Document:

UPGRADE INTERNATIONAL CORP.          Private Placement of Subordinated Debenture

                           UPGRADE INTERNATIONAL CORP.

               $1,000,000  PRINCIPAL AMOUNT SUBORDINATED DEBENTURE

                      CONVERTIBLE AT THE PRICE EQUAL TO THE
                AVERAGE BID PRICE FOR THE COMPANY'S COMMON STOCK
               FOR THE FIVE TRADING DAYS IMMEDIATELY PRECEDING THE
            DATE OF CONVERSION, BUT NOT TO EXCEED USD $2.50 PER SHARE

                           U.S. SUBSCRIPTION AGREEMENT

     The  Securities being offered and subscribed for hereby are speculative and
risky.  See "Risk Factors" attached as Addendum B.  Subscribers must be prepared
to  bear the economic risk of their investment for an indefinite time period and
must be able to withstand a total loss of their investment.  The Securities have
not  been  registered  under the Securities Act of 1933, as amended ("Securities
Act")  or  any  state  or  foreign  securities laws.  Neither the Securities and
Exchange  Commission  ("SEC")  nor any state or foreign regulatory authority has
passed upon the accuracy or adequacy of the Business Plan included as Addendum A
hereto  or any other related materials.  Neither has any such agency reviewed or
endorsed  the  merits of this Offering.  Any representation to the contrary is a
criminal  offense.  The  Securities are offered under exemptions provided by the
Securities Act and certain state securities laws.  The Securities are subject to
restrictions  on  transferability  and  resale, and may be transferred or resold
only  if  effectively  registered with the SEC under the Securities Act and with
any  state  whose securities laws apply, or under an exemption from registration
that  is  available  under  those  laws.  If a holder wishes to transfer or sell
Securities  under an exemption from registration, the holder must provide to the
Company  an attorney's opinion acceptable to the Company that states the reasons
why  an  exemption  from  registration  is  available.

     No  person  is  authorized  to  give  any   information   or  to  make  any
representation  not contained in the  accompanying  materials,  and, if any such
information  or   representation   is  given  or  made,   such   information  or
representation must not be relied upon as having been authorized by the Company.
The delivery of these  materials at any time does not imply that the information
contained  herein is correct as of any subsequent  time.  These materials do not
purport to be all inclusive or to contain all the  information  that a potential
subscriber may desire in considering the Offering.

     All  potential   subscribers   will  have  an   opportunity  to  meet  with
representatives of the Company to verify any of the information  included in the
accompanying  materials  and to  obtain  additional  information  regarding  the
Offering  and  the  Company.  Copies  of  all  documents,  contracts,  financial
statements  and other Company  records will be made  available for inspection at
any such meeting or during  normal  business  hours upon request to the Company.
Subscribers  must  acknowledge  below  that  they  have  read  the  accompanying
materials  carefully and  thoroughly,  they were given the opportunity to obtain
additional  information,  and they did so to their  satisfaction.  In  making an
investment decision, investors must rely on their own examination of the Company
and the terms of the Offering, including the merits and risks involved.

<PAGE>
UPGRADE INTERNATIONAL CORP.        Private Placement  of  Subordinated Debenture
U.S.  Subscription Agreement          Convertible at a price equal to 75% of the
                                      average  bid  price  for the Common  Stock
                                      for  the  five  consecutive  trading  days
                                      immediately    preceding   the   date   of
                                      conversion,  but  not  to exceed $2.50 per
                                      Share

     The  following  documents  accompany  this  Subscription  Agreement and are
incorporated  herein  by  reference:

          Addendum  A               Business  Plan  of  the  Company
          Addendum  B               Risk  Factors
          Addendum  C               Summary  of  Placement
          Addendum  D               Articles  of  Incorporation  of  the Company
          Addendum  E               Bylaws  of  the  Company
          Addendum  F               Form  of  Convertible Subordinated Debenture

          The Date of these Subscription Documents is October 15, 1999.

                                       2
<PAGE>
UPGRADE INTERNATIONAL CORP.        Private Placement  of  Subordinated Debenture
U.S.  Subscription Agreement          Convertible at a price equal to 75% of the
                                      average  bid  price  for the Common  Stock
                                      for  the  five  consecutive  trading  days
                                      immediately    preceding   the   date   of
                                      conversion,  but  not  to exceed $2.50 per
                                      Share

ARIZONA  RESIDENTS:  THESE  SECURITIES  HAVE  BEEN  EXEMPTED  FROM  REGISTRATION
PURSUANT  TO  A.R.S. Sec.44-1846, BUT THE FACT OF THE GRANTING OF SUCH EXEMPTION
IS  NOT  TO BE DEEMED TO BE A FINDING BY THE ARIZONA CORPORATION COMMISSION THAT
THESE  OFFERING MATERIALS ARE TRUE OR ACCURATE, NOR DOES SUCH GRANT OR EXEMPTION
MEAN  THAT  THE  COMMISSION HAS PASSED UPON THE MERITS OR OTHERWISE APPROVED THE
SECURITIES  DESCRIBED  HEREIN.

ALABAMA  RESIDENTS:  THESE  SECURITIES  ARE  OFFERED  PURSUANT  TO  A  CLAIM  OF
EXEMPTION  UNDER  THE ALABAMA SECURITIES ACT.  A REGISTRATION STATEMENT RELATING
TO  THESE  SECURITIES HAS NOT BEEN FILED WITH THE ALABAMA SECURITIES COMMISSION.
THE COMMISSION DOES NOT RECOMMEND OR ENDORSE THE PURCHASE OF ANY SECURITIES, NOR
DOES  IT  PASS  UPON  THE  ACCURACY  OR  COMPLETENESS OF THESE PRIVATE PLACEMENT
MATERIALS.  ANY  REPRESENTATION  TO  THE  CONTRARY  IS  A  CRIMINAL  OFFENSE.

CALIFORNIA  RESIDENTS:  THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS
AGREEMENT  HAS  NOT  BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE
STATE  OF  CALIFORNIA  AND  THE  ISSUANCE  OF  SUCH SECURITIES OR THE PAYMENT OR
RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION IS
UNLAWFUL,  UNLESS THE SALE OF SECURITIES IS EXEMPT FROM QUALIFICATION BY SECTION
25100,  25102  OR  25105 OF THE CALIFORNIA CORPORATIONS CODE.  THE RIGHTS OF ALL
PARTIES  TO  THIS  AGREEMENT  ARE  EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION
BEING  OBTAINED,  UNLESS  THE  SALE  IS  SO  EXEMPT.

FLORIDA  RESIDENTS:  THE  SECURITIES BEING OFFERED HAVE NOT BEEN REGISTERED WITH
THE  FLORIDA  DIVISION  OF  SECURITIES  AND  INVESTOR  PROTECTION.  THE  FIRM IS
REGISTERED  AS  AN  ISSUER/DEALER  TO  SELL  ITS  OWN  SECURITIES.

GEORGIA  RESIDENTS:  THESE  SECURITIES  HAVE  BEEN ISSUED OR SOLD IN RELIANCE ON
PARAGRAPH  (13)  OF  CODE SECTION 10-5-9 OF THE "GEORGIA SECURITIES ACT OF 1973"
AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER
SUCH  ACT  OR  PURSUANT  TO  AN  EFFECTIVE  REGISTRATION  UNDER  SUCH  ACT.

ILLINOIS  RESIDENTS:  THESE SECURITIES ARE BEING OFFERED AND SOLD PURSUANT TO AN
EXEMPTION  FROM  REGISTRATION UNDER SECTION 4G OF THE ILLINOIS SECURITIES LAW OF
1953, AS AMENDED, AND CANNOT BE SOLD OR TRANSFERRED EXCEPT IN A TRANSACTION THAT
IS  EXEMPT  UNDER  THE  ILLINOIS  SECURITIES  LAW  OR  PURSUANT  TO AN EFFECTIVE
REGISTRATION  THEREUNDER  OR  OTHERWISE  IN  COMPLIANCE  WITH  SUCH  LAW.

KENTUCKY  RESIDENTS:  THE SECURITIES  OFFERED BY THIS  MEMORANDUM  HAVE NOT BEEN
REGISTERED  UNDER THE KENTUCKY  SECURITIES  ACT, ARE OFFERED IN RELIANCE UPON AN
EXEMPTION  FROM  REGISTRATION   THEREUNDER  AND  MAY  NOT  BE  RESOLD,  PLEDGED,
HYPOTHECATED OR OTHERWISE  TRANSFERRED UNLESS SO REGISTERED OR AN EXEMPTION FROM
REGISTRATION IS AVAILABLE.

NEW YORK RESIDENTS:  THESE PRIVATE PLACEMENT MATERIALS HAVE NOT BEEN REVIEWED BY
THE  ATTORNEY  GENERAL PRIOR TO THEIR ISSUANCE AND USE.  THE ATTORNEY GENERAL OF
THE  STATE  OF  NEW  YORK  HAS  NOT  PASSED  UPON OR ENDORSED THE MERITS OF THIS
OFFERING.

                                        2
<PAGE>
UPGRADE INTERNATIONAL CORP.        Private Placement  of  Subordinated Debenture
U.S.  Subscription Agreement          Convertible at a price equal to 75% of the
                                      average  bid  price  for the Common  Stock
                                      for  the  five  consecutive  trading  days
                                      immediately    preceding   the   date   of
                                      conversion,  but  not  to exceed $2.50 per
                                      Share

ANY  REPRESENTATION  TO  THE  CONTRARY  IS  UNLAWFUL.
     THESE  PRIVATE  PLACEMENT MATERIALS DO NOT CONTAIN AN UNTRUE STATEMENT OF A
MATERIAL  FACT OR OMIT TO STATE A MATERIAL FACT NECESSARY TO MAKE THE STATEMENTS
MADE,  IN  LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY ARE MADE, NOT MISLEADING.
THESE  MATERIALS  CONTAIN  FAIR  SUMMARIES  OF  THE  MATERIAL TERMS OF DOCUMENTS
SUMMARIZED  HEREIN.

NORTH CAROLINA RESIDENTS: IN MAKING INVESTMENT DECISIONS, INVESTORS MUST RELY ON
THEIR OWN EXAMINATION OF THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE
MERITS AND RISKS INVOLVED.  THESE  SECURITIES  HAVE NOT BEEN  RECOMMENDED BY ANY
FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE
FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY
OF THESE OFFERING  DOCUMENTS.  ANY  REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
     THESE  SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE
AND  MAY  NOT  BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES
ACT  OF  1933,  AS AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS PURSUANT TO
REGISTRATION OR EXEMPTION THEREFOR.  INVESTORS SHOULD BE AWARE THAT THEY WILL BE
REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD
OF  TIME.

OHIO RESIDENTS: THE SECURITIES OFFERED BY THIS MEMORANDUM ARE ISSUED IN RELIANCE
UPON THE EXEMPTIONS FROM REGISTRATION SET FORTH IN SECTIONS  1707.03(K)(2),  (O)
AND  (Q) OF  THE  OHIO  REVISED  CODE,  AND  THEY  CANNOT  BE  RESOLD,  PLEDGED,
HYPOTHECATED  OR OTHERWISE  TRANSFERRED  EXCEPT IN A TRANSACTION  THAT IS EXEMPT
UNDER THE OHIO REVISED CODE OR PURSUANT TO AN EFFECTIVE REGISTRATION  THEREUNDER
OR OTHERWISE IN COMPLIANCE WITH SUCH CODE.

OKLAHOMA RESIDENTS:  THE SECURITIES OFFERED PURSUANT TO THESE OFFERING MATERIALS
HAVE  NOT  BEEN  REGISTERED  UNDER  THE OKLAHOMA STATUTES, 1971, AS AMENDED (THE
"OKLAHOMA ACT"), AND MAY NOT BE RESOLD WITHOUT BEING REGISTERED OR QUALIFIED FOR
AN  EXEMPTION  UNDER  THE  OKLAHOMA  ACT.

TEXAS  RESIDENTS:  THE  SECURITIES OFFERED BY THIS MEMORANDUM MAY BE OFFERED AND
SOLD  ONLY  TO "ACCREDITED INVESTORS" AS DEFINED UNDER THE TEXAS SECURITIES ACT.
      ----
THIS  MEMORANDUM  IS  ONLY  FOR YOUR CONFIDENTIAL USE AND MAY NOT BE REPRODUCED.
ANY  ACTION  CONTRARY  TO  THESE  RESTRICTIONS  MAY PLACE YOU AND THE COMPANY IN
VIOLATION  OF  THE  TEXAS  SECURITIES  ACT.

TENNESSEE  RESIDENTS:  IN  MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON
THEIR OWN EXAMINATION OF THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE
MERITS  AND  RISKS  INVOLVED.
     THESE  SECURITIES  HAVE  NOT  BEEN  RECOMMENDED  BY ANY  FEDERAL  OR  STATE
SECURITIES  COMMISSION  OR  REGULATORY  AUTHORITY.  FURTHERMORE,  THE  FOREGOING
AUTHORITIES  HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED  THE ADEQUACY OF THIS
MEMORANDUM.  ANY  REPRESENTATION  TO THE CONTRARY IS A CRIMINAL  OFFENSE.  THESE
SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT
BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE U. S. SECURITIES

                                        3
<PAGE>
UPGRADE INTERNATIONAL CORP.        Private Placement  of  Subordinated Debenture
U.S.  Subscription Agreement          Convertible at a price equal to 75% of the
                                      average  bid  price  for the Common  Stock
                                      for  the  five  consecutive  trading  days
                                      immediately    preceding   the   date   of
                                      conversion,  but  not  to exceed $2.50 per
                                      Share

ACT  OF  1933, AS AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO
REGISTRATION OR EXEMPTION THEREFROM.  INVESTORS SHOULD BE AWARE THAT THEY MAY BE
REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD
OF  TIME.

ARTICLE  1.  SUBSCRIPTION

     1.1     The  undersigned subscriber ("Subscriber"), intending to be legally
bound,  hereby  irrevocably  subscribes  for and agrees to purchase from Upgrade
International  Corp.,  a  corporation  organized  under the laws of the State of
Florida,  U.S.A.  (the "Company"), a Subordinated Debenture due OCTOBER 15, 2001
("Debenture")  together with simple interest at the rate of seven per cent (7 %)
per  annum  and convertible into shares of the Company's Common Stock, par value
$0.001 per share (the "Shares"), at a price which is equal to 75% of the average
bid  price  for  the Company's Common Stock for the five (5) consecutive trading
days  immediately  preceding  the  date of conversion, but in no event shall the
conversion price exceed USD $2.50 per Share, for a purchase price of ONE MILLION
AND  NO/100 U.S. DOLLARS (the "Purchase Price").  This subscription is submitted
to  you  in accordance with and subject to the terms and conditions set forth in
this Subscription Agreement and pursuant to Rule 506 of Regulation D promulgated
under  the  U.S.  Securities Act of 1933, as amended (the "Securities Act"). The
Debenture  and  Shares  are  sometimes  referred  to  herein collectively as the
"Securities."

     1.2     Subscriber's  subscription  payment, in the form of a bank check or
certified  check made payable to "Monahan & Biagi PLLC Trust Account FBO Upgrade
International  Corp."  in the amount of the Purchase Price is delivered herewith
(unless  payment  is  being wired in accordance with the following instructions)
together  with two executed copies of this Subscription Agreement.  In the event
this subscription is not accepted, in whole or in part, by the Company, the full
or  ratable  amount,  as  the  case may be, of Subscriber's subscription payment
shall be promptly refunded to Subscriber without deduction therefrom or interest
thereon.  Wiring  instructions  are  as  follows:

             To:               The  Commerce  Bank  of  Washington
                               601  Union  Street  -  Suite  3600
                               Seattle,  Washington  U.S.A.  98101

                               Telephone:  (206)  292-4589

             ABA  Number:      125  008  013

             For Credit to:    Monahan  &  Biagi  PLLC

                                        4
<PAGE>
UPGRADE INTERNATIONAL CORP.        Private Placement  of  Subordinated Debenture
U.S.  Subscription Agreement          Convertible at a price equal to 75% of the
                                      average  bid  price  for the Common  Stock
                                      for  the  five  consecutive  trading  days
                                      immediately    preceding   the   date   of
                                      conversion,  but  not  to exceed $2.50 per
                                      Share

             MPD  Account  No.:     001  800329

             Sub  Account  Name:    Upgrade  International  Corp.

             Sub  Account  No.:     91

             Notify  on  Arrival:   Juanita  Grundmann;  (206)  587-5700

     1.3     In the event this subscription is accepted by the Company, in whole
or in part, the Company shall deliver to Subscriber a certificate for the Shares
as to which Subscriber's  subscription is accepted, such certificate to be dated
the  date  of  acceptance of this subscription and to bear the legends described
herein,  together  with  a  copy  of this Subscription Agreement executed by the
Company.

     1.4     Subscriber acknowledges and agrees that the Company did not prepare
any information to be delivered to prospective investors in connection with this
subscription  other than the materials accompanying this Subscription Agreement,
and  the  Company  does  not  make any representation or warranty concerning the
completeness  of  any information received by prospective investors.  Subscriber
acknowledges  and agrees that prospective investors are advised to conduct their
own  review  of  the  business,  properties  and  affairs  of the Company before
subscribing.

     1.5     Subscriber  understands  and  agrees that: (1) this subscription is
not  subject  to  the Company's receiving any minimum amount of subscriptions or
the  escrow of any subscription payments; (2) this Subscription Agreement is not
binding  upon  the  Company  until accepted by it; (3) Subscriber's subscription
payment  shall  be  available  to  the  Company  immediately after the Company's
acceptance  of  this  subscription;  and (4) the Company shall have the right to
accept  or reject this subscription in whole or in part for any reason or for no
reason.

ARTICLE  2.  REPRESENTATIONS  AND  WARRANTIES  OF  THE  COMPANY

     The  Company  represents  and  warrants  to, and agrees with, Subscriber as
follows:

     2.1     The  Company  is  duly  organized,  validly  existing  and  in good
standing  under  the  laws  of  the State of Florida, U.S.A., with all requisite
power  and  authority  to own, lease, license, and use its properties and assets
and  to  carry  out  the  business  in which it is engaged.  The Company is duly
qualified  to  transact  the  business  in  which  it  is engaged and is in good
standing  as a foreign corporation in every jurisdiction in which its ownership,
leasing,  licensing  or use of property or assets or the conduct of its business
make  such  qualification  necessary.

     2.2     The  Company  is  authorized  to  issue 50,000,000 Shares of Common
Stock,  par  value  $0.001  per  share.

                                        5
<PAGE>
UPGRADE INTERNATIONAL CORP.        Private Placement  of  Subordinated Debenture
U.S.  Subscription Agreement          Convertible at a price equal to 75% of the
                                      average  bid  price  for the Common  Stock
                                      for  the  five  consecutive  trading  days
                                      immediately    preceding   the   date   of
                                      conversion,  but  not  to exceed $2.50 per
                                      Share

     2.3     The  Company  has  all  requisite  power  and authority to execute,
deliver  and  perform  its  obligations under this Subscription Agreement and to
issue,  sell  and  deliver the Securities.  This Subscription Agreement has been
duly authorized by the Company, and (subject, with respect to enforceability, to
the  provisions  of  specific  performance,  bankruptcy  and  similar  laws  and
principles  of  equity)  when  executed  and  delivered  by  the  Company,  will
constitute  the  legal, valid and binding obligation of the Company, enforceable
as  to  the Company in accordance with its terms.  The Securities have been duly
authorized  by  the Company and (subject, with respect to enforceability, to the
provisions  of  specific performance, bankruptcy and similar laws and principles
of equity), when issued, sold and delivered in accordance with the terms of this
Subscription  Agreement,  the  Shares  will  be duly authorized, validly issued,
fully  paid  and  non-assessable.

     2.4     No consent, authorization, approval, order, license, certificate or
permit  of  or from, or declaration or filing with, any federal, state, local or
other  governmental  authority or any court or any other tribunal is required by
the  Company  for  the execution, delivery or performance by the Company of this
Subscription  Agreement  or  the  execution,  issuance,  sale or delivery of the
Securities  (except  as  may  be  required  under  federal,  state or provincial
securities  laws).

     2.5     No  consent  of  any  party to any contract, agreement, instrument,
lease,  license, arrangement or understanding to which the Company is a party or
to  which  any  of  its  properties  or  assets  are subject is required for the
execution, delivery or performance by the Company of this Subscription Agreement
or  the  issuance,  sale  and  delivery  of  the  Securities.

     2.6     The  execution,  delivery  and  performance  of  this  Subscription
Agreement  and  the  issuance,  sale  and  delivery  of the Securities, will not
violate,  result  in  a  breach of, conflict with (with or without the giving of
notice or the passage of time or both) or entitle any party to terminate or call
a  default  under  any material contract, agreement, instrument, lease, license,
arrangement or understanding or violate or result in a breach of any term of the
certificate  of  incorporation  or  by-laws  of, or conflict with any law, rule,
regulation,  order, judgment or decree binding upon, the Company or to which any
of  its  operations, businesses, properties or assets are subject, the result of
which  may  have  a  material  adverse  effect  on  the  business,  operations,
liabilities  or  condition  (financial  or  otherwise)  of  the  Company.

ARTICLE  3.  REPRESENTATIONS  AND  WARRANTIES  OF  SUBSCRIBER

     Subscriber  hereby  represents, warrants and certifies to, and agrees with,
the  Company  as  follows:

                                        6
<PAGE>
UPGRADE INTERNATIONAL CORP.        Private Placement  of  Subordinated Debenture
U.S.  Subscription Agreement          Convertible at a price equal to 75% of the
                                      average  bid  price  for the Common  Stock
                                      for  the  five  consecutive  trading  days
                                      immediately    preceding   the   date   of
                                      conversion,  but  not  to exceed $2.50 per
                                      Share

     3.1     Subscriber  has  received, thoroughly reviewed, and understands all
of  the  information contained in Addenda A though E described on page 2 of this
Subscription  Agreement,  and Subscriber has had an opportunity to ask questions
and  to  obtain  all desired information regarding the Company, the Offering and
this  Subscription  Agreement.  Subscriber currently has knowledge sufficient to
Subscriber,  in  the  prudent  management of Subscriber's affairs, regarding the
Company  and its operations and principals to justify Subscriber's submission of
this Subscription Agreement to the Company.  Regarding the Company, its business
plans  and  financial condition: Subscriber has received all materials that have
been  requested  by  Subscriber, and the Company has answered all inquiries that
Subscriber  or  Subscriber's  representatives have put to it; Subscriber has had
access  to  all  additional  information necessary to verify the accuracy of the
information  requested  by  Subscriber  or  this  Subscription  Agreement;  and
Subscriber has taken all the steps necessary to evaluate the merits and risks of
an  investment  by  Subscriber  in  the  Securities.  In  making this investment
decision,  Subscriber  has  not  relied  on  any information not provided by the
Company.

     3.2     Subscriber   has   such   knowledge   and  experience  in  finance,
securities,  investments  and other  business  matters  as to be able to protect
Subscriber's  interests in connection with this  transaction,  and  Subscriber's
investment   in  the  Company   hereunder  is  not  material  when  compared  to
Subscriber's  total  financial  capacity.  Subscriber  has  adequate  means  for
providing for Subscriber's current needs and possible contingencies, has no need
for liquidity regarding this investment, and has no reason to expect a change in
Subscriber's  circumstances,  financial or other, that may cause or require sale
of Subscriber's Securities.

     3.3     Subscriber  understands  the  many  risks  of  an investment in the
Company  and  can  afford to bear such risks, including, but not limited to, the
risk  of  losing  Subscriber's  entire  investment.

     3.4     Subscriber acknowledges that the Shares presently are quoted on the
NASD Over-the-Counter Bulletin Board (OTCBB), that such market generally is thin
and  illiquid,  and  that  Subscriber  may  find  it  impossible  to  liquidate
Subscriber's investment at a time when Subscriber may desire to do so, or at any
other  time.

     3.5     Subscriber  has been advised by the Company that (a) the Securities
have  not  been  registered  under  the  U.S. Securities Act of 1933, as amended
("Securities  Act"), (b) the Securities are being offered and sold to Subscriber
on  the  basis  of  the  exemptions from registration provided by Securities Act
Section  4(2)  and  Regulation  D promulgated under the Securities Act,  (c) the
Offering  has  not  been  filed  with or submitted to, reviewed by, or otherwise
passed  on  by  the  U.  S. Securities and Exchange Commission or any other U.S.
federal  or  state  agency or self-regulatory organization where an exemption is
being  relied upon, and (d) the Company's reliance on the exemptions provided by
Securities  Act  Section  4(2)  and  Regulation  D  is  based  in  part upon the
representations  made  by Subscriber in this Subscription Agreement.  Subscriber
acknowledges  that Subscriber has been informed by the Company of, or Subscriber
is  otherwise  familiar  with,  the  nature  of  the  limitations imposed by the
Securities  Act  and  the  rules  and  regulations thereunder on the transfer of
securities.

                                        7
<PAGE>
UPGRADE INTERNATIONAL CORP.        Private Placement  of  Subordinated Debenture
U.S.  Subscription Agreement          Convertible at a price equal to 75% of the
                                      average  bid  price  for the Common  Stock
                                      for  the  five  consecutive  trading  days
                                      immediately    preceding   the   date   of
                                      conversion,  but  not  to exceed $2.50 per
                                      Share

     3.6     Subscriber  (or  any  person identified in any special instructions
above)  is  acquiring  the  Securities  for Subscriber's (their) own account for
investment  and  not  with  a  view  to  the sale or distribution thereof or the
granting  of  any  participation therein, and Subscriber (or such person) has no
present intention of distributing or selling to others any of such Securities or
granting  any  participation  therein.   Subscriber  (or  such  person)  has  no
agreement  or  other  arrangement,  formal or informal, with any person to sell,
transfer,  pledge  or  otherwise  dispose  of  any of the Securities which would
guarantee  to  Subscriber (or such person) any profit, or protect Subscriber (or
such  person)  against  loss,  regarding the Securities, and Subscriber (or such
person)  has  no  plans  to  enter  into  any  such  agreement  or  arrangement.

     3.7     Subscriber  is  an "Accredited Investor" as that term is defined in
Regulation  501(a)  of  Regulation  D  promulgated  under  the  Securities  Act.
Specifically,  Subscriber  is  (check  all  appropriate  item(s)):
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      _____(a)     A  bank  as defined in Section 3(a)(2) of the Securities Act,
or  a  savings  and  loan association or other institution as defined in Section
3(a)(5)(A)  of the Securities Act, whether acting in its individual or fiduciary
capacity; a broker or dealer registered pursuant to Section 15 of the Securities
Exchange  Act  of  1934; an insurance company as defined in Section 2(13) of the
Securities  Act;  an  investment company registered under the Investment Company
Act  of 1940 or a business development company as defined in Section 2(a)(48) of
that  Act;  a  small  Business  Investment  Company  licensed  by the U.S. Small
Business  Administration  under  Section  301(c)  or  (d)  of the Small Business
Investment  Act  of  1958;  a  plan  established  and maintained by a state, its
political  subdivisions,  or  any  agency  or  instrumentality of a state or its
political subdivisions, for the benefit of its employees, if such plan has total
assets  in  excess of $5,000,000; an employee benefit plan within the meaning of
the  Employee Retirement Income Security Act of 1974, if the investment decision
is  made  by a plan fiduciary, as defined in Section 3(21) of such Act, which is
either  a  bank,  savings and loan association, insurance company, or registered
investment  advisor,  or if the employee benefit plan has total assets in excess
of $5,000,000 or, if a self-directed plan, with investment decisions made solely
by  persons  that  are  accredited  investors.

      _____(b)     A  private business development company as defined in Section
202(a)(22)  of  the  Investment  Advisers  Act  of  1940.

      _____(c)     An  organization  described  in  Section  501(c)(3)  of  the
Internal  Revenue Code, corporation, Massachusetts or similar business trust, or
partnership,  not  formed  for  the specific purpose of acquiring the securities
offered,  with  total  assets  in  excess  of  $5,000,000.

                                        8
<PAGE>
UPGRADE INTERNATIONAL CORP.        Private Placement  of  Subordinated Debenture
U.S.  Subscription Agreement          Convertible at a price equal to 75% of the
                                      average  bid  price  for the Common  Stock
                                      for  the  five  consecutive  trading  days
                                      immediately    preceding   the   date   of
                                      conversion,  but  not  to exceed $2.50 per
                                      Share

      _____(d)     A  director  or  executive  officer  of  the  Company.

      _____(e)     A  natural  person  whose  individual net worth, or joint net
worth  with  that  person's  spouse,  at the time of his or her purchase exceeds
$1,000,000.

      _____(f)     A  natural  person  who had an individual income in excess of
$200,000 in each of the two most recent years or joint income with that person's
spouse  in  excess  of  $300,000  in  each  of  those years and has a reasonable
expectation  of  reaching  the  same  income  level  in  the  current  year.  If
Subscriber is a California resident, Subscriber's investment in the Company will
not  exceed  10% of Subscriber's net worth (or, if married, joint net worth with
spouse).  If  Subscriber is a Massachusetts resident, Subscriber's investment in
the  Company  will  not  exceed  25% of Subscriber's joint net worth with spouse
(exclusive  of  principal  residence  and  its  furnishings).

      _____(g)     A  trust,  with  total  assets  in  excess of $5,000,000, not
formed for the  specific  purpose of acquiring  the  securities  offered,  whose
purchase  is  directed  by  a   sophisticated   person  as   described  in  Rule
506(b)(2)(ii)  promulgated  under the  Securities  Act (i.e., a purchaser not an
Accredited Investor who either alone or with his purchaser representative(s) has
such  knowledge  and  experience  in  financial  and  business  matters that the
purchaser  is capable  of  evaluating  the  merits and risks of the  prospective
investment).

      _____(h)     An  entity  in  which all of the equity owners are accredited
investors.  (If  this  alternative  is  checked,  Subscriber  must identify each
equity  owner  and  provide statements signed by each equity owner demonstrating
how  each  qualifies  as  an  accredited  investor.)

     3.8     If  Subscriber  is  a  natural  person,  Subscriber is: a bona fide
resident  of  the  State  contained  in  Subscriber's  address  set forth on the
signature  page of this Agreement as Subscriber's residence address; at least 21
years of age; and legally competent to execute this Agreement.  If Subscriber is
an  entity other than a natural person, Subscriber is duly authorized to execute
this  Agreement,  and this Agreement, when executed and delivered by Subscriber,
will  constitute  Subscriber's  legal, valid and binding obligation, enforceable
against Subscriber in accordance with its terms; and the execution, delivery and
performance  of  this  Agreement  and  the  consummation  of  the  transactions
contemplated  hereby  have  been  duly  authorized by all requisite corporate or
other  necessary  action  on  the  part  of  Subscriber.

     3.9     Subscriber  acknowledges  the  Securities will be subject to a stop
transfer  order  and  the  certificate or certificates evidencing the Securities
will bear the following or a substantially similar legend and such other legends
as  may  be  required  by  other  applicable  securities  laws  (if  any):

                                        9
<PAGE>
UPGRADE INTERNATIONAL CORP.        Private Placement  of  Subordinated Debenture
U.S.  Subscription Agreement          Convertible at a price equal to 75% of the
                                      average  bid  price  for the Common  Stock
                                      for  the  five  consecutive  trading  days
                                      immediately    preceding   the   date   of
                                      conversion,  but  not  to exceed $2.50 per
                                      Share

          "These Securities have not been registered under the Securities Act of
          1933, as amended.  Such Securities may be sold or  offered  for  sale,
          transferred,  hypothecated  or  otherwise  assigned  only  pursuant to
          registration under such Act or pursuant to an available exemption from
          registration  supported  by an opinion reasonably  acceptable  to  the
          Company  by  counsel  reasonably  acceptable  to the Company  that  an
          exemption   from   registration   for   such  sale,  offer,  transfer,
          hypothecation or other assignment is available under such Act."

     3.9     Subscriber  agrees  that  Subscriber  will  not offer or resell the
Securities  unless  (a)  resale  of  such  Securities  is  registered  under the
Securities  Act,  or  (b)  an exemption from registration is available under the
Securities  Act.

     3.10     Subscriber  is  acquiring  the  Securities  for  Subscriber's  own
account  for  investment and not with a view to the sale or distribution thereof
or  the  granting  of  any  participation therein, and Subscriber has no present
intention  of  distributing  or  selling  to  others  any  of such Securities or
granting  any  participation  therein.  Subscriber  has  no  agreement  or other
arrangement,  formal  or  informal, with any person to sell, transfer, pledge or
otherwise  dispose  of any of the Securities which would guarantee to Subscriber
any  profit,  or  protect Subscriber against loss, regarding the Securities, and
Subscriber  has  no  plans  to  enter  into  any  such agreement or arrangement.

     3.11     It  never  has  been  represented,  guaranteed   or  warranted  to
Subscriber  by  the  Company,  or its principals, including any of the officers,
directors,  shareholders,  partners, employees or agents of either, or any other
persons,  whether  expressly  or  by  implication,  that:

          (a)     the Company or Subscriber will realize any given percentage of
profits  or  amount  or type of consideration, profit or loss as a result of the
Company's  activities  or  Subscriber's  investment  in  the  Company;  or

          (b)     the  past  performance  or experience of the management of the
Company, or of any other person, in any way indicates the predictable results of
ownership  of  the  Securities  or  of  the  Company's  activities.

     3.12     Subscriber  understands  that  the  net proceeds from all paid and
accepted  subscriptions  will  be  used  for  Company  purposes,  and  that  the
Securities  to  be  issued  hereunder  will  not  be  secured by any collateral.
Further,  the  Company  may, in its sole discretion, reject this subscription or
reduce  this  subscription  in  any amount and to any extent, whether or not pro
rata  reductions  are  made  of  investors'  subscriptions.

                                       10
<PAGE>
UPGRADE INTERNATIONAL CORP.        Private Placement  of  Subordinated Debenture
U.S.  Subscription Agreement          Convertible at a price equal to 75% of the
                                      average  bid  price  for the Common  Stock
                                      for  the  five  consecutive  trading  days
                                      immediately    preceding   the   date   of
                                      conversion,  but  not  to exceed $2.50 per
                                      Share

     3.13     The  representations,  warranties,  certifications  and agreements
made  by  Subscriber herein are true and correct and shall survive the execution
and  delivery of this Subscription Agreement and the purchase and receipt of the
Securities.

ARTICLE  4.  INDEMNIFICATION

     Subscriber  acknowledges  that Subscriber understands the meaning and legal
consequences  of  the  terms  of this Subscription Agreement, including, but not
limited  to, the representations, warranties, certifications and agreements made
by Subscriber in Article 3 hereof, and Subscriber hereby agrees to indemnify and
hold  harmless  the  Company and each incorporator, officer, director, employee,
agent  and controlling person thereof, past, present or future, from and against
any  and  all  claims,  loss,  damage,  liability, costs and expenses, including
without  limitation  reasonable attorneys' fees and expenses, due or relating to
or arising out of a breach, inaccuracy or inadequacy of any such representation,
warranty,  certification  or agreement or of any other term of this Subscription
Agreement.

ARTICLE  5.  REGISTRATION  OF  SHARES

     Upon  conversion  of  the  full  principal  amount of the Debenture and all
accrued  interest  thereon  into  shares of Common Stock of the Company, or upon
conversion  of  such  lesser  amount on the Maturity Date of this Debenture, the
Company  agrees  to promptly file with the SEC a registration statement covering
the  Conversion  Shares,  and  agrees  to  use  reasonable efforts to cause such
registration  to  become  effective.  Notwithstanding the foregoing, the Company
agrees  to register the underlying Shares subject to the Debenture together with
and  in  conjunction  with  the  Company's pending $2.50 per share common round,
which  is  estimated  to  be  accomplished  on  or  before  December  31,  1999.

ARTICLE  6.  GENERAL  PROVISIONS

     6.1     Neither  this  Subscription  Agreement,  nor  any  of  Subscriber's
interest  herein,  shall be assignable or transferable by Subscriber in whole or
in  part  except  by  operation  of  law.

     6.2     All  notices  or other communications given or made hereunder shall
be  in writing and shall be delivered or mailed to Subscriber at the address set
forth  below  and  to  the  Company  at the address set forth below, or shall be
delivered  by  facsimile  transmission  with a copy by first class mail, postage
prepaid,  to  the  other party at his/its address set forth below.  Notices hand
delivered  shall  be deemed given upon receipt and notices sent by mail shall be
deemed  given  on  the  fifth  business day following deposit in the mail, first
class  airmail  postage  prepaid.  Notices  delivered  by facsimile transmission
shall  be  deemed  given  one  business  day  following the day of transmission,
provided that the sender has confirmation of receipt of transmission and mails a
copy  by  first  class  mail,  postage  prepaid, addressed to the other party at
his/its  address  below.

                                       11
<PAGE>
UPGRADE INTERNATIONAL CORP.        Private Placement  of  Subordinated Debenture
U.S.  Subscription Agreement          Convertible at a price equal to 75% of the
                                      average  bid  price  for the Common  Stock
                                      for  the  five  consecutive  trading  days
                                      immediately    preceding   the   date   of
                                      conversion,  but  not  to exceed $2.50 per
                                      Share

     6.3     This  Subscription  Agreement shall be construed in accordance with
and  governed  by  the laws of the State of Washington, U.S.A., as in effect for
contracts  made  and  to  be  performed  in the State of Washington.  Subscriber
hereby  submits  to the jurisdiction of the courts of or located in the State of
Washington  for  all  purposes  relating  to  this  Subscription  Agreement, the
Securities  and Subscriber's interest in the Company, and such courts shall have
exclusive  jurisdiction  relating  thereto.

     6.4     This  Subscription  Agreement  constitutes  the   entire  agreement
between  the  parties  hereto  regarding  the  subject  matter hereof and may be
amended  only  by  a  writing  executed  by  both  parties.

     6.5     This  Subscription  Agreement  may  be  executed  in  one  or  more
counterparts,  each  of which shall be deemed an original and all of which shall
constitute  one  and  the  same  agreement.

     IN  WITNESS  WHEREOF, the parties have executed this Subscription Agreement
as of the day and year this subscription is accepted by the Company as set forth
below.

Signature of/for Subscriber(s):           Signature of/for Any Co-Subscriber:

___________________________________       ______________________________________

___________________________________       ______________________________________
  Print Name of Signatory Here             Print Name of Any Co-Signatory Here

Subscriber's  Mailing  Address:           Type  of  Ownership:

________________________________                Individual         _______
Street  and  Number                             Community
                                                  Property         _______
________________________________                Tenants in
City  or  Town                                    Common           _______
                                                Joint Tenants
________________________________                  With Rights
State      Country     Zip Code                   of Survivorship  _______
                                                Partnership        _______
________________________________                Corporation        _______

                                       12
<PAGE>
UPGRADE INTERNATIONAL CORP.        Private Placement  of  Subordinated Debenture
U.S.  Subscription Agreement          Convertible at a price equal to 75% of the
                                      average  bid  price  for the Common  Stock
                                      for  the  five  consecutive  trading  days
                                      immediately    preceding   the   date   of
                                      conversion,  but  not  to exceed $2.50 per
                                      Share

U.S.  Social  Security  or  other               Custodial Account  _______
Tax  Number  of  Subscriber                     Other  (explain)   _______
                                                __________________________
Facsimile  No.:  (718)  851-3511                __________________________

                            CERTIFICATE OF SIGNATORY
                            ------------------------

(To be completed if Securities are being subscribed for by an Entity)

     I, _____________________________,  am  the _____________________________ of
__________________________________________  (the  "Entity").  I  hereby  certify
that  I  am empowered and duly authorized by the Entity to execute and carry out
the  terms of the Subscription Agreement and to purchase and hold the Securities
on  behalf  of the Entity, and I further certify that the Subscription Agreement
has  been  duly  and  validly executed on behalf of the Entity and constitutes a
legal  and  binding  obligation  of  the  Entity.

     IN  WITNESS WHEREOF, I have set my hand this _____ day of ________________,
1999.

                                          ______________________________________
                                                       (Signature)

                                   ACCEPTANCE
                                   ----------

     UPGRADE  INTERNATIONAL CORP., a corporation organized under the laws of the
State  of  Florida, U.S.A., hereby accepts the foregoing subscription subject to
the  terms  and  conditions  of  this  Subscription Agreement this ______ day of
___________________,  1999.

                                      UPGRADE  INTERNATIONAL  CORP.

                                      By:______________________________________
                                           Daniel  Bland,  President

                                      Address:  1411 Fourth Avenue, Suite 629

                                       13
<PAGE>
UPGRADE INTERNATIONAL CORP.        Private Placement  of  Subordinated Debenture
U.S.  Subscription Agreement          Convertible at a price equal to 75% of the
                                      average  bid  price  for the Common  Stock
                                      for  the  five  consecutive  trading  days
                                      immediately    preceding   the   date   of
                                      conversion,  but  not  to exceed $2.50 per
                                      Share

                                      Seattle,  Washington  98101

                               Facsimile  No.:_____________________________

                                       14
<PAGE>
UPGRADE INTERNATIONAL CORP.        Private Placement  of  Subordinated Debenture
U.S.  Subscription Agreement          Convertible at a price equal to 75% of the
                                      average  bid  price  for the Common  Stock
                                      for  the  five  consecutive  trading  days
                                      immediately    preceding   the   date   of
                                      conversion,  but  not  to exceed $2.50 per
                                      Share

                       CONVERTIBLE SUBORDINATED DEBENTURE
                                       OF
                           UPGRADE INTERNATIONAL CORP.

THIS  DEBENTURE  AND  THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED.  THEY MAY NOT BE SOLD, OFFERED FOR
SALE,  PLEDGED  OR  HYPOTHECATED  IN  THE  ABSENCE  OF AN EFFECTIVE REGISTRATION
STATEMENT  AS  TO  THE  SECURITIES  UNDER  SAID  ACT  OR  AN  OPINION OF COUNSEL
SATISFACTORY  TO  THE  CORPORATION  THAT  SUCH  REGISTRATION  IS  NOT  REQUIRED.

                       CONVERTIBLE SUBORDINATED DEBENTURE

OCTOBER  15,  1999                                                 $1,000,000.00

     FOR  VALUE  RECEIVED,  UPGRADE  INTERNATIONAL  CORP., a Florida corporation
("COMPANY"),  promises  to pay to __________________________________ ("HOLDER"),
the  principal sum of One Million Dollars (USD $1,000,000), together with simple
interest  from the date of this Debenture on the unpaid principal balance at the
rate  of  seven percent (7%) per annum.  All unpaid principal, together with any
then  unpaid  and accrued interest and other amounts payable hereunder, shall be
due  and  payable on the earlier of: (i) October 15, 2001 (the "MATURITY DATE"),
or  (ii) when such amounts are made due and payable upon or after the occurrence
of an Event of Default (as defined below).  This Debenture is issued pursuant to
the  Convertible  Subordinated  Debenture  Subscription  Agreement  dated  as of
October  15,  1999  (as  amended,  modified  or  supplemented, the "SUBSCRIPTION
AGREEMENT")  between  Company  and  the  Holder.

     The  following is a statement of the rights of Holder and the conditions to
which  this  Debenture  is  subject,  and  to  which  the  Holder hereof, by the
acceptance  of  this  Debenture,  agrees:

     1.     DEFINITIONS.  As used in  this  Debenture, the following capitalized
            -----------
terms  have  the  following  meanings:

                                       28
<PAGE>
UPGRADE INTERNATIONAL CORP.        Private Placement  of  Subordinated Debenture
U.S.  Subscription Agreement          Convertible at a price equal to 75% of the
                                      average  bid  price  for the Common  Stock
                                      for  the  five  consecutive  trading  days
                                      immediately    preceding   the   date   of
                                      conversion,  but  not  to exceed $2.50 per
                                      Share

          (a)     For  purposes  of the foregoing, the "ARTICLES" shall mean the
Articles  of  Incorporation  of  Company.

          (b)     "HOLDER"  shall  mean the Person specified in the introductory
paragraph of this Debenture or any Person who shall at the time be the holder of
this  Debenture.

          (c)     "INDEBTEDNESS"  of shall mean and include the aggregate amount
of,  without  duplication  (i)  all  obligations  for  borrowed  money, (ii) all
obligations  evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations to pay the deferred purchase price of property or services
(other  than  accounts  payable  incurred  in  the  ordinary  course of business
determined  in  accordance  with generally accepted accounting principles), (iv)
all  obligations  with  respect to capital leases, (v) all guaranty obligations,
(vi)  all  obligations  created  or  arising under any conditional sale or other
title  retention agreement with respect to property acquired by such Person, and
(vii)  all reimbursement and other payment obligations, contingent or otherwise,
in  respect  of  letters  of  credit.

          (d)     "INVESTMENT"  of  any Person shall mean any loan or advance of
funds  by  such  Person to any other Person (other than advances to employees of
such  Person  for  moving  and  travel  expense,  drawing  accounts  and similar
expenditures  in  the  ordinary  course  of  business),  any  purchase  or other
acquisition  of  any  equity securities or Indebtedness of any other Person, any
capital contribution by such Person to or any other investment by such Person in
any  other  Person  (including, without limitation, any Indebtedness incurred by
such  Person  of the type described in clauses (i) and (ii) of the definition of
"INDEBTEDNESS"  on  behalf  of  any  other  Person);  provided,  however,  that
                                                      --------   -------
Investments  shall not include accounts receivable or other indebtedness owed by
customers  of  such  Person which are current assets and arose from sales in the
ordinary  course  of  such  Person's  business.

          (e)     "COMPANY"  includes  the  corporation initially executing this
Debenture  and  any  Person  which shall succeed to or assume the obligations of
Company  under  this  Debenture.

          (f)     "PERSON"  shall mean and include an individual, a partnership,
a  corporation  (including  a  business trust), a joint stock company, a limited
liability  company,  an  unincorporated  association,  a  joint venture or other
entity,  or  a  governmental  authority.

                                       29
<PAGE>
UPGRADE INTERNATIONAL CORP.        Private Placement  of  Subordinated Debenture
U.S.  Subscription Agreement          Convertible at a price equal to 75% of the
                                      average  bid  price  for the Common  Stock
                                      for  the  five  consecutive  trading  days
                                      immediately    preceding   the   date   of
                                      conversion,  but  not  to exceed $2.50 per
                                      Share

          (g)     "SENIOR  INDEBTEDNESS"  shall  mean,  unless  expressly
subordinated  to  or made on a parity with the amounts due under this Debenture,
the  principal  of, unpaid interest on and amounts reimbursable, fees, expenses,
costs  of  enforcement and other amounts due in connection with (i) indebtedness
of Company to banks, commercial finance lenders, insurance companies, leasing or
equipment financing institutions or other lending institutions regularly engaged
in  the business of lending money (excluding venture capital, investment banking
or  similar  institutions which sometimes engage in lending activities but which
are  primarily  engaged in investments in equity securities), which is for money
borrowed,  or  purchase  or  leasing  of equipment in the case of lease or other
equipment  financing,  whether or not secured, and (ii) any such indebtedness or
any  debentures,  notes or other evidence of indebtedness issued in exchange for
such  Senior  Indebtedness, or any indebtedness arising from the satisfaction of
such  Senior  Indebtedness  by  a  guarantor.

          (h)     "TRANSACTION  DOCUMENTS"  shall  mean  the  Debenture  and the
Subscription  Agreement.

     2.   INTEREST.  Accrued  interest  on this Debenture shall be payable at
          --------
such  time  as  the  outstanding  principal amount hereof shall be paid in full.

     3.   EVENTS  OF  DEFAULT.  The  occurrence  of any of the  following  shall
          -------------------
constitute  an  "EVENT  OF  DEFAULT"  under  this Debenture and the Subscription
Agreement:

          (a)     Failure  to  Pay.  Company shall fail to pay (i) any principal
payment  on  the  due  date  hereunder,  or  (ii)  any interest or other payment
required  under the terms of this Debenture or the Subscription Agreement on the
date  due, and such payment shall not have been made within fifteen (15) days of
Company's  receipt of Holder's written notice to Company of such failure to pay;
or

          (b)     Breaches  of  Covenants.  Company  shall  fail  to  observe or
perform  any  covenant,  obligation,  condition  or  agreement contained in this
Debenture or the Subscription Agreement (other than those covenants specified in
Section  3(a)),  and  (i)  such  failure shall continue for thirty (30) days and
remain  uncured,  or  (ii)  if  such  failure  is not curable within such 30-day
period,  but  is  reasonably  capable  of  cure  within 60 days, either (A) such
failure  shall  continue  for 60 days, or (B) Company shall not have commenced a
cure  in  a  manner reasonably satisfactory to Holder within the initial 30- day
period;  or

          (c)     Representations and Warranties.  Any representation, warranty,
certificate, or other statement (financial or otherwise) made or furnished by or
on  behalf  of Company to Holder in writing in connection with this Debenture or
the  Subscription  Agreement,  or  as an inducement to Holder to enter into this
Debenture  and the Subscription Agreement, shall be false, incorrect, incomplete
or  misleading  in  any  material  respect  when  made  or  furnished;  or

                                       30
<PAGE>
UPGRADE INTERNATIONAL CORP.        Private Placement  of  Subordinated Debenture
U.S.  Subscription Agreement          Convertible at a price equal to 75% of the
                                      average  bid  price  for the Common  Stock
                                      for  the  five  consecutive  trading  days
                                      immediately    preceding   the   date   of
                                      conversion,  but  not  to exceed $2.50 per
                                      Share

          (d)     Voluntary Bankruptcy or Insolvency Proceedings.  Company shall
(i)  apply  for or consent to the appointment of a receiver, trustee, liquidator
or  custodian of itself or of all or a substantial part of its property, (ii) be
unable,  or  admit  in writing its inability, to pay its debts generally as they
mature,  (iii)  make  a  general assignment for the benefit of its or any of its
creditors,  (iv)  be  dissolved  or  liquidated  in  full or in part, (v) become
insolvent  (as  such  term  may  be  defined or interpreted under any applicable
statute),   (vi)  commence  a  voluntary  case  or  other   proceeding   seeking
liquidation,  reorganization or other relief with respect to itself or its debts
under any  bankruptcy,  insolvency  or other  similar  law now or  hereafter  in
effect,  or  consent  to any such  relief  or to the  appointment  of or  taking
possession  of its  property  by any  official in an  involuntary  case or other
proceeding  commenced  against  it, or (vii) take any action for the  purpose of
effecting any of the foregoing; or

          (e)     Involuntary Bankruptcy or Insolvency Proceedings.  Proceedings
for  the  appointment of a receiver, trustee, liquidator or custodian of Company
or  of all or a substantial part of the property thereof, or an involuntary case
or  other  proceedings  seeking liquidation, reorganization or other relief with
respect  to  Company  or  the  debts thereof under any bankruptcy, insolvency or
other  similar  law  now or hereafter in effect, shall be commenced and an order
for  relief  entered,  or  such  proceeding shall not be dismissed or discharged
within  90  days  of  commencement;  or

          (f)     Transaction  Documents.  Any  Transaction  Document  or  any
material  term thereof shall cease to be, or be asserted by Company not to be, a
legal,  valid  and  binding obligation of Company enforceable in accordance with
its  terms.

     4.     RIGHTS  OF HOLDER UPON DEFAULT.  Upon the occurrence or existence of
            -------------------------------
any  Event  of Default (other than an Event of Default referred to in Paragraphs
3(d)  and  3(e)) and at any time thereafter during the continuance of such Event
of  Default,  Holder  may, by written notice to Company, declare all outstanding
obligations  payable  by  Company  hereunder  to  be immediately due and payable
without  presentment,  demand,  protest  or any other notice of any kind, all of
which  are  hereby  expressly  waived,  anything  contained  herein  or  in  the
Subscription  Agreement to the contrary notwithstanding.  Upon the occurrence or
existence  of  any  Event  of  Default  described  in  Paragraphs 3(d) and 3(e),
immediately  and  without notice, all outstanding obligations payable by Company
hereunder  shall  automatically  become  immediately  due  and  payable, without
presentment,  demand,  protest or any other notice of any kind, all of which are
hereby  expressly  waived,  anything  contained  herein  or  in the Subscription
Agreement to the contrary notwithstanding.  In addition to the foregoing remedy,
upon  the  occurrence  or existence of any Event of Default, Holder may exercise
any  other  right, power or remedy granted to it by the Transaction Documents or
otherwise  permitted to it by law, either by suit in equity or by action at law,
or  both.

                                       31
<PAGE>
UPGRADE INTERNATIONAL CORP.        Private Placement  of  Subordinated Debenture
U.S.  Subscription Agreement          Convertible at a price equal to 75% of the
                                      average  bid  price  for the Common  Stock
                                      for  the  five  consecutive  trading  days
                                      immediately    preceding   the   date   of
                                      conversion,  but  not  to exceed $2.50 per
                                      Share

     5.     SUBORDINATION.  The  indebtedness  evidenced  by  this  Debenture is
            --------------
hereby  expressly  subordinated, to the extent and in the manner hereinafter set
forth,  in  right  of  payment  to the prior payment in full of all of Company's
Senior  Indebtedness.

          (a)     Insolvency  Proceedings.  If  there  shall  occur  any
receivership,  insolvency,  assignment for the benefit of creditors, bankruptcy,
reorganization,  or  arrangement  with  creditors  (whether  or  not pursuant to
bankruptcy  or  other  insolvency laws), sale of all or substantially all of the
assets,  dissolution,  liquidation,  or  any other marshalling of the assets and
liabilities of Company, (i) no amount shall be paid by Company in respect of the
principal of, interest on or other amounts due with respect to this Debenture at
the  time  outstanding,  unless  and  until the principal of and interest on the
Senior Indebtedness then outstanding shall be paid in full, and (ii) no claim or
proof of claim shall be filed with Company by or on behalf of the Holder of this
Debenture which shall assert any right to receive any payments in respect of the
principal  of  and  interest  on this Debenture except subject to the payment in
full  of  the  principal  of and interest on all of the Senior Indebtedness then
outstanding.

          (b)     Default on Senior Indebtedness.  If there shall occur an event
of  default  which  has  been  declared  in  writing  with respect to any Senior
Indebtedness,  as  defined  herein,  or  in  the  instrument  under  which it is
outstanding, permitting the holder to accelerate the maturity thereof and Holder
shall  have  received  written  notice  thereof  from  the holder of such Senior
Indebtedness, then, unless and until such event of default shall have been cured
or  waived  or shall have ceased to exist, or all Senior Indebtedness shall have
been  paid  in  full, no payment shall be made in respect of the principal of or
interest  on  this Debenture, unless within 180 days after the happening of such
event  of  default, the maturity of such Senior Indebtedness shall not have been
accelerated.  Not  more  than  one notice may be given to the Holder pursuant to
the  terms  of  this  Section  5(b)  during  any  365-day  period.

          (c)     Further  Assurances.  By  acceptance  of  this  Debenture, the
Holder agrees to execute and deliver customary forms of subordination agreements
requested  from  time  to  time  by  holders  of  Senior  Indebtedness, and as a
condition  to  the  Holder's  rights  hereunder, Company may require that Holder
execute  such  forms  of subordination agreements provided that such forms shall
not  impose  on  Holder  terms  less  favorable  than  those  provided  herein.

          (d)     Other Indebtedness.  No Indebtedness which does not constitute
Senior  Indebtedness  shall  be  senior  in  any  respect  to  the  Indebtedness
represented  by  this  Debenture  unless  consented to in writing by the Holder.

                                       32
<PAGE>
UPGRADE INTERNATIONAL CORP.        Private Placement  of  Subordinated Debenture
U.S.  Subscription Agreement          Convertible at a price equal to 75% of the
                                      average  bid  price  for the Common  Stock
                                      for  the  five  consecutive  trading  days
                                      immediately    preceding   the   date   of
                                      conversion,  but  not  to exceed $2.50 per
                                      Share

          (e)     Subrogation.  Subject  to  the  payment  in full of all Senior
Indebtedness  and until this Debenture shall be paid in full, the holder of this
Debenture  shall  be  subrogated  to  the rights of the holder(s) of such Senior
Indebtedness  (to  the  extent  of  the  payments  or  distributions made to the
holder(s) of such Senior Indebtedness pursuant to the provisions of this Section
5)  to receive payments and distributions of assets of Company applicable to the
Senior Indebtedness.  No such payments or distributions applicable to the Senior
Indebtedness shall, as between Company and its creditors, other than the holders
of  Senior  Indebtedness and the Holder, be deemed to be a payment by Company to
or  on  account  of  this  Debenture;  and  for purposes of such subrogation, no
payments  or  distributions  to  the holders of Senior Indebtedness to which the
Holder  would  be entitled except for the provisions of this Section 5 shall, as
between Company and its creditors, other than the holders of Senior Indebtedness
and  the  Holder,  be  deemed to be a payment by Company to or on account of the
Senior  Indebtedness.

          (f)     No  Impairment.  Subject to the rights, if any, of the holders
of Senior Indebtedness under this Section 5 to receive cash, securities or other
properties  otherwise  payable  or  deliverable to the Holder of this Debenture,
nothing contained in this Section 5 shall impair, as between Company and Holder,
the obligation of Company, subject to the terms and conditions hereof, to pay to
the  Holder the principal hereof and interest hereon as and when the same become
due  and  payable  or  shall  prevent the Holder of this Debenture, upon default
hereunder,  from  exercising  all rights, powers and remedies otherwise provided
herein  or  by  applicable  law.

          (g)     Lien  Subordination.  Any  Lien  of  Holder,  whether  now  or
hereafter  existing  in connection with the amounts due under this Debenture, on
any  assets  or  property of Company or any proceeds or revenues therefrom which
Holder  may  have  at  any  time as security for any amounts due and obligations
under this Debenture, shall be subordinate to all Liens now or hereafter granted
to  a  holder  of  Senior Indebtedness by Company or by law, notwithstanding the
date,  order  or  method  of  attachment  or  perfection of any such Lien or the
provisions  of  any  applicable  law.

          (h)     Reliance  of  Holders  of Senior Indebtedness.  Holder, by its
acceptance  hereof,  shall be deemed to acknowledge and agree that the foregoing
subordination  provisions  are,  and  are intended to be, an inducement to and a
consideration  of  each  holder  of  Senior  Indebtedness,  whether  such Senior
Indebtedness  was  created  or  acquired  before  or  after  the creation of the
indebtedness  evidenced  by  this  Debenture,  and  each  such  holder of Senior
Indebtedness  shall  be deemed conclusively to have relied on such subordination
provisions  in  acquiring  and  holding,  or  in continuing to hold, such Senior
Indebtedness.

                                       33
<PAGE>
UPGRADE INTERNATIONAL CORP.        Private Placement  of  Subordinated Debenture
U.S.  Subscription Agreement          Convertible at a price equal to 75% of the
                                      average  bid  price  for the Common  Stock
                                      for  the  five  consecutive  trading  days
                                      immediately    preceding   the   date   of
                                      conversion,  but  not  to exceed $2.50 per
                                      Share

6.     CONVERSION.
       -----------

          (a)     Conversion  by  Holder.  The  Holder of this Debenture has the
right,  at  the  Holder's  option  and at any time prior to October 15, 2001, to
convert  the  principal  amount  and  all accrued interest due and owing on this
Debenture,  either  in its entirety or in increments of $25,000, into fully paid
and  non-assessable shares of Common Stock of the Company.  The number of shares
of Common Stock into which this Debenture may be converted ("Conversion Shares")
shall  be  determined by dividing the principal amount together with all accrued
interest  to  the  date  of  conversion  (or such lesser amount in increments of
$25,000)  by  the  Conversion  Price (as defined below) in effect at the time of
such  conversion.

          (b)     Conversion  Price.  The  Conversion  Price  shall  be equal to
seventy-five  percent  (75%)  of  the average bid price for the Company's Common
Stock  for  the five (5) consecutive trading days immediately preceding the date
of  conversion,  but in no event shall the Conversion Price exceed USD $2.50 per
Share.

          (c)     Automatic Conversion upon Merger.  The entire principal amount
of  this  Debenture  and  all  accrued  interest  thereon shall be automatically
converted  into  shares  of  Common Stock at the Conversion Price at the time in
effect  immediately prior to any consolidation or merger of Company with or into
any entity or Person, or any other corporate reorganization in which the Company
shall not be the continuing or surviving entity of such consolidation, merger or
reorganization,  or any transaction or series of related transactions by Company
in  which  in  excess  of 50% of the Company's voting power is transferred, or a
sale  of  all  or  substantially  all  of  the  assets  of  the  Company.

          (d)     Conversion  upon  Call  of  Company.  Notwithstanding  any
provision  to  the contrary herein, if at any time prior to the Maturity Date of
this  Debenture,  the  average  bid price for the Company's Common Stock for any
five (5) consecutive trading day period equals One and 50/100 Dollar (USD $1.50)
or  less,  the  Company,  at its option, shall be entitled to require the Holder
hereof  to  immediately  convert the entire outstanding principal amount of this
Debenture  and  all  accrued interest thereon into shares of Common Stock of the
Company  at  a  conversion  price of USD $1.50 per Share, or in lieu thereof, to
cancel  this  Debenture  by  paying to the Holder the then outstanding principal
balance  together  with  any  accrued  and  unpaid  interest  thereon.

          (e)     Adjustments for Stock Splits.  In the event the Company should
at  any time or from time to time after the date of issuance hereof fix a record
date for the effectuation of a split or subdivision of the outstanding shares of
Common  Stock, or the holders of Common Stock are entitled to receive a dividend
or  other  distribution  payable  in  additional  shares of Common Stock without
payment  of  any  consideration  by  the  holder  for the additional shares, the
Conversion  Price of this Debenture shall be appropriately decreased so that the
number  of  shares  of  Common  Stock issuable upon conversion of this Debenture
shall  be  increased in proportion to such increase in the number of outstanding
shares.

                                       34
<PAGE>
UPGRADE INTERNATIONAL CORP.        Private Placement  of  Subordinated Debenture
U.S.  Subscription Agreement          Convertible at a price equal to 75% of the
                                      average  bid  price  for the Common  Stock
                                      for  the  five  consecutive  trading  days
                                      immediately    preceding   the   date   of
                                      conversion,  but  not  to exceed $2.50 per
                                      Share

          (f)     Adjustments for Reverse Stock Splits.  If the number of shares
of  Common Stock outstanding at any time after the date hereof is decreased by a
combination  of  the  outstanding  shares  of  Common Stock, then, following the
record  date  of such combination, the Conversion Price for this Debenture shall
be appropriately increased so that the number of shares of Common Stock issuable
on  conversion  hereof  shall be decreased in proportion to such decrease in the
number  of  outstanding  shares.

          (g)     Reservation  of  Stock  Issuable upon Conversion.  The Company
shall at all times reserve and keep available out of its authorized but unissued
shares  of  Common  Stock  solely for the purpose of effecting the conversion of
this  Debenture, such number of its shares of Common Stock as shall from time to
time  be  sufficient  to  effect  the  conversion  of  this  Debenture.

          (h)     Notice  of  Conversion  Pursuant  to Section 6(a).  Before the
Holder of this Debenture shall be entitled to convert this Debenture into shares
of  Common Stock of the Company pursuant to Section 6(a), Holder shall surrender
this  Debenture to the Company at its principal corporate office, and shall give
written  notice  in  substantially  the  form  attached as Appendix I hereto, to
Company  with  a copy to Company's legal counsel: James F. Biagi, Jr., Monahan &
Biagi,  P.L.L.C.,  701  Fifth Avenue, Suite 5701, Seattle, Washington  98104, of
Holder's  election  to convert all (or a portion) of the principal amount of the
Debenture  and  any  accrued  interest  thereon,  which  notice shall also state
therein the name or names in which the certificate or certificates for shares of
Company's  Common  Stock  are  to  be  issued.

          (i)     Notice  of  Conversion  Pursuant  to  Section  6(c).  If  this
Debenture is automatically converted pursuant to Section 6(c) or is converted at
the Company's option pursuant to Section 6(d), written notice shall be delivered
to  the  Holder  at the address last shown on the records of the Company for the
Holder  or  given  by  the  Holder  to  the  Company  for the purpose of notice,
notifying the Holder of the conversion to be effected, specifying the Conversion
Price,  the  principal  amount  of  the Debenture to be converted, the amount of
accrued  interest to be converted, the date on which such conversion will occur,
and  calling  upon  such Holder to surrender the Debenture to the Company in the
manner  and  at  the  time  and  place  designated.

          (j)     Issuance of Securities on Conversion.  Upon receipt of written
notice from the Holder of this Debenture and surrender of the Debenture pursuant
to  Sections 6(a) and 6(h) above, the Company shall, at its expense, cause to be
issued  and  delivered to the Holder, a certificate or certificates representing

                                       35
<PAGE>
UPGRADE INTERNATIONAL CORP.        Private Placement  of  Subordinated Debenture
U.S.  Subscription Agreement          Convertible at a price equal to 75% of the
                                      average  bid  price  for the Common  Stock
                                      for  the  five  consecutive  trading  days
                                      immediately    preceding   the   date   of
                                      conversion,  but  not  to exceed $2.50 per
                                      Share

the  number  of  fully  paid  and  nonassessable shares of Common Stock to which
Holder shall be entitled on such conversion.  Such conversion shall be deemed to
have  been  made  immediately  prior  to  the  close  of business on the date of
surrender  of  the  Debenture  as provided in Section 6(h) above.  No fractional
shares  will  be issued on conversion of this Debenture.  In lieu of the Company
issuing  any  fractional  shares  to  the  Holder  upon  the  conversion of this
Debenture,  the  Company  shall  pay  to  the  Holder  in cash the amount of any
outstanding  principal  and  accrued  interest  that  is  not  so  converted.

          (k)     Delay in Issuance on Conversion.  For purposes of Section 6(j)
above,  "cause to be issued"  shall mean that Company will instruct its transfer
agent to issue and deliver the  certificate or  certificates  for such shares to
Holder. In the event the  certificate(s)  for the shares of Common Stock are not
issued within ten (10) days of the date written  notice of Holder's  election to
convert is received  by the Company  together  with the  surrendered  Debenture,
Holder shall notify Company of such delay,  and Company shall have an additional
10-day  period in which to effect  the  issuance  of such  certificates.  If the
certificates are not issued on or before the expiration of this 10-day extension
period,  Holder shall be entitled to receive  additional shares of the Company's
Common  Stock as follows:  for each full  thirty  (30)-day  period that  elapses
(subsequent   to  the   aforesaid   10-day   extension   period)  in  which  the
certificate(s)  are not issued,  Holder shall be entitled to receive  additional
shares of Common  Stock in an amount  equal to one percent (1%) of the number of
shares that Holder is entitled to receive at the time of conversion.

          (l)     Termination  of  Rights.  All  rights  with  respect  to  this
Debenture  shall  terminate  upon  the  issuance  of shares of Common Stock upon
conversion  of  this  Debenture  or  upon  payment  in  full  of the outstanding
principal amount together with any accrued interest thereon, whether or not this
Debenture  has  been  surrendered.  Notwithstanding  the  foregoing,  the Holder
agrees  to  surrender this Debenture to the Company for cancellation as provided
herein,  but  in  any event not later than ten (10) days following conversion of
this  Debenture  or  payment  in  full.

     7.     SUCCESSORS  AND  ASSIGNS.  Subject  to  the restrictions on transfer
            ------------------------
described  in Sections 9 and 10 below, the rights and obligations of Company and
Holder  shall  be  binding  upon  and  benefit  the  successors, assigns, heirs,
administrators  and  transferees  of  the  parties.

     8.     WAIVER  AND  AMENDMENT.  Any  provision  of  this  Debenture  may be
            -----------------------
amended,  waived  or  modified  upon  the written consent of Company and Holder.

     9.     TRANSFER  OF  THIS  DEBENTURE  OR  SECURITIES ISSUABLE ON CONVERSION
            --------------------------------------------------------------------
HEREOF.  With  respect to any offer, sale or other disposition of this Debenture
------
or  securities  into  which  such  Debenture may be converted, Holder shall give
written  notice to Company prior thereto, describing briefly the manner thereof,

                                       36
<PAGE>
UPGRADE INTERNATIONAL CORP.        Private Placement  of  Subordinated Debenture
U.S.  Subscription Agreement          Convertible at a price equal to 75% of the
                                      average  bid  price  for the Common  Stock
                                      for  the  five  consecutive  trading  days
                                      immediately    preceding   the   date   of
                                      conversion,  but  not  to exceed $2.50 per
                                      Share

together  with a written  opinion of Holder's  counsel,  to the effect that such
offer,  sale or other  distribution  may be  effected  without  registration  or
qualification  (under any  federal or state law then in effect).  Promptly  upon
receiving  such  written  notice  and  reasonably  satisfactory  opinion  if  so
requested, Company, as promptly as practicable,  shall notify Holder that Holder
may sell or  otherwise  dispose of this  Debenture  or such  securities,  all in
accordance  with  the  terms  of  the  notice  delivered  to the  Company.  If a
determination  has been made  pursuant  to this  Section 9 that the  opinion  of
counsel of Holder is not reasonably  satisfactory  to Company,  Company shall so
notify the Holder promptly after such determination has been made. The Debenture
thus  transferred  and  each   certificate   representing  the  securities  thus
transferred   shall  bear  a  legend  as  to  the  applicable   restrictions  on
transferability  in order to ensure  compliance with the Securities Act of 1933,
as amended (the "Act"), unless in the opinion of counsel for Company such legend
is not required in order to ensure  compliance  with the Act.  Company may issue
stop  transfer  instructions  to its  transfer  agent in  connection  with  such
restrictions.  Subject to the foregoing,  transfers of this  Debenture  shall be
registered upon  registration  books maintained for such purpose by or on behalf
of Company as provided in the Subscription  Agreement.  Prior to presentation of
this Debenture for registration and transfer, Company shall treat the registered
holder  thereof as the owner and  holder of this  Debenture  for the  purpose of
receiving  all  payments  of  principal  and  interest  hereon and for all other
purposes whatsoever, whether or not this Debenture shall be overdue, and Company
shall not be affected by notice to the contrary.

     10.     ASSIGNMENT  BY  COMPANY.  Neither  this  Debenture  nor  any of the
             ------------------------
rights,  interests or obligations hereunder may be assigned, by operation of law
or  otherwise, in whole or in part, by Company without the prior written consent
of  Holder,  except  in  connection  with  an assignment in whole to a successor
corporation to Company, provided that such successor corporation acquires all or
substantially all of Company's property and assets and Holder's rights hereunder
are  not  impaired.

     11.     TREATMENT  OF  DEBENTURE.  To  the  extent  permitted  by generally
             -------------------------
accepted  accounting  principles,  Company  will  treat,  account and report the
Debenture as debt and not equity for accounting purposes and with respect to any
returns  filed  with  federal,  state  or  local  tax  authorities.

     12.     NOTICES.  All  notices  and  other  communications  required  or
             --------
permitted  hereunder  shall  be  in  writing, shall be effective when given, and
shall  in  any event be deemed to be given upon receipt or, if earlier: (a) five
(5)  days  after deposit with the U.S. Postal Service or other applicable postal
service,  if  delivered by first class mail, postage prepaid, (b) upon delivery,
if  delivered  by  hand,  (c) one business day after the business day of deposit

                                       37
<PAGE>
UPGRADE INTERNATIONAL CORP.        Private Placement  of  Subordinated Debenture
U.S.  Subscription Agreement          Convertible at a price equal to 75% of the
                                      average  bid  price  for the Common  Stock
                                      for  the  five  consecutive  trading  days
                                      immediately    preceding   the   date   of
                                      conversion,  but  not  to exceed $2.50 per
                                      Share

with  Federal  Express or similar overnight courier, freight prepaid, or (d) one
business day after the business day of a facsimile transmission, if delivered by
facsimile  transmission  with  a  copy by first class mail, postage prepaid, and
shall be addressed (i) if to the Holder, at the Holder's address as set forth in
the  Subscription  Agreement  or  on the register maintained by the Company, and
(ii)  if  to  the Company, at the address of its principal corporate offices, or
(iii)  at  such  other address as a party may designate by ten (10) days advance
written  notice  to  the  other  party  pursuant  to  the  provisions  above.

     13.     NO  SHAREHOLDER  RIGHTS.  Nothing contained in this Debenture shall
             -----------------------
be construed as conferring upon the Holder or any other person the right to vote
or  to  consent  or to receive notice as a shareholder in respect of meetings of
shareholders  for  the election of directors of the Company or any other matters
or any rights whatsoever as a shareholder of the Company, and no dividends shall
be  payable  or  accrued  in  respect  of  this  Debenture.

     14.     REGISTRATION  OF  SHARES.  Upon  conversion  of  the full principal
             ------------------------
amount of this Debenture and all accrued  interest thereon into shares of Common
Stock of the Company,  or upon  conversion of such lesser amount on the Maturity
Date of this  Debenture,  the  Company  agrees to  promptly  file with the SEC a
registration  statement  covering  the  Conversion  Shares,  and  agrees  to use
reasonable   efforts   to  cause   such   registration   to  become   effective.
Notwithstanding  the  foregoing,  the Company  agrees to register the underlying
Shares  subject  to the  Debenture  together  with and in  conjunction  with the
Company's  pending  $2.50 per  share  common  round,  which is  estimated  to be
accomplished on or before December 31, 1999.

     15.     PAYMENT;  PREPAYMENT.
             ---------------------

     (a)     In  the  event  the  Holder  of  this  Debenture  does not exercise
Holder's  option  to  convert the entire principal amount of this Debenture (and
all  accrued  interest  thereon)  prior  to  the  Maturity Date, the unconverted
outstanding  principal amount, together with all accrued interest thereon, shall
be  due and payable to Holder on October 15, 2001.  Company shall be entitled to
a grace period of ten (10) days following the Maturity Date to make the required
payment.  Payment  shall  be  made  in  lawful  tender  of  the  United  States.

          (b)     The  unpaid  principal  and interest due on this Debenture may
not  be prepaid, in whole or in part, without the express written consent of the
Holder  of  this  Debenture.

     16.     USURY.  In  the  event any interest is paid on this Debenture which
             -----
is  deemed  to  be in excess of the then legal maximum rate, that portion of the
interest payment representing an amount in excess of the then legal maximum rate
shall be deemed a payment of principal and applied against the principal of this
Debenture.

                                       38
<PAGE>
UPGRADE INTERNATIONAL CORP.        Private Placement  of  Subordinated Debenture
U.S.  Subscription Agreement          Convertible at a price equal to 75% of the
                                      average  bid  price  for the Common  Stock
                                      for  the  five  consecutive  trading  days
                                      immediately    preceding   the   date   of
                                      conversion,  but  not  to exceed $2.50 per
                                      Share

     17.     GOVERNING LAW.  This Debenture and all actions arising out of or in
             -------------
connection  with this Debenture shall be governed by and construed in accordance
with  the laws of the State of Washington as in effect for contracts made and to
be  performed  in  the  State  of  Washington.

     18.     HEADING;  REFERENCES.  All  headings  used  herein  are  used  for
             --------------------
convenience  only and shall not be used to construe or interpret this Debenture.
Except  where  otherwise  indicated,  all references herein to Sections refer to
Sections  hereof.

     IN  WITNESS  WHEREOF, the Company has caused this Debenture to be issued as
of  the  date  first  written  above.

                                     UPGRADE  INTERNATIONAL  CORP.,
                                     a  Florida  corporation

                                     By:______________________________________
                                            Daniel  S.  Bland,  President

                                       39
<PAGE>
UPGRADE INTERNATIONAL CORP.        Private Placement  of  Subordinated Debenture
U.S.  Subscription Agreement          Convertible at a price equal to 75% of the
                                      average  bid  price  for the Common  Stock
                                      for  the  five  consecutive  trading  days
                                      immediately    preceding   the   date   of
                                      conversion,  but  not  to exceed $2.50 per
                                      Share

                                   APPENDIX I

                              NOTICE OF CONVERSION

                (TO BE SIGNED ONLY UPON CONVERSION OF DEBENTURE)

TO:  UPGRADE  INTERNATIONAL  CORPORATION

     The  undersigned,  the  holder of the  foregoing  Convertible  Subordinated
Debenture, hereby surrenders such Debenture for conversion into shares of Common
Stock   of    Upgrade    International    Corporation,    to   the   extent   of
_______________________  Dollars  ($__________)  unpaid  principal  amount  [and
accrued interest] of such Debenture, and requests that the certificates for such
shares be issued in the name of, and delivered to______________________________,
whose address is_____________________________________________________________.

Dated:____________________

                                                ________________________________
                                                          (Signature)

                                                ________________________________
                                                ________________________________
                                                ________________________________
                                                           (Address)

                                       40
<PAGE>--------------------------------------------------------------------------------
                        WARRANT TO PURCHASE COMMON STOCK
                                       OF
                        UPGRADE INTERNATIONAL CORPORATION
--------------------------------------------------------------------------------

                   THIS WARRANT AND THE SHARES OF COMMON STOCK
                     ISSUABLE PURSUANT TO THIS WARRANT HAVE
              NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
             AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD, PLEDGED OR
            OTHERWISE TRANSFERRED UNLESS REGISTERED UNDER THE ACT OR
                AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE

FOR  VALUE  RECEIVED

Upgrade  International  Corporation,  a  Washington corporation (the "Company"),
grants  the  following  rights to Bob Horsting, having an address at 1727 Sunset
Ride  Road,  Glenview,  IL  60025  ("Holder").

ARTICLE  1.     DEFINITIONS

As  used  herein,  the following terms shall have the following meanings, unless
the  context  shall  otherwise  require:

     (a)  "Common  Stock"  shall mean the common  stock,  par value  $0.0001 per
          share, of the Company.

     (b)  "Corporate  Office"  shall  mean the  office  of the  Company  (or its
          successor)  at which at any  particular  time its  principal  business
          shall be  administered,  which office is located at the date hereof at
          1411 Fourth Avenue, Suite #629, Seattle, WA 98104.

     (c)  "Effective Date" shall mean August 16, 2000

     (d)  "Exercise  Date" shall mean any date upon which the Holder  shall give
          the Company a Notice of  Exercise,  which shall be deemed the date the
          Notice of Exercise was first  deposited in the U.S.  Mails, if mailed,
          or the date received by the courier company if delivered by recognized
          courier  company,  or the date  received by the  Company if  otherwise
          given or delivered.

     (e)  "Exercise  Price"  shall mean the price to be paid to the  Company for
          each  share of Common  Stock to be  purchased  upon  exercise  of this
          Warrant in accordance with the terms hereof, which shall be $10.00 per
          share.

<PAGE>
     (f)  "Expiration Date" shall mean 5:00 PM (Pacific Standard time) on August
          16, 2002.

     (g)  "SEC" shall mean the United States Securities and Exchange Commission.

ARTICLE  2.     EXERCISE

2.1  EXERCISE OF WARRANT
     This Warrant  shall  entitle  Holder to purchase up to 100 shares of Common
     Stock  (the  "Shares")  at  the  Exercise  Price.  This  Warrant  shall  be
     exercisable at any time and from time to time prior to the Expiration  Date
     (the  "Exercise  Period")  upon  execution.  This  Warrant and the right to
     purchase  Shares  hereunder  shall expire and become void at the Expiration
     Date.

2.2  MANNER OF EXERCISE
     (a)  Holder  may  exercise  this  Warrant at any time and from time to time
          during the Exercise Period,  in whole or in part, by delivering to the
          Company at its Corporate Office (i) a duly executed Notice of Exercise
          in  substantially  the form  attached  as Appendix I hereto and (ii) a
          bank cashier's or certified check for the aggregate  Exercise Price of
          the Shares being purchased.

     (b)  From time to time upon exercise of this Warrant,  in whole or part, in
          accordance  with its terms,  the Company will cause its transfer agent
          to  countersign   and  deliver  stock   certificates   to  the  Holder
          representing  the number of Shares  being  purchased  pursuant to such
          exercise, subject to adjustment as described herein.

     (c)  Promptly  following any exercise of this  Warrant,  if the Warrant has
          not been fully exercised and has not expired, the Company will deliver
          to the Holder a new  Warrant  for the  balance  of the Shares  covered
          hereby.

2.3  TERMINATION
     All rights of the Holder in this Warrant,  to the extent they have not been
     exercised, shall terminate on the Expiration Date.

2.4  NO RIGHT PRIOR TO EXERCISE
     Prior to its exercise pursuant to Section 2.3 above, this Warrant shall not
     entitle the Holder to any voting or other rights as holder of Shares.

2.5  ADJUSTMENTS
     In case of any reclassification, capital reorganization, stock dividend, or
     other  change of  outstanding  shares of  Common  Stock,  or in case of any
     consolidation  or merger of the Company  with or into  another  corporation
     (other  than  a  consolidation  or  merger  in  which  the  Company  is the
     continuing  corporation and which does not result in any  reclassification,
     capital  reorganization,  stock  dividend,  or other change of  outstanding
     shares of Common  Stock),  or in case of any sale or  conveyance to another
     corporation  of the  property of the Company  as, or  substantially  as, an
     entirety  (other  than  a  sale/leaseback,   mortgage  or  other  financing
     transaction),  the Company  shall cause  effective  provision to be made so
     that the  Holder  shall  have the  right  thereafter,  by  exercising  this
     Warrant, to purchase the kind and number of

<PAGE>
     shares of stock or other securities or property (including cash) receivable
     upon such  reclassification,  capital  reorganization,  stock dividend,  or
     other change, consolidation, merger, sale or conveyance as the Holder would
     have been entitled to receive had the Holder exercised this Warrant in full
     immediately before such  reclassification,  capital  reorganization,  stock
     dividend, or other change,  consolidation,  merger, sale or conveyance. Any
     such provision  shall include  provision for  adjustments  that shall be as
     nearly equivalent as may be practicable to the adjustments  provided for in
     this  Section  2.6.  The  foregoing  provisions  shall  similarly  apply to
     successive reclassifications, capital reorganizations, stock dividends, and
     other  changes  of  outstanding  shares of Common  Stock and to  successive
     consolidations, mergers, sales or conveyances.

2.6  FRACTIONAL SHARES
     No fractional  Shares shall be issuable upon exercise or conversion of this
     Warrant and the number of Shares to be issued  shall be rounded down to the
     nearest  whole  Share.  If a  fractional  Share  interest  arises  upon any
     exercise or conversion of the Warrant,  the Company  shall  eliminate  such
     fractional   Share  interest  by  paying  Holder  the  amount  computed  by
     multiplying  the  fractional  interest  by the  closing bid price of a full
     Share on the date of the Notice of Exercise.

ARTICLE  3.     REPRESENTATIONS  AND  COVENANTS  OF  THE  COMPANY

3.1  REPRESENTATIONS AND WARRANTIES

     The Company hereby represents and warrants to the Holder as follows:

     (a)  All Shares which may be issued upon the exercise of the purchase right
          represented by this Warrant shall, upon issuance,  by duly authorized,
          validly issued,  fully-paid and  nonassessable,  and free of any liens
          and  encumbrances  except for  restrictions  on transfer  provided for
          herein or under applicable  federal and state securities laws, and not
          subject to any pre-emptive rights.

     (b)  The Company is a corporation duly organized and validly existing under
          the  laws of the  State of  Washington,  and has the  full  power  and
          authority to issue this  Warrant and to comply with the terms  hereof.
          The  execution,  delivery  and  performance  by  the  Company  of  its
          obligations under this Warrant,  including,  without  limitation,  the
          issuance of the Shares upon any  exercise  of the  Warrant,  have been
          duly authorized by all necessary  corporate  action.  This Warrant has
          been duly  executed  and  delivered  by the Company and is a valid and
          binding obligation of the Company,  enforceable in accordance with its
          terms, except as enforcement may be limited by applicable  bankruptcy,
          insolvency, reorganization or similar laws affecting enforceability of
          creditors'  rights  generally  and except as the  availability  of the
          remedy of specific  enforcement,  injunctive relief or other equitable
          relief is  subject to the  discretion  of the court  before  which any
          proceeding therefor may be brought.

<PAGE>
     (c)  The  Company  is not  subject  to or  bound  by any  provision  of any
          certificate or articles of incorporation or by-laws, mortgage, deed of
          trust,  lease, note, bond,  indenture,  other instrument or agreement,
          license,  permit,  trust,  custodianship,  other  restriction  or  any
          applicable  provision  of any law,  statute,  any court,  governmental
          body,  administrative  agency or arbitrator  which could prevent or be
          violated  by or under  which  there  would be a  default  (or right of
          termination) as a result of the execution, delivery and performance by
          the Company of this Warrant.

ARTICLE  4.     MISCELLANEOUS

4.1  TRANSFER
     This Warrant may not be  transferred  or assigned,  in whole or in part, at
     any time without the consent of the Company.

4.2  LOSS, THEFT, DESTRUCTION OR MUTILATION
     If this Warrant shall become mutilated or defaced or be destroyed,  lost or
     stolen, the Company shall execute and deliver a new Warrant in exchange for
     and upon surrender and  cancellation  of such mutilated or defaced  Warrant
     or, in lieu of and in substitution for such Warrants so destroyed,  lost or
     stolen, upon the Holder filing with the Company evidence satisfactory to it
     that  such  Warrant  has been so  mutilated,  defaced,  destroyed,  lost or
     stolen.  However,  the Company  shall be  entitled,  as a condition  to the
     execution   and  delivery  of  such  new  Warrant,   to  demand   indemnity
     satisfactory  to it and payment of the  expenses  and  charges  incurred in
     connection  with  the  delivery  of  such  new  Warrant.   Any  Warrant  so
     surrendered to the Company shall be canceled.

4.3  NOTICES
     All notices and other communications from the Company to the Holder or vice
     versa shall be deemed  delivered and effective  when given  personally,  by
     facsimile  transmission and confirmed in writing,  or mailed by first-class
     registered  or certified  mail,  postage  prepaid,  at such address  and/or
     facsimile  number as may have been  furnished to the Company or the Holder,
     as the case may be, in  writing by the  Company or the Holder  from time to
     time; provided,  however,  that the Notice of Exercise may not be delivered
     by facsimile transmission.

4.4  WAIVER
     This Warrant and any term hereof may be changed, waived, or terminated only
     by an instrument in writing  signed by the party against which  enforcement
     of such change, waiver, discharge or termination is sought.

<PAGE>
4.5  GOVERNING LAW
     This Warrant shall be governed by and construed in accordance with the laws
     of the  State  of  Washington,  without  giving  effect  to its  principles
     regarding conflicts of law.

                                          UPGRADE  INTERNATIONAL  CORP.

                                          ______________________________________
                                          By:  Daniel  Bland
                                          Its:  President

Attest:___________________________

<PAGE>
                                   APPENDIX I

                               NOTICE OF EXERCISE

1.   The undersigned hereby elects to purchase ____________ shares of the Common
     Stock of Upgrade  International  Corporation  pursuant  to the terms of the
     attached  Warrant,  and tenders  herewith  payment of the purchase price of
     such shares in full.

2.   Please issue a certificate or certificates  representing said shares in the
     name of the undersigned or in such other name as specified below.

      ______________________________________
      (Name)

      ______________________________________

      ______________________________________
      (Address)

3.   The  undersigned  represents  it is acquiring the shares solely for its own
     account and not as a nominee for any other party and not with a view toward
     the resale or  distribution  thereof except in compliance  with  applicable
     securities laws.

      ______________________________________         ___________________________
      (Signature)                                    (Date)

<PAGE>

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