TAX REGULATORY AGREEMENT


                                      Among

               California Economic Development Financing Authority

                First Trust of California, National Association,
                                   as Trustee,

                                       and

                   Advanced Aerodynamics and Structures, Inc.

              -----------------------------------------------------

                           Dated as of August 1, 1997

              -----------------------------------------------------



                   Executed as Part of the Proceedings for the
                         Authorization and Issuance of:

                                   $8,500,000
               California Economic Development Financing Authority
                              Variable Rate Demand
                Industrial Development Revenue Bonds, Series 1997
              (Advanced Aerodynamics and Structures, Inc. Project)











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              -----------------------------------------------------

                                TABLE OF CONTENTS

              -----------------------------------------------------


         (This Table of Contents is for convenience of reference only and is not
part of the Tax Regulatory Agreement.)

                                    ARTICLE I

                                   DEFINITIONS

Section 1.1.  Definitions.....................................................1
Section 1.2.  Reliance on Borrower's Information..............................12

                                   ARTICLE II

                             CERTAIN REPRESENTATIONS
                                 BY THE BORROWER

Section 2.1.   Description of the Project and Description of the Facilities...12
Section 2.2.   Capital Expenditures...........................................13
Section 2.3.   Prior Issues and $40 Million Limit.............................14
Section 2.4.   Federal Tax Return Information.................................14
Section 2.5.   Composite Issues...............................................14
Section 2.6.   Prohibited Uses................................................15
Section 2.7.   No Composite Project...........................................15
Section 2.8.   Acquisition of Existing Property...............................15
Section 2.9.   Land Acquisition Limit and No Acquisition of Farmland..........16
Section 2.10.  Representations by the Borrower for Purposes of IRS Form 8038..16

                                   ARTICLE III

                              USE OF BOND PROCEEDS

Section 3.1.  Anticipated Use of Proceeds.....................................17
Section 3.2.  Certification as to Costs of the Project........................18

                                   ARTICLE IV

                                    ARBITRAGE

Section 4.1.  Arbitrage Representations and Elections.........................18
Section 4.2.  Arbitrage Compliance............................................20
Section 4.3.  Calculation of Rebate Amount....................................20




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Section 4.4.  Payment to United States........................................23
Section 4.5.  Recordkeeping...................................................23
Section 4.6.  Rebate Analyst..................................................24

                                    ARTICLE V
                             COMPLIANCE WITH CODE.............................24

                                   ARTICLE VI

                       TERM OF TAX REGULATORY AGREEMENT.......................26

                                   ARTICLE VII

                                   AMENDMENTS.................................26

                                  ARTICLE VIII

                           EVENTS OF DEFAULT, REMEDIES

Section 8.1. Events of Default................................................26
Section 8.2.  Remedies for an Event of Default................................26


EXHIBIT A-1-Sources and Uses of Funds......................................A-1-1
EXHIBIT A-2-Property Financed or Refinanced by the Bonds...................A-2-1
EXHIBIT B-1-Form of Dealer Certification of Bona Fide Bid Price of a
                           Certificate of Deposit..........................B-1-1
EXHIBIT B-2-Form of Dealer Certification for a Certificate of Deposit
                           for Which No Active Secondary Market Exists.....B-2-1
EXHIBIT B-3-Form of Provider Certification for a Certificate of Deposit....B-3-1
EXHIBIT B-4-Form of Provider Certification For an Investment Contract......B-4-1
EXHIBIT B-5-Form of Borrower's Certification for a
                           Certificate of Deposit Involving Three Bids.....B-5-1
EXHIBIT B-6-Form of Borrower's Certification for an
                           Investment Contract Involving Three Bids........B-6-1
EXHIBIT C-Useful Life Calculation............................................C-1
EXHIBIT D-Declaration of Official Intent.....................................D-1




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                            TAX REGULATORY AGREEMENT


         THIS TAX REGULATORY AGREEMENT (this "Tax Regulatory Agreement") is made
and dated as of August 1, 1997,  by and among  California  Economic  Development
Financing  Authority  and its  successors  or assigns (the  "Issuer"),  Advanced
Aerodynamics  and  Structures,  Inc., a corporation  duly organized and existing
under the laws of the State of  California  and its  successors  or assigns (the
"Borrower"), and First Trust of California,  National Association, solely in its
capacity as trustee under the Indenture, as defined below (the "Trustee");

                              W I T N E S S E T H:

         WHEREAS, the Issuer has authorized the issuance of $8,500,000 aggregate
principal  amount of its Variable  Rate Demand  Industrial  Development  Revenue
Bonds,  Series 1997 (Advanced  Aerodynamics and Structures,  Inc.  Project) (the
"Bonds"),  the proceeds of which are being loaned to the Borrower  pursuant to a
Loan Agreement,  dated as of August 1, 1997, between the Issuer and the Borrower
(the   "Agreement"),   to  finance  the   construction  and  installation  of  a
manufacturing  facility and the acquisition of certain manufacturing  equipment,
as more fully set forth in the Agreement (the "Project") and to pay a portion of
the costs of issuance of the Bonds;

         WHEREAS,  the Borrower will use the Project in the  manufacture of wire
bonding tools and accessories or for the manufacture of other tangible  personal
property; and

          WHEREAS,  the  Issuer  has  determined  that  the  issuance,  sale and
delivery of the Bonds is needed to finance the Project; and

         WHEREAS,  this Tax  Regulatory  Agreement  has been entered into by the
Issuer, the Borrower and the Trustee to ensure compliance with the provisions of
the Internal  Revenue Code of 1986, as amended,  and the Regulations  thereunder
(the "Code"); and

         WHEREAS,  to  ensure  that  interest  on the Bonds  will be and  remain
excludable from gross income under the Code, the restrictions listed in this Tax
Regulatory Agreement must be satisfied.

         NOW THEREFORE, the Issuer, the Borrower and the Trustee hereby agree as
follows:

                                    ARTICLE I

                                   DEFINITIONS

         Section 1.1.  Definitions.  The following  words and phrases shall have
the following meanings. Any capitalized word or term used herein but not defined
herein shall have the same meaning given in the hereinafter defined Indenture.





<PAGE>




         "Abusive Arbitrage Device" means any action which has the effect of (i)
enabling the Issuer or the Borrower to exploit the  difference  between  taxable
and tax-exempt interest rates to obtain a material financial advantage; and (ii)
overburdening  the  tax-exempt  bond  market as defined in ss.  1.148-10  of the
Regulations.

         "Accounting  Method" means both the overall  method used to account for
the Gross  Proceeds of the Bonds  (e.g.,  the cash method or a modified  accrual
method)  and the method  used to account for or  allocate  any  particular  item
within  that  overall  accounting  method  (e.g.,  accounting  for  Investments,
Expenditures,  allocations to and from different sources and particular items of
the foregoing).

         "Agreement" means Loan Agreement,  dated as of August 1, 1997,  between
the Issuer and the Borrower, and any amendments and supplements thereto.

         "Average Economic Life" means the average reasonably  expected economic
life of the Facilities as defined in ss. 147(b) of the Code.

          "Average  Maturity" means the average maturity of the Bonds as defined
in ss. 147(b) of the Code.

         "Bond Counsel" means a law firm of nationally  recognized  bond counsel
who is requested to deliver its  approving  opinion with respect to the issuance
of and the exclusion from federal income taxation of interest on the Bonds.

         "Bond Year" means the period  commencing August 1 of each calendar year
and  terminating on July 31 of the immediately  succeeding  calendar year during
the term of the Bonds,  except  that the first Bond Year shall  commence  on the
Date of Issuance and end on July 31, 1998 (unless a different period is required
by the Regulations or selected by the Borrower pursuant to the Regulations).

         "Bond Yield" means the Yield of the Bonds calculated in accordance with
Section 1.148-4 of the Regulations.

         "Borrower"  means  Advanced   Aerodynamics  and  Structures,   Inc.,  a
corporation  duly  organized  and  existing  under  the  laws  of the  State  of
California or any entity which is the surviving,  resulting or transferee entity
in any merger, consolidation or transfer permitted under the Agreement.

         "Capital  Expenditure"  means  any  cost  of a type  that  is  for  the
acquisition, construction,  reconstruction or improvement of land or property of
a character  subject to the  allowance  for  depreciation.  For  example,  costs
incurred to acquire,  construct,  reconstruct  or improve  land,  buildings  and
equipment  generally  are  Capital  Expenditures.  Whether an  expenditure  is a
capital  expenditure  is  determined  at the time the  expenditure  is paid with
respect  to the  property.  Future  changes  in law do  not  affect  whether  an
expenditure is a capital expenditure.




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         "Capital  Project"  means all Capital  Expenditures  that carry out the
governmental  purpose of the Bonds.  For example,  a Capital Project may include
Capital  Expenditures for one or more building  improvements or equipment,  plus
related  capitalized  interest paid or accrued prior to the in-service  date for
the Capital Project.

         "Class  of  Investments"  means  one of the  following,  each of  which
represents a different Class of Investments:

         (a) Each category of yield  restricted  Purpose  Investment and Program
Investment,  as  defined  in ss.  1.148-1(b),  that is  subject  to a  different
definition of materially higher Yield under ss. 1.148-2(d)(2);

         (b) Yield restricted Nonpurpose Investments; and

         (c) All other Nonpurpose Investments.

         "Code" means the Internal Revenue Code of 1986, as amended.

         "Collateral   Account"  means  the  interest  bearing  deposit  account
established by the Borrower with the Bank pursuant to the Investment  Agreement,
dated August 5, 1997, between the Bank and the Borrower to secure the Borrower's
obligations to the Bank under the Reimbursement Agreement.

     "Computation  Date"  means an  Installment  Computation  Date or the  Final
Computation Date.

         "Computation  Date  Credit"  means on the last  day of each  Bond  Year
during  which  there are Gross  Proceeds  subject to the rebate  requirement  of
Article IV hereof, and on the Final Computation Date, the amount of $1,000.

         "Consistently  Applied" means applied  uniformly within a fiscal period
and between  fiscal  periods to account  for Gross  Proceeds of an issue and any
amounts that are in a commingled fund.

         "Costs of Issuance"  means all costs  incurred in  connection  with the
issuance of the Bonds,  other than fees paid to or on behalf of credit enhancers
as  fees  for  "qualified  guarantees"  as  defined  in  ss.  1.148-4(f)  of the
Regulations  or to the Issuer as a portion of its higher Yield  permitted on the
Agreement  under ss.  1.148-2(d)(2)  of the  Regulations.  Examples  of Costs of
Issuance include (but are not limited to):

                  (a) underwriter's spread (whether realized directly or derived
         through  purchase of the Bonds at a discount below the price at which a
         substantial  number of the Bonds are sold to the  public) or  placement
         agent's fee;





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<PAGE>



                  (b)  counsel  fees  (including  bond  counsel,   underwriter's
         counsel,  placement  agent's  counsel,  issuer's  counsel,   borrower's
         counsel,  trustee's  counsel,  and any other  specialized  counsel fees
         incurred in connection with the issuance of the Bonds);

                  (c)  financial advisor fees incurred in connection with the 
          issuance of the Bonds;

                  (d) rating  agency fees  (except for any such fee that is paid
         in connection  with or as a part of the fee for credit  enhancement  of
         the Bonds);

                  (e) trustee fees incurred in  connection  with the issuance of
         the Bonds;

                  (f) accountant  fees incurred in connection  with the issuance
         of the Bonds;

                  (g) printing costs (for the Bonds and of the  preliminary  and
         final offering circulars or official statements);

                  (h) costs  incurred in  connection  with the  required  public
         approval process (e.g.,  publication costs for public notices generally
         and costs of the public hearing); and

                  (i) Issuer  fees to cover  administrative  costs and  expenses
         incurred in connection with the issuance of the Bonds.

         "Current Outlay of Cash" means an outlay  reasonably  expected to occur
not later than 5 banking days after the date as of which the allocation of Gross
Proceeds to the Expenditure is made.

         "Date of Issuance" means August 5, 1997.

         "Discharged"  means,  with  respect to any Bond,  the date on which all
amounts due with respect to such Bond are actually and  unconditionally  due, if
cash is available at the place of payment,  and no interest accrues with respect
to such Bond after such date.

         "Economic  Accrual Method" (also known as the constant  interest method
or actuarial  method)  means the method of computing  Yield that is based on the
compounding of interest at the end of each compounding period.

         "Exempt Person" means any organization  described in Section  501(c)(3)
of the Code or a state or a local governmental unit of a state.

         "Expenditure"  means a book or record entry which allocates Proceeds of
the Bonds in connection with a Current Outlay of Cash.





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<PAGE>



         "Facilities"  means the  Manufacturing  Facility financed or refinanced
with the Proceeds of the Bonds and described in Exhibit A-2 hereto.

         "Fair  Market  Value"  means the price at which a willing  buyer  would
purchase  an  Investment  from a  willing  seller in a bona  fide,  arm's-length
transaction.  Fair Market Value  generally is  determined on the date on which a
contract to purchase or sell the Nonpurpose  Investment  becomes  binding (i.e.,
the trade date rather than the settlement date). Except as otherwise provided in
this  definition,  an Investment  that is not of a type traded on an established
securities  market  (within the meaning of ss. 1273 of the Code),  is rebuttably
presumed to be acquired or disposed of for a price that is not equal to its Fair
Market Value. The Fair Market Value of a United States Treasury  obligation that
is purchased directly from the United States Treasury is its purchase price. The
following  guidelines  shall apply for purposes of  determining  the Fair Market
Value of the obligations described below:

                  (a)  Certificates of Deposit.  The purchase of certificates of
         deposit  with  fixed  interest  rates,   fixed  payment  schedules  and
         substantial  penalties  for  early  withdrawal  will be deemed to be an
         Investment  purchased at its Fair Market Value on the purchase  date if
         the Yield on the certificate of deposit is not less than:

                            (i)  The  Yield  on  reasonably   comparable  direct
                  obligations of the United States; and

                           (ii) The highest Yield that is published or posted by
                  the  provider to be currently  available  from the provider on
                  reasonably  comparable  certificates of deposit offered to the
                  public.

                  (b) Guaranteed Investment  Contracts.  A Guaranteed Investment
         Contract is a Nonpurpose  Investment that has  specifically  negotiated
         withdrawal or  reinvestment  provisions and a  specifically  negotiated
         interest rate, and also includes any agreement to supply Investments on
         two or more  future  dates  (e,g,,  a  forward  supply  contract).  The
         purchase  price of a Guaranteed  Investment  Contract is treated as its
         Fair Market Value on the purchase date if:

                            (i) The Borrower makes a bona fide  solicitation for
                  a specified  Guaranteed  Investment  Contract  and receives at
                  least  three  bona  fide  bids  from  providers  that  have no
                  material   financial   interest   in  the  issue   (e.g.,   as
                  underwriters or brokers);

                           (ii)  The  Borrower  purchases  the  highest-Yielding
                  Guaranteed  Investment  Contract for which a qualifying bid is
                  made (determined net of broker's fees);

                          (iii) The Yield on the Guaranteed  Investment Contract
                  (determined  net of broker's  fees) is not less than the Yield
                  then available from the provider on




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                  reasonably comparable Guaranteed Investment Contracts, if any,
                  offered  to other  persons  from a source of funds  other than
                  gross proceeds of tax-exempt bonds;

                           (iv) The determination of the terms of the Guaranteed
                  Investment Contract takes into account as a significant factor
                  the Borrower's  reasonably  expected drawdown schedule for the
                  amounts to be invested, exclusive of amounts deposited in debt
                  service funds and reasonably  required  reserve or replacement
                  funds;

                            (v) The terms of the Guaranteed Investment Contract,
                  including  collateral security  requirements,  are reasonable;
                  and

                           (vi)  The  obligor  on  the   Guaranteed   Investment
                  Contract certifies the administrative  costs that it is paying
                  (or expects to pay) to third  parties in  connection  with the
                  Guaranteed Investment Contract.

         "Final Computation Date" means the date the last Bond is Discharged.

         "Future  Value"  means the Value of a Receipt  or Payment at the end of
any interval as determined by using the Economic  Accrual  Method and equals the
Value of that Payment or Receipt when it is paid or received (or treated as paid
or received),  plus interest assumed to be earned and compounded over the period
at a rate equal to the Yield on the Bonds,  using the same compounding  interval
and financial conventions used to compute the Yield on the Bonds.

          "Gross  Proceeds"  means any Proceeds or  Replacement  Proceeds of the
Bonds.

         "Indenture"  means, the Indenture of Trust, dated as of August 1, 1997,
between the Issuer and the Trustee, and any amendments and supplements thereto.

         "Installment  Computation  Date"  means the last day of the fifth  Bond
Year and each succeeding  fifth Bond Year as stated in Section 4.1 hereof or the
last day of any Bond Year prior to the fifth Bond Year  selected by the Borrower
as stated in Section 4.1 hereof.

         "Investment"  means any Purpose  Investment or  Nonpurpose  Investment,
including any other tax-exempt bond.

         "Investment Instructions" means the letter of instructions set forth as
an exhibit to the No Arbitrage  Certificate  of the Issuer dated the date of the
initial delivery of the Bonds.

         "Investment  Proceeds"  means any amounts  actually  or  constructively
received from investing Proceeds of the Bonds.

         "Investment-Type  Property"  means any  property,  other than  property
described  in ss.  148(b)(2)(A),  (B),  (C) or (E) of  the  Code  that  is  held
principally as a passive vehicle for the




                                        6

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production of income. Except as otherwise provided, a prepayment for property or
services is Investment-Type  Property if a principal purpose for prepaying is to
receive an Investment return from the time the prepayment is made until the time
payment  otherwise would be made. A prepayment is not  Investment-Type  Property
if--

                  (a) The prepayment is made for a substantial  business purpose
         other  than  Investment  return  and  the  issuer  has no  commercially
         reasonable alternative to the prepayment, or

                  (b) Prepayments on substantially  the same terms are made by a
         substantial  percentage  of persons who are  similarly  situated to the
         issuer but who are not beneficiaries of tax-exempt financing.

         "Issue  Price"  means,  except as  otherwise  provided,  issue price as
defined in ss.ss. 1273 and 1274 of the Code. Generally, the Issue Price of bonds
that are publicly  offered is the first price at which a  substantial  amount of
the bonds is sold to the public. Ten percent is a substantial amount. The public
does not include bond houses, brokers or similar persons or organizations acting
in the capacity of underwriters or wholesalers.  The Issue Price does not change
if part of the issue is later  sold at a  different  price.  The Issue  Price of
bonds that are not substantially  identical is determined separately.  The Issue
Price of bonds for which a bona fide public offering is made is determined as of
the sale date based upon  reasonable  expectations  regarding the initial public
offering  price.  If a bond is  issued  for  property,  the  applicable  Federal
tax-exempt  rate is used in lieu of the Federal  rate in  determining  the Issue
Price under ss. 1274 of the Code.  The issue price of bonds may not exceed their
Fair Market Value as of the sale date.
With respect to the Bonds, the Issue Price is $8,500,000.

         "Manufacturing  Facility"  means a Capital  Project that is used in the
manufacturing  or  production  of  tangible  personal  property  (including  the
processing  resulting in a change in the condition of such  property)  including
facilities that are directly  related and ancillary to a Manufacturing  Facility
if such directly  related and ancillary  facilities are located on the same site
as the Manufacturing Facility and not more than 25 percent of the proceeds of an
issue that finances the Manufacturing Facility are used to provide such directly
related and ancillary facilities.

         "Net Sale Proceeds" means Sale Proceeds, less the portion of those Sale
Proceeds invested in a reasonably required reserve or replacement fund under ss.
148(d) of the Code and as part of a minor portion under ss. 148(e) of the Code.

         "Nonpurpose  Investment"  means  any  security,   obligation,   annuity
contract  or  Investment  type  property  as defined in ss.  148(b) of the Code,
including  "specified  private activity bonds" as defined in ss.  57(a)(5)(c) of
the  Code,  but  excluding  all  other  obligations  the  interest  on  which is
excludable from federal gross income. The term "Nonpurpose  Investment" does not
include the Borrower's  obligations  to make payments to the Issuer  pursuant to
the provisions of the Agreement.




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         "Payments"  means,  for purposes of computing  the Rebate  Amount,  (a)
amounts actually or constructively  paid to acquire a Nonpurpose  Investment (or
treated as paid to a commingled  fund); (b) for a Nonpurpose  Investment that is
allocated  to an  issue  on a date  after  it is  actually  acquired  (e.g.,  an
Investment  that becomes  allocable to  Transferred  Proceeds or to  Replacement
Proceeds) or that  becomes  subject to the rebate  requirement  of the Code on a
date  after  it  is  actually  acquired  (e.g.,  an  Investment  allocated  to a
reasonably  required reserve or replacement fund for a construction issue at the
end of the two-year spending period), the Value of that Investment on that date;
(c) for a Nonpurpose Investment that was allocated to an issue at the end of the
preceding  computation  period, the Value of that Investment at the beginning of
the computation period; (d) on the last day of each Bond Year during which there
are  amounts  allocated  to Gross  Proceeds  of an issue that are subject to the
rebate  requirement  of the Code,  and on the final maturity date, a Computation
Date Credit;  and (e) Yield Reduction  Payments on Nonpurpose  Investments  made
pursuant to ss.  1.148-5(c)  of the  Regulations.  For purposes of computing the
Yield on an Investment  (including the Value of the  Investment),  Payment means
amounts  to be  actually  or  constructively  paid to  acquire  the  Investment;
provided,  however,  that  payments  made  by a  conduit  borrower,  such as the
Borrower,  are not treated as paid until the conduit  borrower ceases to receive
the benefit of earnings on those  amounts.  Payments on  Investments,  including
Guaranteed Investment Contracts, are adjusted for Qualified Administrative Costs
of acquiring a Nonpurpose Investment.

         "Pre-Issuance  Accrued  Interest" means amounts  representing  interest
that accrued on an obligation  for a period not greater than one year before the
Date of  Issuance  but only if those  amounts are paid within one year after the
Date of Issuance.

         "Principal  User"  means a person who is a principal  owner,  principal
lessee, a principal  output purchaser or "other"  principal user and any Related
Person to a Principal  User. A principal owner is a person who at any time holds
more than a 10 percent  ownership  interest  (by value) in a facility  or, if no
person  holds more than a 10  percent  ownership  interest,  then the person (or
persons in the case of multiple  equal  owners) who holds the largest  ownership
interest in the facility.  A person is treated as holding an ownership  interest
if such  person  is an owner  for  federal  income  tax  purposes  generally.  A
principal  lessee is a person who at any time leases more than 10 percent of the
facility  (disregarding  portions used by the lessee under a short-term  lease).
The  portion  of a  facility  leased  to a lessee  is  generally  determined  by
reference to its fair rental value.  A short-term  lease is one which has a term
of one year or less,  taking into  account  all options to renew and  reasonably
anticipated  renewals.  A principal output purchaser is any person who purchases
output of a facility,  unless the total output  purchased by such person  during
each one-year period  beginning with the date such facility is placed in service
is 10 percent or less of such  facility's  output  during each such  period.  An
"other"  principal user is a person who enjoys a use of a facility (other than a
short-term use) in a degree  comparable to the enjoyment of a principal owner or
a  principal   lessee,   taking  into  account  all  the   relevant   facts  and
circumstances,  such as the person's  participation  in control over use of such
facility or its remote or proximate geographic location.





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<PAGE>



         "Prior  Issues" means any issue of tax-exempt  obligations  (whether or
not the issuer of each issue is the same) to which Section 103(b)(6) of the 1954
Code or Section 144(a) of the Code applies.

         "Proceeds" means any Sale Proceeds, Investment Proceeds and Transferred
Proceeds of an issue.  Proceeds do not  include,  however,  amounts  actually or
constructively  received with respect to a Purpose  Investment that are properly
allocable  to  the  immaterially  higher  Yield  under  ss.  1.148-2(d)  of  the
Regulations or section 143(g) of the Code or to Qualified  Administrative  Costs
recoverable under ss. 1.148-5(e) of the Regulations.

         "Project" has the meaning given to such term in the preambles hereto.

          "Project  Fund" means the  Project  Fund  established  pursuant to the
Indenture.
          "Purchase  Fund" means the Purchase Fund  established  pursuant to the
Indenture.

          "Purpose Investment" means an Investment that is acquired to carry out
the governmental
purpose of an issue.  The Agreement constitutes a Purpose Investment.

         "Qualified    Administrative    Costs"   means    reasonable,    direct
administrative  costs,  other than carrying  costs,  such as  separately  stated
brokerage  or  selling   commissions,   but  not  legal  and  accounting   fees,
recordkeeping,  custody and similar  costs.  General  overhead costs and similar
indirect costs of the issuer such as employee  salaries and office  expenses and
costs   associated   with   computing   the  Rebate  Amount  are  not  Qualified
Administrative Costs. In general, administrative costs are not reasonable unless
they are comparable to  administrative  costs that would be charged for the same
Investment  or a reasonably  comparable  Investment if acquired with a source of
funds other than Gross Proceeds of tax-exempt bonds.

         "Qualified  Hedging  Transaction"  means a  contract  which  meets  the
requirements of ss. 1.148-4(h)(2) of the Regulations.

         "Rebate Amount" means the excess of the Future Value of all Receipts on
Nonpurpose  Investments  over the Future Value of all the Payments on Nonpurpose
Investments.  Future Value is computed as of the Computation Date. Rebate Amount
additionally  includes any penalties and interest on  underpayments  reduced for
recoveries of overpayments.

         "Rebate  Analyst"  shall mean the entity chosen by the Borrower and the
Issuer in accordance with Section 4.6 hereof to determine the amount of required
deposits to the Rebate Fund, if any.

          "Rebate  Fund"  means the  Rebate  Fund  established  pursuant  to the
Indenture.

         "Receipts"  means,  for purposes of computing  the Rebate  Amount,  (a)
amounts  actually  or  constructively  received  from  a  Nonpurpose  Investment
(including amounts treated as received




                                        9

<PAGE>



from a commingled  fund),  such as earnings and return of  principal;  (b) for a
Nonpurpose  Investment  that  ceases  to be  allocated  to an issue  before  its
disposition or redemption date (e.g.,  an Investment  that becomes  allocable to
Transferred  Proceeds  of another  issue or that ceases to be  allocable  to the
issue  pursuant to the universal cap under ss.  1.148-6 of the  Regulations)  or
that  ceases  to be  subject  to the  rebate  requirement  of the Code on a date
earlier than its disposition or redemption  date (e.g., an Investment  allocated
to a fund  initially  subject  to the  rebate  requirement  of the Code but that
subsequently  qualifies  as a bona fide debt  service  fund),  the Value of that
Nonpurpose  Investment on that date; and (c) for a Nonpurpose Investment that is
held at the end of a computation period, the Value of that Investment at the end
of that period. For purposes of computing Yield on an Investment, Receipts means
amounts to be actually or constructively  received from the Investment,  such as
earnings  and  return  of  principal  (including  the  Value of an  Investment).
Receipts on Investments, including Guaranteed Investment Contracts, are adjusted
(reduced) for Qualified Administrative Costs.

         "Recomputation Event" means a transfer, waiver, modification or similar
transaction  of any right that is part of the terms of the Bonds or a  Qualified
Hedging  Transaction  is entered into,  or  terminated,  in connection  with the
Bonds.

         "Regulation" or  "Regulations"  means the temporary,  proposed or final
Income  Tax  Regulations  promulgated  by the  Department  of the  Treasury  and
applicable to the Bonds,  including ss.ss.  1.148-0 through 1.148-11,  ss. 1.149
and ss.ss. 1.150-1 and 1.150-2 as issued by the Internal Revenue Service on June
18, 1993 for bonds  issued after July 1, 1993,  including  any  amendments  made
thereto.

         "Related  Person"  means  any  person if (i) the  relationship  to such
person would result in a  disallowance  of loss under  Sections 267 or 707(b) of
the Code or (ii)  such  person  is a  member  of the  same  controlled  group of
corporations (as defined in Section 1563(a) of the Code,  except that "more than
50 percent" shall be substituted for "at least 80 percent" each place it appears
therein).

         "Replacement  Proceeds" means amounts which have a sufficiently  direct
nexus to the Bonds or to the governmental  purpose of the Bonds to conclude that
the amounts would have been used for that  governmental  purpose if the Proceeds
of the Bonds were not used or to be used for that governmental  purpose, as more
fully defined in ss. 1.148-1(c) of the Regulations.

         "Revenue  Fund"  means the  Revenue  Fund  established  pursuant to the
Indenture.

         "Sale Proceeds" means any amounts actually or  constructively  received
from the sale of the Bonds, including amounts used to pay underwriters' discount
or  compensation  or  placement  agent's  fee and  accrued  interest  other than
Pre-Issuance Accrued Interest.

         "SLGS" means United States Treasury Certificates of Indebtedness, Notes
and Bonds-State and Local Government Series.





                                       10

<PAGE>



         "Tax Regulatory Agreement" means this Tax Regulatory Agreement.

         "Test-Period  Beneficiary"  means  any  person  who  is an  owner  or a
Principal  User of  facilities  financed  by an issue or  issues  of  tax-exempt
obligations  issued under the 1954 Code or the Code during the three-year period
beginning on the later of the date such facilities were placed in service or the
date of  issuance  for such  issue or  issues  of  tax-exempt  obligations.  For
purposes  of  determining  whether a person is a  Test-Period  Beneficiary,  all
persons who are Related Persons shall be treated as one person.

         "Transferred Proceeds" means Proceeds of a refunding issue which become
transferred  proceeds of a  refunding  issue and cease to be Proceeds of a prior
issue when Proceeds of the  refunding  issue  discharge  any of the  outstanding
principal  amount of the prior issue.  The amount of Proceeds of the prior issue
that become  transferred  proceeds of the refunding  issue is an amount equal to
the Proceeds of the prior issue on the date of that  discharge  multiplied  by a
fraction:

                  (a) The  numerator  of which is the  principal  amount  of the
         prior issue discharged with Proceeds of the refunding issue on the date
         of that discharge; and

                  (b)  The  denominator  of  which  is  the  total   outstanding
         principal amount of the prior issue on the date immediately  before the
         date of that discharge.

         "Universal Cap" means the Value of all outstanding Bonds.

         "Value"  means  Value  as  determined  under  ss.   1.148-4(e)  of  the
Regulations  for a  Bond  and  Value  determined  under  ss.  1.148-5(d)  of the
Regulations for an Investment.

         "Yield" means,  for purposes of determining the Yield on the Bonds, the
Yield computed  under the Economic  Accrual  Method using  consistently  applied
compounding  intervals  of not more than one  year.  A short  first  compounding
interval and a short last  compounding  interval may be used. Yield is expressed
as an annual  percentage rate that is calculated to at least four decimal places
(e.g., 5.2525 percent). Other reasonable,  standard financial conventions,  such
as the 30 days per month/360 days per year convention,  may be used in computing
Yield but must be  consistently  applied.  The Yield on an issue that would be a
Purpose Investment  (absent ss.  148(b)(3)(A) of the Code) is equal to the Yield
on the conduit financing issue that financed that Purpose Investment.  The Yield
on a fixed yield issue is the discount  rate that,  when used in  computing  the
present Value as of the issue date of all  unconditionally  payable  payments of
principal,  interest and fees for qualified  guarantees on the issue and amounts
reasonably  expected to be paid as fees for  qualified  guarantees on the issue,
produces an amount equal to the present Value,  using the same discount rate, of
the  aggregate  issue price of bonds of the issue as of the issue  date.  In the
case of obligations  purchased or sold at a substantial discount or premium, the
Regulations  prescribe certain special Yield calculation  rules. For purposes of
determining  the Yield on an  Investment,  the Yield computed under the Economic
Accrual Method,  using the same compounding  interval and financial  conventions
used to compute the Yield on the Bonds.




                                       11

<PAGE>




         The Yield on an Investment  allocated to the Bonds is the discount rate
that,  when used in computing the present Value as of the date the Investment is
first allocated to the issue of all  unconditionally  payable  receipts from the
Investment, produces an amount equal to the present Value of all unconditionally
payable  payments for the  Investment.  The Yield on an Investment  shall not be
adjusted  by any  hedging  transaction  entered  into in  connection  with  such
Investment  unless the Issuer,  the Trustee and the  Borrower  have  received an
opinion of Bond Counsel that such an adjustment is permitted by the Regulations.
Yield shall be calculated separately for each Class of Investments.

         "Yield  Reduction  Payment"  means a payment to the United  States with
respect to an Investment  which is treated as a Payment for that Investment that
reduces the Yield on that  Investment in accordance  with ss.  1.148-5(c) of the
Regulations.  Yield Reduction Payments include Rebate Amounts paid to the United
States.

         "1954 Code" means the Internal Revenue Code of 1954, as amended,  as in
effect on the effective date of the Code.

         Section 1.2. Reliance on Borrower's  Information.  Bond Counsel and the
Issuer  shall be  permitted  to rely  upon the  contents  of any  certification,
document or instructions  provided pursuant to this Tax Regulatory Agreement and
shall not be responsible or liable in any way for the accuracy of their contents
or the failure of the Borrower to deliver any required information.

                                   ARTICLE II

                             CERTAIN REPRESENTATIONS
                                 BY THE BORROWER

         Section  2.1.  Description  of  the  Project  and  Description  of  the
Facilities.

         The  Borrower  hereby  represents  and  warrants for the benefit of the
Issuer, the Trustee and the registered owners of the Bonds that:

                  (a) The  description of the Project set forth in the preambles
         hereto and the  description  of the Facilities set forth in Exhibit A-2
         hereto are true and accurate.

                  (b) The  Facilities  constitute  a  Manufacturing  Facility of
         advanced  propjet and jet aircraft or facilities  directly  related and
         ancillary to such Manufacturing Facility.

                  (c) The portion of the  Facilities  which  constitutes  office
         space serves solely the manufacturing portion of the Facilities,  is on
         the same site as the  manufacturing  portion of the  Facilities  and is
         financed  with not more  than 25  percent  of the net  Proceeds  of the
         Bonds.

         Section 2.2.  Capital Expenditures.




                                       12

<PAGE>




         The  Borrower  hereby  represents  and  warrants for the benefit of the
Issuer, the Trustee and the registered owners of the Bonds that:

                  (a) During the period beginning three years before the Date of
         Issuance and ending on the Date of Issuance,  the  aggregate  amount of
         Capital Expenditures  (including any expenditure that was or could have
         been treated as a Capital  Expenditure under any rule or election under
         the Code) paid or incurred,  excluding  those to be paid or  reimbursed
         with Proceeds of the Bonds,  with respect to (i) facilities  located in
         the incorporated  municipality (or unincorporated  county) in which the
         Facilities  are located and (ii) the Principal  User of which was or is
         the Borrower, any other Principal User of the Facilities or any Related
         Person thereto, was $6,000.

                  (b) During the period  beginning  on the Date of Issuance  and
         ending  on the  date  three  years  after  the  Date of  Issuance,  the
         aggregate  amount of Capital  Expenditures  (including any  expenditure
         that was or could have been treated as a Capital  Expenditure under any
         rule or election  under the Code)  expected to be  incurred,  excluding
         those to be paid or reimbursed with Proceeds of the Bonds, with respect
         to  (i)  facilities  located  in  the  incorporated   municipality  (or
         unincorporated county) in which the Facilities are located and (ii) the
         Principal  User of which was or is the  Borrower,  any other  Principal
         User of the Facilities or any Related Person thereto, is anticipated to
         be $800,000.

                  (c)  The  amount  of  capitalized  interest  to be paid on all
         financings for the Facilities  excluding that paid from Proceeds of the
         Bonds  is  $0.  The  amount  of  Capitalized  interest  to be  paid  in
         connection  with the  Facilities  paid  from  Proceeds  of the Bonds is
         $184,000.

                  (d) The  sum of (i)  the  Capital  Expenditures  described  in
         paragraph  (a) above plus (ii) the actual  Capital  Expenditures  to be
         incurred  as  described  in  paragraphs  (b) and  (c)  plus  (iii)  the
         aggregate  outstanding  amount of all $1 million or $10 million  exempt
         small issues set forth in Section 2.3(a) below plus (iv) the greater of
         the Issue  Price or the par  amount of the Bonds  shall not  exceed $10
         million.

                  (e) The information contained in subsections (a), (b), (c) and
         (d) above,  which has been  provided to the Issuer to enable the Issuer
         to elect to qualify the Bonds for the $10,000,000 exemption afforded by
         Section  144(a)(4) of the Code,  is true,  accurate and  complete.  The
         Issuer  hereby  elects  to issue the Bonds  pursuant  to the  exemption
         afforded by Section 144(a)(4) of the Code.

                  (f)  The  Facilities  will  not be  sold,  leased  or the  use
         otherwise  transferred  to a person other than the Borrower,  any other
         Principal  User  of  the  Facilities  or  any  Related  Person  thereto
         identified  as of the Date of  Issuance  during the  three-year  period
         ending three years after the Date of Issuance,  unless the Borrower has
         received an  approving  opinion of Bond Counsel to the effect that such
         sale, lease or transfer will not adversely affect the tax-exempt status
         of the Bonds.




                                       13

<PAGE>




         Section 2.3.  Prior Issues and $40 Million Limit.

         The  Borrower  hereby  represents  and  warrants for the benefit of the
Issuer, the Trustee and the registered owners of the Bonds that:

                  (a) The aggregate face amount of all Prior Issues  outstanding
         as of the Date of Issuance,  the proceeds of which were or will be used
         to any extent with respect to  facilities  located in the  incorporated
         municipality  (or  unincorporated  county) in which the  Facilities are
         located and the Principal  Users of such  facilities  are the Borrower,
         any  other  Principal  User of the  Facilities  or any  Related  Person
         thereto, is $0.

                  (b) The  aggregate  face  amount of all Prior  Issues  and all
         exempt facility  bonds,  qualified  redevelopment  bonds and industrial
         development  bonds as defined in the 1954 Code or the Code  outstanding
         as of the Date of Issuance,  the proceeds of which were used by or were
         allocated to the Borrower,  any other  Principal User of the Facilities
         or any Related Person thereto as a Test-Period Beneficiary is $0.

         Section 2.4. Federal Tax Return Information.  The Facilities have a SIC
Code Number of 3721.  The  Borrower  files its federal  income tax return at the
Internal Revenue Service Center in Fresno,  California.  The Borrower's  federal
employer identification number of the Borrower is 95-4257380.

         Section 2.5.  Composite Issues.

         The  Borrower  hereby  represents  and  warrants for the benefit of the
Issuer, the Trustee and the registered owners of the Bonds that:

                  (a) During the period beginning 15 days prior to the sale date
         of the Bonds and ending 15 days  thereafter  none of the Borrower,  any
         other  Principal  User of the  Facilities or any Related Person thereto
         sold,  guaranteed,  arranged,  participated in, assisted with, borrowed
         the proceeds of, or leased  facilities  financed by obligations  issued
         under  Section  103 of the 1954 Code or Section  103 of the Code by any
         state or local governmental unit or any constituted authority empowered
         to issue obligations by or on behalf of any state or local governmental
         unit.

                  (b) During the period  commencing  on the Date of Issuance and
         ending 15 days thereafter,  there will be no obligations sold or issued
         under  Section 103 of the 1954 Code or the Code that are  guaranteed by
         the Borrower, any other Principal User of the Facilities or any Related
         Person or which are issued with the assistance or participation  of, or
         by  arrangement  with,  the Borrower,  any other  Principal User of the
         Facilities or any Related  Person  without the written  opinion of Bond
         Counsel to the effect that the  issuance of such  obligations  will not
         adversely  affect their opinion as to the  exclusion  from gross income
         for federal income tax purposes of interest with respect to the Bonds.





                                       14

<PAGE>



                  (c) Other than the Borrower,  any other  Principal User of the
         Facilities or any Related Person,  no person (or Related Person to such
         other person) has (i) guaranteed,  arranged,  participated in, assisted
         with the  issuance  of, or paid any portion of the Costs of Issuance of
         the Bonds or (ii) provided any property or any franchise,  trademark or
         trade name (within the meaning of Section 1253 of the Code) which is to
         be used in connection with the Facilities.

         Section 2.6.  Prohibited  Uses.  The  Borrower  hereby  represents  and
warrants for the benefit of the Issuer, the Trustee and the registered owners of
the Bonds that no portion of the  Proceeds of the Bonds is being used to provide
a facility, a purpose of which is retail food and beverage services,  automobile
sales or service, or the provision of recreation or entertainment. No portion of
the  proceeds of the Bonds is being used to provide  any  private or  commercial
golf course,  country club, health club,  massage parlor,  tennis club,  skating
facility  (including  roller skating,  skateboarding  and ice skating),  racquet
sports facility  (including any handball,  squash or racquetball court), hot tub
facility,  suntan  facility,  racetrack,  skybox or other luxury box,  airplane,
store the  principal  business of which is the sale of alcoholic  beverages  for
consumption off premises, or facility used primarily for gambling. No portion of
the  Proceeds  of the Bonds is being  used  directly  or  indirectly  to provide
residential real property for single- or multi-family units.

         Section 2.7. No Composite  Project.  The Borrower hereby represents and
warrants for the benefit of the Issuer, the Trustee and the registered owners of
the  Bonds  that  the  Facilities  are  a  stand-alone   Manufacturing  Facility
unconnected  to any other  facility and do not share any portion of  substantial
common  facilities with any other building (other than the  Facilities),  (b) an
enclosed shopping mall or (c) a strip of offices, stores or warehouses.

         Section 2.8.  Acquisition  of Existing  Property.  The Borrower  hereby
represents  and  warrants  for the  benefit of the  Issuer,  the Trustee and the
registered owners of the Bonds that no portion of the Proceeds of the Bonds will
be used to pay the cost of acquisition of real property  (other than land or any
interest therein) the first use of which will not be pursuant to the acquisition
with the Proceeds of the Bonds.

         Section 2.9.  Land Acquisition Limit and No Acquisition of Farmland.

         The  Borrower  hereby  represents  and  warrants for the benefit of the
Issuer, the Trustee and the registered owners of the Bonds that:

                  (a) The amount of Proceeds of the Bonds expended for land will
         not exceed $0,  which is not greater than 25 percent of the Proceeds of
         the Bonds.

                  (b) No  portion  of the  Proceeds  of the  Bonds  will be used
         directly or  indirectly  for the  acquisition  of land or any  interest
         therein to be used for the purpose of farming.





                                       15

<PAGE>



         Section 2.10.  Representations by the Borrower for Purposes of IRS Form
8038.  Section 149(e) of the Code requires as a condition to  qualification  for
tax-exemption  that the Issuer provide to the Secretary of the Treasury  certain
information  with  respect  to the Bonds  and the  application  of the  proceeds
derived therefrom. The following  representations of the Borrower will be relied
upon by the Issuer and Bond Counsel in  satisfying  this  information  reporting
requirement. Accordingly, the Borrower hereby represents, covenants and warrants
to the best of their knowledge,  for the benefit of the Issuer, Bond Counsel and
the  registered  owners of the Bonds,  the truth and accuracy of (c) through (t)
below:

         (a) Issuer's employer identification number.................68-0304653

         (b) Number of 8038 reports previously filed by the Issuer this 
             calendar year....................................................5

         (c) Issue price of the Bonds................................$8,500,000

         (d) Proceeds used for Accrued Interest............................. $0

         (e) Costs of Issuance (including Underwriter's
             Discount).................................................$170,000

         (f) Reasonably required Reserve Fund Deposits.......................$0

         (g) Proceeds used for Credit Enhancement............................$0

         (h) Proceeds used to refund prior issue............................ $0

         (i) Nonrefunding Proceeds.................................. $8,330,000

         (j) Date of final maturity of the Bonds.................August 1, 2027

         (k) Interest Rate on the final maturity of
             the Bonds..................................................... VR%

         (l) Issue price of the final maturity of
             the Bonds...............................................$8,500,000

         (m) Issue price on the entire issue of the Bonds............$8,500,000

         (n) Stated redemption price at maturity of the final maturity of
             the Bonds...............................................$8,500,000

         (o) Stated redemption price at maturity of the entire issue of
             the Bonds...............................................$8,500,000





                                       16

<PAGE>



         (p) Weighted average maturity of the entire issue
             of the Bonds.........................................  29.98 years

         (q) Yield on the entire issue of the Bonds.........................VR%

         (r)  Net interest cost for the entire issue of
              the Bonds.....................................................VR%

         (s)  The Standard Industrial Classification Code(s) for the
              Facilities is ...............................................3721

         (t)  Type of Property financed by Nonrefunding Proceeds of the Bonds:

              Land..........................................................$0

              Buildings.............................................$7,164,000

              Equipment with recovery period of more than 5 years...$1,166,000

              Equipment with recovery period of 5 years or less.............$0

              Other ........................................................$0

                  Total.............................................$8,330,000


                                   ARTICLE III

                              USE OF BOND PROCEEDS

         Section  3.1.  Anticipated  Use of Proceeds.  The  Borrower  covenants,
represents  and  warrants  for the  benefit of the  Issuer,  the Trustee and the
registered  owners of the Bonds that the  Proceeds  of the Bonds will be used in
the manner set forth in Exhibit  A-2 hereto and that the  Proceeds  of the Bonds
will be invested in accordance with the Investment Instructions.

         Section 3.2.  Certification  as to Costs of the  Project.  The Borrower
hereby  certifies,  with respect to the amounts  shown in Exhibit A-1, that such
amounts  consist only of costs which are directly  related to and  necessary for
the financing of the Project.





                                       17

<PAGE>



                                   ARTICLE IV

                                    ARBITRAGE

         Section 4.1.  Arbitrage  Representations  and Elections.  In connection
with the issuance of the Bonds,  the Borrower hereby  represents,  certifies and
warrants as follows:

                  (a) The Borrower has entered into contracts with third parties
         for the  acquisition,  construction  and  equipping  of the  Facilities
         obligating an  expenditure  in excess of 5% of the Net Sale Proceeds of
         the  Bonds  and  the  Borrower  will  proceed  with  due  diligence  in
         completing  the  Facilities  and in allocating the Net Sale Proceeds of
         the Bonds to such Expenditures.

                  (b) The Borrower will use a reasonable,  Consistently  Applied
         Accounting  Method to  account  for  Gross  Proceeds,  Investments  and
         Expenditures  for the Bonds.  The  Borrower  shall  additionally  use a
         Consistently  Applied Accounting Method for allocating  Proceeds of the
         Bonds to Expenditures, subject to the Current Outlay of Cash rule.

                  (c) The  Borrower  shall not  commingle  Proceeds of the Bonds
         with any other funds.

                  (d) In connection  with the Bonds,  there has not been created
         or  established  and the  Borrower  does not expect  that there will be
         created or established,  any sinking fund, pledged fund or similar fund
         (other than as  specifically  identified in the  Indenture),  including
         without  limitation any  arrangement  under which money,  securities or
         obligations  are pledged  directly or indirectly to secure the Bonds or
         any  contract  securing  the  Bonds or any  arrangement  providing  for
         compensating or minimum  balances to be maintained by the Borrower with
         any  owner or credit  enhancer  of the  Bonds,  except  the  Collateral
         Account.

                  (e)  The  allocation  of  Net  Proceeds  of the  Bonds  to the
         reimbursement portion of the costs of the Facilities will be made as of
         and  completed on the Date of  Issuance.  The  declaration  of official
         intent required by ss. 1.150-2 of the  Regulations  with respect to Net
         Proceeds  of the Bonds  used to  reimburse  the  Borrower  for  certain
         Capital Expenditures made in connection with the Facilities is attached
         hereto as Exhibit D.

                  (f) The Borrower  reasonably  expects that 85% of the Net Sale
         Proceeds of the Bonds will be used to complete  the  Facilities  within
         three  years  of the  Date of  Issuance  and not  more  than 50% of the
         Proceeds of the Bonds will be invested in Nonpurpose Investments having
         a substantially  guaranteed  Yield for four years or more. The Borrower
         reasonably expects that the Net Sale Proceeds of the Bonds deposited to
         the  Project  Fund will be  expended in  accordance  with the  schedule
         contained in the No




                                       18

<PAGE>



         Arbitrage   Certificate   executed  and  delivered  by  the  Issuer  in
         connection with the issuance and delivery of the Bonds.

                  (g)  All  funds  and  accounts  established  pursuant  to  the
         Indenture  will be invested  pursuant to the No  Arbitrage  Certificate
         executed  by the  Issuer  on the Date of  Issuance  and the  Investment
         Instructions  delivered  to the Issuer and the  Borrower on the Date of
         Issuance.

                  (h) The  Borrower  will not enter into and will not direct the
         Trustee to engage in any Abusive  Arbitrage  Devises.  If the  Borrower
         directs the Trustee to invest any of the Gross Proceeds in certificates
         of deposit or pursuant to an investment  contract or a  certificate  of
         deposit,   the  Borrower   will  obtain  and  provide  to  the  Trustee
         certifications in the form attached hereto as Exhibit B.

                  (i) The Borrower hereby makes,  and the Issuer hereby accepts,
         the following  elections and other choices  pursuant to the Regulations
         with respect to the Bonds:

                           (i) The  Borrower  elects the bond year stated in the
                  definition of the Bond Year.

                          (ii)  The  Borrower  elects  to  avail  itself  of all
                  unrestricted yield investments  granted in the Regulations for
                  temporary period,  reasonably  required reserve fund and minor
                  portion investments.

                         (iii)  So  long  as  the   amount  on  deposit  in  the
                  Collateral Account exceeds a reasonably  required reserve fund
                  for the Bonds  pursuant  to  Section  148(d) of the Code,  the
                  Borrower  elects to treat the last day of the first  Bond Year
                  (July 31, 1998) as the initial  Installment  Computation  Date
                  and  the  Borrower  elects  to  treat  the  last  day of  each
                  subsequent  Bond Year as  subsequent  Installment  Computation
                  Dates.  Commencing  with the Bond Year following the Bond Year
                  in which the amount on deposit in the Collateral  Account does
                  not exceed a  reasonably  required  reserve fund for the Bonds
                  pursuant to Section 148(d) of the Code, the Borrower elects to
                  treat the last day of the fifth  Bond Year as the  Installment
                  Computation Date and the Borrower elects to treat the last day
                  of each  subsequent  fifth Bond Year  thereafter as subsequent
                  Installment  Computation  Dates.  The Borrower elects to treat
                  the last day of the  fifth  Bond  Year as the  initial  rebate
                  payment  date  and  the  last  day of  each  fifth  Bond  Year
                  thereafter as subsequent  rebate payment  dates.  The Borrower
                  may  change  or  adjust  such  dates  as   permitted   by  the
                  Regulations.

                          (iv) With respect to the  Universal  Cap, the Borrower
                  as of the Date of Issuance  does not expect that the operation
                  of  the   Universal   Cap  will  result  in  a  reduction   or
                  reallocation  of  Gross  Proceeds  of the  Bonds  and that the
                  Borrower (A) does not expect to pledge funds (other than those
                  described in the Indenture)




                                       19

<PAGE>



                  to the  payment  of the  Bonds;  (B)  expects  to expend  Sale
                  Proceeds of the Bonds within the expected  temporary  periods;
                  and (C) does not  expect  to retire  any of the Bonds  earlier
                  than shown in the Yield computations for the Bonds pursuant to
                  this Article IV.

         Section  4.2.  Arbitrage  Compliance.   The  Borrower  and  the  Issuer
acknowledge  that the  continued  exclusion  of interest on the Bonds from gross
income of the  recipients  thereof  for  purposes  of  federal  income  taxation
depends, in part, upon compliance with the arbitrage  limitations imposed by ss.
148 of the Code,  including  the rebate  requirement  described  in Section  4.3
below. The Borrower and the Issuer hereby agree and covenant that they shall not
permit at any time or times any of the  Proceeds  of the Bonds or other funds of
the  Borrower  to be used,  directly  or  indirectly,  to  acquire  any asset or
obligation,  the  acquisition  of which would  cause the Bonds to be  "arbitrage
bonds" for  purposes of ss. 148 of the Code.  The  Borrower  further  agrees and
covenants  that it  shall,  to the  extent  that any  Proceeds  of the Bonds are
invested in any Investment  which is not Investment  Securities,  do and perform
all acts and things  necessary in order to ensure that the  requirements  of ss.
148 of the Code and the  Regulations are met. To the extent that Proceeds of the
Bonds are invested in any  Investment  which is not Investment  Securities,  the
Borrower  shall  retain,  at its own  expense,  a Rebate  Analyst  to make  such
determinations  and calculations as may be necessary in order to ensure that the
Borrower  takes the actions  described  in Sections  4.2 through 4.6 hereof with
respect to the Investment of Gross Proceeds on deposit in the funds and accounts
established  under the Indenture.  If the Borrower fails to retain such a Rebate
Analyst,  the Issuer shall,  upon being notified in writing of such failure,  at
the Borrower's expense,  retain such a Rebate Analyst. The Borrower shall direct
the  Trustee  to make the  required  transfers  and  dispositions  described  in
Sections  4.2,  4.3 and 4.4 hereof,  and the  Trustee may rely upon  information
provided by the Borrower.

         Section 4.3.  Calculation of Rebate Amount.

                  (a)ss.  148(f) of the Code  requires the payment to the United
         States of the Rebate  Amount.  Except as  provided  below,  the Revenue
         Fund, the Project Fund, the Rebate Fund, the Collateral Account and all
         other funds or  accounts  treated as  containing  Gross  Proceeds,  are
         subject to this rebate requirement.

                  (b)In accordance with the requirements set out in the Code and
         pursuant to the  Indenture,  the Issuer has created the Rebate Fund, to
         be held by the Trustee, in its capacity as Trustee under the Indenture,
         and used as provided in this Section.

                            (i) On or before 25 days following each  Computation
                  Date, upon the Borrower's written  direction,  an amount shall
                  be  deposited to the Rebate Fund by the Trustee from source or
                  sources  stated in such  direction  so that the balance of the
                  Rebate Fund shall equal the aggregate Rebate Amount as of such
                  determination date.





                                       20

<PAGE>



                           (ii)  Amounts  deposited  in the Rebate Fund shall be
                  invested in accordance with the Investment Instructions by the
                  Trustee at the written direction of the Borrower.

                          (iii) All money at any time  deposited  in the  Rebate
                  Fund shall be held by the Trustee,  to the extent  required by
                  this Tax Regulatory  Agreement and the Indenture,  for payment
                  to the United  States of America  of the  Rebate  Amount.  All
                  amounts  deposited into or on deposit in the Rebate Fund shall
                  be governed by this Tax Regulatory Agreement.

                           (iv) For purposes of crediting  amounts to the Rebate
                  Fund or withdrawing  amounts from the Rebate Fund,  Nonpurpose
                  Investments  shall be valued in the  manner  provided  in this
                  Article.

                  (c) In order to meet the rebate  requirement  of ss. 148(f) of
         the Code,  the Borrower  agrees and  covenants to take,  or cause to be
         taken by the  Trustee or the Rebate  Analyst  described  in Section 4.6
         hereof, as appropriate, the following actions:

                            (i) For each Investment of amounts held with respect
                   to the Bonds in (A) the Revenue Fund,  (B) the Purchase Fund,
                   (C) the  Project  Fund and (D) the Rebate  Fund,  the Trustee
                   shall  record  the  purchase  date  of such  Investment,  its
                   purchase  price,  accrued  interest due on its purchase date,
                   its face amount, its coupon rate, its Yield, the frequency of
                   its interest payment, its disposition price, accrued interest
                   due on its  disposition  date and its  disposition  date. The
                   Rebate Analyst  retained by the Borrower shall  determine the
                   Fair Market Value for such  Investments and the Yield thereon
                   as may be  required  by the  Regulations.  The  Yield  for an
                   Investment  shall be calculated by using the method set forth
                   in the Regulations.

                           (ii) For each Computation Date specified in paragraph
                   (iii) below,  the Rebate  Analyst  shall compute the Yield on
                   the  Bonds  as  required  by  the  Regulations  based  on the
                   definition of issue price  contained in Section 148(h) of the
                   Code and the Regulations. The Bonds are a variable rate issue
                   and  accordingly  the yield on the Bonds cannot be determined
                   at this time.  The Yield on the Bonds shall be  calculated by
                   the Rebate  Analyst at such time in order to comply with this
                   Tax  Regulatory  Agreement and the  Regulations  based on the
                   definitions of issue price contained in Section 148(h) of the
                   Code using  payments  or  prepayments  of the  principal  of,
                   premium,  if any, and  interest on the Bonds  required by the
                   Regulations.  For purposes of this Tax  Regulatory  Agreement
                   the initial  offering price to the public (not including bond
                   houses  and  brokers,  or similar  persons  or  organizations
                   acting in the capacity of  underwriters  or  wholesalers)  at
                   which a  substantial  amount  of the  Bonds  were sold is the
                   Issue  Price.   Any   reasonable   amounts  paid  for  credit
                   enhancement have been and may




                                       21

<PAGE>



                   generally be treated as interest on the Bonds for purposes of
                   Yield computation to the extent permitted by the Regulations.

                          (iii)  Subject  to the  special  rules  set  forth  in
                   paragraphs  (iv) and (v)  below,  the  Rebate  Analyst  shall
                   determine the amount of earnings  received on all  Nonpurpose
                   Investments  described  in  paragraph  (i)  above,  for  each
                   Computation Date. In addition,  where Nonpurpose  Investments
                   are retained by the Trustee  after  retirement  of the Bonds,
                   any  unrealized  gains or losses as of the date of retirement
                   of the Bonds must be taken into  account in  calculating  the
                   earnings  on  such  Nonpurpose   Investments  to  the  extent
                   required by the Regulations.

                           (iv)  In  determining   the  Rebate  Amount  computed
                   pursuant to this  Section,  (A) all earnings on any bona fide
                   debt  service  fund  (including  the  Revenue  Fund  and  the
                   Purchase  Fund) shall not be taken into  account for any Bond
                   Year during which the gross earnings of such funds total less
                   than $100,000,  (B) the Universal Cap applicable to the Bonds
                   pursuant to ss. 1.148-  6(b)(2) of the  Regulations  shall be
                   taken into account,  (C) all of the Borrower's  elections and
                   other  choices set forth in Section 4.1 hereof shall be taken
                   into account and (D) all spending exceptions to rebate met by
                   the Borrower shall be taken into account.

                            (v) For each Computation Date specified in paragraph
                   (iii) above,  the Rebate  Analyst  shall  calculate  for each
                   Investment  described in paragraphs  (i) and (iii) above,  an
                   amount equal to the earnings  which would have been  received
                   on such  Investment at an interest rate equal to the Yield on
                   the Bonds as described in paragraph (ii) above. The method of
                   calculation shall follow that set forth in the Regulations.

                           (vi) For each  Computation  Date,  the Rebate Analyst
                   shall  determine  the  amount  of  earnings  received  on all
                   Investments held in the Rebate Fund for the Computation Date.
                   The method of calculation  shall follow that set forth in the
                   Regulations.

                          (vii) For each  Computation  Date,  the Rebate Analyst
                   shall calculate the Rebate Amount, by any appropriate  method
                   to be described  in the Code and  Regulations  applicable  or
                   which becomes  applicable to the Bonds. The  determination of
                   the Rebate Amount shall account for the amount (to be rounded
                   down to the nearest multiple of $100) equal to the sum of all
                   amounts determined in paragraph (iii), all amounts determined
                   in  paragraphs  (v) and (vi),  and less any amount  which has
                   previously been paid to the United States pursuant to Section
                   4.4 below. The Rebate Analyst shall notify the Trustee of the
                   Rebate Amount.





                                       22

<PAGE>



                         (viii)  If the  Rebate  Amount  exceeds  the  amount on
                   deposit in the Rebate Fund,  the Borrower  shall  immediately
                   pay such amount to the  Trustee  for deposit  into the Rebate
                   Fund.






                                       23

<PAGE>



         Section 4.4.  Payment to United States.

                  (a) Not later  than sixty (60) days after the last day of each
         fifth  Bond  Year (or such  longer  period as may be  permitted  by the
         Regulations),  the  Trustee  shall pay to the  United  States an amount
         that, when added to the Future Value as of the most recent  Computation
         Date of previous  rebate  payments made for the Bonds,  equals at least
         ninety percent (90%) of the Rebate Amount  required to be on deposit in
         the Rebate Fund as of such payment  date. No later than sixty (60) days
         after the Final  Computation  Date the Trustee  shall pay to the United
         States  an  amount  that,  when  added to the  Future  Value as of such
         Computation Date of previous rebate payments made for the Bonds, equals
         at least one hundred  percent  (100%) of the balance  remaining  in the
         Rebate Fund.

                  (b) The Trustee shall mail each payment of an  installment  to
         the Internal Revenue Service Center, Philadelphia,  Pennsylvania 19255.
         Each payment shall be accompanied by Internal Revenue Form 8038-T, and,
         if necessary,  a statement  summarizing the determination of the Rebate
         Amount.

                  (c) If on any Computation Date, the aggregate amount earned on
         Nonpurpose  Investments  in which the Gross  Proceeds  of the Bonds are
         invested  is less than the amount  that  would have been  earned if the
         obligations had been invested at a rate equal to the Yield on the Bonds
         as determined  in Section 4.3, such deficit may at the written  request
         of the  Borrower  be  withdrawn  from the  Rebate  Fund and paid to the
         Borrower or as the Borrower shall direct.  The Borrower may direct that
         any  overpayment  of rebate may be  recovered  from any  Rebate  Amount
         previously paid to the United States pursuant to ss.  1.148-3(i) of the
         Regulations.

                  (d) The  Borrower  shall also pay any  penalty or  interest on
         underpayments  of Rebate Amount not paid in a timely manner pursuant to
         this Tax Regulatory Agreement, the Code and the Regulations.

         Section 4.5. Recordkeeping.  In connection with the rebate requirement,
the Borrower and the Trustee shall maintain the following records:

                  (a) The Borrower and the Trustee shall record all amounts paid
         to the United States pursuant to Section 4.4 hereof.  The Trustee shall
         furnish to the Issuer and the Borrower  copies of any  materials  filed
         with the Internal Revenue Service  pertaining thereto and shall provide
         the Issuer and the Borrower with all records in its possession that the
         Issuer,  the Borrower or the Rebate Analyst may request relating to the
         calculation of any Rebate Amount.

                  (b) The Borrower and the Trustee  shall retain  records of the
         rebate  calculations  until six years after the  retirement of the last
         obligation of the Bonds.






                                       24

<PAGE>



         Section 4.6.  Rebate Analyst.

                  (a) To the extent  required to comply with the  provisions  of
         Section 4.2 hereof, the Borrower shall appoint a Rebate Analyst and any
         successor  Rebate  Analyst for the Bonds  reasonably  acceptable to the
         Issuer, subject to the conditions set forth in this Section. The Rebate
         Analyst and each successor  Rebate Analyst shall signify its acceptance
         of the duties  imposed  upon it hereunder  by a written  instrument  of
         acceptance  delivered to the Trustee, the Issuer and the Borrower under
         which such Rebate  Analyst will agree to discharge its duties  pursuant
         to this Tax Regulatory  Agreement in a manner  consistent  with prudent
         industry practice.

                  (b)  The  Rebate  Analyst  may  at  any  time  resign  and  be
         discharged of the duties and obligations created by this Tax Regulatory
         Agreement by giving notice to the Trustee, the Issuer and the Borrower.
         The Rebate  Analyst may be removed at any time by an instrument  signed
         by the Issuer and the Borrower and filed with the Issuer,  the Borrower
         and  the  Trustee.   The  Borrower  and  the  Issuer  shall,  upon  the
         resignation  or  removal  of the Rebate  Analyst,  appoint a  successor
         Rebate Analyst.

                  (c) Each successor Rebate Analyst  appointed  pursuant to this
         Section  shall be  either  a firm of  independent  accountants  or Bond
         Counsel or another entity  experienced in calculating  rebate  payments
         required by ss. 148(f) of the Code.

                  (d) In order to provide for the  administration of the matters
         pertaining to arbitrage rebate  calculations  set forth herein,  and in
         the Investment Instructions and No Arbitrage Certificate,  the Trustee,
         the  Borrower  and the Issuer may  provide  for the  employment  of the
         Rebate Analyst on or prior to July 31, 2002. The Trustee and the Issuer
         may rely  conclusively  upon and  shall  be  fully  protected  from all
         liability in relying upon the opinions,  calculations,  determinations,
         directions and advice of the Rebate  Analyst.  The charges and fees for
         such Rebate Analyst shall be paid by the Borrower upon  presentation of
         an invoice for services rendered in connection therewith.

                                    ARTICLE V

                              COMPLIANCE WITH CODE

         In order to ensure that  interest on the Bonds is  excludable  from the
gross income of the recipients  thereof for purposes of federal income taxation,
the Borrower hereby represents and covenants as follows:

                  (a) The Average  Maturity of the Bonds does not exceed 120% of
         the Average  Economic Life of the Facilities  within the meaning of ss.
         147(b) of the Code as set forth in Exhibit C hereto.





                                       25

<PAGE>



                  (b) The  Bonds  are not  and  shall  not  become  directly  or
         indirectly "federally  guaranteed." Unless otherwise excepted under ss.
         149(b) of the Code, the Bonds will be considered "federally guaranteed"
         if (i) the payment of principal  and interest with respect to the Bonds
         is guaranteed (in whole or in part) by the United States (or any agency
         or  instrumentality  thereof),  (ii)  five (5)  percent  or more of the
         Proceeds of the Bonds is (A) to be used in making loans, the payment of
         principal or interest  with respect to which are to be  guaranteed  (in
         whole  or  in  part)  by  the   United   States   (or  any   agency  or
         instrumentality thereof) or (B) to be invested (directly or indirectly)
         in  federally  insured  deposits  or  accounts  or (iii) the payment of
         principal or interest on the Bonds is otherwise  indirectly  guaranteed
         (in  whole  or in  part)  by  the  United  States  (or  any  agency  or
         instrumentality thereof).

                  (c) The Borrower  will  provide to the Issuer all  information
         necessary  to enable the Issuer to complete and file  Internal  Revenue
         Forms 8038 and 8038-T pursuant to ss. 149(e) of the Code.

                  (d) As required by ss.  147(f) of the Code,  the Bonds and the
         Project  were the subject of a public  hearing  held on June 18,  1997,
         which was preceded by reasonable public notice.

                  (e) The  Borrower  will  comply  with,  and make  all  filings
         required by, all effective rules, rulings or regulations promulgated by
         the  Department  of the  Treasury  or IRS with  respect to  obligations
         described in ss.ss. 103 and 144 of the Code, such as the Bonds.

                  (f) The Borrower  agrees to rebate all amounts  required to be
         rebated to the United  States of America  pursuant to ss. 148(f) of the
         Code. The Borrower  agrees to provide any  instructions  to the Trustee
         that are  necessary to satisfy the  requirements  of ss.  148(f) of the
         Code.  The Borrower will not deposit or instruct the Trustee to deposit
         amounts in the Rebate Fund in excess of the amounts reasonably expected
         to be needed to make the  payments to the United  States as required by
         ss. 148(f) of the Code.

                  (g) The Sale Proceeds of the Bonds and any Investment Proceeds
         will be expended for the purposes set forth in the Agreement and in the
         Indenture  and no amount of such  Proceeds of the Bonds in excess of 2%
         of the Sale  Proceeds of the Bonds will be expended to pay the costs of
         issuing the Bonds within the meaning of ss. 147(g) of the Code.

                  (h) The Issuer shall not sell any other tax-exempt obligations
         within 15 days of the sale date of the Bonds  pursuant to the same plan
         of  financing  with the Bonds and payable from  substantially  the same
         source of funds, determined without regard to qualified guaranties from
         unrelated parties and used to pay the Bonds.

                  (i) The Bonds were  approved  by the  Governor of the State of
         California following the public hearings referred to in (d) above.




                                       26

<PAGE>




                                   ARTICLE VI

                        TERM OF TAX REGULATORY AGREEMENT

         This  Tax  Regulatory  Agreement  shall be  effective  from the Date of
Issuance  through the date that the last Bond is  redeemed,  paid or deemed paid
pursuant to the terms of the Indenture,  except that the requirements of Section
4.5 shall survive until six years after the  retirement of the last  obligations
of the Bonds.

                                   ARTICLE VII

                                   AMENDMENTS

         Notwithstanding  any other provision hereof,  any provision of this Tax
Regulatory Agreement may be deleted or modified at any time at the option of the
Borrower,  with the consent of the Issuer,  if the  Borrower has provided to the
Trustee and the Issuer an opinion,  in form and  substance  satisfactory  to the
Trustee and the Issuer,  of Bond Counsel that such deletion or modification will
not  adversely  affect the  exclusion  of  interest  on the Bonds from the gross
income of the recipients thereof for purposes of federal income taxation.

                                  ARTICLE VIII

                           EVENTS OF DEFAULT, REMEDIES

         Section  8.1.  Events of Default.  The failure of any party to this Tax
Regulatory  Agreement to perform any of its required  duties under any provision
hereof shall constitute an Event of Default under this Tax Regulatory  Agreement
and under the Indenture.

         Section 8.2. Remedies for an Event of Default. Upon an occurrence of an
Event of Default  under  Section  8.1  hereof,  the Issuer or the Trustee may in
their discretion,  proceed to protect and enforce their rights and the rights of
the  registered  owners of the Bonds by pursuing any available  remedy under the
Indenture or by pursuing any other available remedy,  including, but not limited
to, a suit at law or in equity.




                                       27

<PAGE>



         IN WITNESS  WHEREOF,  the Issuer,  the  Borrower  and the Trustee  have
caused this Tax Regulatory  Agreement to be executed in their  respective  names
and by their proper officers  thereunto duly  authorized,  all as of the day and
year first written above.

                               CALIFORNIA ECONOMIC DEVELOPMENT
                               FINANCING AUTHORITY


                               By___________________________________________
                                   Chair

Attest:


By_____________________________________
   Secretary


                                ADVANCED AERODYNAMICS AND
                                STRUCTURES, INC.


                                By__________________________________________
                                     Authorized Signatory




                                FIRST TRUST OF CALIFORNIA,
                                NATIONAL ASSOCIATION, AS TRUSTEE


                                By__________________________________________
                                    Authorized Officer







<PAGE>



                                   EXHIBIT A-1


                            SOURCES AND USES OF FUNDS


         1. Amount  received  from the sale of the Bonds  (exclusive  of accrued
interest) is as follows:

         Face amount of the Bonds....................................$8,500,000
         Less:  Underwriters' discount..................................$-0-
         Total amount received from the sale of the Bonds............$8,500,000

         2. Proceeds of the Bonds totaling $8,330,000,  representing 100% of the
Net Sale  Proceeds of the Bonds after  deduction  of the amounts  described in 3
below will be deposited to the Project Fund.

         3.  $170,000 of the Bond  proceeds  will be  deposited  in the Costs of
Issuance Fund to pay a portion of the Costs of Issuance of the Bonds.


                       Estimated Use of Substantially all
                             of the Proceeds of the
                                      Bonds

(1)      Issue price of Bonds........................................$8,500,000
(2)      Substantially All Factor.......................................... .95
(3)                        Total.....................................$8,075,000
                                                                      =========
(4)      Amount paid for qualified Project Costs*
            (including interest during construction, if any)........ $8,330,000

         Note:  All  investment  earnings,  if any, on the Bond proceeds will be
used for qualified  Project Costs (including  interest during  construction,  if
any).



*Qualified Project Costs:

         Building                                                    $7,164,000
         Equipment                                                    1,166,000





                                       A-1

<PAGE>



                                   EXHIBIT A-2


                  Property Financed or Refinanced by the Bonds



1.       Construction and installation of a manufacturing facility consisting of
         approximately 200,000 square feet - $7,164,000.

2.       Acquisition and installation of manufacturing equipment - $1,166,000.


Total             $8,330,000.


























                                       A-2

<PAGE>



                                   EXHIBIT B-1


                    FORM OF DEALER CERTIFICATION OF BONA FIDE
                      BID PRICE OF A CERTIFICATE OF DEPOSIT


         I, [Name],  [Position]  of [Entity  Providing the  Certification]  (the
"Dealer") HEREBY CERTIFY that the Dealer maintains an active secondary market in
certificates of deposit of a type similar to that [sold/purchased] by the Dealer
on behalf of Advanced Aerodynamics and Structures,  Inc., a Delaware corporation
(the  "Borrower"),  and that the price at which the  certificate  of deposit was
[sold  to/purchased  from] the Borrower is the bona fide bid price quoted by the
Dealer  in  an  active  secondary  market  maintained  by  the  Dealer  in  such
certificates of deposit.

         IN  WITNESS  WHEREOF,  I have  hereunto  set my hand this  _____ day of
_______________, 19__.



                                   By_________________________________________
                                   Title:_____________________________________


                                      B-1-1

<PAGE>



                                   EXHIBIT B-2


                       FORM OF DEALER CERTIFICATION FOR A
                        CERTIFICATE OF DEPOSIT FOR WHICH
                        NO ACTIVE SECONDARY MARKET EXISTS


         I, [Name], [Position], of [Entity Providing Certificate] (the "Dealer")
HEREBY  CERTIFY  that there is no active  secondary  market in  certificates  of
deposit of the type [sold/  purchased]  on behalf of Advanced  Aerodynamics  and
Structures,  Inc., a Delaware corporation [to/from] the Dealer (the "Certificate
of Deposit");  that the yield on the Certificate of Deposit is as high or higher
than the yield on comparable  obligations  traded on an active secondary market,
and as high or higher than the yield available on reasonably  comparable  direct
obligations offered by the United States Treasury;  that the Dealer maintains an
active  secondary  market in comparable  certificates of deposit,  and that this
Certification is based on actual trades adjusted to reflect the size and term of
the  Certificate  of Deposit  and the  stability  and  reputation  of the person
issuing it.

         IN  WITNESS  WHEREOF,  I have  hereunto  set my  hand  this  _____  day
_________ of 19__.


                                           By__________________________________
                                           Title:______________________________





                                      B-2-1

<PAGE>



                                   EXHIBIT B-3


                         FORM OF PROVIDER CERTIFICATION
                          FOR A CERTIFICATE OF DEPOSIT


     I, [Name], [Position], of [Entity Providing the Certificate of Deposit]
(the  "Provider")  HEREBY  CERTIFY that the yield on the  Certificate of Deposit
entered  into on [DATE] is not less than the  highest  yield  that the  Provider
publishes or posts for comparable  certificates of deposit offered to the public
and that the  yield on the  Certificate  of  Deposit  is not less than the yield
available on  reasonably  comparable  direct  obligations  offered by the United
States Treasury.

         IN  WITNESS  WHEREOF,  I have  hereunto  set my hand  this  ____ day of
_________________, 19__.


                                        By_____________________________________
                                        Title:_________________________________








                                      B-3-1

<PAGE>



                                   EXHIBIT B-4


                         FORM OF PROVIDER CERTIFICATION
                           FOR AN INVESTMENT CONTRACT


         I, [Name],  [Position],  of [Entity Providing Investment Contract] (the
"Provider")  HEREBY CERTIFY in connection with the Investment  Contract  between
[NAME] and the Provider dated as of [DATE] (the "Investment  Contract") that the
yield on the  Investment  Contract  is at least  equal to the yield  offered  on
reasonably  comparable  Investment  contracts offered to other persons,  if any,
from a source of funds other than gross proceeds of an issue of tax-exempt bonds
and that the amount of administrative  costs that are reasonably  expected to be
paid by the Provider to third parties in connection with the Investment Contract
is $ . For  purposes of this  certification,  administrative  costs  include all
brokerage  or  selling  commissions  paid by the  Provider  to third  parties in
connection with the Investment  Contract,  legal or accounting fees,  investment
advisory fees,  recordkeeping,  safekeeping,  custody and other similar costs or
expenses.

         IN  WITNESS  WHEREOF,  I have  hereunto  set my  hand  this  _____  day
_____________ of 19__.

 
                                    By_________________________________________
                                    Title:_____________________________________






                                      B-4-1

<PAGE>



                                   EXHIBIT B-5


                     FORM OF BORROWER'S CERTIFICATION FOR A
                   CERTIFICATE OF DEPOSIT INVOLVING THREE BIDS


         I, [[Name],  [Position], of Advanced Aerodynamics and Structures, Inc.,
a Delaware  corporation (the "Borrower"),  HEREBY CERTIFY in connection with the
certificates of deposit of the type purchased by the Borrower that such purchase
was made pursuant to the Indenture of Trust, dated as of August 1, 1997, between
California  Economic  Development  Financing  Authority  and the First  Trust of
California,  National  Association after receipt of at least three bids and that
the  certificates  of  deposit  were  purchased  from the  highest  bidder in an
arm's-length transaction without regard to yield.

         IN  WITNESS  WHEREOF,  I have  hereunto  set my hand this  _____ day of
_______________, 19__.

 
                                ADVANCED AERODYNAMICS AND
                                STRUCTURES, INC.



                                By
                                Title:






                                      B-5-1

<PAGE>



                                   EXHIBIT B-6


                     FORM OF BORROWER'S CERTIFICATION FOR AN
                    INVESTMENT CONTRACT INVOLVING THREE BIDS


         I, [[Name],  [Position], of Advanced Aerodynamics and Structures, Inc.,
a Delaware  corporation (the "Borrower"),  HEREBY CERTIFY in connection with the
Investment  contract  between  the  Borrower  and [Entity  Providing  Investment
Contract] (the "Provider") dated as of
                  , (the "Investment  Contract") that (i) at least three bids on
the  Investment  Contract  were  received  from persons  other than those with a
material financial  advantage in the California Economic  Development  Financing
Authority Variable Rate Demand Industrial Development Revenue Bonds, Series 1997
(Advanced  Aerodynamics  and Structures,  Inc.  Project),  (ii) the yield on the
Investment  Contract  purchased is at least equal to the yield offered under the
highest  bid  received  from an  uninterested  party,  (iii)  the  price  of the
Investment  Contract  takes into account as a significant  factor the Borrower's
expected  drawdown  for the funds to be  invested  (other  than  float  funds or
reasonably  required  reserve  or  replacement  funds)  and (iv) any  collateral
security requirements for the Investment Contract are reasonable.

         IN WITNESS  WHEREOF,  I have  hereunto  set my hand this _______ day of
_________________, 19__.


                                ADVANCED AERODYNAMICS AND
                                STRUCTURES, INC.



                                By
                                Title:






                                      B-6-1

<PAGE>



                                    EXHIBIT C


         Useful Life of the Property Financed or Refinanced by the Bonds




                            Cost                 Useful Life*

Land                $           0       x        n/a
Building                7,164,000       x        41                $293,724,000
Equipment               1,166,000       x        10                  12,826,000

                       $8,330,000                                  $306,550,000

 less:  cost of land            0

                       $8,330,000


Average life of Project = $306,550,000 / 8,330,000 = 36.80 years.

Useful life of Project for purposes of Section 147 (b) of the Code =

                  36.80 years x 1.20 = 44.16 years

Average life of Bonds = 29.98 years


         The  information  contained  in this  schedule,  attached as an exhibit
hereto,  setting forth the respective cost, economic life, ADR midpoint life, if
any, under Revenue  Procedure  87-56,  1987-42 I.R.B.  4, and Revenue  Procedure
83-35,  1983-2 C.B.  745, as  supplemented  and amended  from time to time,  and
guideline  life, if any,  under  Revenue  Procedure  62-21,  1962-2 C.B. 118, as
supplemented  and  amended  from time to time,  of each asset of the  Facilities
financed with the Proceeds of the Bonds, is true, accurate and complete.

* Includes time from date of issuance until property is placed in service.




                                       C-1

<PAGE>


                                    EXHIBIT D


                         Declaration of Official Intent


                                 [See Attached]




                                       D-1