annualreport2009.htm

Exhibit 10.19

SERIES A CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT

THIS SERIES A CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT (this “Agreement”) is made and entered into as of November 4, 2009 by and among LocatePLUS Holdings Corporation , a Delaware corporation, (collectively, the “Company”), and the investors listed on Schedule 1 attached hereto (who shall execute this Agreement and who are collectively referred to as the “Investors”).

RECITALS

WHEREAS, the Company and the Investors are executing and delivering this Agreement in reliance upon an exemption from securities registration pursuant to Section 4(2) and/or Rule 506 of Regulation D (“Regulation D”) as promulgated by the United States Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended (the “Securities Act”);

WHEREAS, the Company desires to authorize, issue and sell seventy two thousand (72,000) shares of its Series A Convertible Preferred Stock, $1.00 par value per share (the “Series A Stock”) to the Investors, and the Investors desire to purchase the Series A Stock, all on the terms and subject to the conditions herein set forth; and

WHEREAS, on November 4, 2009 the Company and Dutchess Private Equities Fund, Ltd. executed and delivered a Debt Conversion Agreement (the “Debt Conversion Agreement”) to take effect upon such time as the fulfillment of the Company obligations herein for duly authorized issuance of the Series A Stock.

NOW, THEREFORE, for and in consideration of the foregoing premises, the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

1. Authorization of Securities. The Company has duly obtained the authorization authorizations for issuance of the preferred stock of which the Series A Stock is a part (the “Preferred Stock”) set forth in the Company’s Amended Certificate of Incorporation and the Certificate of Designation for the Series A Stock, containing the rights, privileges and preferences as described in the Debt Conversion Agreement The Company has authorized and reserved a sufficient number of shares of Common Stock to satisfy the rights of conversion and purchase of the holders of the Series A Stock. (the “Conversion Shares”).

2. Sale and Purchase of Series A Stock. Subject to the terms and conditions herein, the Company agrees to sell to the Investors, and each of the Investors severally agrees to purchase from the Company on the date hereof in accordance with this Agreement, the number of shares of Series A Stock set forth opposite such Investor’s name on Schedule 1 at a purchase price of Twenty-Five dollars ($25.00) per share in accordance with the terms and conditions of the Debt Conversion Agreement (the “Purchase Commitment”). The Company’s agreement with each Investor is a separate agreement, and the sale of the Series A Stock to each Investor is a separate sale.

3. The Closing. The closing of the sale of the Series A Stock shall take place at 10:00 a.m. Boston time (the “Closing”) on the date hereof. The date and time on which the Closing occurs shall be referred to as the “Closing Date”. On the Closing Date, the Company shall deliver to each of the Investors purchasing shares of the Series A Stock on such date a stock certificate for the number of shares of Series A Stock being acquired by such Investor, which shares shall be registered in the Investor’s name or as otherwise designated by the Investor.

4. Representations and Warranties by the Company. As a material inducement to each of the Investors to enter into this Agreement and to purchase the number of shares of the Series A Stock set forth after such Investor’s name on Schedule 1, with the understanding that each Investor will be relying thereon in consummating the transactions contemplated hereunder, the Company hereby represents and warrants to each Investor as of the date of this Agreement that, except as set forth (i) in the Disclosure Schedule attached hereto and prepared and delivered by the Company to the Investors on the date hereof (the “Disclosure Schedule”), (ii) the Transaction Documents or (iii) SEC Form 10-K of the Company for the year ended December 31, 2008 and the SEC Form 10-Q of the Company for the six months ended June 30, 2009 (the “SEC Documents”, the statements contained in this Section 4 are true and correct. The Disclosure Schedule is arranged in sections corresponding to the sections and subsections of this Section 4:

4.1. Organization, Qualification and Power. The Company is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation, and has all requisite corporate power and authority, and all governmental licenses, governmental authorizations, governmental consents and governmental approvals, required to carry on its business as now conducted and to own, lease and operate the assets and properties of the Company as now owned, leased and operated. The Company is duly qualified or licensed to do business as a foreign corporation and is in good standing in every jurisdiction in which the character or location of its properties and assets owned, leased or operated by the Company or the nature of the business conducted by the Company requires such qualification or licensing, except where the failure to be so qualified, licensed or in good standing in such other jurisdiction could not, individually or in the aggregate, have a Material Adverse Effect (as defined herein) on the Company. The Company has heretofore delivered to the Investors complete and accurate copies of its Articles of Incorporation and Bylaws, as currently in effect. The Company has previously delivered to the Investors a complete and accurate list of all jurisdictions in which the Company is qualified or licensed to do business as of the date hereof.

4.2. Authorization; Enforcement. The Company has full power and authority to enter into this Agreement, the related Debt Conversion Agreement, any and all agreements referenced herein or therein, and all agreements and documents related to the foregoing (collectively, the “Transaction Documents”) and, to carry out the transactions contemplated in the Transaction Documents. Subject to the terms and conditions of the Debt Conversion Agreement, The Board of Directors of the Company and the Company’s stockholders have taken all action required by law, the Company’s charter documents and otherwise to duly and validly authorize and approve the execution, delivery and performance by the Company of the Transaction Documents and the consummation by the Company of the transactions contemplated in the Transaction Documents and no other corporate proceedings on the part of the Company are necessary to authorize the Transaction Documents or to consummate the transactions contemplated thereby. The Transaction Documents have been duly and validly executed and delivered by the Company and constitute the legal, valid and binding obligations of the Company, enforceable against it in accordance with their respective terms, subject to laws of general application relating to bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and rules of law governing specific performance, injunctive relief or other equitable remedies.

4.3. Capitalization of the Company. The Company has authorized (a) 50,000,000 shares of Common Stock, 49,993,987 of which shares are issued and outstanding, and (b) 1,000,000 shares of Preferred Stock of which 72,000 shares of Series A Preferred Stock have been authorized but none of which is issued and outstanding (together with the Common Stock, the “Capital Stock”). All of the issued and outstanding shares of the Capital Stock are duly authorized, validly issued, fully paid, non-assessable and free of preemptive rights. Except as set forth in the Disclosure Schedule, the Transaction Documents or the SEC Documents (a) there are no outstanding obligations of the Company to repurchase, redeem or otherwise acquire any of its securities, (b) there are no stockholder agreements, voting trusts or other agreements or understandings to which the Company is a party or by which it is bound relating to the voting or registration of any shares of Capital Stock, (c) there are no outstanding 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, (d) there are no 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, (e) there are no outstanding debt securities, (f) 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 Securities Act, (g) there are no outstanding registration statements or comment letters from the SEC or any other regulatory agency and (h)there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Preferred Stock as described in this Agreement.

4.4. Non-Contravention. Neither the execution, delivery and performance by the Company of the Transaction Documents nor the consummation of the transactions contemplated therein will (i) contravene or conflict with the Certificate of Incorporation or By-Laws of the Company, (ii) contravene or conflict with or constitute a violation of any provision of any Applicable Law (as defined herein) binding upon or applicable to the Company or any of the Company’s assets, (iii) result in the creation or imposition of any Lien (as defined herein) on any of the Company’s assets, other than Permitted Liens (as defined herein), (iv) be in conflict with, constitute (with or without due notice or lapse of time or both) a default under, result in the loss of any material benefit under, or give rise to any right of termination, cancellation, increased payments or acceleration under any terms, conditions or provisions of any material note, bond, lease, mortgage, indenture, license, contract, franchise, permit, instrument or other agreement or obligation to which the Company is a party, or by which any of its properties or assets may be bound, or (v) to the knowledge of the Company, materially disrupt or impair any business relationship with any material supplier, customer, distributor, sales representative or employee of the Company. Except as set forth in the Disclosure Schedule, the Transaction Documents or the SEC Documents , neither the Company nor its subsidiaries is in violation of any term of or in default under its Certificate of Incorporation or By-laws or any material contract, agreement, mortgage, indebtedness, indenture, instrument, judgment, decree or order or any statute, rule or regulation applicable to the Company or its subsidiaries. The business of the Company and its subsidiaries is not being conducted, and shall not be conducted in violation of any material law, ordinance, or regulation of any governmental entity. Except as specifically contemplated by the Transaction Documents and as required under the Securities Act and any Applicable Law, the Company is not required to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency 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 thereof. All consents, authorizations, 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. The Company and its subsidiaries are unaware of any facts or circumstance, which might give rise to any of the foregoing.

4.5. Consents and Approvals. No consent, approval, order or authorization of or from, or registration, notification, declaration or filing with (hereinafter sometimes separately referred to as a “Consent” and sometimes collectively as “Consents”), of any Person, including, without limitation, any Governmental Authority (as defined herein), is required in connection with the execution, delivery or performance of the Transaction Documents by the Company or the consummation by the Company of the transactions contemplated therein. To the knowledge of the Company, there are no facts relating to the identity or circumstances of the Company that would prevent or materially delay obtaining any of the Consents.

4.6. Financial Statements; Undisclosed Liabilities.

(a) The Company has previously delivered to the Investors complete and accurate copies of the audited financial statements of the Company as of December 31, 2008 Latest Financial Statements and the unaudited financial statements of the Company for the six months ended June 30, 2009 all, as included in the

SEC Documents ( the “Latest Financial Statements”). The Latest Financial Statements are based upon the information contained in the books and records of the Company and fairly and accurately present the financial condition of the Company as of the dates thereof and results of operations for the periods referred to therein. The Latest Financial Statements have been prepared in accordance with GAAP (as defined herein). The financial statements for the period ended June 30, 2009 have been prepared in accordance with GAAP applicable to unaudited interim financial statements and thus may not contain all notes and may not contain prior period comparative data which are required by GAAP for audited financial statements)They reflect all adjustments necessary to a fair and accurate statement of the financial condition and results of operations of the Company for the interim periods presented.

(b) All accounts, books and ledgers related to the business of the Company and its subsidiaries are properly and accurately kept, are complete in all material respects, and there are no material inaccuracies or discrepancies of any kind contained or reflected therein subject to the year end adjustments made by the outside

accountant which shall be in accordance with prior practice.

(c) Except as and to the extent reflected in the Latest Financial Statements subject to year end adjustments made in accordance with prior practice, the Company does not have any Liabilities (as defined herein) of any nature (whether accrued, absolute, contingent, unliquidated or otherwise, whether due or to become due, and

regardless of when asserted), other than Liabilities incurred in the Ordinary Course of Business (as defined herein) since the date of the Latest Financial Statements and Liabilities arising in connection with this Agreement and the transactions contemplated herein.

4.7. Assets and Properties.

(a) Except as previously disclosed in the SEC Documents, the Company has good and valid right, title and interest in and to or, in the case of leased properties or properties held under license, good and valid leasehold or license interests in, all of their assets and properties, including, but not limited to, all of the machinery,

equipment, terminals, computers, vehicles, and all other assets and properties (real, personal or mixed, tangible or intangible) reflected in the Latest Financial Statements and all of the assets purchased or otherwise acquired since the date of the Latest Financial Statements, except those assets and properties disposed of in the Company’s ordinary course of business after the date of the Latest Financial Statements. The Company holds title to each such property and asset free and clear of all Liens, except Permitted Liens.

(b) Except as previously disclosed in the SEC Documents, the material equipment owed by the Company has been properly maintained and is in good operating condition and repair and is adequate for the uses for which they are currently being put by the Company, normal wear and tear excepted. To the knowledge of the

Company, no such asset is in need of maintenance or repair, except for routine maintenance and repairs that are in the ordinary course.

(c) Except as previously disclosed in the SEC Documents, the Company owns or has the right to use all material property, real or personal, tangible or intangible, which is necessary for the operation of its business in substantially the same manner as it has been conducted during the period covered by the Latest Financial

Statements.

4.8. Compliance with Applicable Laws. Except as set forth in the Transaction Documents, the SEC Documents or the Disclosure Schedule, the Company has not violated or infringed, nor is it in violation or infringement of, any Applicable Law or any order, writ, injunction or decree of any Governmental Authority in connection with its activities. The Company, and its officers, directors, agents and employees, have complied with all Applicable Laws. No claims have been filed against the Company alleging a violation of any Applicable Law.

4.9. Permits. The Company has conducted its business in compliance with all material terms and conditions of all licenses, permits, quotas, authorizations, registrations and other approvals that are necessary to the operation of, or relate solely to, the Company’s business (collectively, the “Permits”). Each Permit is valid and in full force and effect and none of the Permits will be terminated, revoked, modified or become terminable or impaired in any respect for any reason, except as would not have a Material Adverse Effect.

4.10. Receivables. The accounts receivable and other receivables reflected on the Latest Financial Statements, and those arising after the date thereof, are valid receivables that have arisen from bona fide transactions in the Company’s ordinary course of business, and the Company is not aware that such accounts are subject to valid counterclaims or setoffs, and are collectible in accordance with their terms, except as and to the extent of the bad debt allowance reflected on the Latest Financial Statements.

4.11. Litigation. Except as set forth in the Transaction Documents, the SEC Documents or the Disclosure Schedule, there are no (a) actions, suits, claims, hearings, arbitrations, proceedings (public or private) or governmental investigations that have been brought by or against any Governmental Authority or any other Person, nor any investigations or reviews by any Governmental Authority against or affecting the Company, pending or, to the Company’s knowledge, threatened, against or by the Company or any of its assets or which seek to enjoin or rescind the transactions contemplated by this Agreement; or (b) existing orders, judgments or decrees of any Governmental Authority naming the Company as an affected party or otherwise affecting any of the assets or the business of the Company.

4.12. Labor and Employment Matters. Except as set forth in the Transaction Documents, the SEC Documents or the Disclosure Schedule, the Company has previously provided to the Investors a complete and accurate list of all current employees, officers and directors of the Company, which list includes their base salaries and bonus. All employees of the Company are employed on an at-will basis. Neither the Company nor any of its subsidiaries is involved in any labor dispute nor, to the knowledge of the Company or any of its subsidiaries, is any such dispute threatened. None of the Company’s or its subsidiaries’ employees is a member of a union and the Company and its subsidiaries believe that their relations with their employees are good

4.13. Tax Matters. Except as set forth in the Transaction Documents, the SEC Documents or the Disclosure Schedule as and with the exception of its corporate federal and state income tax return for the year ended December 31, 2008, the Company has, or will have prior to Closing (a) properly completed and filed on a timely basis all tax returns (federal, provincial, state, county, local and other) relating to all excise, payroll, real estate, capital stock, intangible, value-added, income, sales, use, service, employment, property and, without limitation of the foregoing, all other taxes of every kind and nature which the Company is required to file in connection with its business prior to the Closing Date (i.e., the due date for such tax return being on or before the Closing Date) and for which the non-payment of, or failure to file, could result in a Lien on any of the Company’s assets, or result in the Investors becoming liable or responsible therefore, and (b) paid in full all Taxes (as defined herein), interest, penalties, assessments or deficiencies shown to be due to any taxing authority on such returns. The Company is not currently the beneficiary of any extension of time within which to file any such return. The Company is not a party to any pending or, to the knowledge of the Company, any threatened action or proceeding against the Company for the assessment or collection of Taxes by any Governmental Authority, and there is no basis for any such action or proceeding. There are no audits pending with respect to any liabilities for Taxes of the Company.

4.14. Indemnification, Guarantee or Assumption of Liability Obligations. Except as permitted by Applicable Law or set forth in the Company‘s Certificate of Incorporation or By-laws or set forth in the Transaction Documents, the SEC Documents or the Disclosure Schedule the Company is not a party to any Contract that contains any provisions requiring the Company to indemnify, guarantee or assume liabilities of any Person except as made in the ordinary course of business with routine agreements.

4.15. Employee Benefit Plans. Except as set forth in the Transaction Documents, the SEC Documents or the Disclosure Schedule the Company does not have any liability arising directly or indirectly under Section 412 of the Code, or Section 302 of Title IV of ERISA. The Company does not have any liability arising directly or indirectly to or with respect to any “multiemployer plan” within the meaning of Section 4001(a)(3) of ERISA. The Company does not have any liability arising under the Consolidated Omnibus Reconciliation Act of 1985, as amended, Section 4980B of the Code and Part 6 of Subtitle B of Title I of ERISA. Nothing has occurred or failed to occur with respect to any the Company Pension Plan that could result in any liability to the Investors.

4.16. Disclosure. To the best of the knowledge and belief of the management of the Company, no representation or warranty by the Company in this Agreement and no statement contained or to be contained in any document, certificate or other writing furnished by the Company to the Investors in connection with the transactions contemplated by this Agreement, contains or will contain any untrue statement of a material fact or omits or will omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. There is no fact that has not been disclosed to the Investors of which any officer or director of the Company is aware which has or could reasonably be expected to have a Material Adverse Effect.

4.17. 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.

4.18. Regulatory Permits. The Company and its subsidiaries possess all material certificates, authorizations and permits issued by the appropriate federal, state or foreign regulatory authorities necessary to 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, authorization or permit.

4.19. 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, and (iii) the recorded amounts for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

4.20. SEC Documents: Financial Statements. Except as set forth in the Disclosure Schedule, since the date hereof, the Company has filed all reports, schedules, forms, statements and other documents required to be filed by it with the Commission under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) The Company has made available through the Commission’s website at www.sec.gov., complete and accurate copies of the SEC Documents. As of their respective dates, the financial statements of the Company disclosed in the SEC Documents (the “Financial Statements”) complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the Commission 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).

4.21. Acknowledgment Regarding Investor’s Purchase of the Preferred Stock. The Company acknowledges and agrees that the Investors are acting solely in the capacity of an arm’s-length purchaser with respect to the Transaction Documents and the transactions contemplated thereby. The Company further acknowledges that the Investors are 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 thereby and any advice given by the Investors or any of their respective representatives or agents in connection with the Transaction Documents and the transactions contemplated thereby is merely incidental to such Investor’s purchase of the Preferred Stock or the Conversion Shares. The Company further represents to the Investor 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.

4.22. No General Solicitation. None of the Company, its subsidiaries or Affiliates (as defined herein), nor any person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D under the Securities Act) in connection with the offer or sale of the Preferred Stock.

4.23. No Integrated Offering. None of the Company, its subsidiaries or Affiliates, nor any person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would require registration of the Preferred Stock under the Securities Act or cause this offering of the Preferred Stock to be integrated with prior offerings by the Company for purposes of the Securities Act.

4.24. Certain Transactions. Except as permitted by Applicable Law or set forth in the Company‘s Certificate of Incorporation or By-laws or set forth in the Transaction Documents, the SEC Documents or the Disclosure Schedule 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 in the SEC Documents, none of the officers, directors, or employees of the Company, its subsidiaries or Affiliates is presently a party to any transaction with the Company, its subsidiaries or Affiliates (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.

4.25. Rights of First Refusal. The Company is not obligated to offer the securities offered hereunder on a right of first refusal basis or otherwise to any third parties, including but not limited to, current or former shareholders of the Company, its subsidiaries, Affiliates, underwriters, brokers, agents or other third parties.

4.27. Cancelleation of Debentures and Warrants. The Investors and the Company agree that at and subject to the conditions of Closing hereunder, Dutchess Private Equities Fund, Ltd will cancel all Convertible Debentures issued by the Company to Dutchess Private Equities Fund, Ltd. and all Warrants held by Dutchess Private Equities Fund, Ltd. and all indebtedness and other obligations of the Company associated with such Debentures and Warrants.

5. Representations of the Investors. Each of the Investors severally represents to the Company that:

5.1. Investment Intent. The shares of the Series A Stock and the Conversion Shares into which such shares may be converted that are being acquired by the Investor are being purchased for investment for the Investor’s own account and not with a view to, or for resale in connection with, any distribution or public offering thereof. The Investor has no present plan or intention to engage in a sale, exchange, transfer, distribution, redemption, reduction in any way of the Investor’s risk of ownership by short sale or otherwise, or other disposition, directly or indirectly of the Series A Stock being acquired by the Investor pursuant to the Transaction Documents or the Conversion Shares into which such shares may be converted. The Investor is able to bear the economic risk of its investment and has the knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks (including tax considerations) of its investment, including the high degree of risk of loss of the Investor’s entire investment herein.

5.2. Restrictions on Resale, Rule 144. The Investor understands that the shares of the Series A Stock and the Conversion Shares have not been registered under the Securities Act or any state securities laws by reason of their contemplated issuance in transactions exempt from the registration requirements of the Securities Act pursuant to Section 4(2) thereof or Rule 504, 505 or 506 promulgated under the Securities Act and applicable state securities laws, and that the reliance of the Company and others upon these exemptions is predicated in part upon this representation by the Investor. The Investor further understands that the Series A Stock and the Conversion Shares may not be transferred or resold without (i) registration under the Securities Act and any applicable state securities laws, or (ii) an exemption from the requirements of the Securities Act and applicable state securities laws. The Investor also understands that the Conversion Shares will be issued without prior registration thereof under the Securities Act or applicable state securities laws in reliance upon Section 4(2) of the Securities Act and transactional exemptions from registration under applicable state securities laws based upon appropriate representations of the Investor. As such, the Conversion Shares will be subject to transfer restrictions similar to restrictions applicable to the Series A Stock. The Investor understands that (i) an exemption from such registration is presently available pursuant to Rule 144 promulgated under the Securities Act by the Commission, (ii) the Company has made a commitment to remain eligible for Rule 144,. The Investor understands that any sales pursuant to Rule 144 can be made only in full compliance with the provisions of Rule 144.

If so requested by the Investors, the Company shall instruct counsel to write a Rule 144 opinion letter provided the necessary paperwork has been submitted and such counsel can write an opinion that the proposed transaction fits within the Exemption (as defined herein) .

5.3 Location of Principal Office, Qualification as an Accredited Investor, etc. The state in which the Investor’s principal office (or domicile, if the Investor is an individual) is located is the state set forth in the Investor’s address on Schedule 1. The Investor by execution of this Agreement hereby represents that he, she or it qualifies as an “accredited investor” for purposes of Regulation D promulgated under the Securities Act. The Investor (i) is an investor in securities of companies similar to the Company and acknowledges that it is able to fend for itself, and bear the loss of its entire investment in the Series A Stock, and (ii) has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the investment to be made by it pursuant to this Agreement. If other than an individual, the Investor also represents it has not been organized solely for the purpose of acquiring the Series A Stock or the Conversion Shares.

5.4. Acts and Proceedings. The Investor has full power and authority to enter into and perform under the Transaction Documents in accordance with their respective terms. The Transaction Documents have been duly authorized by all necessary action on the part of the Investor, has been duly executed and delivered by the Investor, and each is a valid and binding agreement of the Investor and enforceable against the Investor in accordance with their terms, except as enforceability may be limited by bankruptcy, insolvency, moratorium, reorganization or other similar laws affecting the enforcement of creditors’ rights generally and to judicial limitations on the remedy of specific enforcement and other equitable remedies.

5.5. Exculpation Among Investors. The Investor acknowledges that in making the decision to invest in the Company, the Investor is not relying on any other Investor or upon any person, firm or company, other than the Company and its officers, employees and/or directors. The Investor agrees that none of any of the other Investor, nor their partners, employees, officers or controlling persons, shall be liable for any actions taken by the Investor, or omitted to be taken by the Investor, in connection with such investment.

5.6. Disclosure of Information. The Investor represents that the Company has made available to the Investor at a reasonable time prior to the execution of the Transaction Documents the opportunity to ask questions and receive answers from the Company’s management concerning the Company’s business, management and financial affairs, the terms and conditions of the offering of the Series A Stock and to obtain any additional information (that the Company possesses or can acquire without unreasonable effort or expense) as may be necessary to verify the accuracy of information furnished to such Investor. Investor further represents that it, except as otherwise provided by law, is entering into the Transaction Documents and is acquiring the Series A Stock without any representation or warranty, express or implied, by the Company or any of its officers, directors, employees or affiliated, except as expressly set forth in this Agreement. The foregoing, however, does not limit or modify the representations and warranties of the Company in the Transaction Documents or the right of the Investors to rely thereon.

5.7. Legend; Stop Transfer. The Series A Stock, and any Conversion Shares issued upon conversion thereof, shall bear a legend substantially similar to the following:

THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER EITHER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR APPLICABLE BLUE SKY LAWS, AND ARE SUBJECT TO CERTAIN INVESTMENT REPRESENTATIONS. THESE SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION UNDER THE ACT AND SUCH APPLICABLE BLUE SKY LAWS, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

The Company shall make a notation regarding the restrictions on transfer of the Series A Stock and any such Conversion Shares in its books and the Series A Stock and any such Conversion Shares shall be transferred on the books of the Company only if transferred or sold pursuant to an effective registration statement under the Securities Act covering the securities to be transferred or an opinion of counsel satisfactory to the Company that such registration is not required.

Any legend endorsed on a certificate pursuant to Section 5.7 hereof shall be removed, and the Company shall issue a certificate without such legend to the holder of such security, if such security is being disposed of pursuant to a registration under the Securities Act or pursuant to Rule 144 or any similar rule then in effect.

It shall be the Company’s responsibility to take all necessary actions and to bear all such costs to issue the Conversion Shares 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 Conversion Shares is to be registered shall be treated as a shareholder of record on and after the Conversion Date. The Company hereby acknowledges that the date of consideration for this Debenture is the Issuance Date of the original Obligations, as outlined in the Debt Conversion Agreement, and shall use all commercially reasonable best efforts to facilitate sales under Rule 144 of the Securities Act

5.8 No Brokers or Finders. No person, firm or corporation has or will have, as a result of any contractual undertaking by the Investor, any right, interest or valid claim against the Investor or the Company for any commission, fee or other compensation as a finder or broker, or in any similar capacity, in connection with the transactions contemplated by the Transaction Documents. Each responsible Investor will indemnify and hold the Company harmless against any and all liability with respect to any such commission, fee or other compensation which may be payable or determined to be payable.

5.9. No Governmental Review. Each Investor understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Preferred Stock or the Conversion Shares, or the fairness or suitability of the investment in the Preferred Stock or the Conversion Shares, nor have such authorities passed upon or endorsed the merits of the offering of the Preferred Stock or the Conversion Shares.

5.10. Receipt of Documents. Each Investor and his or its counsel has received and read in their entirety: (i) the Transaction Documents and each representation, warranty and covenant set forth therein; (ii) all due diligence and other information requested by the Investor to verify the accuracy and completeness of such representations, warranties and covenants; (iii) the Company’s Form 10-KSB for the fiscal year ended December 31, 2008; (iv) the Company’s Form 10-QSB for the six months ended June 30, 2009 and (v) answers to all questions each Investor submitted to the Company regarding an investment in the Company; and each Investor has relied on the information contained therein.

5.11. Due Formation of Corporate and Other Investors. If the Investors is a corporation, trust, partnership or other entity that is not an individual person, it has been formed and validly exists and has not been organized for the specific purpose of purchasing the Series A Stock and is not prohibited from doing so.

5.12. No Legal Advice From the Company. Each Investor acknowledges, that it had the opportunity to review the Transaction Documents and the transactions contemplated thereby with his or its own legal counsel and investment and tax advisors. Each Investor is relying solely on such counsel and advisors and not on any statements or representations of the Company, its subsidiaries, Affiliates or any of their respective representatives or agents for legal, tax or investment advice with respect to this investment, the transactions contemplated by the Transaction Documents or the securities laws of any jurisdiction.

6. Covenants.

6.1. Best Efforts. Each party shall use its best efforts to timely satisfy each of the conditions to be satisfied by it as provided in Sections 7 and 8 hereof.

6.2. Reporting Status. Until the earlier of (i) the date as of which the Investors may sell all of the Conversion Shares without restriction pursuant to Rule 144(k) promulgated under the Securities Act (or successor thereto), or (ii) the date on which (A) the Investors shall have sold all the Conversion Shares and (B) none of the Series A Stock are outstanding (the “Registration Period”), the Company shall file in a timely manner all reports required to be filed with the Commission pursuant to the Exchange Act and the regulations of the Commission thereunder, and the Company shall not terminate its status as an issuer required to file reports under the Exchange Act even if the Exchange Act or the rules and regulations thereunder would otherwise permit such termination.

6.3. Reservation of Shares. The Company shall take all action reasonably necessary to at all times have authorized, and reserved for the purpose of issuance, such number of shares of Common Stock as shall be necessary to effect the issuance of the Conversion Shares. If at any time the Company does not have available such shares of Common Stock as shall from time-to-time be sufficient to effect the conversion of all of the Conversion Shares, then the Company and its management shall, upon the written request of the Investors, do the following: (i) call and hold a special meeting of the shareholders or initiate a request for consents of shareholders within thirty (30) days of such occurrence for the sole purpose of increasing the number of shares authorized, (ii) recommend to the shareholders that they vote in favor of increasing the number of shares of Common Stock authorized, and (iii) vote all of their shares in favor of increasing the number of authorized shares of Common Stock.

6.4. Listings or Quotation. If not already done prior to the Closing, the Company shall promptly secure the listing or quotation of the Conversion Shares upon each national securities exchange, automated quotation system or The National Association of Securities Dealers Inc.’s Over-The-Counter Bulletin Board (“OTCBB”) or other market, if any, upon which shares of Common Stock are then listed or quoted. The Company shall use its best efforts to maintain, so long as any other shares of Common Stock shall be so listed, such listing of all Conversion Shares from time-to-time issuable under the terms of this Agreement. The Company shall maintain the Common Stock’s authorization for quotation on the OTCBB.

6.5. Fees and Expenses. Each of the Company and the Investors shall pay all costs and expenses incurred by such party in connection with the negotiation, investigation, preparation, execution and delivery of the Transaction Documents.

6.6. 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 after the Closing Date, the Company shall immediately appoint a new transfer agent and shall require that the new transfer agent agree to be bound by the terms of any transfer agent instructions issued by the Company and in place as of the date hereof.

7. Conditions To The Company’s Obligation To Sell. The obligation of the Company hereunder to issue and sell the Preferred Stock to the Investors at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion:

7.1. The Investor and Company shall have executed the Debt Conversion Agreement, Certificate of Designation and this Agreement (collectively, the “Transaction Documents”) .

7.2. All necessary consents and approvals from regulatory and other authorities and all filings with such authorities and all other consents and approvals required by the Transaction Documents shall have been obtained and made to the Company’s satisfaction.

7.3. The representations and warranties of the Investors shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date), and the Investors shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by the Investors at or prior to the Closing Date.

7.4. Cancellation of Debentures and Warrants. Dutchess Private Equities Fund, Ltd shall have cancelled all Convertible Debentures issued by the Company to Dutchess Private Equities Fund, Ltd. and all Warrants held by Dutchess Private Equities Fund, Ltd. and all indebtedness and other obligations of the Company associated with such Debentures and Warrants and instruments of cancellation of all such documents and the Company's obligations hereunder shall have been executed and delivered to the Companyin form and substance acceptable to the Company in its sole discretion.

8. Conditions To The Investor’s Obligation To Purchase. The obligation of the Investors hereunder to purchase the Series A Stock at the Closing(s) is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for each Investor’s sole benefit and may be waived by that Investor at any time in the Investor’s sole discretion:

8.1. The Company shall have executed the Transaction Documents and delivered the same to the Investors.

8.2. The Common Stock shall be authorized for quotation on the OTCBB and trading in the Common Stock shall not have been suspended for any reason.

8.3. The representations and warranties of the Company shall be true and correct in all material respects (except to the extent that any of such representations and warranties is qualified herein as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date) and the Company shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by the Transaction Document to be performed, satisfied or complied with by the Company at or prior to the Closing Date. If requested by the Investor, the Investor shall have received a certificate, executed by the President of the Company, dated as of the Closing Date, to the foregoing effect and as to such other matters as may be reasonably requested by the Investor.

8.4. The Company shall have delivered to the Investors the Series A Stock in the respective amounts set forth opposite each Investors name on Schedule 1 attached hereto.

8.5. The Company shall have delivered to the Investors a certificate of good standing from the Delaware Secretary of State.

8.6. The Company shall have reserved out shares of Common Stock to effect the conversion of all of the Conversion Shares then outstanding.

8.7. No Events of Default past any applicable cure period, shall have occurred under the Transaction Documents.

8.8. The Company shall deliver to the Investor a board resolution stating that all management, director and officers have authorized the Debt Conversion Agreement and this Agreement.

9. Indemnification.

9.1. In consideration of the Investor’s execution and delivery of this Agreement and acquiring the Preferred Stock and the Conversion Shares 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 Investors and each other holder of the Preferred Stock and the Conversion Shares, and all of their officers, directors, employees and agents (including, without limitation, those retained in connection with the transactions contemplated by the Transaction Documents) (collectively, the “Investor 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 Investor 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 the Investor Indemnitees or any of them as a result of, or arising out of, or relating to (a) 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 thereby, (b) any breach of any covenant, agreement or obligation of the Company contained in the Transaction Documents or any other certificate, instrument or document contemplated thereby, or (c) any cause of action, suit or claim brought or made against such Indemnitee and arising out of or resulting from the execution, delivery, performance or enforcement of the Transaction Documents or any other instrument, document or agreement executed pursuant thereto, provided that no indemnification shall be provided for any such actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses resulting directly or indirectly from willful or negligent conduct of any Investor or in breach of any of the Transaction Documents. 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.

9.2. In consideration of the Company’s execution and delivery of the Transaction Documents, and in addition to all of the Investor’s other obligations under the Transaction Documents, the Investor shall defend, protect, indemnify and hold harmless the Company and all of its officers, directors, employees and agents (including, without limitation, those retained in connection with the transactions contemplated by the Transaction Documents) (collectively, the “Company Indemnitees”) from and against any and all Indemnified Liabilities incurred by the Indemnitees or any of them as a result of, or arising out of, or relating to (a) any misrepresentation or breach of any representation or warranty made by the Investors in the Transaction Documents, instrument or document contemplated thereby or executed by the Investor, (b) any breach of any covenant, agreement or obligation of the Investors contained in the Transaction Documents or any other certificate, instrument or document contemplated thereby or executed by the Investor, or (c) any cause of action, suit or claim brought or made against such Company Indemnitee based on material misrepresentations or due to a material breach and arising out of or resulting from the execution, delivery, performance or enforcement of the Transaction Documents or any other instrument, document or agreement executed pursuant thereto by any of the parties thereto, including, specifically, documents executed in settlement of any litigation. To the extent that the foregoing undertaking by each Investor may be unenforceable for any reason, each Investor shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities, which is permissible under applicable law.

10. Definitions. The following terms, as used herein, have the following meanings:

10.1. “Affiliate” means, with respect to any person or entity, another person or entity that, directly or indirectly, (i) has a ten percent (10%) or more equity interest in that person or entity,

(ii) has ten percent (10%) 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.

10.2. “Agreement” has the meaning set forth in the Introduction.

10.3. “Applicable Law” means, with respect to any Person, any domestic or foreign, federal, state or local common law or duty, case law or ruling, statute, law, ordinance,

policy, guidance, rule, administrative interpretation, regulation, code, order, writ, injunction, directive, judgment, decree or other requirement of any Governmental

Authority applicable to such Person or any of its Affiliates or Plan Affiliates or any of their respective properties, assets, officers, directors, employees, consultants

or agents (in connection with such officer’s, director’s, employee’s, consultant’s or agent’s activities on behalf of such Person or any of its Affiliates or Plan Affiliates).

10.4. “Capital Stock” has the meaning set forth in Section 4.3 hereof.

10.5. “Certificate of Incorporation” means the Company’s Certificate of Incorporation as filed with the Delaware Secretary of State, as may be amended from time to time.

10.6. “Closing” has the meaning set forth in Section 3 hereof.

10.7. “Closing Date” has the meaning set forth in Section 3 hereof.

10.8. “Code” means the Internal Revenue Code of 1986, as amended, and the regulations or other binding pronouncements promulgated thereunder.

10.9. “Common Stock” has the meaning set forth in Section 1 hereof.

10.10. “Company” has the meaning set forth in the Introduction.

10.11. “Compensation Plan” means any material benefit or arrangement that is not either a Pension Plan or a Welfare Plan, including, without limitation, (i) each employment or consulting

agreement, (ii) each arrangement providing for insurance coverage or workers’ compensation benefits, (iii) each bonus, incentive bonus or deferred bonus arrangement, (iv) each

arrangement providing termination allowance, severance or similar benefits, (v) each equity compensation plan, (vi) each current or deferred compensation agreement, arrangement

or policy, and (vii) each compensation policy and practice maintained by the Company or any ERISA Affiliate of the Company covering the employees, former employees, directors

and former directors of the Company and the beneficiaries of any of them.

10.12. “Consent” or “Consents” have the meanings set forth in Section 4.5 hereof.

10.13. “Contracts” means all contracts, agreements, options, leases, licenses, sales and accepted purchase orders, commitments and other instruments of any kind, whether written or oral,

to which the Company is a party on the Closing Date, including the Scheduled Contracts.

10.14. “Conversion Shares” has the meaning set forth in Section 1 hereof.

10.15. “Disclosure Schedule” has the meaning set forth in Section 4 hereof.

10.16. “Effective Date” has the meaning set forth in Section 6.3 hereof.

10.17. “Employee Benefit Plan” means all Pension Plans, Welfare Plans and Compensation Plans.

10.18. “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

10.19. “ERISA Affiliate” means any “person,” within the meaning of Section 7701(a)(1) of the Code, that together with the Company is considered a single employer pursuant to

Section 414(b), (c), (m) or (o) of the Code or Section 3(5) or 4001(b)(1) of ERISA.

10.20. “Exchange Act” means the Securities Exchange Act of 1934, as amended.

10.21. “Filing Date” has the meaning set forth in Section 6.3 hereof.

10.22. “GAAP” means generally accepted accounting principles in the United States, consistently applied.

10.23. “Governmental Authority” means any foreign, domestic, federal, territorial, state or local governmental authority, quasi-governmental authority, instrumentality, court, government

or self-regulatory organization, commission, tribunal or organization or any regulatory, administrative or other agency, or any political or other subdivision, department or branch of

any of the foregoing.

10.24. “Intellectual Property” means all rights in patents, patent applications, trademarks (whether registered or not), trademark applications, service mark registrations and service

mark applications, trade names, trade dress, logos, slogans, tag lines, uniform resource locators, Internet domain names, Internet domain name applications, corporate names,

copyright applications, registered copyrighted works and commercially significant unregistered copyrightable works (including proprietary software, books, written materials,

prerecorded video or audio tapes, and other copyrightable works), technology, software, trade secrets, know-how, technical documentation, specifications, data, designs and

other intellectual property and proprietary rights used in or necessary to the conduct of the business of the Company, but excluding third-party off-the-shelf computer programs.

10.25. “Investors” has the meaning set forth in the Introduction.

10.26. “Latest Financial Statements” has the meaning set forth in Section 4.6(a) hereof.

10.27. “Liability” or “Liabilities” means any liabilities, obligations or claims of any kind whatsoever whether absolute, accrued or un-accrued, fixed or contingent, matured or un-matured,

asserted or unasserted, known or unknown, direct or indirect, contingent or otherwise and whether due or to become due, including without limitation any foreign or domestic tax

liabilities or deferred tax liabilities incurred in respect of or measured by the Company’s income, or any other debts, liabilities or obligations relating to or arising out of any act,

omission, transaction, circumstance, sale of goods or services, state of facts or other condition which occurred or existed on or before the date hereof, whether or not known, due or payable.

10.28. “Lien” means, with respect to any asset, any mortgage, title defect or objection, lien, pledge, charge, security interest, hypothecation, restriction, encumbrance, adverse claim

or charge of any kind in respect of such asset.

10.29. “Material Adverse Effect” means, with respect to the Company, any change in or effect on its business, customers, customer relations, operations, properties, working

capital condition (financial or otherwise), assets, properties, liabilities or prospects (financial or otherwise) that is materially adverse to its business, properties, working

capital condition (financial or otherwise),assets, liabilities or prospects (financial or otherwise).

10.30. “Material Customers” has the meaning set forth in Section 4.17 hereof.

10.31. “Ordinary Course of Business” means any action taken by the Company that is (i) consistent with its past practices and is taken in the ordinary course of its normal

day-to-day operations, and (ii) not required to be specifically authorized by its Board of Directors.

10.32. “Penalty Date” has the meaning set forth in Section 6.3 hereof.

10.33. “Pension Plan” means an “employee pension benefit plan” as such term is defined in Sections 3(2) or 3(3) of ERISA and all other material employee benefit arrangements or

programs relating to the Company’s business, including, without limitation, any such arrangements or programs providing severance pay, sick leave, vacation pay, salary

continuation for disability, retirement benefits, deferred compensation, bonus pay, incentive pay, stock options, hospitalization insurance, medical insurance and life

insurance, sponsored or maintained by the Company or any Affiliate of the Company or to which the Company or any Affiliate of the Company is obligated to contribute

thereunder on behalf of any current or former employee who performed services with respect to the Company’s business.

10.34. “Permits” has the meaning set forth in Section 4.9 hereof.

10.35. “Permitted Liens” means (i) Liens for Taxes or governmental assessments, charges or claims the payment of which is not yet due, or for Taxes the validity of which are being

contested in good faith by appropriate proceedings; (ii) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, materialmen and other similar Persons

and other Liens imposed by Applicable Law incurred in the Ordinary Course of Business for sums not yet delinquent or being contested in good faith; (iii) Liens relating to

deposits made in the Ordinary Course of Business in connection with workers’ compensation, unemployment insurance and other types of social security or to secure the

performance of leases, trade contracts or other similar agreements; and (iii) other Liens set forth on the Disclosure Schedule; provided, however, that, with respect to each of

clauses (i) through (iii), to the extent that any such Lien on that arose prior to the date of the Latest Financial Statements and relates to, or secures the payment of, a Liability

that is required to be accrued for under GAAP, such Lien shall not be a Permitted Lien unless all such Liabilities have been fully accrued or otherwise reflected on the

Latest Financial Statements. Notwithstanding the foregoing, no Lien arising under the Code or ERISA with respect to the operation, termination, restoration or funding of any

Employee Benefit Plan sponsored by, maintained by or contributed to by the Company or any of its ERISA Affiliates or arising in connection with any excise tax or penalty tax

with respect to such Employee Benefit Plan shall be a Permitted Lien.

10.36. “Person” means an individual, corporation, partnership, limited liability company, association, trust, estate or other entity or organization, including a Governmental Authority.

10.37. “Plan Affiliate” means, with respect to any Person, any Employee Benefit Plan sponsored by, maintained by or contributed to by such Person, and with respect to any Employee

Benefit Plan, any Person sponsoring, maintaining or contributing to such plan or arrangement.

10.38. “Preferred Stock” has the meaning set forth in Section 1 hereof.

10.39. “Purchase Commitment” has the meaning set forth in Section 2 hereof.

10.40. “Scheduled Contracts” has the meaning set forth in Section 4.12 hereof.

10.41. “SEC Documents” has the meaning set forth in Section 4.26 hereof.

10.42. “Securities Act” means the Securities Act of 1933, as amended.

10.43. “Series A Stock” has the meaning set forth in the Recitals.

10.44. “Tax” or “Taxes” means all taxes imposed of any nature including federal, state, local or foreign net income tax, alternative or add-on minimum tax, profits or excess profits tax,

franchise tax, grossincome, adjusted gross income or gross receipts tax, employment related tax (including employee withholding or employer payroll tax, FICA or FUTA),

real or personal property tax or ad valorem tax, sales or use tax, excise tax, stamp tax or duty, any withholding or back up withholding tax, value added tax, severance tax, prohibited

transaction tax, premiums tax, environmental tax, intangibles tax or occupation tax, together with any interest or any penalty, addition to tax or additional amount imposed by any

Governmental Authority (domestic or foreign) responsible for the imposition of any such tax. The term Tax shall also include any Liability of the Company for the Taxes of any

other Person under U.S. Treasury Regulations Section 1.1502-6 (or similar provisions of state, local or foreign law), as a transferee or successor by contract or otherwise.

10.45. “Tax Return” means all returns, declarations, reports, estimates, forms, information returns and statements or other information required to be filed with respect to any Tax.

10.46. “Transaction Documents” has the meaning set forth in Section 4.2 hereof.

10.47. “Welfare Plan” means an “employee welfare benefit plan” as such term is defined in Section 3(1) of ERISA (including without limitation a plan excluded from coverage by

Section 4 of ERISA).

11. Miscellaneous.

11.1. Waivers, Amendments and Approvals. In each case in which approval of any of the Investors is required by the terms of this Agreement, such requirement shall be satisfied by a vote or the written action of such Investor. With the written consent of any Investor, the obligations of the Company to that Investor under this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) and with the written approval of such Investor, the Company may enter into a supplementary agreement for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement applicable to such Investor; provided, however, that no such waiver or supplemental agreement shall be effective to amend the terms of the shares of the Series A Stock under circumstances where such amendment to the terms of the shares of Series A Stock shall require the vote of the holders of shares of Series A Stock called for by the Certificate of Incorporation or Certificate of Designation and such vote shall not have been obtained.

11.2. Written Changes, Waivers, Etc. Neither this Agreement nor any provision hereof may be changed, waived, discharged or terminated orally, except by a statement in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought, except to the extent provided in Section 11.1 hereof.

11.3. Notices. Any and all notices required or permitted to be given to a party pursuant to the provisions of this Agreement will be in writing and will be effective and deemed to provide such party sufficient notice under this Agreement on the earliest of the following: (i) at the time of personal delivery, if delivery is in person; (ii) one (1) business day after deposit with an express overnight courier for United States deliveries, or two (2) business days after such deposit for deliveries outside of the United States, with proof of delivery from the courier requested; or (iii) three (3) business days after deposit in the United States mail by certified mail (return receipt requested) for United States deliveries. All notices for delivery outside the United States will be sent by express courier. All notices not delivered personally will be sent with postage and/or other charges prepaid and properly addressed to the party or parties to be notified at such address or addresses as such party or parties may designate by one of the indicated means of notice herein to the other party or parties hereto. If the notice shall be given to the Company, a copy of which shall simultaneously be given to Michael Lorenz, residing at 5109 Waterford Wood Way, Fayetteville, NY 13066

11.4. Survival of Representations, Warranties, Etc. All representations, warranties, covenants and agreements contained herein, including the indemnification obligations set forth in Section 9 hereof, shall survive after the execution and delivery of this Agreement or such certificate or document, as the case may be, for a period of two (2) years.

11.5. Delays or Omissions. Except as expressly provided herein, no delay or omission to exercise any right, power or remedy accruing to any party under this Agreement shall impair any such right, power or remedy of such party nor shall it be construed to be a waiver of any such breach or default, or an acquiescence thereto, or of a similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any party hereto of any breach or default under this Agreement, or any waiver on the part of any party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing.

11.6. Other Remedies. Any and all remedies herein expressly conferred upon a party shall be deemed cumulative with, and not exclusive of, any other remedy conferred hereby or by law on such party, and the exercise of anyone remedy shall not preclude the exercise of any other.

11.7. Attorney Fees. Should suit be brought to enforce or interpret any part of this Agreement, the prevailing party shall be entitled to recover, as an element of the costs of suit and not as damages, reasonable attorney fees to be fixed by the court (including, without limitation, costs, expenses and fees on any appeal). The prevailing party shall be the party entitled to recover its costs of suit, regardless of whether such suit proceeds to final judgment. A party not entitled to recover its costs shall not be entitled to recover attorney fees. No sum for attorney fees shall be counted in calculating the amount of a judgment for purposes of determining if a party is entitled to recover costs or attorney fees.

11.8. Entire Agreement. This Agreement including the exhibits hereto and the other Transaction Documents constitute the entire understanding and agreement of the parties hereto with respect to the subject matter hereof and thereof and supersede all prior and contemporaneous agreements or understandings, inducements or conditions, express or implied, written or oral, between the parties with respect hereto and thereto. The express terms hereof control and supersede any course of performance or usage of the trade inconsistent with any of the terms hereof.

11.9. Severability. Should any one or more of the provisions of this Agreement or of any agreement entered into pursuant to this Agreement be determined to be illegal or unenforceable, all other provisions of this Agreement and of each other agreement entered into pursuant to this Agreement, shall be given effect separately from the provision or provisions determined to be illegal or unenforceable and shall not be affected thereby. The parties further agree to replace such void or unenforceable provision of this Agreement with a valid and enforceable provision which will achieve, to the extent possible, the economic, business and other purposes of the void or unenforceable provision.

11.10. Successors and Assigns. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon and be enforceable by the successors and assigns of the parties hereto, including the holder(s) from time-to-time of any of the Series A Stock. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

11.11. Governing Law. The validity, terms, performance and enforcement of this Agreement shall be governed and construed by the provisions hereof and in accordance with the laws of the Commonwealth of Massachusetts applicable to agreements that are negotiated, executed, delivered and performed solely in the Commonwealth of Massachusetts.

11.12. Counterparts. This Agreement may be executed concurrently in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

11.13. Publicity. The Company and the Investors shall have the right to approve, before issuance any press release or any other public statement with respect to the transactions contemplated hereby made by any party; provided, however, that the Company shall be entitled, without the prior approval of the Investors, to issue any press release or other public disclosure with respect to such transactions required under applicable securities or other laws or regulations (the Company shall use its best efforts to consult the Investors in connection with any such press release or other public disclosure prior to its release and Investors shall be provided with a copy thereof upon release thereof).

11.14. Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

11.15. Tacking. For purposes of calculating under SEC Rule 144 the holding period for the Series A Stock purchased pursuant to this Agreement and the Conversion Shares, the Investors shall claim a holding period tacking back to the Closing Date of the original Debentures, as defined in the Debt Conversion Agreement. The Company shall not adopt a position inconsistent with the foregoing or contest such tacking for any reason, and the Company shall use its best efforts to cooperate with the Investors in any efforts the Investors may undertake to assert such tacking in connection with the future sale of the Series A Stock or the Conversion Shares.

11.16. No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.

11.17. Headings. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.

11.18. Disputes Under Debenture. All disputes arising under this Agreement shall be governed by and interpreted in accordance with the laws of the Commonwealth of Massachusetts, without regard to principles of conflict of laws. The parties to this Agreement shall submit all disputes arising under this Agreement to arbitration in Boston, Massachusetts before a single arbitrator of the American Arbitration Association (the “AAA”). The arbitrator shall be selected by application of the rules of the AAA, or by mutual agreement of the parties, except that such arbitrator shall be an attorney admitted to practice law in the Commonwealth of Massachusetts. No party hereto will challenge the jurisdiction or venue provisions as provided in this section. Nothing in this section shall limit the Holder's right to obtain an injunction for a breach of this Debenture from a court of law. Any injunction obtained shall remain in full force and effect until the arbitrator, as set forth in herein, fully adjudicates the dispute.

IN WITNESS WHEREOF, the parties hereto have caused this Series A Convertible Preferred Stock Purchase Agreement to be executed by their respective officers thereunto duly authorized as of the day and year first above written.

		THE COMPANY: LOCATEPLUS HOLDINGS CORPORATION
		By:___________________ Name: Geoffrey Lee Its: Interim Chief Executive Officer

SCHEDULE 1

List of Investors, Signatures and Purchase Commitments

Name	Signature	Address/Facsimile Number of Investor	Purchase Commitment ($)	Purchase Commitment (# Shares)

Dutchess Private Equities Fund Ltd.	___________________ Douglas H. Leighton, Director	Douglas H. Leighton c/o Dutchess Capital Management 50 Commonwealth Ave., Suite 2 Boston, MA 02116 Tel: 617-301-4700 Fax: 617-249-0947	$1,817,828	72,000

Exhibit 10.20

PURCHASE AND SALE AGREEMENT

BY AND AMONG

LOCATEPLUS HOLDINGS CORPORATION,

EMPLOYMENT SCREENING PROFILES, INC.

Table of Contents
	Page

ARTICLE I - ACQUISITION; PURCHASE PRICE	1
1.01 Acquisition	1
1.02 Tax Treatment	1
1.03 Delivery of LP Stock and ESP Stock	1

ARTICLE II - THE CLOSING	2
2.01 Time, Date and Place of Closing	2
2.02 Events Comprising The Closing	2
2.03 Purchaser's Conditions of Closing	2
2.04 Seller's Conditions of Closing	2
2.05 Deliveries by the Seller	3
2.06 Deliveries by the Purchaser	3
2.07 Filings	3
2.08 Return of Items	3

ARTICLE III - SELLER'S REPRESENTATIONS AND WARRANTIES	4
3.01 Status of the Company	4
3.02 Financials	4
3.03 Tax Returns; Taxes	5
3.04 Real and Personal Property	5
3.05 Patents; Trademarks; Trade Names, Licenses, Etc.	5
3.06 Contracts; Powers of Attorney	5
3.07 Insurance	6
3.08 No Misleading Statements or Omissions	6
3.09 Litigation; Compliance With Law	6
3.10 Absence of Restrictions and Conflicts	6

ARTICLE IV -- PURCHASER'S REPRESENTATIONS AND WARRANTIES	6
4.01 Status of Purchaser	6
4.02 Authorizations	6
4.03 No Misleading Statements or Omissions	6

ARTICLE V - SURVIVAL; INDEMNIFICATION	7
5.01 Survival	7
5.02 Indemnification	7

ARTICLE VI -OTHER AGREEMENTS	7
6.01 Continuing Operation of Business	7
6.02 Inspection; Updated Financial Statements	7
6.03 No Negotiations	7
6.04 Good Faith Efforts; Further Assurances; Cooperation	8
6.05 Brokerage Commissions	8
6.06 Public Announcements	8

ARTICLE VII - TERMINATION AND ABANDONMENT; SPECIFIC PERFORMANCE	8
7.01 Termination and Abandonment	8
7.02 Specific Performance and Other Remedies	8
7.03 Rights and Obligations on Termination	8

ARTICLE VIII -MISCELLANEOUS PROVISIONS	9
8.01 Notices	9
8.02 Exhibits and Schedules	9
8.03 Time of the Essence; Computation of Time	9
8.04 Assignment; Successors in Interest	9
8.05 Number; Gender	10
8.06 Controlling Law; Integration; Amendment; Waiver	10
8.07 Expenses	10
8.08 Arbitration of Disputes	10
8.09 Counterparts	10

PURCHASE AND SALE AGREEMENT

BY AND AMONG

LOCATEPLUS HOLDINGS CORPORATION

EMPLOYMENT SCREENING PROFILES, INC.

AND

DERRICK A. SPATORICO

This is a Purchase and Sale Agreement (the "Agreement') dated as of September 20, 2009 by and between LOCATEPLUS HOLDINGS CORPORATION( the "Purchaser") a Delaware corporation, having its principal office at 100 Cummings Center Suite 235, Beverly MA 01915, EMPLOYMENT SCREENING PROFILES, INC., d/b/a Trubackgrounds, Inc., a Florida corporation, having its principal office at 4025 Tampa Rd., Suite 1206, Oldsmar, FL 34677, herein called the "Company" and its shareholder, DERRICK A. SPATORICO, ESQ. of 1 East Main Street, Rochester, NY 14614 (the "the Shareholder"). The Company and the Shareholder are herein sometimes collectively called the "Seller".

The Seller has agreed to sell and the Purchaser has agreed to buy one thousand (1,000) shares of the Common Stock, no par value, of the Company ( the “ESP Stock” ), constituting all the outstanding shares of Common Stock of the Company pursuant to the terms and conditions of this Purchase and Sale Agreement.

ARTICLE I. ACQUISITION ; PURCHASE PRICE; ADJUSTMENTS

1.01 Acquisition.

At the Closing described below the Seller shall sell and transfer and the Purchaser shall acquire, for a consideration of one million seven hundred and fifty thousand dollars ($1,750,000), consisting of nine million (9,000,000) shares of Common Stock of the Company (the “LP Stock”) at $0.1944 per share, herein called the “Purchase Price”, all the ESP stock (the “ESP Stock”) and associated rights and business of the Company. The LP Stock and any Additional LP Stock as described below are defined herein as the “Purchase Price.”

1.02 Tax Treatment.

Each of Purchaser, Company and Shareholder shall use its best efforts to cause the Acquisition to qualify, and will not take any actions which could prevent the Acquisition from qualifying, as a reorganization under the provisions of section 368(a) of the Code.

1.03. Delivery of LP Stock and ESP Stock.

At and after the successful completion of the Closing under the Purchase Agreement the following shall occur:

(a) The LP Stock is currently in escrow under a prior agreement (the “Prior Escrow”) which prohibits further transfer by LP. Subject to satisfactory completion of the Closing, at such time as the Prior Escrow terminates as to the LP Stock (but not later than September 1, 2010), the LP Stock shall automatically transfer to a second escrow (the “ESP Escrow”)pursuant to an escrow agreement approved at or before the Closing by both parties (the “ESP Escrow Agreement”) substantially in the form of Exhibit A. Under the ESP Escrow Agreement, the Purchaser’s rights to a further transfer of the LP Stock shall be subject to this Agreement. At and after the Closing, the Shareholder shall have and retain during the continuance of the ESP Escrow all the voting rights and rights to receive dividends possessed by the LP Stock and Purchaser represents and warrants that these rights are unencumbered by any claim of Fields and that these voting/dividend privileges are transferable to the Seller.

(b) The ESP Stock shall be transferred into the ESP Escrow at the Closing pursuant to Instruments of Transfer substantially in the form of Exhibit B . Certificates for the ESP Stock, together with the executed Instruments of Transfer to the Purchaser shall be delivered to the Escrow Agent where they shall remain until either (i) the LP Stock has been fully delivered into the ESP Escrow and the ESP Escrow shall have terminated by the terms of the ESP Escrow Agreement and the LP Stock shall have been delivered to the Seller or (ii) the Shareholder shall have exercised his rights to terminate the ESP Escrow as provide in paragraph 2(e) below. At and after the Closing the Purchaser shall have and retain during the continuance of the ESP Escrow all the voting, control and ownership rights, including the right to receive dividends, possessed by the ESP Stock and shall incur any and all liabilities and obligations (including tax liabilities) associated with such ownership, subject to the successful termination of the ESP Escrow and delivery of the ESP Stock to the Purchaser.

(c) During the continuance of the Escrow the Purchaser shall obtain and include the Company, its officers and Directors in directors and officers liability insurance coverage currently maintained by the Purchaser.

(d) The Purchaser shall have the obligation in any case to deliver all the LP Stock to the Shareholder on or before September 1, 2011.

(e) The Shareholder shall have the right at any time after September 1, 2010 to require the Purchaser to deliver up to four million five hundred thousand (4,500,000) shares of the LP Stock.

(f) The Shareholder shall be entitled to an escrow fee payable in cash on a quarterly basis. The escrow fee shall be calculated at rate of five percent (5.00%) per annum for the first 12 months following closing, then seven and one half percent (7.50%) per annum for months 13 through 18 inclusive and then twelve and one-half percent (12.5%) per annum thereafter (multiplied by the product of the number of\shares remaining in the Escrow Account for the benefit of the Shareholder and $0.1944). The first year's escrow fee shall be earned in full upon a successful closing. This fee shall be payable on a quarterly basis to the Shareholder. In the event the Purchaser fails to make any payment to the Shareholder when due after not less than thirty (30) days’ notice and /or files a petition in bankruptcy voluntarily or a creditor files an involuntary petition, absent notice to the Shareholder and a written agreement is not in place at the time authorizing a deferral of the payment or authorizing the payment to be made in the form of cash and additional shares or simply additional shares, all shares of ESP shall immediately revert to the Shareholder at his sole option, and upon written notice sent by regular US mail to the Purchaser at its last known address and correspondingly, any shares of the Purchaser in the possession of the Shareholder or in the Escrow shall be returned to the Purchaser or otherwise canceled without further notice to the Shareholder. This return/cancellation provision shall be limited to a maximum return or cancellation or combination of the two to 9,000,000 shares. In the event of the filing of a bankruptcy petition against the Purchaser by a party or entity other than the Purchaser, the reversion referenced above shall be deemed to have occurred 1 hour prior to the bankruptcy court clerk's receipt of the petition by operation of law and without the necessity of any further notice.

ARTICLE II. THE CLOSING

2.01 Time, Date and Place of Closing.

The Closing shall take place at the offices of the Purchaser, 100 Cummings Center Suite 235, Beverly MA 01915 , at 10:00 AM local time, on Tuesday September 29, 2009. The Closing may also take place at such other location and time on which the parties hereto shall mutually agree. The date upon which

the Closing is to take place is defined as the "Closing Date". Failure to close the transactions contemplated herein on the Closing Date shall not in and of itself constitute a reason for a party to terminate this Agreement, termination being governed by Article VII, and so long as this Agreement is not so terminated, the parties hereto shall continue as set forth in this Agreement to cause the Closing to occur as soon as practicable.

2.02 Events Comprising the Closing.

The Closing, which shall be subject to the satisfaction of the conditions set forth in Sections 2.03 and 2.04 shall consist of the delivery by the Seller of the documents to be delivered to the Escrow Agent and others pursuant to Section 2.05, the delivery by the Purchaser of the required Purchase Price and the documents to be delivered pursuant to Section 2.06, the delivery of any other documents provided for hereunder The Closing of any and all of the transactions hereby shall be deemed not to have occurred unless and until all transactions constituting that Closing shall have been completed and duly accepted by the parties and all such transactions shall be deemed to have taken place simultaneously.

2.03 Purchaser's Conditions of Closing.

Consummation by the Purchaser of the Closing is subject to the fulfillment prior to or at the Closing Date of each of the following conditions, any one or more of which may be waived by the Purchaser in whole or in part :

(a) The representations and warranties of the Seller contained in this Agreement or in any certificate, schedule, exhibit or other agreement delivered pursuant to the provisions of this Agreement shall be true in all material respects as of the date when made, shall be deemed to be made again at and as of the Closing Date and shall be true in all material respects at and as of the Closing Date.

(b) The Seller, in all material respects, shall have performed and complied with all covenants, agreements and conditions required by this Agreement to be performed or complied with by each of them prior to or at the Closing Date.

(c) The Company, in all material respects, shall be in full compliance with all the required terms and conditions of all agreements material to its business.

(d) No material adverse change shall have taken place in the business or financial condition of the Company or either the Shareholder between the date hereof and the Closing Date, other than changes occurring with the prior written consent of the Purchaser.

(e) All required consents of governmental authorities and contracting or other third parties (including without limitation creditors, suppliers and the State of Florida to the transactions contemplated by this Agreement shall have been properly obtained and evidence thereof provided to the Purchaser insofar as is material to consummation of the purchase of the Company Assets.

(f) There shall be no judgment, decree, injunction, ruling, order or notice of any court or governmental authority outstanding against the Seller or the Purchaser, or any claim or proceeding or threat of any such action ( "a Litigation Problem" ) which prohibits, restricts or delays, or could in the reasonable opinion of counsel for the Purchaser prohibit, restrict or delay the consummation of any of the transactions contemplated by the Agreement, provided, however that the Purchaser may in its sole discretion waive in writing prior to the Closing all or any part of this condition as to any particular Litigation Problem.

(g) Except for the filing of any required certificate amending Certificates of Incorporation or similar documents of the Company, the Purchaser to reflect the Closing, all consents, authorizations, orders and approvals of, and filings and registrations with any governmental authority which are required for, or in connection with the execution and delivery of this Agreement and the consummation by each party hereto of the transactions contemplated hereby shall have been obtained or made.

(h) The execution of this Agreement and the sale and transfer of the ESP stock shall have received any required approval by the holders of the outstanding shares or other equity interests of the Company entitled to vote thereon in accordance with the provisions of the corporation and other applicable laws of its state of incorporation and with its certificate of incorporation or similar founding document.

(i) The Seller has delivered to the Purchaser financial statements of the Company for each of the two (2) most recently ended fiscal years, together with financial statements for the period ended June 30, 2009, receipt of which is hereby acknowledged, in form and substance acceptable to the purchaser.

2.04 Seller's Conditions of Closing.

Consummation by the Purchaser and the Seller of the Closing transactions is subject to the fulfillment prior to or at the Closing Date of each of the following conditions:

(a) The representations and warranties of the Purchaser contained in this Agreement or in any certificate, schedule, exhibit or other agreement delivered pursuant to one or more of the provisions of this Agreement, shall be true in all material respects as of the date when made, shall be deemed to be made again at and as of the Closing Date and shall be true in all material respects at and as of the Closing Date.

(b) The Purchaser shall have complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed or complied with by it prior to or at the Closing Date.

(c) No material adverse change in the business or financial condition of the Purchaser shall have occurred between the date hereof and the Closing Date, other than changes occurring by reason of actions taken with the prior written consent of the Seller.

(d) All consents, authorizations, orders and approvals of, and filings and registrations with any governmental authority which are required for, or in connection with the execution and delivery of this Agreement and the consummation by each party hereto of the transactions contemplated hereby shall have been obtained or made.

(e) The Purchaser’s Board of Directors shall at the Closing appoint the Shareholder to a position on the Board of Directors, effective as of the Closing Date, to serve until his successor shall be elected and qualify. The next annual meeting of shareholders shall occur no later than August 1, 2010 at which time the shareholders will vote on a slate of directors. At that meeting, the Shareholder shall have all of the privileges of share ownership including the right to vote all the LP Stock irrespective of whether or not it has remained in the ESP Escrow;

(f) The Purchaser shall at the Closing sign (i) a twelve-month consulting services agreement with the Shareholder, substantially in the form of Consulting Agreement attached as Exhibit C providing for compensation of fifty thousand dollars ($50,000.00) payable in equal monthly installments in exchange for no more than twenty five (25) hours of work per month, cumulative from month to month and (ii) a retainer agreement whereby he may be required from time to time to provide selected legal services at an hourly rate of three hundred dollars ($300) plus expenses.

2.05 Deliveries by the Seller.

It shall be a Purchaser's Condition of Closing that the Seller shall deliver the following at the Closing, all of which shall be satisfactory in form and substance to the Purchaser (all documents shall be dated the Date of Closing unless otherwise specified):

(a) To the Escrow Agent, certificates in the name of the Shareholder evidencing ownership of the ESP Stock, accompanied with a duly executed assignment of all the ESP Stock, by the Instruments of Transfer substantially in the form attached as Exhibit B to this Agreement.

(b) Executed copy of the ESP Escrow Agreement.

(c) Evidence satisfactory to the Purchaser as to (i) the good standing of the Company as a corporation under the laws of its jurisdiction of organization, (ii) the due authorization by the Company and its shareholders and directors of this Agreement of all such transfers and other actions taken and documents executed by the Seller and (iii) as to such other items of a legal nature as the Purchaser shall reasonably request to satisfy itself of the legality of the transactions contemplated by this Agreement.

(d) Certificate signed by the Seller updating the Disclosure Schedule delivered pursuant to Article III and confirming the accuracy of all representations and warranties as of the Closing date.

(e) Executed copy of the Consulting Agreement between the Company and Derrick Spatorico substantially in the form attached as Exhibit C to this Agreement.

(f) Consents to the transactions contemplated hereby of the parties to all material contracts, agreements, commitments and understandings to which the Seller is party or to which it or its assets are subject, to the extent reasonably required to consummate the purchase of the ESP stock

(g) Secretary's Certificate attaching true, correct and complete copies of (a) the by-laws, operating agreements or other similar documents of the Company and (b) votes or consents of directors and shareholders required to accomplish the transactions contemplated by this Agreement and certifying that they are in full force and effect and were properly authorized.

(h) Assignment by the Shareholder of all his right, title and interest in and to all software, systems, copyrights documents, records and other intellectual property associated with and/or used or required for the operation of the business of the Company, in form and substance acceptable to the Purchaser.

(i) Such other documents, certificates and opinions as the Purchaser may reasonably request for the purpose of enabling its counsel to provide opinions under this Agreement and in order to evidence the accuracy and completeness of any of the representations, warranties or statements of the Seller.

2.06 Deliveries by The Purchaser.

The Purchaser hereby covenants and agrees to use its best efforts to deliver or cause to be delivered the following at the Closing, subject to all the terms and conditions of this Agreement:

(a) A certificate dated the Date of Closing and executed by an officer of the Purchaser certifying that (i) the representations and warranties of the Purchaser contained in this Agreement or in any exhibit, schedule, certificate or other document delivered by the Purchaser pursuant to this Agreement are true and correct on and as of the Date of Closing with the same effect as though such representations and warranties had been made on and as of such date or, if not, in what respects they are not and (ii) each and all of the agreements and covenants of the Purchaser to be performed on or before the Date of Closing pursuant to the terms of this Agreement have been duly performed or, if not, in what respects they have not.

(b) Evidence satisfactory to the Seller as to the existence of the LP Stock and the Prior Escrow.

(d) Such other documents, certificates and opinions as the Seller may reasonably request for the purpose of enabling its counsel to provide opinions under this Agreement and in order to evidence the accuracy and completeness of any of the representations, warranties or statements of the Purchaser.

2.07 Filings.

Immediately after the delivery of the items set forth in Sections 2.05 and 2.06 by the parties thereto, the any required filings shall be made with corporate and other authorities.

2.08 Return of Items.

If for any reason the Closing is not consummated after the deliveries provided for in Sections 2.05 and 2.06, all items delivered shall be returned to the party or parties delivering them.

ARTICLE III. SELLER'S REPRESENTATIONS AND WARRANTIES

Each of the Company and the Shareholder, jointly and severally, represents and warrants to the Purchaser as of the date hereof and as of the Closing Date, as follows, EXCEPT AS SET FORTH IN THE DISCLOSURE SCHEDULE ATTACHED HERETO AS EXHIBIT D , AS UPDATED:

3.01 Status of the Company.

(a) Organization. The Company is a corporation duly organized and validly existing in good standing under the laws of Florida and has full corporate power to own or lease its properties and conduct its business as now being conducted. True and accurate copies of (a) the articles of incorporation, as amended to date, (b) a short form Certificate of Good Standing (listing all amendments, restatements, any articles of merger or similar action affecting the articles of incorporation) from the office of the Florida Secretary of State and dated not more than forty five (45) business days prior to the date of the Closing and (c) the bylaws and any amendments thereto certified by the Secretary as being in full force and effect without modification, have been furnished to the Purchaser. The Company is duly qualified and in good standing to transact business as a foreign corporation and has paid all taxes and other fees due in each state or jurisdiction where it does business, except where the failure to so qualify and be in good standing would not have a material adverse effect on the business of the Company. The Company does not own, lease nor use real or personal property nor have employees or agents located in any state or jurisdiction outside Florida. The Company has no subsidiaries or affiliates or equity securities of, investments in or loans or advances to any corporation, LLC, partnership, joint venture or other business enterprise or any agreements or commitments for such. The minute books of the Company reflect all material actions and proceedings taken at meetings or by written consent of the shareholders or Board of Directors and any committee thereof. The stock records of the Company accurately reflect all stock issuances and transfers of record.

(b) Capitalization; Ownership Interests. All outstanding shares of capital stock of the Company are owned by Shareholder as set forth on the signature page of this Agreement. The ESP stock constitutes all the issued and outstanding capital stock of the Company, is fully paid and non-assessable and may be freely transferred by the Shareholder to the Purchaser. No warrants, subscriptions, calls or other rights or commitments to issue or acquire any capital stock or other securities of the Company or rights or obligations of any kind convertible into securities of any kind or class of the Company are authorized, outstanding or otherwise existing. Except as described in the Disclosure Schedule there are no agreements or understandings of any kind to which the Company is a party or by which it is bound relating to the issuance, voting, purchase, repurchase, redemption or transfer of stock or other equity interest of the Company or any other securities of any Company and no agreements or other understandings as to joint venture, profit sharing or other interests in operations or ownership. No stock or other equity interest in the Company has been issued or sold and delivered in violation of any preemptive or similar right or in violation of any corporate, business organization or securities law. No shareholder or equity owner or former shareholder or equity owner and no shareholder of any corporation or other entity heretofore merged or consolidated with or into the Company or its predecessors has any claim or cause of action whatsoever against it or its shareholders or equity owners arising out of or in any way connected with any occurrence or state of facts in existence prior to the date of this Agreement and no such shareholder equity owner or former shareholder or equity owner shall come to have any claim or cause of action whatsoever against the Company or the Seller or the Purchaser arising out of or in any way connected with any occurrence or state of facts in existence prior to the date of this Agreement.

(c) Authorization. The execution and delivery of this Agreement and the due consummation by the Seller of the transactions contemplated by this Agreement have been duly authorized by all necessary action on the part of the Board of Directors and shareholders of the Company in compliance with applicable law and this Agreement constitutes the valid and binding agreement of the Company and the Shareholder, enforceable against each of them in accordance with its terms, subject to applicable bankruptcy, reorganization, insolvency, moratorium and similar laws from time to time in effect and to general principles of equity. The Company and the Shareholder are duly authorized to execute this Agreement and all other agreements or documents attached as exhibits or referred to therein and to engage in and consummate all the transactions and other acts contemplated thereby. Except as described in the Disclosure Schedule, the Seller knows of no claim, law or regulatory or contract provision that would prevent or impede the due execution and delivery of all such documents by the Seller and the completion of all such transactions and acts.

3.02 Financials

(a) Financial Statements. Attached as exhibits to the Disclosure Statement are true, correct and complete copies of a balance sheet of the Company as of December 31, 2008, plus related statements of net income for the two (2) fiscal years then ended, together with interim financial statements through June 30, 2009 (all of which, including the Note thereto, together with the financial statements hereafter delivered are referred to herein as the "Company Financials" ). Receipt of the Company Financials is hereby acknowledged by the Purchaser. Except as described in the Disclosure Schedule, the Company Financials are consistent in all material respects with the books and records of the Company taken as a whole, have been prepared in accordance with generally accepted accounting principles applied on a consistent basis throughout the periods covered by such statements and fairly present the financial position of the Company as of their respective dates and the results of operations of the Company for the periods then ended.

(b) Absence of Undisclosed Liabilities. Except as and to the extent reflected or reserved against in the Company Financials or expressly described in the Note thereto or in the Disclosure Schedule, and except for trade payables and similar liabilities and obligations arising in the ordinary course of business since June 30, 2009 or which in the aggregate do not exceed $10,000, the Company will have on the Closing Date (x) no known liabilities or obligations of a type that would be required by generally accepted accounting principles to be accrued or otherwise reflected on a balance sheet (or the notes thereto) dated as of the Closing and (y) no other material liability of any nature, whether accrued, absolute, contingent or otherwise, known or unknown, arising from any state of facts existing on or before the Closing Date. The Purchaser acknowledges the existence of a Note of the Company in favor of the Shareholder in the amount of one hundred and forty eight thousand dollars ($148,000).

(c) No Liabilities as Guarantor; Warranties. Except as set forth in the Disclosure Schedule, neither of the Company nor any the Shareholder is directly or indirectly liable, by guaranty, surety or otherwise with respect to any debt, dividend or other obligation of any person, corporation, association, partnership or other entity, except endorsements made in the ordinary course of business in connection with the deposit of items for collection. Except as set forth in the Disclosure Schedule and except as provided by applicable law relating to the sale of goods and services, there are no outstanding warranties or guaranties upon any goods or services sold by the Company.

(d) Absence of Certain Changes. Except as set forth in the Disclosure Schedule or as contemplated by or disclosed in this Agreement, since June 30, 2009 , there has not been any material adverse change in the financial condition, assets, liabilities or business of the Company or the Shareholder.

(e) Accounts Receivable. Except as set forth on the Disclosure Schedule, any and all accounts receivable of the Company as reflected in the Company Financials, to the extent uncollected, are valid and represent moneys due for products or services sold and delivered. The Seller knows of no reason why each of these accounts receivable cannot be collected in the ordinary course of business without resort to legal proceedings. Neither the Seller nor the Company provides any guarantee of collectability of any such account receivable. There are no refunds or other adjustments, except discounts given in the ordinary course of business, payable in respect of any of such accounts receivable. To the knowledge of the Seller, there are no defenses, rights of set-off, assignments, restrictions, encumbrances or conditions enforceable by third parties on or affecting any thereof.

3.03 Tax Returns; Taxes.

The Company has properly completed and filed in correct form all federal, state, municipal and other tax and related reporting returns of every nature required to be filed by it ( the "Returns" ) and no extensions of time in which to file any such returns are in effect, except state and other returns with respect to which the failure to file would not subject either of them to liability in excess of $10,000 in the aggregate. Except as set forth in the Disclosure Schedule all amounts shown as due and payable have been paid and all accrued liabilities are properly reflected on the Financial Statements. The Company has delivered to the Purchaser true and correct copies of the Returns for the last three taxable years. The Company has generally paid and/or satisfied on or before their respective due dates all income, sales and other taxes (whether or not requiring the filing of returns), including all deficiency assessments, additions to tax, penalties and interest of which notice has been received, to the extent that such amounts have become due, and none of such taxes, assessments or charges is delinquent. All taxes or other assessments and levies which the Company is or was required by law to withhold or collect have been duly withheld and collected, and have been paid over to the proper governmental authorities or are held by the Company in a depository bank account for such payment and all such withholdings and collections and all other payments due in connection therewith are duly set forth on the books of the Company. All taxes or other assessments and levies which the Company is or was required by law to withhold or collect have been duly withheld and collected, and have been paid over to the proper governmental authorities or are held by the Company in a depository bank account for such payment and all such withholdings and collections and all other payments due in connection therewith are duly set forth on the books of the Company. No tax return of any Company has been audited by any federal, state or local tax authority. There are no outstanding agreements or waivers extending the statutory period of limitation applicable to any federal, state or local tax return for any period with respect to any Company.

3.04 Real and Personal Property.

(a) Ownership. The Company owns no real property except as set forth in the Disclosure Schedule. All of the personal property, including contract rights, patents, trademarks or names, licenses, permits and applications therefor ( the "Assets" ) reflected on the Company Financials as owned by any Company are owned free and clear by the Company and, except as clearly set forth or described in the Company Financials or in the Disclosure Schedule, none of such personal property is subject to any material mortgage, pledge, lien, restriction, encumbrance, charge or other adverse claim.

(b) Leases; Subleases. The Disclosure Schedule sets forth each lease or sublease pursuant to which the Company leases or subleases any real or personal property, either as lessor or lessee. The Seller has delivered to the Purchaser true and correct copies of all leases and subleases required to be set forth in the Disclosure Schedule. The Company is not in default in connection with any lease or sublease to which any of them is a party or by which either is bound nor, so far as the Seller knows is there any basis for any claim or default in any respect under any such lease.

(c) Documentation; Records. The products, services and systems provided or used by the Company and included in the Seller's Assets are documented, and any software includes source code, manuals, operating system instructions and backup, all software is written in standard language and can readily be archived, accessed (subject to password) and requirements retrieved and utilized by trained personnel without the addition of codes, keys or other encryption or security devices not transferred or provided to the Purchaser.

3.05 Patents; Trademarks; Trade Names, Licenses, Etc.

(a) Ownership. The Company owns patents, trademarks, service marks, trade names, service names, licenses, permits applications therefor and registrations thereof, except for the right to use its corporate name within the State of Florida.

(b) No Violations. To the best of the Seller's knowledge, the Company has not violated or infringed any patent, trademark, service mark, trade name, copyright, technology, know-how, process, license, permit, trade secret or other rights or other intellectual properties of any third party .

3.06 Contracts; Powers of Attorney.

(a) Contracts. Each written or oral contract, agreement, commitment or understanding to which the Company or any person constituting the Seller a party or to which any of their properties is subject which is material to the operation of the business or the Seller's Assets being transferred is listed in the Disclosure Schedule. All such contracts, agreements, commitments or understandings are referred to herein as "Contracts." Except as set forth in the Disclosure Schedule neither the Company nor is in default in connection with any Contracts nor, so far as any of them knows, is there any basis for any material claim or default in, any respect under any Contract; so far as any of them knows, no other party is in material default under any of the Contracts, no act or event (other than overdue payments not more than 60 days late) has occurred which, with notice or lapse of time, or both, would constitute a default under any of the Contracts and, so far as they both know, there is no basis for such; there is no outstanding notice of cancellation or termination in connection therewith; and to the best of the Seller's knowledge, each of the Contracts is a valid and binding obligation of the signatory, and, so far as they know, of the other parties thereto, which is in full force and effect in accordance with its terms. To the extent requested by the Purchaser in writing before the date hereof, the Seller has furnished to the Purchaser letters or other written evidence acceptable to it from contracting parties evidencing the due compliance by the Seller with the terms and conditions of applicable contracts and that they are in full force and effect.

(b) Powers of Attorney. Except as set forth in the Disclosure Schedule there are no persons holding powers of attorney or similar rights from the Company or the Seller.

3.07 Insurance.

The Disclosure Schedule sets forth a complete and accurate schedule (including the type of policy, the policy number, the carrier, the limits of coverage and the expiration date) of all insurance policies held by the Company now in force. All such policies are in full force and effect and the premiums due thereon have been timely paid. The Company will continue to maintain such insurance coverage in full force and effect to and including the Closing Date.

3.08. No Misleading Statements or Omissions.

No representation or warranty by the Seller in this Article III or in any written exhibit, statement, certificate or agreement required to be furnished by the Seller to the Purchaser pursuant to this Agreement intentionally contains or will contain any untrue statement of a material fact, or intentionally omits or will omit to state a material fact necessary to make the statements herein or therein not misleading.

3.09. Litigation; Compliance with Law.

(a) Neither the Company nor the Shareholder is engaged in or a party to or, to the best knowledge of either of them, threatened with any claim, controversy, legal action, or other proceeding whether or not before any court or administrative agency and whether by a private or public party, any adverse determination of which might adversely affect it or its business and, so far as either of them knows, there is no basis for such;

(b) No governmental authority in the last five years has (i) charged the Company or the Shareholder with the commission of a crime or (ii) given notice to the Company or either the Shareholder that it was conducting any investigation of which the Company or either the Shareholder was the subject.

(c) The Company and the Shareholder has complied in all material respects with each federal, state or other statute, law, judgment, order, decree, regulation or rule of any court or governmental authority applicable to it, including without limitation all trademark, copyright, antitrust and trade regulation laws, all communications laws, and all rules and regulations promulgated under such laws. Except as set forth in the Disclosure Schedule, the Company holds all required licenses and permits to conduct the business done and intended to be done by it.

3.10. Absence of Restrictions and Conflicts.

The execution and delivery of this Agreement, the consummation of the transactions contemplated by this Agreement and the fulfillment of and compliance with the terms and conditions of this Agreement do not and will not with the passing of time or the giving of notice or both (a) constitute a violation of, conflict with, constitute a breach of or default under or result in the creation or imposition of any security interest, lien or other encumbrance, upon any of the Assets under (i) any term or provision of the articles of incorporation or bylaws or other similar basic document of the Company or (ii) any agreement, commitment or understanding to which the Company or either the Shareholder is a party or to which any of them or any of their properties is subject; (iii) any judgment, decree or order of any court or governmental authority or agency; or (iv) any statute, law, regulation or rule or (b) create, or cause the acceleration of maturity of, any debt, obligation or liability of the Company or either the Shareholder. No consent, approval, order or authorization of, or registration, declaration or filing with any governmental authority or other person, corporation, firm or entity with respect to the Company or any the Shareholder is required in connection with the execution or delivery of or the performance under this Agreement or the consummation of the transactions contemplated by this Agreement other than as set forth in the Disclosure Schedule or described elsewhere herein.

ARTICLE IV. PURCHASER'S REPRESENTATIONS AND WARRANTIES.

The Purchaser hereby represents and warrants to the Company and the Shareholder as of the date of this Agreement and as of the Closing Date, as follows:

4.01. Status of Purchaser.

The Purchaser is a corporation duly incorporated, organized and existing in good standing under the laws of Delaware and has the corporate power and authority to own its properties and carry on its business as contemplated by this Agreement.

4.02 Authorizations.

The Purchaser has full power and authority to enter into this Agreement, and to enter into the other transactions provided for herein, and the execution and delivery of this Agreement and the consummation by the Purchaser of the transactions provided for herein by the Purchaser have been duly and validly authorized by all necessary action on the part of the Purchaser in compliance with its organizational documents and applicable law. This Agreement constitutes the valid and binding agreement of the Purchaser , enforceable against it in accordance with its terms, subject to applicable bankruptcy, reorganization, insolvency, moratorium and similar laws from time to time in effect and to general principles of equity. Subject to the restrictions described above in this Agreement, the issuance and delivery of the LP Stock and the Additional LP Stock is within the corporate powers of the Purchaser and has been duly and properly authorized by proper action of the Board of Directors and officers. When issued and delivered to the Seller the LP Stock and the Additional LP Stock will be fully paid and non-assessable on the books of the Purchaser and free from any ownership claims of prior shareholders or others. The voting and other rights in the LP Stock provided to the Shareholder at the Closing by virtue of this Agreement are freely assignable to the Shareholder.

4.03 No Misleading Statements or Omissions.

No representation or warranty by the Purchaser in this Article IV or in any written exhibit, statement, certificate or agreement required to be furnished by the Purchaser pursuant to this Agreement intentionally contains or will contain any untrue statement of a material fact, or intentionally omits or will omit to state a material fact necessary to make the statements herein or therein not misleading.

ARTICLE V. SURVIVAL; INDEMNIFICATION

5.01 Survival.

All representations and warranties made by the Purchaser or the Seller in this Agreement or required by this Agreement to be made in any exhibit, schedule, certificate, instrument or agreement delivered pursuant to this Agreement, shall be made at and as of the date of this Agreement and at and as of the Closing Date hereunder. The representations, warranties, covenants and agreements made by the Purchaser and the Seller in this Agreement and in any exhibit, schedule, certificate, instrument or agreement delivered pursuant to this Agreement shall survive the Closing for a period of one (1) year. No investigation made by the Purchaser or the Seller or any of their representatives shall affect the enforceability of any such representations, warranties, covenants, agreements or undertakings or their survival.

5.02. Indemnification.

The Company and the Shareholder shall indemnify, defend and hold harmless the Purchaser and their successors and assigns, from and against any and all loss, liability, claim or expense (including without limitation reasonable attorneys' fees ) incurred or suffered as a result of a material breach of a representation or warranty by either of them or failure to comply with this Agreement including all exhibits. The Purchaser shall indemnify and hold harmless the Seller from and against all loss, liability claim or expense( including reasonable attorneys fees ) which either of them may incur or suffer as a result of a material breach of a representation or warranty by the Purchaser or failure by the Purchaser to comply with this Agreement including all exhibits. The provisions of this Section 5.02 shall survive the Closing. For purposes of this section, a loss, liability, claim or expense shall not be deemed material except to the extent that it exceeds $15,000. No claim for indemnity may be brought more than one (1) year after the Closing Date. This right of indemnity shall not be deemed exclusive of other remedies provided by law or by contract.

ARTICLE VI. OTHER AGREEMENTS

6.01 Continuing Operation of Business.

The Seller agrees that after execution of this Agreement and prior to the Closing (except upon the prior written consent of the Purchaser which will not be unreasonably withheld ) the Company will do the following:

(a) Carry on its business diligently and in the ordinary course.

(b) Not incur any additional liabilities or obligations in excess of $10,000 except such liabilities or obligations as the Shareholder consider to be reasonable and necessary for the business.

(d) Not to increase the compensation of any employee of the Company.

(e) Not to license, assign, sell, transfer or encumber any of the property or assets of the Company including development rights to any new products or services, other than in the ordinary course of business.

(f) Not to do any act, or omit to do any act, or to permit any act or omission to act, any of which will cause a breach of any contract, agreement, commitment or understanding to which the Company is a party or by which it is bound that is likely to materially and adversely affect its business or financial condition; and

(g) To prepare and file all required returns for taxes, and other tax reports, filings and amendments thereof, required to be filed, and to allow Purchaser to review all such returns, reports, filings, and amendments prior to the filing thereof.

6.02. Inspection; Updated Financial Statements.

(a) Inspection. The Seller shall allow the Purchaser and its authorized employees and representatives full access during normal business hours and prior to the Closing Date to all of the properties and records of the Company and shall at their own expense furnish to the Purchaser and its representatives such information concerning the Company as they may reasonably request. The Purchaser and its representatives shall have the right to review and copy such records as they may deem advisable, and shall advise the Seller of those items of which copies are made. All such investigations and copies shall be undertaken in strictest confidence and upon request the Purchaser and, if requested, each representative shall sign a confidentiality agreement before being permitted to proceed. The Seller and their representatives, and if the transactions contemplated herein are not consummated, the Purchaser and its representatives, shall treat all information obtained from the others, and not otherwise known to such party or already in the public domain, as confidential, and if the transactions contemplated herein are not consummated, each party shall return to each other party all materials and copies made of materials belonging to the other party.

(b) Updated Financial Statements. Without limiting the foregoing, the Seller shall cause to be prepared and shall deliver to the Purchaser monthly as requested, as soon as practicable after they have been prepared (but in no event later than fifteen days after the end of each month) unaudited monthly consolidated financial statements (including without limitation a balance sheet and statements of income and cash flow for the month and cumulative) of the Company as prepared in the ordinary course of business, for periods ending after the date of the last Seller's Financials delivered hereunder.

6.03. No Negotiations.

From the date hereof until the Closing or until this Agreement is terminated as provided in Article VII, the Seller shall not, and will direct the officers, directors, representatives, financial advisors and counsel of the Seller not to solicit or enter into any discussions or negotiations with, or furnish or cause to be furnished any information concerning, the Seller to any person or entity (other than the Purchaser and its representatives) in connection with any acquisition of all or any interest in the Company or product or service developed by the Company or the Seller, whether by merger, sale or purchase of equity interests, sale of all or substantially all of the assets or other takeover or business combination involving any of them.

6.04 Good Faith Efforts; Further Assurances; Cooperation.

The parties hereto shall in good faith undertake to perform their obligations herein, to satisfy all conditions and to cause the transactions contemplated herein to be carried out promptly in accordance with the terms hereof. Upon the execution of this Agreement and thereafter, each party shall do such things as may be reasonably requested by the other parties hereto in order more effectively to consummate or document the transactions contemplated by this Agreement. The parties shall cooperate fully with each other and their respective officers, directors, employees, agents, counsel, accountants and other designees in connection with any steps required to be taken as part of their respective obligations under this Agreement.

6.05 Brokerage Commissions.

Each of the parties hereby agrees for the benefit of the others that, other than as stated in the Disclosure Schedule, no person, firm, corporation or other entity is entitled to any brokerage commission or finder's fee in connection with any of the transactions contemplated by this Agreement, arising out of acts by him or it or his or its employees or agents. The Purchaser agrees to indemnify and hold harmless the Seller from and against any and all claims or demands for such commissions or fees based on any arrangement made by the Purchaser, and the Seller agrees to so indemnify and hold harmless the Purchaser from and against any and all claims or demands for such commissions or fees based on any arrangement made by the Seller.

6.06 Public Announcements.

The Seller will make no press releases or other public announcements relative to the transactions contemplated by this Agreement without the prior written consent of the Purchaser. The Purchaser will furnish to the Seller any public announcement it makes with respect to the transactions contemplated by this Agreement, prior to its release whenever practicable.

ARTICLE VII. TERMINATION AND ABANDONMENT; SPECIFIC PERFORMANCE

7.01 Termination and Abandonment.

This Agreement may be terminated at any time prior to the Closing:

(a) by mutual agreement of the Seller and Purchaser;

(b) by the Purchaser if the conditions set forth in Sections 2.03 and 2.05 shall not have been complied with or performed in any material respect and such non-compliance or nonperformance shall not have been cured or eliminated (or by its nature cannot be cured or eliminated) on or before the Closing Date; provided, however, that if such non-compliance or nonperformance can be cured or eliminated, the Purchaser shall not so terminate unless it has given the Seller written notice that non- compliance or non-performance has occurred, specifying the nature thereof and the action required to cure, and (ii) such non-compliance or non-performance shall not have been cured or eliminated within fifteen (15) days of receipt of such notice;

(c) by the Seller if the conditions set forth in sections 2.04 and 2.06 shall have not been complied with or performed in any material respect and such non-compliance or non- performance shall not have been cured or eliminated (or by its nature cannot be cured or eliminated) on or before the Closing Date; provided, however, if such non - compliance or non-performance can be cured or eliminated, the Seller shall not so terminate unless and until (i) it has given the Purchaser written notice that non- compliance or non-performance has occurred, specifying the nature thereof and the action required to cure, and (ii) such non-compliance or non-performance shall not have been cured or eliminated within fifteen (15) days of receipt of such notice;

(d) by the Purchaser or the Seller by written notice to the other, if any action or proceeding shall have been instituted before any court or other governmental body or by any public authority or any private person, firm, corporation or entity to restrain or prohibit or question the validity or legality of the transactions contemplated by this Agreement or to subject one or more of the parties to this Agreement or the directors or officers of Purchaser or the Seller to liability on the grounds that it or they have breached any law or regulation or otherwise acted improperly in connection with such transactions, other than an action, suit or proceeding instituted by a person other than a governmental authority which, in the written opinion of counsel to the party receiving notice of termination, does not have a substantial likelihood of success; or

(e) by the Purchaser or the Seller if the Closing has not occurred on or before the required Date of Closing or any agreed upon extension

7.02. Specific Performance and Other Remedies.

The parties hereto each acknowledge that the rights of the others to consummate the transactions contemplated hereby are special, unique and of extraordinary character, and that, in the event that any party violates or fails and refuses to perform any covenant or agreement made by it herein, the non-breaching party may be without an adequate remedy at law. The parties each agree, therefore, that in the event that he or it violates or fails or refuses to perform any covenant or agreement made by him or it herein, the non breaching party or parties may, in addition to any remedies at law for damages or other relief, institute and prosecute an action in any court of competent jurisdiction to enforce specific performance of such covenant or agreement or seek any other equitable relief.

7.03 Rights and Obligations on Termination.

(a) Redelivery. If this Agreement is terminated and abandoned as provided herein, each party hereto will redeliver all documents, work papers and other materials and information, including all copies and summaries thereof of any other party relating to the transactions contemplated hereby, whether so obtained before or after the execution hereof, to the party furnishing the same, and all information received by any party hereto with respect to the business of any other party shall not at any time be used for the advantage of, or disclosed to third parties by, such party to the detriment of the party furnishing such information; provided, however, that this paragraph shall not apply to any documents, work papers, materials, or information which are a matter of public knowledge or which have heretofore been or are hereafter published in any publication for public distribution or filed as public information with any governmental authority.

(b) Survival. The following provisions shall survive termination of this Agreement: Sections: Article III, Article IV, Sections 5.01,5.02,6.05,Articke VII, 8.06, 8.08.

ARTICLE VIII. MISCELLANEOUS PROVISIONS

8.01. Notices.

All notices, communications and deliveries hereunder shall be made in writing signed by the party making the same, shall specify the section hereunder pursuant to which it is given, and shall be deemed given on the date delivered if delivered in person or on the third business day after it is mailed if mailed certified first class mail return receipt requested (with postage and other fees prepaid) as follows

To the Purchaser:

LOCATEPLUS Holdings Corporation

100 Cumming s Center, # 235M

Beverly MA 01915

(978) 524-8887 (fax)

Att; Geoffrey Lee, CEO

with a copy to:

Geoffrey T. Chalmers, Esq.

33 Broad Street, Suite 1100

Boston, Ma 02109

(617) 227-3709 (fax)

To the Seller:

Employment Screening Profiles, Inc.

d/b/a Trubackgrounds, Inc.,

4025 Tampa Rd., Suite 1206,

Oldsmar, FL 34677

Att; Derrick A. Spatorico, Esq.

(585) 546-2474(fax)

with a copy to:

Derrick A. Spatorico, Esq.

1 East Main Street, Suite 150

Rochester, NY 14614

or to such other representative or at such other address as a party hereto may furnish to the other parties in writing. If notice is given of a permitted successor or assign of a party hereto, the notice shall be given as set forth above to such successor or assign of such party.

8.02 Exhibits and Schedules.

All enumerated exhibits and schedules to this Agreement, and any attachments thereto, are hereby incorporated into this Agreement and- hereby are made a part hereof as if set out in full in the first place that reference is made thereto. All exhibits, schedules, certificates, information and lists to be disclosed in writing and delivered pursuant to this Agreement shall, if not attached to this Agreement, be delivered to the appropriate party at the address indicated above, shall indicate the section hereunder pursuant to which it was delivered or mailed, and shall be signed or initialed by the party or parties or an attorney-in-fact of the party or parties delivering the same.

8.03 Time of the Essence, Computation of Time.

Time is of the essence of each and every provision of this Agreement which, by its terms, calls for performance by a specified date. Whenever the last day for the exercise of any privilege or the discharge of any duty hereunder shall fall upon Saturday, Sunday or any public or legal holiday, whether state or federal, the party having such privilege or duty may exercise such privilege or discharge such duty on the next succeeding regular business day.

8.04 Assignment; Successors in Interest.

No assignment or transfer by Purchaser or Seller of its rights and obligations hereunder prior to the Closing shall be made except with the prior written consent of the other party(ies). This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective legal representatives, heirs, descendants and permitted successors and assigns, and any reference to a party hereto shall also be a reference to a permitted successor or assign.

8.05 Number; Gender.

Whenever the context so requires, the singular number shall include the plural and the plural shall include the singular, and the gender of any pronoun shall include the other genders.

8.06 Controlling Law, Integration, Amendment; Waiver.

This Agreement shall be governed by and construed and enforced in accordance with the laws of Massachusetts. This Agreement and the other agreements contemplated hereby supersede all prior negotiations, agreements and understandings between the parties with respect to the subject matter hereof, constitute the entire agreement between the parties and may not be altered or amended except in writing signed by Purchaser, the Purchaser and the Seller. The failure of any party hereto at any time or times to require performance of any provisions hereof shall in no manner affect the right to enforce the same. No waiver by any party hereto of any condition, or of the breach of any term, provision, warranty , representation, agreement or covenant contained in this Agreement or the other agreements contemplated hereby, whether by conduct or otherwise, in any one or more instances shall be deemed or construed as a further or continuing waiver of any such condition or breach or a waiver of any other condition or of the breach of any other term, provision, warranty, representation, agreement or covenant herein or therein contained.

8.07 Expenses.

Each party hereto agrees to pay its own expenses of this Agreement and the transactions contemplated hereby.

8.08. Arbitration of Disputes.

In the event of any controversy or claim arising out of or relating to this Agreement or any act or omission of a party hereunder (a "dispute"), either party (by written notice to the other) may invoke the procedures of this section. Promptly after such notice is given, the Shareholder and senior management of the Purchaser will meet to attempt to negotiate a settlement of all pending disputes. If for any reason the parties have not entered into a written settlement of the dispute(s) within 30 days after the original notice, either party may give notice demanding arbitration. Thereafter all pending disputes shall be settled by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association, or such other rules and procedures as the parties may hereafter consent to in writing. The arbitration shall occur in Boston, Massachusetts or such other location as is mutually acceptable to the parties. The arbitrator (or a majority thereof, if more than one) shall be licensed to practiced law in Massachusetts and experienced in corporate and contract law, and the arbitrator(s) shall be required to decide each claim in accordance with applicable law and to set forth briefly in writing the award, the rationale of the decision, and those facts considered by the arbitrator(s) to be material to such decision. Judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. This agreement to arbitrate shall be enforceable under the Uniform Arbitration Act.

8.09 Counterparts.

This Agreement may be signed by each party upon a separate copy and in such case one counterpart of this Agreement shall consist of enough of such copies to reflect the signatures of each party. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and it shall not be necessary in making proof of this Agreement or the terms hereof to produce or account for more than one of such counterparts. This Agreement shall become effective when one or more counterparts have been signed by each of the parties and delivered to each of the other parties.

DULY EXECUTED BY the parties hereto, under seal, as of the day and year first above written.

Purchaser: LOCATEPLUS HOLDINGS CORPORATION

By: _________________

Geoffrey Lee, CEO

Seller: EMPLOYMENT SCREENING PROFILES, INC.

By: ___________________

Derrick A. Spatorico, President

By:____________________

Derrick A. Spatorico, Individually


Delaware		04-3332304
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)


100 Cummings Center, Suite 235m, Beverly, MA		01915
(Address of principal executive offices)		(Zip Code)

	Table of Contents
		Page

PART I

ITEM 1	Description of Business	1

ITEM 1A	Risk Factors	7

ITEM 2	Description of Property	10

ITEM 3	Legal Proceedings	11

ITEM 4	Submission of Matters to a vote of Security Holders	11

PART II

ITEM 5	Market for Common Equity and Related Stockholder Matters	11

ITEM 6	Management's Discussion and Analysis of Financial Condition and Results of Operations	13

ITEM 7	Financial Statements	19

ITEM 8	Changes In and Disagreements with Accountants and Financial Disclosure	19

ITEM 8A	Controls and Proceedures	19

PART III

ITEM 9	Directors, Executive Officers, Promotoers, and Control Persons; Compliance with Section 16(a) of the Exchange Act	21

ITEM 10	Executive Compensation	24

ITEM 11	Security Ownership and Certain Beneficial Owners and Management	24

ITEM 12	Certain Relationships and Related Transactions	25

ITEM 13	Exhibits and Reports on Form 8-K	26

ITEM 14	Principal Accountant Fees and Services	29

Level	Industry Users	Sample Datasets Available to Users
I	General Business	Names, Addresses and Phone Numbers Past Residences, Neighbors and Affiliates Real Property
II	Private Investigators Insurance Attorneys/Law Firms Government Corporate Security	Level I Data, plus: Liens and Judgments Drivers’ Records Certain Motor Vehicle Records
III	Law Enforcement	Level I and II Data, plus: Comprehensive Criminal Records Restricted Motor Vehicle Records Certain Credit Reporting Data

Consideration

Equity Instruments (9,000,000 common shares of LocatePlus Holdings)	$ 900,000

Fair value of total consideration transferred	$ 900,000

Recognized amounts of identifiable assets acquired and liabilities assumed

Financial assets	$ 14,578
Property, plant, and equipment	$ 40,837
Note Payable	$ (148,000)
Financial liabilities	$ (5,828)

Total identifiable net assets	$ (98,413)

Goodwill	$ 998,413
	$ 900,000

	Revenue	Earnings

Actual from 9/24/2009 - 12/31/2009	$ 272,714	$ 44,693

Supplemental pro forma from 1/1/2009 - 12/31/2009	$ 7,685,933	$ (1,969,626)

Supplemental pro forma for 1/1/2008 - 12/31/2008	$ 9,382,807	$ (1,358,151)

	2007
	Three months ended
	March 31		June 30		September 30		December 31
	High	Low	High	Low	High	Low	High	Low
LPHC.PK	.42	.18	.22	.09	.15	.08	.12	.04

	2008
	Three months ended
	March 31		June 30		September 30		December 31
	High	Low	High	Low	High	Low	High	Low
LPHC.PK	.15	.04	.28	.04	.14	.02	.05	.01

	2009
	Three months ended
	March 31		June 30		September 30		December 31
	High	Low	High	Low	High	Low	High	Low
LPHC.PK	.05	.01	.15	.02	.17	.08	.19	.10

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of Outstanding options, Warrants and rights	Number of securities remaining available for future issuance under equity compensation plans(1)

Equity Compensation Plans approved by security holders:
Common Stock	226,987	$38.83	964,210


Contractual Obligations	Total		Less than 1 Year		1-3 Years		3-5 Years
Long-Term Debt including current portion	$	3,588,799	$	3,469,234	$	119,565		-
Operating Leases		1,999,707		406,766		758,154		834,787
License Agreements		405,000		405,000		-		-
Total	$	5,993,506	$	4,281,000	$	877,719	$	834,787

Executive Officers and Directors	Age	Positions
Christian Williamson	37	Chairman of the Board, Governance Committee Member
Derrick Spatorico	41	Director, Acting President and Chief Executive Officer, Treasurer, Compensation Committee Member
Richard Pyle	65	Director, Governance Committee Chairman, Audit Committee Member
Patrick Murphy	56	Director and Secretary
James Ahern	69	Director, Compensation Committee Chairman
George Isaac	65	Director, Audit Committee Chairman, Compensation Committee Member
Bart Valdez	47	Director, Governance Committee Member, Compensation Committee Member, Audit Committee Member

Name and Principal Position	Year	Salary ($)	Bonus ($)	Severance ($)	Options Awards (shares)	Non-Equity Incentive Plan Comp ($)	Non- Qualified Deferred Comp ($)	All Other Comp ($)	Totals ($)
Geoffrey Lee(5)	2009	125,000	-	-	-	39,773	-	-	164,773
Interim CEO

James C. Fields(3)	2009	49,038						-	49,038
Former President,CEO,	2008	252,190	-	-		-	-	13,200(4)	265,390
Acting CFO, Secretary	2007	212,631	–	-	600,000(1)	-	-	13,200(4)	225,831


Jon R. Latorella	2008	60,215		250,000				15,000(2)	325,215
Former Chairman of the Board & CEO	2007	231,468	325,0000	-	-	-	-	15,000(2)	571,468

	Common Stock
Beneficial Owner	Number of Shares Beneficially Owned	Percentage of Class
Directors
Christian Williamson	1,628,880	3.3%
Bart Valdez	605,005	1.2%
Richard Pyle	57,182	-
George Isaac
James Ahern
Officers
Derrick Spatorico	650,000	1.3%
Patrick Murphy	550,000	1.1%
5% or More Shareholders
James C. Fields(2)	19,866,461	39.7%
Special Situation Funds(1)	1,410,000	2.8%
All directors and executive officers as a group (5 persons)	3,491,067	6.9%


LocatePLUS Holdings Corporation
Consolidated Condensed Balance Sheets

	December 31, 2009			December 31, 2008
Assets
Current assets:
Cash and cash equivalents	$	53,546		$	92,465
Accounts receivable		760,933			510,964
Prepaid expenses and other current assets		3,017			99,903

Total current assets		817,496			703,332

Property and equipment, net		68,371			715,553
Intangible assets		1,022,997			79,464
Other assets		100,468			122,917

Total assets	$	2,009,332		$	1,621,266

Liabilities and Stockholders’ (Deficit) Equity
Current liabilities:
Accounts payable		1,370,805			1,139,317
Accrued expenses		3,992,513			3,474,152
Deferred revenue		284,360			306,875
Notes Payable		148,000			607,883
Convertible notes payable		3,288,419			2,586,992

Total current liabilities		9,084,097			8,115,219

Long term convertible notes payable		119,565			247
Shares subject to mandatory redemption		1,800,000			1,500,000

Total liabilities		11,003,662			9,615,466

Commitments and contingencies

Stockholders’ (deficit) equity:
Common Stock , $0.01 par value, 25,000,000 and 50,000,000 shares authorized
23,795,500 and 49,993,700 shares issued and outstanding at December 31, 2008 and 2009 respectively		499,937			237,955
Preferred Stock , $1.00 par value, 1,000,000 shares authorized and
72,000 shares issued and outstanding at December 31, 2009		-			-
Additional paid-in capital		39,206,050			39,395,136
Warrants		3,627,194			3,627,194
Shares pending issuance		900,000			-
Impairment on Assets		-			(873,500	)
Accumulated deficit		(53,227,511	)		(50,380,985	)

Total stockholders’ equity		(8,994,330	)		(7,994,200	)

Total liabilities and stockholders’ equity	$	2,009,332		$	1,621,266

LocatePLUS Holdings Corporation
Consolidated Statements of Operations

	For the twelve months ended December 31,
	2009			2008


Revenue		7,260,952			8,013,600

Cost of Revenue		1,760,298			1,691,293

Gross Profit	$	5,500,654		$	6,322,307

Operating expenses:
Sales and marketing		1,179,221			1,591,405
General and administrative		4,998,011			5,366,168
Research and development		29,645			194,728

Total operating expenses	$	6,206,877		$	7,152,301

Operating loss		(706,223	)		(829,994	)

Other income (expense):
Interest expense		(514,714	)		(511,542	)
Other income		4,466			7,924
Finance related expenses		(294,765	)		-
Loss on termination of research and development project		(586,334	)		-
Gain on extinguishment of debt		127,000			-
Loss on permanent impairment of investment		(875,000	)		-

Net loss	$	(2,845,570	)	$	(1,333,612	)

Basic and diluted net loss per share	$	(0.06)		$	(0.08)

Shares used in computing basic and diluted net loss per share		44,445,410			16,538,323

LocatePLUS Holdings Corporation
Consolidated Statement of Stockholders' Equity

	Common stock				Share Pending		Additional			Warrants			Impairment			Accumulated			Total stockholders’
	Shares		Amount		Issuance		paid-in capital						on assets			deficit			equity (deficit)
Balance at December 31, 2007		11,397,657		113,977				39,218,416			3,692,378			(861,350	)		(49,047,373	)		(6,883,952	)
Issuance of shares		12,397,870		123,978				176,720			(65,184	)								235,514
Adjustment to impairment														(12,150	)					(12,150	)
Net loss																	(1,333,612	)		(1,333,612	)
Balance at December 31, 2008		23,795,527		237,955				39,395,136			3,627,194			(873,500	)		(50,380,985	)		(7,994,200	)
Issuance of shares		26,198,190		261,982				(189,086	)								(956	)		71,940
Adjustment to impairment														873,500						873,500
Shares Pending Issuance						900,000														900,000
Net loss																	(2,845,570	)		(2,845,570	)
Balance at December 31, 2009		49,993,717	$	499,937		900,000	$	39,206,050		$	3,627,194			-		$	(53,227,511	)	$	(8,994,330	)


LocatePLUS Holdings Corporation
Consolidated Statements of Cash Flows
	For the year ended December 31, 2009			For the year ended December 31, 2008
Cash flows from operating activities:
Net loss	$	(2,845,570	)	$	(1,333,612	)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization of property and equipment		101,613			562,728
Loss on termination of property and equipment		459,334			1,836
Provision for doubtful accounts		(7,000	)		(72,164	)
Interest expense related to warrants issued with debt		345,457			343,225
Acquisition of Goodwill		(998,413	)		-
Shares pending issuance		900,000			-
Conversion of payable to debt		75,000			-
Loss on investment		(1,500	)		-
Conversion of debt to equity securities		85,062			-
Loss on permanent impairment of investment		875,000			-
Stock Based Compensation		-			26,636
Changes in assets and liabilities:
Accounts receivable		(242,968	)		282,722
Prepaid expenses and other assets		195,219			169,789
Accounts payable		256,490			(120,106	)
Accrued expenses		518,361			47,652
Deferred revenue		(22,516	)		147,574
Security deposits		(21,004	)		192,574

Net cash provided (used by) by operating activities		(327,435	)		238,851

Cash flows from investing activities:
Purchases of property and equipment		(40,837	)		-

Net cash used in investing activities		(40,837	)		-

Cash flows from financing activities:
Repayment of debt		(20,647	)		(204,650	)
Proceeds from issuance of debt		350,000			-
Payments of obligations under capital lease		-			(37,878	)

Net cash provided (used) in financing activities		329,353			(242,528	)

Net decrease in cash and cash equivalents		(38,919	)		(3,677	)

Cash and cash equivalents, beginning of period		92,465			96,142

Cash and cash equivalents, end of period	$	53,546		$	92,465

	For the twelve months ended
	December 31
	2009	2008
Expected life	6 years	6 years
Volatility	33%	31%
Risk free interest rate	0.45 %	0.36 %
Dividend yields	-	-
Weighted-average fair value of options granted during the period	-	-

	December 31,
	2009	2008

Equipment	$ 4,638,081	$ 4,597,245
Vehicles	22,343	22,343
Software (see note below)	332,587	918,920
Furniture and fixtures	389,783	389,783
Leasehold improvements	624,142	624,142
	6,006,936	6,552,433
Less accumulated depreciation and amortization	5,938,565	5,836,880
Property and equipment, net	$ 68,371	$ 715,553

Year ending December 31,
2010	$ 394,730
2011	387,138
2012	371,016
2013	371,016
2014 and future	463,770
Total	$ 1,987,670

	2009	2008

Net operating loss carry forwards	$ 15,000,000	$ 14,735,000
Stock based compensation	390,000	450,000
Bad debt reserve	39,000	44,400
Investment loss	5,000	5,000
Gross deferred tax assets	15,434,000	15,234,400

Valuation allowance	(15,434,000)	(15,234,400)
Net deferred tax assets	$ -	$ -

From:	Through:	# of Preferred Shares

Closing Date	December 31, 2010	600
March 31, 2011	December 31, 2011	1,000
March 31, 2012	December 31, 2012	1,400

		Weighted average
	Shares	exercise price

Outstanding at December 31, 2007	410,906	$ 29.87
Granted	600,000	$ 0.11
Exercised	-	-
Forfeited / Canceled	-	-

Outstanding at December 31, 2008	1,010,906	$ 12.21
Issued	-	-
Exercised	-	-
Canceled	(783,919)	$ 4.60

Outstanding at December 31, 2009	226,987	$ 38.83

	Options outstanding			Options exercisable

		weighted average remaining	Weighted average		Weighted average
Range of exercise price	Shares	contractual life (years)	exercise price	Shares	exercise price

$10.00-$15.00	123,237	2.67	$ 10.07	123,237	$ 10.07
$15.00-$75.00	103,750	4.48	$ 73.00	103,750	$ 73.00
	226,987	3.50	$ 38.83	226,987	$ 38.83

		DUTCHESS PRIVATE EQUITIES FUND, LTD.:
		By:___________________ Name: Douglas H. Leighton Title: Director

		THE COMPANY:
		LOCATEPLUS HOLDINGS CORPORATION
		By: ____________________ Name: Geoffrey Lee Its: Interim Chief Executive Officer

Date: March 31, 2010	/s/ Derrick Spatorico
	Derrick Spatorico
	Acting President, Chief Executive Officer, and Treasurer