DEBT CONVERSION
AGREEMENT
  THIS DEBT CONVERSION AGREEMENT
(this “Agreement”)
is made and entered into as of  November 4, 2009, by and between
Locateplus Holdings Corporation, a Delaware corporation (the “Company”),
100 Cummings Center, No. 235M, Beverly, MA 01915 and Dutchess Private Equities
Fund Ltd., a Cayman Islands exempted company (“Dutchess”),
50 Commonwealth Avenue, Suite 2, Boston, MA 02116.
  RECITALS
 
 WHEREAS,
approximately $1,817,828 in principal and accrued interest is currently owed to
Dutchess by the Company and is outstanding on the books and records of the
Company, which amount is comprised of: (i) that Convertible Debenture between
Dutchess and the Company dated December 30, 2005 and (ii) that Convertible
Debenture between Dutchess and the Company dated March 16, 2007 issued to
Dutchess by the Company (the “Debentures”),
true copies of which are attached as Exhibit
A;
 
 WHERAS,
Dutchess holds a warrant to purchase up to 1,125,000 shares of the Company’s
Common Stock at an exercise price of $.10 per share (the “Warrant”)
a true copy of which is also attached as Exhibit
B;
 
 WHEREAS,
Dutchess desires to convert all amounts outstanding under the Debentures and
Warrant (collectively, the “Obligations” and each an “Obligation”)
into an aggregate of 72,000 shares of Series A Preferred Stock, Par Value $1.00
per share (“Preferred
Stock”), of the Company (the “Preferred
Shares”), and the Company desires to convert such Obligations into such
Preferred Shares.
 
 NOW,
THEREFORE, for and in consideration of the foregoing premises, the mutual
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto, intending to be legally bound, hereby agree as
follows:
 
 1.  Conversion
of the Obligations; Issuance of thePreferred
Shares.
 
 1.1  At the
Closing (as defined in Section 2 hereof) and
subject to the terms and conditions of this Agreement, Dutchess hereby agrees to
convert all of the Obligations into the Preferred Sharesat a conversion price of twenty-five dollars ($25.00) per share, and the
Company hereby agrees to issue an aggregate of seventy-two thousand (72,000)
Preferred
Shares to Dutchess.  By converting the Obligations into the
Preferred
Shares, Dutchess acknowledges and agrees that the Obligations will be
cancelled and terminated in all respects and for all purposes and that Dutchess
will be deemed to have released all claims held by Dutchess with respect to the
Obligations, including the payment of principal and interest thereon, and any
fees and other amounts payable with respect to the Obligations.
 
 1.2  For
purposes of calculating the holding periods for the Preferred
Shares, Dutchess shall tack back to the holding period(s) for the
specific Debenture(s) under which Dutchess became entitled to receive the Preferred
Shares pursuant to this Agreement.  The Company shall not adopt
a position inconsistent with the foregoing or contest such tacking for any
reason and shall cooperate with Dutchess in any efforts Dutchess may undertake
to assert such tacking in connection with the future sale of any Preferred
Shares.
  2.  Closing; Delivery of
Preferred Shares.
 
 2.1  Closing.  The
closing of the conversion of the Obligations and the issuance of the Preferred
Shares (the “Closing”) shall occur at 10:00 a.m.
local time on a date to be mutually agreed upon on or before December 31, 2009
(the “Closing
Date”) at the offices of the Company, or at such other location as shall
be agreed by the parties.
 
 2.2  Deliveries.  At the
Closing, the Company shall deliver to Dutchess (i) a stock certificate
representing the Preferred
Shares in the name of Dutchess; and (ii) and Stipulation of Dismissal
without Prejudice of the current case of LocatePLUS Holdings
Corporation v Dutchess Private Equities Fund,
Ltd.  in Suffolk Superior Court, Civil Action No. 09 - 1385A
and Dutchess shall deliver (i) instruments of cancellation of the Obligations,
(ii) an assignment to the Company of all shares of capital stock of the Company
or rights thereto owned by Dutchess or any of its affiliates and (iii) an
assignment of certain Debt pursuant to a Debt Purchase Agreement dated as of
November 4, 2009 between the parties.  .
 
 3.  Representations
and Warranties of Dutchess.Dutchess represents and
warrants to the Company as follows.
 
 3.1  Acquisition for Own Account for
Investment.  Dutchess is acquiring the Preferred
Shares for Dutchess’s own account for investment purposes only and not
with a view to, or for sale in connection with, a distribution of the Preferred
Shares within the meaning of the Securities Act of 1933, as amended (the
“1933
Act”).
 
 3.2  Understanding of
Risks.  Dutchess is aware of the highly speculative nature of
the investment in the Preferred
Shares and the financial hazards involved in such
investment.
 
 3.3  Dutchess’s
Qualifications.  By reason of Dutchess’s business or financial
experience, Dutchess is capable of evaluating the merits and risks of this
investment, has the ability to protect Dutchess’s own interests in this
transaction, and is financially capable of bearing a total loss of the
investment.
 
 3.4  No General Solicitation; Place of
Sale.  At no time was Dutchess presented with or solicited by
any publicly issued or circulated newspaper, mail, radio, television or other
form of general advertising or solicitation in connection with the offer, sale
and purchase of the Preferred
Shares.
 
 3.5  Compliance with Securities
Laws.  Dutchess understands and acknowledges that the Preferred
Shares are not being registered with the United States Securities and
Exchange Commission (the “Commission”)
under the 1933 Act, but instead are being sold under an exemption or exemptions
from the registration and qualification requirements of the 1933 Act or
applicable state securities laws that impose certain restrictions on Dutchess’s
ability to transfer the Preferred Shares.
 
 3.6  Restrictions on
Transfer.  Dutchess understands that Dutchess may not transfer
any Preferred
Shares unless such Preferred
Shares are registered under the 1933 Act or applicable state securities
laws, or unless exemptions from such registration and qualification requirements
are available.
 
 3.7  Representation by
Counsel.  Dutchess has been represented by its own counsel,
accountant and tax specialist in connection with the acquisition of the Preferred
Shares and entering into this Agreement and acknowledges that Dutchess is
not relying on any securities, tax, accounting or other advice from the Company
or its counsel or advisors.
  
 4.  Representations
and Warranties of the Company.The Company represents and
warrants to Dutchess as follows.
 
 4.1  Authority.  The
Company has the power and authority to enter into and perform its obligations
under this Agreement and to issue the Preferred Sharesto Dutchess.The
Company has been duly organized and is validly existing in good standing under
the laws of the jurisdiction of its organization as the type of entity that it
purports to be.  The execution and delivery of this Agreement by the
Company, and the consummation by the Company of the transactions contemplated
hereby, have been duly authorized by all necessary action and no other
proceeding on the part of the Company is necessary to authorize the execution,
delivery and performance of this Agreement and the transactions contemplated
hereby.
 
 4.2  Valid Issuance of Preferred
Shares.  The Preferred Shares, when issued and delivered in
accordance with the terms of this Agreement for the consideration expressed
herein, will be duly and validly issued, fully paid and non-assessable shares
of  Series A Preferred Stock. The Company’s obligation to issue such
Preferred
Shares and to close according to the terms and conditions of this
Agreement are contingent upon the Company’s having obtained all required
authorizations.
 
 4.3  Representation by
Counsel.  The Company has been represented by its own counsel,
accountant and tax specialist in connection with the issuance of thePreferred
Shares and entering into this Agreement and acknowledges that the Company
is not relying on any securities, tax, accounting or other advice from Dutchess
or its counsel or advisors.
 
 4.4  Consent.No consent, approval,
authorization or order of any court or governmental authority or third-party is
required in connection with the execution, delivery or performance of this
Agreement by the parties.
 
 5.  Covenants
of the Company.The Company
hereby covenants to Dutchess as follows:
 
 5.1  Within
ten (10) days of the execution of this Agreement the Company shall commence to
obtain the necessary authorizations to create and issue the Preferred
Shares and shall    file any and all necessary
paperwork with the Delaware Secretary of State and the Board of Directors shall
approve the execution of a Certificate of Designations, Preferences and Rights
of Series A Preferred Stock, Par Value $1.00 per share  (the “Certificate”)  substantially
in the form of Certificate attached as Exhibit C to this
Agreement.  which shall include, among other rights, privileges and
preferences, the following:
  a.           Dividends
shall be paid quarterly, in cash or in  Series A Preferred Stock, at
the option of the Corporation,, at the rate of  twenty five cents
($.25) per share..  Dividends shall be cumulative.
  b.           At
the option of the holder thereof, each share of Preferred Stock may be converted
into 41.66 shares of the Company’s common stock, par value $0.01 per share
(“Common
Stock”), as set forth in the Certificate.
  c.  The
Series A Preferred Stock shall be senior in rights, privileges and preferences
to all other series of preferred or common stock of the Company, including with
respect to dividend, distribution and liquidation rights, privileges and
preferences.
  5.2 The
Company shall purchase pro rata from all the holders of the Preferred
Shares, at the beginning of each calendar quarter, those amounts of Preferred
Shares at a price of $25 per share, all  as set forth
below:
  i.
              From
      the Closing through December 31 2010 – 600  Preferred
      Shares
  ii.
              From
      March 31, 2011 through December 31, 2011 – 1,000  Preferred
      Shares
  iii.
              From
      March 31, 2012 through December 31, 2012 – 1,400  Preferred
      Shares.
 
 The specified number
of Preferred Shareswhich the Company is obliged to purchase by any specified date shall be
reduced by the number of Preferred
Shares converted to Common Stock before such date and by the number of
Preferred
Shares purchased by the Company before such date pursuant to any Puts as
set forth below.
 
 5.3Each
holder of Preferred
Shares shall have the right, at its sole option, after November 1, 2009,
to request that the Company buy a specified number of shares of Preferred
Shares owned by such holder in exchange for payment by the Company of the
Put Consideration (as defined below).  In order to exercise this
right, the holder shall send the Company a  signed and dated notice in
writing setting forth the number of shares of Preferred
Shares that the holder intends to sell and a computation of the Put
Consideration.  The “Put
Consideration” is the product of the number of Preferred
Shares that the holder intends to sell multiplied by twenty-five dollars
($25.00) per Share (the “Put
Price”). The total Put Consideration payable by the Company during any
calendar quarter shall not exceed fifteen thousand dollars ($15,000) through the
last quarter of 2010, twenty five thousand dollars ($25,000) per quarter through
the last quarter of 2011 and thirty five thousand dollars ($35,000) thereafter.
The Company, in its sole discretion, may determine whether to agree to an
increase in the Put Consideration as described above.
 
 5.4While
the Preferred Sharesare outstanding, the Company shall authorize and reserve a sufficient
number of its previously authorized but unissued shares of Common Stock to
satisfy the rights of conversion and purchase of the holders of the Preferred
Shares, which amounts shall be determined by reference to the
Certificate.
 
 Acknowledgements.The parties hereby
acknowledge and agree that, as of the date hereof, the outstanding balances
under the Debentures, are as set forth on Exhibit D attached
hereto.
 
 6. Restrictive
Legend.
 
 6.1
Legend.  Dutchess understands and agrees that the Company may
place the legend set forth below or a similar legend on any stock certificates
evidencing the Preferred
Shares, or any Common Stock into which the Preferred
Shares are converted, together with any other legends that may be
required by state or federal securities laws or the Company’s Certificate of
Incorporation or Bylaws:
  THE SECURITIES
REPRESENTED THIS CERTIFICATE  HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF
CERTAIN STATES.  THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND
 MAY NOT BE
TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM..
 
 4
 7.Compliance
with Laws and Regulations.  The sale and transfer of the Preferred
Shares will be subject to and conditioned upon compliance by the Company
and Dutchess with all applicable state and federal laws and regulations and with
all applicable requirements of any stock exchange or automated quotation system
on which the Company’s Common Stock may be listed or quoted at the time of such
issuance or transfer.
 
 8.General
Provisions.
 
 8.1 Successors and
Assigns; Assignment.  Except as otherwise provided in this
Agreement, this Agreement, and the rights and obligations of the parties
hereunder, will be binding upon and inure to the benefit of their respective
successors, assigns, heirs, executors, administrators and legal
representatives.  This Agreement is not assignable without the prior
written consent of the parties hereto, except that Dutchess may assign this
Agreement to any affiliate upon notice to, and without the consent of the
Company.
 
 8.2 Governing
Law.  The validity, terms, performance and enforcement of this
Agreement shall be governed and construed by the provisions hereof and in
accordance with the laws of the Commonwealth of Massachusetts applicable to
agreements that are negotiated, executed, delivered and performed solely in the
Commonwealth of Massachusetts.
 
 8.3  Notices.  Any
and all notices required or permitted to be given to a party pursuant to the
provisions of this Agreement will be in writing and will be effective and deemed
to provide such party sufficient notice under this Agreement on the earliest of
the following: (i) at the time of personal delivery, if delivery is in person;
(ii) one (1) business day after deposit with an express overnight courier for
United States deliveries, or two (2) business days after such deposit for
deliveries outside of the United States, with proof of delivery from the courier
requested; or (iii) three (3) business days after deposit in the United States
mail by certified mail (return receipt requested) for United States
deliveries.  All notices for delivery outside the United States will
be sent by express courier.  All notices not delivered personally will
be sent with postage and/or other charges prepaid and properly addressed to the
party to be notified at the address first set forth above or at such other
address as such party may designate by one of the indicated means of notice
herein to the other party hereto.
 
 8.4 Further
Assurances.  The parties agree to execute such further
docu­ments and instruments and to take such further actions as may be
reasonably necessary to carry out the purposes and intent of this
Agreement.
 
 8.5 Titles and
Headings.  The titles, captions and headings of this Agreement
are included for ease of reference only and will be disregarded in interpreting
or construing this Agreement.
 
 8.6 Entire
Agreement.  This Agreement constitutes the entire agreement and
understanding of the parties with respect to the subject matter of this
Agreement, and supersedes all prior understandings and agreements, whether oral
or written, between or among the parties hereto with respect to the specific
subject matter hereof.
 
 8.7
Counterparts.  This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered will be deemed an
original, and all of which together shall constitute one and the same
agreement.
 
 8.8 Facsimile
Signatures.  This Agreement may be executed and delivered by
facsimile and upon such delivery the facsimile signature will be deemed to have
the same effect as if the original signature had been delivered to the other
party
 
 8.9 Amendment and
Waivers.  This Agreement may be amended only by a written
agreement executed by each of the parties hereto.  No amendment of or
waiver of, or modification of any obligation under this Agreement will be
enforceable unless set forth in a writing signed by the party against which
enforcement is sought.  Any amendment effected in accordance with this
section will be binding upon all parties hereto and each of their respective
successors and assigns.  No delay or failure to require performance of
any provision of this Agreement shall constitute a waiver of that provision as
to that or any other instance.  No waiver granted under this Agreement
as to any one provision herein shall constitute a subsequent waiver of such
provision or of any other provision herein, nor shall it constitute the waiver
of any per­formance other than the actual performance specifically
waived.
 
 8.10 Third-Party
Beneficiaries.  Nothing in this Agreement is intended to confer
upon any other person, whether or not named herein, and rights or remedies of
any nature whatsoever under or by reason of this Agreement.
 
 8.11 Disputes Under
the Agreement.All disputes arising under this
Agreement shall be governed by and interpreted in accordance with the laws of
the Commonwealth of Massachusetts, without regard to principles of conflict of
laws.  The parties to this Agreement shall submit all disputes arising
under this Agreement to arbitration in Boston, Massachusetts before a single
arbitrator pursuant to the commercial arbitration rules of the American
Arbitration Association (the “AAA”).  The arbitrator shall be
selected by application of the rules of the AAA, or by mutual agreement of the
parties, except that such arbitrator shall be an attorney admitted to practice
law in the Commonwealth of Massachusetts.  No party hereto will
challenge the jurisdiction or venue provisions as provided in this section. The
decisions of the arbitrator shall be final and binding on all parties, shall not
be subject to appeal and may be enforced by any party in a court of applicable
jurisdiction.Nothing in this section shall limit the
Holder's right to obtain an injunction for a breach of this
Agreement  from a court of law.Any injunction obtained shall remain in
full force and effect until the arbitrator, as set forth herein, fully
adjudicates the dispute.
  
  [Signature
      page follows]
  
 6
 
  IN WITNESS WHEREOF, the
Company and Dutchess have caused this Debt Conversion Agreement to be executed
and delivered as of the date first written above.
  
  DUTCHESS
      PRIVATE EQUITIES FUND, LTD.:By:___________________
                Name:  Douglas
      H. Leighton
                Title:    DirectorTHE
      COMPANY:LOCATEPLUS
      HOLDINGS CORPORATIONBy:
      ____________________
                Name:  Geoffrey
      Lee
                Its:        Interim
      Chief Executive Officer
 
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