Document:

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                         LocatePlus Holdings Corporation
                         -------------------------------
                              ____________________

 This offering consists of $1,500,000 of the Company's Fifteen Month Convertible
                         Debentures convertible into the
                             Company's Common Stock.

                              ____________________

                             SUBSCRIPTION AGREEMENT

                               ___________________

<PAGE>

SUBSCRIPTION  PROCEDURES

     Convertible  Debentures  of  LocatePlus Holdings Corporation(the "Company")
                                  -------------------------------
are  being offered (the "Debentures"). This offering is being made in accordance
with  the  exemptions  from  registration provided for under Section 4(2) of the
Securities Act of 1933, as amended (the "1933 Act") and Rule 506 of Regulation D
promulgated  under  the  1933  Act.

     In  order to purchase Debentures, each subscriber must complete and execute
a  questionnaire  (the  "Questionnaire")  and  a  subscription  agreement  (the
"Subscription  Agreement").  In  addition,  the  subscriber  must make a payment
pursuant to the Funds Authorization Distribution Agreement, for the amount being
purchased  or  directly  by  the  Holder.  All  subscriptions  are  subject  to
acceptance  by the Company, which shall not occur until the Company has returned
the  signed  Company  Signature  Page.

          The  Questionnaire is designed to enable the Holder to demonstrate the
minimum  legal  requirements under federal and state securities laws to purchase
the  Debentures.  The  Signature Page for the Questionnaire and the Subscription
Agreement  contain  representations  relating  to the subscription and should be
reviewed  carefully  by  each  subscriber.

     If  you  are  a  foreign  person or foreign entity, you may be subject to a
withholding  tax  equal  to  thirty  percent  (30%) of any dividends paid by the
Company.  In order to eliminate or reduce such withholding tax you must submit a
properly  executed I.R.S. Form 4224 (Exemption from Withholding of Tax on Income
Effectively  Connected  with  the  Conduct  of a Trade or Business in the United
States)  or I.R.S. Form 1001 (Ownership Exemption or Reduced Trade Certificate),
claiming  exemption  from  withholding or eligibility for treaty benefits in the
form  of  a  lower  rate  of  withholding  tax  on  interest  or  dividends.

     Payment  of  the  full subscription amount will be made by wire transfer by
Dutchess Private Equities Fund, II, LP (the "Holder") on or prior to the closing
per  the  wire  instructions  that  will  be  established.  In  the  event  of a
termination  of  the  offering  or the rejection of a subscription, subscription
funds  will  be  returned  by  the  Company  without  interest  or  charges.

THE  SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND ARE BEING OFFERED AND SOLD
IN  RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SUCH LAWS.  THE
SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT
BE  TRANSFERRED  OR  RESOLD  EXCEPT  AS  PERMITTED  UNDER  SUCH LAWS PURSUANT TO
REGISTRATION  OR  AN EXEMPTION THEREFROM.  THE SECURITIES HAVE NOT BEEN APPROVED
OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY OTHER REGULATORY
AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE
MERITS  OF  THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THE OFFERING MATERIALS.
ANY  REPRESENTATION  TO  THE  CONTRARY  IS  UNLAWFUL.

SUBSCRIPTION  AGREEMENT
-----------------------

To:     LocatePlus  Holdings  Corporation
        ---------------------------------

     This  Subscription  Agreement  is  made  between  LocatePlus  Holdings
                                                       --------------------
Corporation,  a  placeStateDelaware  corporation,  (the  "Company"),  and  the
           -
undersigned  prospective  Holder  ("Holder")  who  is subscribing hereby for the
Company's  convertible  debentures (the "Debentures") on December 29, 2005. This
subscription is submitted to you in accordance with and subject to the terms and
conditions  described in this Subscription Agreement, together with any Exhibits
thereto,  relating  to  an offering (the "Offering") of One Million Five Hundred
Thousand  dollars  ($1,500,000)  of  Debentures.  The  Offering  is  limited  to
accredited  Investors  and  is  made  in  accordance  with  the  exemptions from
registration  provided  for  under  Section 4(2) of the 1933 Act and Rule 506 of
Regulation  D  promulgated  under  the  1933  Act  ("Regulation  D").

     Whereas,  contemporaneously  with  the  execution  and  delivery  of  this
Agreement,  the  parties  hereto  are  executing  and  delivering  a  Debenture
Registration Rights Agreement, the Debenture Agreement, the Irrevocable Transfer
Agent  Agreement  between  the  Company  and  Dutchess  Capital Management, LLC,
Security  Agreement  and  Warrant  Agreement  (collectively,  the  "Transaction
Documents").

1.     SUBSCRIPTION.
       ------------

     (a)     The  closing  shall  be  deemed to have occurred on the date in the
preamble  of  this  document  (the  "Closing Date" or a "Closing").  The Company
shall  pay  twelve percent (12%) annual coupon on the unpaid principal amount of
this  Debenture  (the "Debenture") at such times and in such amounts as outlined
in  the  Debenture  Agreement.

     (b)     Upon  receipt  by  the  Company  of  the  requisite payment for the
Debentures being purchased, the Debentures so purchased will be forwarded by the
Company  to  the  Holder or its broker, as listed on the signature page, and the
name  of  such  Holder will be registered on the Debenture transfer books of the
Company  as  the  record  owner  of  such  Debentures.

     (c)     As long as the Holder owns the Debenture, the Holder shall have the
right  to  change  the  terms for the balance of the Debenture it then holds, to
match  the  terms  of  any  other  offering  of  securities made by the Company.

     (d)   The  Holders  shall  fund  one  million dollars ($1,500,000) upon the
closing.

2.     REPRESENTATIONS  AND  WARRANTIES  OF  THE  HOLDER.
       -------------------------------------------------
     The  Holder hereby represents and warrants to, and agrees with, the Company
as  follows:

     (a)     The  Holder  has  been  furnished  with, and has carefully read the
applicable  form  of  Debenture Registration Rights Agreement, and the Debenture
and  is familiar with and understands the terms of the Offering. With respect to
  -
tax  and other economic considerations involved in his investment, the Holder is
not  relying on the Company. The Holder has carefully considered and has, to the
extent  the Holder believes such discussion necessary, discussed with the Holder
's professional legal, tax, accounting and financial advisors the suitability of
an  investment  in  the Company, by purchasing the Debentures, for the Holder 's
particular  tax  and  financial situation and has determined that the investment
being  made  by  the  Holder  is  a  suitable  investment  for  the  Holder.

     (b)     The  Holder  acknowledges  that  all  documents, records, and books
pertaining  to  this  investment  which  the Holder has requested have been made
available  for  inspection  or  the  Holder  has  had  access  thereto.

     (c)     The Holder has had a reasonable opportunity to ask questions of and
receive  answers  from  a  person  or  persons  acting  on behalf of the Company
concerning  the  Offering  and  if  such  opportunity  was  taken  then all such
questions  have  been  answered  to  the  full  satisfaction  of  the  Holder.

     (d)     The Holder will not sell, or otherwise dispose of the Debentures or
the  Common  Stock issued upon conversion of the Debentures without registration
under  the  1933  Act  or applicable state securities laws or compliance with an
exemption  therefrom  including  but  not limited to: Rule 144A, 144 (k) (herein
after  referred  to as an "Exemption").  The Debentures have not been registered
under  the  1933  Act  or under the securities laws of any state. Resales of the
Common  Stock underlying the Debentures or issued in payment of accrued interest
on  the  Debentures are to be registered by the Company pursuant to the terms of
the  Debenture Registration Rights Agreement incorporated herein and made a part
hereof.

     (e)     The Holder recognizes that an investment in the Debentures involves
substantial  risks,  including  loss  of  the  entire amount of such investment.
Further,  the  Holder  has  carefully read and considered the schedules attached
hereto.

     (f)     The  Holder  acknowledges  that  each  certificate representing the
Debentures  (and  the  shares  of  Common  Stock  issued  upon conversion of the
Debentures, unless registered or with an Exemption) or in payment of interest on
the  Debentures  shall  be  stamped  or  otherwise  imprinted  with  a  legend
substantially  in  the  following  form:

THE  SECURITIES  EVIDENCED  BY  THIS  CERTIFICATE  MAY  NOT  BE OFFERED OR SOLD,
TRANSFERRED,  PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT (i) PURSUANT
TO  AN  EFFECTIVE  REGISTRATION  STATEMENT  UNDER THE SECURITIES ACT OF 1933, AS
AMENDED,  (ii)  TO THE EXTENT APPLICABLE, PURSUANT TO RULE 144 UNDER THE ACT (OR
ANY  SIMILAR  RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR
(iii)  PURSUANT  TO  AN  AVAILABLE  EXEMPTION  FROM REGISTRATION UNDER SUCH ACT.

     If Holder sends a Notice of Conversion (See Exhibit A attached hereto), and
provided  a registration statement under the Securities Act of 1933 is in effect
as  to  the  sale,  then in such event the Company shall have its transfer agent
send Holder the appropriate number of shares of Common Stock without restrictive
legends (other than a legend referring to the resale registration and prospectus
delivery  requirements)  and  the  Company  is  not  subject  to  stop  transfer
instructions.

     (g)     If  this Subscription Agreement is executed and delivered on behalf
of  a  corporation  or  legal  entity  other  than  a  natural person:  (i) such
corporation or other entity has the full legal right and power and all authority
and  approval  required  (a)  to execute and deliver, or authorize execution and
delivery  of  this  Subscription Agreement and all other instruments (including,
without  limitation,  the  Debenture  Registration Rights Agreement, Irrevocable
Transfer  Agent  Agreement,  Security Agreement, Warrant Agreement and Debenture
Agreements)  executed  and  delivered  by  or  on  behalf of such corporation in
connection  with the purchase of the Debentures and (b) to purchase and hold the
Debentures;  and  (ii)  the  signature  of  the  party signing on behalf of such
corporation  or  entity  is  binding  upon  such  corporation.

     (h)     The Holder is not subscribing for the Debentures as a result of, or
pursuant to, any advertisement, article, notice or other communication published
in  any  newspaper,  magazine  or  similar media or broadcast over television or
radio  or  presented  at  any  seminar  or  meeting.

      (i)     The  Holder  is  purchasing the Debentures for its own account for
investment,  and  not  with  a  view  toward the resale or distribution thereof,
except pursuant to sales registered or exempted from registration under the 1933
Act.  The  Holder  has  not  offered or sold any portion of the Debentures being
acquired  nor  does  the  Holder  have  any  present  intention  of dividing the
Debentures with others or of selling, distributing or otherwise disposing of any
portion  of  the  Debentures either currently or after the passage of a fixed or
determinable  period  of  time  or  upon the occurrence or non-occurrence of any
predetermined  event  or  circumstance  in  violation  of the 1933 Act provided,
however,  that  by  making  the representations herein, Holder does not agree to
hold  any  of the Debentures for any minimum or other specific term and reserves
the  right  to  dispose  of  the  Debentures  at  any time in accordance with or
pursuant to a registration statement or an exemption under the 1933 Act.  Holder
is  neither  an  underwriter  of,  nor a dealer in, the Debentures or the Common
Stock  issuable  upon conversion thereof or upon the payment of interest thereon
and  is not participating in the distribution or resale of the Debentures or the
Common  Stock  issuable  upon  conversion  or  exercise  thereof.

     (j)     The Holder or the Holder's representatives, as the case may be, has
such  knowledge  and  experience in financial, tax and business matters so as to
enable  the  Holder  to  utilize the information made available to the Holder in
connection  with  the Offering to evaluate the merits and risks of an investment
in  the  Debentures  and  to  make  an informed investment decision with respect
thereto.

3.     REPRESENTATIONS  AND  WARRANTIES  OF  THE  COMPANY.
       --------------------------------------------------

     Except  as  set  forth  in  the  Schedules  attached  hereto,  the  Company
represents  and  warrants  to  the  Holder  that:

     a.     Organization  and Qualification.  The Company and its "SUBSIDIARIES"
            -------------------------------
(which for purposes of this Subscription Agreement means any entity in which the
Company,  directly  or  indirectly,  owns  capital  stock  or holds an equity or
similar  interest)  (a complete list of which is set forth in Schedule 3(a)) are
corporations duly organized and validly existing in good standing under the laws
of  the  respective jurisdictions of their incorporation, and have the requisite
corporate  power and authorization to own their properties and to carry on their
business  as now being conducted. Both the Company and its Subsidiaries are duly
qualified to do business and are in good standing in every jurisdiction in which
their  ownership  of  property  or  the nature of the business conducted by them
makes  such qualification necessary, except to the extent that the failure to be
so qualified or be in good standing would not have a Material Adverse Effect. As
used  in  this  Subscription  Agreement,  "MATERIAL  ADVERSE  EFFECT"  means any
material adverse effect on the business, properties, assets, operations, results
of  operations,  financial  condition  or  prospects  of  the  Company  and  its
Subsidiaries,  if  any,  taken  as  a whole, or on the transactions contemplated
hereby  or  by  the  agreements and instruments to be entered into in connection
herewith,  or  on  the  authority  or  ability  of  the  Company  to perform its
obligations  under  the Transaction Documents (as defined in Section 3(b)below).

     b.     Authorization;  Enforcement; Compliance with Other Instruments.  (i)
            --------------------------------------------------------------
The  Company  has  the requisite corporate power and authority to enter into and
perform  this  Subscription  Agreement,  the  Debenture  Registration  Rights
Agreement,  Warrant  Agreement, Security Agreement, and the Irrevocable Transfer
Agent  Instructions  among the Company, the Holder, Transfer Agent, and Dutchess
Capital  Management,  LLC  and  the  Debenture  Agreement, and each of the other
agreements  entered  into  by  the  parties  hereto  in  connection  with  the
transactions  contemplated  by  this  Subscription  Agreement (collectively, the
"TRANSACTION  DOCUMENTS"),  and  to  issue the Debentures in accordance with the
terms  hereof  and  thereof,  (ii) the execution and delivery of the Transaction
Documents  by  the  Company  and  the  consummation  by  it  of the transactions
contemplated  hereby  and  thereby, including without limitation the reservation
for  issuance  and  the issuance of the Debentures pursuant to this Subscription
Agreement,  have  been  duly  and  validly  authorized by the Company's Board of
Directors  and  no  further consent or authorization is required by the Company,
its  Board  of  Directors,  or its shareholders, (iii) the Transaction Documents
have  been  duly and validly executed and delivered by the Company, and (iv) the
Transaction  Documents  constitute  the  valid  and  binding  obligations of the
Company  enforceable  against the Company in accordance with their terms, except
as  such  enforceability  may  be  limited  by  general  principles of equity or
applicable  bankruptcy,  insolvency,  reorganization, moratorium, liquidation or
similar  laws relating to, or affecting generally, the enforcement of creditors'
rights  and  remedies.

     c.     Capitalization.  As of the date hereof, the authorized capital stock
            --------------
of the Company consists of 25,000,000 shares of Common Stock, of which as of the
date  hereof, approximately 5,551,603 shares are issued and outstanding.  All of
such  outstanding shares have been, or upon issuance will be, validly issued and
are fully paid and nonassessable.  Except as disclosed in Schedule 3(c) which is
attached  hereto  and made a part hereof, (i) no shares of the Company's capital
stock  are subject to preemptive rights or any other similar rights or any liens
or  encumbrances  suffered  or  permitted  by  the  Company,  (ii)  there are no
outstanding  debt  securities,  (iii) there are no outstanding shares of capital
stock, options, warrants, scrip, rights to subscribe to, calls or commitments of
any  character whatsoever relating to, or securities or rights convertible into,
any  shares  of  capital  stock  of  the  Company or any of its Subsidiaries, or
contracts,  commitments,  understandings or arrangements by which the Company or
any  of  its  Subsidiaries  is or may become bound to issue additional shares of
capital  stock  of  the Company or any of its Subsidiaries or options, warrants,
scrip,  rights to subscribe to, calls or commitments of any character whatsoever
relating  to,  or  securities  or rights convertible into, any shares of capital
stock of the Company or any of its Subsidiaries, (iv) there are no agreements or
arrangements  under which the Company or any of its Subsidiaries is obligated to
register  the  sale  of  any  of their securities under the 1933 Act (except the
Debenture  Registration  Rights  Agreement),  (v)  there  are  no  outstanding
securities  of  the  Company  or  any  of  its  Subsidiaries  which  contain any
redemption  or  similar  provisions,  and  there  are no contracts, commitments,
understandings  or  arrangements by which the Company or any of its Subsidiaries
is  or  may  become  bound  to  redeem  a  security of the Company or any of its
Subsidiaries,  (vi)  there  are  no  securities  or  instruments  containing
anti-dilution  or  similar  provisions that will be triggered by the issuance of
the  Securities  as  described in this Subscription Agreement, (vii) the Company
does  not  have  any  stock  appreciation  rights  or  "phantom  stock" plans or
agreements or any similar plan or agreement and (viii) there is no dispute as to
the  class  of  any  shares  of  the  Company's  capital  stock. The Company has
furnished to the Holder, or the Holder has had access through EDGAR to, true and
correct  copies  of the Company's Articles of Incorporation, as in effect on the
date  hereof (the "ARTICLES OF INCORPORATION"), and the Company's By-laws, as in
effect  on  the  date  hereof  (the  "BY-LAWS  ').

     d.     Issuance  of  Debentures.     A  sufficient  number  of  Debentures
            ------------------------
issuable pursuant to this Subscription Agreement, but not more than 4.99% of the
shares of Common Stock outstanding as of the date hereof (if the Company becomes
listed  on  Nasdaq or the American Stock Exchange), has been duly authorized and
reserved for issuance pursuant to this Subscription Agreement.  Upon issuance in
accordance  with  this  Subscription  Agreement,  the Debentures will be validly
issued,  fully paid and nonassessable and free from all taxes, liens and charges
with  respect  to  the issue thereof. In the event the Company cannot register a
sufficient  number  of  shares  of  Common Stock, due to the remaining number of
authorized  shares  of Common Stock being insufficient, the Company will use its
best  efforts  to  register  the  maximum  number  of shares it can based on the
remaining balance of authorized shares and will use its best efforts to increase
the  number  of  its  authorized  shares  as  soon  as  reasonably  practicable.

     e.     No  Conflicts.  The  execution,  delivery  and  performance  of  the
            -------------
Transaction  Documents by the Company and the consummation by the Company of the
transactions  contemplated hereby and thereby will not (i) result in a violation
of  the  Articles of Incorporation, any Certificate of Designations, Preferences
and  Rights  of  any outstanding series of preferred stock of the Company or the
By-laws  or  (ii)  conflict  with, or constitute a material default (or an event
which  with  notice  or  lapse  of time or both would become a material default)
under,  or  give to others any rights of termination, amendment, acceleration or
cancellation  of,  any  material  agreement,  contract,  indenture  mortgage,
indebtedness  or instrument to which the Company or any of its Subsidiaries is a
party, or result in a violation of any law, rule, regulation, order, judgment or
decree,  including  United  States  federal  and  state  securities  laws  and
regulations  and  the rules and regulations of the principal securities exchange
or  trading market on which the Common Stock is traded or listed (the "Principal
Market"),  applicable  to the Company or any of its Subsidiaries or by which any
property  or  asset  of  the  Company  or  any  of  its Subsidiaries is bound or
affected.  Except  as  disclosed  in  Schedule 3(e), neither the Company nor its
Subsidiaries  is  in violation of any term of, or in default under, the Articles
of Incorporation, any Certificate of Designations, Preferences and Rights of any
outstanding  series  of  preferred  stock of the Company or the By-laws or their
organizational  charter  or  by-laws,  respectively, or any contract, agreement,
mortgage,  indebtedness, indenture, instrument, judgment, decree or order or any
statute,  rule  or  regulation  applicable  to  the Company or its Subsidiaries,
except  for  possible  conflicts,  defaults,  terminations,  amendments,
accelerations,  cancellations  and  violations that would not individually or in
the  aggregate  have  a Material Adverse Effect. The business of the Company and
its  Subsidiaries  is  not  being  conducted,  and  shall  not  be conducted, in
violation  of  any  law,  statute,  ordinance,  rule, order or regulation of any
governmental  authority  or  agency,  regulatory  or  self-regulatory agency, or
court,  except  for  possible  violations  the  sanctions  for  which  either
individually  or  in  the  aggregate  would  not have a Material Adverse Effect.
Except  as  specifically  contemplated  by  this  Subscription  Agreement and as
required  under the 1933 Act, the Company is not required to obtain any consent,
authorization,  permit  or  order of, or make any filing or registration (except
the filing of a registration statement)  with, any court, governmental authority
or  agency,  regulatory  or self-regulatory agency or other third party in order
for  it  to  execute,  deliver  or  perform  any  of  its  obligations under, or
contemplated  by,  the Transaction Documents in accordance with the terms hereof
or  thereof.  All  consents,  authorizations,  permits,  orders,  filings  and
registrations  which the Company is required to obtain pursuant to the preceding
sentence  have  been obtained or effected on or prior to the date hereof and are
in  full force and effect as of the date hereof. Except as disclosed in Schedule
3(e), the Company and its Subsidiaries are unaware of any facts or circumstances
which  might give rise to any of the foregoing. The Company is not, and will not
be,  in  violation  of  the  listing  requirements of the Principal Market as in
effect  on  the date hereof and on each of the Closing Dates and is not aware of
any  facts  which  would reasonably lead to delisting of the Common Stock by the
Principal  Market  in  the  foreseeable  future.

     f.     SEC  Documents;  Financial  Statements.  The  Company  has filed all
            --------------------------------------
reports,  schedules,  forms, statements and other documents required to be filed
by  it  with  the  Securities  and  Exchange  Commission ("SEC") pursuant to the
reporting  requirements of the  Securities and Exchange Act of 1934 ("1934 Act")
(all  of  the foregoing filed since the hereof and all exhibits included therein
and  financial  statements  and  schedules thereto and documents incorporated by
reference  therein  being  hereinafter  referred to as the "SEC DOCUMENTS"). The
Company  has  delivered  to  the Holder or its representatives, or they have had
access  through  EDGAR,  to true and complete copies of the SEC Documents. As of
their respective dates, the SEC Documents complied in all material respects with
the  requirements  of  the  1934  Act  and  the rules and regulations of the SEC
promulgated  thereunder  applicable  to  the  SEC Documents, and none of the SEC
Documents,  at  the  time  they  were  filed  with the SEC, contained any untrue
statement  of a material fact or omitted to state a material fact required to be
stated  therein  or  necessary  to  make the statements therein, in light of the
circumstances under which they were made, not misleading. As of their respective
dates,  the  financial  statements  of the Company included in the SEC Documents
complied  as  to  form  in  all  material  respects  with  applicable accounting
requirements  and  the  published  rules and regulations of the SEC with respect
thereto.  Such  financial  statements  have  been  prepared  in  accordance with
generally  accepted  accounting  principles,  consistently  applied,  during the
periods  involved  (except  (i)  as may be otherwise indicated in such financial
statements  or  the  notes  thereto,  or  (ii)  in the case of unaudited interim
statements,  to  the  extent  they  may exclude footnotes or may be condensed or
summary  statements)  and  fairly present in all material respects the financial
position  of  the  Company  as  of  the  dates  thereof  and  the results of its
operations  and  cash  flows for the periods then ended (subject, in the case of
unaudited  statements,  to  normal year-end audit adjustments). No other written
information  provided  by or on behalf of the Company to the Holder which is not
included  in  the  SEC  Documents,  including,  without  limitation, information
referred  to in Section 3(d) of this Subscription Agreement, contains any untrue
statement  of  a  material fact or omits to state any material fact necessary to
make  the  statements therein, in the light of the circumstance under which they
are  or  were  made,  not  misleading.

     g.     Absence of Certain Changes.  Except as disclosed in Schedule 3(g) or
            --------------------------
the  SEC  Documents  filed  at  least thirty (30) days prior to the date hereof,
there  has  been  no  change or development in the business, properties, assets,
operations,  financial  condition,  results  of  operations  or prospects of the
Company  or  its  Subsidiaries which has had or reasonably could have a Material
Adverse  Effect.  The  Company  has  not taken any steps, and does not currently
expect  to take any steps, to seek protection pursuant to any bankruptcy law nor
does  the  Company  or  its Subsidiaries have any knowledge or reason to believe
that  its  creditors  intend  to  initiate  involuntary  bankruptcy proceedings.

     h.     Absence  of  Litigation.  Except  as  set forth in the Company's SEC
            -----------------------
filings,  there  is no action, suit, proceeding, inquiry or investigation before
or  by  any court, public board, government agency, self-regulatory organization
or body pending or, to the knowledge of the executive officers of Company or any
of  its  Subsidiaries,  threatened  against or affecting the Company, the Common
Stock  or  any  of  the  Company's  Subsidiaries  or any of the Company's or the
Company's  Subsidiaries'  officers  or directors in their capacities as such, in
which  an  adverse  decision  could  have  a  Material  Adverse  Effect.

     i.     Acknowledgment  Regarding  the  Purchase of Debentures.  The Company
            ------------------------------------------------------
acknowledges  and  agrees that the Holder is acting solely in the capacity of an
arm's  length  investor  with  respect  to  the  Transaction  Documents  and the
transactions  contemplated  hereby and thereby. The Company further acknowledges
that the Holder is not acting as a financial advisor or fiduciary of the Company
(or  in  any similar capacity) with respect to the Transaction Documents and the
transactions  contemplated hereby and thereby and any advice given by the Holder
or  any  of  its  respective  representatives  or  agents in connection with the
Transaction  Documents  and  the transactions contemplated hereby and thereby is
merely  incidental  to  the  Holder's  purchase  of  the Debentures. The Company
further  represents  to the Holder that the Company's decision to enter into the
Transaction Documents has been based solely on the independent evaluation by the
Company  and  its  representatives.

     j.     Intentionally  omitted.

     k.     Employee Relations.  Neither the Company nor any of its Subsidiaries
            ------------------
is  involved  in any union labor dispute nor, to the knowledge of the Company or
any of its Subsidiaries, is any such dispute threatened. Neither the Company nor
any of its Subsidiaries is a party to a collective bargaining agreement, and the
Company  and  its  Subsidiaries  believe that relations with their employees are
good.  No  executive  officer  (as  defined  in Rule 501(f) of the 1933 Act) has
notified  the Company that such officer intends to leave the Company's employ or
otherwise  terminate  such  officer's  employment  with  the  Company.

     l.     Intellectual  Property  Rights.  All  patents,  patent applications,
            ------------------------------
trademark  registrations and applications for trademark registration held by the
Company  are  owned  free  and  clear  of  all  mortgages,  liens,  charges  or
encumbrances  whatsoever.  No  licenses  have been granted with respect to these
items  and  the  Company  and  its Subsidiaries do not have any knowledge of any
infringement by the Company or its Subsidiaries of trademark, trade name rights,
patents, patent rights, copyrights, inventions, licenses, service names, service
marks,  service  mark  registrations,  trade  secret  or other similar rights of
others,  and, except as set forth on Schedule 3(l), there is no claim, action or
proceeding  being  made or brought against, or to the Company's knowledge, being
threatened  against,  the Company or its Subsidiaries regarding trademark, trade
name,  patents,  patent  rights,  invention,  copyright, license, service names,
service  marks,  service mark registrations, trade secret or other infringement;
and  the  Company and its Subsidiaries are unaware of any facts or circumstances
which  might give rise to any of the foregoing. The Company and its Subsidiaries
have  taken reasonable security measures to protect the secrecy, confidentiality
and  value  of  all  of  their  intellectual  properties.

     m.     Environmental  Laws.  The  Company  and  its Subsidiaries (i) are in
            -------------------
compliance  with  any  and all applicable foreign, federal, state and local laws
and  regulations  relating  to  the  protection  of human health and safety, the
environment  or  hazardous  or  toxic  substances  or  wastes,  pollutants  or
contaminants ("ENVIRONMENTAL LAWS"), (ii) have received all permits, licenses or
other  approvals required of them under applicable Environmental Laws to conduct
their  respective  businesses  and  (iii)  are  in compliance with all terms and
conditions  of  any such permit, license or approval where, in each of the three
foregoing  cases,  the  failure  to so comply would have, individually or in the
aggregate,  a  Material  Adverse  Effect.

     n.     Title.  The  Company  and  its Subsidiaries have good and marketable
            -----
title  in  fee  simple to all real property and good and marketable title to all
personal property owned by them which is material to the business of the Company
and its Subsidiaries, in each case free and clear of all liens, encumbrances and
defects  except  such  as  are  described  in  Schedule  3(n)  or such as do not
materially  affect  the value of such property and do not interfere with the use
made  and  proposed  to  be  made  of such property by the Company or any of its
Subsidiaries.  Any  real property and facilities held under lease by the Company
or  any  of  its  Subsidiaries  are  held  by  them  under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with  the use made and proposed to be made of such property and buildings by the
Company  and  its  Subsidiaries.

     o.     Insurance.  The  Company and each of its Subsidiaries are insured by
            ---------
insurers  of  recognized  financial responsibility against such losses and risks
and  in  such  amounts  as  management of the Company believes to be prudent and
customary  in  the  businesses  in  which  the  Company and its Subsidiaries are
engaged.  Neither  the  Company  nor  any  such  Subsidiary has been refused any
insurance  coverage  sought  or applied for and neither the Company nor any such
Subsidiary  has  any  reason  to  believe  that it will not be able to renew its
existing  insurance  coverage  as  and  when  such coverage expires or to obtain
similar  coverage  from  similar  insurers  as  may be necessary to continue its
business  at  a  cost  that  would  not  have  a  Material  Adverse  Effect.

     p.     Regulatory  Permits.  The  Company and its Subsidiaries have in full
            -------------------
force  and  effect  all certificates, approvals, authorizations and permits from
the  appropriate  federal,  state,  local  or foreign regulatory authorities and
comparable foreign regulatory agencies, necessary to own, lease or operate their
respective  properties  and  assets and conduct their respective businesses, and
neither  the  Company  nor  any  such  Subsidiary  has  received  any  notice of
proceedings  relating to the revocation or modification of any such certificate,
approval,  authorization  or  permit,  except  for such certificates, approvals,
authorizations  or  permits  which  if  not  obtained,  or  such  revocations or
modifications  which,  would  not  have  a  Material  Adverse  Effect.

     q.     Internal  Accounting  Controls.  The  Company  and  each  of  its
            ------------------------------
Subsidiaries  maintain  a  system  of internal accounting controls sufficient to
provide  reasonable  assurance  that (i) transactions are executed in accordance
with  management's  general  or  specific  authorizations, (ii) transactions are
recorded  as  necessary  to  permit  preparation  of  financial  statements  in
conformity  with  generally accepted accounting principles and to maintain asset
accountability,  (iii)  access  to  assets  is permitted only in accordance with
management's  general  or  specific  authorization  and  (iv)  the  recorded
accountability  for  assets  is  compared with the existing assets at reasonable
intervals  and  appropriate  action  is  taken  with respect to any differences.

     r.     No  Materially  Adverse Contracts, Etc.  Neither the Company nor any
            --------------------------------------
of  its  Subsidiaries  is  subject  to  any  charter,  corporate  or other legal
restriction,  or  any  judgment,  decree, order, rule or regulation which in the
judgment  of  the  Company's officers has or is expected in the future to have a
Material  Adverse  Effect.  Neither the Company nor any of its Subsidiaries is a
party  to  any  contract  or  agreement  which  in the judgment of the Company's
officers  has  or  is  expected  to  have  a  Material  Adverse  Effect.

     s.     Tax  Status.  The  Company's  consolidated  2004  federal income tax
            -----------
return,  the  Company  and each of its Subsidiaries has made or filed all United
States  federal  and  state  income  and  all  other  tax  returns,  reports and
declarations  required  by  any  jurisdiction to which it is subject (unless and
only  to  the extent that the Company and each of its Subsidiaries has set aside
on  its  books  provisions reasonably adequate for the payment of all unpaid and
unreported  taxes) and has paid all taxes and other governmental assessments and
charges  that  are  material  in  amount,  shown or determined to be due on such
returns,  reports  and  declarations, except those being contested in good faith
and  has set aside on its books provision reasonably adequate for the payment of
all  taxes  for periods subsequent to the periods to which such returns, reports
or declarations apply.  There are no unpaid taxes in any material amount claimed
to  be  due by the taxing authority of any jurisdiction, and the officers of the
Company  know  of  no  basis  for  any  such  claim.

     t.     Certain  Transactions.  Except  as  set  forth  in the SEC Documents
            ---------------------
filed  at  least  ten  days prior to the date hereof and except for arm's length
transactions pursuant to which the Company makes payments in the ordinary course
of  business  upon  terms  no  less favorable than the Company could obtain from
third  parties  and  other than the grant of stock options disclosed on Schedule
3(c),  none of the officers, directors, or employees of the Company is presently
a  party  to  any transaction with the Company or any of its Subsidiaries (other
than for services as employees, officers and directors), including any contract,
agreement  or  other  arrangement providing for the furnishing of services to or
by,  providing  for rental of real or personal property to or from, or otherwise
requiring  payments to or from any officer, director or such employee or, to the
knowledge of the Company, any corporation, partnership, trust or other entity in
which  any officer, director, or any such employee has a substantial interest or
is  an  officer,  director,  trustee  or  partner.

     u.     Dilutive  Effect.  The Company understands and acknowledges that the
            ----------------
number  of  shares  of  Common  Stock  issuable  upon purchases pursuant to this
Subscription Agreement will increase in certain circumstances including, but not
necessarily limited to, the circumstance wherein the trading price of the Common
Stock  declines  following  the  effective  date  of  the registration statement
covering the Common Stock underlying the Debentures (the "Effective Date").  The
Company's executive officers and directors have studied and fully understand the
nature  of  the  transactions  contemplated  by  this Subscription Agreement and
recognize that they have a potential dilutive effect.  The board of directors of
the  Company  has  concluded,  in  its  good  faith  business judgment that such
issuance  is  in  the  best  interests of the Company.  The Company specifically
acknowledges that, subject to such limitations as are expressly set forth in the
Transaction  Documents,  its  obligation  to  issue  shares of Common Stock upon
purchases  pursuant to this Subscription Agreement is absolute and unconditional
regardless  of  the dilutive effect that such issuance may have on the ownership
interests  of  other  shareholders  of  the  Company.

     v.   Additional Financings. The Company shall not, directly nor indirectly,
          ---------------------
without  the  prior  written consent of Holder, offer, sell, grant any option to
purchase,  or  otherwise  dispose  of (or announce any offer, sale, grant or any
option  to  purchase or other disposition) any of its Common Stock or securities
convertible  into  Common  Stock,  or file any registration statement, including
those  on Form S-8 for any securities (a "SUBSEQUENT FINANCING"), in either case
ending  on the earlier to occur of (i) 360 (three hundred and sixty ) days after
the  effective  date of the registration statement covering resale of the shares
of  Common  Stock  underlying the Debentures (the "Effective Date") and (ii) the
date  on which the full Face Amount, accrued interest and penalties, if any,  on
the  Debentures  have  been  paid  ("Lock  Up  Period").

During  the  twelve  (12)  month  period  following  Closing, or if there is any
outstanding  balance on the Debentures, the Holder shall retain a first right of
refusal  for any additional financings.  The Company must submit to the Holder a
duly authorized term sheet of the financing and the Holder may elect, in writing
within five (5) days, to exercise its right to finance the Company upon the same
terms  and  conditions.  In the event the Holder does not elect to complete such
financing  within  such  period,  the  Company  may  proceed  with  the proposed
third-party  financing  on  the  same  terms  and conditions as contained in the
notice  to  Holder.

The  Holder  shall  also  reserve  the  right  to switch to the terms of the new
financing  ("Most  Favored  Nations").

w.   Sarbanes-Oxley  Compliance.  The  Company hereby acknowledges that they are
     ---------------------------
current  with the requirement of Sarbanes-Oxley Act of 2002 ("Sarbox"), and will
remain  compliant  with  Sarbox  and  its  rules  and  regulations for reporting
requirements  in the time frame required by Sarbox, and any updates to deadlines
imposed  by  Sarbox.

x.  Code  of Ethics.  The Company has adopted a Code of Ethics and has filed the
    ----------------
Code  with  the  SEC.

4.     COVENANTS  OF  THE  COMPANY
       ---------------------------

     a.     Best  Efforts.  The  Company  shall  use  its best efforts timely to
            -------------
satisfy  each  of  the  conditions  to  be  satisfied  by it as provided in this
Subscription  Agreement.

     b.     Blue Sky.  The Company shall, at its sole cost and expense, make all
            --------
filings  and  reports  relating  to the offer and sale of the Debentures and the
Common  Stock  underlying  the  Debentures  as  required  under  the  applicable
securities  or  "Blue Sky" laws of such states of the United States as specified
by  the  Holder.

     c.     Reporting Status.  Until the earlier of (i) the date that the Holder
            ----------------
may  sell all of the Common Stock underlying the Debentures acquired pursuant to
this  Subscription  Agreement  without  restriction  pursuant  to  Rule  144(k)
promulgated under the 1933 Act (or successor thereto), or (ii) the date on which
the  Holder  shall have sold all the Common Stock underlying the Debentures, the
Company shall file all reports required to be filed with the SEC pursuant to the
1934  Act, and the Company shall not terminate its status as a reporting company
under  the  1934  Act.

     d.     Use  of Proceeds.     The Company shall use the entire proceeds from
            ----------------
this  Debenture  exclusively  to further the growth and interest of the Company.
Any  other use of the funds contemplated herein, shall be considered a breach of
contract  and  an  event  of  Default.

     e.     Conditions  to  Closing,The  Company  shall sign and comply with the
            ------------------------
Transaction  Documents  with  Dutchess  Private  Equities  Fund,  II,  L.P.

     f.     Financial  Information.  The Company agrees to make available to the
            ----------------------
Holder  via  EDGAR  or other electronic means the following: (i) within five (5)
business  days  after  the  filing  thereof  with  the SEC, a copy of its Annual
Reports  on  Form  10-KSB,  its  Quarterly  Reports  on Form 10-QSB, any Current
Reports on Form 8-K and any Registration Statements or amendments filed pursuant
to  the  1933 Act; (ii) on the same day as the release thereof, facsimile copies
of  all  press  releases issued by the Company or any of its Subsidiaries, (iii)
copies  of  any  notices  and  other  information made available or given to the
shareholders  of  the  Company  generally,  contemporaneously  with  the  making
available or giving thereof to the shareholders and (iv) within two (2) calendar
days  of filing or delivery thereof, copies of all documents filed with, and all
correspondence sent to, the Principal Market, any securities exchange or market,
or  the  National  Association  of  Securities  Dealers,  Inc.

     g.     Reservation of Common Stock.  Subject to the following sentence, the
            ---------------------------
Company  shall  take  all  action necessary to at all times have authorized, and
reserved  for  the  purpose of issuance, a sufficient number of shares of Common
Stock to provide for the issuance of the Common Stock underlying the Debentures.
In  the  event  that  the  Company determines that it does not have a sufficient
number  of  authorized  shares of Common Stock to reserve and keep available for
issuance,  the  Company  shall  use  its  best efforts to increase the number of
authorized  shares  of  Common  Stock  by  seeking  shareholder approval for the
authorization  of  such  additional  shares.  The Holder shall have the right to
determine  the  amount of shares to be re-registered to satisfy the terms of the
Agreement.  Such  amount  must  be  usual  or  customary.

     h.     Listing.  The  Company  shall  promptly secure the listing of all of
            -------
the  Common  Stock  underlying the Debentures upon the Principal Market and each
other  national securities exchange and automated quotation system, if any, upon
which  shares  of  Common  Stock  are then listed (subject to official notice of
issuance)  and  shall  maintain,  such  listing.  The Company shall maintain the
Common  Stock's  authorization for quotation on the Principal Market, unless the
Holder  and  the  Company  agree  otherwise.  Neither the Company nor any of its
Subsidiaries  shall take any action which would be reasonably expected to result
in  the  delisting  or  suspension  of  the Common Stock on the Principal Market
(excluding  suspensions of not more than one trading day resulting from business
announcements  by the Company). The Company shall promptly provide to the Holder
copies  of  any  notices  it  receives  from  the Principal Market regarding the
continued  eligibility  of  the  Common  Stock  for  listing  on  such automated
quotation  system  or  securities  exchange.  The Company shall pay all fees and
expenses  in  connection  with  satisfying  its  obligations under this Section.

     i.     Transactions  With  Affiliates.  During  the  Lock-Up  Period,  the
            ------------------------------
Company  shall not, and shall cause each of its Subsidiaries not to, enter into,
amend,  modify  or  supplement,  or  permit any Subsidiary to enter into, amend,
modify or supplement, any agreement, transaction, commitment or arrangement with
any of its or any Subsidiary's officers, directors, persons who were officers or
directors  at  any  time  during  the  previous  two  years,  shareholders  who
beneficially own five percent (5%) or more of the Common Stock, or affiliates or
with  any  individual  related  by  blood,  marriage  or  adoption  to  any such
individual or with any entity in which any such entity or individual owns a five
percent  (5%)  or  more  beneficial interest (each a "RELATED PARTY") during the
Lock  Up  Period;  except  for (i) customary employment arrangements and benefit
programs  on reasonable terms (including changes currently under discussion with
the  Company's  Board of Directors concerning the compensation, to be payable in
stock,  of  the  Chairman  of  the  Board),  (ii)  any  agreement,  transaction,
commitment  or  arrangement  on  an arms-length basis on terms no less favorable
than  terms  which  would  have  been  obtainable  from a person other than such
Related  Party,  or  (iii) any agreement, transaction, commitment or arrangement
which  is  approved by a majority of the disinterested directors of the Company.
For  purposes  hereof, any director who is also an officer of the Company or any
Subsidiary  of the Company shall not be a disinterested director with respect to
any  such  agreement,  transaction,  commitment  or arrangement. "AFFILIATE" for
purposes  hereof  means, with respect to any person or entity, another person or
entity  that, directly or indirectly, (i) has a five percent (5%) or more equity
interest  in  that  person  or entity, (ii) has five percent (5%) or more common
ownership  with  that person or entity, (iii) Controls that person or entity, or
(iv)  shares common control with that person or entity.  "CONTROL" or "CONTROLS"
for  purposes  hereof  means  that  a  person or entity has the power, direct or
indirect,  to  conduct  or  govern  the  policies  of  another person or entity.

     j.     Corporate  Existence.  The  Company  shall  use  its  commercially
            --------------------
reasonable  best efforts to preserve and continue the corporate existence of the
Company.

     k.     Notice  of Certain Events Affecting Registration.  The Company shall
            ------------------------------------------------
promptly  notify  Holder  upon  the occurrence of any of the following events in
respect  of  a  registration statement or related prospectus covering the Common
Stock  underlying  the  Debentures:  (i)  receipt  of any request for additional
information  by  the  SEC  or  any other federal or state governmental authority
during  the period of effectiveness of the registration statement for amendments
or  supplements  to  the  registration statement or related prospectus; (ii) the
issuance  by the SEC or any other federal or state governmental authority of any
stop  order  suspending  the  effectiveness of any registration statement or the
initiation  of  any  proceedings  for  that  purpose;  (iii)  receipt  of  any
notification  with  respect  to the suspension of the qualification or exemption
from qualification of any of the Common Stock underlying the Debentures for sale
in  any jurisdiction or the initiation or threatening of any proceeding for such
purpose;  (iv)  the happening of any event that makes any statement made in such
registration  statement  or  related  prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect or
that  requires  the making of any changes in the registration statement, related
prospectus  or  documents  so  that, in the case of a registration statement, it
will  not  contain  any untrue statement of a material fact or omit to state any
material  fact required to be stated therein or necessary to make the statements
therein  not misleading, and that in the case of the related prospectus, it will
not  contain  any  untrue  statement  of  a  material  fact or omit to state any
material  fact required to be stated therein or necessary to make the statements
therein,  in  the  light  of  the  circumstances under which they were made, not
misleading; and (v) the Company's reasonable determination that a post-effective
amendment  to  the  registration statement would be appropriate, and the Company
shall  promptly make available to Holder any such supplement or amendment to the
related  prospectus.

     l.  Indemnification.  In  consideration  of  the  Holder's  execution  and
         ----------------
delivery  of  the this Agreement and the Debenture Registration Rights Agreement
and  acquiring  the Debentures hereunder and in addition to all of the Company's
other  obligations  under  the  Transaction Documents, the Company shall defend,
protect,  indemnify  and  hold  harmless the Holder and all of its shareholders,
officers,  directors,  employees and direct or indirect investors and any of the
foregoing  person's  agents  or  other  representatives  (including,  without
limitation,  those  retained in connection with the transactions contemplated by
this  Agreement)  (collectively, the "Indemnitees") from and against any and all
actions,  causes  of  action,  suits,  claims,  losses,  costs, penalties, fees,
liabilities  and  damages, and expenses in connection therewith (irrespective of
whether  any  such Indemnitee is a party to the action for which indemnification
hereunder is sought), and including reasonable attorneys' fees and disbursements
(the  "Indemnified  Liabilities"), incurred by any Indemnitee as a result of, or
arising  out  of,  or  relating  to  (i)  any misrepresentation or breach of any
representation  or  warranty made by the Company in the Transaction Documents or
any  other  certificate,  instrument or document contemplated hereby or thereby,
(ii)  any  breach  of  any  covenant,  agreement  or  obligation  of the Company
contained  in  the Transaction Documents or any other certificate, instrument or
document  contemplated  hereby  or  thereby,  (iii) any cause of action, suit or
claim  brought  or made against such Indemnitee by a third party and arising out
of  or resulting from the execution, delivery, performance or enforcement of the
Transaction  Documents  or  any  other  certificate,  instrument  or  document
contemplated  hereby or thereby, (iv) any transaction financed or to be financed
in  whole  or in part, directly or indirectly, with the proceeds of the issuance
of the Debentures or (v) the status of the Holder as an investor in the Company,
except,  in  the  case  of  any of such clauses, insofar as any such Indemnified
Liability  was  attributable  to  gross  negligence,  willful  misconduct or any
illegal  activity  on  the  part  of Holder and, in the case of clause (v) only,
insofar  as  any  such  Indemnified  Liability  was  attributable  to  an untrue
statement,  alleged  untrue  statement,  omission  or  alleged  omission made in
reliance  upon  and  in  conformity  with  written  information furnished to the
Company  by  the  Holder which is specifically intended by the Holder for use in
the  preparation  of  any  Registration  Statement,  preliminary  prospectus  or
prospectus.  To  the extent that the foregoing undertaking by the Company may be
unenforceable for any reason, the Company shall make the maximum contribution to
the  payment  and  satisfaction  of each of the Indemnified Liabilities which is
permissible  under  applicable  law.  The  indemnity provisions contained herein
shall  be  in  addition  to any cause of action or similar rights the Holder may
have,  and  any liabilities to which the Holder may be subject.  Notwithstanding
the  foregoing,  the Company shall have no indemnification responsibility in the
event  Holder  fails  to timely notify the Company of a claim or potential claim
for  which  indemnification  is  sought,  but  only to the extent the Company is
prejudiced  thereby.  The Company shall have the right to control the defense of
any  such  claim  and the Holder shall not consent to any settlement of any such
claim  without  the  prior  written  consent  of the Company (which shall not be
unreasonably  withheld  or  delayed).  The  Holder shall provide indemnification
comparable  in  scope  and  coverage  to  the  Company and corresponding related
persons  in  respect  of  any  Indemnified  Liability  if  and  to  the  extent
attributable  to gross negligence, willful misconduct or any illegal activity on
the  part  of  Holder,  and shall be obligated to reimburse the Company and such
persons  to  the  same  extent  as the Company's reimbursement obligations under
Section  4(m)  below.

     m.     Reimbursement.  If  (i)  Holder,  other  than by reason of its gross
            -------------
negligence  or  willful  misconduct,  becomes  involved  in  any capacity in any
action,  proceeding  or investigation brought by any shareholder of the Company,
in  connection  with  or  as  a  result  of the consummation of the transactions
contemplated by the Transaction Documents, or if Holder is impleaded in any such
action, proceeding or investigation by any person, or (ii) Holder, other than by
reason of its gross negligence or willful misconduct or by reason of its trading
of  the  Common  Stock in a manner that is  illegal under the federal securities
laws,  becomes  involved  in  any  capacity  in  any  action,  proceeding  or
investigation  brought  by  the  SEC  against  or  involving  the  Company or in
connection  with  or  as  a  result  of  the  consummation  of  the transactions
contemplated by the Transaction Documents, or if Holder is impleaded in any such
action,  proceeding  or  investigation by any person, then in any such case, the
Company  will  reimburse  Holder  for  its  reasonable  legal and other expenses
(including the cost of any investigation and preparation) incurred in connection
therewith,  as  such expenses are incurred. In addition, other than with respect
to  any  matter in which Holder is a named party, the Company will pay to Holder
the charges, as reasonably determined by Holder, for the time of any officers or
employees  of  Holder devoted to appearing and preparing to appear as witnesses,
assisting  in preparation for hearings, trials or pretrial matters, or otherwise
with  respect  to  inquiries, hearing, trials, and other proceedings relating to
the subject matter of this Subscription Agreement. The reimbursement obligations
of  the  Company  under this section shall be in addition to any liability which
the  Company may otherwise have, shall extend upon the same terms and conditions
to  any  affiliates of Holder that are actually named in such action, proceeding
or  investigation,  and  partners,  directors,  agents,  employees,  attorneys,
accountants,  auditors  and controlling persons (if any), as the case may be, of
Holder  and  any  such  affiliate,  and  shall  be binding upon and inure to the
benefit  of any successors of the Company, Holder and any such affiliate and any
such  person.

     n.  Transfer  Agent.  The  Company  covenants and agrees that, in the event
         ----------------
that  the  Company's  agency  relationship  with  the  transfer  agent should be
terminated  for  any  reason  prior  to  the  Maturity  Date  (as defined in the
Debenture Agreement), the Company shall immediately appoint a new transfer agent
and  shall  require that the new transfer agent execute and agree to be bound by
the  terms  of  the Irrevocable Transfer Agent Instructions (as defined herein).
The  Company  shall  be  up to date with all payments to the transfer agent, and
continue  to  pay  transfer  agent as outlined in the Irrevocable Transfer Agent
Agreement.

5.     OPINION  LETTER/BOARD  RESOLUTION
       ---------------------------------

     Prior  to or on the Closing Date the Company shall deliver to the Holder an
opinion  letter signed by counsel for the Company in the form attached hereto as
Exhibit  D.  If the Company's counsel fails to provide a Rule 144 opinion letter
in  a  timely  manner, then the Company shall: (a) pay the Investor's counsel to
write  said  Rule  144  opinion letter; and (b) instruct the designated transfer
agent  to  accept  same  Rule 144 Opinion letter (attached hereto as Exhibit E).
Also,  prior to or on the Closing Date the Company shall deliver to the Holder a
signed  Board  Resolution  authorizing  this  Offering,  which shall be attached
hereto  as  Exhibit  F.

6.     DELIVERY  INSTRUCTIONS;  FEES
       -----------------------------

     The  Debentures  being  purchased  hereunder shall be delivered to Dutchess
Private Equities Fund, L.P., II, on the Closing Date at which time funds will be
wired to the Company and the Debentures will be delivered to the Holder, per the
Holder's  instructions.

7.     UNDERSTANDINGS.
       --------------

     The  undersigned  understands,  acknowledges and agrees with the Company as
follows:

FOR  ALL  SUBSCRIBERS:

     a.     This  Subscription  may  be  rejected,  in  whole or in part, by the
Company  in its sole and absolute discretion at any time before the date set for
Closing  unless  the Company has given notice of acceptance of the undersigned's
subscription by signing this Subscription Agreement and delivering it to Holder.

     b.     No  U.S.  federal  or  state  agency  or  any  agency  of  any other
jurisdiction  has  made  any  finding or determination as to the fairness of the
terms  of  the  Offering for investment nor any recommendation or endorsement of
the  Debentures  or  the  Company.

     c.     The  representations,  warranties  and agreements of the undersigned
and  the  Company  contained  herein  shall  be true and correct in all material
respects  on  and as of the date of the sale of the Debentures as if made on and
as  of  such  date  and  shall  survive  the  execution  and  delivery  of  this
Subscription  Agreement  and  the  purchase  of  the  Debentures.

     d.     In  making  an  investment  decision, Holders must rely on their own
examination  of  the Company and the terms of the Offering, including the merits
and  risks  involved.  The  shares  have  not been recommended by any federal or
state securities commission or regulatory authority.  Furthermore, the foregoing
authorities  have  not confirmed the accuracy or determined the adequacy of this
document.  Any  representation  to  the  contrary  is  a  criminal  offense.

     e.     The Offering is intended to be exempt from registration by virtue of
Section  4(2)  of  the  1933  Act and the provisions of Regulation D thereunder,
which  is  in  part  dependent  upon the truth, completeness and accuracy of the
statements  made  by  the  undersigned  herein  and  in  the  Questionnaire.

     f.     It  is  understood  that  in  order not to jeopardize the Offering's
exempt  status  under  Section 4(2) of the 1933 Act and Regulation D, any Holder
may,  at a minimum, be required to fulfill the investor suitability requirements
thereunder.

     g.     The  shares  may  not  be  resold  except  as  permitted  under  the
securities act and applicable state securities laws, pursuant to registration or
exemption  therefrom.  Holder should be aware that they will be required to bear
the  financial  risks  of  this  investment  for  an  indefinite period of time.

8.     DISPUTES  SUBJECT  TO  ARBITRATION  GOVERNED  BY  MASSACHUSETTS  LAW
       --------------------------------------------------------------------

     a.     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
will  submit all disputes arising under this agreement to arbitration in Boston,
Massachusetts before a single arbitrator of the American Arbitration Association
("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  to  this agreement will challenge the jurisdiction or venue provisions as
provided  in  this  section.

9.     MISCELLANEOUS.
       -------------

     a.     Any  notices,  consents, waivers or other communications required or
permitted  to be given under the terms of this Subscription Agreement must be in
writing  and  will  be  deemed  to  have  been  delivered (i) upon receipt, when
delivered  personally;  (ii)  upon  receipt,  when sent by facsimile (provided a
confirmation  of  transmission  is  mechanically or electronically generated and
kept  on  file  by the sending party); or (iii) one (1) day after deposit with a
nationally  recognized  overnight  delivery  service,  in  each  case  properly
addressed to the party to receive the same.  The addresses and facsimile numbers
for  such  communications  shall  be:

If  to  the  Company:

James  C.  Fields
LocatePLUS  Holdings  Corporation
100  Cummings  Center  #235M
Beverly,  MA  01915
Telephone:  978-921-2727
Facsimile:  978-524-8887

If  to  the  Holder:

     At  the  address  listed  in  the  Questionnaire.

     Each  party  shall provide five (5) business days prior notice to the other
party  of  any  change  in  address,  phone  number  or  facsimile  number.

     b.     All  pronouns and any variations thereof used herein shall be deemed
to  refer  to  the  masculine,  feminine, impersonal, singular or plural, as the
identity  of  the  person  or  persons  may  require.

     c.     Neither  this  Subscription Agreement nor any provision hereof shall
be  waived,  modified,  changed,  discharged,  terminated,  revoked or canceled,
except  by  an  instrument  in  writing  signed  by the party effecting the same
against  whom  any  change,  discharge  or  termination  is  sought.

     d.     Notices  required  or  permitted  to  be given hereunder shall be in
writing  and  shall be deemed to be sufficiently given when personally delivered
or  sent  by  facsimile  transmission:  (i) if to the Company, at it's executive
offices or (ii) if to the Holder, at the address for correspondence set forth in
the  Questionnaire,  or  at  such  other  address  as may have been specified by
written  notice  given  in  accordance  with  this  paragraph.

     e.     This  Subscription  Agreement  shall  be  enforced,  governed  and
construed  in  all  respects  in accordance with the laws of the Commonwealth of
Massachusetts,  as  such  laws are applied by Massachusetts courts to agreements
entered  into, and to be performed in, Massachusetts by and between residents of
Massachusetts,  and  shall  be  binding  upon the undersigned, the undersigned's
heirs,  estate  and  legal representatives and shall inure to the benefit of the
Company  and its successors.  If any provision of this Subscription Agreement is
invalid  or  unenforceable under any applicable statue or rule of law, then such
provisions  shall  be  deemed  inoperative  to  the  extent that it may conflict
therewith  and  shall be deemed modified to conform with such statute or rule of
law.  Any provision hereof that may prove invalid or unenforceable under any law
shall  not  affect the validity or enforceability of any other provision hereof.

     f.     This  Agreement  shall  not  be  assignable.

     g.     This  Subscription  Agreement,  together with Exhibits A, B, C, D, E
and  F  attached  hereto and made a part hereof, constitute the entire agreement
between  the parties hereto with respect to the subject matter hereof and may be
amended  only  by  a  writing  executed  by  both  parties  hereto.

     h.     This  Subscription  Agreement  may  be  executed  in  two  or  more
counterparts,  all  of  which  taken  together  shall constitute one instrument.
Execution  and  delivery of this Subscription Agreement by exchange of facsimile
copies  bearing  the facsimile signature of a party shall constitute a valid and
binding  execution  and  delivery  of this Subscription Agreement by such party.
Such  facsimile  copies  shall  constitute  enforceable  original  documents.

10.  Transfer  Agent  Instructions

     The  Company shall issue the Irrevocable Transfer Agent Instructions to its
transfer  agent  irrevocably appointing Dutchess Capital Management, LLC and its
managing  members  ("DCM"),  as  its  agent  for  purpose of having certificates
issued,  registered  in the name of the Holder or its respective nominee(s), for
the  issuance  of  Shares  representing  such  amounts  from  the respective for
conversions  or  warrants,  as  specified from time to time by the Holder to the
Company  upon  the  Conversion Date (as defined in the Debenture Agreement), and
for  any  and  all  Liquidated  Damages,  if any (as this term is defined in the
Debenture  Registration Rights Agreement). DCM shall be paid a cash fee of Fifty
Dollars  ($50)  for every occasion they act pursuant to the Irrevocable Transfer
Agent  Instructions. The Company shall not change its transfer agent without the
express  written  consent  of the Holder, which may be withheld by the Holder in
its  sole  discretion.  The  Company warrants that no instruction other than the
Irrevocable  Transfer Agent Instructions referred to in this Section 10, will be
given by the Company to its transfer agent and that the issuance of Shares shall
otherwise  be freely transferable on the books and records of the Company as and
to  the  extent provided in this Agreement and the Debenture Registration Rights
Agreement.  Nothing  in  this  Section  10  shall affect in any way the Holder's
obligations  and  agreement  to  comply with all applicable securities laws upon
resale of Shares. If the Holder provides the Company with an opinion of counsel,
in  form,  scope  and  substance customary for opinions of counsel in comparable
transactions to the effect that registration of a resale by the Holder of any of
the  Conversion  Shares  is  not  required under the 1933 Act, the Company shall
within  two  (2)  business days instruct its transfer agent to issue one or more
certificates  in such name and in such denominations as specified by the Holder.
The  Company  acknowledges that a breach by it of its obligations hereunder will
cause  irreparable harm to the Holder by vitiating the intent and purpose of the
transaction  contemplated hereby. Accordingly, the Company acknowledges that the
remedy  at  law  for  a  breach of its obligations under this Section 10 will be
inadequate  and  agrees,  in  the  event of a breach or threatened breach by the
Company of the provisions of this Section 10, that the Holder shall be entitled,
in  addition  to  all other available remedies, to an injunction restraining any
breach  and  requiring immediate issuance and transfer, without the necessity of
showing  economic  loss  and  without any bond or other security being required.

11.  Waiver:

The  Holder's  delay or failure at any time or times hereafter to require strict
performance  by  Company  of any undertakings, agreements or covenants shall not
waiver,  affect,  or  diminish  any  right of the Holder under this Agreement to
demand  strict  compliance and performance herewith. Any waiver by the Holder of
any  Event  of  Default  shall  not  waive or affect any other Event of Default,
whether  such Event of Default is prior or subsequent thereto and whether of the
same  or a different type. None of the undertakings, agreements and covenants of
the  Company  contained  in  this  Agreement,  and no Event of Default, shall be
deemed  to  have  been  waived by the Holder, nor may this Agreement be amended,
changed  or  modified,  unless such waiver, amendment, change or modification is
evidenced  by an instrument in writing specifying such waiver, amendment, change
or  modification  and  signed  by  the  Holder.

12.  Waiver  of  Jury  Trial.

AS A MATERIAL INDUCEMENT FOR EACH PARTY HERETO TO ENTER INTO THIS AGREEMENT, THE
PARTIES  HERETO  HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
RELATED  IN  ANY WAY TO THIS AGREEMENT AND/OR ANY AND ALL OF THE OTHER DOCUMENTS
ASSOCIATED  WITH  THIS  TRANSACTION.

13.  NO  ORAL  AGREEMENTS

THIS  WRITTEN AGREEMENT AND THE ACCOMPANYING TRANSACTION DOCUMENTS REPRESENT THE
FINAL  AGREEEMENTS  BETWEEN  THE  COMPANY  AND  THE  HOLDERS  AND  MAY  NOT  BE
CONTRADICTED  BY  EVIDENCE  OF  PRIOR,  CONTEMPORANEOUS,  OR  SUBSEQUENT  ORAL
AGREEMENTS  OF  THE  PARTIES,  THERE  ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE
PARTIES.

          [BALANCE  OF  PAGE  INTENTIONALLY  LEFT  BLANK)

<PAGE>
LocatePlus  Holdings  Corporation
---------------------------------

QUESTIONNAIRE

     The information contained in this Questionnaire is being furnished in order
to  determine  whether the undersigned's subscription to purchase the Debentures
described  in  the  Subscription  Agreement  may  be  accepted.

     ALL  INFORMATION  CONTAINED  IN  THIS  QUESTIONNAIRE  WILL  BE  TREATED
CONFIDENTIALLY.  The  undersigned  understands,  however,  that  the Company may
present  this  Questionnaire  to  such parties as it deems appropriate if called
upon  to  establish that the proposed offer and sale of the Securities is exempt
from  registration  under  the  1933  Act, as amended.  Further, the undersigned
understands  that  the offering is required to be reported to the Securities and
Exchange  Commission, and to various state securities and "blue sky" regulators.

     IN ADDITION TO SIGNING THE SIGNATURE PAGE, IF REQUESTED BY THE COMPANY, THE
UNDERSIGNED  MUST  COMPLETE  FORM  W-9.

I.     PLEASE  CHECK  EACH  OF  THE  STATEMENTS  BELOW  THAT  APPLIES.

          1.     The  undersigned: (a) has total assets in excess of $5,000,000;
(b)  was not formed for the specific purpose of acquiring the securities and (c)
has  its  principal  place  of  business  in  ___________.

     2.     The  undersigned  is a natural person whose individual net worth* or
joint  net  worth  with  his  or  her  spouse  exceeds  $1,000,000.

     3.     The undersigned is a natural person who had an individual income* in
excess  of  $200,000  in  each  of  the two most recent years and who reasonably
expects  an  individual  income in excess of $200,000 in the current year.  Such
income  is  solely  that  of  the  undersigned  and  excludes  the income of the
undersigned's  spouse.

     4.     The  undersigned  is  a natural person who, together with his or her
spouse, has had a joint income* in excess of $300,000 in each of of the two most
recent  years and who reasonably expects a joint income in excess of $300,000 in
the  current  year.

*     For  purposes of this Questionnaire, the term "net worth" means the excess
of  total  assets  over total liabilities.  In determining "income", an investor
should  add  to  his  or  her  adjusted gross income any amounts attributable to
tax-exempt  income  received, losses claimed as a limited partner in any limited
partnership,  deductions  claimed  for  depletion, contributions to IRA or Keogh
retirement  plan, alimony payments and any amount by which income from long-term
capital  gains  has  been  reduced  in  arriving  at  adjusted  gross  income.

          5.     The  undersigned  is:

     (a)     a  bank  as  defined  in  Section  3(a)(2)  of  the  1933  Act;  or

     (b)     a  savings  and loan association or other institution as defined in
Section 3(a)(5)(A) of the 1933 Act whether acting in its individual or fiduciary
capacity;  or

     (c)     a  broker  or  dealer registered pursuant to Section 15 of the 1934
Act;  or

     (d)     an  insurance  company as defined in Section 2(13) of the 1933 Act;
or

     (e)     An  investment  company registered under the Investment Company Act
of  1940 or a business development company as defined in Section 2(a)(48) of the
Investment  Company  Act  of  1940;  or

     (f)     a  small  business  investment  company  licensed by the U.S. Small
Business  Administration  under  Section  301  (c)  or (d) of the Small Business
Investment  Act  of  1958;  or

X     6.     The  undersigned is an entity in which all of the equity owners are
accredited  investors.

<PAGE>
II.     HOLDER  INFORMATION.

     Name  of  Entity  ___Dutchess  Private  EquitiesFund,  II,  L.P._
                          --------------------------------------------

Person's  Name  Douglas  Leighton  Title:_Managing  Member
                -----------------         ----------------

     State  of  Organization  ____Delaware___________________
                              ------------

     Principal  Business  Address  ___50  Commonwealth  Ave__

     City,  State,  Zip  Code  ______Boston,  MA  02116__________
                                     ------------------

     Taxpayer  Identification  Number  _____________________

-     Phone  __617-301-4700________  Fax  ___617-249-0947___
               ------------               ---------------

     Send  Correspondence  to:
          ____________50  Commonweatlh  Ave,  Suite  2__________
     ____________Boston,  MA  02116____________________
     _______________________________________________

<PAGE>
LocatePlus  Holdings  Corporation
---------------------------------
SIGNATURE  PAGE
---------------

     Your  signature on this Signature Page evidences your agreement to be bound
by  the  Questionnaire, Subscription Agreement and Debenture Registration Rights
Agreement.

     1.     The undersigned hereby represents that (a) the information contained
in  the  Questionnaire  is  complete  and  accurate and (b) the undersigned will
notify  Company  immediately  if  any  material change in any of the information
      ---------
occurs  prior  to  the  acceptance  of  the  undersigned's subscription and will
promptly  send  Companywritten  confirmation  of  such  change.
                -------

     2.     The  undersigned signatory hereby certifies that he/she has read and
understands  the  Subscription  Agreement  and  Questionnaire,  and  the
representations  made  by  the  undersigned  in  the  Subscription Agreement and
Questionnaire  are  true  and  accurate.

           $1,500,000                         December  29,  2005
______________________________          ________________________
Amount  of  Debentures  being  purchased                    Date

Dutchess  Private  Equities  Fund  II,  LP

     By:  /s/ Douglas  Leighton
          (Signature)

Name: Douglas  Leighton
----------------------------------------------
(Please  Type  or  Print)

Title:  Managing  Member,
Dutchess  Capital  Management,  LLC;
General  Partner  to:
Dutchess Private Equities Fund, LP and Dutchess Private Equities Fund  II, LP
----------------------------------------------
(Please  Type  or  Print)

<PAGE>

COMPANY  ACCEPTANCE  PAGE
-------------------------

This  Subscription  Agreement  accepted  and  agreed
to  this  29th  day  of  December,  2005.

By  LocatePlus Holdings Corporation and duly authorized to sign on behalf of the
-----------------------------------
Company:

By   /s/ Jon R. Latorella
Name:  Jon  Latorella
Title: Chief  Executive  Officer

By   /s/ James C. Fields
Name:  James  Fields
Title: Chief Financial OfficerDEBENTURE AGREEMENT

THE  SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND ARE BEING OFFERED AND SOLD
IN  RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SUCH LAWS.  THE
SECURITIES ARE SUBJECT TO RESTRICTIONS OF TRANSFERABILITY AND RESALE AND MAY NOT
BE  TRANSFERRED  OR  RESOLD  EXCEPT  AS  PERMITTED  UNDER  SUCH LAWS PURSUANT TO
REGISTRATION  OR  AN EXEMPTION THEREFROM.  THE SECURITIES HAVE NOT BEEN APPROVED
OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY OTHER REGULATORY
AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE
MERITS  OF  THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THE OFFERING MATERIALS.
ANY  REPRESENTATION  TO  THE  CONTRARY  IS  UNLAWFUL.

FACE  AMOUNT                                        $750,000
PRICE                                               $750,000
DEBENTURE  NUMBER                                July  -  2006-101
ISSUANCE  DATE                                      July 21, 2006
MATURITY DATE                                       July 21, 2011

     FOR VALUE RECEIVED, LocatePlus Holdings Corporation, a Delaware corporation
(the  "Company"), hereby promises to pay DUTCHESS PRIVATE EQUITIES FUND, LP (the
"Holder")  by July 21, 2011 (the "Maturity Date"), the principal amount of Seven
Hundred  and  Fifty  Thousand  Dollars  ($750,000) U.S., and to pay interest and
redemption  on  the  principal amount hereof, and any accrued penalties, in such
amounts, at such times and on such terms and conditions as are specified herein.

     The  Debenture  set  forth  in  this  Agreement  is  subject  to  automatic
conversion  at the end of five (5) years from the date of issuance at which time
the Debenture outstanding will be automatically converted based upon the formula
set  forth  in  Article  3.2(c).

Article  1          Interest

     The Company shall pay twelve percent (12%) annual coupon on the unpaid Face
Amount  of  this  Debenture.  The  first payment is due and payable within three
days  of  the  Holder's  disbursement  of  funds  to  the Company (a "Closing").

     Any monies paid to the Holder in excess of the interest due when paid shall
be  credited  toward  the  Redemption  of  the  Face  Amount  of  the Debenture.

Article  2          Method  of  Payment

     Section 2.1     Prior to Registration with the SEC

          Prior to the U.S. Securities and Exchange Commission ("SEC") declaring
the  registration  statement  for  the  shares  underlying  the  Debenture
("Registration  Statement")  effective ("Effective Date"), the Company will make
amortizing payments to the Holder (a "Payment," or collectively, the "Payments")
on  a  monthly  basis  on the first day of each business day of each month while
there  is  an  outstanding  balance  on  the Debenture, in the following amounts
("Payment  Amount"  or  collectively,  the  "Payment  Amounts"):

     Payment  for  Month  1  (due  within  three  (3) days of the Issuance Date)
$7,432.63
     Payment for Month 2 and each month thereafter
$89,334.79

Notwithstanding any provision to the contrary in this Debenture, the Company may
pay  in full to the Holder the Face Amount, or any balance remaining thereon, in
readily  available  funds,  at  any  time and from time to time without penalty.

     Section 2.2     Subsequent to the Effective Date

     After the Effective Date of the Registration Statement, the Holder, at its
sole option, shall be entitled to either i) request a Payment from the Company
in the amounts set forth in the table in Section 2.1, above; or ii) the Holder
may elect to convert a portion of the Debenture pursuant to Article 3, below.
In the event the Holder is unable to convert that portion of the Debenture equal
to the Payment Amount during a calendar month, the Company shall make a Payment
in cash in an amount equal to the difference between the amount converted by the
Holder and the Payment Amount due for that month.

     Nothing contained in this Article 2 shall limit the amount the Holder can
elect to convert during a calendar month except as defined in Section 3.2 (i),
below.

     All Payments made under Article 2, shall be applied toward the total
Redemption Amount as outlined in Article 14, herein.

     Section  2.3  No  Penalty  for  Prepayment.

The  Company  may  make  additional  payments  toward  Redemption ("Prepayment")
without  any  penalties.

Section  2.4  Accelerated  Repayment in the Event of a Subsequent Financing by a
Third  Party.

If, at any time after Closing, the Company receives financing from a third party
(excluding the Holder), the Company is required to pay to the Holder 100% of the
proceeds  raised  from  the  third party in excess of an aggregate amount of one
dollar  ($1.00)  (the  "Threshold  Amount").  The  Threshold  Amount  shall also
pertain  to  any  assets  sold,  transferred or disposed of by the Company.  The
Company  agrees  to pay one hundred percent (100%) of any proceeds raised by the
Company  over  the  Threshold  Amount  toward  the  Accelerated Repayment of the
Debenture  with  Interest  until  such time as the Face Amount of the Debenture,
including  accrued  interest  and  penalties,  has  been  paid  in  full.  The
accelerated  Repayment shall be made to the Holder upon the Company's receipt of
the  financing. Failure to do so will result in an Event of Default as set forth
herein.

Article 3          Conversion

Section  3.1     Conversion  Privilege

(a)     The Holder of this Debenture shall have the right to convert any and all
     amounts  owing under this Debenture into shares of Common Stock at any time
following  the  Closing  Date  and  which is before the close of business on the
Maturity  Date,  except  as  set  forth  in Section 3.2(c) below.  The number of
shares  of  Common  Stock  issuable  upon  the  conversion  of this Debenture is
determined  pursuant  to  Section  3.2 and rounding the result up to the nearest
whole  share.

(b)     This Debenture may not be converted, whether in whole or in part, except
     in  accordance  with  this  Article  3.

(c)     In the event all or any portion of this Debenture remains outstanding on
     the  Maturity  Date,  the  unconverted  portion  of  such  Debenture  will
automatically  be  converted  into  shares  of  Common Stock on such date in the
manner  set  forth  in  Section  3.2.

Section  3.2     Conversion  Procedure

(a)     Conversion  Procedures.  The Holder may elect to convert the unpaid Face
Amount  of  and accrued interest on  this Debenture, in whole or in part, at any
time  following  the  Closing Date.  Such conversion shall be effectuated by the
Holder  sending  to  the  Company  a facsimile or electronic mail version of the
signed  Notice  of  Conversion which evidences the Holder's intention to convert
the  Debenture  as  indicated.  The  date  on  which the Notice of Conversion is
delivered ("Conversion Date") shall be deemed to be the date on which the Holder
     has  delivered  to the Company a facsimile or electronic mail of the signed
Notice  of  Conversion.  Notwithstanding  the  above,  any  Notice of Conversion
received  by  5:00  P.M. EST, shall be deemed to have been received the previous
business  day, with receipt being via a confirmation of time of facsimile of the
Holder.

(b)     Common  Stock  to  be  Issued.     Upon  the  Holder's conversion of any
Debenture, the Company shall issue the number of shares of Common Stock equal to
     the  Conversion.  If, at the time of conversion, the Registration Statement
has  been  declared  effective, the Company shall instruct its transfer agent to
issue  stock  certificates  without  restrictive  legend  (other  than  a legend
referring to the registration statement and prospectus delivery requirements) or
stop  transfer  instructions.  If,  at  the time of the Holder's conversion, the
Registration  Statement  has  not  been  declared  effective,  the Company shall
instruct  the  transfer  agent  to  issue  the  certificates with an appropriate
legend.  The  Company  shall  act as Registrar and shall maintain an appropriate
ledger  containing the necessary information with respect to each Debenture. The
Company  warrants that no instructions, other than these instructions, have been
given  or  will  be  given to the transfer agent and that the Common Stock shall
otherwise  be  freely  resold,  except  as  may  be  otherwise set forth herein.

(c)     Conversion  Price.  The  Holder  is  entitled to convert the unpaid Face
Amount  of  this  Debenture, plus accrued interest, any time following a Closing
Date,  at  the  lesser of the following prices (the "Fixed Conversion Price") or
the  "Conversion  Price"  of  $1.00  ($1.00).  No  fractional  shares  or  scrip
representing fractions of shares will be issued on conversion, but the number of
     shares  issuable  shall  be rounded up, in the event of a partial share, to
the  nearest  whole  share.  The  Holder  shall retain all rights of conversions
during  any  partial  trading  days.

(d)     Maximum  Interest.  Nothing  contained in this Debenture shall be deemed
to  establish  or require the Company to pay interest to the Holder at a rate in
excess  of  the  maximum rate permitted by governing law.  In the event that the
rate  of  interest  required  to  be  paid exceeds the maximum rate permitted by
governing  law,  the  rate  of  interest required to be paid thereunder shall be
automatically  reduced to the maximum rate permitted under the governing law and
such  excess,  if so ordered, shall be credited on any remaining balances due to
the  Holder.  In  the event this Section 3.2 (d) applies, the Parties agree that
the  terms  of  this  Debenture  remain  in  full  force and effect except as is
necessary  to  make  the  interest  rate  comply  with  applicable  law.

(e)     Opinion  Letter.  It  shall  be the Company's responsibility to take all
necessary  actions  and  to  bear  all  such  costs to issue the Common Stock as
provided  herein,  including  the  responsibility  and  cost  for delivery of an
opinion  letter  to the transfer agent, if so required.  The person or entity in
whose  name the certificate of Common Stock is to be registered shall be treated
as  a  shareholder of record on and after the conversion date. Upon surrender of
any  Debentures that are to be converted in part, the Company shall issue to the
Holder  a  new  Debenture  equal  to  the unconverted amount, if so requested in
writing  by  Holder.

(f)     Delivery of Shares.  Within three (3) business days after receipt of the
     documentation  referred  to  above  in  Section  3.2(a),  the Company shall
deliver  a  certificate,  in  accordance  with  Section 3.2(c) for the number of
shares  of  Common Stock issuable upon the conversion.  In the event the Company
does  not  make  delivery  of  the Common Stock, as instructed by Holder, within
three  (3)  business  days  after  the Conversion Date, the Company shall pay to
Holder  in cash, as liquidated damages, an additional three percent (3%) per day
of  the  dollar  value  of  the  Debentures  being  converted.

          If  the  failure  of the Company to issue the Common Stock pursuant to
this Article 3.2 (f) is due to the unavailability of authorized shares of Common
Stock,  the  provisions  of  this  Article  3.2  (f)  shall apply as well as the
provisions  of  Article  3.2  (k)  shall  apply.

              The  Company  shall  make any payments required under this Article
3.2(f)  in  immediately  available funds within three (3) business days from the
date  the  Common  Stock  is  fully  delivered.  Nothing  herein shall limit the
Holder's  right,  at  the  Holder's sole discretion, to pursue actual damages or
cancel  the  conversion  for  the  Company's failure to issue and deliver Common
Stock  to  the  Holder within three (3) business days after the Conversion Date.

     The  Company  shall  at  all  times  reserve  (or  make alternative written
arrangements  for  reservation or contribution of shares) and have available all
Common  Stock  necessary to meet conversion of the full amount of the Debentures
then  outstanding  and  due to the Holder. If, at any time, the Holder submits a
Notice  of  Conversion  and  the Company does not have sufficient authorized but
unissued shares of Common Stock (or alternative shares of Common Stock as may be
contributed  by  Stockholders) available to effect, in full, a conversion of the
Debentures  (a  "Conversion Default", the date of such default being referred to
herein  as the "Conversion Default Date"), the Company shall issue to the Holder
all  of  the  shares  of Common Stock which are then available.  Any Convertible
Debentures  or  any  portion  thereof,  which  cannot  be  converted  due to the
Company's  lack  of  sufficient  authorized  common  stock  (the  "Unconverted
Debentures"), may be deemed null and void upon written notice sent by the Holder
to  the  Company.  The  Company  shall provide notice of such Conversion Default
("Notice  of  Conversion  Default")  to the Holder, by facsimile, within one (1)
business  days  of  such  default.

     In  the event of Conversion Default, the Company will pay to the Holder the
amount of (N/365) x (.24) x the initial issuance price of the outstanding and/or
tendered  but  not converted Debentures held by each Holder where N = the number
of days from the Conversion Default Date to the date that the Company authorizes
a  sufficient  number  of  shares  of  Common  Stock to effect conversion of all
remaining  Debentures (the "Authorization Date").  The Company shall send notice
to  Holder  of outstanding Debenture that additional shares of Common Stock have
been  authorized;  stating  the  Authorization  Date  and the amount of Holder's
accrued  Conversion  Default  Payments  ("Authorization  Notice").  The  accrued
Conversion  Default  shall  be  paid in cash or shall be convertible into Common
Stock  at  the  Conversion  Rate,  upon written notice sent by the Holder to the
Company,  as  follows:   (i) in the event the Holder elects to take such payment
in  cash,  cash  payment  shall  be made to the Holder  within five (5) business
days,  or  (ii)  in  the  event Holder elects to take such payment in stock, the
Holder  may  convert  at  the conversion rate set forth in the first sentence of
this  paragraph  within  five  (5)  business  days  until  the expiration of the
conversion  period.

     The  Company  acknowledges that its failure to maintain a sufficient number
of authorized but unissued shares of Common Stock to effect in full a conversion
of  the  Debenture  will  cause  the Holder to suffer irreparable harm, and that
damages  will be difficult to ascertain.  Accordingly, the parties agree that it
is  appropriate to include in this Agreement a provision for liquidated damages.
The  parties  acknowledge  and  agree  that the liquidated damages provision set
forth in this section represents the parties' good faith effort to quantify such
damages  and, as such, agree that the form and amount of such liquidated damages
are  reasonable  and  will  not constitute a penalty.  The payment of liquidated
damages shall not relieve the Company from its obligations to deliver the Common
Stock  pursuant  to the terms of this Debenture.  Nothing herein shall limit the
Holder's  right to pursue actual damages for the Company's failure to maintain a
sufficient  number  of  authorized  shares  of  Common  Stock.

     If,  by the third (3rd) business day after the Conversion Date, any portion
of  the  shares  of  the  Convertible  Debentures have not been delivered to the
Holder  and  the  Holder  purchases, in an open market transaction or otherwise,
shares  of  Common  Stock  necessary to make delivery of shares which would have
been delivered if the full amount of the shares to be converted and delivered to
the  Holder  by the Company (the "Covering Shares") , then the Company shall pay
to  the  Holder,  in addition to any other amounts due to the Holder pursuant to
this  Convertible  Debenture,  and  not  in  lieu thereof, the Buy-In Adjustment
Amount  (as  defined below).  The "Buy In Adjustment Amount" is the amount equal
to  the  excess,  if  any,  of  (x) the Holder's total purchase price (including
brokerage  commissions,  if  any)  for  the  Covering  Shares  minus (y) the net
proceeds  (after  brokerage commissions, if any) received by the Holder from the
sale  of the Sold Shares.  The Company shall pay the Buy-In Adjustment Amount to
the  Holder  in  immediately  available  funds  within five (5) business days of
written  demand  by the Holder.  By way of illustration and not in limitation of
the  foregoing,  if  the  Holder purchases shares of Common Stock having a total
purchase  price  (including  brokerage commissions) of $11,000 to cover a Buy-In
with  respect to shares of Common Stock it sold for net proceeds of $10,000, the
Buy-In Adjustment Amount which the Company will be required to pay to the Holder
will  be  $1,000.

(g)     Prospectus  and Other Documents. The Company shall furnish to Holder one
(1)  prospectus  and  any  other documents incidental to the registration of the
shares  of Common Stock underlying the Debentures, including any amendment of or
supplements  thereto.  Any  filings  submitted  via  EDGAR  will  constitute
fulfillment  of  the  Company's  obligation  under  this  Section.

(h)     Limitation  on Issuance of Shares. If the Company's Common Stock becomes
listed  on  the  Nasdaq SmallCap Market after the issuance of the Debenture, the
Company  may  be limited in the number of shares of Common Stock it may issue by
virtue  of  (A)  the number of authorized shares or (B) the applicable rules and
regulations  of  the  principal  securities  market on which the Common Stock is
listed  or  traded,  including,  but  not  necessarily  limited  to, NASDAQ Rule
4310(c)(25)(H)(i)  or  Rule  4460(i)(1), as may be applicable (collectively, the
"Cap  Regulations").  Without  limiting  the  other  provisions thereof: (i) the
Company  will  take  all  steps  necessary  to  issue  shares of Common Stock on
conversion of the Debentures without violating the Cap Regulations, and (ii) if,
     despite  taking  such steps, the Company cannot issue such shares of Common
Stock  without  violating  the Cap Regulations or the Holder cannot convert as a
result  of the Cap Regulations (each such Debenture, an "Unconverted Debenture")
the  Holder  shall  have  the  right  to  elect either of the following options:

     (x)  if  permitted  by  the  Cap  Regulations, require the Company to issue
shares of Common Stock in accordance with the Holder's Notice of Conversion at a
conversion  purchase  price  equal  to  the average of the closing bid price per
share  of  Common  Stock  for  any five (5) consecutive Trading Days (subject to
certain  equitable  adjustments for certain events occurring during such period)
during the sixty (60) Trading Days immediately preceding the Conversion Date; or

     (y)  require the Company to redeem each Unconverted Debenture for an amount
(the  "Redemption Amount"), payable in cash, equal to the sum of (i) one hundred
thirty-three  percent  (133%) of the principal of an Unconverted Debenture, plus
(ii)  any  accrued but unpaid interest thereon through and including the date on
which  the  Redemption  Amount  is  paid  to the holder (the "Redemption Date").

     The  Holder  may  elect, without limitation, one of the above remedies with
respect  to  a  portion  of such Unconverted Debenture and the other remedy with
respect  to  other  portions  of the Unconverted Debenture.  The Debenture shall
contain  provisions  substantially  consistent  with  the above terms, with such
additional  provisions  as may be consented to by the Holder.  The provisions of
this  section  are  not  intended to limit the scope of the provisions otherwise
included  in  the  Debenture.

(i)     Limitation  on  Amount  of  Conversion  and  Ownership.  Notwithstanding
anything  to  the  contrary  in  this Debenture, in no event shall the Holder be
entitled  to convert that amount of Debenture, and in no event shall the Company
permit  that  amount of conversion, into that number of shares, which when added
to  the sum of the number of shares of Common Stock beneficially owned, (as such
term  is  defined  under Section 13(d) and Rule 13d-3 of the Securities Exchange
Act  of  1934, as may be amended, (the "1934 Act")), by the Holder, would exceed
4.99%  of  the  number  of  shares of Common Stock outstanding on the Conversion
Date,  as  determined  in  accordance with Rule 13d-1(j) of the 1934 Act. In the
event  that  the  number  of shares of Common Stock outstanding as determined in
accordance  with  Section  13(d)  of the 1934 Act is different on any Conversion
Date  than it was on the Closing Date, then the number of shares of Common Stock
outstanding  on  such  Conversion  Date shall govern for purposes of determining
whether the Holder would be acquiring beneficial ownership of more than 4.99% of
     the  number  of shares of Common Stock outstanding on such Conversion Date.
However,  nothing  in  this Article 3.2(i) shall be read to reduce the amount of
principal,  interest  or  penalties,  if  any,  due  to  the  Holder.

(j)     Legend.  The  Holder acknowledges that each certificate representing the
Debentures,  and the Common Stock unless registered pursuant to the Registration
Rights  Agreement,  shall  be  stamped  or  otherwise  imprinted  with  a legend
substantially  in  the  following  form:

THE  SECURITIES  EVIDENCED  BY  THIS  CERTIFICATE  MAY  NOT  BE OFFERED OR SOLD,
TRANSFERRED,  PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT (i) PURSUANT
TO  AN  EFFECTIVE  REGISTRATION  STATEMENT  UNDER THE SECURITIES ACT OF 1933, AS
AMENDED,  (ii)  TO THE EXTENT APPLICABLE, PURSUANT TO RULE 144 UNDER THE ACT (OR
ANY  SIMILAR  RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR
(iii)  PURSUANT  TO  AN  AVAILABLE  EXEMPTION  FROM REGISTRATION UNDER SUCH ACT.

     (k)  Prior to conversion of the Debenture, if at any time the conversion of
all  the Debentures and exercise of all the Warrants outstanding would result in
an  insufficient  number of authorized shares of Common Stock being available to
cover all the conversions, then in such event, the Company will move to call and
hold  a shareholder's meeting or have shareholder action with written consent of
the proper number of shareholders within thirty (30) days of such event, or such
greater  period  of  time  if  statutorily  required  or reasonably necessary as
regards  standard brokerage house and/or SEC requirements and/or procedures, for
the  purpose  of authorizing additional shares of Common Stock such as necessary
to  facilitate  the  Holder's  conversions.   In such an event management of the
Company  shall  recommend  to  all shareholders to vote their shares in favor of
increasing  the  authorized  number of shares of Common Stock. Management of the
Company  shall vote all of its shares of Common Stock in favor of increasing the
number  of shares of authorized Common Stock to an amount equal to three hundred
percent  (300%)  of  the  remaining  balance  on  the  Debenture.  The  Company
represents  and warrants that under no circumstances will it deny or prevent the
Holder's  right  to  convert the Debentures as permitted under the terms of this
Subscription  Agreement  or  the Registration Rights Agreement.  Nothing in this
Section shall limit the obligation of the Company to make the payments set forth
in  this  Article 3.  The Holder, at its sole option, may request the company to
authorize  and  issue  additional shares if the Holder feels it is necessary for
conversions in the future. In the event the Company's shareholder's meeting does
not  result  in  the  necessary  authorization,  the  Company  shall  redeem the
outstanding  Debentures  for  an amount equal to the sum of the principal of the
outstanding  Debentures  plus  accrued  interest  thereon  multiplied  by  133%.

Section  3.3     Fractional  Shares.  The  Company  shall  not  issue fractional
shares of Common Stock, or scrip representing fractions of such shares, upon the
     conversion  of this Debenture.  Instead, the Company shall round up, to the
nearest  whole  share.

Section  3.4     Taxes  on  Conversion.  The  Company shall pay any documentary,
stamp  or  similar  issue  or  transfer tax due on the issue of shares of Common
Stock  upon the conversion of this Debenture.  However, the Holder shall pay any
such  tax  which  is  due because the shares are issued in a name other than its
name.

Section  3.5     Company  to  Reserve  Stock.  The  Company  shall  reserve  and
maintain  the number of shares of Common Stock required pursuant to and upon the
terms  set  forth in the Subscription Agreement to permit the conversion of this
Debenture.  All  shares  of Common Stock which may be issued upon the conversion
hereof  shall  upon  issuance  by  the Company be validly issued, fully paid and
nonassessable  and  free  from  all taxes, liens and charges with respect to the
issuance  thereof.

Section  3.6     Restrictions  on  Sale.  This Debenture has not been registered
under  the  Securities  Act  of 1933, as amended (the "Act") and is being issued
under Section 4(2) of the Act and Rule 506 of Regulation D promulgated under the
     Act.  This  Debenture  and  the  Common  Stock issuable upon the conversion
thereof may only be sold pursuant to registration under or an exemption from the
Act.

     Section 3.7     Stock Splits, Combinations and Dividends.  If the shares of
Common Stock are subdivided or combined into a greater or smaller number of
shares of Common Stock, or if a dividend is paid on the Common Stock in shares
of Common Stock, the Conversion Price shall be proportionately reduced in the
case of a subdivision of shares or stock dividend, or proportionately increased
in the case of combination of shares, in each such case, by the ratio that the
total number of shares of Common Stock outstanding immediately after such event
bears to the total number of shares of Common Stock outstanding immediately
prior to such event.

Article 4          Mergers
     The  Company shall not consolidate or merge into, or transfer any or all of
its assets to, any person, unless such person assumes in writing the obligations
of  the  Company  under this Debenture and immediately after such transaction no
Event  of  Default  exists.  Any  reference herein to the Company shall refer to
such  surviving  or  transferee  corporation  and the obligations of the Company
shall  terminate  only upon such written assumption of the Company's obligation.
In  the event of a merger, or other consolidation, the Company shall give notice
to  the  Holder  simultaneously  with  the  announcement  to the public markets.

Article 5       Security

     This Debenture is secured by a Security Agreement (the "Security
Agreement") of this date between the Company and the Holder.

Article 6          Defaults and Remedies

Section  6.1     Events  of Default.  An "Event of Default" occurs if any one of
the  following  occur:

     (a)  the Company does not make timely Payment or Conversion, in whole or in
part,  necessary  to  cover  the  principal,  interest  or  other sum due on the
Maturity  Date, Conversion Date, upon redemption, or otherwise described herein;
or,

     (b)  the  Company does not make a Payment in cash for a period of three (3)
business  days  when  due  as  described  in  this  Agreement;  or,

     (c)  any  of  the  Company's representations or warranties contained in the
Transaction  Documents  or  this  Debenture  were false when made or the Company
fails  to  comply  with any of its other agreements in the Transaction Documents
(as defined in Article 17 below) and such failure continues for a period of five
(5)  business  days;  or,

     (d)  the  Company  pursuant to or within the meaning of any Bankruptcy Law:
(i)  commences  a  voluntary  case;  (ii)  consents to the entry of an order for
relief against it in an involuntary case; (iii) consents to the appointment of a
Custodian  (as hereinafter defined) of it or for all or substantially all of its
property  or (iv) makes a general assignment for the benefit of its creditors or
(v)  a  court  of  competent  jurisdiction  enters  an order or decree under any
Bankruptcy  Law  that  (A)  is  for relief against the Company in an involuntary
case;  (B)  appoints  a Custodian of the Company for all or substantially all of
its  property  or  (C)  orders  the liquidation of the Company, and the order or
decree  remains  unstayed  and  in  effect  for  sixty  (60)  calendar days; or,

     (e)  the  Company's  Common  Stock  is suspended or no longer listed on any
recognized  exchange  including  electronic  over-the-counter  bulletin  board
("Principal  Market")  for  in  excess  of  three  (3) consecutive Trading Days.
Failure  to  comply  with  the requirements for continued listing on a Principal
Market  for  a period of five (5) trading days; or notification from a Principal
Market  that  the  Company  is  not  in  compliance with the conditions for such
continued  listing  on  such  Principal  Market;  or,

     (f)  the  Company  breaches  any  covenant  or condition of the Transaction
Documents,  and  such breach, if subject to cure, continues for a period of five
(5)  business  days;  or,

     (g)  the Registration Statement is not declared effective by the SEC within
twelve  (12)  months  of  the  Issuance  Date.

Section  6.2     Remedies.  In  the  Event  of  Default, the Holder may elect to
secure  a  portion  of  the  Company's  assets  in Collateral (as defined in the
Security  Agreement).  The  Holder  may  also  elect to garnish revenue from the
Company  in  an  amount  that will repay the Holder on the schedules outlined in
this  Agreement.

     In  the  Event  of  Default,  as outlined in this Agreement, the Holder can
exercise  its  right to increase the Face Amount of the Debenture by ten percent
(10%)  as an initial penalty, and by ten percent (10%) for each subsequent Event
of  Default.  In  addition,  the Holder may elect to increase the Face Amount by
two and one-half percent (2.5%) per month (pro-rata for partial periods) paid as
liquated  damages ("Liquidated Damages"), compounded daily.  It is the intention
and acknowledgement of both parties that the Liquidated Damages not be deemed as
interest  or  a  penalty  under  the  terms  of  this  Agreement.

Section  6.3     Acceleration.  If  an  Event  of  Default occurs, the Holder by
notice  to  the  Company  may  declare  the  remaining  principal amount of this
Debenture,  together with all accrued interest and any liquidated damages, to be
immediately  due  and  payable  in  full.

Section  6.4     Seniority.  The  Company  warrants  that no indebtedness of the
Company is senior to this Debenture in right of payment, whether with respect to
     interest,  damages  or  upon liquidation or dissolution or otherwise.  And,
the  Company  warrants  that it has taken all necessary steps to subordinate its
other  obligations  to  the  rights  of  the  Holder  hereunder.

     Section 6.5     Cost of Collections. If an Event of Default occurs, the
Company shall pay the Holder's reasonable costs of collection, including
reasonable attorney's fees and costs of arbitration.

Article 7          Registered Debentures

Section 7.1     Record Ownership.  The Company, or the Company's attorney, shall
     maintain  a  register  of  the  Holder  of  the Debentures (the "Register")
showing  their  names and addresses and the serial numbers and principal amounts
of  Debentures  issued  to  them.  The Register may be maintained in electronic,
magnetic  or other computerized form.  The Company may treat the person named as
the  Holder  of  this  Debenture  in  the  Register  as  the  sole owner of this
Debenture.   The  Holder  of  this  Debenture is exclusively entitled to receive
payments  of  interest  on this Debenture, receive notifications with respect to
this  Debenture,  convert it into Common Stock and otherwise exercise all of the
rights  and  powers  as  the  absolute  owner  hereof.

     Worn  or  Lost  Debentures.  If  this  Debenture  becomes  worn, defaced or
mutilated but is still substantially intact and recognizable, the Company or its
agent  may  issue a new Debenture in lieu hereof upon its surrender.   Where the
Holder  of  this Debenture claims that the Debenture has been lost, destroyed or
wrongfully  taken,  the  Company  shall  issue  a  new Debenture in place of the
Debenture  if  the  Holder  so  requests  by  written  notice  to  the  Company.

Article 8          Notice.

     Any  notices,  consents,  waivers  or  other  communications  required  or
permitted  to  be given under the terms of this Debenture must be in writing and
will  be  deemed  to  have  been  delivered  (i)  upon  receipt,  when delivered
personally;  (ii)  upon receipt, when sent by facsimile (provided a confirmation
of  transmission is mechanically or electronically generated and kept on file by
the  sending  party);  or  (iii)  one  (1)  day  after deposit with a nationally
recognized  overnight  delivery  service, in each case properly addressed to the
party  to  receive  the  same.  The  addresses  and  facsimile  numbers for such
communications  shall  be:

If  to  the  Company:

James C. Fields
LocatePLUS Holdings Corporation
100 Cummings Center #235M
Beverly, MA 01915
Telephone: 978-921-2727
Facsimile:  978-524-8887

If  to  the  Investor:

Douglas  Leighton
Dutchess  Capital  Management
50  Commonwealth  Ave,  Suite  2
Boston,  MA  02116
Telephone:  617-301-4700
Facsimile:  617-249-0947

     Each  party  shall provide five (5) business days prior notice to the other
party  of  any  change  in  address,  phone  number  or  facsimile  number.

Article 9          Time

     Where  this  Debenture  authorizes  or requires the payment of money or the
performance of a condition or obligation on a Saturday or Sunday or a holiday on
which  the  United  States  Stock Markets ("US Markets") are closed ("Holiday"),
such  payment  shall  be  made  or condition or obligation performed on the last
business day preceding such Saturday, Sunday or Holiday.  A "business day" shall
mean  a  day  on  which  the  US  Markets are open for a full day or half day of
trading.

Article 10          No Assignment

     This  Debenture and the obligation hereunder shall not be assignable by the
Company  or  the  Holder.

Article 11          Rules of Construction.

     In  this  Debenture,  unless  the  context otherwise requires, words in the
singular  number include the plural, and in the plural include the singular, and
words  of the masculine gender include the feminine and the neuter, and when the
tense  so  indicates,  words  of the neuter gender may refer to any gender.  The
numbers  and  titles  of  sections  contained  in the Debenture are inserted for
convenience  of  reference  only, and they neither form a part of this Debenture
nor are they to be used in the construction or interpretation hereof.  Wherever,
in  this  Debenture, a determination of the Company is required or allowed, such
determination  shall  be  made  by  a  majority of the Board of Directors of the
Company and if it is made in good faith, it shall be conclusive and binding upon
the  Company  and  the  Holder  of  this  Debenture.

Article 12          Governing Law
     The validity, terms, performance and enforcement of this Debenture 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.

Article 13          Disputes Under 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
will  submit all disputes arising under this agreement to arbitration in Boston,
Massachusetts before a single arbitrator of the American Arbitration Association
("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  to  this agreement will challenge the jurisdiction or venue provisions as
provided  in  this  section.  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.

Article  14  Redemption

     The  Holder  shall  have  the  right  to  be  redeemed,  in  cash, from the
Debenture,  in whole or in part, at a price equal to one hundred and twenty-five
percent  (125%)  of the outstanding principal amount of the Debenture, including
accrued  interest  (and  penalties  if  applicable). Any Payments, as defined in
Article  2  above,  shall  apply  to  the  Redemption  Amount.

Article  15     Holder  Warrants

     As  an  additional inducement to the Holder, the Company shall issue to the
Holder  a  warrant  to  purchase three hundred and seventy-five thousand dollars
($375,000)  worth of shares of its common stock exercisable at the strike prices
outlined  in  the  Warrant  Agreement,  attached  hereto  and  incorporated  by
reference.

Article  16     Investor  Shares

     The  Company  shall  issue  two  hundred  thousand  (200,000)  shares  of
unregistered,  restricted  Common  Stock  to  the Holder as an incentive for the
investment  ("Incentive  Shares").  The  Incentive  Shares  shall  be issued and
delivered  immediately  to  the  Holder  and  shall carry piggyback registration
rights.   In  the  event  the Shares are not registered in the next registration
statement,  the  Company  shall  pay  to  the  Holder, as a penalty, two hundred
thousand  (200,000)  additional  shares  of  common  stock  for  each  time  a
registration  statement is filed and the Shares are not included.  The Holder at
its  sole discretion may waive such penalty.  The Company's failure to issue the
Incentive  Shares  constitutes  an  Event of Default and the Holder may elect to
enforce the remedies outlined in Article 6.  The Company's obligation to provide
the  Holder  with  the  Incentive Shares, as set forth herein, shall survive the
operation  of the Agreement and any default on this obligation shall provide the
Holder  with all rights, remedies and default provisions set forth in this Note,
or  otherwise  available  by  law.

Article  17     Transaction  Documents

The  Company  agrees  that  contemporaneously with the execution and delivery of
this  Debenture,  the  parties  hereto  are executing and delivering a Debenture
Registration  Rights  Agreement,  Subscription  Agreement, Warrant Agreement and
Security Agreement (collectively, the "Transaction Documents") pursuant to which
the  Company  has agreed to provide certain rights and obligations as defined in
the  Transaction  Documents.

Article  18     Waiver

The  Holder's  delay or failure at any time or times hereafter to require strict
performance  by  the  Company of any undertakings, agreements or covenants shall
not  waive,  affect, or diminish any right of the Holder under this Agreement to
demand  strict  compliance and performance herewith. Any waiver by the Holder of
any  Event  of  Default  shall  not  waive or affect any other Event of Default,
whether  such Event of Default is prior or subsequent thereto and whether of the
same  or a different type. None of the undertakings, agreements and covenants of
the  Company  contained  in  this  Agreement,  and no Event of Default, shall be
deemed  to  have  been  waived by the Holder, nor may this Agreement be amended,
changed  or  modified,  unless such waiver, amendment, change or modification is
evidenced  by an instrument in writing specifying such waiver, amendment, change
or  modification  and  signed  by  the  Holder.

Article 19     Integration

This  Debenture  is  the FINAL AGREEMENT between the Company and the Holder with
respect  to  the  terms  and conditions set forth herein, and, the terms of this
Debenture  may  not  be  contradicted  by evidence of prior, contemporaneous, or
subsequent  oral  agreements of the Parties.  The execution and delivery of this
Debenture  is  done  in  conjunction  with  the  execution  of  the  Transaction
Documents,  as  defined  in  Article  16.  The  execution  and  delivery of this
Debenture  shall  not  alter any past written agreements between the Company and
the  Holder.

Article  20     Failure  To  Meet  Obligations  by  the  Company

           The  Company  acknowledges that its failure to timely meet any of its
obligations  hereunder,  including,  but  without limitation, its obligations to
make  Payments,  deliver  shares  and,  as  necessary,  to register and maintain
sufficient  number  of  Shares, will cause the Holder to suffer irreparable harm
and  that  the  actual  damage  to  the  Holder  will be difficult to ascertain.
Accordingly,  the  parties  agree  that  it  is  appropriate  to include in this
Debenture a provision for liquidated damages.  The parties acknowledge and agree
that  the  liquidated damages provision set forth in this section represents the
parties' good faith effort to quantify such damages and, as such, agree that the
form  and amount of such liquidated damages are reasonable and do not constitute
a penalty.  The payment of liquidated damages shall not relieve the Company from
its  obligations  to  deliver  the  Common  Stock  pursuant to the terms of this
Debenture.

                                      *.*.*

     IN WITNESS WHEREOF, the Company has duly executed this Debenture as of the
date first written above and duly authorized to sign on behalf of:
                         LOCATEPLUS  HOLDINGS  CORPORATION.
                         ----------------------------------

By /s/ Jon R. Latorella
Name:  Jon  Latorella
Title: Chief  Executive  Officer

By /s/ James C. Fields
Name:  James  C.  Fields
Title: Chief  Financial  Officer

                              DUTCHESS PRIVATE EQUITIES FUND, L.P.
                              BY ITS GENERAL PARTNER DUTCHESS
                              CAPITAL MANAGEMENT, LLC

By:  /s/ Douglas  H.  Leighton
Name:  Douglas  H.  Leighton
       Title:  A  Managing  Member

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00112-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00112-of-00352.parquet"}]]