Exhibit 4.1
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“ACT”), OR ANY APPLICABLE STATE SECURITIES OR
“BLUE SKY” LAWS. THE SECURITIES MAY NOT BE
SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER SAID ACT, OR AN
OPINION OF COUNSEL IN FORM, SUBSTANCE AND SCOPE CUSTOMARY FOR
OPINIONS OF COUNSEL IN COMPARABLE TRANSACTIONS THAT REGISTRATION IS
NOT REQUIRED UNDER SAID ACT OR UNLESS SOLD PURSUANT TO RULE 144 OR
REGULATION S UNDER SAID ACT.
CONVERTIBLE NOTE
October 24,
2007 $100,000
FOR VALUE RECEIVED , BEVERLY HOLDINGS, INC.
, a Nevada corporation (hereinafter called the “ Borrower ”),
hereby promises to pay to the order of ________________ or
registered assigns (the “ Holder ”) the sum
of One Hundred Thousand Dollars ($100,000), with any unpaid
principal balance due on October 24, 2008 (the “ Maturity Date ”),
and to pay interest on the unpaid principal balance hereof at the
rate of twelve percent (12%) (the “ Interest Rate ”)
per annum from October 24, 2007 (the “ Issue Date ”)
until the same becomes due and payable, whether at maturity or upon
acceleration or by prepayment or otherwise. Interest shall commence
accruing on the Issue Date, shall be computed on the basis of a
365-day year and the actual number of days elapsed and shall be
payable monthly in arrears. All payments due hereunder
(to the extent not converted into the common stock, $0.001 par
value per share, of the Borrower (the “ Common Stock ”)
in accordance with the terms hereof) shall be made in lawful money
of the United States of America. All payments shall be made at such
address as the Holder shall hereafter give to the Borrower by
written notice made in accordance with the provisions of this
Note. Whenever any amount expressed to be due by the
terms of this Note is due on any day which is not a business day,
the same shall instead be due on the next succeeding day which is a
business day and, in the case of any interest payment date which is
not the date on which this Note is paid in full, the extension of
the due date thereof shall not be taken into account for purposes
of determining the amount of interest due on such
date.
The
following terms shall apply to this Note:
ARTICLE I.CONVERSION RIGHTS
1.1
Holder Conversion Right .
(a) The
Holder shall have the right from time to time, and at any time on
or prior to the date of payment of (1) the outstanding principal
amount of this Note plus (2)
accrued and unpaid interest, if any, due hereunder, to convert all
or any part of the outstanding principal amount of this Note into
fully paid and non-assessable shares of Common Stock, at a
conversion price equal to $0.50 (the “ Conversion Price
”) determined as provided herein (a “ Conversion
”). Except in the case of an Exempt Issuance as
defined below, if the Borrower, prior to the earlier of (i) the
payment or conversion in full of the Note or (ii) October 24, 2010,
shall issue shares of Common Stock or rights, warrants, options or
other securities or debt that are convertible into or exchangeable
for shares of Common Stock (“ Common Stock
Equivalents ”) in connection with any financing
entitling any party to acquire shares of Common Stock, at a price
per share less than the Conversion Price, then, at the sole option
of the Holder, the Conversion Price shall be reduced to the price
(calculated to the nearest one hundredth of a cent). No
adjustment under this Section shall be made as a result of an
Exempt Issuance which shall be defined as any issuance of shares of
Common Stock or Common Stock Equivalents that are not in connection
with a financing transaction including, but not limited to, (a)
shares of Common Stock or Common Stock Equivalents to employees,
officers or directors of the Corporation pursuant to any stock or
option plan, and (b) securities upon the exercise of or conversion
of any securities issued hereunder, convertible securities, options
or warrants issued and outstanding on the date of the Note,
provided that such securities have not been amended since the date
of the Note to increase the number of such securities or to
decrease the exercise or conversion price of any such
securities.
(b) The
number of shares of Common Stock to be issued upon each conversion
of this Note shall be determined by dividing the Conversion Amount
(as defined below) by the Conversion Price as specified in the
notice of conversion, in the form attached hereto as Exhibit A (the
“ Notice of
Conversion ”), delivered to the Borrower by the Holder
in accordance with Section 1.3 below; provided that the Notice of
Conversion is submitted by facsimile (or by other means resulting
in, or reasonably expected to result in, notice) to the Borrower on
such conversion date (the “ Conversion Date
”). The term “ Conversion Amount
” means, with respect to any conversion of this Note, the sum
of (1) the principal amount of this Note to be converted in such
conversion plus (2)
accrued and unpaid interest, if any, on such principal amount at
the interest rates provided in this Note to the Conversion
Date.
1.2
Authorized Shares . The
Borrower covenants that during the period the conversion right
exists, the Borrower will reserve from its authorized and unissued
Common Stock a sufficient number of shares, free from preemptive
rights, to provide for the issuance of Common Stock upon the full
conversion of this Note (the “ Reserved Amount
”). The Borrower represents that upon issuance,
such shares will be duly and validly issued, fully paid and
non-assessable.
1.3
Method of
Conversion .
(a)
Mechanics of Conversion . Subject
to Section 1.1, this Note may be converted by the Holder in whole
or in part at any time from time to time after the Issue Date, by
(A) submitting to the Borrower a Notice of Conversion (by
facsimile or other reasonable means of communication dispatched on
the Conversion Date) and (B) subject to Section 1.3(b),
surrendering this Note at the principal office of the
Borrower.
(b)
Surrender of Note Upon Conversion .
Notwithstanding anything to the contrary set forth herein, upon
conversion of this Note in accordance with the terms hereof, the
Holder shall not be required to physically surrender this Note to
the Borrower unless the entire unpaid principal amount of this Note
is so converted. The Holder and the Borrower shall
maintain records showing the principal amount so converted and the
dates of such conversions or shall use such other method,
reasonably satisfactory to the Holder and the Borrower, so as not
to require physical surrender of this Note upon each such
conversion. In the event of any dispute or discrepancy,
such records of the Borrower shall be controlling and determinative
in the absence of manifest error. Notwithstanding the
foregoing, if any portion of this Note is converted as aforesaid,
the Holder may not transfer this Note unless the Holder first
physically surrenders this Note to the Borrower, whereupon the
Borrower will forthwith issue and deliver upon the order of the
Holder a new Note of like tenor, registered as the Holder (upon
payment by the Holder of any applicable transfer taxes) may
request, representing in the aggregate the remaining unpaid
principal amount of this Note. The Holder and any
assignee, by acceptance of this Note, acknowledge and agree that,
by reason of the provisions of this paragraph, following conversion
of a portion of this Note, the unpaid and unconverted principal
amount of this Note represented by this Note may be less than the
amount stated on the face hereof.
(c)
Payment of Taxes . The
Borrower shall not be required to pay any tax which may be payable
in respect of any transfer involved in the issue and delivery of
shares of Common Stock or other securities or property on
conversion of this Note in a name other than that of the Holder (or
in street name), and the Borrower shall not be required to issue or
deliver any such shares or other securities or property unless and
until the person or persons (other than the Holder or the custodian
in whose street name such shares are to be held for the
Holder’s account) requesting the issuance thereof shall have
paid to the Borrower the amount of any such tax or shall have
established to the satisfaction of the Borrower that such tax has
been paid.
(d)
Delivery of Common Stock Upon Conversion . Upon
receipt by the Borrower from the Holder of a facsimile transmission
(or other reasonable means of communication) of a Notice of
Conversion meeting the requirements for conversion as provided in
this Section 1.4, the Borrower shall issue and deliver or cause to
be issued and delivered to or upon the order of the Holder
certificates for the Common Stock issuable upon such conversion
after such receipt (and, solely in the case of conversion of the
entire unpaid principal amount hereof, surrender of this Note) in
accordance with the terms hereof.
(e)
Obligation of Borrower to Deliver Common Stock . Upon
receipt by the Borrower of a Notice of Conversion, the Holder shall
be deemed to be the holder of record of the Common Stock issuable
upon such conversion, the outstanding principal amount and the
amount of accrued and unpaid interest on this Note shall be reduced
to reflect such conversion, and, unless the Borrower defaults on
its obligations under this Article I, all rights with respect to
the portion of this Note being so converted shall forthwith
terminate except the right to receive the Common Stock or other
securities, cash or other assets, as herein provided, on such
conversion. If the Holder shall have given a Notice of
Conversion as provided herein, the Borrower’s obligation to
issue and deliver the certificates for Common Stock shall be
absolute and unconditional, irrespective of the absence of any
action by the Holder to enforce the same, any waiver or consent
with respect to any provision thereof, t
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