DIRECT OBLIGATION NOTE


         FOR  VALUE  RECEIVED,   the  undersigned,   ADVANCED  AERODYNAMICS  AND
STRUCTURES,  INC. (the  "Company),  hereby promises to pay to THE SUMITOMO BANK,
LIMITED  ("Sumitomo"),  a banking corporation organized under the laws of Japan,
acting through its Los Angeles  Branch,  on or before August 5, 2002, the lesser
of (i) the principal sum of Eight Million Six Hundred Twenty-Five Thousand Seven
Hundred Fifty-Four Dollars ($8,625,754), together with all other amounts due and
owing under the  Reimbursement  Agreement dated as of August 1, 1997 (as amended
from time to time,  the  "Reimbursement  Agreement")  between  the  company  and
Sumitomo,  or (ii) the  aggregate  outstanding  amount of all loans  made to the
Company by Sumitomo pursuant to the Reimbursement  Agreement,  together with all
other amounts due and owing under the  Reimbursement  Agreement,  in immediately
available  funds at the principal  corporate  office of  Sumitomo's  Los Angeles
Branch in Los Angeles,  California (or such other office of Sumitomo  located in
the United States of America as Sumitomo may designate to the Company in writing
from time to time), on the dates and at the times specified in the Reimbursement
Agreement and to pay interest on the outstanding  balance of such amounts at the
times  specified in the  Reimbursement  Agreement at a rate per annum (except as
otherwise  specified  in the  Reimbursement  Agreement)  equal to (x) LIBOR less
0.15% per annum and (y) with respect to any amount not paid when due, a rate per
annum equal to the sum of the corporate  base rate publicly  announced by Morgan
Guaranty  Trust  Company of New York in New York,  New York for its  successor),
from time to time as its  prevailing  corporate  base  rated,  which  rate shall
change when and as said  corporate base rate changes,  plus two percent  (2.0%).
Sumitomo is  authorized  to record all loans and all payments made on account of
the principal due on the loans on the Loan Schedule  attached hereto.  Such Loan
Schedule,  and any continuations  thereof,  are hereby incorporated by reference
herein and made a party hereof,  and  Sumitomo's  endorsements  thereon shall be
conclusive  absent manifest  error.  The failure to make any such notation shall
not, however,  affect the Company's obligations under this Note. As used herein,
"LIBOR"  means  with  respect  to any Reset Date (as  hereinafter  defined)  the
arithmetic  mean of the rates at which  deposits in U.S.  Dollars are offered by
four  major  banks in the  London  interbank  market  selected  by the Bank,  at
approximately  11:00 a.m.,  London time,  on the day that is two  Business  Days
preceding  the Reset Date to prime  banks in the London  interbank  market for a
period  of one (1)  week  commencing  on the  Reset  Date.  "Reset  Date"  means
Wednesday of each week (or, if such  Wednesday  is not a Business  Day, the next
Business Day).


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         This obligation is issued under, and is subject to all of the terms of,
the Reimbursement  Agreement.  Terms defined in the Reimbursement  Agreement and
not otherwise defined herein shall have the same meanings herein as therein.

         Notwithstanding the due date of this Note each and every amount payable
shall be  accelerated  to the  extent  that:  (x) funds are  available  from the
Trustee from sources available under the Indenture, (y) funds are available from
the Remarketing  Agent from the remarketing  proceeds of the Bonds, or (z) funds
are available from any Alternate Letter of Credit (as defined in the Indenture).

         The Company hereby waives  presentment  for payment,  demand,  protest,
notice  of  protest,  notice  of  dishonor  and all  defenses  on the  ground of
extension  of time of payment for the payment  hereof  which may be given (other
than in writing) by Sumitomo to the Company.

         This Note shall be governed by and  construed  in  accordance  with the
laws of the State of California.

         IN  WITNESS  WHEREOF,  the  Company  has  caused  this  Note to be duly
executed.

Dated: __________________

                                           ADVANCED AERODYNAMICS AND
                                           STRUCTURES, INC.


                                            By:________________________________
                                               President

ATTEST:

By:________________________
         Secretary

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                                  LOAN SCHEDULE



                 Principal      Principal                        Notation
   Date           Amount          Paid           Balance          Made By
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