THE JACKSON RIVERS COMPANY
CONVERTIBLE NOTE
$60,000.00
March 12, 2006
THE
JACKSON RIVERS COMPANY, (OTCBB: JKRI) a Florida corporation
(the
Company"), for value received hereby promises to pay to the order
of PAUL
NICHOLS, and or assignee ("Payee"), the Principal Amount of Sixty
Thousand and
No/100 Dollars ($60,000.00) on or before the Due Date of this Note
at the office
of the Payee at 550 Greens Parkway, Suite 230, Houston, Texas
77067, with
accrued interest payments & principal from the date of issuance
of this Note at
the rate of eight percent (8.0%) per annum due and payable on or
before May 13,
2006 (the "Due Date").
For the
purpose of calculating interest for any period for which
interest
shall be payable, such interest shall be calculated on the basis of
a 30 day
month and a 360 day year. Except as otherwise provided herein, all
sums of past
due principal and interest shall bear interest at the maximum rate
of interest
permitted by applicable law.
1.
Covenants.
The Company covenants that so long as this Note shall be
outstanding:
(a) The Company shall maintain an office at 550 Greens Parkway,
Suite 230,
Houston, Texas 77067, or at such other place as the Company may
designate
by written notice given pursuant to the terms hereof, where
notices,
presentations and demands to or upon the Company in respect of
this Note
may be made or given.
(b) The Company shall promptly cause to be paid and discharged
all
lawful
taxes, assessments and governmental charges or levies imposed
upon
the
Company or any subsidiary or upon the income and profits of, or
upon
any
property belonging to the Company or any subsidiary before the
same
shall
become in default, as well as all lawful claims for labor,
materials
and
supplies which, if unpaid, might become a lien or charge upon
such
property
or any part thereof; provided, however, that the Company shall
not be
required to cause to be paid and discharged any such tax,
assessment, charge, levy or claim so long as the amount or
validity
thereof
shall be contested in good faith by appropriate proceedings,
and
the
Company or such subsidiary, as the case may he, shall set aside on
its
books
reserves with respect thereto which the Company and the
independent
public
accountants who are at the time employed to audit the books and
accounts
of the Company or such subsidiary consider adequate.
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(c) The Company shall at all times cause its physical property
and
the
physical property of its subsidiaries used or desirable in the
conduct
of the
business of the Company or its subsidiaries to be maintained,
preserved,
protected and kept in good repair, working order and condition,
and from
time to time cause to be made all needful and proper repairs,
replacements, betterments and improvements thereto, so that the
business
carried on
in connection therewith may in the opinion of the Company be
properly
and advantageously conducted at all times; provided, however,
that
nothing in this Paragraph 1(c) shall require the Company or any
subsidiary
to maintain, preserve, protect or keep in good repair, working
order or
condition any physical property which, in the sole discretion
of
the
Company, is obsolete or surplus or unfit for use or may not be
used
advantageously in the conduct of the business of the Company or
such
subsidiary, as the case may be.
(d) The Company shall at all times keep, and cause each
subsidiary
to keep,
true and complete books of record and accounts in accordance
with
generally
accepted accounting principles and practices and file timely
all
required
reports with the Securities and Exchange Commission.
(e) The Company shall at all times cause to be done all things
necessary
to preserve and keep in full force and effect its corporate
existence,
rights, and franchises, and the corporate existences, rights
and
franchises of each subsidiary, and comply with and cause each
subsidiary
to comply with, all laws and governmental requirements
applicable
to the Company or such subsidiary; provided, however, that
nothing in
this Paragraph 1(e) shall (i) require the Company or any
subsidiary
to maintain, preserve or renew any right or franchise which in
the
opinion of the Board of Directors of the Company is not necessary
or
desirable
in the conduct of the business of the Company or of such
subsidiary, as the case may be; or (ii) prevent the termination of
the
corporate
existence of any subsidiary if in the opinion of the Board of
Directors
of the Company such termination is in the best interest of the
Company
and not disadvantageous to the Payee; or (iii) prevent any
consolidation or merger involving the Company or a subsidiary.
2.
Repayment of Principal upon Funding Event. Upon a "Funding
Event,"
which shall be defined as receipt by Company of financing from a
third party in
the amount of $300,000.00 or more, Company shall repay Principal to
Payee in
cash out of that Funding Event. In addition, Payee will be paid any
interest for
the term of the Note and will also be issued common stock in the
company equal
to value of the Principal, based on the average of the lowest three
closing bid
prices in past 20 trading days immediately preceding the Repayment
Date.
(a)
Piggy Back
Registration Rights. The Shares issued to the Payee shall
be entitled to "Piggy Back Registration Rights" pursuant to a
registration of the Company's securities made effective during
the
term of this Note. Upon effectiveness of said Registration
Statement, Payee's Shares shall be immediately registered and
therefore eligible for trading under any and all restrictions
that
may apply.
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(b)
The Payee is an
"accredited investor" as defined under Rule 501
under the Securities Act.
(c)
The Payee
acknowledges that the Shares have not been registered
under the Securities Act or the securities laws of any state and
are
being offered pursuant to applicable exemptions from such
registration for nonpublic offerings as "restricted securities"
as
defined by Rule 144 promulgated pursuant to the Securities Act.
The
Shares may not be resold in the absence of an effective
registration
thereof under the Securities Act and applicable state
securities
laws unless, in the opinion of the Company's counsel, an
applicable
exemption from registration is available.
(d)
The Payee is
acquiring the Shares for its own account, for
investment purposes only and not with a view to, or for sale in
connection with, a distribution, as that term is used in
Section
2(11) of the Securities Act, in a manner which would require
registration under the Securities Act or any state securities
laws.
(e)
The Payee
understands and acknowledges that the Shares will bear the
following legend:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE. THE SECURITIES HAVE BEEN ACQUIRED
FOR
INVESTMENT AND MAY NOT BE SOLD OR TRANSFERRED FOR VALUE IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION THEREOF UNDER THE
SECURITIES
ACT OF 1933 AND/OR THE SECURITIES ACT OF ANY STATE HAVING
JURISDICTION OR AN OPINION OF COUNSEL ACCEPTABLE TO THE
CORPORATION
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR ACTS.
(f)
The Payee
acknowledges that an investment in the Shares is not
liquid and is transferable only under limited conditions. The
Payee
acknowledges that such securities must be held indefinitely
unless
they are subsequently registered under the Securities Act or an
exemption from such registration is available. The Payee is aware
of
the provisions of Rule 144 promulgated under the Securities
Act,
which permits limited resale of securities purchased in a
private
placement subject to the satisfaction of certain conditions and
that
such Rule is not now available and, in the future, may not
become
available for resale of the Shares.
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(g)
Payee
Sophistication and Ability to Bear Risk of Loss. The Payee
acknowledges that it is able to protect its interests in
connection
with the acquisition of the Shares and can bear the economic risk
of
investment in such securities without producing a material
adverse
change in Payee's financial condition. The Payee otherwise has
such
knowledge and experience in financial or business matters that it
is
capable of evaluating the merits and risks of the investment in
the
Shares.
(h)
Purchases by
Groups. The Payee represents, warrants, and covenants
that it is not acquiring the Shares as part of a group within
the
meaning of Section 13(d)(3) of the Securities Exchange Act of
1934,
as amended.
3.
Conversion of Note.
(a) In the event that a Funding Event does not occur and Company
is
unable to
repay the Principal, the Payee may convert all or part of the
remaining
principal balance, plus accrued interest, of this Note into the
common
stock, par value $0001 per share, of the Company (the "Common
Stock").
In the event of a conversion, the number of shares of the
Common
Stock to
be issued shall be determined by dividing (i) the unpaid
principal
balance of this Note, plus any accrued interest by (ii) fifty
percent (50%) of
the average of the lowest three closing bid prices in
past 20
trading days immediately preceding any such conversion. All
such
Common
Stock conversions shall not exceed 4.99% of the then
outstanding
Common
Stocks of the Company. If this Note is surrendered for
conversion,
it shall
be duly endorsed, or be accompanied by a written instrument of
transfer
in a form satisfactory to
