HIGH POINT TRANSPORT, INC.

 

(a)

Right to Convert.  Subject to the provisions of paragraph 4.1(b), below, the record holder of this Debenture shall be entitled, on or after the Date of Original Issuance, at the option of the Holder, to convert this Debenture, in whole or in part, into fully paid and non-assessable shares of the Company’s Common Stock at the rate of $1.00 per share.

 

(a)

all shares which may be issued upon the exercise of the conversion privilege granted herein will, upon issuance in accordance with the terms hereof, be fully paid, non-assessable, and free from all taxes, liens and charges (except for taxes, if any, upon the income of the Holder) with respect to the issue thereof, and that the issuance thereof shall not give rise to any preemptive rights on the part of the stockholders;

 

(b)

the failure of the Company to issue shares upon the conversion of the Debenture will cause the holder immediate irreparable harm.

 

(a)

In case the Company shall (i) pay a dividend or make a distribution in shares of Common Stock, (ii) subdivide its outstanding shares of Common Stock into a greater number of shares of Common Stock, (iii) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock, (iv) make a distribution on its Common Stock in shares of its capital stock other than Common Stock, or (v) issue by reclassification of its Common Stock other securities of the Company, the conversion privilege of the Debenture and the Conversion Price then in effect immediately prior thereto shall be adjusted so that

 

the Holder shall be entitled to receive the kind and number of shares of Common Stock and other securities of the Company which it would have owned or would have been entitled to receive after the happening of any of the events described above, had the Debenture been converted immediately prior to the happening of such event or any record date with respect thereto. Any adjustment made pursuant to this paragraph (a) shall become effective immediately after the effective date of such event retroactive to the record date, if any, for such event.

 

 (b)

When the number of shares of Common Stock or the Conversion Price is adjusted as herein provided, the Company shall cause to be promptly mailed to the Holder by first class mail, postage prepaid, notice of such adjustment or adjustments and a certificate of a firm of independent public accountants selected by the Board of Directors of the Company (who may be the regular accountants employed by the Company) setting forth the number of shares of Common Stock and the Conversion Price after such adjustment, a brief statement of the facts requiring such adjustment and the computation by which such adjustment was made.

 

(c)

For the purpose of this Section 4.5, the term "Common Stock" shall mean (A) the class of stock designated as the Common Stock of the Company at the date of this Debenture or (B) any other class of stock resulting from successive changes or reclassification of such Common Stock consisting solely of changes in par value, or from par value to no par value, or from no par value to par value. In the event that at any time, as a result of an adjustment made pursuant to this Section 4.5, the Holder shall become entitled to receive any securities upon conversion of the Company other than shares of Common Stock thereafter the number of such other securities and the Conversion Price of such securities shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Common Stock contained in this Section 4.5.

 

(a)

Each certificate for Common Stock issuable hereunder shall bear a legend substantially worded as follows unless such securities have been sold pursuant to an effective registration statement under the Securities Act:

 

     (b)

Except as otherwise provided in this Sec­tion 5, the Debenture shall be stamped or otherwise imprinted with a legend in substantially the following form:

 

(a)

At all times keep reserved the total number of shares of Common Stock necessary for the conversion of all of the then outstanding Debentures at the then current Conversion Rate;

 

(b)

Not pay any dividends in cash and/or property or other assets of the Company in respect of its Common Stock or otherwise.

 

(c)

Not issue any debentures of the Company other than the Debentures unless the rights of the holders of such debentures are subordinated to the Debentures or paripassu therewith, in which event the terms of the subordination provision shall be similar to the terms set forth in Section 9 of this Debenture;

 

 (d)

Not enter into a loan secured by the property and/or assets of the Company or any of its subsidiaries with (i) any director, officer or 5% stockholder of the Company, (ii) any entity in which a director, officer or 5% stockholder has an interest as an officer, director, partner, beneficiary of a trust or is a 5% or more equity holder of such entity, or (iii) any parent, spouse, child or grandchild of an officer, director or 5% stockholder of the Company upon terms no less favorable to the Company than those which could be obtained from an “arms-length” lender; and

 

(e)

Not redeem, repurchase or otherwise acquire any shares of the common or preferred stock of the Company.

 

(a)

if the Company shall default in the payment or prepayment of any part of the principal of any of the Debentures after the same shall become due and payable, whether at maturity or at a date fixed for prepayment or by acceleration or otherwise, and such default shall continue for more than 30 days; or

 

(b)

if the Company shall default in the payment of any installment of interest on any of the Debentures for more than 30 days after the same shall become due and payable; or

 

(c)

if the Company shall make an assignment for the benefit of creditors or shall be unable to pay its debts as they become due; or

 

(d)

if the Company shall dissolve; terminate its existence; become insolvent on a balance sheet basis; commence a voluntary case under the federal bankruptcy laws or under any other federal or state law relating to insolvency or debtor's relief; permit the entry of a decree or order for relief against the Company in an involuntary case under the federal bankruptcy

 

laws or under any other applicable federal or state law relating to insolvency or debtor's relief; permit the appointment or consent to the appointment of a receiver, trustee, or custodian of the Company or of any of the Company's property; make an assignment for the benefit of creditors; or admit in writing to be failing generally to pay its debts as such debts become due;

 

(e)

if the Company shall default in the performance of or compliance with any agreement, condition or term contained in this Debenture or any of the other Debentures and such default shall not have been cured within 30 days after such default,

 

(f)

Any of the representations or warranties made by the Company herein, in the Subscription Agreement, or in any certificate or financial or other statements heretofore or hereafter furnished by or on behalf of the Company in connection with the execution and delivery of this Debenture or the Subscription Agreement shall be false or misleading in any material respect at the time made; or

 

(g)

Any money judgment, writ or warrant of attachment, or similar process not covered by insurance in excess of One Hundred Thousand Dollars ($100,000) in the aggregate shall be entered or filed against the Company or any of its properties or other assets and shall remain unpaid, unvacated, unbonded or unstayed for a period of thirty (30) days or in any event later than ten (10) days prior to the date of any proposed sale thereunder; or

 

(a)   It is the intention of the parties that the laws of the State of Florida shall govern the validity of this Debenture, the construction of its terms and the interpretation of the rights and duties of the parties.

 

(b)

In the case of any dispute, question, controversy or claim arising among the parties hereto which shall arise out of or in connection with this Debenture, the same shall be submitted to arbitration before a panel of three arbitrators in Tampa, Florida, in accordance with the rules of the American Arbitration Association.  One arbitrator shall be appointed by the party or parties bringing the claims ("Claimant") and one arbitrator shall be appointed by the party or parties defending the claim ("Respondent").  The arbitrators selected by such parties shall be selected within thirty (30) days after notification by the Claimant to the Respondent that it has determined to submit such dispute, question, controversy or claim to arbitration.  The two arbitrators so selected shall select a third arbitrator within thirty (30) days after the selection of the arbitrator selected by such parties.  Should a party fail to select an arbitrator within the specified time period, or should the arbitrators selected by the parties fail to select a third arbitrator, the missing arbitrator or arbitrators shall be appointed by the Tampa, Florida office of the American Arbitration Association.  The decision of the panel shall be final and binding on the parties and enforceable in any court of competent jurisdiction.  The costs of the arbitration will be imposed upon the Claimant and Respondent as determined by the arbitration panel or, failing such determination, will be borne equally by the Claimant and the Respondent.  The successful or prevailing party or parties shall be entitled to recover reasonable attorneys fees in addition to any other relief to which it may be entitled.

 

(c)

In the event of any dispute, question, controversy or claim arising among the parties hereto which shall arise out of or in connection with this Debenture, the parties shall keep the proceeding related to such controversy in strict confidence and shall not disclose the nature of said dispute, the status of the proceeding or any testimony, documents or information obtained or exchanged in the course of said proceeding without the express written consent of all parties to such dispute.

HIGH POINT TRANSPORT, INC.

[Corporate Seal]

By___________________________

  

Paul A. Henley, President & CEO

Number:                      

Name of Holder:                                

Principal: $                                

Original Issue Date:                                            

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Date of Conversion*

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Applicable Conversion Price

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Signature

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Name

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Address

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