<PAGE>



                              EMPLOYMENT AGREEMENT

         EMPLOYMENT AGREEMENT (this "Agreement") made as of the 7th day of
September, 2000 by and between DENNIS S. ROSATELLI, with an address at 73 Lake
View Drive, Old Tappan, New Jersey 07675 (hereinafter referred to as "Employee")
and DUALSTAR COMMUNICATIONS, INC., a Delaware corporation having its principal
place of business at One Park Avenue, New York, New York 10016 (hereinafter
referred to as the "Company").

         1. Employment. The Company hereby employs Employee and Employee agrees
to work for the Company with the title specified on Schedule A below during the
Term (as defined below) of and upon the terms and conditions set forth in this
Agreement.

         2. Compensation/Benefits. (a) Base Salary. During the Term of this
Agreement, the Company agrees to pay Employee the base annual salary specified
on Schedule A below ("Base Salary"). Such Base Salary shall be reviewed no less
frequently than annually during the term of this Agreement and may be increased
but not decreased by the Company's board of directors in its sole and absolute
discretion, after taking into consideration a variety of factors, including,
without limitation, the performance of the Employee and the Company and the base
salary (and raises) paid by comparable companies to employees having comparable
responsibilities. In the event of any increase, the increased amount shall
become the Base Salary. Such Base Salary shall be payable in accordance with the
Company's normal business practices or in such other amounts and at such other
times as the parties may mutually agree.

         (b) Bonuses. During each year of the Term of this Agreement, the
Company agrees to submit for approval to the Board of Directors, in its sole and
absolute discretion, an incentive payment plan ("IPP"), which shall establish
performance targets for the Company and/or its business units, and bonus
payments based upon the achievement of such performance targets. The Company
agrees that the Employee shall participate in such IPP at a target bonus of 40%
of Base Salary, based upon 100% achievement of the performance targets
established in the IPP. The target bonus percentage shall be reviewed no less
frequently than annually during the term of this Agreement and may be increased
but not decreased by the Company's board of directors in its sole and absolute
discretion. In establishing performance targets and target bonus percentages for
the Employee, the Company will consider a variety of factors, including, without
limitation, performance targets set for, and bonus payments paid to, employees
having comparable responsibilities at comparable companies.

         (c) Benefits/Vacation. During the Term of this Agreement, the Company
also shall provide Employee with such other benefits, including medical,
disability, pension and severance plans, as are made generally available to
executive employees of the Company from time to time. Employee shall be entitled
to three weeks as vacation and such personal and sick benefit days during each
year of the Term in accordance with standard Company policies.

         (d) Life Insurance. Subject to Employee's submitting to any required
physical examinations, the Company shall purchase and maintain in effect a term
insurance policy with a face amount of one times Employee's Base Salary or other
greater amount as may be specified in the Company's executive benefit policies
or plans on the life of Employee and shall permit



                                       1

<PAGE>

Employee to designate the beneficiary thereof.

         (e) Stock Options. The Company shall recommend to the Compensation
Committee of the DualStar Technologies Corporation Board of Directors to issue
to Employee stock options (the "Options") to purchase up to 250,000 shares of
the Company's common stock at an exercise price of $4.50 per share, subject to
approval by the Board of Directors. The Options will be granted pursuant to the
DualStar Technologies Corporation 1994 Stock Option Plan and shall vest as
follows:

               (i)  one-third of the Options will vest upon the first
                    anniversary of the date hereof;

               (ii) two-thirds of the Options will vest ratably on a monthly
                    basis on the last day of each of the 24 calendar months
                    following the first anniversary of the date hereof.

All unvested Options shall vest in their entirety upon a Change of Control
(defined below) of the Company. The Options shall be evidenced by a written
Stock Option Agreement, in the form of Schedule B attached hereto

         3. Services. Employee agrees to devote substantially all of his working
time, attention and energies to the business of the Company and its Affiliates
under the general direction of the President and Chief Executive Officer.
Nothing herein shall be interpreted to preclude Employee from participating as
an officer or director of, or advisor to, any charitable or other tax exempt or
civic organization.

         4. Term. The term of this Agreement (the "Term" or the "Term of this
Agreement") shall commence on the date stated in the first paragraph of this
Agreement and employment shall commence on October 2, 2000, and the term of this
agreement shall continue through the Date of Termination, as hereinafter
defined.

         5. Early Termination. (a) In General. The Employee's employment
hereunder shall terminate and, other than the obligations listed in Paragraph
5(b), the Company's obligations hereunder shall cease, including the obligation
to pay compensation for any period after the date of termination on the Date of
Termination. The Date of Termination shall be (i) in the case of the death of
the Employee, the date of death; (ii) in the case of a termination by Employee,
the last date to be worked as specified in a written notice delivered by
Employee to the Company, which shall be not less than two weeks following the
date that such notice is given; (iii) in the case of a termination by the
Company other than for Cause (as defined below), the date set forth in a written
notice delivered by the Company to Employee, which date shall be not less than
two weeks following upon written notice following the date that such notice is
given; or (iv) in the case of a termination by the Company for Cause (as defined
below), the date upon which written notice of such termination is delivered to
Employee.

         "Cause" shall mean a finding by the Company's board of directors that
the Employee has acted with willful misconduct or gross negligence in connection
with the performance of his



                                       2

<PAGE>

duties hereunder, which conduct has materially injured the Company, or has been
convicted of, or entered a plea of nolo contendere to, a felony. Upon the Date
of Termination, the Term of this Agreement shall expire. Notwithstanding the
foregoing, the Employee shall not be deemed to have been terminated for Cause
arising out of an act of willful misconduct or gross negligence without (a) no
less than ten (10) days prior written notice to the Employee setting for the
reasons for the Company's intention to terminate for Cause, (b) an opportunity
for the Employee to be heard (together with comments of counsel) before the
Board of Directors of the Company, and (c) delivery to the Employee of a notice
of termination from the Board of Directors of the Company stating its opinion
that the Employee has acted with willful misconduct or gross negligence and
specifying the particulars thereof.

         (b) Payments Upon Termination. (i) Upon termination of this Agreement
for any reason, Employee shall be entitled to all compensation and benefits
earned but not yet paid up to and including the termination date, including Base
Salary, pro rata bonus, if any, in the year of termination (payable in
accordance with Company policy), and any other incentive compensation. Unless
otherwise specified in this Agreement, unused vacation shall be treated in
accordance with Company policy.

         (ii) In the event of Employee's (A) termination of employment or this
Agreement by the Company other than for Cause, or (B) termination of employment
by Employee for "Good Reason" (as defined below), in addition to the Company's
obligations set forth in subparagraph (i) above, Employee shall be entitled to
severance in an amount equal to one full year of Base Salary (the "Severance
Amount"), all unvested Options then held by Employee shall immediately vest and
Employee shall retain all rights to the Options, but shall have a period of nine
(9) months following the Date of Termination in which to exercise such Options,
in accordance with the option agreement governing such options (the "Option
Agreement"), and Employee shall continue to receive employee benefits for a
period of six months following the Date of Termination and the Employee's
eligible dependents will continue to participate in all of Company's health and
welfare plans (or Company-provided equivalent benefits) in which such dependents
participated prior to the Date of Termination, subject to the Employee
continuing to make any required contributions for such participation. Following
such 6-month period, Employee shall be entitled to all benefits ordinarily
accorded terminated employees of the Company. The Company's obligation to make
the foregoing employee benefits available to Employee and his eligible
dependents shall cease upon Employee becoming eligible for comparable benefits
from a subsequent employer. Effective upon the Date of Termination pursuant to
clause (A) or (B) above, in consideration of the payment of the Severance Amount
and as a condition to the payment thereof, Employee acknowledges that payment of
the Severance Amount and the provision of the other benefits contemplated hereby
shall constitute complete satisfaction of all obligations owed by the Company to
the Employee and shall further constitute Employee's sole remedy against the
Company.

         (iii) In the event of a termination by Employee other than for Good
Reason, in addition to the Company's obligations set forth in subparagraph (i)
above, Employee shall retain that portion of the Options which have vested prior
to the Date of Termination, but shall have a period of ninety (90) days from the
Date of Termination in which to exercise such Options. In the event of a
termination by the Company for Cause, the provisions of Section 5(f) below shall
govern.


                                       3
<PAGE>

         (iv) In the event of a termination of employment by reason of
Employee's death or disability, in addition to the Company's obligations set
forth in subparagraph (i) above, all unvested Options then held by Employee (or
his estate, if applicable) shall immediately vest and Employee (or his estate)
shall retain all rights to the Options, but shall have a period of eighteen (18)
months from the Date of Termination in which to exercise such Options.

         (c) Method of Payment. The Company shall pay the Severance Amount in a
lump sum not later than ten (10) days after the date the Company selects as
Employee's last day of active employment (the "Effective Date"), provided,
however, that at Employee's option, the Severance Amount shall be payable to
Employee in the form of equal periodic payments ("Deferred Payment") according
to the Company's regular payroll schedule or at any other intervals elected by
Employee for a period commencing on the first regular payroll pay date beginning
after the Effective Date (the "Deferred Payment Period"). In order to receive
Deferred Payment during a Deferred Payment Period, Employee must elect such
Deferred Payment in writing and specify the Deferred Payment Period, which may
not exceed the number of months of Base Monthly Salary payable to Employee as
the Severance Amount. In the event of Employee's death during the Deferred
Payment Period, any unpaid Deferred Payment shall be paid in a lump sum to such
beneficiary or beneficiaries designated by Employee in writing or, failing such
designation, to Employee's spouse if Employee is married or to Employee's estate
if Employee is unmarried. In no event shall Employee be required to mitigate his
damages arising out of any termination of this Agreement by the Company or by
Employee and the amount of payment to be made hereunder shall not be reduced by
any compensation earned by the Employee as a result of employment with another
employer, by retirement benefits, or other types of benefits received or income
earned.

         (d) Good Reason. For purposes of this Agreement, Good Reason shall
mean, with respect to Employee, (i) the assignment to Employee of any duties
materially inconsistent with, or substantially reduced as compared to, those set
forth in Section 1 or Schedule A, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and that is remedied
by the Company promptly after receipt of notice thereof given by Employee; (ii)
any material reduction in Employee's Base Salary, opportunity to earn annual
bonuses or other compensation or employee benefits, other than as a result of an
isolated and inadvertent action not taken in bad faith and that is remedied by
the Company promptly after receipt of notice thereof given by Employee; (iii)
the Company's requiring Employee to relocate his principal place of business to
a place that is not within the states of New York, New Jersey or Connecticut, or
(iv) any purported termination of this Agreement by the Company otherwise than
as expressly permitted by this Agreement. The Company has advised Employee that
DualStar Technologies Corporation, the parent of the Company ("DST"),
anticipates consummating a series of transactions (the "Restructuring"), the
effect of which will be to divest DST of its mechanical and electrical lines of
business. Following the consummation of such transactions, the
telecommunications business conducted by the Company will be the primary
business of the Company and DST. It is also anticipated that the Company, or its
successor, will have at least one class of its securities registered under the
Securities Exchange Act of 1934, as amended. Employee will be recommended to
serve as the Executive Vice President and Chief Financial


                                       4
<PAGE>

Financial Officer of Company, or its successor. In addition to the foregoing,
Good Reason shall also mean, with respect to Employee, the failure of Employee
to be employed by the Company or its successor as Executive Vice President and
Chief Financial Officer following the Restructuring, under at least the terms
and conditions herein.

         (e) Disability. If Employee shall become unable efficiently to perform
the essential functions of his job, even with reasonable accommodation, as a
result of a disability or illness, as such terms are defined by the Americans
with Disabilities Act, he shall be entitled to his regular compensation until
the total period of disability or illness (whether or not continuous and whether
or not the same disability or illness) shall exceed 60 days during any calendar
year in the Term hereunder. This Agreement may thereafter be terminated by the
Company and, subject to the terms of paragraph (b) above, the Company's
obligations hereunder shall cease, including the obligation to pay compensation
for any period after the Date of Termination. Any amounts payable as
compensation during the period of disability or illness, shall be reduced by any
amounts paid during such period under any disability plan or similar insurance
maintained by the Company for Employee's benefit.

         (f) Cause. Upon a termination for Cause, Employee shall receive Base
Salary through the Date of Termination, and all other entitlement to benefits or
bonuses shall cease immediately, and all stock options not yet fully vested and
exercised shall be forfeited. Employee shall retain that portion of the Options
that have vested prior to the Date of Termination for Cause, but shall have a
period of 90 days from the Date of Termination in which to exercise such
Options.

         (g) Change of Control. As used herein, For purposes hereof, a "Change
of Control" of the Company shall be deemed to have occurred if, after the date
hereof, (i) any person or two or more persons acting in concert, other than the
Company, any employee benefit plan sponsored by the Company, Excelon Capital
Partners, Inc., Cerberus Capital Management, L.P., Blackacre Capital Management
LLC, Technology Investors Groups, LLC or any of their Affiliates, acquires
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "'34 Act") directly or
indirectly of fifty percent (50%) or more of the total voting power represented
by the Company's then outstanding voting securities (calculated as provided in
paragraph (d) of Rule 13d-3 under the '34 Act in the case of rights to acquire
voting securities); or (ii) any person or two or more persons acting in concert,
other than the Company, any employee benefit plan sponsored by the Company,
Excelon Capital Partners, Cerberus Capital Management, L.P, Blackacre Capital
Management LLC, Technology Investors Group, LLC or any of their Affiliates,
shall purchase shares of the Company pursuant to a tender offer or exchange
offer to acquire any voting securities of the Company (or securities convertible
into such voting securities) for cash, securities or any other consideration,
provided that after the consummation of the offer, the person or persons in
question has beneficial ownership directly or indirectly of fifty percent (50%)
or more of the total voting power represented by the Company's then outstanding
voting securities (all as calculated under clause (i) above)); or (iii) the
shareholders of the Company shall approve (A) any consolidation or merger of the
Company in which the Company is not the continuing or surviving corporation
(other than a merger of the Company in which holder of the Common Shares of the
Company immediately prior to the merger have the same proportionate ownership



                                       5
<PAGE>

of common stock of the surviving corporation immediately after the merger as
immediately before), or pursuant to which Common Shares of the Company would be
converted into cash, securities or other property, or (B) any sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions) of all or substantially all of the assets of the Company, other
than a sale, lease, exchange or other transfer of all or substantially all
assets of the Company to Excelon Capital Partners, Inc., Cerberus Capital
Management, L.P., Blackacre Capital Management, LLC, Technology Investors Group,
LLC or any of their affiliates; or (iv) a change in control of a nature that
would be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the '34 Act, whether or not the Company is then
subject to such reporting requirement; or (v) there shall have been a change in
the composition of the Board of Directors of the Company at any time during any
consecutive twenty-four (24) month period such that "continuing directors" cease
for any reason to constitute at least a 70% majority of the Board. For purposes
of this clause, "continuing directors" means those members of the Board who
either were directors at the beginning of such twenty-four month period or were
elected by or on the nomination or recommendation of at least a 70% majority of
the then-existing "continuing directors." So long as there has not been a
"change of control" within the meaning of clause (v), the Board of Directors may
adopt by a 70% majority of the "continuing directors" a resolution to the effect
that an event described in clauses (i) or (ii) shall not constitute a "change of
control."

         6. Employer's Authority. Employee agrees to observe and comply with the
rules and regulations of the Company as adopted by the Company's board of
directors respecting the performance of his duties and to carry out and perform
orders, directions and policies communicated to him from time to time,
consistent with his position as Executive Vice President and Chief Financial
Officer.

         7. Automobile Allowance. During the Term of this Agreement, Employee
shall be entitled to an automobile allowance as specified on Schedule A below,
payable monthly in arrears.

         8. Expenses. During the Term of this Agreement, the Company shall
reimburse Employee for the reasonable business expenses incurred by Employee in
the course of performing his duties for the Company hereunder in accordance with
the procedures then in place for such reimbursement.

         9. Non-Disclosure and Non-Competition. Employee has executed a
Nondisclosure Agreement of the Company attached hereto as Exhibit 1. In
addition, during the Term and for a further period of one year thereafter,
Employee shall not participate, without the written consent of the Company, in
the management or control of, or act as an employee or officer of, any business
operation which engages in any activity which is primarily engaged in or
competes significantly with the material telecommunications businesses conducted
by the Company or any of its Affiliates (the "Companies"). Such covenant shall
apply within all territories in which the Companies are actively engaged in
business or are actively soliciting business. The parties agree that if any
portion of this Paragraph 9 shall be deemed by any court or agency to be
unreasonable and/or unenforceable, then it shall be modified to the extent
necessary to make it enforceable by such court or agency.


                                       6
<PAGE>

         10. Survival. The last sentence of Paragraph 5(b)(ii), Paragraph 9,
Paragraph 15 and Paragraph 17, of this Agreement shall survive termination of
employment hereunder and of this Agreement.

         11. Execution, Delivery and Performance. To the best of Employee's
knowledge, the execution, delivery and performance by Employee of this Agreement
or any other agreement, instrument or document contemplated herein or hereby
will not result in a breach of or conflict with any terms of any other
agreement, instrument or document to which Employee is a party or by which
Employee or his property is bound. No consent or approval of any person or
entity, other than those that have been obtained by Employee, is required for
Employee to execute, deliver and perform its obligations under this Agreement or
any agreement, instrument or document contemplated herein or hereby.

         12. Notices. Any notice permitted or required hereunder shall be deemed
sufficient when hand-delivered or mailed by certified mail, postage prepaid, and
addressed if to the Company at the address indicated above and if to the
Employee at the address indicated below (or to such other address as may be
provided by written notice received at least five (5) business days prior to the
hand delivery or mailing of any such notice).

         13. Miscellaneous. (a) This Agreement (i) constitutes the entire
agreement between the parties concerning the subjects hereof and supersedes any
and all prior agreements or understandings, (ii) may not be assigned by Employee
without the prior written consent of the Company, and (iii) may be assigned by
the Company to any Affiliate of the Company or to the successors or assigns of
the Company, provided such successors or assigns carry on substantially the
Company's telecommunications business as conducted at the time of assignment and
shall be binding upon, and inure to the benefit of, any such Affiliate,
successor or assign.

         (b) Headings herein are for convenience of reference only and shall not
define, limit or interpret the contents hereof.

         (c) As used herein, the term "Affiliate" shall mean any entity
controlled by or under common control with another person.

         14. Amendment. This Agreement may be amended, modified or supplemented
by the mutual consent of the parties in writing, but no oral amendment,
modification or supplement shall be effective.

         15. Specific Enforcement. The parties acknowledge that the Company
would be irreparably damaged and there would be no adequate remedy at law for
the Employee's breach of Paragraph 9 of this Agreement, and accordingly, the
terms thereof shall be specifically enforced. Employee hereby consents to the
entry of any temporary restraining order or preliminary injunction, in addition
to any other remedies available at law or in equity, to enforce the provisions
hereof, provided sufficient facts are shown to warrant such relief. In the event
that any action is brought to enforce Paragraph 9 hereof, the prevailing party
shall be entitled to recover its costs and attorneys fees in addition to any
other relief granted.



                                       7
<PAGE>

         16. Severability. The provisions of this Agreement are severable. The
invalidity of any provision shall not affect the validity of any other
provision.

         17. Governing Law; Arbitration. This Agreement shall be construed and
regulated in all respects under the laws of the State of New York without regard
to its conflict of laws principles. Any dispute, controversy or questions
arising under, out of, or relating to this Agreement of Employee's employment
with the Company or termination thereof, shall be referred for arbitration in
the State of New York to a single neutral arbitrator selected by the Employee
and Company and this shall be the exclusive and sole means of resolving any such
dispute. The arbitration proceeding shall be governed by the Employment Rules of
the American Arbitration Association then in effect or such rules last in effect
(in the event such Association is no longer in existence) but shall not be
conducted under the auspices of the Association, and the decision of the
arbitrator shall be governed by the rule of law. If the parties are unable to
agree upon a neutral arbitrator within thirty (30) days after each party has
given the other written notice of the desire to submit a dispute, controversy or
question for decision as aforesaid, then either party may apply to the CPR of
New York City for the appointment of a neutral arbitrator or, if the CPR is not
then in existence or does not desire to act in the matter, either party may
apply to the Presiding Judge of the appropriate court for the appointment of a
neutral arbitrator to hear the parties and settle the dispute, controversy or
question. Such right to submit a dispute, controversy or question arising
hereunder to arbitration and the decision of the neutral arbitrator shall be
final, conclusive and binding on all parties and interested persons and no
action at law or in equity shall be instituted or, if instituted, further
prosecuted by either party other than to enforce the award of the neutral
arbitrator. The arbitrator shall take submissions and hear testimony, if
necessary, and shall render a written decision as promptly as possible, The
arbitrator may require any form of discovery (e.g., depositions) in making his
decision. In connection with any arbitration, the prevailing party shall be
entitled to recover its costs and reasonable attorneys' fees in addition to
other relief granted.




         IN WITNESS WHEREOF, this Agreement is entered into as of the date and
year first above written.

DUALSTAR COMMUNICATIONS, INC.               EMPLOYEE:


By:
   -----------------------------            ----------------------------
   Name:  Jill Thoerle                      Name:  Dennis S. Rosatelli
   Title: President and CEO



                                       8
<PAGE>



                                   Schedule A


          Name:            Dennis s. Rosatelli

          Title:           Executive Vice President and Chief Financial Officer

          Base Salary:     $240,000.00

          Car Allowance:   $600.00

          Home Address:    73 Lake View Drive
                           Old Tappan, New Jersey  07675






                                       9
<PAGE>


                                                                      Schedule B

                             STOCK OPTION AGREEMENT

          THIS AGREEMENT, made as of the 7th day of September, 2000, (the "Grant
Date") between DualStar Technologies Corporation, a Delaware corporation (the
"Company"), with an address at One Park Avenue, New York, New York 10016 and
Dennis S. Rosatelli (the "Optionee"), an employee of the Company with an address
at 73 Lake View Drive, Old Tappan, New Jersey 07675.

         WHEREAS, the Company has adopted the 1994 Stock Option Plan, as amended
(the "Plan"), in order to provide additional incentive to certain directors,
officers and key employees of the Company; and

         WHEREAS, the Board and/or the Committee responsible for administration
of the Plan has determined to grant to the Optionee the Stock Option as provided
herein;

         NOW, THEREFORE, the parties hereto agree as follows:

         1.   Grant of Option.

              1.1   The Company hereby grants to the Optionee the right and
                    option (the "Option") to purchase all or any part of an
                    aggregate of 250,000 whole shares of Common Stock, $0.01 par
                    value, of the Company ("Stock"), subject to, and in
                    accordance with, the terms and conditions set forth in this
                    Agreement and the Plan. Dividends, subscription rights and
                    other rights generally afforded stockholders declared or
                    granted with respect to Stock prior to the exercise of the
                    Option are not included in the Option.

              1.2   This Agreement shall be construed in accordance and
                    consistent with, and subject to, the provisions of the Plan
                    (the provisions of which are incorporated herein by
                    reference) and, except as otherwise expressly set forth
                    herein, the capitalized terms used in this Agreement shall
                    have the same definitions as set forth in the Plan.

              1.3   This Option is not intended to be and shall not be treated
                    as an incentive stock option under Section 422 of the Code.

         2. Purchase Price. The price at which the Optionee shall be entitled to
purchase shares of Stock upon the exercise of the Option shall be $ 4.50 per
share, subject to approval by the Board of Directors.

         3. Duration of Option. The Option shall be exercisable to the extent
and in the manner provided herein for a period of ten (10) years from the Grant
Date (the "Exercise Term"); provided, however, that the Option may be earlier
terminated as provided in Section 6 hereof.



                                       10
<PAGE>


         4. Exercisability of Option. The Option shall vest and be exercisable
by Optionee and Optionee shall be entitled to purchase, in whole at any time or
in part (in whole numbers only) from time to time as follows:

               (ii) one-third of the Options shall vest at the first anniversary
                    of the date hereof; and

               (ii) two-thirds of the Options shall vest ratably on a monthly
                    basis on the last day of each of the 24 calendar months
                    following the first anniversary of the date hereof.


         5. Exercise, Payment for, and Delivery of Stock.

                  5.1 Subject to the terms and conditions of this Agreement and
the Plan, the Option may be exercised by delivery of written notice to the
Company, at its principal executive office, received at the Company not later
than 5:00 p.m. N.Y. time on or prior to the day the Option is to expire. Such
notice shall state that the Optionee is electing to exercise the Option and the
number of shares of Stock in respect of which the Option is being exercised and
shall be signed by the person or persons exercising the Option. If requested by
the Board and/or the Committee, such person or persons shall (i) deliver this
Agreement to the Secretary of the Company who shall endorse thereon a notation
of such exercise, and (ii) provide satisfactory proof as to the right of such
person or persons to exercise the Option.

                  5.2 Subject to the terms and conditions of the Plan, the
notice of exercise described in Section 5.1 shall be accompanied by the full
purchase price for the shares of Stock in respect of which the Option is being
exercised and by the Withholding Taxes, if any, in cash (U.S. dollars), by
certified or bank check.

                  5.3 Upon receipt of notice of exercise and full payment for
the shares of Stock in respect of which the Option is being exercised and of the
Withholding Taxes, the Company shall, subject to the Plan, promptly take such
action as may be necessary to effect the issuance to the Optionee of the number
of shares of Stock as to which such exercise was effective, including issuing
and delivering such shares of Stock and entering the Optionee's name as a
stockholder of record on the books of the Company.

                  5.4 The Optionee shall not be deemed to be the holder of, or
to have any of the rights of a holder with respect to any shares of Stock
subject to the Option until the Optionee shall have given the Company the
written notice of exercise described in Section 5.1 and the Optionee shall have
paid the full purchase price for the number of shares of Stock in respect of
which the Option was exercised.

         6. Termination Provisions. Subject to this Agreement and the Plan, the
right to exercise this Option is subject to the following additional restriction
and limitations:


                                       11
<PAGE>

         6.1  Termination of Employment.

                  6.1.1 Retirement; Disability; Death of Optionee. If the
employment of the Optionee is terminated by reason of Retirement or Disability,
or if Optionee shall die, or if Optionee shall become ineligible to continue to
participate in the Plan for any reason (other than as set forth below), any
unvested portion of the Option shall become vested and fully exercisable, and
Optionee may at any time within 18 months after such termination of employment
or event of ineligibility (but in no event after the expiration of the Exercise
Term) exercise the Option. In the event of Optionee's death, the Option shall be
exercisable, to the extent provided in the Plan and this Agreement, by the
legatee or legatees under Optionee's will, or by his/her personal
representatives or distributees and such person or persons shall be substituted
for the Optionee each time the Optionee is referred to herein. In all other
respects, this Option shall terminate upon such death.

                  6.1.2 Termination by Company Other than for Cause. If the
employment of the Optionee is terminated by the Company other than for Cause,
the Option shall be exercisable, for a period of nine (9) months following such
termination.

                  6.1.3 Termination for Cause or Voluntary Termination by
Optionee. Notwithstanding anything to the contrary contained herein, if the
employment of the Optionee is terminated for Cause or Optionee voluntarily
terminates his employment with the Company, the Option shall be exercisable, for
a period of ninety-one (91) days following such termination, but only for the
number of shares as to which this Option might have been exercised on the date
of termination. The portion of the Option, which is not exercisable at the time
of such termination, shall lapse and be forfeited.

                  6.1.4 Change of Control. If the Optionee's employment is
terminated by the Company or by the Optionee following a change of Control, the
provisions of Section 7 apply.

                           7.  Change of Control.  Notwithstanding anything
contained in the Plan or this Agreement to the contrary, in the event of a
Change of Control, all of the Options outstanding on the date of such Change of
Control shall become immediately and fully exercisable. For purposes hereof, a
"Change of Control" of the Company shall be deemed to have occurred if, after
the date hereof, (i) any person or two or more persons acting in concert, other
than the Company, any employee benefit plan sponsored by the Company, Exelon
Capital Partners, Inc.,Cerberus Capital Management, L.P., Blackacre Capital
Management LLC, Technology Investors Groups, LLC or any of their Affiliates,
acquires beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Securities Exchange Act of 1934, as amended (the "'34 Act") directly
or indirectly of fifty percent (50%) or more of the total voting power
represented by the Company's then outstanding voting securities (calculated as
provided in paragraph (d) of Rule 13d-3 under the '34 Act in the case of rights
to acquire voting securities); or (ii) any person or two or more persons acting
in concert, other than the Company, any employee benefit plan sponsored by the
Company, Exelon Capital Partners, Inc., Cerberus Capital Management, L.P,
Blackacre Capital Management LLC, Technology Investors Group, LLC or any of
their Affiliates, shall purchase shares of the Company pursuant to a tender
offer or exchange offer to acquire any voting securities of the Company (or
securities convertible into


                                       12
<PAGE>

such voting securities) for cash, securities or any other consideration,
provided that after the consummation of the offer, the person or persons in
question has beneficial ownership directly or indirectly of fifty percent (50%)
or more of the total voting power represented by the Company's then outstanding
voting securities (all as calculated under clause (i) above)); or (iii) the
shareholders of the Company shall approve (A) any consolidation or merger of the
Company in which the Company is not the continuing or surviving corporation
(other than a merger of the Company in which holder of the Common Shares of the
Company immediately prior to the merger have the same proportionate ownership of
common stock of the surviving corporation immediately after the merger as
immediately before), or pursuant to which Common Shares of the Company would be
converted into cash, securities or other property, or (B) any sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions) of all or substantially all of the assets of the Company, other
than a sale, lease, exchange or other transfer of all or substantially all
assets of the Company to Excelon Capital Partners, Inc., Cerberus Capital
Management, L.P., Blackacre Capital Management, LLC, Technology Investors Group,
LLC or any of their affiliates; or (iv) a change in control of a nature that
would be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the '34 Act, whether or not the Company is then
subject to such reporting requirement; or (v) there shall have been a change in
the composition of the Board of Directors of the Company at any time during any
consecutive twenty-four (24) month period such that "continuing directors" cease
for any reason to constitute at least a 70% majority of the Board. For purposes
of this clause, "continuing directors" means those members of the Board who
either were directors at the beginning of such twenty-four month period or were
elected by or on the nomination or recommendation of at least a 70% majority of
the then-existing "continuing directors." So long as there has not been a
"change of control" within the meaning of clause (v), the Board of Directors may
adopt by a 70% majority of the "continuing directors" a resolution to the effect
that an event described in clauses (i) or (ii) shall not constitute a "change of
control."


         7. Nontransferability. This Option may not be transferred by the
Optionee other than by will or the laws of descent and distribution and may be
exercised during the Optionee's lifetime only by the Optionee or the Optionee's
guardian or legal representative, subject to Section 6 hereof.


         8. Certain Changes. Upon the occurrence of certain events as set forth
in Section 4 of the Plan, the Board or Committee shall determine the appropriate
adjustments to the number of shares subject to the Option and the purchase price
for such shares. The adjustments by the Board or Committee shall be made in
accordance with the Plan and shall be final and binding for all purposes.

         9. Withholding Taxes. If applicable, no later than the date as of which
an amount first becomes includible in the gross income of the Optionee for
Federal income tax purposes with respect to the receipt of shares, securities,
cash or property under the Plan, the Optionee shall pay to the Company, or make
arrangements satisfactory to the Company regarding the payment of, any Federal,
state, or local or foreign taxes of any kind required by law to be withheld with
respect to such amount ("Withholding Taxes"). The obligations of the Company


                                       13
<PAGE>

under the Plan shall be conditional on such payment or arrangements, and the
Company shall, to the extent permitted by law, have the right to deduct any such
taxes from any payment otherwise due to the Optionee.

         10. No Right to Continued Employment. Nothing in this Agreement or the
Plan shall be interpreted or construed to confer upon the Optionee any right
with respect to continuance of employment by the Company, nor shall this
Agreement or the Plan interfere in any way with the right of the Company to
terminate the Optionee's employment at any time.

         11. Covenant Not to Compete. In consideration of grant of the Option,
during the term of employment and for 12 months after the termination of
Optionee's employment, the Optionee shall not directly or indirectly manage,
operate, control or be employed by or participate in the ownership, management,
operation or control of any business which is of the type and character
primarily engaged in and competitive with that of the Company. The Optionee
shall not, during the term of employment, have any other paid employment other
than with a subsidiary or affiliate of the Company, except with the prior
approval of the Board.

         12. Optionee Bound by the Plan. The Optionee hereby acknowledges
receipt of a copy of the Plan and agrees to be bound by all terms and provisions
thereof, including any amendments thereto.

         13. Modification of Agreement. This Agreement may be modified, amended,
suspended or terminated, and any terms or conditions may be waived, but only by
a written instrument executed by the parties hereto.

         14. Severability. Should any provision of this Agreement be held by a
court of competent jurisdiction to be unenforceable or invalid for any reason,
the remaining provisions of this Agreement shall not be affected by such holding
and shall continue in full force in accordance with their terms.

         15. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of New
York, without giving effect to the conflicts of laws principles thereof.

         16. Successors in Interest. This Agreement shall inure to the benefit
of and be binding upon any successor to the Company. This Agreement shall inure
to the benefit of the Optionee's legal representatives. All obligations imposed
upon the Optionee and all rights granted to the Company under this Agreement
shall be final, binding and conclusive upon the Optionee's heirs, executors,
administrators and successors.

         17. Complete Agreement. This Agreement including the Plan contains the
entire agreement and understanding between the parties relating to the subject
matter hereof, and supersedes any prior understandings, agreements or
representations by or between the parties, written or oral, relating to the
subject matter hereof.

         18. Notices. Any notice required or permitted hereunder shall be given
in writing and



                                       14
<PAGE>

shall be personally delivered or mailed by first class registered or certified
mail, postage prepaid, return-receipt-requested, or transmitted by facsimile or
by reputable overnight courier, at:

         if to the Company:         DualStar Technologies Corporation
                                    One Park Avenue
                                    New York, New York  10016
                                    Attn: Chief Financial Officer
                                    Fax: (212) 696-5615

         if to the Optionee:        Dennis S. Rosatelli
                                    73 Lake View Drive
                                    Old Tappan, New Jersey  07675
                                    Fax: 212-616-6269

or at such other addresses as such party may designate by five business days
advance written notice to the other party.

         Each notice or communication that shall have been transmitted in the
manner described above shall be deemed sufficiently given, served, sent or
received for all purposes at such time as it is sent to the addressee (with
return receipt, delivery receipt or the answer back being deemed conclusive, but
not exclusive, evidence of such sending) or at such time as delivery is refused
by the addressee upon presentation.

         19. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.

         20. Conflict. If there is any conflict between this Stock Option
Agreement and Optionee's Employment Agreement with DualStar Communications,
Inc., the terms and conditions of this agreement shall govern.

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

                                      DualStar Technologies Corporation
Attest:

                                      By:___________________________________
_________________________                   Name:
Secretary                                   Title:


                                      ______________________________________
                                      Optionee:





                                       15
<PAGE>



                                                                       Exhibit 1


                             NONDISCLOSURE AGREEMENT
                             -----------------------

         AGREEMENT made as of the 7th day of September, 2000, by and between the
undersigned individual residing at the address indicated following his signature
below (hereinafter referred to as "Employee") and DualStar Communications, Inc.,
a Delaware corporation, having a place of business in New York, New York
(hereinafter referred to as the "Company").

         WHEREAS, Employee is being employed by the Company and may come into
possession of material of a confidential, sensitive or proprietary nature
concerning the business, plans and trade secrets of the Company and its
Affiliates (as defined below) and of third parties; and

         WHEREAS, the continued confidential treatment of such information is
vital to the success of the Company's business,

         NOW THEREFORE, the parties agree as follows:

         1. Employee acknowledges that his work as an employee of the Company
will bring him into close contact with the Confidential Information (as defined
below) of the Company and of third parties. Employee acknowledges that such
Confidential Information is reposed in his in trust.

         2. Employee hereby agrees that he shall, both during and after his
employment with the Company, maintain such Confidential Information in
confidence and neither disclose to others (nor cause to be disclosed) nor use
personally or professionally (nor cause to be used) such Confidential
Information without the prior written permission of the Company. Employee will
also take reasonable precautions to prevent the inadvertent exposure of
Confidential Information to unauthorized persons or entities. The restrictions
contained in this Agreement shall expire two (2) years after termination of
Employee's employment with the Company, regardless of the reason for the
termination.

         3. Employee acknowledges that he may, during his employment, add to the
Company's Confidential Information in accordance with Paragraph 8 below and he
agrees that any such additions shall fall within the strictures of this
Agreement in accordance with Paragraph 8 below.

         4. Employee agrees that upon any termination of his employment with the
Company or any Affiliate thereof, or upon request if sooner, he shall forthwith
return to the Company all reports, correspondence, notes, financial statements,
computer printouts and other documents and recorded material of every nature
(including all copies thereof) which may be in his possession or under his
control dealing with Confidential Information.

         5. Employee acknowledges that the covenants in this Agreement have
existed since the commencement of his involvement with the Company. These
covenants are expressions of his duty as an employee not to use the Confidential
Information to the detriment of the Company. In addition, Employee acknowledges
that he shall benefit from entry into this Agreement as the Company shall be
willing to continue to provide access to Confidential Information to Employee.

         6. Employee acknowledges that the Company would be irreparably damaged
and there would be no adequate remedy at law for Employee's breach of this
Agreement, and accordingly, the terms of this Agreement shall be specifically
enforced. Employee hereby consents to the entry of any


                                       16
<PAGE>

temporary restraining order or preliminary or ex parte injunction, in addition
to any other remedies available at law or in equity, to enforce the provisions
hereof.

         7. This Agreement is not an agreement of employment and nothing herein
shall be construed to obligate the Company to employ Employee for any definite
duration or upon any specific terms. It is understood that the Company has
agreed to employ Employee pursuant to a separate Employment Agreement with the
Company of even date herewith.

         8. As used herein, "Confidential Information" shall mean all
confidential information and trade secrets of the Company or any of its
Affiliates (as such term is defined in the aforesaid Employment Agreement),
whether now existing or hereafter acquired or developed, including, without
limitation, financial statements, business plans, working methods, investments,
materials, processes, programs, designs, drawings, names of and relationships
with current or potential vendors and lenders and other third parties,
contractual arrangements, profit formulas, experimental investigations, studies,
current or potential customer names and requirements, current or potential
professional associations or contacts, information submitted to the Company or
its Affiliates by third parties on a confidential basis and similar other
non-public or otherwise confidential, sensitive or proprietary information.
"Confidential Information" shall not include (i) information that has become
generally known within the communications industry without breach of any
obligation of confidentiality of Employee or any third party, (ii) information
obtained by Employee from third persons without breach of any obligations owed
to the Company or any of its Affiliates or (iii) information provided by the
Company or any of its Affiliates to third persons without confidentiality
restrictions. A person, affiliation or contact is "potential" for purposes of
this paragraph only if such person has been identified in writing as a potential
affiliation or contact or with whom the Company or any of its Affiliates have
communicated within a rolling six-month period.

         9. This Agreement shall survive the termination of the employment of
Employee and shall not be amended except by a writing signed by the parties
hereto. This Agreement shall be binding upon Employee and his heirs, legal
representatives, successors and assigns.

         10. This Agreement shall be governed and construed in accordance with
the laws of the State of New York.

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

                                      DUALSTAR COMMUNICATIONS, INC.




                                      By:
                                         ----------------------------------
                                         Jill Thoerle
                                         President Chief Executive Officer



                                      -------------------------------------
                                      Name:    Dennis S. Rosatelli
                                      Address: 73 Lake View Drive
                                               Old Tappan, New Jersey 07675




                                       17