Document:

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                           SECOND AMENDED AND RESTATED

                                 PROMISSORY NOTE

$12,500,000                                                  Original Issue Date
                                                             December 1, 1999

         FOR VALUE RECEIVED, DUALSTAR TECHNOLOGIES CORPORATION, a Delaware
corporation (the "Company"), hereby promises to pay to MADELEINE, L.L.C., a New
York limited liability company (the "Holder"), at 450 Park Avenue, 28th Floor,
New York, New York 10022 or at such other place as the Holder may in writing
designate, the principal sum of Twelve Million Five Hundred Thousand Dollars
($12,500,000) with interest (computed on the basis of a 360 day year and the
actual number of days elapsed), from November 8, 2000, at the rate of eleven
percent (11%) per annum on the balance of the principal from time to time
remaining unpaid, all on the terms and conditions set forth herein (the "Note").

         1. Maturity, Interest and Amortization. Unless accelerated pursuant to
the terms of this Note, the unpaid principal balance of this Note together with
all unpaid interest accrued thereon shall be due and payable on September 30,
2007 (the "Maturity Date", with the period of time from the date hereof until
the Maturity Date being referred to herein as the "Term"). Interest on the Note
shall accrue at a rate of eleven percent (11%) per annum and shall be payable
quarterly in arrears on each March 15, June 15, September 15, and December 15,
in cash. Principal and interest are payable in lawful money of the United
States. All payments received by Holder under this Note shall be credited first
to any charges or other expenses for which Holder is entitled to payment
hereunder, next to accrued but unpaid interest, and third to unpaid principal.
The Company shall have the right at any time, on at least thirty (30) days'
notice, to prepay any portion of the outstanding principal of this Note without
penalty.

         Notwithstanding any contrary provision contained herein, (i)
immediately upon any Disposition (as such term is hereinafter defined) by the
Company or any of its subsidiaries, the Company shall prepay the unpaid
principal balance of this Note together with all unpaid interest accrued thereon
in an amount equal to 100% of the Net Cash Proceeds (as such term is hereinafter
defined) received by the Company or any of its subsidiaries or affiliates in
connection with such Disposition; provided, that the Company shall in any event
give the Holder thirty (30) business days written notice prior to the occurrence
of any event giving rise to a prepayment obligation under this clause (i); (ii)
immediately upon the incurrence by the Company or any of its subsidiaries of any
Indebtedness or the issuance or sale by the Company or any of its subsidiaries
of any capital stock (other than upon exercise of the Company's Class C
Warrants, Class D Warrants or Class E Warrants or other warrants or options
outstanding as of the date hereof, or upon the issuance of common stock, par
value $.01 per share, of the Company (the "Common Stock"), warrants, options or
other securities convertible into Common Stock issued or granted in exchange
for, or related to the Company obtaining, access rights to provide
telecommunications and related services (including video, voice and data
services) to any properties and permitted to be issued under the Securities
Purchase Agreement (as hereinafter defined)), the Company shall prepay the
unpaid principal balance of this Note together with all

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unpaid interest accrued thereon in an amount equal to 100% of the Net Cash
Proceeds received by the Company or any of its subsidiaries in connection
therewith; provided, that the Company shall in any event give the Holder thirty
(30) business days written notice prior to the occurrence of any event giving
rise to a prepayment obligation under this clause (ii); provided, further, that
any amount of unpaid principal balance together with unpaid interest which is
not prepaid by the Company pursuant to clause (i) and/or (ii) shall remain an
obligation of the Company on such terms and conditions set forth herein.

         "Disposition" for purposes hereof shall mean any transaction, or series
of transactions, pursuant to which the Company or any of its subsidiaries either
(i) sells, assigns, transfers or otherwise disposes of any property or assets
(whether now owned or hereafter acquired) to any other Person, in each case
whether or not the consideration therefor consists of cash, securities or other
assets owned by the acquiring Person, excluding any sales of inventory in the
ordinary course of business on customary business terms or (ii) issues any
capital stock of the Company or such subsidiary including issuance of warrants,
options or convertible securities convertible into capital stock.

         "Unrestricted Subsidiary" for the purposes hereof shall mean any
subsidiary of the Company other than OT, CMA, CA, MA, PC, BMS or IC.

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

         "Market Price" for the purposes hereof shall mean (i) the average
closing bid price for the twenty (20) consecutive trading days prior to the
measuring date, of the Common Stock as reported by the National Association of
Securities Dealers, Inc. Automatic Quotation System or (ii) the average last
reported sale price, for the twenty (20) consecutive trading days prior to the
measuring date, on the primary exchange on which the Common Stock is traded, if
the Common Stock is traded on a national securities exchange.

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

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indirectly) from time to time (whether as initial consideration or through the
payment of deferred consideration) by or on behalf of the Company or any of its
subsidiaries in connection therewith after deducting therefrom only reasonable
brokerage commissions, underwriting fees and discounts, legal fees and similar
fees and commissions.

         1A. Use of Proceeds. The Company shall use the principal received
pursuant to this Note for working capital and general corporate purposes
including lending funds to its wholly-owned subsidiary OnTera, Inc., formerly
known as DualStar Communications Inc. ("OT") to finance the development of its
telecommunications business.

         2. Event of Default/Remedies.

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

              (i) (A) any failure to pay when due (whether at stated maturity,
         by reason of acceleration of the maturity hereof, in connection with a
         mandatory redemption pursuant to Section 6(b), or otherwise) any
         principal hereof or any interest hereon or fail to make the Change of
         Control Offer specified in Section 6(b); (B) any material breach by
         the Company of any of its other obligations or covenants under this
         Note, the Guaranties, the Security Agreements or the Pledge and
         Security Agreements (as such terms are hereinafter defined), provided
         that such breach is not cured by the Company within ten (10) days from
         the date of receipt of any notice from Holder of such breach; or (C)
         any material breach by OT, Centrifugal/Mechanical Associates, Inc.
         ("CMA"), Centrifugal Associates, Inc. ("CA"), Mechanical Associates,
         Inc. ("MA"), ParaComm, Inc. ("PC"), BMS Electric, Inc. ("BMS") or
         Integrated Controls Enterprises, Inc. ("IC") of its obligations or
         covenants under their respective guaranties (the "Guaranties") of this
         Note, the Security Agreements (as herein defined), or the Pledge and
         Security Agreements (as herein defined); or

              (ii) the Company or any subsidiary (other than an Unrestricted
         Subsidiary) thereof (A) becomes insolvent or admits in writing its
         inability to pay its debts as they mature, (B) makes any assignment
         for the benefit of creditors, or (C) applies for or consents to the
         appointment of a receiver or trustee for the Company or such
         subsidiary or for a substantial part of the Company's or such
         subsidiary's property or business, or a receiver or trustee otherwise
         is appointed and is not discharged within 45 days after such
         appointment (for purposes of this subsection, the Company or such
         subsidiary shall be deemed "insolvent" if, as of the Company's or such
         subsidiary's most recent balance sheet, the sum of its debts exceed
         the sum of its assets, at a fair valuation, or it is unable to pay its
         debts as they come due); or

              (iii) any bankruptcy, insolvency, reorganization or liquidation
         proceeding or other proceeding for relief under any bankruptcy law or
         any law for the relief of debtors is instituted by or against the
         Company or any

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         subsidiary (other than an Unrestricted Subsidiary), and if against the
         Company or any subsidiary (other than an Unrestricted Subsidiary) such
         proceeding is not vacated within 45 days; or

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

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

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

              (vii) the Company shall fail to comply with the provisions of
         Section 1A hereof;

              (viii) the Company shall fail to perform in a timely manner, in
         any material respect, its obligations (or disclaim any obligations)
         pursuant to that certain Securities Purchase Agreement dated November
         8, 2000 (as the same may be amended from time to time, the "Securities
         Purchase Agreement") by and among the Company, the Holder and DSTR
         Warrant Co., LLC ("DSTRW") or the Class E Warrant Agreement dated
         November 8, 2000 (as the same may be amended from time to time, the
         "Warrant Agreement") by and between the Company and DSTRW; or

              (ix) an event, development or circumstance resulting in a Company
         Material Adverse Effect (as defined in the Securities Purchase
         Agreement) shall have occurred.

            b. Remedies. Upon the occurrence and during the continuance of an
     Event of Default described in subsections 2(a)(i)(A), 2(a)(ii), 2(a)(iii),
     2(a)(x), or 2(a)(xi) above, all indebtedness under this Note shall
     automatically be immediately due and

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     payable. Upon the occurrence and during the continuance of any other Event
     of Default, Holder at its option and, unless otherwise specified below,
     upon no less than five (5) business days' written notice to the Company (or
     such other notice as is required by law), may do any one or more of the
     following:

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

              (ii) exercise any or all rights provided or permitted by law or
         granted pursuant to this Note, the Securities Purchase Agreement, the
         Guaranties or that certain Pledge Agreement, dated November 30, 1999,
         by and between the Company and Holder relating to all of the common
         stock of CA, MA ,PC, IC and High-Rise, the Pledge and Security
         Agreements, dated as of November 30, 1999, by and between CA and MA
         and the Holder relating to all of the common stock of CMA, and the
         Pledge and Security Agreement, dated as of November 8, 2000 by and
         between IC and the Holder relating to all of the common stock of BMS
         (collectively, the "Pledge and Security Agreements") and those certain
         Security Agreements, dated as of November 30, 1999, by and between CMA
         and the Holder and dated November 8, 2000 by and between OT, PC, BMS,
         IC and the Holder (collectively, the "Security Agreements"), in such
         order and in such manner as Holder may, in its sole judgment,
         determine.

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

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

         5. Notices. Any notice required by the provisions of this Note shall be
in writing and shall be deemed effectively given: (i) upon personal delivery to
the party to be notified, (ii) when sent by confirmed telex or facsimile, (iii)
five (5) days after having been sent by registered or certified mail, return
receipt requested, postage prepaid, or (iv) two (2) days after deposit with a
nationally recognized overnight courier, with written verification of receipt.
All

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notices shall be addressed to Holder at 450 Park Avenue, 28th Floor, New York,
New York 10022, Attention: Mark A. Neporent or at such subsequent address as
Holder shall provide to the Company in writing. Any notice to the Company shall
be addressed to the Company at One Park Avenue, New York, New York 10016 or at
such subsequent address as the Company shall provide to the Holder in writing.

         6. Covenants.

            a. Certain Restrictions. So long as the principal balance of the
     Note remains outstanding, without the consent of the Holder, the Company
     agrees as follows (together with the covenants and agreements of the
     Company contained in Article V of the Securities Purchase Agreement, the
     "Covenants"):

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

              (ii) The Company and its subsidiaries shall not engage in any
         Disposition unless the terms thereof are approved by the Holder, and
         the Net Cash Proceeds thereof are applied to the prepayment of the Note
         or otherwise applied in accordance with Section 1 of this Note.

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

            b. Mandatory Redemption. In connection with any Change of Control
     (as defined below), the Company shall, in accordance with the procedures
     set forth in this Section 6(b), offer to repurchase all or any portion of
     the Note designated by the Holder pursuant to the offer described below
     (the "Change of Control Offer") at an offer price in cash equal to 101% of
     the outstanding principal amount to be so repurchased plus accrued and
     unpaid interest thereon through the Change of Control Payment Date (as
     defined below) (the "Change of Control Payment"). Not later than 30 days
     prior to any such Change of Control, the Company shall mail a notice (a
     "Change of Control Notice") to the Holder stating: (i) that a Change of
     Control is to occur and describing the terms thereof in reasonable detail,
     including the identity of the acquiring person(s) and its capitalization;
     (ii) that the Change of Control Offer is being made pursuant to this
     Section 6(b) and that the Note (or any portion thereof designated by the
     Holder) shall be accepted for payment and redemption; (iii) the Redemption
     Price and the redemption date, which should be no later than the date the
     Change of Control shall occur

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     (the "Change of Control Payment Date"); (iv) that, if not tendered, the
     Note (or untendered portion thereof) shall continue to accrue interest; (v)
     that, unless the Company defaults in the payment of the Change of Control
     Payment, the portion of the Note accepted for payment and redemption
     pursuant to the Change of Control Offer shall cease to accrue interest
     after the Change of Control Payment Date; (vi) that the Holder shall be
     required to surrender this Note pursuant to the Change of Control Offer to
     the Company by the close of business no later than the business day
     preceding the Change of Control Payment Date; (vii) that the Holder is
     entitled to withdraw its election to redeem the Note or any portion thereof
     if the Company receives, not later than the close of business on the
     business day immediately preceding the Change of Control Payment Date, a
     telegram, telex, facsimile transmission or letter, including a statement
     that such Holder is withdrawing its election to have the Note or any
     portion thereof redeemed; and (viii) that in the event of the Note being
     redeemed only in part, such Holder shall be issued a replacement Note in
     the aggregate amount of the unredeemed principal, and the accrued and
     unpaid interest thereon shall not be affected by consummation of the Change
     of Control Offer. The Company shall comply with the applicable securities
     laws and regulations thereunder to the extent such laws and regulations are
     applicable to the repurchase or exchange of shares in connection with
     Change of Control.

            On a Change of Control Payment Date, the Company shall accept for
     payment the Note, to the extent properly tendered pursuant to the Change of
     Control Offer, and promptly pay to the tendering Holder (by wire transfer,
     in accordance with the Holder's instructions, if so requested, and
     otherwise by certified or official bank check) the Change of Control
     Payment. The Corporation shall promptly deliver to the tendering Holder a
     replacement Note in the aggregate amount of the unredeemed principal, and
     the accrued and unpaid interest thereon shall not be affected by
     consummation of the Change of Control Offer.

            c. "Change of Control" means the occurrence of any of the following:

              (i) the acquisition, directly or indirectly, by any person or
         entity (a "Person") or group (within the meaning of Section 13(d)(3)
         of the Exchange Act), other than the Holder and its affiliates (the
         "Permitted Holder Group"), of beneficial ownership of more than 20% of
         the aggregate outstanding voting power of any and all shares,
         interests, participations or other equivalents (however designated and
         whether or not voting) of stock or other equity interests issued by
         the Company (the "Capital Stock");

              (ii) (A) during any period of two years, individuals who at the
         beginning of such period constituted the Board of Directors of the
         Company (together with any new directors whose election by such Board
         of Directors, or whose nomination for election by the shareholders of
         the Company, was approved by a vote of at least 75% of the directors
         of the Company then still in office who were either directors at the
         beginning of such period, or whose election or nomination for election
         was previously so approved) cease for any reason to constitute at
         least two-thirds of the members of the Board of Directors of the

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         Company then in office; or (B) the nominees to the Board of Directors
         of the Company who are designated by the Holder in accordance with the
         Securities Purchase Agreement shall not be elected to the Board of
         Directors at any stockholders' meeting called and convened for such
         purpose;

              (iii) (A) the Company consolidates with or merges into another
         entity or (B) any entity consolidates with or merges into the Company,
         and such transaction is one in which the outstanding voting Capital
         Stock of the Company is reclassified or changed into or exchanged for
         cash, securities or other property, other than any such transaction in
         which (x) the stockholders of the Company immediately prior to such
         transaction retain beneficial ownership of at least 51% of the
         aggregate outstanding voting power of the capital stock of the
         resulting or surviving entity, and (y) no Person or group (other than
         the Permitted Holder Group) obtains beneficial ownership of more than
         20% of the aggregate outstanding voting power of the capital stock of
         the resulting or surviving entity;

              (iv) the Company or any of its subsidiaries, in any one
         transaction or series of related transactions, conveys, transfers or
         leases all or substantially all of its consolidated property and
         assets to any Person or group (within the meaning of Section 13(d)(3)
         of the Exchange Act), other than a sale of certain subsidiaries of the
         Company to M/E Contracting Corp. pursuant to that certain Stock
         Purchase Agreement, dated as of March 28, 2000, between the Company
         and M/E Contracting Corp.; or

              (v) the adoption of a plan relating to the liquidation or
         dissolution of the Company.

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

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

         9. Second Amendment and Restatement. This Note amends and restates in
its entirety (and is given in substitution for but not in satisfaction of) the
Amended and Restated Promissory Note dated as of March 1, 2000 executed by the
Company in favor of the Holder in the original principal amount of $7,000,000,
as amended to date.

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

DUALSTAR TECHNOLOGIES CORPORATION

By:
    ---------------------------

Its:
     --------------------------

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                        DUALSTAR TECHNOLOGIES CORPORATION

                          REGISTRATION RIGHTS AGREEMENT
                          -----------------------------

                                                     November 8, 2000

DSTR Warrant Co., LLC
450 Park Avenue, 28th Floor
New York, New York 10022

Technology Investors Group, L.L.C.
25 Coligni Avenue
New Rochelle, New York  10801

Gentlemen:

         DualStar Technologies Corporation, a Delaware corporation (the
"Company"), proposes to issue and sell to Madeleine, L.L.C. ("Madeleine"), and
Madeleine proposes to purchase and accept from the Company, upon the terms set
forth in the Securities Purchase Agreement of even date herewith (the "Purchase
Agreement"), an amended and restated promissory note (the "Note") in an
aggregate principal amount of up to $20,000,000 (subject to the satisfaction of
the terms and conditions set forth in the Purchase Agreement), and in connection
therewith, Madeleine's affiliate DSTR Warrant Co., LLC (the "Investor") will
receive certain Class E Warrants of the Company (the "Warrants") which are
exercisable for shares of Common Stock, par value $.01 per share (the "Warrant
Shares"), at the option of the Investor at any time following the date of
original issuance of the Warrants at the exercise price set forth in the
Warrants, as adjusted from time to time pursuant to the terms and conditions of
the Warrants. In addition, it is contemplated that, pursuant to a Strategic
Alliance Agreement or otherwise, the Investor and/or its affiliates may receive
additional shares of Common Stock, par value $.01 per share (or warrants or
other rights exercisable for or convertible into additional shares of such
Common Stock) in exchange for granting certain access rights to the Company or
its affiliates (the "Access Rights Shares" and, together with the Warrants and
the Warrant Shares, the "Securities"). In addition, Technology Investor Group,
Inc. ("TIG") holds certain shares of Common Stock of the Company and may also
acquire Warrant Shares from the Company (collectively, "TIG Shares"). As an
inducement to the Investor and TIG to consummate the transactions contemplated
by the Securities Purchase Agreement, the Company agrees with the Investor and
TIG, as follows:

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         1. Resale Shelf Registration. (a) The Company shall, at its cost, use
its reasonable best efforts to file as promptly as is reasonably practicable
after the Company meets the prerequisites to utilize a Form S-3 under the
Securities Act of 1933, as amended (the "Act"), with the Securities and Exchange
Commission (the "Commission") and thereafter shall use its reasonable best
efforts to cause to be declared effective a registration statement (the "Resale
Shelf Registration Statement") on a Form S-3 relating to the offer and sale of
the Transfer Restricted Securities (as defined in Section 9) by the Investor or
its transferees (or in the case of Access Rights Shares, its affiliates) or TIG
from time to time in accordance with the methods of distribution set forth in
the Resale Shelf Registration Statement and Rule 415 under the Act (hereinafter,
the "Resale Shelf Registration").

         (b) The Company shall use its reasonable best efforts to keep the
Resale Shelf Registration Statement continuously effective in order to permit
the prospectus included therein to be lawfully delivered by the Investor or its
transferees (or, in the case of Access Rights Shares, its affiliates) or TIG for
a period of two years from the date of its effectiveness or such shorter period
that will terminate when all the Warrant Shares, Access Rights Shares and TIG
Shares covered by the Resale Shelf Registration Statement (i) have been sold
pursuant thereto or (ii) are no longer Transfer Restricted Securities (in any
such case, such period being called the "Shelf Registration Period"). The
Company shall be deemed not to have used its reasonable best efforts to keep the
Resale Shelf Registration Statement effective during the requisite period if it
voluntarily takes any action (except in connection with a Blackout Period) that
would result in the Investor or its transferees (or, in the case of Access
Rights Shares, its affiliates) or TIG holding Warrant Shares, Access Rights
Shares or TIG Shares covered thereby not being able to offer and sell such
shares during that period, unless such action is required by applicable law.

         (c) Notwithstanding any other provisions of this Agreement to the
contrary, the Company shall cause the Resale Shelf Registration Statement and
the related prospectus and any amendment or supplement thereto, as of the
effective date of the Resale Shelf Registration Statement, amendment or
supplement, (i) to comply in all material respects with the applicable
requirements of the Act and the rules and regulations of the Commission and (ii)
not to contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.

         (d) Each of the Investor and TIG agrees that if it wishes to sell its
Warrant Shares, or to permit a transferee or affiliate to sell its Warrant
Shares or its Access Rights Shares (as the case may be), pursuant to a Resale
Shelf Registration Statement and related prospectus, such sales will be made in
accordance with this Section 1(d). The person wishing to sell Warrant Shares or
Access Rights Shares or TIG Shares pursuant to a Resale Shelf Registration
Statement and related prospectus agrees to complete and return a customary
Notice and Questionnaire in such reasonable form as may be delivered by the
Company to the Investor or TIG prior to any intended distribution of Warrant
Shares, Access Rights Shares or TIG Shares under the Resale

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Shelf Registration Statement. From and after the date the Resale Shelf
Registration Statement is declared effective, the Company shall, as promptly as
is reasonably practicable after the date a Notice and Questionnaire is returned
by a selling person, and in any event within fifteen (15) business days after
such date, (i) if required by applicable law, file with the Commission a
post-effective amendment to the Shelf Registration Statement or prepare and, if
required by applicable law, file a supplement to the related prospectus or a
supplement or amendment to any document incorporated therein by reference or
file any other required document so that the person delivering such Notice and
Questionnaire is named as a selling securityholder in the Resale Shelf
Registration Statement and the related prospectus in such a manner as to permit
such person to deliver such prospectus to purchasers of the Warrant Shares,
Access Rights Shares or TIG Shares in accordance with applicable law and, if the
Company shall file a post-effective amendment to the Resale Shelf Registration
Statement, use commercially reasonable efforts to cause such post-effective
amendment to be declared effective under the Act as promptly as is practicable,
but in any event by the date that is sixty (60) days after the date such
post-effective amendment is required by this clause to be filed; (ii) provide
such selling person copies of any documents filed pursuant to Section 1(d)(i);
and (iii) notify the such selling person as promptly as is reasonably
practicable after the effectiveness under the Act of any post- effective
amendment filed pursuant to Section 1(d)(i); provided, that if such Notice and
Questionnaire is delivered during a period in which the use of the prospectus is
suspended pursuant to Section 3(e) or during a Blackout Period (as defined in
Section 9), the Company shall so inform the person delivering such Notice and
Questionnaire and shall take the actions set forth in clauses (i), (ii) and
(iii) above upon expiration of the suspension period or Blackout Period.
Notwithstanding anything contained herein to the contrary, the Company shall be
under no obligation to name any person if such person has not supplied the
requisite information required by Section 1(d) as a selling securityholder in
any Registration Statement or related prospectus; provided, however, that if
such person has subsequently supplied the requisite information required by this
Section 1(d) pursuant to the provisions of this Section (whether or not the
Investor or TIG has supplied the requisite information required by this Section
1(d) at the time the Resale Shelf Registration Statement was declared effective)
such person will be named as a selling securityholder in the Resale Shelf
Registration Statement or related prospectus in accordance with the requirements
of this Section 1(d).

         2. Demand and Piggyback Registration.

         (a) Subject to Section 2(b), the Investor may, at any time, make a
written request (the "Demand Notice") for registration under the Act (a "Demand
Registration") of Warrant Shares or Access Rights Shares (such securities are
sometimes herein referred to as "Demand Securities"), subject to Blackout
Periods of up to 90 days in any period of twelve consecutive months. The Demand
Notice will specify the number of Demand Securities proposed to be sold by the
Investor and will also specify the intended method or methods of disposition
thereof. Following receipt of a Demand Notice, the Company will, as promptly as
is reasonably practicable, file a registration statement, and the related
prospectus (the "Demand Registration Statement" and, together with the Shelf
Registration Statement, the "Registration Statement") on any appropriate

                                     - 3 -
<PAGE>

form which will cover the Demand Securities that the Company has been so
requested to register by the Investor and use its reasonable efforts to cause
such Registration Statement to become effective.

         (b) The Company will not be required to effect more than two such
Demand Registrations from the Investor. However, (i) the Investor may make an
unlimited number of Demand Registrations for offerings registered on Form S-3,
subject to Blackout Periods of up to 90 days in any period of twelve consecutive
months; and (ii) the Investor will have unlimited piggyback registration rights
in all (x) primary offerings of securities, and (y) secondary offerings of
securities; provided, however, that in each primary or secondary offering,
underwriting cutbacks shall be borne ratably by all stockholders requesting
piggyback registration, in proportion to the respective amounts each has
requested to register. The Company will not grant to future investors
registration rights that are superior to or limit the Investor's registration
rights granted herein.

         A registration requested pursuant to this Section 2(b) will not be
deemed to have been effected (and it will not count as one of the Demand
Registrations) unless the Demand Registration Statement relating thereto has
become effective under the Act and the Investor (together with its transferees
or affiliates, as applicable) has been offered the reasonable opportunity to
sell its Demand Securities under the Demand Registration Statement; provided,
however, that if, after such Demand Registration Statement has become effective,
the offering of the Demand Securities pursuant to such registration is
interfered with by any stop order, injunction or other order or requirement of
the Commission or other governmental agency or court, such registration will be
deemed not to have been effected.

         (c) If the offering of Demand Securities pursuant to such registration
will be in the form of an underwritten offering, and if the managing underwriter
or underwriters of such offering advise the Company and the Investor that in
their view the number of Demand Securities requested to be included in such
offering may materially and adversely affect the success of such offering, the
Company will include in such registration the aggregate number of Demand
Securities which in the view of such managing underwriter or underwriters can be
sold without any such material adverse effect. If any Demand Securities are
required to be excluded pursuant to this Section 2, the number of Demand
Securities to be included in such registration will be reduced to the extent
necessary to reduce the total number of Demand Securities to be included in the
offering to the number recommended by such managing underwriter or underwriters.

         3. Registration Procedures. With respect to a Resale Shelf Registration
or to a Demand Registration, as applicable, the Company will, subject to
Sections 1 and 2, as promptly as is reasonably practicable:

         (a) prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement as may be necessary to
keep the Registration Statement effective for the period described in Section
1(b) for Resale Shelf Registration or for Demand Registration for a period of
not less than 160 days (or such shorter period which will terminate when all
Demand Securities covered by a Demand

                                     - 4 -
<PAGE>

Registration Statement have been sold or withdrawn, but not prior to the
expiration of the forty-day period referred to in Section 4(3) of the Act and
Rule 174 thereunder, if applicable); cause the prospectus to be supplemented by
any required prospectus supplement; and cause such supplement to be filed
pursuant to the Act and any regulations promulgated thereunder;

         (b) furnish to the Investor, TIG and the underwriter or underwriters,
if any, without charge, at least one copy of the Registration Statement and any
post-effective amendment thereto, upon request, and such number of conformed
copies thereof and such number of copies of the prospectus (including the
preliminary prospectus) and any amendments or supplements thereto, and any
document incorporated by reference therein, as the Investor, TIG or underwriter
may reasonably request in order to facilitate the disposition of the Warrant
Shares, Access Rights Shares and/or TIG Shares being sold thereunder (it being
understood that the Company consents to the use of the prospectus and any
amendment or supplement thereto by the Investor covered by the Registration
Statement and the underwriter or underwriters, if any, in connection with the
offering and sale of the Warrant Shares, Access Rights Shares and/or TIG Shares,
covered by the prospectus or any amendment or supplement thereto);

         (c) notify the Investor (and its transferees or affiliates, to the
extent they have included shares in a Registration Statement), and TIG, at any
time when a prospectus relating thereto is required to be delivered under the
Act, when the Company becomes aware of the happening of any event as a result of
which the prospectus included in such Registration Statement (as then in effect)
contains any untrue statement of a material fact or omits to state a material
fact necessary to be stated therein in order to make the statements, in light of
the circumstances under which they were made, not misleading and, as promptly as
is reasonably practicable thereafter, prepare and file with the Commission and
furnish a supplement or amendment to such prospectus so that, as thereafter
delivered to the purchasers of such Warrant Shares, Access Rights Shares and/or
TIG Shares, such prospectus will not contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements,
in light of the circumstances under which they were made, not misleading;

         (d) make generally available to its security holders an earnings
statement satisfying the provisions of Section 11(a) of the Act and the
regulations promulgated thereunder after the end of the twelve-month period
beginning with the first month of the Company's first fiscal quarter commencing
after the effective date of the Registration Statement, which statement shall
cover said twelve-month period; and

         (e) use commercially reasonable efforts to obtain the withdrawal of any
order suspending the effectiveness of the Registration Statement.

         (f) The Investor and TIG, upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 3(c), will
forthwith discontinue (and, if applicable, cause its transferees or affiliates
to discontinue) disposition of the Warrant Shares, Access Rights Shares and/or
TIG Shares until its receipt of the copies of the supplemented or amended
prospectus contemplated by

                                     - 5 -
<PAGE>

Section 3(c) or until it is advised in writing (the "Advice") by the Company
that the use of the prospectus may be resumed, and has received copies of any
additional or supplemental filings which are included or incorporated by
reference in the prospectus, and, if so directed by the Company, such holder
will, or will request the managing underwriter or underwriters, if any, to
deliver to the Company (at the Company's expense) all copies, other than
permanent file copies then in such holder's possession, of the prospectus
covering such Warrant Shares, Access Rights Shares and/or TIG Shares current at
the time of receipt of such notice. In the event the Company shall give any such
notice, the time periods mentioned in Section 3(a) shall be extended by the
number of days during the period from and including the date of the giving of
such notice to and including the date when the Investor shall have received the
copies of the supplemented or amended prospectus contemplated by Section 3(c) or
the Advice.

         4. Restrictions on Sale. The Investor and TIG, if requested by the
managing underwriter or underwriters of any underwritten registration hereunder,
agrees not to effect any sale or distribution of the Note, the Warrants or the
Warrant Shares under the Act during the five (5) business days prior to and
during the 90 day period beginning on the effective date of such registration
(except as part of such registration); provided, that the foregoing restrictions
shall apply only if all executive officers, directors and beneficial owners of
more than 5% of the Common Stock outstanding (on a fully-diluted basis) shall
agree to equivalent or more onerous restrictions; provided, further, that the
managing underwriters shall agree not to waive such restrictions in favor of any
other holder of Common Stock without giving the Investor (and its transferees,
it applicable) the opportunity to have such restrictions waived in respect of a
proportionate amount of its (or their) Warrant Shares.

         5. Registration Expenses. The Company will bear all of the costs and
expenses of each registration hereunder, including the fees and expenses of
counsel and accountants for the Company, and all other costs and expenses of the
Company incident to the preparation, printing and filing under the Act of the
Registration Statement (and all amendments and supplements thereto) and
furnishing copies thereof and of the prospectus included therein, the costs and
expenses incurred by the Company in connection with the qualification of the
Warrant Shares or Access Rights Shares under the state securities or "blue-sky"
laws of various jurisdictions and the fees and expenses of a single counsel for
the holders of the Warrant Shares or Access Rights Shares; provided, that the
Company will not bear costs and expenses of any holders of Securities for
underwriters' commissions, brokerage fees, transfer taxes, transaction fees, or
the fees and expenses of accountants or other representatives retained by any
holder.

         6. Indemnification.

         (a) Indemnification by the Company. The Company agrees to indemnify and
hold harmless the Investor and any affiliate or transferee thereof holding the
Warrant Shares or Access Rights Shares, TIG, their respective officers and
directors and each person who controls any of them within the meaning of either
the Act or the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
against all losses, claims, damages, liabilities and expenses caused by any
untrue or alleged untrue

                                     - 6 -
<PAGE>

statement of a material fact contained in any Registration Statement, prospectus
or preliminary prospectus or any omission or alleged omission to state a
material fact in order to make the statements (in the case of the prospectus or
any preliminary prospectus, in light of the circumstances under which they were
made) not misleading, except insofar as the same are caused by or contained in
any information with respect to the Investor or TIG, as the case may be,
furnished in writing to the Company by or on behalf of the Investor or TIG, as
the case may be, for use therein or by the Investor's or TIG's failure to
deliver a copy of the Registration Statement or prospectus or any amendments or
supplements thereto after the Company has furnished the Investor with a
sufficient number of copies of the same.

         (b) Indemnification by the Investor and TIG. In connection with any
Registration Statement in which the Investor or TIG is participating, the
Investor or TIG, as the case may be, will furnish to the Company in writing such
information with respect to the Investor or TIG, as the case may be, as the
Company reasonably requests for use in connection with any Registration
Statement or prospectus and agrees to indemnify, to the full extent permitted by
law, the Company, its directors and officers and each person who controls the
Company (within the meaning of either the Act or the Exchange Act) against any
losses, claims, damages, liabilities and expenses caused by any untrue or
alleged untrue statement of a material fact or any omission or alleged omission
to state a material fact in order to make the statements in the Registration
Statement or prospectus or preliminary prospectus (in the case of the prospectus
or any preliminary prospectus, in light of the circumstances under which they
were made) not misleading, to the extent that such untrue statement or omission
is contained in any information or affidavit with respect to the Investor or TIG
so furnished in writing by or on behalf of such person for inclusion in any
prospectus or Registration Statement. The Company will be entitled to receive
indemnification in customary form from underwriters, selling brokers, dealer
managers and similar securities industry professionals participating in the
distribution, to the same extent as provided above with respect to information
with respect to such persons so furnished in writing by such persons
specifically for inclusion in any prospectus or Registration Statement.

         (c) Conduct of Indemnification Proceedings. Promptly after receipt by
an indemnified party under this Section 6 of notice of the commencement of any
action or proceeding (including a governmental investigation), such indemnified
party will, if a claim in respect thereof is to be made against the indemnifying
party under this Section 6, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not, in any
event, relieve the indemnifying party from any obligations to any indemnified
party except if and to the extent that such failure materially prejudiced the
indemnifying party. In case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the extent
that it may wish, jointly with any other indemnifying party similarly notified,
to assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party (who shall not, except with the consent of the indemnified
party, be counsel to the indemnified party), and after notice from the
indemnifying party to such

                                     - 7 -
<PAGE>

indemnified party of its election so to assume the defense thereof the
indemnifying party will not be liable to such indemnified party under this
Section 6 for any legal or other expenses, other than reasonable costs of
investigation, subsequently incurred by such indemnified party in connection
with the defense thereof. No indemnifying party will, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party unless such settlement includes an unconditional release of such
indemnified party from all liability on any claims that are the subject matter
of such action. An indemnifying party will not be liable for any settlement of
any action or claim effected without its written consent; provided, however,
that such consent will not be unreasonably withheld.

         (d) Contribution. If for any reason the indemnification provided for in
Sections 6(a) and 6(b), respectively, is unavailable to an indemnified party,
then the indemnifying party will contribute to the amount paid or payable by the
indemnified party as a result of such loss, claim, damage or liability in such
proportion as is appropriate to reflect the relative fault of the indemnified
party and the indemnifying party, as well as any other relevant equitable
consideration. The relative fault of such indemnifying party and indemnified
parties will be determined by reference to, among other things, whether any
action in question, including any untrue and alleged untrue statement of a
material fact or omission or alleged omission to state a material fact, has been
made by, or relates to information supplied by, such indemnifying party or
indemnified parties, and the parties relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the losses, claims, damages, liabilities
and expenses referred to above will be deemed to include, subject to the
limitations set forth in Section 6(c), any legal or other fees or expenses
reasonably incurred by such party in connection with any investigation or
proceeding.

         The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6(d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
No person guilty of fraudulent misrepresentation (within the meaning of the Act)
will be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.

         7. Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers of or consents to departures from the provisions hereof may not be
given without the written agreement thereto by the parties hereto.

         8. Termination. This Agreement will continue in full force and effect
until there are no Transfer Restricted Securities outstanding.

                                     - 8 -
<PAGE>

         9. Miscellaneous.

         (a) Certain Definitions.

         "Blackout Period" means a period of time in which the Company is in
possession of material non-public information which, in its exercise of
reasonable judgment, the Company deems advisable not to disclose publicly;
provided, however, that any such Blackout Periods shall not exceed in the
aggregate 90 days in any consecutive 360 day period.

         "Transfer Restricted Securities" means each Conversion Share, Access
Rights Share or TIG Share until (i) the date on which such share has been
effectively registered under the Act and disposed of in accordance with a
Registration Statement or (ii) the date on which such share is distributed to
the public pursuant to Rule 144 under the Act or is sold pursuant to Rule 144(k)
under the Act.

         (b) Governing Law. The interpretation and construction of this
Agreement, and all matters relating hereto, shall be governed by the laws of the
State of New York.

         (c) Captions. The Section captions used herein are for reference
purposes only, and shall not in any way affect the meaning or interpretation of
this Agreement.

         (d) Publicity. None of the parties hereto will issue any press release
or make any other public statement, in each case relating to or connected with
or arising out of this Agreement or the matters contained herein, without
obtaining the prior approval of the other parties to the contents and the manner
of presentation and publication thereof, except such reports or other notices
that the party issuing or making same has been advised by counsel are required
pursuant to applicable law or regulation.

         (e) Notices. All notices and other communications provided for or
permitted hereunder will be made in writing by hand delivery, first-class mail,
facsimile transmission, or air courier which guarantees overnight delivery:

             (1)      if to the Company:

                      DualStar Technologies Corporation
                      One Park Avenue
                      New York, NY 10016
                      Fax No.:
                      Attention:

with a copy to:

                      Andrews & Kurth L.L.P.
                      805 Third Avenue, 7th Floor
                      New York, NY 10022

                                     - 9 -
<PAGE>

                      Fax No.:      (212) 850-2929
                      Attention:    Paul Silverstein

             (2)      if to the Investor:

                      DSTR Warrant Co., LLC
                      450 Park Avenue, 28th Floor
                      New York, New York  10022
                      Fax No.:      212-758-5305
                      Attention:    Mark Neporent

with a copy to:

                      Schulte Roth & Zabel LLP
                      900 Third Avenue
                      New York, New York  10022
                      Fax No.:      212-593-5955
                      Attention:    Stuart D. Freedman, Esq.

             (3)      if to TIG:

                      Technology Investors Group, L.L.C.
                      25 Coligni Avenue
                      New Rochelle, New York  10801
                      Fax No.:      914-235-8849
                      Attention:    [NAME]

with a copy to:

                      [NAME]

         All such notices and communications will be deemed to have been duly
given: at the time delivered by hand, if personally delivered; three business
days after being deposited in the mail, postage prepaid, if mailed; when receipt
is acknowledged by recipient's facsimile machine operator, if sent by facsimile
transmission; and on the day delivered, if sent by overnight air courier
guaranteeing next day delivery.

         (f) Parties in Interest. This Agreement will not be assignable or
transferable by any of the parties hereto, except that the rights of the
Investor hereunder may be transferred to any person in connection with the sale,
assignment or other transfer of any of its Securities in a private transaction.

         (g) Counterparts. This Agreement may be executed in two or more
counterparts, all of which taken together will constitute one instrument.

         (h) Entire Agreement. This Agreement, including the other documents
referred to herein which form a part hereof, contains the entire understanding
of the parties hereto with respect to the subject matter contained herein and
therein. This

                                     - 10 -
<PAGE>

Agreement supersedes all prior agreements and understandings between the parties
with respect to such subject matter.

                                     - 11 -
<PAGE>

         IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its officer thereunto duly authorized as of the day
and year first above written.

                                           DUALSTAR TECHNOLOGIES CORPORATION

                                           By:
                                               --------------------------------
                                               Name:
                                               Title:

                                           DSTR WARRANT CO., LLC

                                           By:
                                               --------------------------------
                                               Name:
                                               Title:

                                           TECHONOLOGY INVESTOR GROUP, INC.

                                           By:
                                               --------------------------------
                                               Name:
                                               Title:

                                     - 12 -

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