Document:

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 JANAUARY 31, 2012

$60,000.00                                              Date: January 31,  2011

     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"),
                                                                  ------------
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
                                                                   -------
principal  sum of Sixty Thousand and no/100 Dollars ($60,000.00) (the "Principal
                                                                       ---------
Amount")  on January 30, 2012 (the "Maturity Date"), and to pay interest thereon
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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"), commencing on
                                          ---------------------
February 28, 2011, 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 conversion price of $0.05 per share of Common Stock, subject to
adjustments  as  described  below (the "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
       ----------------------------------
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
                               -------------
Conversion  Price  (as  defined  above)  or  (ii)  the  Fixed  Conversion Price.

3.     Exercise  of Conversion.  The Holder may exercise his right of conversion
       -----------------------
at  any  time  authorized under Section 1 above through the following 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 12 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  the Conversison 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.

     3.     Converted Shares.  The shares of Common Stock issued upon conversion
            ----------------
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
              ---------------
certificate  representing  the Conversion Shares shall bear a restrictive legend
concerning  such  restrictions  on  transfer.

     4.     Adjustment  Upon  Conversion.    The  Conversion  Price of this Note
            ----------------------------
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
                  ---------------------
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.

     5.     Right  of  Repayment.
            --------------------

     (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.

     6.     Corporation  Redemption  Rights.  This  Note  may be redeemed at any
            -------------------------------
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
                                                     ------------------
cash  redemption  price of 115% of the outstanding principal amount of this Note
called to be redeemed, together with all outstanding accrued and unpaid interest
thereon  (the  "Redemption  Price."
                -----------------

     7.     Redemption  Process.  The  Corporation  may  exercise  its  right of
            -------------------
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
               ----------------
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.

     8.     Mergers and Sales of Assets by the Corporation.  The Corporation may
            ----------------------------------------------
not  consolidate  or merge with or into any other entity ("Person") or directly,
                                                           -------
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.

     9.     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
                                                  ------------------
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
                                                            --------------------
Statement"  means a registration statement relating to any employee benefit plan
---------
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
             ------------
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 Registration2.  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.

     10.     Representations  and  Warranties.  The  Corporation  represents and
             --------------------------------
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.

     11.     Holder  Representations.  (a)     Investment  Purposes.  The Holder
             -----------------------
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."

     12.     Events of Default.  The following will be "Events of Default" under
             -----------------
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
                                 --------   -------
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.

     13.     Notices.  Any  notice,  demand  or  other communication required or
             -------
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)     Telecopier.  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.

     14.     Attorneys'  Fees.  Should the indebtedness represented by this Note
             ----------------
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.

     15.     Non-Transferable  Note.  This  Note  is  not  transferable  in  any
             ----------------------
manner,  in  whole  or  in  part,  without  the  prior  written  consent  of the
Corporation,  except  by  operation  of  law.

     16.     Waiver.  Prior  to  the  transfer of this Note, the Corporation may
             ------
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.

     17.     Savings Clause.  In the event for any reason, any payment by or act
             --------------
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.

     18.     Recourse.  No  recourse  shall  be  had  for  the  payment  of  the
             --------
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.

     19.     Governing  Law.  This  Note  and  the  rights,  remedies,  powers,
             --------------
covenants,  duties and obligations of the parties hereunder will be construed in
accordance  with  and  governed  by  the  laws  of  the  state  of  Texas.

     20.     Severability.  If any provision of this Note is or becomes invalid,
             ------------
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.

     21.     Binding  on  Successors. This Note will inure to the benefit of and
             -----------------------
be  binding  upon  the  Corporation  and  the Holder and their respective heirs,
executors,  administrators,  successors  and  permitted  assigns.

     22.     Amendment  and  Waiver.  This  Note  may  not  be  amended, waived,
             ----------------------
discharged or terminated except by a document executed by the party against whom
enforcement  of  the  amendment,  waiver,  discharge  or  termination is sought.

     23.     Entire  Agreement.  This  Note  sets  out  the entire agreement and
             -----------------
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:__________________________
          Clayton  I.  Gamber
     President  and  CEO

Witness:______________________
                Henry A. Schulle
                Secretary
<PAGE>

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
                    ---------------------------------------
     Currently  Outstanding     To  be  Converted     To  be  Issued
     ----------------------     -----------------     --------------
Principal  Balance

Interest  Balance  (Accrued  and  unpaid  through  Conversion  Date)
--------------------------------------------------------------------

Total
-----

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:

<PAGE>
                                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:________________________QuickLinks
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  Exhibit 10.6    
    

 
    VENOCO, INC.
  2007 LONG-TERM INCENTIVE PROGRAM    
    

        This Venoco, Inc. 2007 Long-Term Incentive Program (the "Program") is established pursuant to the
Venoco, Inc. Amended and Restated 2005 Stock Incentive Plan (the "Plan") and, in addition to the terms and conditions set forth below, is subject to the provisions of the Plan. Unless otherwise
defined herein, all terms used in this Program that are defined in the Plan shall have the meaning as defined in the Plan. 

A.    PURPOSES  

        The Program is designed to enable eligible executives of Venoco, Inc. (the "Company") to share in the future success of the Company's business by providing
them an opportunity to earn shares of the Company's common stock ("Common Stock"), through the award of stock grants ("Awards") contingent upon achieving certain performance measures. Since the
executives eligible to receive Awards under the Program are those in positions to make significant and direct contributions to the success of the Company, the Program is intended, accordingly, to
promote a closer identity of interests between eligible employees and stockholders. 

B.    AWARD TERMS AND CONDITIONS  

        1.    Eligibility and Participation.    All elected officers and other key employees who are considered by the
Compensation Committee (the "Committee") of the Board of Directors of the Company (the "Board") to be likely to have a significant impact on the business of the Company are eligible to be designated
as participants ("Participants") and to receive Awards under the Program. 

        2.    Awards and Award Cycles.    The Committee shall, from time to time and in its sole discretion, establish such
grant cycles (the "Grant Cycles") for the Program as it deems appropriate. In connection with each such Grant Cycle, the Committee shall designate those individuals or employee groups eligible to
receive Awards with respect to such Grant Cycle and the number of target shares awarded to each such Participant ("Target Shares"). 

        3.    Vesting of Awards.    The extent to which Awards under the Program are vested is determined pursuant to the
below performance criteria, based on total stockholder return ("TSR") of the Common Stock, as determined in accordance with Section 3(c): 

        (a)    Measurement Periods.    With respect to each Grant Cycle, the Committee shall prescribe one or more measurement
periods for purposes of determining vesting (the "Measurement Periods"). 

        (b)    TSR Peer Group Ranking.    The portion of each Award that becomes vested during a Measurement Period shall be
determined by multiplying (i) the number of the Participant's Target Shares eligible for vesting with respect to such Measurement Period by (ii) the Vesting Amount, not to exceed 100%,
as set forth in a schedule established by the Committee for such Grant Cycle and based on the percentile ranking of the TSR of the Common Stock during such Measurement Period when compared to the TSR
during such Measurement Period of the common stock of the corporations included in the comparative group designated by the Committee (the "Comparative Group") in Exhibit A (attached hereto and
as amended from time to time in the sole discretion of the Committee); provided, however, that if the TSR of the Common Stock ranks below the 50th percentile among the
corporations in the Comparative Group, then no Awards with respect to such Measurement Period shall vest; provided further however, that if in any Measurement Period the TSR of the Common Stock ranks
below the 50th percentile but the TSR of the Common Stock 

1

 

exceeds
the TSR of the S&P Oil & Gas Exploration & Production Select Industry Index (the "Index"), then the Vesting Amount for that Measurement Period shall be 75%. 

        (c)    Determination of TSR.    The TSR of the Common Stock and the TSR of the stock of each corporation included in
the Comparative Group and the Index shall be equal to the appreciation of such stock assuming reinvested dividends (at the frequency such dividends are paid) during the applicable Measurement Period.
For purposes of determining the amount of a stock's or Index's appreciation, the initial value of such stock or Index shall be equal to the closing price of such stock or Index on the principal
exchange on which such stock or Index is traded on the last trading day prior to the commencement of the applicable Measurement Period, and the final value shall be equal to the closing price of such
stock on Index on such exchange on the last day of such Measurement Period. 

        4.    Status of Awards Post-Vesting.    

        (a)    Lapse of Risk of Forfeiture.    The Participant's Award is subject to a risk of forfeiture until such time the
Committee determines that a Participant's Award has vested pursuant to Section 3 above and the vesting conditions, if any, pursuant to the Notice of Stock Award and Stock Award Agreement have
been satisfied. Upon vesting, restrictions on transferability shall lapse and the shares shall be released from escrow. 

        (b)    Termination of Employment During a Measurement Period.    Except as otherwise provided in an applicable
employment agreement between the Participant and the Company, if a Participant's employment is terminated for any reason prior to the end of a Measurement Period, the Award granted to that Participant
with respect to such Measurement Period (and other Measurement Periods within a Grant Cycle to the extent not vested) shall be forfeited and be of no further force and effect. 

        5.    Deferrals.    A Participant may elect to defer the taxation associated with the receipt of an Award, provided
such deferral is appropriately and timely communicated to the Company in a manner acceptable to the Company and compliant with Section 409A of the Code. Any such deferral program shall be
administered by the Committee in accordance with the rules and procedures it adopts from time to time, and in accordance with Section 409A of the Code. 

C.    SECTION 162(m)  

        Notwithstanding any other provision of the Program to the contrary, and solely with respect to those Awards (i) made after the "material modification" of
the Plan (within the meaning of Section 1.162-27(f)(2)(ii) of the Treasury Regulations) and (ii) intended to comply with Section 162(m) of the Code, such Awards shall
be granted and administered in accordance with the Plan and, without limiting the generality of the foregoing, shall not exceed the limit established for long-term incentive awards
pursuant to Section 4(a) of the Plan. For each Grant Cycle, the Committee shall establish the applicable performance goals from the list of Qualifying Performance Criteria (as defined in
Section 7(c) of the Plan) within the period of time as required pursuant to Section 162(m). No Award shall be awarded or credited, unless otherwise determined by the Committee, until
achievement of the applicable performance goals have been certified by the Committee (except where certification is not required). 

D.    MISCELLANEOUS PROVISONS  

        1.    Other Terms.    The Committee shall determine the remaining terms and conditions of the Awards awarded under the
Program. 

        2.    Amendment, Suspension or Termination of the Program.    The Committee may at any time amend, suspend or
terminate the Program without the approval of the Company's stockholders. 

2

 

        3.    Section 409A of the Code.    This Program, including any future amendments thereto which do not expressly
amend this Section, is designed, and shall be administered and operated, in the good faith
determination of the Committee, to be exempt from Section 409A of the Code. Although the Company intends to administer the Program so that it is exempt from the requirements of
Section 409A of the Code, the Company does not warrant that any Award under the Program will qualify for such exemption or for favorable tax treatment under any other provision of federal,
state, local or foreign law. The Company shall not be liable to any Participant for any tax, interest or penalties the Participant might owe as a result of his or her participation in the Program. 

        4.    Savings Clause.    This Program is intended to comply in all respects with applicable laws and regulations. In
case any one or more of the provisions of this Program shall be held invalid, illegal or unenforceable in any respect under applicable law or regulation, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby and the invalid, illegal or unenforceable provision shall be deemed null and void; provided, however, to the extent
permissible by law, any provision which could be deemed null and void shall first be construed, interpreted or revised retroactively to permit this Program to be construed in compliance with all
applicable laws so as to foster the intent of this Program. 

3

 
 
 

EXHIBIT A    
    

 
  Comparative Group    
    

        Until such time as changed in the sole and absolute discretion of the Committee, the Comparative Group for purposes of Awards made
under the Venoco, Inc. Amended and Restated 2005 Stock Incentive Plan and pursuant to the 2007 Long-Term Incentive Program consists of the following: 

Clayton
Williams

Berry Petroleum

Comstock Resources Inc.

Denbury Resources

Plains Exploration

Rosetta Resources

St Mary Land & Exploration

Stone Energy

Swift Energy

Whiting Petroleum

Breitburn Energy Partners LP

Cimarex Energy

Crimson Exploration

Continental Resources

Linn Energy, LLC 

*
* * * * 

4

QuickLinks

Exhibit 10.6

VENOCO, INC. 2007 LONG-TERM INCENTIVE PROGRAM

EXHIBIT A

Comparative Group

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