Attached files
THIS NOTE AND THE UNDERLYING COMMON STOCK INTO WHICH THIS NOTE IS CONVERTIBLE
("THE CONVERSION SHARES") HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR UNDER ANY APPLICABLE STATE LAW. THIS NOTE AND THE UNDERLYING COMMON
STOCK MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED, OR PLEDGED WITHOUT (1)
REGISTRATION UNDER THE SECURITIES ACT OF 1933 AND ANY APPLICABLE STATE LAW, OR
(2) AN OPINION OF COUNSEL (SATISFACTORY TO AVSTAR AVIATION GROUP, INC.) THAT
REGISTRATION IS NOT REQUIRED.
8.5% CONVERTIBLE NOTE DUE JULY 1, 2011
$70,000.00 Date: July 1, 2010
FOR VALUE RCEIVED, AvStar Aviation Group, Inc., a corporation duly
organized and existing under the laws of the State of Texas, having an address
of 3600 South Gessner, Suite 220, Houston, Texas 77063(the "Corporation"),
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hereby promises to pay to the order of Henry L. Schulle, having an address of
3600 South Gessner Road, Suite 200, Houston, Texas 77063 ("Holder"), the
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principal sum of Seventy Thousand and 00/100 Dollars ($70,000.00) (the
"Principal Amount") on July 1, 2011 (the "Maturity Date"), and to pay interest
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thereon from the date of issuance of this Note, or from the most recent Interest
Payment Date to which interest has been paid or duly provided for, monthly in
arrears on the last day of each month (each an "Interest Payment Date"),
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commencing on August 1, 2010 at the rate of 8 % per annum, until the principal
hereof is paid or made available for payment. All accrued and unpaid interest
outstanding shall be payable by the Corporation on the Maturity Date. Interest
will be computed on the outstanding daily principal balance for the actual
number of days that such amount is outstanding hereunder based on a 365-day
year.
1. Conversion Rights. At any time prior to the Maturity Date and prior to
payment or redemption of this Note, and, in the event that the Corporation
elects to redeem or pay this Note prior to maturity, within ten days after
Holder's receipt of any redemption or prepayment notice, Holder may at his sole
discretion upon 65 days' notice, convert the entire principal amount of this
Note, or any portion thereof, together with accrued and unpaid interest, if any,
into shares of common stock, $0.001 par value, of the Corporation ("Common
Stock") at the lesser of (I) the Variable Conversion Price or (ii) Fixed
Conversion Price.
The right to convert this Note by Holder after it is called for redemption
will terminate at the close of the tenth day following receipt by Holder of a
redemption notice; provided that such period for Conversion may be extended by
the Corporation at its sole and absolute discretion.
On the Conversion Date (as defined herein) upon conversion of this Note (or
any portion thereof) at the election of Holder pursuant to this Section 1, all
accrued and unpaid interest relating to the portion of the Note so converted
shall be converted into Common Stock simultaneously with such conversion. No
fractional shares will be issued upon conversion, but a cash payment will be
made for any fractional interest based upon the conversion price per share of
the Common Stock.
2. Calculation of Conversion Price. The conversion price shall be the
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lesser of (i) the
Variable Conversion Price as defined herein or (ii) the Fixed Conversion Price
as defined herein (subject to any stock splits, stock dividends or rights
offerings by the Company).
The "Variable Conversion Price" shall mean the Closing Trading Price on the
date the conversion Notice is sent by the Note Holder to the Company via express
courier or facsimile transmission of "Notice of Conversion". The "Trading
Price" shall be defined as the closing price for the Company's stock as reported
on the OTCQB or any reliable reporting service acceptable to the Note Holder and
the Company, on the date of Notice of Conversion. Notwithstanding anything to
the contrary, the Note holder agrees to a minimum Variable Price of $0.005 per
share.
The "Fixed Conversion Price" shall mean $0.04 per share of Common Stock
At any time prior to the Maturity Date and prior to payment or redemption
of this Note, and, in the event that the Corporation elects to redeem or pay
this Note prior to maturity, within ten days after Holder's receipt of any
redemption or prepayment notice, Holder may at his sole discretion convert the
entire principal amount of this Note, or any portion thereof, together with
accrued and unpaid interest, if any, into shares of common stock, $0.001 par
value, of the Corporation ("Common Stock") at the lesser of (i) the Variable
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Conversion Price (as defined above) or (ii) the Fixed Conversion Price.
3. Exercise of Conversion. The Holder may exercise his right of
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conversion at any time authorized under Section 1 above through the following
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procedure:
(a) Delivery of Conversion Notice. Delivery of written notice in the form
annexed hereto as Exhibit A (the "Conversion Notice"), to the Corporation
pursuant to any method authorized under Section 14 hereof prior to the Maturity
Date. The 65th day after the date on which the Conversion Notice is received by
the Corporation is herein called the "Conversion Date"; and
(b) Surrender of Original Note. Surrender of this original Note to the
Corporation no later than the Conversion Date in exchange for a share
certificate for the appropriate number of Conversion Shares, and, if less than
the full amount of debt represented by the Note is converted, a replacement Note
representing the balance of the debt which remains outstanding. Surrender of the
Note by the Holder to the Corporation shall be a good and sufficient discharge
to the Corporation, subject to the delivery of a share certificate for the
appropriate number of Conversion Shares and a replacement Note for the remaining
balance of the debt evidenced by this Note if less than all amounts then
outstanding hereunder are converted.
(c) Order of Conversion. In each case in which the Holder elects to
convert a specified portion of this Note into Conversion Shares, amounts due and
payable under this Note shall be converted in the following order of priority:
all accrued and unpaid interest then due and payable under this Note shall be
first converted, then each scheduled payment shall be converted in the order of
its maturity, with the principal amount of next such payment due first
converted, such that if the Holder converts portions of this Note into Common
Stock, such conversion reduces future payments next due hereunder in the order
of their maturity to the extent of the indebtedness so converted.
4. Converted Shares. The shares of Common Stock issued upon conversion
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will be recorded on the books of the Corporation as of the Conversion Date in
the name of the Holder or its nominee, and will rank pari passu with the issued
and fully paid shares of Common Stock of the Corporation outstanding on the
Conversion Date, and the Holder will accordingly be entitled to any dividends or
other distributions declared, made, or paid on the Common Stock on or after such
Conversion Date. The Conversion Shares may not be transferred or sold except
pursuant to a transaction registered under the Securities Act of 1933, as
amended (the "Securities Act") or pursuant to an exemption therefrom. The share
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certificate representing the Conversion Shares shall bear a restrictive legend
concerning such restrictions on transfer.
5. Adjustment upon Conversion. The Conversion Price of this Note
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shall be adjusted proportionately to compensate for the amount Holder would have
received had Holder converted this Note to Common Stock immediately prior to the
occurrence of the following events:
(a) Stock Dividend. The issuance of shares of Common Stock as a
dividend or a distribution on the Common Stock;
(b) Stock Split. The subdivision or combination of the outstanding
Common Stock; and
(c) Distributions of Property. The distribution to holders of Common
Stock of shares of capital stock of the Corporation (other than Common Stock),
cash, securities (including securities of the Corporation or any other entity,
but not including the Common Stock in clause (b) above), evidences of
indebtedness, or other non-cash assets which, together with all such
distributions to holders of Common Stock within the preceding 12 months that did
not trigger a Conversion Price adjustment, to the extent such distributions
exceed, in the aggregate, an amount equal to 10% of the book value of the total
assets of the Corporation as of the end of the day preceding the record date for
determining shareholders entitled to receive such distribution. In the event of
a distribution to holders of Common Stock of cash, securities, evidences of
indebtedness, or other non-cash assets, the Corporation may, instead of making
any adjustment in the Conversion Price, make proper provisions so that each
holder who converts a Note (or any portion thereof) after the record date for
such distribution and prior to the expiration or redemption of such Note shall
be entitled to receive upon such conversion, in addition to the Conversion
Shares, an appropriate amount of such cash, securities, evidences of
indebtedness, or other non-cash assets. No adjustment to the Conversion Price
will be required to be made unless the cumulative effect of such adjustment
would result in an increase or decrease of at least 1.0% in the amount of the
Conversion Price as last adjusted.
As a condition precedent to the taking of any action which would require an
adjustment in respect of the Holder's rights under this Note, including the
Conversion Price and the number and classes of shares which are to be received
upon the conversion hereof, the Corporation shall take such corporate action
which may, in the opinion of its counsel, be necessary to enable the Corporation
to validly and legally issue a sufficient number of shares of Common Stock, as
fully paid and non-assessable shares, such that the Holder may receive all of
the Common Stock to which the Holder is entitled in accordance with the
provisions hereof.
Immediately after the occurrence of any event which requires an adjustment
in any of the Holder's rights under this Note, including the Conversion Price
and the number and classes of shares which are to be received upon the
conversion hereof, the Corporation shall forthwith give written notice to the
Holder of the particulars of such event and the required adjustment.
If at any time the Corporation proposes to proceed with any of the events
set forth in subsections (a), (b), and (c) of this Section, or a distribution to
holders of Common Stock of rights to subscribe for additional shares of the
Corporation capital stock (other than those referred to in (c) above, (each
referred to as a "Corporate Alteration"), and if the holders of shares of Common
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Stock are entitled under the Corporation's certificate of incorporation, bylaws
or applicable law to vote in respect of such proposed Corporate Alteration, then
the Corporation shall give to the Holder at least 10 days' prior written notice
of the date on which the books of the Corporation shall close or a record shall
be taken for such Corporate Alteration or for determining rights to vote with
respect to such Corporate Alteration and at least 10 days' prior written notice
of the date when the same shall take place.
In the event of any question arising with respect to the calculation of any
adjustments herein provided for, such question shall be conclusively determined
by the Corporation's board of directors, acting in good faith and with the
advice of such professionals as it may deem advisable and such determination
shall be binding upon the Holder.
6. Right of Repayment.
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(a) Ranking, Security. This Note is un-secured as to payment of
principal and interest.
(b) No Sinking Fund. No sinking fund is provided for this Note.
(c) No Limitation on Senior Indebtedness. This Note does not limit the
Corporation's ability to incur indebtedness senior to the Notes or any other
indebtedness.
(d) No Shareholder Voting Rights. This Note does not entitle Holder to
any voting or other rights as a shareholder of the Corporation, or other rights
whatsoever except those herein expressed. No dividends are payable or will
accrue on this Note or the shares purchasable hereunder until, and except to the
extent that, the Note is converted into Common Stock.
7. Corporation Redemption Rights. This Note may be redeemed at any
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time, in whole or in part, at the option of the Corporation, upon not less than
10 nor more than 60 days prior written notice, delivered by the Corporation to
the Holder as provided in Section 12 herein (the "Redemption Notice"), at the
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cash redemption price of 105% of the outstanding principal amount of this Note
called to be redeemed, together with all outstanding accrued and unpaid interest
thereon (the "Redemption Price."
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8. Redemption Process. The Corporation may exercise its right of
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redemption by giving the Redemption Notice to the Holder, setting forth the
intention of the Corporation to redeem all or any part of the outstanding Note
on a date ("Redemption Date") no less than 10 nor more than 60 days following
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the date of the Redemption Notice. Delivery of payment of the redemption amount
in United States funds to the Holder on the Redemption Date shall be a good and
sufficient discharge to the Corporation of the debt evidenced by this Note or of
any lesser amount redeemed and, if less than the full amount of debt represented
by the Note is redeemed, the Corporation shall deliver to the Holder a
replacement Note representing the balance of the debt which remains outstanding.
Delivery of the Redemption Notice shall not impede the right of the Holder to
convert this Note pursuant to its terms at any time prior to the close of
business on the tenth day following receipt by Holder of a Redemption Notice;
provided that such period for Conversion may be extended by the Corporation at
its sole and absolute discretion.
9. Mergers and Sales of Assets by the Corporation. The Corporation may
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not consolidate or merge with or into any other entity ("Person") or directly,
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or indirectly, convey, transfer, sell, lease or otherwise dispose of its
properties and assets substantially as an entirety to any Person, and the
Corporation may not permit any Person to consolidate or merge with or into the
Corporation or convey transfer, sell, lease, or otherwise dispose of such
Person's properties and assets substantially as an entirety to the Corporation,
unless:
(a) Assumption of Obligation under this Note. The Person formed by
such consolidation or into or with which the Corporation is merged or the Person
to which the properties and assets of the Corporation are so conveyed,
transferred, sold, leased or otherwise disposed of is a corporation, limited
liability corporation, partnership, or trust organized and existing under the
laws of the United States, any state thereof or the District of Columbia and has
expressly assumed the due and punctual payment of the principal of, premium, if
any, and interest on this Note and the performance of the other covenants of the
Corporation under this Note;
(b) No Event of Default. Immediately after giving effect to such
transaction, no Event of Default, as defined below, and no event which, after
notice or lapse of time or both, would become an Event of Default, shall have
occurred and be continuing; and
(c) Compliance Certificate or Opinion. The Corporation has provided
to the Holder an officer's certificate or an opinion of counsel stating that the
Corporation is in compliance with (a) and (b) above.
10. Registration Rights. (a) The Corporation shall notify the
Holder in writing at least 20 days prior to the filing of any registration
statement under the Securities Act for purposes of a public offering of
securities of the Corporation (including, but not limited to, registration
statements relating to secondary offerings of securities of the Corporation, but
excluding Special Registration Statements (as hereinafter defined)) and will
afford each the Holder an opportunity to include in such registration statement
all or part of the shares of Common Stock ("Registrable Shares") issued or
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issuable upon conversion of this Note held by the Holder. If the Holder desires
to include in any such registration statement all or any part of the Registrable
Securities held by it, it shall, within 15 days after the above-described notice
from the Corporation, so notify the Corporation in writing. Such notice shall
state the intended method of disposition of the Registrable Securities by the
Holder. If the Holder decides not to include all of its Registrable Securities
in any registration statement thereafter filed by the Corporation, the Holder
shall nevertheless continue to have the right to include any Registrable
Securities in any subsequent registration statement or registration statements
as may be filed by the Corporation with respect to offerings of its securities,
all upon the terms and conditions set forth herein. "Special Registration
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Statement" means a registration statement relating to any employee benefit plan
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or with respect to any corporate reorganization or other transaction under Rule
145 of the Securities Act.
(b) Underwriting. If the registration statement under which the
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Corporation gives notice under this Section 9 is for an underwritten offering,
the Corporation shall so advise the Holder of Registrable Securities. In such
event, the right of the Holder to be included in a registration pursuant to this
Section 9 shall be conditioned upon the Holder's participation in such
underwriting and the inclusion of the Holder's Registrable Securities in the
underwriting to the extent provided herein. All Holders proposing to distribute
their Registrable Securities through such underwriting shall enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by the Corporation. Notwithstanding any other
provision of the Agreement, if the underwriter determines in good faith that
marketing factors require a limitation of the number of shares to be
underwritten, the number of shares that may be included in the underwriting
shall be allocated, first, to the Corporation; and second, to all participating
holders of the shares being registered, including the Holders of Registrable
Securities, on a pro rata basis based on the total number of shares of
securities held by all such participating holders. If the Holder disapproves of
the terms of any such underwriting, the Holder may elect to withdraw therefrom
by written notice to the Corporation and the underwriter, delivered at least ten
business days prior to the effective date of the registration statement. Any
Registrable Securities excluded or withdrawn from such underwriting shall be
excluded and withdrawn from the registration.
(c) Right to Terminate Registration. The Corporation shall have the
right to terminate or withdraw any registration initiated by it under this
Section 9 prior to the effectiveness of such registration whether or not any
Holder has elected to include securities in such registration.
(d) Expenses of Registration2.5 Expenses of Registration. Except
as specifically provided herein, all registration expenses incurred in
connection with any registration under Section 9 herein shall be borne by the
Corporation. All selling expenses incurred in connection with any registrations
hereunder, shall be borne by the holders of the securities so registered pro
rata on the basis of the number of shares so registered and sold.
11. Representations and Warranties. The Corporation represents and
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warrants to Holder that:
(a) Organization, Qualification, Standing. The Corporation is a corporation
duly organized, validly existing and in good standing under the laws of
Texas, has the corporate power to own its properties and to carry on its
businesses as the same are now being conducted and is duly qualified to do
business and is in good standing in each jurisdiction in which the character of
the properties owned by it or the nature of its businesses makes such
qualification necessary.
(b) Litigation. There is no action, suit, or proceeding at law or in equity
or by or before any governmental instrumentality or agency or any
arbitrator now pending or, to the Corporation's knowledge, threatened, against,
or affecting the Corporation, or any of its properties or rights, which, if
adversely determined, might, either in any case or in the aggregate result in a
material adverse change, or result in any substantial liability not adequately
covered by insurance, or for which adequate reserves are not maintained on the
Corporation's balance sheet.
(c) Due Authorization and Compliance with Other Instruments. This Note has
been duly and validly authorized by all requisite corporate proceeding and
constitutes a valid and legally binding obligation of the Corporation
enforceable against the Corporation in accordance with its terms except as
enforceability is limited by bankruptcy, insolvency, reorganization, moratorium,
or other laws relating to or affecting generally the enforcement of creditors'
rights and except to the extent that availability of equitable remedies are
subject to the discretion of courts before which any proceeding therefor may be
brought. The Conversion Shares when issued upon conversion of this Note in
accordance with the terms hereof will be validly issued, fully paid, and
nonassessable shares of Common Stock of the Corporation.
12. Holder Representations. (a) Investment Purposes. The Holder
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is acquiring the Note for investment purposes and not with a view to the resale
or distribution of all or any part thereof. The Holder acknowledges that the
Note has not been registered under the Securities Act, or the securities or
"blue sky" laws of any state or other domestic or foreign jurisdiction and that
none of such securities may be sold, transferred, or otherwise disposed of
except pursuant to an effective registration statement thereunder or an
applicable exemption therefrom.
(b) Accredited Investor. The Holder (i) has such knowledge and
experience in financial and business matters that such Holder is capable of
evaluating the merits and risks of his or her investment in the Note and has the
financial ability to assume the monetary risk associated therewith; (ii) is able
to bear the complete loss of his or her investment in the Note; has received
such documents and information from the Corporation as such Holder has requested
and has had the opportunity to ask questions of and receive answers from the
Corporation and the terms and conditions of the offering of the notes and to
obtain additional information; (iv) is an "accredited investor" as defined in
Rule 501(a) of Regulation D promulgated under the Securities Act; and (v) is not
relying upon any statements or instruments made or issued by any person other
than the Corporation in making a decision to invest in the Note.
(c) Restrictive Legends. Any certificate for Conversion Shares issued
upon conversion of the Note and each certificate for Common Stock issued to a
subsequent transferee shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"The securities represented by this certificate have not been registered under
the Securities Act of 1933, as amended ("Securities Act") or any state
securities act. The securities have been acquired for investment and may not be
sold, transferred, pledged or hypothecated unless (i) they shall have been
registered under the Securities Act and any applicable state securities act, or
(ii) the corporation shall have been furnished with an opinion of counsel,
satisfactory to counsel for the corporation, that registration is not required
under any such act."
13. Events of Default. The following will be "Events of Default" under
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this Note:
(a) Failure to pay the principal or the redemption price of this Note
when and as the same shall become due and payable, either at maturity or by
acceleration or otherwise and such failure shall continue uncured for a period
of ten (10) days after written notice from the Holder of such failure;
(b) Failure to pay any interest on this Note when due when the same
becomes due and payable and such failure shall continue uncured for a period of
ten (10) days after written notice from the Holder of such failure;
(c) Failure to perform any other covenant of the Corporation in this
Note, continuing for a period of thirty (30) days after written notice from the
Holder of such failure;
(d) Default shall be made if a material breach shall exist in any
representation or warranty herein contained, and such default or material breach
shall have continued for a period of 30 days after written notice thereof to the
Corporation from the Holder; provided, however, that if any such default or
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material breach shall be such that it cannot be cured or corrected within such
30-day period, such period shall be extended for such additional period of time
(not exceeding 30 additional days) as shall be necessary to effect such cure or
correction if curative or corrective action is instituted within said 30-day
period and thereafter diligently pursued;
(e) Final unsatisfied judgments not covered by insurance aggregating
in excess of $250,000, at any one time rendered against the Corporation or any
of its subsidiaries and not stayed, bonded or discharged within 30 days, or
(f) If the Corporation (i) applies for or consents to the appointment
of, or if there shall be a taking of possession by, a receiver, custodian,
trustee or liquidator for the Corporation or any of its properties; (ii) becomes
generally unable to pay its debts as they become due; (iii) makes a general
assignment for the benefit of creditors or becomes insolvent; or (iv) files any
petition for relief under the United States Bankruptcy Code or any similar
federal or state statute, or is served with a petition for relief under any such
statute and such petition is not dismissed within 60 days of filing.
At any time after a declaration of acceleration has been made but before a
judgment or decree based on acceleration, the holder of the Note may rescind and
annul such acceleration, if all Events of Default, other than the nonpayment of
accelerated principal and interest, have been cured or waived as provided in
this Note.
14. Notices. Any notice, demand or other communication required or
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permitted to be given to the Corporation or the Holder shall be in writing and
shall be:
(a) Hand Delivery. Personally delivered to the Corporation or the
Holder or any director or officer of the Corporation or the Holder;
(b) Delivery by Mail. Except during a period of strike, lock-out or
other postal disruption, sent by registered mail, postage prepaid to the address
of the Corporation or the Holder as set forth on the first page hereof; or
(c) Facsimile. Sent by telegraph, telecopier, or telex or similar
communication tested prior to sending and confirmed by prepaid registered or
certified mail to the address of the Corporation or the Holder as set forth on
the first page hereof; and
In each case described above, shall be deemed to have been received by the
Corporation or the Holder on the earliest of: the date of delivery under
subsection (a); the actual date of receipt where mailed under subsection (b);
and the day following the date of communication under subsection (c) unless
delivered by certified mail, in which case the actual date of receipt shall
apply. The Corporation or the Holder may give written notice to the other of a
change of address to some other address, in which event any communication shall
thereafter be given to the Corporation or the Holder as hereinbefore provided,
at the last such changed address of which the Corporation or the Holder
communicating has received written notice.
15. Attorneys' Fees. Should the indebtedness represented by this Note
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or any part thereof be collected at law or in equity, or in bankruptcy,
receivership or any other court proceedings (whether at the trial or appellate
level), or should this Note be placed in the hands of attorneys for collection
upon the occurrence of an Event of Default, the Corporation agrees to pay, in
addition to the principal and interest due and payable hereon, all costs of
collection, including reasonable attorneys' fees.
16. Non-Transferable Note. This Note is not transferable in any
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manner, in whole or in part, without the prior written consent of the
Corporation, except by operation of law.
17. Waiver. Prior to the transfer of this Note, the Corporation may
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deem and treat the Holder hereof as the absolute owner hereof (whether or not
this Note shall be overdue) for the purpose of receiving payment of or on
account of the principal hereof and interest hereon, and for all other purposes,
and the Corporation shall not be affected by any Notice to the contrary.
Except as expressly provided for herein, the Corporation hereby waives
presentment, demand, Notice of demand, Notice of intent to accelerate, notice of
acceleration, protest, notice of protest and Notice of dishonor and any other
Notice required to be given by law in connection with the delivery, acceptance,
performance, default or enforcement.
18. Savings Clause. In the event for any reason, any payment by or act
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of the Corporation or the Holder shall result in payment of interest which would
exceed the limit authorized by or be in violation of the law of the jurisdiction
applicable to this Note, then ipso facto the obligation of the Corporation to
pay interest or perform such act or requirement shall be reduced to the limit
authorized under such law, so that in no event shall the Corporation be
obligated to pay any such interest, perform any such act or be bound by any
requirement which would result in the payment of interest in excess of the limit
so authorized. In the event any payment by or act of the Corporation shall
result in the extraction of a rate of interest in excess of a sum which is
lawfully collectible as interest, then such amount (to the extent of such excess
not returned to the Corporation) shall, without further agreement or notice
between or by the Corporation or the Holder, be deemed applied to the payment of
principal, if any, hereunder immediately upon receipt of such excess funds by
the Holder, with the same force and effect as though the Corporation had
specifically designated such sums to be so applied to principal and the Holder
had agreed to accept such sums as an interest-free prepayment of this Note. If
any part of such excess remains after the principal has been paid in full,
whether by the provisions of the preceding sentences of this Section 17 or
otherwise, such excess shall be deemed to be an interest- free loan from the
Corporation to the Holder, which loan shall be payable immediately upon demand
by the Corporation. The provisions of this Section 17 shall control every other
provision of this Note.
19. Recourse. No recourse shall be had for the payment of the
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principal of or the interest on this Note, against any agent, incorporator,
shareholder, officer or director, as such, past, present or future, of the
Corporation or of any successor corporation, all such liability being, by the
acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released. The preceding sentence shall not be deemed to
apply to any person's liability arising out of or related to any conversion of
the Corporation's assets or properties, breach of fiduciary duty owed to the
Corporation or fraud perpetrated on the Corporation or its shareholders.
20. Governing Law. This Note and the rights, remedies, powers,
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covenants, duties and obligations of the parties hereunder will be construed in
accordance with and governed by the laws of the state of Texas.
21. Severability. If any provision of this Note is or becomes invalid,
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illegal or unenforceable in any respect, that fact will not affect the validity,
legality or enforceability of the remaining provisions of this Note or any
valid, legal or enforceable parts of the impugned provision.
22. Binding on Successors. This Note will inure to the benefit of and
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be binding upon the Corporation and the Holder and their respective heirs,
executors, administrators, successors and permitted assigns.
23. Amendment and Waiver. This Note may not be amended, waived,
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discharged or terminated except by a document executed by the party against whom
enforcement of the amendment, waiver, discharge or termination is sought.
24. Entire Agreement. This Note sets out the entire agreement and
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understanding of the Corporation and the Holder and supersedes all prior
agreements, undertakings and understandings, whether oral or written, relative
thereto.
IN WITNESS WHEREOF, AvStar Aviation Group, Inc. has caused this Note to be
signed by its Vice President and corporate Secretary on the date first above
written.
AvStar Aviation Group, Inc.
By:__________________________
Henry A. Schulle
Vice President and Secretary
Witness:______________________
James H. Short
Director
EXHIBIT A
NOTICE OF CONVERSION BY HOLDER
OF
8.5% CONVERTIBLE NOTE
(To be executed by the Registered Holder in Order to Convert the Note)
TO: AvStar Aviation Group, Inc.
3600 South Gessner, Suite 220
Houston, Texas 77063
Facsimile: 713-914-9249 Attn: President
FROM: ("Holder")
DATE:(the "Conversion Date")
RE: Conversion of $ principal amount plus $___________ of accrued and
-
unpaid interest (collectively, the "Converted Note") of the 8 1/2 % Convertible
Note dated July 1, 2010 (the "Note") of AVSTAR AVIATION GROUP, INC. (the
"Corporation") into shares (the "Conversion Shares") of the Corporation's common
stock, $0.001 par value (the "Common Stock").
CONVERSION DATE:
The captioned Holder hereby gives notice to the Corporation, pursuant to
the Note, that the Holder elects to convert the Converted Note into fully paid
and non-assessable shares of Common Stock as of the Conversion Date specified
above.
Amount Amount Conversion Shares
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Currently Outstanding To be Converted To be Issued
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Principal Balance
Interest Balance (Accrued and unpaid through Conversion Date)
--------------------------------------------------------------------
Total
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Based on the Conversion Price now in effect, the number of Conversion Shares
indicated above should be issued in the following name(s):
Name and Record Address
As contemplated by the Note, this Notice of Conversion is being sent by
facsimile or otherwise delivered to the officer indicated above.
If this Notice of Conversion represents the full conversion of the
outstanding principal and interest of the Note, the Holder either (1) has
previously surrendered the Note, duly endorsed, to the Corporation or (2) will
surrender (or cause to be surrendered) the Note, duly endorsed, to the
Corporation at the address indicated above by express courier within five (5)
business days after delivery or facsimile transmission of this Notice of
Conversion.
The certificates representing the Conversion Shares should be transmitted
by the Corporation to the Holder via overnight or express courier or by book
entry transfer within the time contemplated by the Note after receipt of this
Notice of Conversion (by facsimile transmission or otherwise), to:
HOLDER:
By:
Name:
Title:
ASSIGNMENT FORM
If you the holder want to assign this 8 1/2 % Convertible Note, fill in the
form below and have your signature guaranteed:
I assign and transfer this 8 1/2 % Convertible Note to:
Print or type Name:_________________________________
Address: _________________________________________
City, State and zip code______________________________
Social Security Number:_____________________________
and irrevocably appoint, agent to transfer this 8 1/2 % Convertible Note on the
books of the Corporation. The agent may substitute another to act for him.
Dated: ____________ Signed:_______________________
