Document:

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

Note No. 2001 A-_________                                ________________,  2001

$________________________                          ________________,  Washington

     FOR  VALUE  RECEIVED,  UPGRADE  INTERNATIONAL  CORPORATION,  a  Washington
corporation  ("COMPANY"),  promises  to  pay  to _______________________________
("HOLDER"),  the  principal  sum  of  ___________________________  Dollars  (USD
$__________),  together  with simple interest from the date of this Debenture on
the  unpaid  principal balance at the rate of eight percent (8%) 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) three
(3) months from the date hereof (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 February 28, 2001 (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:

            (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"  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

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arising  under  any  conditional  sale  or  other title retention agreement with
respect  to  property  acquired,  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  who  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.

            (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 this 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
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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

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            (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

            (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;  or

            (g)     Registration of Shares.  Failure to file with the SEC by May
31,  2001,  a  registration  statement  covering  the Conversion Shares and such
failure  is  not  cured  within  the  period  prescribed  in  Paragraph  3(b).

     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

<PAGE>
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.

     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.

            (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

<PAGE>
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.

     6.     CONVERSION.
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            (a)     Conversion  by Holder.  The Holder of this Debenture has the
right,  at  the  Holder's  option and at any time prior to the Maturity Date, 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
$1.25  per  share.

            (c)     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.

<PAGE>
            (d)     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.

            (e)     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.

            (f)     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 Sections 6(a), 6(c) or 6(d), Holder
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. For purposes of this
Paragraph  6(h),  the  Notice  of  Conversion  may be given by the Holder to the
Company  and  to  its  legal  counsel by facsimile transmission to the facsimile
numbers  for said parties as set forth in Section 12 hereof. In addition, before
the  Holder  of  this  Debenture shall be entitled to receive the certificate or
certificates  for shares of the Company's Common Stock upon a conversion of this
Debenture,  the  Holder  shall  surrender  this  Debenture to the Company at its
principal  corporate  office.

            (g)     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), 6(c), 6(d) and 6(h) above, the Company shall, at its
expense,  cause  to  be  issued  and  delivered  to the Holder, a certificate or
certificates  representing  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 the Company's receipt of the Notice of Conversion as
provided  in  Section  6(h)  above. Delivery of said stock certificates shall be
made  not  later  than  three (3) business days after the date of receipt by the
Company  of  the  surrendered  Debenture.

            (h)     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.

            (i)     Limitation  on  Conversion.   The  Holder,  upon  conversion
under  this  Debenture  offering,  either  in whole or in part, shall not own of
record  more  than  nine  and  nine-tenths  percent  (9.9%)  of  the  issued and
outstanding  shares  of  Common  Stock  of  the  Company.

<PAGE>
     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  the securities into which such Debenture may be converted, Holder shall give
written  notice to Company prior thereto, describing briefly the manner thereof,
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 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.  Except  as  otherwise provided in Sections 6(h) and 15(a)
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hereof,  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 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 as
follows:

<PAGE>
     If  to  the  Holder:
                               -----------------------
                               -----------------------
                               -----------------------
                               -----------------------

     If  to  the  Company:     UPGRADE  INTERNATIONAL  CORP.
                               1411  Fourth  Avenue,  Suite  629
                               Seattle,  Washington  98101
                               Attention:  Daniel  Bland  or  Howard  Jaffee
                               Facsimile  No.  (206)  903-3117

     With  a  copy  to:        Mr.  James  F.  Biagi,  Jr.
                               Monahan  &  Biagi,  P.L.L.C.
                               701  Fifth  Avenue,  Suite  5701
                               Seattle,  WA.  98104
                               Facsimile  No.  (206)  587-5710

or  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.
             ------------------------

            (a)     On  or before May 31, 2001, the Company agrees to file  with
the  SEC  a registration statement covering the Conversion Shares, and agrees to
use  reasonable  efforts  to  cause  such  registration  to  become  effective

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

            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 May 31, 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.

     16.     ANTI-DILUTION RIGHTS.  If at any time prior to the Maturity Date of
             ---------------------
this  Debenture,  the  Company offers or issues any other series of subordinated
convertible  debentures  on terms and conditions which, when considered in their
entirety, are more favorable than the terms and conditions hereof, the terms and
conditions  of  this  Debenture  shall  be  amended, at the option of the Holder
hereof,  to  the  extent  required  to  make  the  terms  and  conditions hereof
consistent  with and identical to such other subordinated convertible debenture.

<PAGE>
     17.     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.

     18.     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.

     19.     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  Washington  corporation

                                            By:
                                               -----------------------------
                                               Daniel  S.  Bland,  President

<PAGE>

                              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)

                                          ----------------------------------
                                          ----------------------------------
                                          ----------------------------------

<PAGE>PROMISSORY NOTE

This  agreement  dated  for  reference  this  ____  day  of  ________,  2001

BETWEEN:
          UPGRADE  INTERNATIONAL  CORP.,  1411  Fourth  Ave., Suite 629, Seattle
          Washington,  98101  (hereinafter  called  "Borrower")
                                                            OF  THE  FIRST  PART

AND

          ----------------------------------------------------------------------
          ---------------------- (hereinafter  called  "Lender")
                                                           OF  THE  SECOND  PART

WHEREAS, borrower is desirous of borrowing and Lender is desirous of lending USD
$100,000  for  a period of 31 days, subject to the terms and conditions provided
herein.

THEREFORE  BE  IT  AGREED  THAT;

          1.   Interest will be calculated and payable upon maturity of the note
               at  a  rate of 10% per annum, and 10,000 shares will be issued as
               compensation  for  the  loan.
          2.   In  the event that the loan is not repaid on the maturity date, a
               penalty  charge  will  be  due  and  payable  as  follows;
          -    10%  of  the  unpaid  principle and interest at the maturity date
               will  be  issued  in common stock to the lender, calculated based
               upon  the  average  trading  price  of  the  common  stock of the
               borrower  on  the  loan  maturity  date.
          -    Warrants to acquire common stock will be issued equal to 12.5% of
               the  unpaid  principle  and  interest  at  the loan maturity date
               issued  at  a strike price being the average trading price of the
               borrowers  common  stock  on  the  maturity  date.
          -    Bonus  Warrants  to  acquire common stock will be issued equal to
               20%  of  the  unpaid  principle and interest at the loan maturity
               date calculated at the current market issued at a strike price of
               $6.00.
          3.   In  the event that the loan principle and interest is not repaid,
               an  additional  penalty will become due and payable every 30 days
               following  the  maturity  date.

Agreed  this  ____  day  of  ________________,  2001.

-----------------------------
Upgrade  International  Corp.

<PAGE>

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