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                                                                  EXECUTION COPY



                      AMENDED AND RESTATED PROMISSORY NOTE

$7,000,000                                                 Original Issue Date
                                                           December 1, 1999


         AMENDED AND RESTATED PROMISSORY NOTE, dated as of March 1, 2000, by
DUALSTAR TECHNOLOGIES CORPORATION, a Delaware corporation (the "Company"), in
favor of MADELEINE L.L.C., a New York limited liability company (the "Holder"),
for the principal sum of Seven Million Dollars ($7,000,000) with interest
(computed on the basis of a 360 day year and the actual number of days elapsed)
at the rate of 11.0% per annum on the balance of the principal from time to time
remaining unpaid, all on the terms and conditions set forth herein (the "Note").

                                   WITNESSETH:

         WHEREAS, the Company issued a Convertible Promissory Note, dated as of
December 1, 1999 (the "Convertible Note"), in favor of the Holder for the
principal sum of Seven Million Dollars ($7,000,000); and

         WHEREAS, in exchange for the issuance and delivery by the Company to
Cerberus Capital Management, L.P. ("Cerberus") and Blackacre Capital Management
L.L.C. ("Blackacre") of warrants, dated as of December 16, 1999 (the
"Warrants"), entitling Cerberus and Blackacre to purchase from the Company
shares of common stock, par value $.01 per share, of the Company (the "Common
Stock") on such terms described in such Warrants, the Holder agreed to waive its
conversion rights under the Convertible Note and amended and restated the
Convertible Note accordingly as of December 16, 1999 (the Convertible Note, as
so amended and restated is hereinafter referred to as the "Amended Note"); and

         WHEREAS, in consideration of the acceptance and agreement by the
Company to certain amendments, as of March 1, 2000, to that certain letter among
the parties, dated as of December 16, 1999, the Holder has agreed to extend the
Maturity Date of the Amended Note; and

         NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth and for the purpose of defining the terms and
provisions of this Note, the Amended Note is restated below in its entirety, and
the Company and Holder agree as follows:

         FOR VALUE RECEIVED, DUALSTAR TECHNOLOGIES CORPORATION, a Delaware
corporation (the "Company"), promises to pay to MADELEINE L.L.C., a New York
limited liability company (the "Holder"), at 450 Park Avenue, 28th Floor, New
York, New York 10022 or at such other place as the Holder may in writing
designate, the principal sum of Seven Million Dollars ($7,000,000) with interest
(computed on the basis of a 360 day year and the actual number of days elapsed),
from December 1, 1999, at the rate of 11.0% per annum on the balance of the
principal from time to time remaining unpaid, all on the terms and conditions
set forth herein (the "Note").


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         1. Maturity, Interest and Amortization. Unless accelerated pursuant to
the terms of this Note, the unpaid principal balance of this Note together with
all unpaid interest accrued thereon shall be due and payable on May 31, 2000
(the "Maturity Date", with the period of time from the date hereof until the
Maturity Date being referred to herein as the "Term"). Interest on the Note
shall be payable monthly in arrears in cash on the 15th day of each month with
the first payment to be made on December 15, 1999. Principal and interest are
payable in lawful money of the United States. All payments received by Holder
under this Note shall be credited first to any charges or other expenses for
which Holder is entitled to payment hereunder, next to accrued but unpaid
interest, and third to unpaid principal. The Company shall have the right at any
time on at least fifteen (15) days' notice to prepay any portion of the
outstanding principal of this Note without penalty. Notwithstanding any contrary
provision contained herein, (i) immediately upon any Disposition (as such term
is hereinafter defined) by the Company or any of its subsidiaries, the Company
shall prepay the unpaid principal balance of this Note together with all unpaid
interest accrued thereon in an amount equal to 100% of the Net Cash Proceeds (as
such term is hereinafter defined) received by the Company or any of its
subsidiaries or affiliates in connection with such Disposition except to the
extent that such Net Cash Proceeds (x) relate to the sale of High-Rise Electric,
Inc. ("High-Rise") and (y) are used in accordance with a written budget
furnished to Holder within 30 days of the date hereof (and from time to time
thereafter) and approved by Holder, which approval shall not be unreasonably
withheld or delayed; (ii) immediately upon the incurrence by the Company or any
of its subsidiaries of any Indebtedness, the Company shall prepay the unpaid
principal balance of this Note together with all unpaid interest accrued thereon
in an amount equal to 100% of the Net Cash Proceeds received by the Company or
any of its subsidiaries in connection therewith; provided, that any amount of
unpaid principal balance together with unpaid interest which is not prepaid by
the Company pursuant to clause (i) and/or (ii) shall remain an obligation of the
Company on such terms and conditions set forth herein.

         "Disposition" for purposes hereof shall mean any transaction, or series
of transactions, pursuant to which the Company or any of its subsidiaries sells,
assigns, transfers or otherwise disposes of any property or assets (whether now
owned or hereafter acquired) to any other Person, in each case whether or not
the consideration therefor consists of cash, securities or other assets owned by
the acquiring Person, excluding any sales of inventory in the ordinary course of
business on ordinary business terms.

         "Excluded Subsidiary" for the purposes hereof shall mean each of the
following subsidiaries of the Company: Centrifugal Service, Inc.; The Automation
Group, Inc.; Trident Mechanical Systems, Inc.; Property Control, Inc.; Grace
Systems Technologies, Inc.; and HR Electrical Systems, Inc.

         "Indebtedness" for purposes hereof shall mean indebtedness for borrowed
money, but shall not include accounts payable to trade creditors created or
assumed in the ordinary course of business in connection with obtaining
materials or services or amounts owed to employees of the Company in the
ordinary course of business.

         "Net Cash Proceeds" for purposes hereof shall mean (i) with respect to
any Disposition by the Company or any of its subsidiaries, the amount of cash
received (directly or


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indirectly) from time to time (whether as initial consideration or through the
payment of deferred consideration) by or on behalf of the Company or any of its
subsidiaries, in connection therewith after deducting therefrom only (A) the
principal amount of any indebtedness secured by any lien on any asset (other
than indebtedness assumed by the purchaser of such asset) which is required to
be, and is, repaid in connection with such Disposition (other than indebtedness
under this Note), (B) reasonable expenses related thereto reasonably incurred by
the Company or any of its subsidiaries in connection therewith, (C) transfer
taxes paid by the Company or any of its subsidiaries in connection therewith and
(D) net income taxes to be paid in connection with such Disposition (after
taking into account any tax credits or deductions and any tax sharing
arrangements and (ii) with respect to the issuance or incurrence of any
indebtedness by the Company or any of its subsidiaries, or the sale or issuance
by the Company or any of its subsidiaries of any shares of its capital stock,
the aggregate amount of cash received (directly or indirectly) from time to time
(whether as initial consideration or through the payment of deferred
consideration) by or on behalf of the Company or any of its subsidiaries in
connection therewith after deducting therefrom only reasonable brokerage
commissions, underwriting fees and discounts, legal fees and similar fees and
commissions.

         1A. Use of Proceeds. The Company shall use Two Million One Hundred
Thirty-Four Thousand One Hundred Fifteen and 57/100s Dollars ($2,134,115.57) of
the principal received pursuant to this Note to pay (or cause
Centrifugal/Mechanical Associates, Inc. ("CMA") to pay) in full to Technology
Investors Group, L.L.C. the amounts owed under (a) the Promissory Note, dated as
of October 26, 1999 (the "1999 TIG Loan"), (b) the Secured Promissory Note
Extension Agreement, dated as of November 25, 1998 (the "1998 TIG Loan") and (c)
the Promissory Note, dated as of July 24, 1998 (the "Additional TIG Loan, and
with the 1999 TIG Loan and 1998 TIG Loan collectively referred to herein as the
"TIG Loans").

         2. Event of Default/Remedies

                  a. Any of the following events shall constitute an Event of
Default:

                           i. (A) any failure to pay when due (whether at stated
maturity, by reason of acceleration of the maturity hereof or otherwise) any
principal hereof or any interest hereon; (B) any material breach by the Company
of any of its other obligations or covenants under this Note, the Guaranties,
the Security Agreement or the Pledge and Security Agreements (as such terms are
hereinafter defined), provided that such breach is not cured by the Company
within ten (10) days from the date of receipt of any notice from Holder of such
breach; or (C) any material breach by CMA, Centrifugal Associates, Inc. ("CA")
or Mechanical Associates, Inc. ("MA") of its obligations or covenants under
their respective guaranties (the "Guaranties") of this Note, or the Security
Agreement (as herein defined); or

                           ii. the Company or any subsidiary (other than an
Excluded Subsidiary) thereof (A) becomes insolvent or admits in writing its
inability to pay its debts as they mature, (B) makes any assignment for the
benefit of creditors, or (C) applies for or consents to the appointment of a
receiver or trustee for the Company or such subsidiary or for a substantial part
of the Company's or such subsidiary's property or business, or a receiver or
trustee otherwise is appointed and is not discharged within 45 days after such
appointment (for purposes of this


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subsection, the Company or such subsidiary shall be deemed "insolvent" if, as of
the Company's or such subsidiary's most recent balance sheet, the sum of its
debts exceed the sum of its assets, at a fair valuation, or it is unable to pay
its debts as they come due); or

                           iii. any bankruptcy, insolvency, reorganization or
liquidation proceeding or other proceeding for relief under any bankruptcy law
or any law for the relief of debtors is instituted by or against the Company or
any subsidiary (other than an Excluded Subsidiary), and if against the Company
or any subsidiary (other than an Excluded Subsidiary) such proceeding is not
vacated within 45 days; or

                           iv. any money judgment, lien, writ or warrant of
attachment, or similar process is entered of filed against the Company or any
subsidiary (other than an Excluded Subsidiary) or any of the assets of the
Company or any subsidiary (other than an Excluded Subsidiary) and remains
unvacated, unbonded, unstayed, undismissed or undischarged for a period of 45
days or in any event later than 10 days before the date of any proposed sale
thereunder, provided that such a lien (singly or, if more than one,
cumulatively) of less than $250,000 arising in the ordinary course of the
Company's or any subsidiary's business, even if it remains unbonded, unstayed or
undismissed for 45 days, shall not be deemed an Event of Default if the Company
has been advised by counsel in writing and thus believes in good faith that it
has a valid defense to the claim giving rise to such lien and promptly so
advises Holder in writing and timely contests such claim; or

                           v. the Company or any subsidiary (A) defaults on or
breaches in any material respect any material contract with or obligation when
due to a third party or (B) defaults in the performance of any material
obligation to a third party or Holder incurred for money borrowed of $500,000 or
more; or

                           vi. the Common Stock is delisted from the NASDAQ
National Market System ("NASDAQ"), unless such delisting occurs in connection
with the Common Stock being traded on either the American Stock Exchange or the
New York Stock Exchange; or

                           vii. the acquisition, directly or indirectly, by any
person or group (within the meaning of Section 13(d)(3) of the Securities
Exchange Act of 1934) of beneficial ownership of more than 20% of the aggregate
outstanding voting power of the capital stock of the Company; or

                           viii. individuals who as of the date hereof
constituted the board of directors of the Company (together with any new
directors whose election by such board of directors or whose nomination for
election by the stockholders of the Company was approved by a vote of at least
66 2/3% of the directors of the Company then still in office who were either
directors as of the date hereof, or whose election or nomination for election
was previously so approved) cease for any reason to constitute a majority of the
board of directors of the Company then in office;

                           ix. the Company shall fail to comply with the
provisions of Section 1A hereof;


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                           x. the Company shall fail to perform in a timely
manner its obligations (or disclaim any obligations) pursuant to that certain
letter of intent (the "Proposal Letter"), dated December 1, 1999, heretofore
executed and delivered by and among the Company, Cerberus and Blackacre (with
such changes thereto as Cerberus and Blackacre shall agree to in their sole
discretion); or

                           xi. the Company shall fail to perform in a timely
manner its obligations (or shall disclaim any obligations) pursuant to that
certain letter, dated as of December 16, 1999, from the Company to Cerberus and
Blackacre, regarding the payment of certain amounts in connection with a
"Competing Transaction" (as defined therein).

                  b. Remedies. Upon the occurrence and during the continuance of
an Event of Default described in subsections 2(a)(i)(A), 2(a)(ii), 2(a)(iii),
2(a)(x) or 2(a)(xi) above, all indebtedness under this Note shall automatically
be immediately due and payable. Upon the occurrence and during the continuance
of any other Event of Default, Holder at its option and, unless otherwise
specified below, upon no less than five (5) business days' written notice to the
Company (or such other notice as is required by law), may do any one or more of
the following:

                           i. declare all indebtedness under this Note
immediately due and payable and credit any sums received thereafter to such
indebtedness in whatever priority it shall elect; provided, however, that
application of sums so received shall not serve to waive or cure any default
existing under this Note nor to invalidate any notice of default or any act done
pursuant to such notice and shall not prejudice any rights of Holder; and

                           ii. exercise any or all rights provided or permitted
by law or granted pursuant to this Note, the Guaranties or that certain Pledge
Agreement, dated November 30 1999, by and between the Company and Holder
relating to all of the common stock of CA, MA and High-Rise, and the Pledge and
Security Agreements, dated as of November 30, 1999, by and between CA and MA and
the Holder relating to all of the common stock of CMA (collectively, the "Pledge
and Security Agreements") and that certain Security Agreement, dated as of
November 30, 1999, by and between CMA and the Holder (the "Security Agreement"),
in such order and in such manner as Holder may, in its sole judgment, determine,
including without limitation its right to convert this Note to Common Stock
pursuant to Section 5 hereof; provided that, upon conversion in accordance with
the terms hereof, Holder shall not have or exercise any other rights or remedies
hereunder, other than with respect to claims relating to the calculation or
payment of interest or costs and expenses of collection pursuant to Section 8
hereof, that have arisen up to the time of or in connection with conversion.

         3. Default Rate. Any amounts not paid when due shall thereafter bear
interest at a rate per annum equal to the 18.0%. If such default rate would but
for this sentence, exceed the maximum lawful rate, the effective interest rate
under this Note shall be the maximum lawful rate, and any amount received by
Holder in excess of such rate shall be applied to principal and then to fees and
expenses, or, if no such amounts are owing, returned to the Company.



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         4. Waiver. The Company hereby waives any right of offset it may now or
hereafter have against Holder, and the Company hereby also waives diligence,
presentment, protest and demand, notice of protest, dishonor and nonpayment of
this Note and expressly agrees that, without in any way affecting the liability
of the Company hereunder, Holder may in its sole discretion extend any maturity
date or the time for payment of any installment due hereunder, accept security,
release any party liable hereunder and release any security hereafter securing
this Note.

         5. [Intentionally omitted.]

         6. Notices. Any notice required by the provisions of this Note shall be
in writing and shall be deemed effectively given: (i) upon personal delivery to
the party to be notified, (ii) when sent by confirmed telex or facsimile, (iii)
five (5) days after having been sent by registered or certified mail, return
receipt requested, postage prepaid, or (iv) two (2) days after deposit with a
nationally recognized overnight courier, with written verification of receipt.
All notices shall be addressed to Holder at 450 Park Avenue, 28th Floor, New
York, New York 10022, Attention: Mark A. Neporent or at such subsequent address
as Holder shall provide to the Company in writing. Any notice to the Company
shall be addressed to the Company at 11-30 47th Avenue, Long Island City, New
York 11101 or at such subsequent address as the Company shall provide to the
Holder in writing.

         7. Covenants. So long as the principal balance of the Note remains
outstanding, without the consent of the Holder, the Company agrees as follows
(the "Covenants"):

                  (i) The Company will not alter, amend or modify in any respect
the rights, preferences or privileges of the Note.

                  (ii) The Company and its subsidiaries will not incur any
Indebtedness.

                  (iii) The Company and its subsidiaries shall not engage in any
Disposition unless at least 65% of the proceeds thereof consist of cash and the
Net Cash Proceeds thereof are applied to the prepayment of the Note or otherwise
applied in accordance with Section 1 of this Note.

                  (iv) The Company and its subsidiaries (other than any Excluded
Subsidiary) shall not make, or commit to make, any Investment(s) in any Excluded
Subsidiary in excess of $20,000 in the aggregate. "Investments" for purposes
hereof shall mean all investments in the forms of direct or indirect loans
(including guarantees of Indebtedness or other obligations), advances or capital
contributions, purchases or other acquisitions for consideration of
Indebtedness, equity interests (including, without limitation, capital stock,
warrants, options or other rights to acquire capital stock) or other securities,
together with all other items that are or would be classified as investments on
a balance sheet prepared in accordance with generally accepted accounting
principles.


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         No reference contained herein to actions that the Company may take
shall be deemed in any way to prejudice or limit Holder's rights to enforce the
Covenants. The Company acknowledges that the Covenants are a material inducement
to Holder's willingness to purchase the Note, and that Holder would not be
willing to purchase the Note in the absence of the Covenants. Accordingly,
except to the extent that the Covenants expressly limit Holder's discretion, the
Company acknowledges that Holder shall be free to enforce the Covenants in its
absolute discretion or to condition its consent as it sees fit.

         8. Legal Fees. The Company agrees to pay all Holder's reasonable costs
and expenses actually incurred by Holder in connection with the good faith
enforcement of any obligation of the Company under this Note, including without
limitation reasonable attorneys' fees.

         9. Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of New York.

         [Remainder of this page intentionally left blank.]



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         10. Severability. Should any provision or portion of this Note be held
unenforceable or invalid for any reason, the remaining provisions and portions
of this Note shall be unaffected by such holding.



DUALSTAR TECHNOLOGIES CORPORATION

By: /s/ ROBERT BIRNBACH
   ------------------------------

Its: CFO & EVP
    -----------------------------



MADELEINE L.L.C.

By: /s/ MARK NEPORENT
   ------------------------------

Its: Authorized Signatory
    -----------------------------


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