New Note, as a principal prepayment on the New Note;

•

If the Company’s earnings on a consolidated basis during any calendar year exceed one-million dollars ($1,000,000) (i) before interest, taxes, depreciation and amortization, but (ii) after deduction of all principal and interest payments on outstanding debts, other than prepayments to Dutchess mandated by Restructuring Agreement (the “Excess Earnings”), the Company is required to pay to Dutchess 33% of the Excess Earnings, up to the unpaid balance of the New Note, as a principal prepayment on the New Note;

•

The Company is prohibited from selling any of its assets (other than assets sold in the ordinary course of business) without Dutchess’ prior written consent (an “Asset Sale”). In the event of an Asset Sale, the Company is required to pay to Dutchess 33% of the proceeds of the Asset Sale (after the fees and expenses associated with the Asset Sale), up to the unpaid balance of the New Note, as a prepayment on the New Note;

•

Dutchess waived any default that had occurred under the Loan Documents prior to the date of the Restructuring Agreement;

•

Dutchess waived all penalties and premiums that had accrued under the Loan Documents prior to the date of the Restructuring Agreement;

•

Dutchess waived any obligation to register any securities of the Company imposed by the Loan Documents prior to the date of the Restructuring Agreement;

•

Similar provisions in other agreements between the Company and Dutchess providing for (i) payments of premiums, penalties, liquidated damages or additional expenses by the Company, (ii) restrictions on the Company’s rights to issue securities and (iii) requiring the Company to issue securities to Dutchess in satisfaction of debt or otherwise were waived by Dutchess; and

•

In the event of a default under the Restructuring Agreement or the New Note, Dutchess has the right to (1) declare the full unpaid balance of the New Note to be immediately due and payable, and (2) reinstate and enforce its rights under the Loan Documents, including conversion into shares of the Company’s stock. All other rights, representations and warranties would survive and be governed as agreed pursuant to the Loan Documents. In the event of a default, the Company would be obligated to issue to Dutchess stock and warrants for stock of the Company as provided in the Loan Agreements.

NETWORK INSTALLATION CORP.

August 7, 2006

/s/ Jeffrey R. Hultman
Jeffrey R. Hultman
President and Chief Executive Officer