<PAGE>   1
                                                                     EXHIBIT 4.6

                               INDENTURE OF TRUST

                          DATED AS OF FEBRUARY 1, 1999

                                     BETWEEN

                           KELLSTROM INDUSTRIES, INC.

                                       AND

                          NORWEST BANK MINNESOTA, N.A.

                                   AS TRUSTEE

                                   $6,670,000
                           KELLSTROM INDUSTRIES, INC.
                       TAXABLE VARIABLE RATE DEMAND NOTES,
                                   SERIES 1999


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                                TABLE OF CONTENTS
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SECTION                                                                                                       PAGE
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ARTICLE I DEFINITIONS AND RULES OF CONSTRUCTION.............................................................   3
         Section 1.01.   Definitions........................................................................   3
         Section 1.02.   Rules of Construction..............................................................   9

ARTICLE II THE NOTES........................................................................................  10
         Section 2.01.   Issuance of Notes; Form; Dating....................................................  10
         Section 2.02.   Interest on the Notes..............................................................  12
         Section 2.03.   Execution and Authentication.......................................................  13
         Section 2.04.   Note Register......................................................................  14
         Section 2.05.   Registration and Exchange of Notes; Persons Treated as Owners; Book-Entry
                         System.............................................................................  14
         Section 2.06.   Mutilated, Lost, Stolen, Destroyed or Undelivered Notes............................  17
         Section 2.07.   Cancellation of Notes..............................................................  18
         Section 2.08.   Temporary Notes....................................................................  18

ARTICLE III REDEMPTION, PURCHASE AND REMARKETING OF NOTES...................................................  19
         Section 3.01.   Redemption of Notes................................................................  19
         Section 3.02.   Redemption Date....................................................................  20
         Section 3.03.   Selection of Notes To Be Redeemed..................................................  20
         Section 3.04.   Notice to Trustee; Notice of Redemption............................................  21
         Section 3.05.   Payment of Notes Called for Redemption.............................................  22
         Section 3.06.   Notes Redeemed in Part.............................................................  22
         Section 3.07.   Purchase of Notes..................................................................  22
         Section 3.08.   Remarketing of Purchased Notes.....................................................  24

ARTICLE IV PAYMENT OF NOTES AND CREATION OF FUNDS...........................................................  28
         Section 4.01.   Payment of Notes...................................................................  28
         Section 4.02.   Creation of Note Fund..............................................................  28
         Section 4.03.   Payments Into Note Fund............................................................  28
         Section 4.04.   Use of Moneys in Note Fund.........................................................  29
         Section 4.05.   Custody of Note Fund...............................................................  29
         Section 4.06.   Creation of Construction Fund......................................................  29
         Section 4.07.   Deposits into Construction Fund; Cost of the Project...............................  29
         Section 4.08.   Payments from Construction Fund....................................................  30
         Section 4.09.   Disposition of Balance in Construction Fund........................................  32
         Section 4.10.   Trustee's Reliance on Bank.........................................................  32
         Section 4.11.   Moneys To Be Held in Trust.........................................................  32
         Section 4.12.   Payment to Borrower From Note Fund or Construction Fund............................  33
         Section 4.13.   Investment of Moneys...............................................................  33

ARTICLE V LETTER OF CREDIT..................................................................................  36

         Section 5.01.   Requirements for Letter of Credit..................................................  36
         Section 5.02.   Draws on Letter of Credit; Extensions..............................................  36
         Section 5.03.   Substitute Letter of Credit........................................................  37
         Section 5.04.   Enforcement of the Letter of Credit................................................  38

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ARTICLE VI GENERAL COVENANTS, REPRESENTATIONS AND WARRANTIES................................................  39
         Section 6.01.   Payment of Notes...................................................................  39
         Section 6.02.   Covenants, Representations and Warranties of Borrower..............................  39
         Section 6.03.   Notice of Litigation...............................................................  40
         Section 6.04.   Financing and Continuation Statements..............................................  40
         Section 6.05.   Further Assurances.................................................................  40

ARTICLE VII DISCHARGE OF INDENTURE..........................................................................  41
         Section 7.01.   Notes Deemed Paid; Discharge of Indenture..........................................  41
         Section 7.02.   Application of Trust Money.........................................................  42

ARTICLE VIII DEFAULTS AND REMEDIES..........................................................................  43
         Section 8.01.   Events of Default..................................................................  43
         Section 8.02.   Acceleration and Duty to Draw on Letter of Credit..................................  43
         Section 8.03.   Disposition of Amounts Drawn on Letter of Credit;
                         Assignment of Rights to Contest....................................................  44
         Section 8.04.   Other Remedies; Rights of Noteholders..............................................  44
         Section 8.05.   Right of Noteholders to Direct Proceedings.........................................  45
         Section 8.06.   Application of Moneys..............................................................  45
         Section 8.07.   Remedies Vested in Trustee.........................................................  47
         Section 8.08.   Limitations on Suits...............................................................  47
         Section 8.09.   Termination of Proceedings.........................................................  48
         Section 8.10.   Waivers of Events of Default.......................................................  48
         Section 8.11.   Notice of Defaults; Opportunity of Borrower to Cure Defaults.......................  48
         Section 8.12.   Unconditional Right to Receive Principal and Interest..............................  49
         Section 8.13.   Notes Outstanding..................................................................  49
         Section 8.14.   Letter of Credit Bank Deemed Owner.................................................  49
         Section 8.15.   Subrogation Rights of the Bank.....................................................  50

ARTICLE IX TRUSTEE, FISCAL AGENT, PLACEMENT AGENT AND REMARKETING AGENT ....................................  51
         Section 9.01.   Duties of Trustee..................................................................  51
         Section 9.02.   Rights of Trustee..................................................................  52
         Section 9.03.   Individual Rights of Trustee,  Etc.................................................  53
         Section 9.04.   Trustee's Disclaimer...............................................................  53
         Section 9.05.   Notice of Defaults.................................................................  53
         Section 9.06.   Compensation and Indemnification of Trustee........................................  54
         Section 9.07.   Eligibility of Trustee.............................................................  54
         Section 9.08.   Replacement of Trustee.............................................................  55
         Section 9.09.   Fiscal Agent.......................................................................  55
         Section 9.10.   Qualifications of Fiscal Agent; Resignation; Removal...............................  56
         Section 9.11.   Duties of Placement Agent..........................................................  57
         Section 9.12.   [Reserved].........................................................................  57
         Section 9.13.   Duties of Remarketing Agent........................................................  57
         Section 9.14.   Eligibility of Remarketing Agent; Replacement......................................  57
         Section 9.15.   Successor Trustee, Remarketing Agent or Fiscal Agent by Merger.....................  58
         Section 9.16.   Appointment of Co-Trustee..........................................................  59
         Section 9.17.   Several Capacities.................................................................  59

ARTICLE X AMENDMENTS OF AND SUPPLEMENTS TO INDENTURE........................................................  60
         Section 10.01.  Without Consent of Noteholders.....................................................  60
         Section 10.02.  With Consent of Noteholders........................................................  61
         Section 10.03.  Effect of Consents.................................................................  61
         Section 10.04.  Notation on or Exchange of Notes...................................................  61

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         Section 10.05.  Signing by Trustee of Amendments and Supplements...................................  61
         Section 10.06.  Bank, Fiscal Agent and Remarketing Agent Consents Required.........................  62
         Section 10.07.  Notice to Noteholders..............................................................  62
         Section 10.08.  Opinion of Counsel Required........................................................  62

ARTICLE XI MISCELLANEOUS ...................................................................................  63
         Section 11.01.  Notices............................................................................  63
         Section 11.02.  Noteholders' Consents..............................................................  65
         Section 11.03.  Notices to Rating Agency...........................................................  65
         Section 11.04.  Limitation of Rights...............................................................  66
         Section 11.05.  Severability.......................................................................  66
         Section 11.06.  Payments Due on Non-Business Days..................................................  66
         Section 11.07.  Governing Law......................................................................  66
         Section 11.08.  Counterparts.......................................................................  66
         Section 11.09.  References to the Bank.............................................................  66

EXHIBIT A         FORM OF NOTE
EXHIBIT B         NOTICE OF MANDATORY PURCHASE
EXHIBIT C         REQUEST FOR DISBURSEMENT AND CERTIFICATION



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                               INDENTURE OF TRUST

         THIS INDENTURE OF TRUST dated as of February 1, 1999 between KELLSTROM
INDUSTRIES, INC., a Delaware corporation (the "Borrower"), and NORWEST BANK
MINNESOTA, N.A., a national banking association organized and existing under the
laws of the United States of America and having its principal office in
Minneapolis, Minnesota (the "Trustee"), as trustee and as Fiscal Agent
(hereinafter defined) for the Notes (hereinafter defined);

                              W I T N E S S E T H:

         WHEREAS, the Borrower has determined to issue and sell its interest
bearing taxable variable rate demand notes in substantially the form of EXHIBIT
A attached hereto (individually, the "Note" and collectively, the "Notes") in
the aggregate principal amount of Six Million Six Hundred Seventy Thousand
Dollars ($6,670,000) and to use the proceeds from such issuance and sale (i) to
finance, in whole or in part, the cost of acquiring, constructing and equipping
a headquarters facility for the Borrower in Sunrise, Florida (the "Project"),
including reimbursing the Borrower for any of such costs paid by it prior to the
issuance of the Notes, and (ii) to pay the costs of issuance of the Notes and
other related costs;

         WHEREAS, the payment when due of the principal of, interest on and
Purchase Price (hereinafter defined) of the Notes will be supported, to the
extent provided therein, by the Letter of Credit (hereinafter defined) issued in
favor of the Trustee by the Bank (hereinafter defined) in an initial stated
amount equal to the principal amount of Notes issued hereunder plus 35 days'
interest on such amount computed at the Maximum Rate (hereinafter defined), on
the basis of actual number of days elapsed in a year of 365 days, all pursuant
to and as more fully set forth in the Reimbursement Agreement (hereinafter
defined); and

         WHEREAS, the Borrower has requested that the Trustee act (i) hereunder
for the benefit of the Noteholders (hereinafter defined) to perform certain
services in connection with the issuance, authentication and delivery of, the
registration, transfer and exchange of, and the payment of principal, interest
and purchase price with respect to the Notes issued hereunder and (ii) as the
beneficiary of the Letter of Credit for the benefit of the Noteholders, and the
Trustee is willing to accept such appointments and perform such services on the
terms and subject to the conditions set forth herein; and

         WHEREAS, the Borrower has requested that NationsBank, N.A. act as its
agent hereunder to perform certain services in connection with the placement of
the Notes upon issuance thereof, and NationsBank, N.A. is willing to accept such
appointment and perform such services on the terms and subject to the conditions
set forth herein and in the Placement Agreement (hereinafter defined); and

         WHEREAS, the Borrower has requested that NationsBank, N.A. act as its
agent hereunder to perform certain services in connection with the remarketing
of Notes tendered for purchase and the determination of the interest rates with
respect to the Notes, and NationsBank, 


<PAGE>   6

N.A. is willing to accept such appointment and perform such services on the
terms and subject to the conditions set forth herein and in the Remarketing
Agreement (hereinafter defined); and

         WHEREAS, the Borrower and the Trustee desire to set forth certain of
the terms and conditions with respect to the issuance of the Notes;

         NOW, THEREFORE, KNOW ALL BY THESE PRESENTS, THIS INDENTURE WITNESSETH:

         That the Borrower, in consideration of the premises and of the
acceptance by the Trustee of the trusts hereby created, and of the purchase and
acceptance of the Notes by the holders thereof, and of the sum of TEN DOLLARS
($10.00), lawful money of the United States of America, to it paid by the
Trustee, at or before the execution and delivery of these presents, and for
other good and valuable consideration the receipt and sufficiency of which are
hereby acknowledged, in order to secure (i) the payment of the principal and
purchase price of, and the interest on, the Notes and all other amounts payable
by the Borrower pursuant to the terms of the Notes and/or this Indenture
according to their tenor and effect and to ensure the performance and observance
by the Borrower of all the agreements expressed or implied herein and in the
Notes, and (ii) the payment of all amounts due and owing the Bank under and
pursuant to the Reimbursement Agreement, has given, granted, assigned and
pledged and does by these presents give, grant, assign and pledge to the Trustee
and to its successors in the trusts hereby created, and to them and their
assigns forever:

                                 GRANTING CLAUSE

         To secure first, the payment of the Notes, and second, the payment and
performance of the Borrower's obligations to the Bank under the Reimbursement
Agreement, the Borrower (i) assigns and pledges to the Trustee and the Bank and
(ii) grants to the Trustee a first priority security interest in, and to the
Bank a second priority security interest in, all right, title and interest of
the Borrower in and to:

                                       I.

         This Indenture, including any right to delivery of the Letter of
Credit, any right to bring actions and proceedings under this Indenture or for
the enforcement of this Indenture and to do all things that the Borrower is
entitled to do under this Indenture; and

                                       II.

         All moneys and securities held from time to time by the Trustee under
this Indenture, first, for the equal and proportionate benefit of all holders of
the Notes without priority or distinction as to lien or otherwise of any Notes
over any other Notes, and second, for the benefit of the Bank to secure the
payment and performance of the Borrower's obligations to the Bank under the
Reimbursement Agreement, except as otherwise provided in this Indenture; and



                                      -2-

<PAGE>   7


                                      III.

         Any and all real or personal property of every nature now and from time
to time hereafter by delivery or by writing of any kind conveyed, mortgaged,
pledged, assigned or transferred, as and for additional security hereunder by
the Borrower or by anyone on its behalf or with its written consent to the
Trustee which is hereby authorized to receive any and all such property at any
and all times and to hold and apply the same subject to the terms hereof (items
I, II and III being referred to collectively herein as the "Trust Estate").

                                    ARTICLE I

                      DEFINITIONS AND RULES OF CONSTRUCTION

         Section 1.01. DEFINITIONS. For all purposes of this Indenture, unless
the context or use clearly indicates another or different meaning or intent, the
following terms shall have the following meanings:

         "AUTHORIZED DENOMINATIONS" means, with respect to all Notes, $100,000
and any integral multiple of $5,000 in excess thereof.

         "AVAILABLE MONEYS" means moneys which are (a) continuously on deposit
with the Trustee in trust for the benefit of the Noteholders in a separate and
segregated account in which only Available Moneys are held and which are (b)
proceeds of (i) the Notes received contemporaneously with and directly from the
issuance and sale of the Notes, (ii) payments made by the Borrower or any
Guarantor if at the time of the deposit of such payments and for a period of at
least 366 days thereafter no Bankruptcy Filing has occurred, (iii) a draw by the
Trustee on the Letter of Credit, or (iv) income derived from the investment of
the foregoing.

         "BANK" means the issuer of the Letter of Credit, initially NationsBank,
N.A., and upon the issuance and delivery of a Substitute Letter of Credit, shall
mean the issuer of such Substitute Letter of Credit.

         "BANK NOTES" means any Notes purchased with proceeds from a draw under
the Letter of Credit and held pursuant to the terms of the Reimbursement
Agreement and this Indenture. In addition, Notes that are registered in the name
of the Borrower and pledged to the Bank shall constitute Bank Notes.

         "BANKRUPTCY COUNSEL" means any counsel nationally recognized in
bankruptcy matters which is independent of the Borrower and is reasonably
acceptable to the Bank and the Remarketing Agent.

         "BANKRUPTCY FILING" means the filing of a petition by or against the
Borrower or any Guarantor as a debtor under the United States Bankruptcy Code or
similar bankruptcy or insolvency act. If the petition has been dismissed and the
dismissal is final and not subject to appeal at the relevant time, the filing
shall not be considered to have occurred.


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         "BENEFICIAL OWNER" is defined in Section 2.05(c).

         "BORROWER" means Kellstrom Industries, Inc., a Delaware corporation, or
any successor or successors to the Borrower's obligations under this Indenture.

         "BORROWER NOTES" means any Notes (other than Bank Notes) of which the
Borrower, or any affiliate or subsidiary thereof, is the registered holder or
Beneficial Owner.

         "BORROWER REPRESENTATIVE" means a person at the time designated to act
on behalf of the Borrower by a written instrument furnished to the Trustee and
the Fiscal Agent containing the specimen signature of such person and signed on
behalf of the Borrower by its President or any Vice President, or, in the case
of a Person other than a corporation, the person or persons having comparable
positions or roles. The certificate may designate an alternate or alternates.

         "BUSINESS DAY" means any day other than (a) a Saturday or Sunday, (b) a
day on which commercial banks in New York, New York or the city or cities in
which the corporate trust office of the Trustee or the Fiscal Agent, the primary
office of the Remarketing Agent or the paying office of the Bank are located are
authorized or required by law or executive order to close, or (c) a day on which
the New York Stock Exchange or DTC is closed. For purposes of this definition,
"paying office of the Bank" means the Bank office responsible for making
payments under any Letter of Credit.

         "CEDE & CO." means Cede & Co., the nominee of DTC or any successor
nominee of DTC with respect to the Notes.

         "CONSTRUCTION FUND" means the fund by that name created by Section
4.06.

         "COST OF THE PROJECT" means the costs of the Project, as described in
Section 4.07.

         "DTC" means The Depository Trust Company, a limited purpose company
organized under the laws of the State of New York, and its successors and
assigns.

         "DTC PARTICIPANT" or "DTC PARTICIPANTS" means securities brokers and
dealers, banks, trust companies and clearing corporations which have access, as
participants or otherwise (directly or indirectly) to the DTC system.

         "EVENT OF DEFAULT" is defined in Section 8.01.

         "FISCAL AGENT" means the agent appointed from time to time pursuant to
Section 9.09.

         "GUARANTOR" means any guarantor of any of the payment obligations of
the Borrower under any of the Transaction Documents.

         "INDENTURE" means this Indenture of Trust between the Borrower and the
Trustee, as amended or supplemented from time to time in accordance with its
terms.



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<PAGE>   9

         "INTEREST PAYMENT DATE" means the first day of each month.

         "INVESTMENT SECURITIES" means those securities enumerated in Section
4.13 as permitted investments for the proceeds of the Notes.

         "LAND" means the 11.75 acre parcel of real estate in Sunrise, Florida
on which the Project is located.

         "LETTER OF CREDIT" means an irrevocable direct-pay letter of credit
having the characteristics of a "credit" or "letter of credit" set forth in
Section 5-103 of the Uniform Commercial Code of the State of Florida (or in the
case of a Substitute Letter of Credit, Section 5-103 of the Uniform Commercial
Code of the state under whose laws such Substitute Letter of Credit is governed)
except that a letter of credit (a) may not be revocable and (b) may only be
issued by (i) a national bank, (ii) any banking institution organized under the
laws of any state, territory or the District of Columbia, the business of which
is substantially confined to banking and is supervised by the state or
territorial banking commission or similar officials or (iii) a branch or agency
of a foreign bank, provided that the nature and extent of federal and/or state
regulation and the supervision of the particular branch or agency is
substantially equivalent to that applicable to federal or state chartered
domestic banks doing business in the same jurisdiction and which meets the
requirements of Section 5.01. Initially, the term "Letter of Credit" shall mean
the irrevocable, direct-pay letter of credit issued by the Bank to the Trustee
in accordance with Section 5.01, including any permitted supplements or
amendments thereto and any renewals or extensions thereof, and, upon the
expiration or termination of the Letter of Credit and the issuance and delivery
of a Substitute Letter of Credit meeting the requirements set forth in this
paragraph and in Section 5.01 hereof, "Letter of Credit" shall mean such
Substitute Letter of Credit.

         "LETTER OF CREDIT DOCUMENTS" means the Reimbursement Agreement, the
Letter of Credit and all other documents evidencing, securing or otherwise
relating to the Obligations (including the mortgage evidencing the Bank's lien
on the Project and the guaranty of the Guarantors) collectively or individually,
as appropriate, each as amended, substituted, replaced, modified and extended
from time to time.

         "MANDATORY REPURCHASE DATE" means, with respect to any Notes, the date
on which such Notes are required to be purchased pursuant to Section 3.07(a).

         "MAXIMUM RATE" means the lesser of (a) the highest interest rate which
may be borne by the Notes under State law or (b) twelve percent (12%) per year.

         "NOTE" or "NOTES" means the notes issued pursuant to this Indenture in
substantially the form of EXHIBIT A attached hereto.

         "NOTE DOCUMENTS" means this Indenture, the Notes, the Placement
Agreement and the Remarketing Agreement, collectively or individually, as
appropriate, each as amended, modified and extended from time to time.



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<PAGE>   10

         "NOTE FUND" means the fund by that name created by Section 4.02.

         "NOTICE OF MANDATORY REPURCHASE" means that notice required to be
prepared by the Trustee and given by the Fiscal Agent pursuant to Section 3.07,
the form of which is attached hereto as EXHIBIT B.

         "OBLIGATIONS" means, at any time, the sum of (i) the maximum amount
which is, or at any time thereafter may become, available to be drawn under the
Letter of Credit, assuming compliance with all requirements for drawings
thereunder, PLUS (ii) the aggregate amount of all drawings under the Letter of
Credit honored by the Bank but not theretofore reimbursed, PLUS (iii) any
interest, fees or other obligations or amounts owing by the Borrower to the Bank
under the Reimbursement Agreement, the other Letter of Credit Documents, or the
other Transaction Documents.

         "OPINION OF COUNSEL" means a written opinion of counsel who is
reasonably acceptable to the Trustee, the Remarketing Agent and the Bank. The
counsel may be an employee of or counsel to the Trustee, the Remarketing Agent
or the Borrower.

         "OPTIONAL TENDER DATE" is defined in Section 3.07(b)(i).

         "OUTSTANDING" when used with reference to Notes, or "Notes Outstanding"
means all Notes which have been authenticated and delivered by the Fiscal Agent
under this Indenture, except the following:

                  (a) Notes canceled or purchased by or delivered to the Fiscal
         Agent for cancellation pursuant to the provisions of this Indenture.
         Except as otherwise provided in Section 3.08, Notes purchased by the
         Borrower pursuant to optional tender or mandatory repurchase under
         Section 3.07 (including Bank Notes) shall continue to be Outstanding
         until the holder of such Notes directs the Fiscal Agent to cancel them;

                  (b) Notes that have become due (at maturity or on redemption,
         acceleration or otherwise) and for the payment, including interest
         accrued to the due date, of which sufficient moneys are held by the
         Fiscal Agent; and

                  (c) Notes in lieu of which others have been authenticated
         under Section 2.05 (relating to registration and exchange of Notes) or
         Section 2.06 (relating to mutilated, lost, stolen, destroyed or
         undelivered Notes).

         "OWNER", "OWNER", "NOTEHOLDER", "NOTEHOLDER", "HOLDER", "HOLDER" or
words of similar import mean: (a) in the event that the book-entry system of
evidence and transfer of ownership in the Notes is employed pursuant to Section
2.05(c), Cede & Co., as nominee for DTC, or its nominee, and (b) in all other
cases, the registered owner or owners of any Note fully registered as shown on
the register maintained by the Fiscal Agent.

         "PERSON" means (a) any individual, (b) any corporation, partnership,
joint venture, association, joint-stock company, business trust or
unincorporated organization, limited liability



                                      -6-
<PAGE>   11

company, or grouping of any such entities, in each case formed or organized
under the laws of the United States of America, any state thereof or the
District of Columbia or (c) the United States of America or any state thereof,
or any political subdivision of either thereof, or any agency, authority or
other instrumentality of any of the foregoing.

         "PLACEMENT AGENT" means NationsBank, N.A., the placement agent under
the Placement Agreement with respect to the initial placement of the Notes.

         "PLACEMENT AGREEMENT" means the Placement Agreement, dated as of
February 1, 1999, by and between the Borrower and the Placement Agent.

         "PRIVATE PLACEMENT MEMORANDUM" means the Private Placement Memorandum
dated February 16, 1999 relating to the sale of the Notes by the Placement Agent
and the Remarketing Agent.

         "PROJECT" means a headquarters facility for the Borrower located on the
Land.

         "RATING AGENCY" means, if the Notes are rated, Moody's Investors
Service, Inc., if such agency's ratings are in effect with respect to the Notes,
Standard & Poor's, a division of The McGraw-Hill Companies, Inc., if such
agency's ratings are in effect with respect to the Notes, and Fitch IBCA, Inc.
if such agency's ratings are in effect with respect to the Notes, and their
respective successors and assigns. If any such entity ceases to act as a
securities rating agency, the Borrower may, with the approval of the Remarketing
Agent and the Bank, appoint any nationally recognized securities rating agency
as a replacement.

         "RECORD DATE" means the Fiscal Agent's close of business on the
Business Day next preceding each Interest Payment Date.

         "REIMBURSEMENT AGREEMENT" means the agreement between the Borrower and
the Bank pursuant to which the Letter of Credit is issued by the Bank for the
account of the Borrower and delivered to the Trustee, and the Borrower
acknowledges its obligation to reimburse the Bank for payments made under the
Letter of Credit, and includes any and all modifications, alterations,
amendments and supplements thereto. Initially, the Reimbursement Agreement means
the Letter of Credit Reimbursement Agreement, dated as of February 1, 1999,
between the Borrower and the Bank.

         "REMARKETING AGENT" means initially NationsBank, N.A., and any
successor agent or agents appointed from time to time pursuant to Section 9.14.

         "REMARKETING AGREEMENT" means (a) initially the Remarketing and
Interest Services Agreement between the Remarketing Agent and the Borrower,
dated as of February 1, 1999, and any and all modifications, alterations,
amendments and supplements thereto and (b) any agreement between the Borrower
and any successor remarketing agent appointed pursuant to Section 9.14.

         "REMARKETING PROCEEDS" is defined in Section 3.08(b).



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<PAGE>   12

         "REQUEST FOR DISBURSEMENT" means any requisition submitted in
accordance with Section 4.08 and substantially in the form of EXHIBIT C attached
hereto.

         "RESPONSIBLE OFFICER" means, when used with respect to the Trustee, any
agent or officer within the Corporate Trust Department (or any successor group
of the Trustee) including any vice president, assistant vice president,
assistant secretary or any other officer or assistant officer of the Trustee
customarily performing functions similar to those performed by the persons who
at the time shall be such agents or officers, respectively, or to whom any
corporate trust matter is referred at the Trustee's address set forth in Section
11.01 because of his knowledge of and familiarity with the particular subject.

         "STATE" means the State of Florida.

         "SUBSTITUTE LETTER OF CREDIT" is defined in Section 5.03.

         "TRANSACTION DOCUMENTS" means, collectively, the Note Documents and the
Letter of Credit Documents.

         "TRUSTEE" means the entity identified as such in the heading of this
Indenture and such entity's successors under this Indenture, and any separate or
co-trustee at the time serving as such under this Indenture.

         "U.S. GOVERNMENT OBLIGATIONS" means (a) direct obligations of the
United States for which its full faith and credit are pledged for the full and
timely payment thereof, (b) obligations of a person controlled or supervised by
and acting as an agency or instrumentality of the United States, the payment of
which is unconditionally guaranteed as a full faith and credit obligation of the
United States for the full and timely payment thereof or (c) securities or
receipts evidencing ownership interests in obligations or specified portions
(such as principal or interest) of obligations described in (a) or (b).

         "WEEKLY RATE" means with respect to the Notes the variable interest
rate on the Notes established weekly in accordance with Section 2.02.

         "WEEKLY RATE PERIOD" means each period during which a Weekly Rate is in
effect.

         Section 1.02. RULES OF CONSTRUCTION. Unless the context otherwise
requires,

         (a) an accounting term not otherwise defined has the meaning assigned
to it in accordance with generally accepted accounting principles applied on a
consistent basis;

         (b) references to Articles and Sections are to the Articles and
Sections of this Indenture;

         (c) terms defined elsewhere in this Indenture shall have the meanings
ascribed to them therein;



                                      -8-
<PAGE>   13

         (d) words of the masculine gender shall be deemed and construed to
include correlative words of the feminine and neuter genders;

         (e) headings used in this Indenture are for convenience of reference
only and shall not define or limit the provisions hereof;

         (f) each reference herein or in the Notes to a percentage of Notes
required for notices, consents or for any other reason shall be deemed to refer
to Notes then Outstanding; and

         (g) all references herein to time shall be Eastern Time unless
otherwise expressly stated.


                               [End of Article I]








                                      -9-
<PAGE>   14




                                   ARTICLE II

                                    THE NOTES

         Section 2.01. ISSUANCE OF NOTES; FORM; DATING.

         (a) AUTHORIZATION. The Borrower hereby authorizes and creates under
this Indenture an issue of Notes, to be designated "Kellstrom Industries, Inc.
Taxable Variable Rate Demand Notes, Series 1999." The total principal amount of
Notes that may be issued and outstanding hereunder shall be $6,670,000, except
as provided in Section 2.06 with respect to replacement of mutilated, lost,
stolen, destroyed or undelivered Notes. The Notes shall be issuable only as
fully registered notes without coupons in Authorized Denominations only, and in
substantially the form of EXHIBIT A to this Indenture, with appropriate
variations, omissions, insertions, notations, legends or endorsements required
by law or usage or permitted or required by this Indenture. The Notes may be in
printed or typewritten form. No Notes may be issued under the provisions of this
Indenture except in accordance with this Article.

         (b) DETAILS OF NOTES. Each Note shall be dated the date of its original
authentication and delivery hereunder and all Notes shall mature, subject to
prior redemption, on February 1, 2029. Interest on the Notes shall be computed
from the Interest Payment Date next preceding the date of authentication
thereof, unless such authentication date (i) is prior to the first Interest
Payment Date following the initial delivery of the Notes, in which case interest
shall be computed from such initial delivery date, (ii) is after a Record Date
and before the subsequent Interest Payment Date, in which case interest shall be
computed from the subsequent Interest Payment Date, or (iii) is an Interest
Payment Date, in which case interest shall be computed from such authentication
date; provided, that if interest on the Notes is in default, Notes shall bear
interest from the last date to which interest has been paid. The principal of
and redemption or purchase price of the Notes shall be payable in lawful
currency of the United States of America at the principal corporate trust office
of the Fiscal Agent (except as otherwise provided in Section 2.05) upon
presentation and surrender of the Notes. Payments of interest on the Notes will
be mailed to the persons in whose names the Notes are registered on the register
of the Fiscal Agent at the close of business on the Record Date next preceding
each Interest Payment Date; provided that, any Holder of a Note or Notes in an
aggregate principal amount of not less than $500,000 may, by prior written
instructions filed with the Fiscal Agent not later than three (3) Business Days
prior to the Interest Payment Date (which instructions shall remain in effect
until revoked by subsequent written instructions), instruct that interest
payments for any period be made by wire transfer to an account in the
continental United States or other means acceptable to the Fiscal Agent. Notes
will be numbered from 1 upward as determined by the Fiscal Agent and will
contain the designation "R."






                                      -10-
<PAGE>   15

         (c) ISSUANCE AND DELIVERY. Upon the execution and delivery of this
Indenture and receipt by the Trustee of the following items, the Fiscal Agent
shall authenticate and deliver Notes in an aggregate principal amount of
$6,670,000 in accordance with the authorization described in (iv) below:

                  (i) a copy, certified by the Secretary or the Assistant
         Secretary of the Borrower, of the resolution of the Borrower
         authorizing (a) the execution and delivery of the Transaction Documents
         to which the Borrower is a party; (b) the execution, delivery and
         issuance of the Notes in the aggregate principal amount of $6,670,000;
         and (c) the use by the Placement Agent and the Remarketing Agent of the
         Private Placement Memorandum in connection with the initial placement
         and remarketing, respectively, of the Notes;

                  (ii) original executed counterparts of this Indenture, the
         Reimbursement Agreement, the Placement Agreement and the Remarketing
         Agreement;

                  (iii) the original, executed Letter of Credit from the Bank;

                  (iv) an authorization and request from the Borrower to the
         Fiscal Agent to authenticate and deliver $6,670,000 in aggregate
         principal amount of the Notes in specified Authorized Denominations to
         the initial purchaser(s) or DTC or its nominee on behalf of such
         purchaser(s) upon receipt by the Trustee on behalf of the Borrower of
         the sum specified therein;

                  (v) one or more Opinions of Counsel to the Borrower, addressed
         to the Trustee, the Fiscal Agent, the Bank, the Placement Agent and the
         Remarketing Agent, stating among other things, that (A) the Borrower is
         duly organized, validly existing and in good standing under the laws of
         the state of its creation and is authorized to transact business in the
         State, (B) the issuance of the Notes and the execution and delivery of
         the other Transaction Documents to which the Borrower is a party have
         been duly authorized by the Borrower, (C) the Notes and the other
         Transaction Documents to which the Borrower is a party have been duly
         executed and delivered by the Borrower, and (D) the Notes and the other
         Transaction Documents to which the Borrower is a party are the valid,
         legal and binding obligations of the Borrower enforceable in accordance
         with their terms subject to customary equity and bankruptcy exceptions,
         and otherwise in form and substance satisfactory to the Trustee, the
         Fiscal Agent, the Bank, the Placement Agent and the Remarketing Agent;

                  (vi) an Opinion of Counsel to the Bank addressed to the
         Trustee, the Fiscal Agent, the Borrower, the Placement Agent and the
         Remarketing Agent, or upon which the Trustee, the Fiscal Agent, the
         Borrower, the Placement Agent and the Remarketing Agent may rely,
         stating, among other things, that the Letter of Credit has been duly
         authorized, executed and delivered by the Bank, constitutes the valid
         and binding obligation of the Bank and is enforceable in accordance
         with its terms subject to customary equity and bankruptcy exceptions
         and otherwise in form and substance satisfactory to the Trustee, the
         Fiscal Agent, the Placement Agent and the Remarketing Agent;

                  (vii) an Opinion of Counsel to the Placement Agent and the
         Remarketing Agent addressed to the Placement Agent, the Remarketing
         Agent, the Bank, the Trustee, the Fiscal Agent and the Borrower,
         stating, among other things, that (A) no registration of the 



                                      -11-
<PAGE>   16

         Notes is required under the Securities Act of 1933, as amended, and no
         qualification of this Indenture is required under the Trust Indenture
         Act of 1939, as amended, and (B) the Note Documents have been duly
         authorized, executed and delivered by, and are the valid legal and
         binding obligations of, the Placement Agent and the Remarketing Agent,
         to the extent parties thereto, enforceable in accordance with their
         terms subject to customary equity and bankruptcy exceptions and
         otherwise in form and substance satisfactory to the Placement Agent,
         the Remarketing Agent, the Bank, the Trustee, the Fiscal Agent and the
         Borrower; and

                  (viii) such other documentation, certificates and assurances
         as may be reasonably required by the Bank, the Trustee, the Fiscal
         Agent, the Placement Agent or the Remarketing Agent or their respective
         counsel.

         (d) NOTE PROCEEDS. All proceeds from the sale of the Notes issued
hereunder (net of the placement fee and other costs of issuance payable by the
Borrower in connection therewith that may be retained by the Placement Agent
from the purchase price otherwise paid to the Trustee on behalf of the Borrower
to purchase the Notes on their date of issuance) shall be deposited in the
Construction Fund on their date of issuance.

         Section 2.02. INTEREST ON THE NOTES. The Notes shall bear interest as
provided in Section 2.01(b) until paid in full. Interest accrued on the Notes
shall be paid on each Interest Payment Date, commencing on March 1, 1999. The
Notes shall bear interest at the rate determined by the Placement Agent on or
before their date of issuance as necessary to sell all of the Notes at par and
to apply from their date of issuance until and including the next succeeding
Wednesday and thereafter at the Weekly Rate determined by the Remarketing Agent
in the manner set forth below; provided that no Weekly Rate shall exceed the
Maximum Rate. The amount of interest payable on any Interest Payment Date (a)
shall be computed on the basis of the actual number of days elapsed over a year
of 365 or 366 days, whichever may be applicable, and (b) shall be the amount of
interest accrued thereon from the preceding Interest Payment Date (or such other
date as described in Section 2.01(b)) to, but excluding, the Interest Payment
Date on which interest is being paid.

         During each Weekly Rate Period, the Notes shall bear interest at the
Weekly Rate, determined by the Remarketing Agent initially no later than the
first day of each Weekly Rate Period and thereafter no later than Wednesday (or
the next succeeding Business Day, if such Wednesday is not a Business Day) of
each week during such Weekly Rate Period. The Weekly Rate shall be the minimum
rate of interest which the Remarketing Agent determines, in its sole discretion
based upon market conditions, would be necessary to sell the Notes on such date
of determination in a secondary market sale at the principal amount thereof,
plus, if such sale would not be on an Interest Payment Date, accrued interest.

         If the Remarketing Agent has not determined a Weekly Rate for any week,
the Weekly Rate shall be the same as the Weekly Rate for the immediately
preceding week. If for any reason, the Weekly Rate cannot otherwise be
determined for any week as hereinbefore provided, the Weekly Rate for such week
shall be a rate per annum equal to 100% of the rate published in the then most
recent edition of THE BOND BUYER for 30 day prime taxable commercial paper or,
if 



                                      -12-
<PAGE>   17

THE BOND BUYER no longer publishes such information, such other publication or
provider of such information as the Remarketing Agent may select.

         The first Weekly Rate determined for each Weekly Rate Period shall
apply to the period commencing on the first day of such Weekly Rate Period and
ending on the next succeeding Wednesday (or the next succeeding Business Day, if
such Wednesday is not a Business Day). Thereafter, each Weekly Rate shall apply
to the period commencing on Thursday (or if the date of determination is not a
Wednesday, on the next following Business Day) and ending on the next succeeding
date of determination.

         Promptly following the determination of each Weekly Rate, the
Remarketing Agent shall give written notice, which may be delivered by telecopy,
to the Borrower, the Trustee and the Fiscal Agent. Upon the request of any
Noteholder, the Remarketing Agent shall notify any such Noteholder of each
change in the Weekly Rate by first class mail. The failure to give any such
notice shall not affect the change in the Weekly Rate.

         The Remarketing Agent shall also notify the Trustee (who shall notify
the Fiscal Agent) and, upon request, the Borrower, in each case in writing
(which may be in telecopy form) or by telephone, promptly confirmed in writing,
by 4:00 p.m. on the last Wednesday of each month (or if such Wednesday is not a
Business Day, on the next succeeding Business Day) of the Weekly Rate set for
each week in such month, and principal amount of Notes bearing interest at the
Weekly Rate during each week.

         Using the Weekly Rates supplied by the Remarketing Agent, the Fiscal
Agent shall calculate the amount of interest payable on the Notes and notify the
Trustee, the Borrower and the Bank of such amount and the Trustee will verify
such calculation.

         The establishment of the Weekly Rates as provided in this Indenture
shall be conclusive and binding on the Borrower, the Bank, the Trustee, the
Fiscal Agent, the Remarketing Agent and the Noteholders, absent manifest error.
The calculation and verification of interest payable on the Notes as provided in
this Indenture shall be conclusive and binding on the Borrower, the Bank, the
Trustee, the Remarketing Agent, the Fiscal Agent and the Noteholders.

         Section 2.03. EXECUTION AND AUTHENTICATION. The Notes shall be signed
on behalf of the Borrower with the manual or facsimile signature of the
President or any Vice President and attested by the manual or facsimile
signature of the Borrower's Secretary or Assistant Secretary, and the corporate
seal of the Borrower shall be impressed or imprinted on the Notes by facsimile
or otherwise. If any officer of the Borrower whose signature is on a Note no
longer holds that office at the time the Fiscal Agent authenticates the Note,
the Note shall nevertheless be valid. Also, if a person signing a Note is the
proper officer on the actual date of execution, the Note shall be valid even if
that person is not the proper officer on the nominal date of action.

         A Note shall not be valid for any purpose under this Indenture unless
and until the Fiscal Agent manually signs the certificate of authentication on
the Note, and such signature shall be conclusive evidence that the Note has been
authenticated under this Indenture.






                                      -13-
<PAGE>   18

         Section 2.04. NOTE REGISTER. The Fiscal Agent shall keep a register of
Notes and of their transfer and exchange. Notes not held under a book-entry
system must be presented at the principal corporate trust office of the Fiscal
Agent for registration, transfer and exchange, and Notes may be presented at
that office for payment. Notes not held under a book-entry system and optionally
tendered by their holders must be delivered as specified in Section 3.07(b).

         Section 2.05. REGISTRATION AND EXCHANGE OF NOTES; PERSONS TREATED AS
OWNERS; BOOK-ENTRY SYSTEM.

         (a) Notes may be transferred only on the register maintained by the
Fiscal Agent. Upon surrender for transfer of any Note to the Fiscal Agent, duly
endorsed for transfer or accompanied by an assignment duly executed by the
holder or the holder's attorney duly authorized in writing and in either case,
with an appropriate guarantee of signature conforming to the requirements of
EXHIBIT A hereto, the Fiscal Agent shall authenticate a new Note or Notes in an
equal aggregate principal amount and registered in the name of the transferee.

         Notes may be exchanged for an equal aggregate principal amount of Notes
of different Authorized Denominations. The Fiscal Agent shall authenticate and
deliver Notes that the Noteholder making the exchange is entitled to receive,
bearing numbers not then Outstanding.

         Except in connection with the optional tender of Notes pursuant to
Section 3.07(b) and the delivery thereof pursuant to Section 3.08, the Fiscal
Agent shall not be required to transfer or exchange any Note during the period
beginning 15 days before the mailing of notice calling the Note or any portion
of the Note for redemption and ending on the redemption date. Notes subject to
redemption or mandatory repurchase may be transferred or exchanged only if the
Fiscal Agent provides the new holder thereof with a copy of the notice of
redemption or mandatory repurchase, as the case may be.

         The holder of a Note as shown on the register of the Fiscal Agent shall
be the absolute owner of the Note for all purposes, and payment of principal,
interest or purchase price shall be made only to or upon the written order of
such holder or the holder's legal representative; provided that interest shall
be paid to the Person shown on the register as a holder of a Note on the
applicable Record Date.

         (b) The Fiscal Agent may require the payment by a Noteholder requesting
exchange or registration of transfer of any tax or other governmental charge
required to be paid in respect of the exchange or registration of transfer but
shall not impose any other charge.

         (c) The Fiscal Agent or the Remarketing Agent may make appropriate
arrangements for the Notes to be issued or held by means of a book-entry system
administered by DTC with no physical distribution of Notes made to the public.
The Notes will initially be issued by means of a book-entry system administered
by DTC with no physical distribution of Notes made to the public. References in
this Section 2.05(c) to a Note or the Notes shall be construed to mean the Note
or the Notes which are held under the book-entry system. In such event, one Note
of each maturity shall be issued to DTC and immobilized in its custody. A
book-entry system shall be employed, evidencing ownership of the Notes in
Authorized Denominations, with transfers of 



                                      -14-
<PAGE>   19

beneficial ownership effected on the records of DTC and the DTC Participants
pursuant to rules and procedures established by DTC.

         Each DTC Participant shall be credited in the records of DTC with the
amount of such DTC Participant's interest in the Notes. Beneficial ownership
interests in the Notes may be purchased by or through DTC Participants. The
holders of these beneficial ownership interests are hereinafter referred to as
the "Beneficial Owners". The Beneficial Owners shall not receive Notes
representing their beneficial ownership interests. The ownership interests of
each Beneficial Owner shall be recorded through the records of the DTC
Participant from which such Beneficial Owner purchased its Notes. Transfers of
ownership interests in the Notes shall be accomplished by book entries made by
DTC and, in turn, by DTC Participants acting on behalf of Beneficial Owners.

         SO LONG AS CEDE & CO., AS NOMINEE FOR DTC, IS THE REGISTERED OWNER OF
THE NOTES, THE TRUSTEE AND THE FISCAL AGENT SHALL TREAT CEDE & CO. AS THE ONLY
HOLDER OF THE NOTES FOR ALL PURPOSES UNDER THIS INDENTURE, INCLUDING RECEIPT OF
ALL PRINCIPAL AND PURCHASE PRICE OF AND INTEREST ON THE NOTES, RECEIPT OF
NOTICES (EXCEPT AS SET FORTH IN SECTION 3.04), VOTING AND REQUESTING OR
DIRECTING THE TRUSTEE OR FISCAL AGENT TO TAKE OR NOT TO TAKE, OR CONSENTING TO,
CERTAIN ACTIONS UNDER THIS INDENTURE.

         Payments of principal, interest and purchase price with respect to the
Notes, so long as DTC or its nominee, Cede & Co., is the only owner of the
Notes, shall be paid by the Fiscal Agent directly to DTC or its nominee, Cede &
Co. by wire transfer as provided in the Letter of Representations dated February
1, 1999, from the Borrower to DTC (the "Letter of Representations"). DTC shall
remit such payments to DTC Participants, and such payments thereafter shall be
paid by DTC Participants to the Beneficial Owners. The Borrower, the Fiscal
Agent, the Remarketing Agent and the Trustee shall not be responsible or liable
for payment by DTC or DTC Participants, for sending transaction statements or
for maintaining, supervising or reviewing records maintained by DTC or DTC
Participants.

         In the event that (i) DTC determines not to continue to act as
securities depository for the Notes or (ii) the Borrower or the Remarketing
Agent determines that the continuation of the book-entry system of evidence and
transfer of ownership of the Notes would adversely affect their interests or the
interests of the Beneficial Owners of the Notes, the Borrower shall, at its own
discretion or at the request of the Remarketing Agent, discontinue the
book-entry system with DTC. If the Remarketing Agent fails to identify another
qualified securities depository to replace DTC, the Remarketing Agent shall
cause the Fiscal Agent to authenticate and deliver replacement Notes in the form
of fully registered Notes to each Beneficial Owner.

         THE BORROWER, THE BANK, THE REMARKETING AGENT, THE FISCAL AGENT AND THE
TRUSTEE SHALL NOT HAVE ANY RESPONSIBILITY OR OBLIGATIONS TO ANY DTC PARTICIPANT
OR ANY BENEFICIAL OWNER WITH RESPECT TO (I) THE NOTES; (II) THE ACCURACY OF ANY
RECORDS MAINTAINED BY DTC OR ANY DTC PARTICIPANT; (III) THE PAYMENT BY DTC OR
ANY DTC 



                                      -15-
<PAGE>   20

PARTICIPANT OF ANY AMOUNT DUE TO ANY BENEFICIAL OWNER IN RESPECT OF THE
PRINCIPAL OF AND INTEREST ON THE NOTES; (IV) THE DELIVERY OR TIMELINESS OF
DELIVERY BY DTC OR ANY DTC PARTICIPANT OF ANY NOTICE DUE TO ANY BENEFICIAL OWNER
WHICH IS REQUIRED OR PERMITTED UNDER THE TERMS OF THIS INDENTURE TO BE GIVEN TO
BENEFICIAL OWNERS; (V) THE SELECTION OF BENEFICIAL OWNERS TO RECEIVE PAYMENTS IN
THE EVENT OF ANY PARTIAL REDEMPTION OF THE NOTES; OR (VI) ANY CONSENT GIVEN OR
OTHER ACTION TAKEN BY DTC, OR ITS NOMINEE, CEDE & CO., AS OWNER.

         (d) The Fiscal Agent or the Remarketing Agent shall not be limited to
utilizing a book-entry system maintained by DTC but may enter into a custody
agreement with any bank or trust company serving as custodian (which may be the
Fiscal Agent serving in the capacity of custodian) to provide for a book-entry
or similar method for the registration and registration of transfer of all or a
portion of the Notes.

         SO LONG AS A BOOK-ENTRY SYSTEM OF EVIDENCE OF TRANSFER OF OWNERSHIP OF
ALL THE NOTES IS MAINTAINED IN ACCORDANCE HEREWITH, THE PROVISIONS OF THIS
INDENTURE RELATING TO THE DELIVERY OF PHYSICAL NOTE CERTIFICATES SHALL BE DEEMED
TO GIVE FULL EFFECT TO SUCH BOOK-ENTRY SYSTEM.

         In the event the Notes are held under a book-entry system, the
securities depository shall provide the Trustee, upon request of the Trustee,
the names, addresses and principal amount of the holders of beneficial interests
in the Notes. In the event DTC only provides the Trustee with the names of the
DTC Participants, the Trustee shall use all reasonable efforts to obtain the
names, addresses and principal amount of the holders of beneficial interests in
the Notes from DTC or the DTC Participants. Subject to the provisions of Section
8.14 of this Indenture, such beneficial holders shall be treated in all respects
as the holders of the Notes for purposes of Article VIII of this Indenture, and
the Trustee shall send notices to such beneficial owners as required in Article
VIII of this Indenture.

Section 2.06.   MUTILATED, LOST, STOLEN, DESTROYED OR UNDELIVERED NOTES.   

         (a) If any Note is mutilated, lost, stolen or destroyed, the Fiscal
Agent shall authenticate a new Note of the same denomination for any mutilated,
lost, stolen or destroyed Note if there shall first be delivered by the
Noteholder to the Fiscal Agent at its principal corporate trust office (i) in
the case of any mutilated Note, such mutilated Note, and (ii) in the case of any
lost, stolen or destroyed Note, evidence of such loss, theft or destruction
reasonably satisfactory to the Fiscal Agent, the Bank, the Trustee and the
Borrower, together with an indemnity from the Noteholder, reasonably
satisfactory to the Fiscal Agent. If the Note has matured and if the evidence
and indemnity described above have been provided by the Noteholder, instead of
issuing a duplicate Note, the Fiscal Agent, with the consent of the Borrower,
shall pay the Note without requiring surrender of the Note and make such
requirements as the Fiscal Agent deems fit for its protection, including a lost
instrument Note. The Fiscal Agent may charge the Noteholder its reasonable fees
and expenses in this connection.



                                      -16-
<PAGE>   21

         (b) In the event that any Note purchased pursuant to an optional tender
or mandatory repurchase is not delivered by the holder thereof on the date such
Note is purchased, the Borrower shall execute (if necessary) and the Fiscal
Agent shall authenticate and deliver a new Note of like aggregate principal
amount as the Note purchased, which Note shall, for all purposes of this
Indenture, be deemed to evidence the same debt as the Note purchased and shall
be remarketed, delivered and registered in accordance with Section 3.08(d)
hereof.

         If any Note is purchased by the Fiscal Agent with Available Moneys
provided by the Borrower and sufficient for such purchase, the Fiscal Agent,
upon request of the Borrower, shall authenticate a new Note in any Authorized
Denomination specified by the Borrower, registered as the Borrower may direct
and deliver it to the Borrower, or to its order, whether or not such Note is
ever delivered. If any Note is purchased with funds obtained by a drawing on the
Letter of Credit, the Fiscal Agent shall comply with the provisions of Section
3.08(d)(ii).

         (c) Every new Note issued pursuant to this Section 2.06 shall (i)
constitute an additional contractual obligation of the Borrower regardless of
whether, in the case of (a) above, the mutilated, lost, stolen or destroyed
Note and, in the case of (b) above, the Note purchased shall be enforceable at
any time by anyone, and (ii) be entitled to all of the benefits of this
Indenture equally and proportionately with any and all other Notes issued and
Outstanding hereunder.

         (d) All Notes shall be held and owned on the express condition that the
foregoing provisions of this Section 2.06 are exclusive with respect to the
replacement or payment of mutilated, lost, stolen or destroyed Notes and the
replacement of any Note purchased pursuant to an optional tender or mandatory
repurchase and, to the extent permitted by law, and shall preclude any and all
other rights and remedies with respect to the replacement or payment of
negotiable instruments or other investment securities without their surrender,
notwithstanding any law or statute to the contrary now existing or enacted
hereafter.

         Section 2.07. CANCELLATION OF NOTES. All Notes paid, redeemed or
purchased, either at or before maturity, shall be delivered to the Fiscal Agent
when such payment, redemption or purchase is made, and except as otherwise
provided herein shall be canceled. Whenever a Note is delivered to the Fiscal
Agent for cancellation (upon payment, redemption, defeasance or otherwise), or
for transfer, exchange or replacement pursuant to Section 2.05 or 2.06, the
Fiscal Agent shall safeguard such Note for such period of time as may be
required by applicable governmental regulations and shall thereafter promptly
cancel the Note and supply evidence of such cancellation to any party so
requesting.

         Section 2.08. TEMPORARY NOTES. Until definitive Notes are ready for
delivery, the Borrower may execute and the Fiscal Agent shall authenticate
temporary Notes substantially in the form of the definitive Notes, with
appropriate variations. The Borrower shall, without unreasonable delay, prepare
and the Fiscal Agent shall authenticate definitive Notes in exchange for the
temporary Notes. Such exchange shall be made by the Fiscal Agent without charge
to the Noteholders. Temporary Notes shall not otherwise be eligible for transfer
or exchange under Section 2.05.

                               [End of Article II]


                                      -17-
<PAGE>   22


                                   ARTICLE III

                  REDEMPTION, PURCHASE AND REMARKETING OF NOTES

Section 3.01.   REDEMPTION OF NOTES.

         (a) OPTIONAL REDEMPTION. The Notes may be redeemed by the Borrower in
whole on any Business Day, or in part on any Interest Payment Date, or if such
Interest Payment Date is not a Business Day, on the next succeeding Business
Day, at a redemption price equal to the principal thereof, plus accrued interest
to, but not including, the redemption date; provided that any such redemption in
part shall be in a minimum principal amount of $100,000 or a whole multiple of
$5,000 in excess thereof.

         (b) MANDATORY SINKING FUND REDEMPTION. The Notes are not subject to
mandatory sinking fund redemption prior to maturity; provided, however, that
pursuant to the terms of the Reimbursement Agreement, the Bank may direct the
Borrower to exercise its right of optional redemption of the Notes in part from
time to time on the dates specified in the Reimbursement Agreement.

         (c) MANDATORY REDEMPTION UPON DEMAND BY BANK. The Notes are subject to
mandatory redemption at a redemption price equal to the principal amount thereof
plus accrued interest to, but not including, the redemption date in whole or in
part, without premium, at the earliest date for which notice of redemption can
be given upon receipt by the Trustee of written notice from the Bank requesting
such redemption, specifying the principal amount of the Notes to be redeemed (if
less than all of the Notes Outstanding are to be redeemed) and stating that (i)
an "event of default" under and as defined in the Reimbursement Agreement has
occurred and is continuing, or (ii) it holds as the registered or beneficial
owner Notes purchased by the Bank in accordance with Section 3.07, 3.01(e) or
8.03(a) and not remarketed; provided, however, only Notes so held by the Bank
shall be subject to mandatory redemption pursuant to this subsection (ii).

         (d) MANDATORY REDEMPTION ON EXPIRATION OR TERMINATION OF LETTER OF
CREDIT WITHOUT EXTENSION OR PROVIDING A SUBSTITUTE LETTER OF CREDIT. The Notes
are subject to mandatory redemption at a redemption price equal to the principal
amount thereof plus accrued interest to, but not including, the redemption date,
in whole, without premium, on the Interest Payment Date which next precedes by
at least fourteen (14) days the stated expiration or termination date of the
Letter of Credit or, if such Interest Payment Date is not a Business Day, on the
next succeeding Business Day, unless by the 20th day prior to such Interest
Payment Date the Borrower provides to the Trustee, and the Trustee has accepted,
(i) evidence that such Letter of Credit has been extended or (ii) a Substitute
Letter of Credit to be effective on or prior to such Interest Payment Date, in
which event a mandatory repurchase shall occur in accordance with the terms of
subsection 3.07(a)(i) hereof.

         (e) PURCHASE IN LIEU OF REDEMPTION. When Notes are subject to
redemption pursuant to subsections (c) or (d) in this Section 3.01, Notes paid
by the Borrower or paid from a draw or claim under the Letter of Credit or
otherwise paid by or on behalf of the Bank shall be deemed to



                                      -18-
<PAGE>   23

have been purchased in lieu of redemption on the applicable redemption date at a
purchase price equal to the principal amount thereof, plus accrued interest
thereon to, but not including, the date of such purchase, if the Trustee has
received a written request on or before said purchase date from the Borrower or
the Bank, as the case may be, specifying that the moneys provided or to be
provided by such party shall be used to purchase Notes in lieu of redemption. No
purchase of Notes by the Borrower or the Bank pursuant to this Indenture or
advance or use of any moneys to effectuate any such purchase shall be deemed to
be a payment or redemption of the Notes or any portion thereof, and such
purchase shall not operate to extinguish or discharge the indebtedness evidenced
by such Notes. No Notes purchased pursuant to this subsection (e) shall be
required to be remarketed by the Remarketing Agent pursuant to Section 3.08,
unless the Remarketing Agent specifically agrees to undertake such remarketing.
Any purchase by the Borrower pursuant to this Section 3.01(e) must be made with
Available Moneys.

         Section 3.02. REDEMPTION DATE. The redemption date of Notes to be
redeemed pursuant to any optional redemption provisions in Section 3.01(a) shall
be a date permitted by such clause and specified by the Borrower in the notice
delivered pursuant to Section 3.04. The redemption date for mandatory
redemptions shall be as specified in Section 3.01(c) or (d), as the case may be,
or determined by the Trustee consistently with the provisions thereof.

         Section 3.03. SELECTION OF NOTES TO BE REDEEMED. If fewer than all the
Notes are to be redeemed, the Fiscal Agent shall select the Notes to be redeemed
from among the Outstanding Notes, as set forth below, by lot or such other
method as it deems in its sole discretion to be fair and appropriate, except
that Bank Notes will be selected for redemption prior to any other Notes. The
Fiscal Agent shall make the selection from Notes not previously called for
redemption. The Fiscal Agent shall treat each holder of Notes as the owner of
one Note for purposes of selection for redemption, and shall select Notes for
redemption by lot (a) from among the holders of less than $1,000,000 in
aggregate principal amount, provided that if there are no such holders, or if,
after selection from among such holders such selection has not resulted in
redemption of a sufficient amount of Notes, then (b) from among the holders of
$1,000,000 or more in aggregate principal amount of Notes. The Fiscal Agent
shall, on or before the day on which notice of redemption is mailed to the
holders, give telephonic notice to the Remarketing Agent of the Notes selected
for redemption and the name of the holder or holders thereof. No portion of a
Note may be redeemed that would result in a Note which is smaller than the
minimum Authorized Denomination. For this purpose, the Fiscal Agent shall
consider each Note in a denomination larger than the minimum Authorized
Denomination to be separate Notes each in the minimum Authorized Denomination.
Provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption. Notwithstanding the foregoing,
for so long as a book-entry system of evidence of transfer of ownership is in
effect with respect to all the Notes, any selection of Notes to be redeemed
shall be made in accordance with the securities depository's rules and
procedures as then in effect.

         Notwithstanding anything to the contrary in this Indenture, there shall
be no redemption of less than all of the Notes if there has occurred and be
continuing an Event of Default.



                                      -19-
<PAGE>   24

         Section 3.04. NOTICE TO TRUSTEE; NOTICE OF REDEMPTION.

         (a) If the Borrower wishes that any Notes be redeemed pursuant to any
optional redemption provisions in Sections 3.01(a) hereof, the Borrower shall
notify the Trustee, the Fiscal Agent, the Bank and the Remarketing Agent in
writing of the applicable provision, the redemption date, the principal amount
of Notes to be redeemed and other necessary particulars. The Borrower shall give
such notices at least 45 days before the redemption date.

         (b) The Trustee shall prepare and the Fiscal Agent shall send notice of
each redemption to each Noteholder whose Notes are being redeemed, the Borrower,
the Remarketing Agent and the Bank by first-class mail at least 30 days but not
more than 60 days before each redemption, except for any mandatory redemption
pursuant to Section 3.01(d) in which case such notice shall be given at least 15
but not more than 19 days before such redemption and except as otherwise
provided in Section 3.08(a)(i). The notice shall identify the Notes or portions
thereof to be redeemed and shall state (i) the type of redemption and the
redemption date, (ii) the redemption price, (iii) that the Notes called for
redemption must be surrendered to collect the redemption price, (iv) the address
at which the Notes must be surrendered, (v) that if on the redemption date the
Note Fund contains moneys sufficient to pay the redemption price, interest on
the Notes called for redemption will cease to accrue on the redemption date,
(vi) the CUSIP number of the Notes and (vii) any condition to the redemption.

         A copy of each notice of redemption shall also be sent by the Fiscal
Agent by certified or registered mail to each securities depository (each, a
"Depository") registered with the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended, two Business Days prior to mailing
notice to Noteholders and to two national information services which disseminate
redemption notices and to each registered owner of $1,000,000 or more of Notes
on the same date notices are mailed to other Noteholders, provided that the
Fiscal Agent may, in its discretion, provide for overnight, telecopied or other
form of notice to a Depository acceptable to or requested by such Depository.
Notwithstanding the foregoing, in the event that the Depository for the Notes is
DTC, the Trustee shall follow the procedure for redemption and notice as set
forth in DTC's operational arrangements, as in effect at the time.

         With respect to any Notes to be redeemed which have not been presented
for redemption within 60 days after the redemption date, the Trustee, at the
expense of the Borrower, shall prepare and the Fiscal Agent shall give a second
notice of redemption to the holder of any such Notes which have not been
presented for redemption, by first-class mail, within 30 days after the end of
such 60 day period.

         Failure by the Fiscal Agent to give any notice of redemption or any
defect in such notice as to any particular Notes shall not affect the validity
of the call for redemption of any Notes in respect of which no such failure or
defect has occurred. Any notice mailed as provided in this Indenture shall be
conclusively presumed to have been given whether or not actually received by any
holder.

         Section 3.05. PAYMENT OF NOTES CALLED FOR REDEMPTION. On or before the
date fixed for redemption, the Trustee shall cause to be transferred from the
Note Fund to the Fiscal Agent 


                                      -20-
<PAGE>   25

pursuant to Section 4.01 moneys sufficient to pay the redemption price, together
with accrued interest to the redemption date of the Notes called for redemption.
Upon surrender to the Fiscal Agent, Notes called for redemption shall be paid as
provided in this Article at the redemption price provided for in this Article.
On the date fixed for redemption, notice having been given in the manner and
under the conditions hereinabove provided, the Notes or portions thereof called
for redemption shall be due and payable at the redemption price provided
therefor, plus accrued interest to, but not including, such date. On such
redemption date, if moneys sufficient to pay the redemption price of the Notes
to be redeemed, plus accrued interest thereon to, but not including, the date
fixed for redemption, are held by the Fiscal Agent, interest on the Notes called
for redemption shall cease to accrue; such Notes shall cease to be entitled to
any benefits or security under this Indenture or to be deemed Outstanding; and
the holders of such Notes shall have no rights in respect thereof except to
receive payment of the redemption price thereof, plus accrued interest to, but
not including, the date of redemption.

         Section 3.06. NOTES REDEEMED IN PART. Upon surrender of a Note redeemed
in part, the Fiscal Agent shall authenticate for the holder a new Note or Notes
in Authorized Denominations equal in aggregate principal amount to the
unredeemed portion of the Note surrendered.

         Section 3.07. PURCHASE OF NOTES.

         (a) MANDATORY REPURCHASE OF NOTES; NOTICE. Except as provided in
Section 3.07(e), Notes are subject to mandatory repurchase as follows:

                  (i) on the effective date of any Substitute Letter of Credit
         delivered pursuant to Section 5.03, at a purchase price equal to 100%
         of the principal amount thereof plus accrued and unpaid interest
         thereon to but not including the date of purchase; and

                  (ii) on any Interest Payment Date selected by the Borrower in
         a written notice to the Trustee delivered at least 30 days prior to
         such date, or if such Interest Payment Date is not a Business Day, on
         the next succeeding Business Day, at a purchase price equal to 100% of
         the principal amount thereof plus accrued and unpaid interest thereon
         to but not including the date of purchase; provided that any such
         mandatory repurchase, except as provided in Section 9.14 hereof, shall
         be subject to the prior written consent of the Bank.

         The Trustee will prepare and the Fiscal Agent will send to the holders
of Notes subject to mandatory repurchase and to the Remarketing Agent, the Bank
and the Borrower a Notice of Mandatory Repurchase at least 15 days but not more
than 60 days before the Mandatory Repurchase Date. Any Notice of Mandatory
Repurchase will be given by first-class mail and will be substantially in the
form attached hereto as EXHIBIT B.

         With respect to any Notes to be purchased which have not been presented
for purchase within 60 days after the Mandatory Repurchase Date, the Trustee, at
the expense of the Borrower, shall cause the Fiscal Agent to prepare and send a
second notice of purchase to the holder of any such Notes which have not been
presented for purchase, by first-class mail, within 30 days of the end of such
60 day period.



                                      -21-
<PAGE>   26

         (b) OPTIONAL TENDER OF NOTES.

                  (i) Except as provided in Section 3.07(e), the holder (or
         while the Notes are held pursuant to a book-entry system, the
         Beneficial Owner) of any Note (other than a Bank Note or Borrower Note)
         may elect to tender such Note (or portion thereof, provided that each
         of the portion to be purchased and the portion to be retained is in an
         Authorized Denomination) for purchase at a purchase price equal to 100%
         of the principal amount of such Note (or portion thereof), plus accrued
         and unpaid interest thereon to but not including the date of purchase,
         on any Business Day (the "Optional Tender Date"), but only upon (A)
         receipt by the Remarketing Agent by not later than 11:00 a.m. at least
         seven calendar days or five Business Days, whichever may be earlier,
         but not more than 30 days, prior to such Optional Tender Date of
         telephonic (followed, if requested by the Remarketing Agent, by written
         or facsimile confirmation delivered to the Remarketing Agent no later
         than the close of business on the next succeeding Business Day) or
         other written notice from the holder (or while the Notes are held
         pursuant to a book-entry system, the DTC Participant through whom such
         Beneficial Owner holds such Note) stating (1) the principal amount of
         the Note (or portion thereof) to be tendered, (2) the Note number or
         other identification satisfactory to the Remarketing Agent, and (3) the
         Optional Tender Date on which such Note will be tendered; and (B) if
         the Notes are not being held under a book-entry system, delivery of
         such Note (with an appropriate instrument of transfer duly executed in
         blank) to the Fiscal Agent by 10:00 a.m. on such Optional Tender Date.

                  (ii) Any notice of optional tender for purchase delivered
         pursuant to subpart (i) above shall be irrevocable and shall be binding
         on the holder or Beneficial Owner giving or delivering such notice and
         on any transferee of such holder or Beneficial Owner.

                  (iii) Upon receipt by the Remarketing Agent of a notice of
         optional tender for purchase pursuant to subpart (i) above, the
         Remarketing Agent shall give prompt telephonic notice thereof
         including, in particular, notice of the information described in
         subsections 3.07(b)(i) (1) and (3) above, to the Trustee and the Fiscal
         Agent.

         (c) PAYMENT FOR PURCHASED NOTES. To the extent that sufficient moneys
are available therefor by 1:45 p.m. on the Optional Tender Date or the Mandatory
Repurchase Date or other day on which Notes have been successfully remarketed,
as applicable (the "Purchase Date") pursuant to Sections 3.08 and 5.02, upon
surrender to the Fiscal Agent of Notes optionally tendered or called for
mandatory repurchase as provided herein, the purchase price therefor (as
provided in this Section) shall be paid in immediately available funds by the
Fiscal Agent or the Remarketing Agent not later than the close of business on
the Purchase Date. From and after the Purchase Date or, if later, the date on
which such moneys are made available to the Remarketing Agent or the Fiscal
Agent, as applicable, interest accruing on such Notes shall cease to be payable
to the prior holder thereof, such Notes shall cease to be entitled to the
benefits or security of this Indenture and to such extent the prior holder shall
have recourse solely to the funds held



                                      -22-
<PAGE>   27

by the Trustee, the Fiscal Agent or the Remarketing Agent for the purchase of
such Notes as provided in Section 4.11.

         (d) NOTES PURCHASED IN PART. Upon surrender of a Note purchased in part
and receipt by the Fiscal Agent thereof, the Fiscal Agent shall authenticate and
deliver to the surrendering holder a new Note or Notes in Authorized
Denominations equal in aggregate principal amount to the unpurchased portion of
the Note surrendered.

         (e) LIMITATIONS ON TENDERS.

                  (i) The holders or Beneficial Owners shall not have the right
         or be required, as the case may be, to tender any Note for purchase on
         an Optional Tender Date or a Mandatory Repurchase Date (other than a
         mandatory tender in lieu of redemption at the direction of the Bank
         pursuant to Section 3.01(e) or a mandatory tender for purchase at the
         direction of the Bank after acceleration of the Notes pursuant to
         Section 8.03(a)) if on such date, following the occurrence of an Event
         of Default, the Trustee has declared the principal of and interest on
         the Notes to be immediately due and payable pursuant to Section 8.02.

                  (ii) Holders or Beneficial Owners of Notes called for
         redemption or mandatory repurchase shall not have the right (without
         the prior consent of the Remarketing Agent) to tender such Notes for
         purchase on an Optional Tender Date if such Optional Tender Date will
         occur on or after the 10th day prior to the date fixed for redemption
         or mandatory repurchase. Notwithstanding the foregoing, holders or
         Beneficial Owners of Notes called for redemption shall not have the
         right in any event to tender such Notes for purchase on an Optional
         Tender Date if such Optional Tender Date will occur on or after the
         second day prior to the date fixed for redemption.

         Section 3.08. REMARKETING OF PURCHASED NOTES.

         (a) NOTES TO BE REMARKETED. Notes purchased pursuant to optional tender
or mandatory repurchase shall be remarketed by the Remarketing Agent as provided
in this Section except as follows:

                  (i) Notes purchased pursuant to an optional tender or a
         mandatory repurchase and as to which the Remarketing Agent has received
         a notice of redemption may be remarketed before the date fixed for
         redemption only if the purchaser receives prior to purchasing such Note
         a notice that such Note is subject to redemption on the date fixed for
         redemption, notwithstanding the fact that such notice of redemption may
         be sent to such purchaser after the time period mentioned in Section
         3.04(b).

                  (ii) Borrower Notes shall only be remarketed at the direction
         of the Borrower.

                  (iii) The Remarketing Agent shall not be required to offer
         Notes for sale under this Section (A) during the continuance of an
         Event of Default, or (B) as otherwise provided in the Remarketing
         Agreement.



                                      -23-
<PAGE>   28

                  (iv) Notes purchased pursuant to an optional tender and as to
         which the Remarketing Agent has received a Notice of Mandatory
         Repurchase may be remarketed before the Mandatory Repurchase Date only
         if the purchaser receives a copy of the Notice of Mandatory Repurchase
         prior to purchasing such Note.

                  (v) The Remarketing Agent shall not knowingly remarket any
         Notes to the Borrower or any subsidiary or affiliate of the Borrower
         pursuant to this Section 3.08 unless either (A) the entire purchase
         price is paid from Available Moneys or (B) prior to such sale, the
         Trustee and the Fiscal Agent receive a written opinion of Bankruptcy
         Counsel to the effect that such purchase would not result in a
         preferential payment pursuant to the provisions of Section 547 of the
         Bankruptcy Code, 11 U.S.C. Section 101, ET SEQ.

         (b) REMARKETING EFFORT. Except as provided in subsection (a) above or
except to the extent the Borrower directs the Remarketing Agent not to do so,
the Remarketing Agent shall (i) use reasonable best efforts to remarket on or
prior to any scheduled purchase date all Notes tendered or to be purchased
pursuant to Section 3.07 (a "Scheduled Purchase Date"), and (ii) to the extent
such Notes are not remarketed on the Scheduled Purchase Date, continue to use
reasonable best efforts to remarket such Notes, upon the terms and subject to
the conditions of the Remarketing Agreement, for purchase on a Business Day
after such Scheduled Purchase Date (an "Unscheduled Purchase Date").

         As early as practicable but not later than 9:00 a.m. on each Scheduled
Purchase Date and each Unscheduled Purchase Date, the Remarketing Agent shall
notify the Fiscal Agent by telephone of (A) the amount of funds it has received
from the remarketing of such Notes (the "Remarketing Proceeds"), and (B) if the
Notes are not held pursuant to a book-entry system, the information to enable
the Fiscal Agent to prepare new Note certificates with respect to Notes which
were remarketed. If the Remarketing Agent has received Remarketing Proceeds with
respect to all of the Notes to be remarketed on a Scheduled Purchase Date, it
shall transfer such Remarketing Proceeds to the owners tendering such Notes for
purchase as provided in subsection (c) below. If the Remarketing Agent has not
received Remarketing Proceeds with respect to all of such Notes to be remarketed
on a Scheduled Purchase Date or has received Remarketing Proceeds with respect
to all or a portion of Notes remarketed on an Unscheduled Purchase Date, it
shall transfer to the Trustee for redelivery to the Fiscal Agent the Remarketing
Proceeds which the Remarketing Agent has received as provided in subsection (c)
below. The Fiscal Agent shall immediately notify the Trustee and promptly
thereafter notify the Borrower by telephone of the amount of such Remarketing
Proceeds and the Trustee shall, if required, take action as set forth in Section
5.02(a). If the Fiscal Agent fails to receive the notice described in the first
sentence of this paragraph from the Remarketing Agent by 9:00 a.m. on any
Scheduled Purchase Date, the Fiscal Agent shall contact the Remarketing Agent by
telephone to confirm the information required to be provided in such notice.
Upon such confirmation by the Fiscal Agent, the Fiscal Agent shall notify the
Trustee in the manner set forth above, and the Trustee shall, if required, take
action as set forth in Section 5.02(a).



                                      -24-
<PAGE>   29

         (c) REMARKETING PROCEEDS. If the Remarketing Agent has received from
the purchasers thereof Remarketing Proceeds for the remarketing of all Notes to
be remarketed on a Scheduled Purchase Date, the Remarketing Agent shall promptly
forward such Remarketing Proceeds by wire transfer (or in such other manner as
is acceptable to the Remarketing Agent) to the owners tendering such Notes for
purchase. Except as otherwise provided below with respect to Bank Notes, until
such transfer, all such Remarketing Proceeds shall be deposited in a separate,
segregated account of the Remarketing Agent for application in accordance with
the provisions of this Section 3.08, and until so applied shall be held
uninvested in trust for the benefit of the holders tendering such Notes for
purchase.

         If the Remarketing Agent has not received Remarketing Proceeds with
respect to all of the Notes to be remarketed on a Scheduled Purchase Date or has
received Remarketing Proceeds from the remarketing of all or a portion of the
Notes to be remarketed on an Unscheduled Purchase Date, the Remarketing Agent
will promptly forward all of the Remarketing Proceeds which it has received, if
any, by wire transfer (or in such other manner as is acceptable to the
Remarketing Agent and the Trustee) to the Trustee for delivery to the Fiscal
Agent for payment to the owners tendering such Notes for purchase or for payment
to the Bank in the case of Bank Notes. Except as otherwise provided below with
respect to Bank Notes, upon receipt by the Trustee and the Fiscal Agent, all
such Remarketing Proceeds shall be deposited in a separate, segregated account
of the Note Fund for application in accordance with the provisions of this
Section 3.08 and Article IV hereof and, until so applied, shall be held in trust
for the benefit of the owners tendering such Notes for purchase.

         (d) DELIVERY OF PURCHASED NOTES. Notes purchased pursuant to Section
3.07 shall be delivered as follows:

                  (i) Notes (other than Bank Notes) purchased with Remarketing
         Proceeds shall be delivered to the purchasers thereof upon receipt of
         payment therefor. Prior to such delivery, the Fiscal Agent shall
         provide for registration of transfer to the Holders, as provided in a
         written notice from the Remarketing Agent; and

                  (ii) All Bank Notes shall be registered in the name of the
         Borrower, subject to a pledge to the Bank and shall be held by the
         Fiscal Agent pursuant to the Reimbursement Agreement. Upon receipt of
         Remarketing Proceeds in respect of the sale of Bank Notes, the Fiscal
         Agent shall notify the Bank and the Borrower of such receipt. Upon
         receipt of notice by the Fiscal Agent from the Bank by telephone,
         telecopy or telex, promptly confirmed in writing, that the Notes have
         ceased to be Bank Notes and that the amount of the Letter of Credit has
         been reinstated as provided therein, the Fiscal Agent shall remit the
         Remarketing Proceeds as directed by the Bank and release the Bank Notes
         and deliver them to the purchasers thereof in accordance with Section
         (d)(i) above. The Fiscal Agent shall hold such Remarketing Proceeds in
         a segregated account in trust for the benefit of the Bank except that
         if the Letter of Credit is not reinstated as provided in the Letter of
         Credit, then the Fiscal Agent shall hold such funds for the benefit of,
         and return them as soon as possible to, the Persons who provided such
         Remarketing Proceeds as specified in a notice from the Remarketing
         Agent to the Fiscal Agent.

                              [End of Article III]



                                      -25-
<PAGE>   30

                                   ARTICLE IV

                     PAYMENT OF NOTES AND CREATION OF FUNDS

         Section 4.01. PAYMENT OF NOTES. The Trustee shall direct the Fiscal
Agent to make payments when due of principal of and interest on the Notes, and
the Fiscal Agent or the Remarketing Agent, as applicable, shall make payments of
the purchase price of Notes purchased pursuant to an optional tender or a
mandatory repurchase:

         (a) FIRST, (but only with respect to payments of purchase price) from
Remarketing Proceeds under Section 3.08, excluding any remarketing to the
Borrower, any subsidiary or affiliate thereof or any Guarantor;

         (b) SECOND, from moneys drawn by the Trustee under the Letter of Credit
and deposited in the Note Fund;

         (c) THIRD, from any moneys which constitute Available Moneys in the
Construction Fund directed to be paid into the Note Fund in accordance with the
provisions of Section 4.09;

         (d) FOURTH, from any other Available Moneys held by the Trustee in the
Note Fund; and

         (e) LAST, from any other moneys available to the Fiscal Agent or the
Trustee.

         Notwithstanding the foregoing, however, payments of purchase price of,
principal of, and interest on Borrower Notes and Bank Notes shall be paid only
from the first and last categories of moneys. The proceeds of investments of any
moneys in any of these categories may be used to the same extent as the moneys
invested could be used.

         Section 4.02. CREATION OF NOTE FUND. There is hereby created by the
Borrower and ordered established with the Trustee a trust fund to be designated
"Kellstrom Industries, Inc. Taxable Variable Rate Demand Notes, Series 1999 Note
Fund". The money and securities in the Note Fund shall be held in trust by the
Trustee and applied as herein provided and, until such application, the money
and securities in such fund shall be subject to a first priority lien and charge
in favor of the Noteholders, and a second priority lien and charge in favor of
the Bank, each as described in the Granting Clauses hereto.

         Section 4.03. PAYMENTS INTO NOTE FUND. Subject to the provisions of
Section 5.02(b), there shall be deposited into the Note Fund, as and when
received, (a) all proceeds of drawings under the Letter of Credit received by
the Trustee and (b) all other moneys received by the Trustee from the Borrower
hereunder which are required, or which are accompanied by directions that such
moneys are, to be paid into the Note Fund, including, without limitation, moneys
transferred to the Note Fund pursuant to Sections 3.08(c), 4.08 and 4.09. No
other funds (other than investment proceeds from moneys deposited therein) shall
be deposited or commingled with the Note Fund. To the extent that moneys
described above would not constitute Available Moneys at the time of such
deposit, the Trustee shall create 



                                      -26-
<PAGE>   31

separate subaccounts in the Note Fund in which moneys described above shall be
held until such moneys constitute Available Moneys. The Trustee shall create a
separate subaccount in the Note Fund for and shall not commingle moneys
described in Section 4.01(b) with any other moneys hereunder. The Trustee shall
create a separate subaccount in the Note Fund for and shall not commingle moneys
described in Section 4.01(c) with any other moneys hereunder.

         Section 4.04. USE OF MONEYS IN NOTE FUND. Moneys in the Note Fund shall
be used solely for the payment of the principal of and interest on the Notes as
the same become due and payable whether at maturity, upon redemption or
otherwise and for the purchase price of the Notes as the same shall become due,
and the Trustee shall transfer to the Fiscal Agent sufficient funds therefrom to
accomplish such payment in accordance with the provisions of the Notes and this
Indenture; provided, however, that to the extent such principal, interest or
purchase price is paid with proceeds of a drawing under the Letter of Credit and
the Borrower does not reimburse the Bank directly, the Trustee shall promptly
reimburse the Bank from funds on deposit in the Note Fund (other than
Remarketing Proceeds derived from the sale of any Notes that are not Bank Notes
or proceeds from a drawing on the Letter of Credit required to pay principal,
interest or purchase price of the Notes) in accordance with written instructions
given from time to time to the Trustee by the Bank.

         Section 4.05. CUSTODY OF NOTE FUND. The Note Fund shall be held in the
custody of the Trustee but in the name of the Borrower. The Borrower hereby
authorizes and directs (a) the Trustee to withdraw sufficient funds from the
Note Fund to pay the principal of, interest on and the purchase price of the
Notes as the same become due and payable, and to withdraw from the Note Fund
funds sufficient to pay any other amounts payable therefrom as the same become
due and payable, and (b) the Fiscal Agent to use such funds transferred to it to
make such payments, which authorization and direction the Trustee and the Fiscal
Agent hereby accept; provided, however, that to the extent such principal,
interest or purchase price is paid with proceeds of a drawing under the Letter
of Credit and the Borrower does not reimburse the Bank directly, the Trustee
shall promptly reimburse the Bank from funds on deposit in the Note Fund other
than (i) Remarketing Proceeds to be paid to former holders derived from the sale
of any Notes that are not Bank Notes, or (ii) proceeds from a drawing on the
Letter of Credit required to pay principal, interest or purchase price of the
Notes, in accordance with written instructions given from time to time to the
Trustee by the Bank.

         Section 4.06. CREATION OF CONSTRUCTION FUND. There is hereby created by
the Borrower and ordered established with the Trustee a trust fund to be
designated "Kellstrom Industries, Inc. Taxable Variable Rate Demand Revenue
Notes, Series 1999 Construction Fund". The money and securities in the
Construction Fund shall be held in trust by the Trustee and applied as provided
herein and, until such application, the money and securities in such fund shall
be subject to a first priority lien and charge in favor of the Noteholders and a
second priority lien and charge in favor of the Bank, each as described in the
Granting Clauses hereto.

         Section 4.07. DEPOSITS INTO CONSTRUCTION FUND; COST OF THE PROJECT. All
proceeds from the sale of the Notes (net of any placement fee and other costs of
issuance specified by the Borrower in the authorization and request delivered to
the Fiscal Agent pursuant to Section 2.01(c)(iv)) shall be deposited into the
Construction Fund to be applied by the Trustee


                                      -27-
<PAGE>   32

and the Borrower in the manner hereinafter provided for payment of the Cost of
the Project. The Cost of the Project shall include the following:

         (a) The cost of the Land and the sitework related to the Land;

         (b) The cost of labor, materials, machinery and equipment as payable to
contractors, builders and materialmen in connection with the construction and
equipping of the Project;

         (c) Governmental charges levied or assessed during construction on the
Project, or on any property acquired therefor, and premiums on insurance in
connection with the Project during construction;

         (d) Expenses necessary or incident to determining the feasibility or
practicability of completing the Project, the fees and expenses of appraisers,
architects, engineers and management consultants for making studies, surveys and
estimates of costs and of revenues and other estimates, and fees and expenses of
architects and engineers for preparation of plans, drawings and specifications
and supervision of construction, as well as for the performance of all other
duties of architects and engineers in relation to the construction of the
Project or the issuance of the Notes;

         (e) Expenses of administration, management, supervision, operation and
inspection properly chargeable to the Project, legal expenses and fees of the
Borrower in connection with the Project and the issuance and sale of the Notes,
legal expenses and fees, fees and expenses of the Trustee and the Fiscal Agent,
Letter of Credit fees, fees and expenses of the Placement Agent and the
Remarketing Agent in arranging for the placement and remarketing of the Notes,
management fees, interest expense and financing charges, cost of audits, cost of
preparing, issuing and selling the Notes, abstracts and reports on titles to
real estate, title insurance premiums, recording fees and taxes, and all other
items of expense, including those of the Borrower, not elsewhere specified in
this section incident to the acquisition, construction and equipping of the
Project;

         (f) Any other cost relating to the acquisition, construction and
equipping of the Project approved by the Bank;

         (g) Reimbursement to the Borrower for any costs described above paid by
it, whether before or after the execution of this Indenture; and

         (h) Reimbursement to the Bank for amounts drawn on the Letter of Credit
to pay interest on the Notes during construction of the Project.




                                      -28-
<PAGE>   33

         Section 4.08. PAYMENTS FROM CONSTRUCTION FUND. Except as provided in
Section 4.09, the Trustee shall use moneys in the Construction Fund solely to
pay the Cost of the Project. Disbursements from the Construction Fund shall be
made not more frequently than once each calendar month. Before each payment
shall be made from the Construction Fund, there shall be filed with the Trustee:

         (a) A Request for Disbursement, signed by a Borrower Representative and
approved by the Bank, stating:

                  (i) the name of the Person to whom the payment is due;

                  (ii) the amount to be paid;

                  (iii) the purpose in reasonable detail for which the
          obligation to be paid was incurred; and

                  (iv) the proposed date upon which such disbursement is to be
          made.

         (b) A certificate attached to the Request for Disbursement, signed by a
Borrower Representative, stating that:

                  (i) there has been received no notice (A) of any lien, right
         to lien or attachment upon, or claim affecting the right to receive
         payment of, any of the moneys payable under such Request for
         Disbursement to any of the persons, firms or corporations named
         therein, and (B) that any materials, supplies or equipment covered by
         such Request for Disbursement are subject to any lien, attachment,
         claim or security interest, or if any notice of any such lien,
         attachment, claim or security interest has been received, such lien,
         attachment, claim or security interest has been released or discharged
         or will be released or discharged upon payment of the Request for
         Disbursement;

                  (ii) such Request for Disbursement contains no items
         representing payment on account of any percentage entitled to be
         retained at the date of the certificate;

                  (iii) the obligation stated on the Request for Disbursement
         has been incurred in or about the issuance of the Notes or the
         acquisition, construction or equipping of the Project, each item is a
         proper charge against the Construction Fund and the obligation has not
         been the basis for a prior Request for Disbursement that has been paid;
         and

                  (iv) as of the date of such certificate no event or condition
         has happened or existed or is happening or exists that constitutes, or
         that with notice or lapse of time or both, would constitute, an Event
         of Default, or if such an event or condition has happened or existed,
         or is happening or exists, specifying the nature and period of such
         event or condition and what action the Borrower has taken, is taking or
         proposes to take with respect thereto.

         (c) An invoice, bill or other appropriate evidence of the obligation
described in the Request for Disbursement.



                                      -29-
<PAGE>   34

         The Trustee may transfer moneys from the Construction Fund to the Note
Fund or to the Bank and apply such moneys to pay Letter of Credit fees or to
reimburse the Bank for amounts drawn under the Letter of Credit to pay interest
on the Notes during construction of the Project, when due, without the need for
submission of a Request for Disbursement or other documents.

         Upon receipt of the above, the Trustee shall within three Business Days
make payment from the Construction Fund in accordance with such Request for
Disbursement; provided, however, that if such certificate states that any Event
of Default exists, the Borrower shall not be entitled to request or receive any
further disbursements until such time as the deficiency has been cured to the
satisfaction of the Bank. All such payments shall be made by check or draft
payable either (i) directly to the Person to be paid, (ii) to both the Borrower
and such Person or (iii) upon receipt of evidence that the Borrower has
previously paid such amount, to the Borrower.

         Anything to the contrary herein notwithstanding, the Trustee may pay
Requests for Disbursements executed only by the Bank (so long as it has not
failed to honor a validly drawn draft under the Letter of Credit) if the Bank
certifies to the Trustee that the Bank alone is entitled to direct the
disbursement of moneys in the Construction Fund due to a default by the Borrower
under, or the occurrence of other circumstances provided for in, the Letter of
Credit Documents.

         Section 4.09. DISPOSITION OF BALANCE IN CONSTRUCTION FUND. When the
Project is completed and all Costs of the Project have been paid, a certificate
of the Borrower to that effect signed by a Borrower Representative shall be
delivered to the Trustee. Any amounts thereafter remaining in the Construction
Fund shall be held in the Construction Fund as collateral for the payment of the
Notes. Such remaining amounts may be transferred from the Construction Fund (i)
to the Note Fund at the direction of the Borrower to be used to effect the
optional redemption of Notes to the maximum extent possible or (ii) to or
otherwise on behalf of the Borrower upon the instructions of the Bank to be used
by the Borrower only for such purposes as permitted by the Bank.

         Section 4.10. TRUSTEE'S RELIANCE ON BANK. So long as no Event of
Default under Section 8.01(a) or (b) has occurred and is continuing, the Trustee
may conclusively rely on directions from the Bank in approving or disapproving
any Request for Disbursement submitted hereunder, and may waive any requirement
of this Article pertaining to the Construction Fund and moneys therein at the
direction of the Bank. Any approval, disapproval or waiver by the Trustee, based
upon such directions, shall be no basis for and shall give no rise to any
liability to the Borrower, the Noteholders or any other Person on the part of
the Trustee.

         Section 4.11. MONEYS TO BE HELD IN TRUST. All money that the Trustee
has withdrawn from the Note Fund or has received from any other source and set
aside or transferred to the Fiscal Agent for the purpose of paying any of the
Notes, either at the maturity thereof or by purchase (other than as provided in
Section 3.08) or call for redemption or for the purpose of paying any interest
on the Notes, shall be held in trust for the respective Holders. Moneys received
by the Remarketing Agent, the Fiscal Agent or the Trustee from the sale of a
Note under Section 3.08 or from the purchase of any Note shall be held
segregated from other funds held by the Remarketing Agent, the Fiscal Agent or
the Trustee in trust for the benefit of the Person from 



                                      -30-
<PAGE>   35

whom such Note was purchased and shall not be invested while so held. Any moneys
deposited with the Trustee, the Fiscal Agent or the Remarketing Agent pursuant
to the terms of this Indenture for the payment of principal or purchase price of
Notes, or the payment of interest on Notes, that remains unclaimed by the
Holders of the Notes on the date fixed for the payment, redemption or purchase
of such Notes, shall be transferred to the appropriate governmental authorities
of the states upon the expiration of the escheat period in accordance with the
escheat laws applicable to each of the Holders of the Notes, and upon such
transfer, the Trustee, the Fiscal Agent and the Remarketing Agent shall have no
responsibility with respect to such money.

         Section 4.12. PAYMENT TO BORROWER FROM NOTE FUND OR CONSTRUCTION FUND.
Any amounts remaining in the Note Fund or Construction Fund after payment in
full of the principal of and interest on the Outstanding Notes, the fees,
charges and expenses of the Trustee, the Fiscal Agent, the Remarketing Agent and
the Bank (including without limitation the fees and expenses of their respective
counsel) and all other amounts required to be paid hereunder and under the
Letter of Credit Documents shall be paid promptly to the Borrower; provided the
Trustee has received written confirmation from each of the Remarketing Agent and
the Bank that all of their fees, charges and expenses have been paid in full.

         Section 4.13. INVESTMENT OF MONEYS. To the extent permitted by law and
except as otherwise provided herein, the Trustee or the Fiscal Agent, as the
case may be, shall invest and reinvest moneys held by it representing proceeds
of drawings under the Letter of Credit and moneys on deposit in the Note Fund as
directed in writing by a Borrower Representative containing the written consent
of the Bank only in U. S. Government Obligations (or in a mutual fund composed
solely of U. S. Government Obligations which at the time of any such investment
has a securities rating from each Rating Agency equal to or higher than the then
current rating on the Notes), maturing at such times as such amounts shall be
needed for the purposes thereof. Unclaimed moneys held by the Trustee, the
Fiscal Agent or the Remarketing Agent under Section 4.11 shall be held
uninvested by the Trustee, the Fiscal Agent or the Remarketing Agent, as the
case may be.

         Moneys held by the Trustee in the Construction Fund shall be invested
and reinvested by the Trustee in any of the following on which neither the
Borrower nor any of its subsidiaries or affiliates nor any Guarantor is the
obligor, as directed in writing by a Borrower Representative containing the
written consent of the Bank:

                  (i) U. S. Government Obligations;

                  (ii) obligations of the Federal Intermediate Credit Banks,
         Federal Home Loan Banks, National Bank for Cooperatives, Federal Land
         Banks, The Governmental National Mortgage Association or The Federal
         National Mortgage Association;

                  (iii) certificates of deposit of banks or trust companies
         (including the Trustee and the Bank) organized under the laws of the
         United States or any state thereof, but only if such bank or trust
         company has a minimum combined capital and surplus not less than
         $20,000,000;



                                      -31-
<PAGE>   36

                  (iv) commercial paper or finance company paper which is rated
         not less than P-1, A-1 or F-1, or their equivalent, by a Rating Agency;

                  (v) any repurchase agreement secured by any one or more of the
         securities described in (i) through (iv), inclusive, above;

                  (vi) obligations issued by any state of the United States, any
         territory of the United States or any political subdivision of either,
         the interest on which is excludable from the gross income of the owner
         thereof for federal income tax purposes, and which obligations are
         rated by a Rating Agency (A) in either of its two highest long-term
         debt categories, or (B) not less than either P-1, A-1, or F-1 or their
         equivalent;

                  (vii) banker's acceptances, Eurodollar deposits, certificates
         of deposit or interest accruing demand deposits of banks or trust
         companies (including the Trustee and the Bank) organized under the laws
         of the United States or Canada or any state or province thereof, or
         domestic branches of foreign banks, having a capital and surplus of
         $25,000,000 or more;

                  (viii) any money market fund or mutual fund (including any
         such fund for which the Trustee in its individual capacity, the Bank or
         any of their affiliates is investment manager or advisor) investing in
         obligations described in clauses (i) through (vii), inclusive, above;

                  (ix) an investment agreement with a financial institution
         which has a bond rating of not less than "A" or its equivalent, by a
         Rating Agency, with the proceeds of the Notes invested therein
         collateralized by securities of such type and maturities acceptable to
         the Bank; and

                  (x) any other investment permitted by the Bank.

         To the extent that the Trustee or the Fiscal Agent, as the case may be,
has not received written directions from the Borrower regarding investment of
moneys, the Trustee or the Fiscal Agent, as the case may be, shall, until such
directions are received, invest such moneys pursuant to standing written
instructions of the Borrower that have been approved by the Bank and are
delivered to the Trustee or the Fiscal Agent, as the case may be, by the
Borrower upon the original issuance of the Notes, as such instructions may be
amended from time to time by the Borrower with the consent of the Bank.

         The Trustee or the Fiscal Agent, as applicable, may purchase or sell
investments permitted by this Article through itself or any subsidiary or
affiliate as principal or agent. Investments will be made so as to mature or be
subject to redemption at the option of the holder on or before the date or dates
that the Trustee or the Fiscal Agent, as applicable, or the Borrower, as
appropriate, anticipates that moneys from the investments will be required.
Investments shall be registered in the name of the Trustee or the Fiscal Agent,
as applicable, or its nominee and held by or under the control of the Trustee or
the Fiscal Agent, as applicable. The Trustee or the Fiscal Agent, as applicable,
shall sell and reduce to cash a sufficient amount of investments whenever the
cash held by the Trustee or the Fiscal Agent, as applicable, is insufficient for
its purposes, regardless of the loss on liquidation.



                                      -32-
<PAGE>   37

         All such investments shall be held by or under the control of the
Trustee or the Fiscal Agent, as applicable, and while so held shall be deemed a
part of the particular fund in which held. The interest accruing thereon and any
profit realized from such investments shall be credited to such fund, and any
loss resulting from such investments shall be charged to such fund. The Trustee
and the Fiscal Agent shall not be responsible for any losses on investments made
in accordance with this section or the tax consequences thereof.


                               [End of Article IV]







                                      -33-
<PAGE>   38


                                    ARTICLE V

                                LETTER OF CREDIT

         Section 5.01. REQUIREMENTS FOR LETTER OF CREDIT. In order to support
its obligations to make payments under the Notes, the Borrower hereby agrees (a)
upon the initial authentication and delivery of the Notes, to deliver to the
Trustee the Letter of Credit, issued by the Bank in favor of the Trustee and for
the benefit of the holders of the Notes (other than Bank Notes and Borrower
Notes), and (b) to ensure that so long as any Notes remain Outstanding, a Letter
of Credit shall be in effect with respect to such Notes with terms substantially
conforming to those of the original Letter of Credit.

         Section 5.02. DRAWS ON LETTER OF CREDIT; EXTENSIONS.

         (a) The Trustee shall make timely draws in accordance with the Letter
of Credit such that timely payment under Section 4.01 is made without resort to
the sources of payment described in Section 4.01(c) or (d). Such draws shall be
in amounts equal to (i) the purchase price payable with respect to the Notes
(excluding Bank Notes and Borrower Notes which are not entitled to any benefit
of the Letter of Credit), less the amounts, if any, available under Section
4.01(a), or (ii) the total principal and interest due on the Notes (excluding
Bank Notes and Borrower Notes which are not entitled to any benefit of the
Letter of Credit). If any such draws are made on a Mandatory Repurchase Date in
connection with the delivery of a Substitute Letter of Credit such draws shall
be made under the existing Letter of Credit and not on the Substitute Letter of
Credit. In the event the Trustee uses Available Moneys (other than Available
Moneys arising from a draw under the Letter of Credit) for the payment of
principal of or interest on the Notes as the same become due and payable whether
at maturity, upon redemption or otherwise or for purchase price of the Notes
when due, the Trustee shall, within 10 days after such payment, give notice
thereof to the Bank in accordance with the terms of the Letter of Credit. The
notice from the Trustee to the Bank shall be in the form attached to the Letter
of Credit. The Trustee agrees to make such draws so as to be able to obtain and
to transfer to the Fiscal Agent by 1:45 p.m. to the extent funds have been
received from the Bank on the payment or purchase date, as the case may be, such
funds to the extent necessary to permit the Fiscal Agent to make such payment
when due in accordance with this Indenture and the Notes.

         (b) In drawing on the Letter of Credit, the Trustee shall be acting on
behalf of the Noteholders by facilitating payment of the Notes and not on behalf
of the Borrower and shall not be subject to the control of the Borrower.
Proceeds of draws on the Letter of Credit shall be segregated from, and not
commingled with, other moneys held by the Trustee and shall be paid to the
Fiscal Agent, who shall hold such moneys segregated from, and not commingled
with, other moneys held by the Fiscal Agent. If the Trustee is also acting as
Fiscal Agent, such moneys shall be held in the Note Fund.

         (c) The Trustee shall advise the Borrower by telecopy or telex on the
date of each draw on the Letter of Credit of the amount and date of such draw
and of the reason for such draw.



                                      -34-
<PAGE>   39

         (d) For extensions of the term of the Letter of Credit, the Trustee
shall, at the direction of a Borrower Representative, but only if required to
evidence an extension of the term of the Letter of Credit, surrender the Letter
of Credit to the Bank in exchange for a new letter of credit of the Bank or the
Letter of Credit with notations thereon, as the Bank may so elect, conforming in
all material respects to the Letter of Credit except that the expiration date
shall be extended. Any such extension shall be for a period of at least one year
or, if less, until the fifteenth day following the maturity date of the Notes.

         (e) No draws shall be made by the Trustee under the Letter of Credit
for Bank Notes or Borrower Notes.

Section 5.03.   SUBSTITUTE LETTER OF CREDIT.

         (a) Upon at least 35 days' prior written notice to the Trustee, the
Fiscal Agent and the Remarketing Agent, the Borrower may provide for the
delivery to the Trustee of a substitute Letter of Credit complying with the
provisions of this Indenture (the "Substitute Letter of Credit"), which shall be
effective upon acceptance by the Trustee. Any Substitute Letter of Credit shall
have a stated expiration date of at least one year following the effective date
thereof and at least 15 days following an Interest Payment Date.

         (b) On or before the date of delivery of any Substitute Letter of
Credit to the Trustee, as a condition to the acceptance by the Trustee of such
Substitute Letter of Credit, the Borrower shall furnish to the Trustee:

                  (i) An Opinion of Counsel addressed to the Trustee to the
         effect that (A) the Substitute Letter of Credit is the valid and
         binding obligation of the issuer thereof enforceable against such
         issuer in accordance with its terms except insofar as its
         enforceability may be limited by any insolvency or similar proceedings
         applicable to the issuer or by proceedings affecting generally the
         rights of the issuer's creditors or by general equitable principles;
         (B) payments of principal, interest or purchase price on the Notes from
         the proceeds of a draw on the Substitute Letter of Credit will not
         constitute avoidable preferences under any applicable bankruptcy,
         reorganization, insolvency or other similar laws; (C) the Substitute
         Letter of Credit does not constitute a separate security requiring
         registration under any applicable federal or state securities laws; and
         (D) the delivery and acceptance of the Substitute Letter of Credit are
         authorized under the Indenture. In the case of a Substitute Letter of
         Credit, issued by a branch or agency of a foreign commercial bank,
         there shall also be delivered an Opinion of Counsel from a firm
         licensed to practice law in the jurisdiction in which the head office
         of such bank is located, addressed to the Trustee to the effect that
         the Substitute Letter of Credit is the valid and binding obligation of
         such bank, enforceable against such bank in accordance with its terms,
         subject to the limitations referred to in Section 5.03(b)(i)(A) above;

                  (ii) written evidence satisfactory to the Trustee that the
         issuer of the Substitute Letter of Credit meets the requirements for an
         issuer of a Letter of Credit in Article I hereof;



                                      -35-
<PAGE>   40

                  (iii) written confirmation from the Remarketing Agent (or any
         successor Remarketing Agent which has been appointed to serve as the
         Remarketing Agent on the effective date of the Substitute Letter of
         Credit) that it has agreed to remarket the Notes on or after the date
         of the delivery of the Substitute Letter of Credit; and

                  (iv) if the Notes will be rated following acceptance by the
         Trustee of such Substitute Letter of Credit, a letter from each Rating
         Agency setting forth such rating(s).

         The Trustee shall accept any such Substitute Letter of Credit only in
accordance with the terms, and upon satisfaction of the conditions, contained in
this Section and any other applicable provisions of this Indenture.
Notwithstanding anything to the contrary herein, any Substitute Letter of Credit
shall become effective on a Business Day. Acceptance of the Substitute Letter of
Credit shall result in the occurrence of a Mandatory Repurchase Date, and the
Trustee shall not terminate or surrender the Letter of Credit until the Trustee
has made such drawings thereunder, if any, as shall be required under the
Indenture to provide for payment of the purchase price of the Notes, and has
received the proceeds of such drawing from the Bank.

         (c) Not more than 60 days and not less than 15 days prior to the
effective date of the Substitute Letter of Credit, the Fiscal Agent shall, in
addition to the notice required by Section 11.01(b), send by registered or
certified mail to the Remarketing Agent and each holder of the Notes, notice of
the issuance of the Substitute Letter of Credit, which notice shall include (i)
the identity of the issuer thereof, (ii) the date the Substitute Letter of
Credit will be effective, and (iii) notice pursuant to Section 3.07 that the
Notes are subject to mandatory repurchase pursuant to Section 3.07.

         Section 5.04. ENFORCEMENT OF THE LETTER OF CREDIT. The Trustee shall
hold and maintain the Letter of Credit for the benefit of the Owners of the
Notes until the Letter of Credit terminates or expires in accordance with its
terms. When the Letter of Credit terminates or expires in accordance with its
terms, the Trustee shall immediately surrender it to the Bank. The Trustee
hereby agrees that, except in the case of a redemption in part pursuant to
Article III hereof or any other reduction in the principal amount of Notes
Outstanding, it will not under any circumstances request that the Bank reduce
the amount of the Letter of Credit. If at any time, all Notes shall cease to be
Outstanding, the Trustee shall surrender the Letter of Credit to the Bank in
accordance with the terms thereof, together with written confirmation from the
Trustee to the Bank stating that the Letter of Credit is being delivered to the
Bank for cancellation and that the Trustee relinquishes its right to make any
further draws thereunder. If at any time, the Bank fails to honor a draft
presented under the Letter of Credit, in conformity with the terms thereof, the
Trustee shall give immediate telephonic notice thereof to the Remarketing Agent,
the Fiscal Agent and the Borrower.

                               [End of Article V]



                                      -36-
<PAGE>   41


                                   ARTICLE VI

                GENERAL COVENANTS, REPRESENTATIONS AND WARRANTIES

         Section 6.01. PAYMENT OF NOTES. The Borrower shall promptly pay, or
cause to be paid, the principal of (whether at maturity, by acceleration, call
for redemption or otherwise) and interest on and purchase price of every Note
issued under this Indenture to the Fiscal Agent for payment to the owners of the
Notes, on the dates and in the manner provided herein according to the true
intent and meaning thereof.

         Section 6.02.   COVENANTS.  REPRESENTATIONS AND WARRANTIES OF BORROWER.

         (a) COMPLIANCE WITH TERMS. The Borrower shall observe and perform all
covenants, conditions and agreements required on its part to be observed and
performed in this Indenture, the Reimbursement Agreement, the Placement
Agreement, the Remarketing Agreement and in each Note executed, authenticated
and delivered hereunder, in all other documents related hereto, and under any
laws or regulations related to the issuance of the Notes.

         (b) INCORPORATION BY REFERENCE. The Borrower represents and warrants
that each of the Borrower's representations and warranties contained in the
Reimbursement Agreement, the Placement Agreement and the Remarketing Agreement
are true and correct in all material respects on and as of the date hereof and
are hereby made to the Trustee as if set forth herein.

         (c) DUE AUTHORIZATION. The Borrower (i) has the requisite corporate
power and authority to execute, deliver and perform this Indenture and each of
the other Transaction Documents to which it is a party and to incur and perform
the obligations herein and therein provided for, and (ii) is duly authorized
under all applicable provisions of law, and has taken all necessary corporate
action on its part required, to execute, deliver and perform this Indenture and
each of the other Transaction Documents to which it is a party.

         (d) NO CONFLICTS. Neither the execution and delivery of the Transaction
Documents to which the Borrower is a party, nor the consummation of the
transactions contemplated therein, nor performance of and compliance with the
terms and provision thereof will (i) violate or conflict with any provision of
the articles of incorporation or by laws of the Borrower, (ii) to the Borrower's
knowledge, violate, contravene or materially conflict with any law, regulation,
order, writ, judgment, injunction, decree or permit applicable to the Borrower,
(iii) violate, contravene or materially conflict with any contractual provisions
of, or cause an event of default under, any indenture, loan agreement, mortgage,
deed of trust, contract or other agreement or instrument to which the Borrower
is a party or by which the Borrower may be bound, or (iv) to the Borrower's
knowledge, result in or require the creation of any lien, security interest or
other charge or encumbrance (other than those contemplated in or in connection
with the Transaction Documents) upon or with respect to any material asset of
the Borrower.

         (e) CONSENTS. No consent, approval, authorization or order of, or
filing, registration or qualification with, any court or governmental authority
or third party is required in connection





                                      -37-
<PAGE>   42

with the execution, delivery or performance of this Indenture or any of the
other Transaction Documents.

         (f) ENFORCEABLE OBLIGATIONS. This Indenture and the other Transaction
Documents to which the Borrower is a party have been duly executed and delivered
and constitute legal, valid and binding obligations of the Borrower enforceable
in accordance with their respective terms, except as may be limited by
bankruptcy or insolvency laws or similar laws affecting creditors' rights
generally.

         Section 6.03. NOTICE OF LITIGATION. The Borrower shall promptly inform
the Trustee, the Bank, the Fiscal Agent, the Placement Agent and the Remarketing
Agent of (a) any litigation pending or to its knowledge threatened, to which the
Borrower is or may be a party and that has not been previously disclosed to the
Trustee, the Bank, the Fiscal Agent, the Placement Agent and the Remarketing
Agent, the adverse determination of which might materially prejudice the payment
of the Notes or the performance of its obligations hereunder, and (b) any
materially adverse developments in any such litigation previously disclosed to
the Trustee, the Bank, the Fiscal Agent, the Placement Agent and the Remarketing
Agent.

         Section 6.04. FINANCING AND CONTINUATION STATEMENTS. Financing
statements with respect to the Trust Estate and meeting the requirements of the
Uniform Commercial Code of the State shall be filed by the Borrower in all
offices in the State where such filing is necessary to perfect the security
interest in the Trust Estate created by this Indenture. Whenever in the opinion
of the Trustee or the Bank (but without obligation on either or both of them to
make such a determination) such action is necessary to preserve such security
interest or the priority thereof and upon the written direction of either of
them to do so, the Borrower shall file additional financing or continuation
statements in all such offices. During the sixth month period immediately
preceding February 1, 2004 and February 1 of each fifth year thereafter, upon
the written direction of the Trustee or the Bank to do so, the Borrower shall
deliver or cause to be delivered to the Trustee and the Bank an opinion of
counsel, addressed to the Trustee and the Bank, or other evidence reasonably
satisfactory to each of them, stating that no further filing of any instrument
is necessary to preserve, perfect or protect the priority of the security
interest in the Trust Estate created hereby at such time or during the five year
period immediately succeeding such June 1, as the case may be, or, if any such
filing is necessary, setting forth the requirements with respect thereto, in
which case the Borrower shall cause such requirements to be met. The expenses,
including reasonable attorney's fees, of all such filings and opinions shall be
paid by the Borrower.

         Section 6.05. FURTHER ASSURANCES. The Borrower shall execute and
deliver such supplemental agreements and such further instruments and do such
further acts, as the Trustee may reasonably require to carry out the purposes of
this Indenture.

                               [End of Article VI]



                                      -38-
<PAGE>   43


                                   ARTICLE VII

                             DISCHARGE OF INDENTURE

         Section 7.01. NOTES DEEMED PAID; DISCHARGE OF INDENTURE. All Notes
shall be deemed paid for all purposes of this Indenture when (a) payment of the
greater of the principal of and the maximum amount of interest that may become
due on the Notes to the due date of such principal and interest (whether at
maturity, upon redemption, acceleration or otherwise) or the payment of the
purchase price of any Note that may be optionally tendered by the owner either
(i) has been made in accordance with the terms of Section 3.05 or Section
3.07(c) or (ii) has been provided for by depositing with the Trustee (A) moneys
sufficient to make such payment, which moneys must constitute Available Moneys
and/or (B) noncallable U.S. Government Obligations maturing as to principal and
interest in such amounts and at such times as will ensure the availability of
sufficient moneys to make such payment without regard to the reinvestment
thereof, provided that (i) such U.S. Government Obligations must be purchased
from Available Moneys and (ii) the Trustee has received written evidence from
each Rating Agency that as a result of such action, their rating on the Notes
will not be lowered or eliminated; and (b) all compensation and expenses of the
Trustee and the Fiscal Agent (as well as the fees and expenses of their counsel)
pertaining to each Note in respect of which such payment or deposit is made have
been paid or provided for to their respective satisfaction. When a Note is
deemed paid, it shall no longer be secured by or entitled to the benefits of
this Indenture, except for payment from moneys or U.S. Government Obligations
under subsection (a) above and except that it may be optionally tendered if and
as provided in Section 3.07(b) and it may be transferred, exchanged, registered,
discharged from registration or replaced as provided in Article II.

         Notwithstanding the foregoing, no deposit under subsection (a) above
made for the purpose of paying the redemption price of a Note (as opposed to the
final payment thereof upon maturity) will be deemed a payment of a Note as
aforesaid until (x) notice of redemption of the Note is given in accordance with
Article III or, if the Note is not to be redeemed within the next 60 days, until
the Borrower has given the Trustee and the Fiscal Agent, in form satisfactory to
the Trustee, irrevocable instructions to notify, as soon as practicable, the
holder of the Note, in accordance with Article III, that the deposit required by
subsection (a) above has been made with the Trustee and that the Note is deemed
to be paid under this Article and stating the redemption date upon which moneys
are to be available for the payment of the principal of the Note or (y) the
maturity of the Note. Additionally, and while the deposit under subsection (a)
above made for the purpose of paying the final payment of a Note upon its
maturity shall be deemed a payment of such Note as aforesaid, the Trustee shall
mail notice to the Owner of such Note, as soon as practicable stating that the
deposit required by subsection (a) above has been made with the Trustee and that
the Note is deemed to be paid under this Article.

         When all Outstanding Notes are deemed paid under the foregoing
provisions of this Section and other sums due under this Indenture and the
Reimbursement Agreement are paid in full, the Trustee shall, upon request,
acknowledge the discharge of the Borrower's obligations under this Indenture
except for obligations relating to optional tender as provided in Section
3.07(b), obligations under Article II in respect of the transfer, exchange,
registration, discharge from registration and replacement of Notes, and
obligations under Section 9.06 hereof with 




                                      -39-
<PAGE>   44

respect to the Trustee's compensation and indemnification, and the Trustee
without request or further direction shall surrender the Letter of Credit to the
Bank, in accordance with the terms of the Letter of Credit and the provisions of
Section 5.04 hereof. Notes delivered to the Fiscal Agent for payment shall be
canceled by the Fiscal Agent pursuant to Section 2.07.

         The Trustee may request and shall be fully protected in relying upon a
certificate of an independent certified public accountant to the effect that a
deposit will be sufficient to defease the Notes as provided in this Section
7.01.

         Upon receipt of any amount pursuant to this Article VII, the Trustee
shall give written notice thereof, which notice shall include, without
limitation, the amount of such deposit and any instructions given to the Trustee
pursuant thereto, to the Remarketing Agent by first-class mail, postage prepaid.

         Section 7.02. APPLICATION OF TRUST MONEY. The Trustee and the Fiscal
Agent shall hold in trust money or U.S. Government Obligations deposited with
them pursuant to the preceding Section and shall apply the deposited money and
the money from the U.S. Government Obligations in accordance with this Indenture
only to the payment of principal of and interest on, or purchase price of, the
Notes.

                              [End of Article VII]







                                      -40-
<PAGE>   45


                                  ARTICLE VIII

                              DEFAULTS AND REMEDIES

         Section 8.01. EVENTS OF DEFAULT. Each of the following events shall be
an Event of Default:

         (a) Default in the due and punctual payment of any interest on any
Note;

         (b) Default in the due and punctual payment of the principal or
purchase price of any Note (whether at maturity, by acceleration or redemption,
upon purchase or otherwise);

         (c) Default in the observance or performance of any other of the
covenants, conditions or agreements on the part of the Borrower under this
Indenture with such default continuing for a period of thirty (30) consecutive
days (or such further time as may be granted in writing by the Trustee, with
notice to the Bank) after receipt by the Borrower Representative of a written
notice from the Trustee or the Bank specifying such default and requiring the
same to be remedied; or

         (d) Receipt by the Trustee of written notice from the Bank that an
Event of Default has occurred under the Reimbursement Agreement accompanied by a
demand by the Bank that the Trustee declare the Notes to be immediately due and
payable.

         For purposes of this Section 8.01, the Trustee shall not be deemed to
have knowledge of an Event of Default hereunder unless a Responsible Officer in
the corporate trust department of the Trustee has actual knowledge thereof or
unless written notice of any event which is an Event of Default is received by
the Trustee and such notice references this Indenture or the Notes.

         Section 8.02. ACCELERATION AND DUTY TO DRAW ON LETTER OF CREDIT.

         (a) Upon the occurrence of an Event of Default under Section 8.01(a),
(b) or (d) hereof, the Trustee shall, by notice to the holders, the Bank, the
Remarketing Agent and the Borrower, declare the entire unpaid principal of and
interest on the Notes immediately due and payable and, thereupon, the entire
unpaid principal of and interest on the Notes shall forthwith become immediately
due and payable. Upon the occurrence and continuance of any other Event of
Default, the Trustee may, and if requested by the holders of not less than a
majority in aggregate principal amount of Notes then Outstanding shall, by
notice to the holders, the Bank, the Remarketing Agent and the Borrower, declare
the entire unpaid principal of and interest on the Notes immediately due and
payable and, thereupon, the entire unpaid principal of and interest on the Notes
shall forthwith become due and payable. Upon any such declaration, the Borrower
shall forthwith cause the Trustee to pay to the holders of the Notes from the
Trust Estate the entire unpaid principal of and accrued interest on the Notes.
In the event the Trustee fails to accelerate as required by this Section
8.02(a), the owners of a majority in aggregate principal amount of Notes
Outstanding shall have the right to take such actions.



                                      -41-
<PAGE>   46

         (b) Upon the acceleration of the maturity of the Notes, by declaration
or otherwise, the Trustee shall immediately draw upon the Letter of Credit for
the aggregate unpaid principal amount of the Notes and interest accrued thereon
which shall be applied immediately as set forth in Section 8.03. Upon such
acceleration, interest on the Notes shall cease to accrue as of the date of
declaration of such acceleration.

         Section 8.03. DISPOSITION OF AMOUNTS DRAWN ON LETTER OF CREDIT;
ASSIGNMENT OF RIGHTS TO CONTEST.

         (a) All amounts drawn on the Letter of Credit by the Trustee in
accordance with Section 8.02(b) shall be held in the Note Fund (and invested in
accordance with Section 4.13), and shall be applied immediately to the payment
of principal of and interest accrued on the Notes unless, prior to or with the
proceeds of the draw on the Letter of Credit, the Trustee receives written
instructions from the Bank to use such proceeds to purchase all Notes. If such
instructions are received by the Trustee, such draw proceeds shall be
immediately applied to the purchase of the Notes, the acceleration of the Notes
shall be canceled, the Notes shall become Bank Notes, and the Notes shall be
registered in the name of the Borrower and pledged under the Reimbursement
Agreement as additional security for repayment of the Borrower's obligations
under the Reimbursement Agreement. Thereafter, such Notes shall not be
remarketed by the Remarketing Agent unless the Letter of Credit is reinstated or
a Substitute Letter of Credit is delivered pursuant to Section 5.03.

         (b) The Trustee hereby assigns to the Bank all its rights to contest or
otherwise dispute in the Trustee's name, place and stead and at the Bank's sole
election and cost any claim of preferential transfer made by a bankruptcy
trustee, debtor-in-possession or other similar official with respect to any
amount paid to the Trustee by or on behalf of the Borrower to be applied to
principal of or interest on or purchase price of the Notes, to the extent of
payments made to the Trustee pursuant to a drawing under the Letter of Credit.
The Trustee shall cooperate with and assist the Bank in any such contest or
dispute as the Bank may reasonably request; provided, however, that the Bank
shall reimburse the Trustee for the reasonable costs incurred in connection with
providing such cooperation and assistance. The Trustee shall give the Bank
prompt notice of any claim of preferential transfer of which the Trustee has
knowledge. The foregoing assignment shall not be deemed to confer upon the Bank
any right to contest or otherwise dispute any claim of preferential transfer
with respect to any amount as to which there has been no drawing under the
Letter of Credit. The assignment set forth above shall in no event be effective
until the Bank has first furnished to the Trustee an agreement to indemnify the
Trustee and the holders of the Notes against any claim, liability or damage
which they might suffer by reason of any such contest or dispute.

         Section 8.04. OTHER REMEDIES; RIGHTS OF NOTEHOLDERS. Upon the
occurrence of an Event of Default, the Trustee, subject to the terms of this
Indenture, may proceed to protect and enforce its rights and the rights of the
Noteholders by mandamus or other suit, action or proceeding, at law or in
equity, including but not limited to an action for specific performance of any
agreement herein contained or making a demand for payment from the Borrower and
taking action pursuant to any other document to which the Trustee is a party.



                                      -42-
<PAGE>   47

         Upon the occurrence of an Event of Default and subject to Section 8.14,
if requested to do so by the holders of not less than a majority in aggregate
principal amount of Notes Outstanding and if indemnified as provided in Section
9.01(d), the Trustee, subject to the terms of this Indenture, shall exercise
such one or more of the rights and powers conferred by this Article as the
Trustee, upon being advised by counsel, shall deem most expedient in the
interests of the Noteholders.

         No remedy conferred by this Indenture upon or reserved to the Trustee
or to the Noteholders is intended to be exclusive of any other remedy, but each
such remedy shall be cumulative and shall be in addition to any other remedy
given to the Trustee or to the Noteholders hereunder or now or hereafter
existing at law or in equity. No delay or failure to exercise any right or power
accruing upon any default or Event of Default shall impair any such right or
power or shall be construed to be a waiver of any such default or Event of
Default or acquiescence therein, and every such right and power may be exercised
from time to time and as often as may be deemed necessary. No waiver of any
default or Event of Default hereunder, whether by the Trustee pursuant to
Section 8.10 or by the Noteholders, shall extend to or shall affect any
subsequent default or Event of Default or shall impair any rights or remedies
consequent thereon.

         Section 8.05. RIGHT OF NOTEHOLDERS TO DIRECT PROCEEDINGS.
Notwithstanding anything in this Indenture to the contrary, but subject to
Section 8.14, the holders of a majority in aggregate principal amount of Notes
Outstanding shall have the right, at any time, by an instrument or instruments
in writing executed and delivered to the Trustee, to direct the method and place
of conducting all proceedings to be taken in connection with the enforcement of
the terms and conditions of this Indenture or for the appointment of a receiver
or any other proceedings hereunder; provided, however, that such direction shall
not be otherwise than in accordance with the provisions of law and of this
Indenture.

         Section 8.06. APPLICATION OF MONEYS. All moneys received by the Trustee
pursuant to any right given or action taken under the provisions of this Article
shall, after payment of the costs and expenses of the proceedings resulting in
the collection of such moneys and of the expenses, liabilities and advances
incurred or made by the Trustee, be deposited in the Note Fund; provided,
however, that no proceeds from any draw on the Letter of Credit shall be used
for any purpose other than payment of the principal of and interest on the Notes
or the purchase price thereof. All moneys in the Note Fund shall be applied as
follows:

         (a) Unless the principal of all Notes has become or has been declared
due and payable:

                  First, to the payment to the persons entitled thereto of all
         installments of interest then due on the Notes, in the order of the
         maturity of the installments of such interest and, if the amount
         available shall not be sufficient to pay in full any particular
         installment, then to the payment ratably, according to the amounts due
         on such installment, to the persons entitled thereto, without any
         discrimination or preference except as provided in Section 8.13, and as
         to any difference in the respective rates of interest specified in the
         Notes;



                                      -43-
<PAGE>   48

                  Second, to the payment to the persons entitled thereto of the
         unpaid principal of any of the Notes which has become due (other than
         Notes called for redemption for the payment of which moneys are held
         pursuant to the provisions of this Indenture), in the order of their
         due dates, with interest on such Notes at the respective rates
         specified therein from the respective dates upon which they become due
         and, if the amount available shall not be sufficient to pay in full
         Notes due on any particular date, together with such interest, then
         first to the payment of such interest ratably, according to the amount
         of such interest due on such date, and then to the amount of such
         principal, ratably, according to the amount of such principal due on
         such date, to the persons entitled thereto, without any discrimination
         or preference, except as provided in Section 8.13, and as to any
         difference in the respective rates of interest specified in the Notes;
         and

                  Third, to the extent permitted by law, to the payment to the
         persons entitled thereto of the unpaid interest on overdue installments
         of interest ratably, according to the amounts of such interest due on
         such date, without any discrimination or preference, except as provided
         in Section 8.13, and as to any difference in the respective rates of
         interest specified in the Notes.

         (b) If the principal of all Notes have become due or have been declared
due and payable, all such moneys shall be applied to the payment of the
principal and interest then due and unpaid upon the Notes, including to the
extent permitted by law, interest on overdue installments of interest, without
preference or priority of principal over interest or of interest over principal,
or of any installment of interest over any other installment of interest, or of
any Note over any other Note, ratably according to the amounts due respectively
for principal and interest, to the persons entitled thereto, without any
discrimination or privilege, except as provided in Section 8.13.

         (c) If the principal of all Notes have been declared due and payable,
and if such declaration is thereafter rescinded and annulled under the
provisions of this Article, then, subject to the provisions of Section 8.06(b)
in the event that the principal of all Notes later become due or be declared due
and payable, the moneys shall be applied in accordance with the provisions of
Section 8.06(a).

         (d) All amounts received from a draw upon the Letter of Credit shall be
applied exclusively to the payment of the principal of and interest on the Notes
or the purchase price thereof.

         Whenever moneys are to be applied pursuant to the provisions of this
Section, such moneys shall be applied at such times and from time to time as the
Trustee shall determine, having due regard to the amount of such moneys
available for application and the likelihood of additional moneys becoming
available for such application in the future. Whenever the Trustee shall apply
such moneys, it shall fix the date (which shall be an Interest Payment Date
unless it shall deem another date more suitable or as required by Section
8.03(a)) upon which such application is to be made. The Trustee shall give such
notice as it may deem appropriate of the deposit with it of any such moneys and
of the fixing of any such date, and shall not be required to 



                                      -44-
<PAGE>   49

make payment to the holder of any Note until such Note is presented to the
Trustee for appropriate endorsement or for cancellation if fully paid.

         Whenever all principal of and interest on all Notes have been paid
under the provisions of this Section and all expenses and charges of the Trustee
have been paid, and all obligations of the Borrower to the Bank pursuant to the
Reimbursement Agreement shall have been paid in full, the balance remaining in
the Note Fund shall be paid to the Borrower as provided in Section 4.12.

         Section 8.07. REMEDIES VESTED IN TRUSTEE. All rights of action
(including the right to file proof of claims) under this Indenture or under any
of the Notes may be enforced by the Trustee without the possession of any of the
Notes or the production thereof in any trial or other proceeding relating
thereto and any such suit or proceeding instituted by the Trustee may be brought
in its name, as Trustee, without the necessity of joining as plaintiffs or
defendants any holders of the Notes, and any recovery of judgment shall be for
the equal benefit of the holders of the Outstanding Notes.

         Section 8.08. LIMITATIONS ON SUITS. Except to enforce the rights given
under Sections 8.02(a), 8.05 and 8.12, no holder of any Note shall have any
right to institute any suit, action or proceeding in equity or at law for the
enforcement of this Indenture or for the execution of any trust thereof or any
other remedy hereunder, unless (a) a default has occurred of which the Trustee
has been notified as provided in Section 9.05, or of which by such Section it is
deemed to have notice, (b) such default has become an Event of Default and the
holders of at least a majority in aggregate principal amount of Notes
Outstanding have made written request to the Trustee and have offered it
reasonable opportunity either to proceed to exercise the powers hereinbefore
granted or to institute such action, suit or proceeding in its own name, (c)
such holders have offered to the Trustee indemnity as provided in Section
9.01(d), (d) the Trustee for 60 days after such notice fails or refuses to
exercise the powers hereinbefore granted, or to institute such action, suit or
proceeding in its own name or in the name of such holders, (e) no direction
inconsistent with such request has been given to the Trustee during such 60 day
period by the holders of a majority in aggregate principal amount of Notes
Outstanding, and (f) notice of such action, suit or proceeding is given to the
Trustee; it being understood and intended that no one or more holders of the
Notes shall have any right in any manner whatsoever to affect, disturb or
prejudice this Indenture by its, his or their action or to enforce any right
hereunder except in the manner herein provided, and that all proceedings at law
or in equity shall be instituted and maintained in the manner herein provided
and for the equal benefit of the holders of all Notes Outstanding.

         The notification, request and offer of indemnity set forth in the
preceding paragraph, at the option of the Trustee, shall be conditions precedent
to the execution of the powers and trusts in this Indenture and to any action or
cause of action for the enforcement of this Indenture or for any other remedy
hereunder.

         Section 8.09. TERMINATION OF PROCEEDINGS. In case the Trustee has
proceeded to enforce any right under this Indenture by the appointment of a
receiver, by entry or otherwise, and such proceedings have been discontinued or
abandoned for any reason, or have been determined adversely, then and in every
such case the Borrower, the Noteholders, the Bank and the Trustee 



                                      -45-
<PAGE>   50

shall be restored to their former positions and rights hereunder, and all
rights, remedies and powers of the Trustee shall continue as if no such
proceedings had been taken.

         Section 8.10. WAIVERS OF EVENTS OF DEFAULT. The Trustee, with the
written consent of the Bank, may waive any Event of Default hereunder and its
consequences and rescind any declaration of maturity of principal of and
interest on the Notes, and shall do so, with the written consent of the Bank,
upon the written request of the holders of (a) a majority in aggregate principal
amount of Notes Outstanding in respect of which default in the payment of
principal and/or interest exists, or (b) a majority in aggregate principal
amount of Notes Outstanding in the case of any other default; provided, however,
that:

                  (i) there shall not be waived without the consent of the
         holders of all Notes then Outstanding: (A) any default in the payment
         of the principal of any Outstanding Notes when due (whether at maturity
         or by mandatory or optional redemption); or (B) any default in the
         payment when due of the interest on any such Notes unless, in either
         case, prior to such waiver or rescission (1) there have been paid or
         provided for all arrears of interest at the rate borne by the Notes on
         overdue installments of principal, all arrears of payments of principal
         and interest when due and all expenses of the Trustee and the Bank in
         connection with such default, and (2) in case of any such waiver or
         rescission, or in case of the discontinuance, abandonment or adverse
         determination of any proceeding taken by the Trustee on account of any
         such default, the Trustee, the Bank and the Noteholders shall be
         restored to their respective former positions and rights hereunder;

                  (ii) no acceleration of maturity under Section 8.02 made at
         the request of the holders of not less than a majority in aggregate
         principal amount of Notes Outstanding shall be rescinded unless
         requested by the holders of a majority in aggregate principal amount of
         Notes Outstanding; and

                  (iii) unless the Trustee has been notified by the Bank in
         writing that the Letter of Credit is reinstated in full as to principal
         and interest and that the Bank has rescinded or withdrawn the written
         notice referred to in Section 8.01(d), there shall be no waiver or
         rescission so long as the Letter of Credit is in effect.

         No such waiver or rescission shall extend to any subsequent or other
default or impair any right consequent thereon.

         Section 8.11. NOTICE OF DEFAULTS; OPPORTUNITY OF BORROWER TO CURE
DEFAULTS. Notwithstanding anything in this Indenture to the contrary, no default
specified in Section 8.01(c) on the part of the Borrower shall constitute an
Event of Default until (a) notice of such default shall be given (i) by the
Trustee to the Borrower and the Bank, or (ii) by the holders of not less than a
majority in aggregate principal amount of Notes Outstanding to the Trustee, the
Borrower and the Bank, and (b)the Borrower has had 30 days after such notice to
correct such default or cause such default to be corrected, and shall not have
corrected such default or caused such default to be corrected within such
period; provided, however, if any default specified in Section 8.01(c) shall be
such that it cannot be corrected within such period, it shall not constitute an
Event of Default if corrective action is instituted by the Borrower within such
period and 



                                      -46-
<PAGE>   51

diligently pursued until such default is corrected; provided, further, that the
period for corrective action shall not in any event extend more than 180 days
after such notice to correct such default.

         With regard to any alleged default concerning which notice is given to
the Bank, the Bank may, but is under no obligation to, perform any covenant,
condition or agreement the nonperformance of which is alleged in such notice to
constitute a default, in the name and stead of the Borrower with full power to
do any and all things and acts to the same extent that the Borrower could do and
perform any such things and acts with power of substitution.

         Section 8.12. UNCONDITIONAL RIGHT TO RECEIVE PRINCIPAL AND INTEREST.
Notwithstanding the terms of Section 8.08, any Noteholder may enforce, by action
at law, payment of the principal or purchase price of and interest on any Note
at and after the maturity thereof, or on the date fixed for redemption or
purchase or (subject to the provisions of Section 8.02) on the same being
declared due prior to maturity as herein provided, or the obligation of the
Borrower to pay the principal or purchase price of and interest on each of the
Notes issued hereunder to the respective holders thereof at the time, place,
from the source and in the manner herein and in the Notes expressed.

         Section 8.13. NOTES OUTSTANDING. Notwithstanding anything else in this
Article to the contrary, but subject to Section 8.14, Borrower Notes shall not
be deemed to be Outstanding for purposes of this Article and the Borrower as
holder thereof shall not be entitled to any rights or payments therefor pursuant
to Sections 8.05, 8.06, 8.08, 8.10 and 8.12.

         Section 8.14. LETTER OF CREDIT BANK DEEMED OWNER. For all purposes of
this Article VIII (other than receipt of payments), the Bank shall, so long as
the Bank shall not have dishonored any draw under the Letter of Credit strictly
complying with the terms thereof (other than for a reason permitted by the
Letter of Credit or pursuant to any administrative or judicial order, ruling,
finding or decision), be deemed the holder and registered owner of all Notes. As
such, the Bank may take all actions permitted by this Article VIII to be taken
by the Trustee or the holders or registered owners of the Notes, to the
exclusion of the Trustee or the actual holders and registered owners of the
Notes; the purpose of this Section 8.14 being to permit the Bank to direct the
taking of actions and enforcement of remedies permitted by this Article VIII so
long as the Bank shall not have dishonored any draw under the Letter of Credit
complying with the terms thereof (other than for a reason permitted by the
Letter of Credit or pursuant to any administrative or judicial order, ruling,
rule, finding or decision).






                                      -47-
<PAGE>   52

         Section 8.15. SUBROGATION RIGHTS OF THE BANK.

         (a) Notwithstanding anything else contained herein, whenever the
Trustee shall make any payment to any Noteholder with funds drawn under Letter
of Credit pursuant hereto, the Trustee shall make such payments as agent for the
Bank and not as agent for the Borrower, and the Bank and its assigns shall
thereafter, to the extent of the amount so paid, be subrogated to the rights
thereon of the Noteholders to whom such payment was made, and the Trustee shall,
in the event of the payment of principal, keep a written record of such
payments. When a Noteholder has been paid the entire principal of and interest
on his Note with funds drawn under the Letter of Credit, such Note shall be
surrendered to the Trustee as agent for the Bank, in lieu of cancellation
thereof, and such Note shall be transferred and delivered to the Bank or as the
Bank shall direct.

         (b) In the event the Bank makes any payment with respect to the payment
of the principal or purchase price of or interest on any Note to the Trustee
under the Letter of Credit, the Bank shall be subrogated to the rights possessed
under the Indenture by the Trustee, the Borrower and the owners of such Notes so
paid, and the Bank shall be subrogated to the rights of the Borrower and the
Trustee under any other document, instrument or agreement securing repayment of
the principal or purchase price of and interest on the Notes. For purposes of
the Bank's subrogation rights hereunder, (i) any reference in the Indenture to
the Noteholders shall include the Bank, which shall be entitled to be treated as
if the Bank were a registered owner of Notes in the principal amount of any
principal payment made by the Bank under the Letter of Credit, (ii) any portion
of any Note as to which the principal or purchase price is paid with money
collected pursuant to the Letter of Credit shall be deemed to be outstanding
under the Indenture and the principal amount of such Note, together with
interest due and unpaid thereon, which have been paid by the Bank pursuant to
the Letter of Credit shall be deemed to be held by and owing to the Bank, and
(iii) the Bank may exercise any and all rights and benefits it would have under
the Indenture as a Holder of Notes to the extent of the principal amount of
Notes owned or deemed to be owned by the Bank and any and all interest so due
and unpaid thereon; provided that such Bank Notes (A) shall not be taken into
account in determining any deficiency for which a claim or draw is to be made
under the Letter of Credit, and (B) shall be subordinated in right of payment as
of any Interest Payment Date or upon the redemption or acceleration of the
Notes. Subrogation rights granted to the Bank hereunder are not intended to be
exclusive of any other rights or remedies available to the Bank, and such
subrogation rights shall be cumulative and shall be in addition to every right
or remedy given hereunder or under any other instrument or agreement with
respect to reimbursement of money paid by the Bank pursuant to the Letter of
Credit, and every other right or remedy now or hereafter existing at law or in
equity or by statute.

                              [End of Article VIII]



                                      -48-
<PAGE>   53


                                   ARTICLE IX

                             TRUSTEE, FISCAL AGENT,
                      PLACEMENT AGENT AND REMARKETING AGENT

         Section 9.01.   DUTIES OF TRUSTEE.

         (a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise its rights and powers and use the same degree of care and skill
in its exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.

         (b) Except during the continuance of an Event of Default:

                  (i) the Trustee need perform only those duties that are
         specifically set forth in this Indenture and no others and no implied
         covenants or obligations shall be read into this Indenture against the
         Trustee, and

                  (ii) in the absence of bad faith, negligence or willful
         misconduct on its part, the Trustee may conclusively rely, as to the
         truth of the statements and the correctness of the opinions expressed,
         upon certificates or opinions furnished to the Trustee and conforming
         to the requirements of this Indenture. However, the Trustee shall
         examine the certificates and opinions to determine whether they conform
         to the requirements of this Indenture.

         (c) The Trustee shall not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:

                  (i) this subsection does not limit the effect of (b) above;

                  (ii) the Trustee shall not be liable for any error of judgment
         made in good faith by a Responsible Officer, unless it is proved that
         the Trustee was negligent in ascertaining the pertinent facts; and

                  (iii) the Trustee shall not be liable with respect to any
         action it takes or omits to take in good faith in accordance with a
         direction received by it pursuant to Section 8.05.

         (d) The Trustee may refuse to perform any duty or exercise any right or
power unless it receives indemnity reasonably satisfactory to it against any
loss, liability or expense, but (i) the Trustee may not require indemnity as a
condition to declaring the principal of and interest on the Notes to be due
immediately under Section 8.02 and (ii) the Trustee may not require indemnity as
a condition to drawing on the Letter of Credit or to taking any action under the
Letter of Credit. The Trustee shall not be required to give any bond or surety
in respect of the execution of the trust created hereby or the powers granted
hereunder. The permissive right of the Trustee to do things enumerated under
this Indenture shall not be construed as a duty of the Trustee.






                                      -49-
<PAGE>   54

         (e) The Trustee shall not be liable for interest on any cash held by it
except as the Trustee may agree with the Borrower in writing.

         (f) The Trustee may conclusively rely on a Borrower Representative's
certificate as to whether a Bankruptcy Filing has occurred.

         (g) The Trustee shall strictly comply with the terms of the Letter of
Credit.

         (h) The Trustee shall maintain adequate records pertaining to the funds
held by the Trustee, the investment thereof and the disbursement therefrom;
notwithstanding anything to the contrary in this Indenture or the Notes, the
Trustee shall not be required to advance its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder.

         (i) Every provision of this Indenture that in any way relates to the
Trustee is subject to all the foregoing paragraphs of this Section.

         (j) The Trustee shall not in any event be responsible for ensuring that
the rate of interest due and payable on the Notes under this Indenture does not
exceed the highest legal rate of interest permissible under federal or state law
applicable thereto.

         Section 9.02.   RIGHTS OF TRUSTEE.

         (a) Subject to the foregoing Section, including, but not limited to,
Sections 9.01(b)(ii) and 9.01(c), the Trustee may rely on any document believed
by it to be genuine and to have been signed or presented by the proper Person.
The Trustee need not investigate any fact or matter stated in the document. Any
action taken by the Trustee pursuant to this Indenture upon the request or
authority or consent of any Person, who at the time of making such request or
authority or consent is the owner of any Note, shall be conclusive and binding
upon all future owners of any Note issued in replacement thereof.

         (b) Before the Trustee acts or refrains from acting, it may require a
certificate of an appropriate officer or officers of the Borrower or an Opinion
of Counsel stating that (i) the person making such certificate or opinion has
read such covenant or condition, (ii) the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based; (iii) in the opinion of such person, he has
made such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has been
complied with; and (iv) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with. The Trustee shall not
be liable for any loss or damage or action it takes or omits to take in good
faith in reliance on the certificate or Opinion of Counsel.

         (c) The Trustee may execute any of the trusts or powers hereunder and
perform any of its duties through agents, attorneys or employees or co-trustees
and shall not be responsible for the misconduct or negligence of any agent,
attorney, employee or co-trustee appointed with due care.



                                      -50-
<PAGE>   55

         Section 9.03. INDIVIDUAL RIGHTS OF TRUSTEE, ETC. The Trustee in its
individual or any other capacity may become the owner, custodian or pledgee of
Notes and may otherwise deal with the Bank or with the Borrower or its
affiliates with the same rights it would have if it were not Trustee. The Fiscal
Agent may do the same with like rights.

         Section 9.04. TRUSTEE'S DISCLAIMER. Subject to Sections 9.01(b) and
9.01(c):

         (a) the Trustee (i) makes no representation as to the validity or
adequacy of this Indenture or the Notes, and (ii) shall not be responsible for
any statement in the Notes or for the perfection of any lien created by this
Indenture or otherwise as security for the Notes;

         (b) the Trustee may construe any of the provisions of this Indenture
insofar as the same may appear to be ambiguous or inconsistent with any other
provision hereof, and any construction of any such provisions hereof by the
Trustee in good faith shall be binding upon the Noteholders, the Borrower and
the Remarketing Agent;

         (c) the Trustee shall not be responsible for the application of any of
the proceeds of the Notes or any other moneys deposited with it and paid out,
withdrawn or transferred hereunder if such application, payment, withdrawal or
transfer shall be made in accordance with the provisions of this Indenture;

         (d) except as to a determination whether the Borrower has delivered the
opinion of counsel or provided other satisfactory evidence to the Trustee that
the Borrower has satisfied the filing requirements set forth in the next to last
sentence of Section 6.04, the Trustee shall not be under any obligation to see
to the recording or filing of this Indenture, any financing statements or any
other instrument or otherwise to the giving to any person of notice of the
provisions hereof or thereof;

         (e) the Trustee shall not be under any obligation to effect or maintain
insurance or to renew any policies of insurance or to inquire as to the
sufficiency of any policies of insurance carried by the Borrower, or to report,
or make or file claims or proof of loss for, any loss or damage insured against
or which may occur, or to keep itself informed or advised as to the payment of
any taxes or assessments, or to require any such payment to be made; and

         (f) the Trustee shall not be personally liable for any claims by or on
behalf of any Person, arising from the conduct or management of, or from any
work or thing done on, the Project, and shall have no affirmative duty with
respect to compliance of the Project under state or federal laws pertaining to
the transport, storage, treatment or disposal of pollutants, contaminants, waste
or hazardous materials, or regulations, permits or licenses issued under such
laws or otherwise.

         Section 9.05. NOTICE OF DEFAULTS. The Trustee shall not have notice, or
be deemed to have notice, of any default or Event of Default under this
Indenture, other than an Event of Default under Section 8.01(a), (b) or (d),
unless specifically notified in writing at such address as set forth in Section
11.01 hereof of such default or Event of Default by Noteholders having, in 


                                      -51-
<PAGE>   56

the aggregate, not less than 25% in principal amount of the Notes Outstanding,
by the Fiscal Agent, by the Bank, by the Remarketing Agent or by the Borrower.

         If an event occurs which with the giving of notice or lapse of time or
both would be an Event of Default, and if the Event of Default is continuing and
if the Trustee has notice thereof as herein provided, the Trustee shall mail to
each Noteholder, the Remarketing Agent and the Bank notice of the Event of
Default upon its having notice of such occurrence. Except in the case of a
default in payment or purchase of any Notes, the Trustee may withhold the notice
if and so long as it determines that withholding the notice is in the interests
of Noteholders; provided, that in any event such notice shall not be withheld
from the Bank or the Remarketing Agent.

         Section 9.06. COMPENSATION AND INDEMNIFICATION OF TRUSTEE. For acting
as trustee under this Indenture, the Trustee shall be entitled to compensation
by the Borrower (which shall not be limited by any statute regulating the
compensation of a trustee of an express trust) of reasonable fees for the
Trustee's services and reimbursement of advances, counsel fees and other
expenses reasonably and necessarily made or incurred by the Trustee in
connection with its services under this Indenture.

         The Trustee shall be indemnified by the Borrower for, and shall be held
harmless against, any loss, liability or expense incurred without negligence,
willful misconduct or bad faith on the Trustee's part, arising directly or
indirectly out of or in connection with the acceptance or administration of the
trust created by this Indenture, including the costs and expenses (including
counsel fees) of defending itself against any claim or liability in connection
with the exercise or performance of any of its powers or duties hereunder.

         Section 9.07. ELIGIBILITY OF TRUSTEE. This Indenture shall always have
a Trustee that meets the qualifications set forth in this Section 9.07. Each
Trustee shall: (i) be acceptable to the Bank and the Remarketing Agent, (ii) be
a corporation or national banking association duly organized under the laws of
the United States of America or any state or territory thereof, doing business
and having an office in such location as shall be approved by the Remarketing
Agent, (iii) have together with its affiliates (herein defined) a combined
capital and surplus of at least $100,000,000 as set forth in its most recent
published annual report of condition, (iv) have senior long-term debt securities
or outstanding bank deposit obligations, as appropriate, rated "Baa3/P3" or
better by Moody's Investors Service, Inc., "BBB-/A3" or better by Standard &
Poor's Ratings Services, a Division of The McGraw-Hill Companies, Inc. or
"BBB-/F3" or better by Fitch IBCA, Inc., or be a direct or indirect subsidiary
of a bank or bank holding company which has senior long-term debt securities or
outstanding bank deposit obligations, as appropriate, rated "Baa3/P3" or better
by Moody's Investors Service, Inc., "BBB-/A3" or better by Standard & Poor's
Ratings Services, a Division of The McGraw-Hill Companies, Inc. or "BBB-/F3" or
better by Fitch IBCA, Inc., or otherwise be acceptable to any Rating Agency then
rating the Notes, and (v) be authorized by law to perform all the duties imposed
upon it by this Indenture. For purposes of this Section, the term "affiliate" of
the Trustee shall mean any Person which, directly or indirectly, controls or is
controlled by or is under common control with the Trustee.



                                      -52-
<PAGE>   57

         Section 9.08. REPLACEMENT OF TRUSTEE. The Trustee may resign and be
discharged of the trust created by this Indenture by notifying the Bank, the
Fiscal Agent, the Remarketing Agent and the Borrower; provided, however, that no
such resignation shall become effective until the appointment of a successor
Trustee, as hereinafter provided. The holders of not less than a majority in
principal amount of the Notes Outstanding may remove the Trustee by notifying
the removed Trustee and may appoint a successor Trustee with the Bank's and, so
long as no Event of Default has occurred, the Borrower's prior written consent;
provided, however, that no such removal shall become effective until the
appointment of a successor Trustee, as hereinafter provided. The Borrower shall
remove the Trustee at the request of the Bank or if the Trustee is prohibited
from acting by law or by regulation, rule or order of any court or
administrative body having jurisdiction over the Trustee; provided, however,
that no such removal shall become effective until the appointment of a successor
Trustee, as hereinafter provided. Upon the removal or replacement of the Trustee
for any reason, the Borrower shall give written notice thereof to the
Remarketing Agent, the Fiscal Agent and the Bank by first-class mail, postage
prepaid.

         If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Borrower, with the prior written consent
of the Bank, shall promptly appoint a successor Trustee. Notice of such
appointment shall be given by the Borrower to the Remarketing Agent and the
Fiscal Agent in writing by first-class mail.

         A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Bank, the Borrower, the Fiscal
Agent and the Remarketing Agent. Immediately thereafter, the retiring Trustee
shall transfer all property held by it as Trustee hereunder to the successor
Trustee, the resignation or removal of the retiring Trustee shall then (but only
then) become effective, and the successor Trustee shall have all the rights,
powers and duties of the Trustee under this Indenture. The successor Trustee
shall notify the holders of the Notes of its acceptance of the trusts hereunder
by first-class mail promptly following such acceptance.

         If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Bank, the
Borrower or the holders of a majority in principal amount of the Notes
Outstanding may petition any court of competent jurisdiction for the appointment
of a successor Trustee.

         If the Trustee fails to comply with Section 9.07, any Noteholder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.





                                      -53-
<PAGE>   58

         Section 9.09. FISCAL AGENT. The Borrower shall, with the prior approval
of the Bank and the Remarketing Agent, appoint the Fiscal Agent for the Notes
subject to the conditions set forth in Section 9.10. Norwest Bank Minnesota,
N.A., Minneapolis, Minnesota shall be the initial Fiscal Agent and by executing
this Indenture as Trustee also signifies its acceptance of the duties and
obligations imposed upon it hereunder as Fiscal Agent. Any successor Fiscal
Agent shall signify its acceptance of the duties and obligations imposed upon it
hereunder by a written instrument of acceptance delivered to the Borrower, the
Bank and the Trustee under which such Fiscal Agent will agree, particularly:

         (a) to carry out all of its duties set forth herein;

         (b) to hold all sums held by it pursuant to the Indenture in a
segregated account for the payment of the principal of or interest on Notes in
trust for the benefit of the Noteholders until such sums shall be paid to such
Noteholders or otherwise disposed of as herein provided;

         (c) to hold all Notes delivered to it pursuant to this Indenture, as
agent and bailee of, and in escrow for the benefit of, the respective holders
which have so delivered such Notes until moneys representing the purchase price
of such Notes have been delivered to or for the account of or to the order of
such holders; and

         (d) to keep such books and records as shall be consistent with prudent
industry practice and to make such books and records available for inspection by
the Trustee, the Remarketing Agent, the Bank and the Borrower at all reasonable
times.

         Section 9.10. QUALIFICATIONS OF FISCAL AGENT; RESIGNATION; REMOVAL. The
Fiscal Agent shall meet the qualifications of the Trustee set forth in Section
9.07. For acting under this Indenture, the Fiscal Agent shall be entitled to
compensation by the Borrower of reasonable fees for the Fiscal Agent's services
and reimbursement of advances, counsel fees and other expenses reasonably and
necessarily made or incurred by the Fiscal Agent in connection with its services
under this Indenture.

         The Fiscal Agent shall be indemnified by the Borrower for, and shall be
held harmless against, any loss, liability or expense directly or indirectly
incurred without negligence, willful misconduct or bad faith on the Fiscal
Agent's part, arising directly or indirectly out of or in connection with its
duties under this Indenture, including the costs and expenses (including counsel
fees) of defending itself against any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder.

         The Fiscal Agent may at any time resign and be discharged of the duties
and obligations created by this Indenture by giving at least 60 days' prior
written notice to the Bank, the Borrower, the Remarketing Agent and the Trustee.
The Fiscal Agent may be removed at any time at the written direction of the
Bank, and so long as no Event of Default has occurred and is continuing, the
Borrower, by an instrument filed with the Fiscal Agent, the Bank, the
Remarketing Agent and the Trustee. Except as provided below, no resignation or
removal will be effective until the successor has delivered an acceptance of its
appointment to the Trustee.

         In the event of the resignation or removal of the Fiscal Agent, the
Fiscal Agent shall pay over, assign and deliver any property held by it in such
capacity hereunder to its successor or, if there be no successor, to the
Trustee.

         In the event that the Borrower shall fail to appoint a Fiscal Agent
hereunder, or in the event that the Fiscal Agent shall resign or be removed, or
be dissolved, or if the property or affairs of the Fiscal Agent shall be taken
under the control of any state or federal court or administrative body because
of bankruptcy or insolvency, or for any other reason, and the 



                                      -54-
<PAGE>   59

Borrower shall not have appointed its successor as Fiscal Agent, the Trustee
shall IPSO FACTO be deemed to be the Fiscal Agent for all purposes of this
Indenture until the appointment by the Borrower of a successor Fiscal Agent.

         Section 9.11. DUTIES OF PLACEMENT AGENT.

         The Placement Agent shall, in accordance with the Placement Agreement,
use its reasonable best efforts to place the Notes with the initial purchasers
thereof on their date of issuance. The Placement Agent may for its own account
or as broker or agent for others deal in Notes and may do anything any other
Noteholder may do to the same extent as if the Placement Agent were not serving
as such.

         Section 9.12. [Reserved]

         Section 9.13. DUTIES OF REMARKETING AGENT.

         (a) The Remarketing Agent shall, in accordance with the Remarketing
Agreement and as provided in this Indenture, establish the Weekly Rates on the
Notes, remarket the Notes and perform the other duties provided for it to be
done hereunder. The Remarketing Agent may for its own account or as broker or
agent for others deal in Notes and may do anything any other Noteholder may do
to the same extent as if the Remarketing Agent were not serving as such. The
Remarketing Agent has no duty to act hereunder to the extent the Remarketing
Agent is not required to perform its obligations under the Remarketing
Agreement.

         (b) The Remarketing Agent may execute and perform any of its duties
hereunder through agents, attorneys or co-remarketing agents and shall not be
responsible for the misconduct or negligence of any agent, attorney or
co-remarketing agent appointed with due care.

         Section 9.14. ELIGIBILITY OF REMARKETING AGENT; REPLACEMENT. The
Remarketing Agent shall be a member of the National Association of Securities
Dealers, Inc. having excess net capital (as defined in Rule l5c-3 of the
Securities Exchange Act of 1934, as amended) of at least $25,000,000 or, in the
alternative, a national banking association having a combined capital stock,
surplus and undivided profits of at least $100,000,000, and, if the Notes are
rated by a Rating Agency, the Remarketing Agent must be rated at least "Baa3/P3"
by Moody's Investors Service, Inc., "BBB-/A3" by Standard & Poor's Rating
Services, a Division of The McGraw-Hill Companies, Inc., or "BBB-/F3" by Fitch
IBCA, Inc. or otherwise be acceptable to the Rating Agency then rating the
Notes.

         NationsBank, N.A. is hereby appointed as the initial Remarketing Agent
and is herein referred to as the "Remarketing Agent." Any Remarketing Agent
shall accept its appointment hereunder in writing. The Remarketing Agent may
resign by notifying the Borrower, the Trustee, the Fiscal Agent and the Bank at
least 45 days before the effective date of the resignation. The Bank or the
Borrower (but only with the Bank's prior written consent) may at any time remove
the Remarketing Agent and appoint a successor by notifying the Remarketing
Agent, the Fiscal Agent, the Bank and the Trustee at least 30 days prior to the
effective date of 


                                      -55-
<PAGE>   60

such removal. Notwithstanding anything herein to the contrary and subject to
satisfying the requirements of Section 5.03 with respect to the Substitute
Letter of Credit, the Borrower may simultaneously remove the Remarketing Agent
and the Bank by notifying the Remarketing Agent, the Bank, the Fiscal Agent and
the Trustee. Upon the receipt or giving, as the case may be, of notice of the
resignation or the removal of the Remarketing Agent, the Borrower, but only with
the prior written consent of the Bank, shall proceed to appoint a successor by
notifying the Remarketing Agent, the Bank, the Fiscal Agent and the Trustee. If
the Remarketing Agent resigns or is removed pursuant to the terms of this
Indenture and, after 45 days in the case of giving notice of resignation or 30
days in the case of receiving notice of removal, the Borrower has failed to
appoint a successor Remarketing Agent in accordance with the terms of this
Section 9.14, the Borrower shall immediately give notice thereof to the Trustee
and shall direct the Trustee to give notice to the holders of the Notes of a
mandatory repurchase of such Notes pursuant to Section 3.07(a)(ii) hereof. Such
mandatory repurchase shall take place on the first Interest Payment Date to
occur following such Notice of Mandatory Repurchase by the Trustee (or if such
date is not a Business Day, on the next succeeding Business Day), unless such
Mandatory Repurchase Date is a date less than 15 days after such Notice of
Mandatory Repurchase is given, in which case such mandatory repurchase shall
occur on the next succeeding Interest Payment Date (or, if such date is not a
Business Day, on the next succeeding Business Day). Notwithstanding the
foregoing, no such resignation or removal shall be effective until either (i)
the successor Remarketing Agent has delivered an acceptance of its appointment
to the Trustee, or (ii) the Mandatory Repurchase Date described above.

         Notwithstanding the foregoing, with prior written notice to (but
without the consent of) the Borrower, the Trustee, the Fiscal Agent, the Bank
and the Noteholders, the Remarketing Agent may assign or transfer any or all of
its rights and obligations hereunder and under the Remarketing Agreement to any
wholly-owned subsidiary or affiliate of the Remarketing Agent so long as such
subsidiary or affiliate meets the qualifications for a Remarketing Agent set
forth herein and is otherwise permitted to perform such obligations under all
applicable federal and state banking and securities laws, rules and regulations.

         Section 9.15. SUCCESSOR TRUSTEE, REMARKETING AGENT OR FISCAL AGENT BY
MERGER. If the Trustee, the Remarketing Agent or the Fiscal Agent consolidates
with, merges or converts into, or transfers all or substantially all its assets
(or, in the case of a bank or trust company, its corporate trust assets) to,
another corporation or national banking association, the resulting, surviving or
transferee corporation or national banking association without any further act
shall be the successor Trustee, Remarketing Agent or Fiscal Agent, provided that
such corporation or national banking association shall otherwise be eligible to
serve in such capacity under this Indenture.

         Section 9.16. APPOINTMENT OF CO-TRUSTEE. It is the purpose of this
Indenture that there shall be no violation of any law of any jurisdiction
(including particularly the law of the State) denying or restricting the right
of banking corporations or associations to transact business as trustee in such
jurisdiction. It is recognized that in case of litigation under this Indenture,
and in particular in case of the enforcement thereof upon a default or an Event
of Default, or in case the Trustee deems that by reason of any present or future
law of any jurisdiction it may not exercise any of the powers, rights or
remedies herein granted to the Trustee or hold title to the properties, 


                                      -56-
<PAGE>   61

in trust, as herein granted, or take any action which may be desirable or
necessary in connection therewith, it may be necessary that the Trustee appoint
an additional individual or institution as a separate or co-trustee. The
following provisions of this Section are adapted to these ends.

         In the event that the Trustee appoints an additional individual or
institution as a separate or co-trustee, each and every remedy, power, right,
claim, demand, cause of action, immunity, estate, title, interest and lien
expressed or intended by this Indenture to be exercised by or vested in or
conveyed to the Trustee with respect thereto shall be exercisable by and vest in
such separate or co-trustee but only to the extent necessary to enable such
separate or co-trustee to exercise such powers, rights and remedies, and every
covenant and obligation necessary to the exercise thereof by such separate or
co-trustee shall run to and be enforceable by either of them; provided, however,
that no co-trustee shall be liable by reason of any act or omission of any other
such co-trustee.

         Should any instrument in writing from the Borrower be required by the
separate or co-trustee so appointed by the Trustee for more fully and certainly
vesting in and confirming to him or it such properties, rights, powers, trusts,
duties and obligations, any and all such instruments in writing shall, on
request, be executed, acknowledged and delivered by the Borrower. In case any
separate or co-trustee or a successor to either shall die, become incapable of
acting, resign or be removed, all the estates, properties, rights, powers,
trusts, duties and obligations of such separate or co-trustee, so far as
permitted by law, shall vest in and be exercised by the Trustee until the
appointment of a new co-trustee or successor to such separate or co-trustee.

         Section 9.17 SEVERAL CAPACITIES. Anything in this Indenture to the
contrary notwithstanding, the same entity may serve hereunder as the Trustee,
the Bank, the Fiscal Agent and the Remarketing Agent and in any other
combination of such capacities, to the extent permitted by law; provided,
however, that in no event shall the same entity serve hereunder as the Trustee
and the Bank.

                               [End of Article IX]


                                      -57-
<PAGE>   62


                                    ARTICLE X

                   AMENDMENTS OF AND SUPPLEMENTS TO INDENTURE

         Section 10.01. WITHOUT CONSENT OF NOTEHOLDERS. The Borrower and the
Trustee may amend or supplement this Indenture or the Notes without prior notice
to or consent of any Noteholder:

         (a) to cure any ambiguity, inconsistency or formal defect or omission;

         (b) to grant to the Trustee for the benefit of the Noteholders
additional rights, remedies, powers or authority;

         (c) to subject to this Indenture additional collateral or to add other
agreements of the Borrower;

         (d) to modify this Indenture or the Notes to permit qualification under
the Trust Indenture Act of 1939, as amended, or any similar federal statute at
the time in effect; to permit the qualification of the Notes for sale under the
securities laws of any state of the United States; or to prevent the application
of the Investment Company Act of 1940, as amended, to any of the transactions
contemplated by, or any of the parties to, this Indenture or the Notes;

         (e) to provide for uncertificated Notes or to make any change necessary
to give effect to a custody agreement pursuant to Section 2.05(d);

         (f) to evidence the succession of a new Trustee or the appointment by
the Trustee of a co-trustee;

         (g) to make any change not materially adversely affecting any
Noteholder's rights requested by the Rating Agency in order (i) to obtain a
rating from the Rating Agency after the initial issuance of the Notes if the
Notes are initially issued without a rating equivalent to the rating assigned to
other securities supported by a Letter of Credit of the Bank, or (ii) to
maintain any rating on the Notes;

         (h) to make any change not materially adversely affecting any
Noteholder's rights to provide for or to implement the provisions of a Letter of
Credit;

         (i) to make any other change to provide for or to implement the
provisions of a Letter of Credit only if such Letter of Credit and the changes
to this Indenture become effective on a Mandatory Repurchase Date;

         (j) to make any change to be effective on any Mandatory Repurchase Date
provided that such change has been disclosed to all owners of Notes who purchase
on such date;

         (k) to make any change that does not materially adversely affect the
rights of any Noteholder; or



                                      -58-
<PAGE>   63

         (l) to add to this Indenture the obligation of the Trustee or the
Borrower to disclose such information regarding the Notes, the Project, the
Trustee, the Borrower or the Bank as shall be required or recommended to be
disclosed in accordance with applicable regulations or guidelines established
by, among others, the Securities and Exchange Commission.

         Section 10.02. WITH CONSENT OF NOTEHOLDERS. If an amendment of or
supplement to this Indenture or the Notes without any consent of Noteholders is
not permitted by the preceding Section, the Borrower and the Trustee may enter
into such amendment or supplement without prior notice to any Noteholders but
with the consent of the holders of at least a majority in principal amount of
the Notes Outstanding. However, without the consent of all Noteholders affected,
no amendment or supplement may (a) extend the maturity of the principal of, or
interest on, any Note, (b) reduce the principal amount of, or rate of interest
on, any Note or change the terms of any redemption, (c) effect a privilege or
priority of any Note or Notes over any other Note or Notes (except as provided
herein), (d) reduce the percentage of the principal amount of the Notes required
for consent to such amendment or supplement, (e) eliminate the holders' rights
to optionally tender the Notes, (f) extend the due date for the purchase of
Notes optionally tendered by the holders thereof or reduce the purchase price of
such Notes, (g) create a lien ranking prior to or on a parity with the lien of
this Indenture on the property described in the Granting Clause of this
Indenture, or (h) deprive any Noteholder of the lien created by this Indenture
on such property. In addition, if moneys or U. S. Government Obligations have
been deposited or set aside with the Trustee pursuant to Article VII for the
payment of Notes and those Notes shall not have in fact been actually paid in
full, no amendment to the provisions of that Article shall be made without the
consent of the holder of each of those Notes affected.

         Section 10.03. EFFECT OF CONSENTS. After an amendment or supplement
becomes effective, it shall bind every Noteholder unless it makes a change
described in any of the lettered clauses of the preceding Section. In such case,
the amendment or supplement shall bind each Noteholder who consented to it and
each subsequent holder of a Note or portion of a Note evidencing the same debt
as the consenting holder's Note.

         Section 10.04. NOTATION ON OR EXCHANGE OF NOTES. If an amendment or
supplement changes the terms of a Note, the Trustee may require the holder to
deliver it to the Fiscal Agent. The Fiscal Agent may place an appropriate
notation on the Note regarding the changed terms and return it to the holder.
Alternatively, if the Trustee and the Borrower determine, the Borrower in
exchange for the Note shall issue and the Fiscal Agent or the Trustee shall
authenticate a new Note that reflects the changed terms. In either event, the
cost of placing such notation on the Note(s) shall be borne by the Borrower.

         Section 10.05. SIGNING BY TRUSTEE OF AMENDMENTS AND SUPPLEMENTS. The
Trustee shall sign any amendment or supplement to this Indenture or the Notes
authorized by this Article if the amendment or supplement, in the judgment of
the Trustee, does not adversely affect the rights, duties, liabilities or
immunities of the Trustee. If it does, the Trustee may, but need not, sign it.
In signing an amendment or supplement, the Trustee shall be entitled to receive
and (subject to Section 9.01) shall be fully protected in relying on an Opinion
of Counsel stating that such 



                                      -59-
<PAGE>   64

amendment or supplement is authorized by this Indenture and is duly authorized,
executed and delivered and enforceable in accordance with its terms.

         Section 10.06. BANK, FISCAL AGENT AND REMARKETING AGENT CONSENTS
REQUIRED. Notwithstanding the other provisions of this Article X, an amendment
or supplement to this Indenture or the Notes shall not become effective unless
the Remarketing Agent (but only to the extent that such amendment or supplement
affects the rights, duties or obligations of the Remarketing Agent hereunder),
the Fiscal Agent (but only to the extent that such amendment or supplement
affects the rights, duties or obligations of the Fiscal Agent hereunder) and the
Bank deliver to the Trustee their written consents to the amendment or
supplement. In any event, no amendment or supplement hereto shall become
effective until the Remarketing Agent and the Fiscal Agent acknowledge receipt
of a copy of such supplement or amendment.

         Section 10.07. NOTICE TO NOTEHOLDERS. The Trustee shall cause notice of
the execution of a supplemental Indenture to be mailed promptly by first-class
mail to each Noteholder at the holder's registered address. The notice shall
state briefly the nature of the supplemental Indenture and that copies thereof
are on file with the Trustee for inspection by all Noteholders.

         Section 10.08. OPINION OF COUNSEL REQUIRED. An amendment or supplement
to this Indenture shall not become effective unless the Trustee has received an
Opinion of Counsel to the Borrower addressed to the Trustee, the Fiscal Agent,
the Bank, the Borrower and the Remarketing Agent to the effect that such
amendment or supplement is authorized by this Indenture.

                               [End of Article X]






                                      -60-
<PAGE>   65


                                   ARTICLE XI

                                  MISCELLANEOUS

         Section 11.01 NOTICES.

         (a) Any notice, request, direction, designation, consent,
acknowledgment, certification, appointment, waiver or other communication
required or permitted by this Indenture or the Notes must be in writing except
as expressly provided otherwise in this Indenture or the Notes.

         (b) Except as otherwise provided herein, any notice or other
communication required or permitted by this Indenture shall be sufficiently
given and deemed given when (i) delivered by hand, (ii) sent by a nationally
recognized overnight courier, (iii) mailed by first-class mail, postage prepaid,
or, (iv) unless specifically prohibited under the terms of the Indenture, by
telecopy under the provisions of this Indenture, addressed as follows:

         (1)      If to the Borrower:

                  Kellstrom Industries, Inc.
                  1100 International Parkway
                  Sunrise, Florida  33323
                  Attn:  Michael W. Wallace, Chief Financial Officer
                  Facsimile Number:  (954) 845-0428

                  with a copy to:

                  Akerman, Senterfitt & Eidson, P.A.
                  255 S. Orange Avenue
                  Orlando, Florida  32802
                  Attn:  T. Dean Dickson, Esq.
                  Facsimile Number:  (407) 843-6610

         (2) If to the Trustee or the Fiscal Agent:

                  Norwest Bank Minnesota, N.A.
                  Norwest Center
                  6th Street and Marquette Avenue
                  Minneapolis, Minnesota  55479-0069
                  Attn:  Corporate Trust Department
                  Facsimile Number:  (612) 667-9825

         (3)      If to the Remarketing Agent:

                  NationsBank, N.A.
                  BankAmerica Corporate Center
                  100 North Tryon Street
                  NC1-007-06-06
                  Charlotte, North Carolina 28255
                  Attn:  Credit Enhanced Product Trading
                  Facsimile:  (704) 335-2291



                                      -61-
<PAGE>   66

                  with copies to:

                  NationsBank, N.A.
                  Atlanta Plaza Building
                  GA1-006-09-13
                  600 Peachtree Street, N.E., 9th Floor
                  Atlanta, Georgia 30308
                  Attn:  Corporate Taxable Finance
                  Facsimile Number:  (404) 607-6484

                  and

                  Mays & Valentine, L.L.P.
                  NationsBank Center
                  1111 East Main Street
                  Richmond, Virginia  23219
                  Attn:  William R. Derry, Jr., Esq.
                  Facsimile Number:  (804) 697-1339

         (4)      If to the Bank:

                  NationsBank, N.A.
                  600 Peachtree Street,, 13th Floor
                  Atlanta, Georgia  30308
                  Attn:  Robert Walker
                  Facsimile Number:  (404) 607-6281

                  with a copy to:

                  English, McCaughan & O'Bryan, P.A.
                  100 N.E. 3rd Avenue
                  Fort Lauderdale, Florida  33301
                  Attn:  Judith L. Keiser, Esquire
                  Facsimile Number:  (954) 763-2439





                                      -62-
<PAGE>   67

Notice to the Trustee and other information necessary to draw on the Letter of
Credit shall be sent by telephone (promptly confirmed by telecopy), telecopy or
as may be otherwise designated in writing by the Trustee. Any addressee may
designate additional or different addresses or telecopy numbers for purposes of
this Section.

         A copy of any notice to any party given hereunder (with the exception
of notices required for drawings under any Letter of Credit) shall be provided
to the Remarketing Agent and the Bank in the manner such notice is otherwise
given.

         The beneficial owner of $1,000,000 or more of Notes may, by written
notice to the Trustee and the Fiscal Agent, request that all notices given with
respect to such Notes be given to the registered owner thereof and to a second
address provided in such written notice to the Trustee and the Fiscal Agent.
Upon receipt of such notice described in the preceding sentence, the Trustee and
the Fiscal Agent, as applicable, shall send all notices relating to the relevant
Notes to the registered owner and the second address so designated.

         Section 11.02. NOTEHOLDERS' CONSENTS. Any consent or other instrument
required by this Indenture to be signed by Noteholders may be in any number of
concurrent documents and may be signed by a Noteholder or by the holder's agent
appointed in writing. Proof of the execution of such instrument or of the
instrument appointing an agent and of the ownership of Notes, if made in the
following manner, shall be conclusive for any purposes of this Indenture with
regard to any action taken by the Trustee under the instrument:

         (a) The fact and date of a person's signing an instrument may be proved
by the certificate of any officer in any jurisdiction who by law has power to
take acknowledgments within that jurisdiction that the person signing the
writing acknowledged before the officer the execution of the writing, or by an
affidavit of any witness to the signing.

         (b) The fact of ownership of Notes, the amount or amounts, numbers and
other identification of such Notes and the date of holding shall be proved by
the registration books kept pursuant to this Indenture.

         In determining whether the holders of the required principal amount of
Notes Outstanding have taken any action under this Indenture, Notes owned by the
Borrower or any subsidiary or affiliate of the Borrower shall be disregarded and
deemed not to be Outstanding; provided, however, that Bank Notes will not be
disregarded and shall be deemed to be Outstanding for such purpose. In
determining whether the Trustee shall be protected in relying on any such
action, only Notes which the Trustee knows to be so owned shall be disregarded.

         Section 11.03. NOTICES TO RATING AGENCY. The Trustee shall notify each
Rating Agency in writing of the occurrence of any of the following events prior
(to the extent possible) to the occurrence thereof: (a) any change in the
identity of the Trustee, the Fiscal Agent or the Remarketing Agent; (b) any
amendment or modification of or change to this Indenture, the Reimbursement
Agreement (to the extent the Trustee has notice thereof) or the Letter of
Credit; (c) the expiration, substitution or termination of the Letter of Credit,
or any extension thereof; 



                                      -63-
<PAGE>   68

(d) the payment in full of the principal of and interest on the Notes; and (e)
the delivery of any written opinion of Bankruptcy Counsel required to be
delivered under the terms of this Indenture.

         Section 11.04. LIMITATION OF RIGHTS. Nothing expressed or implied in
this Indenture or the Notes shall give any person other than the Trustee, the
Bank, the Fiscal Agent, the Borrower, the Remarketing Agent and the Noteholders
any right, remedy or claim under or with respect to this Indenture.

         Section 11.05. SEVERABILITY. If any provision of this Indenture shall
be determined to be unenforceable by a court of law, such holding shall not
affect any other provision of this Indenture; provided, no holding or invalidity
shall require the Trustee to make any payment from any source except those
pledged hereunder.

         Section 11.06. PAYMENTS DUE ON NON-BUSINESS DAYS. If a payment date is
not a Business Day at the place of payment, then payment shall be made at that
place on the next succeeding Business Day, with the same force and effect as if
made on the payment date, and, in the case of any such payment, no interest
shall accrue for the intervening period.

         Section 11.07. GOVERNING LAW. This Indenture and the authority of the
Borrower to issue the Notes shall be governed by and construed in accordance
with the laws of the State.

         Section 11.08. COUNTERPARTS. This Indenture may be signed in several
counterparts, each of which shall be an original and all of which together shall
constitute the same instrument.

         Section 11.09. REFERENCES TO THE BANK. The Bank has no rights to
enforce any provision of this Indenture during any period in which it has
dishonored a draw under any Letter of Credit presented in strict compliance with
the terms thereof (other than for a reason permitted by the Letter of Credit or
pursuant to any administrative or judicial order, ruling, rule, finding or
decision).

                               [End of Article XI]



                                      -64-
<PAGE>   69


IN WITNESS WHEREOF, the Borrower and the Trustee have caused this Indenture to
be executed in their respective names by their respective duly authorized
officers, all as of the date first above written.

                                         KELLSTROM INDUSTRIES, INC.



                                         By:
                                           -------------------------------------
                                            Title:






                       [Signatures continue on next page.]






                                      -65-
<PAGE>   70


                [Counterpart signature page to Indenture of Trust
         dated as of February 1, 1999 between Kellstrom Industries, Inc.
                        and Norwest Bank Minnesota, N.A.]



                                          NORWEST BANK MINNESOTA, N.A.



                                          By:
                                             -----------------------------------
                                             Title: 




                                      -66-
<PAGE>   71
                                    EXHIBIT A

                                  FORM OF NOTE

Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the issuer or its
agent for registration of transfer, exchange, or payment, and any certificate is
registered in the name of Cede & Co., or in such other name as is requested by
an authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.

REGISTERED                                              REGISTERED
----------                                              ----------

No.  R-___                                              $               


                            UNITED STATES OF AMERICA
                                STATE OF FLORIDA


                           KELLSTROM INDUSTRIES, INC.
                       TAXABLE VARIABLE RATE DEMAND NOTES
                                   SERIES 1999


<TABLE>
<CAPTION>
        INTEREST RATE                  MATURITY DATE                 ISSUE DATE                      CUSIP
        -------------                  -------------                 ----------                      -----
<S>                                  <C>                         <C>                              <C>
         As Described                February 1, 2029             February 22, 1999              [488035 AD8]

</TABLE>

REGISTERED OWNER: CEDE & CO.

PRINCIPAL AMOUNT:

         Kellstrom Industries, Inc., a Delaware corporation (the "Borrower"),
for value received, hereby promises to pay, as hereinafter provided, to the
registered owner, or registered assigns or legal representative, upon
presentation and surrender hereof at the principal corporate trust office of
Norwest Bank Minnesota, N.A., or its successor in trust (the "Fiscal Agent"), or
by wire transfer, as provided in the Indenture, as hereinafter defined, the
principal sum set forth above on the Maturity Date set forth above, subject to
the prior mandatory or optional redemption of this Note as hereinafter 




                                      A-1
<PAGE>   72

provided, and to pay interest thereon at the Interest Rate, as hereinafter
described, payable in arrears on the Interest Payment Date, as hereinafter
defined, until payment in full and, to the extent permitted by law, interest on
overdue installments of such interest, from the Interest Payment Date next
preceding the date on which this Note is authenticated, unless this Note is (a)
authenticated before the first Interest Payment Date following the initial
delivery of the Notes, in which case it shall bear interest from the date of
such initial delivery, (b) authenticated after a Record Date and before the
subsequent Interest Payment Date, in which case interest shall be computed from
the subsequent Interest Payment Date, or (c) authenticated upon an Interest
Payment Date, in which case it shall bear interest from such Interest Payment
Date (unless interest on this Note is in default at the time of authentication,
in which case this Note shall bear interest from the date to which interest has
been paid). Except as otherwise provided in the Indenture, interest hereon shall
be paid to the person in whose name this Note is registered at the close of
business on the Record Date, as hereinafter defined, by check or draft mailed to
such person at his address as it appears on the register maintained by the
Fiscal Agent, or by wire transfer for holders of an aggregate principal amount
of at least $500,000, at the request of such holders, as provided in the
Indenture. Principal of and interest on or the purchase price of this Note are
payable in lawful money of the United States of America at the principal
corporate trust office of the Fiscal Agent upon presentation and surrender of
this Note. If any payment hereon is due on a day which is not a Business Day,
payment shall be made on the next succeeding Business Day with the same force
and effect as if made on the day such payment was due and, in the case of any
such payment, no interest shall accrue for the intervening period.

         THE NOTE IS NOT A DEPOSIT OR OBLIGATION OF, OR GUARANTEED BY,
BANKAMERICA CORPORATION OR ANY OF ITS AFFILIATED BANKS (INCLUDING THE BANK), IS
NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, AND IS SUBJECT TO
INVESTMENT RISK, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
ALTHOUGH NOT GUARANTEED BY THE BANK, PAYMENTS OF PRINCIPAL OF AND INTEREST ON
THE NOTE (AND IF REMARKETING PROCEEDS ARE NOT AVAILABLE, THE PURCHASE PRICE OF
THE NOTE) WILL BE MADE FROM DRAWINGS UNDER THE LETTER OF CREDIT ISSUED BY THE
BANK. THE FAILURE OF THE BANK TO HONOR ANY DRAWING UNDER THE LETTER OF CREDIT
WILL NOT GIVE RISE TO ANY CLAIMS OTHER THAN AGAINST THE BANK.

         This Note is one of an issue of $6,670,000 in aggregate principal
amount of Kellstrom Industries, Inc. Taxable Variable Rate Demand Notes, Series
1999 (the "Notes"), of like date and tenor, except as to number and principal
amount, authorized and issued pursuant to the Indenture of Trust dated as of
February 1, 1999 (the "Indenture") between the Borrower and Norwest Bank
Minnesota, N.A., as trustee (the "Trustee"), to finance, in whole or in part,
the cost of the acquisition, construction and equipping of a headquarters
facility for the Borrower in Sunrise, Florida (the "Project"), including
reimbursing the Borrower for any of such costs paid by it prior to the issuance
of the Notes, and to pay certain costs of issuing the Notes and other related
costs. Pursuant to the Indenture, the Borrower has caused NationsBank, N.A. (the
"Bank") to issue its irrevocable Letter of Credit dated the date of the issuance
of the Notes (the "Letter of Credit") in favor of the Trustee, in an amount
sufficient to pay the outstanding principal amount of and unpaid interest on or
purchase price of the Notes, but not to exceed 





                                      A-2
<PAGE>   73

$6,746,751, pursuant to a Letter of Credit Reimbursement Agreement dated as of
February 1, 1999 (the "Reimbursement Agreement"), between the Bank and the
Borrower, which Letter of Credit has been issued in favor of the Trustee and
which initially expires (subject to early termination or extension as provided
in the Reimbursement Agreement and the Indenture) on February 22, 2002.
Substitute letters of credit may be delivered in accordance with the Indenture.
The Trustee will draw on the Letter of Credit from time to time to pay the
principal of, interest on and purchase price of the Notes. Reference is hereby
made to the Indenture, the Letter of Credit and the Reimbursement Agreement and
to all amendments thereof and supplements thereto for a description of the
provisions, among others, with respect to the nature and extent of the security,
the default provisions, the rights, duties and obligations of the Borrower and
the Trustee or the rights of the holders of the Notes and the terms upon which
the Notes are issued and secured.

         The Notes are issuable as fully registered Notes in denominations of
$100,000 or any integral multiple of $5,000 in excess thereof (the "Authorized
Denominations"). This Note, upon surrender hereof at the principal office of the
Fiscal Agent with a written instrument of transfer satisfactory to the Fiscal
Agent executed by the holder hereof or his attorney duly authorized in writing,
may, at the option of the holder hereof, be exchanged for an equal aggregate
principal amount of Notes of the same aggregate principal amount and tenor as
the Notes being exchanged and of any Authorized Denomination. This Note is
transferable as provided in the Indenture, subject to certain limitations
therein contained, only upon the register of the Fiscal Agent, and only upon
surrender of this Note for transfer to the Fiscal Agent accompanied by a written
instrument of transfer (in substantially the form of the assignment attached
hereto) duly executed by the holder hereof or his duly authorized attorney.
Thereupon, one or more new Notes of any Authorized Denomination or Denominations
and in the same aggregate principal amount and tenor as the Note surrendered
will be issued to the designated transferee or transferees.

         The person in whose name this Note is registered shall be deemed and
regarded as the absolute owner hereof for any purpose, as provided in the
Indenture.

         The Fiscal Agent or NationsBank, N.A., as Remarketing Agent (together
with its successors, the "Remarketing Agent") may make appropriate arrangements
for the Notes (or any portion thereof) to be issued or held by means of a
book-entry system administered by The Depository Trust Company ("DTC") with no
physical distribution of Notes made to the public (other than those Notes, if
any, not held under such book-entry system). References in the remainder of this
paragraph and in the next five succeeding paragraphs to a Note or the Notes
shall be construed to mean the Note or Notes held under the book-entry system.
In such event, one Note for each maturity will be issued to DTC, and immobilized
in its custody. A book-entry system will be employed, evidencing ownership of
the Notes in Authorized Denominations, with transfers of beneficial ownership
effected on the records of DTC and the DTC Participants pursuant to rules and
procedures established by DTC.

         Each DTC Participant will be credited in the records of DTC with the
amount of such DTC Participant's interest in the Notes. Beneficial ownership
interests in the Notes may be purchased by or through DTC Participants. The
holders of such beneficial ownership interests are hereinafter referred to as
the "Beneficial Owners." The Beneficial Owners will not receive 


                                      A-3
<PAGE>   74

Notes representing their beneficial ownership interests. The ownership interests
of each Beneficial Owner will be recorded through the records of the DTC
Participant from which such Beneficial Owner purchased its Notes. Transfers of
ownership interests in the Notes will be accomplished by book entries made by
DTC and, in turn, by DTC Participants acting on behalf of Beneficial Owners. SO
LONG AS CEDE CO., AS NOMINEE FOR DTC, IS THE REGISTERED OWNER OF THE NOTES, THE
TRUSTEE AND THE FISCAL AGENT SHALL TREAT CEDE & CO. AS THE ONLY HOLDER OF THE
NOTES FOR ALL PURPOSES UNDER THE INDENTURE, INCLUDING RECEIPT OF ALL PRINCIPAL
OF AND INTEREST ON THE NOTES, RECEIPT OF NOTICES, VOTING AND REQUESTING OR
DIRECTING THE TRUSTEE TO TAKE OR NOT TO TAKE, OR CONSENTING TO, CERTAIN ACTIONS
UNDER THE INDENTURE.

         Payments of principal, interest and purchase price with respect to the
Notes, so long as DTC is the only owner of the Notes, will be paid by the Fiscal
Agent directly to DTC or its nominee, Cede & Co. as provided in the Blanket
Letter of Representation from the Borrower to DTC (the "Letter of
Representation"). DTC will remit such payments to DTC Participants, and such
payments thereafter will be paid by DTC Participants to the Beneficial Owners.
The Borrower, the Fiscal Agent and the Trustee shall not be responsible or
liable for payment by DTC or DTC Participants, for sending transaction
statements or for maintaining, supervising or reviewing records maintained by
DTC or DTC Participants.

         In the event that (a) DTC determines not to continue to act as
securities depository for the Notes or (b) the Borrower or the Remarketing Agent
determines that the continuation of the book-entry system of evidence and
transfer of ownership of the Notes would adversely affect their interests or the
interests of the Beneficial Owners of the Notes, the Borrower shall discontinue
the book-entry system with DTC. If the Remarketing Agent fails to identify
another qualified securities depository to replace DTC, the Remarketing Agent
will cause the Fiscal Agent to authenticate and deliver replacement Notes in the
form of fully registered Notes to each Beneficial Owner.

         THE BORROWER, THE BANK, THE FISCAL AGENT, THE REMARKETING AGENT AND THE
TRUSTEE SHALL NOT HAVE ANY RESPONSIBILITY OR OBLIGATIONS TO ANY DTC PARTICIPANT
OR ANY BENEFICIAL OWNER WITH RESPECT TO (A) THE NOTES; (B) THE ACCURACY OF ANY
RECORDS MAINTAINED BY DTC OR ANY DTC PARTICIPANT; (C) THE PAYMENT BY DTC OR ANY
DTC PARTICIPANT OF ANY AMOUNT DUE TO ANY BENEFICIAL OWNER IN RESPECT OF THE
PRINCIPAL OF AND INTEREST ON THE NOTES; (D)THE DELIVERY OR TIMELINESS OF
DELIVERY BY DTC OR ANY DTC PARTICIPANT OF ANY NOTICE DUE TO ANY BENEFICIAL OWNER
WHICH IS REQUIRED OR PERMITTED UNDER THE TERMS OF THE INDENTURE TO BE GIVEN TO
BENEFICIAL OWNERS; (E) THE SELECTION OF BENEFICIAL OWNERS TO RECEIVE PAYMENTS IN
THE EVENT OF ANY PARTIAL REDEMPTION OF THE NOTES; OR (F) ANY CONSENT GIVEN OR
OTHER ACTION TAKEN BY DTC, OR ITS NOMINEE, CEDE & CO., AS OWNER.

         In the event that a book-entry system of evidence and transfer of
ownership of the Notes is discontinued pursuant to the provisions of the
Indenture, the Notes shall be delivered solely as 



                                      A-4
<PAGE>   75

fully registered Notes without coupons in the Authorized Denominations, shall be
lettered "R" and numbered separately from "1" upward, and shall be payable,
executed, authenticated, registered, exchanged and canceled pursuant to the
provisions hereof and of the Indenture.

         All references herein to time shall be Eastern Time unless otherwise
expressly stated herein.

         Except as otherwise specifically provided herein, all capitalized words
and terms shall have the same meaning when used herein as set forth in the
Indenture.

1.       INTEREST RATE ON NOTES.

         The Notes shall bear interest as provided herein from the Issue Date
referenced above until paid in full. Interest accrued on the Notes shall be paid
on each Interest Payment Date, commencing on March 1, 1999. The Notes shall bear
interest at the rate determined by NationsBank, N.A., as Placement Agent, on or
before the Issue Date as necessary to sell all of the Notes at par and to apply
until and including the next succeeding Wednesday and thereafter at the Weekly
Rate determined by the Remarketing Agent in the manner set forth below; provided
that no Weekly Rate shall exceed the Maximum Rate. The amount of interest
payable on any Interest Payment Date (a) shall be computed on the basis of the
actual number of days elapsed over a year of 365 or 366 days, whichever may be
applicable, and (b) shall be the amount of interest accrued thereon from the
preceding Interest Payment Date (or such other date as described above) to, but
excluding, the Interest Payment Date on which interest is being paid.

         During each Weekly Rate Period, the Notes shall bear interest at the
Weekly Rate, determined by the Remarketing Agent initially no later than the
first day of each Weekly Rate Period and thereafter no later than Wednesday (or
the next succeeding Business Day, if such Wednesday is not a Business Day) of
each week during such Weekly Rate Period. The Weekly Rate shall be the minimum
rate of interest which the Remarketing Agent determines, in its sole discretion
based upon market conditions, would be necessary to sell the Notes on such date
of determination in a secondary market sale at the principal amount thereof,
plus, if such sale would not be on an Interest Payment Date, accrued interest.

         If the Remarketing Agent has not determined a Weekly Rate for any week,
the Weekly Rate shall be the same as the Weekly Rate for the immediately
preceding week. If for any reason, the Weekly Rate cannot otherwise be
determined for any week as hereinbefore provided, the Weekly Rate for such week
shall be a rate per annum equal to 100% of the rate published in the then most
recent edition of THE BOND BUYER for 30 day prime taxable commercial paper or,
if THE BOND BUYER no longer publishes such information, such other publication
or provider of such information as the Remarketing Agent may select.

         The first Weekly Rate determined for each Weekly Rate Period shall
apply to the period commencing on the first day of such Weekly Rate Period and
ending on the next succeeding Wednesday (or the next succeeding Business Day, if
such Wednesday is not a Business Day). Thereafter, each Weekly Rate shall apply
to the period commencing on Thursday (or if the date 



                                      A-5
<PAGE>   76

of determination is not a Wednesday, on the next following Business Day) and
ending on the next succeeding date of determination.

         "Interest Payment Date" means the first day of each month commencing
March 1, 1999.

         "Maximum Rate" means the lesser of (a) the highest interest rate which
may be borne by the Notes under Florida law or (b) twelve percent (12%) per
year.

         "Record Date" means the Fiscal Agent's close of business on the
Business Day next preceding each Interest Payment Date.

         The Remarketing Agent's determination of the Weekly Rates shall be
conclusive and binding on the Noteholders, the Remarketing Agent, the Trustee,
the Fiscal Agent, the Bank and the Borrower, absent manifest error.

2.       REDEMPTION OF NOTES.

         (a) OPTIONAL REDEMPTION. The Notes may be redeemed by the Borrower, in
whole on any Business Day, or in part on any Interest Payment Date, or if such
Interest Payment Date is not a Business Day, on the next succeeding Business
Day, at a redemption price equal to the principal thereof, plus accrued interest
to, but not including, the redemption date; provided that any such redemption in
part shall be in a minimum principal amount of $100,000 or a whole multiple of
$5,000 in excess thereof.

         (b) MANDATORY REDEMPTION.

         (i) The Notes are not subject to mandatory sinking fund redemption
         prior to their scheduled maturity; provided, however, that pursuant to
         the terms of the Reimbursement Agreement, the Bank may direct the
         Borrower to exercise its right of optional redemption of the Notes in
         part from time to time on the dates specified in the Reimbursement
         Agreement.

         (ii) The Notes are subject to mandatory redemption at a redemption
         price equal to the principal amount thereof plus accrued interest to,
         but not including, the redemption date in whole or in part, without
         premium, at the earliest date for which notice of redemption can be
         given upon receipt by the Trustee of written notice from the Bank
         requesting such redemption, specifying the principal amount of the
         Notes to be redeemed (if less than all of the Notes Outstanding are to
         be redeemed) and stating that (A) an event of default under and as
         defined in the Reimbursement Agreement has occurred and is continuing,
         or (B) it holds as the registered or beneficial owner Notes purchased
         by the Bank in accordance with Section 3.07 or 3.01(e) or 8.03(a) of
         the Indenture and not remarketed; provided, however, only Notes so held
         by the Bank shall be subject to mandatory redemption pursuant to this
         subsection (B).

         (iii) The Notes are subject to mandatory redemption at a redemption
         price equal to the principal amount thereof plus accrued interest to,
         but not including, the redemption date, 



                                      A-6
<PAGE>   77

         in whole, without premium, on the Interest Payment Date which next
         precedes by at least fourteen (14) days the stated expiration or
         termination date of the Letter of Credit or, if such Interest Payment
         Date is not a Business Day, on the next succeeding Business Day, unless
         by the 20th day prior to such Interest Payment Date the Borrower
         provides to the Trustee, and the Trustee has accepted, (A) evidence
         that such Letter of Credit has been extended or (B) a Substitute Letter
         of Credit to be effective on or prior to such Interest Payment Date, in
         which event a mandatory repurchase shall occur in accordance with the
         terms of subsection 3(b)(i) below.

         (iv) When Notes are subject to mandatory redemption pursuant to
         subsections (ii) or (iii) of 2(b), Notes paid by the Borrower or paid
         from a draw or claim under the Letter of Credit or otherwise paid by or
         on behalf of the Bank shall be deemed to have been purchased in lieu of
         redemption on the applicable redemption date at a purchase price equal
         to the principal amount thereof, plus interest accrued thereon to, but
         not including, the date of such purchase, if the Trustee has received a
         written request on or before said purchase date from the Borrower or
         the Bank, as the case may be, specifying that the moneys provided or to
         be provided by such party shall be used to purchase Notes in lieu of
         redemption. No purchase of Notes by the Borrower or the Bank pursuant
         to the Indenture or advance or use of any moneys to effectuate any such
         purchase shall be deemed to be a payment or redemption of the Notes or
         any portion thereof, and such purchase shall not operate to extinguish
         or discharge the indebtedness evidence by such Notes. No Notes
         purchased pursuant to this subsection (iv) shall be required to be
         remarketed by the Remarketing Agent pursuant to the Indenture, unless
         the Remarketing Agent specifically agrees to undertake such
         remarketing.

         (d) NOTICE OF REDEMPTION; EFFECT.

         (i) The Trustee will prepare and the Fiscal Agent will send notice of
         each redemption to each Noteholder whose Notes are being redeemed, the
         Borrower, the Remarketing Agent and the Bank by first-class mail at
         least 30 days but not more than 60 days before each redemption, except
         for any mandatory redemption pursuant to subsection 2(b)(iii) in which
         case such notice shall be given at least 15 but not more than 19 days
         before such redemption.

             Failure by the Fiscal Agent to give any notice of redemption
         or any defect in such notice as to any particular Notes will not affect
         the validity of the call for redemption of any Notes in respect of
         which no such failure or defect has occurred. The notice shall identify
         the Notes or portions thereof to be redeemed and set forth certain
         other information relevant to such redemption, including the redemption
         date and redemption price.

         (ii) On the date fixed for redemption, notice having been given in the
         manner and under the conditions provided in the Indenture, the Notes or
         portions thereof called for redemption shall be due and payable at the
         redemption price provided therefor, plus accrued interest to, but not
         including, such date. On such redemption date, if moneys sufficient to
         pay the redemption price of the Notes to be redeemed, plus accrued
         interest



                                      A-7
<PAGE>   78

         thereon to, but not including, the date fixed for redemption, are held
         by the Fiscal Agent, interest on the Notes called for redemption shall
         cease to accrue; such Notes shall cease to be entitled to any benefits
         or security under the Indenture or to be deemed Outstanding; and the
         holders of such Notes shall have no rights in respect thereof except to
         receive payment of the redemption price thereof, plus accrued interest
         to, but not including, the date fixed for redemption.

         (e) SELECTION OF NOTES TO BE REDEEMED. If fewer than all the Notes are
to be redeemed, the Fiscal Agent shall select the Notes to be redeemed from
among the Outstanding Notes, as set forth below, by lot or such other method as
it deems in its sole discretion to be fair and appropriate, except that Bank
Notes will be selected for redemption prior to any other Notes. The Fiscal Agent
shall make the selection from Notes not previously called for redemption. The
Fiscal Agent shall treat each holder of Notes as the owner of one Note for
purposes of selection for redemption, and shall select Notes for redemption by
lot (i) from among the holders of less than $1,000,000 in aggregate principal
amount, provided that if there are no such holders, or if, after selection from
among such holders such selection has not resulted in redemption of a sufficient
amount of Notes, then (ii) from among the holders of $1,000,000 or more in
aggregate principal amount of Notes. No portion of a Note may be redeemed that
would result in a Note which is smaller than the minimum Authorized
Denomination. For this purpose, the Fiscal Agent will consider each Note in a
denomination larger than the minimum Authorized Denomination to be separate
Notes each in the minimum Authorized Denomination.

         Upon surrender of a Note redeemed in part, the Fiscal Agent will
authenticate for the surrendering holder a new Note or Notes equal in principal
amount to the unredeemed portion of the Note surrendered.

3.       PURCHASE OF NOTES.

         (a) OPTIONAL TENDER OF NOTES.

         (i) Except as provided in Section 3(e) below, the holder (or while the
         Notes are held pursuant to a book-entry system, the Beneficial Owner)
         of any Note (other than a Bank Note or Borrower Note) may elect to
         tender such Note (or portion thereof, provided that each of the portion
         to be purchased and the portion to be retained is in an Authorized
         Denomination) for purchase at a purchase price equal to 100% of the
         principal amount of such Note (or portion thereof), plus accrued and
         unpaid interest thereon to, but not including, the date of purchase, on
         any Business Day (the "Optional Tender Date"), but only upon (A)
         receipt by the Remarketing Agent by not later than 11:00 a.m. at least
         seven calendar days or five Business Days, whichever may be earlier,
         but not more than 30 days, prior to such Optional Tender Date of
         telephonic (followed, if requested by the Remarketing Agent, by written
         or facsimile confirmation delivered to the Remarketing Agent no later
         than the close of business on the next succeeding Business Day) or
         other written notice stating (x) the principal amount of the Note (or
         portion thereof) to be tendered, (y) the Note number or other
         identification satisfactory to the Remarketing Agent, and (z) the
         Optional Tender Date on which such Note will be tendered; and (B) if
         the Notes are not being held under a book-entry system, delivery of
         such Note (with an 


                                      A-8
<PAGE>   79

         appropriate instrument of transfer duly executed in blank) to the
         Fiscal Agent by 10:00 a.m. on such Optional Tender Date.

         (ii) Any notice of optional tender for purchase shall be irrevocable
         and shall be binding on the holder giving or delivering such notice and
         on any transferee of such holder.

         (b) MANDATORY REPURCHASE OF NOTES; NOTICE. Except as provided in
Section 3(e) below, Notes are subject to mandatory repurchase as follows:

         (i) on the effective date of any Substitute Letter of Credit delivered
         pursuant to the Indenture, at a purchase price equal to 100% of the
         principal amount thereof plus accrued and unpaid interest thereon to
         but not including the date of purchase; and

         (ii) on any Interest Payment Date selected by the Borrower in a written
         notice to the Trustee delivered at least 30 days prior to such date, or
         if such Interest Payment Date is not a Business Day, on the next
         succeeding Business Day, at a purchase price equal to 100% of the
         principal amount thereof plus accrued and unpaid interest thereon to
         but not including the date of purchase; provided that, except as
         otherwise provided in the Indenture, any such mandatory repurchase
         shall be subject to the prior written consent of the Bank.

         The Trustee will prepare and the Fiscal Agent will send to the holders
of Notes subject to mandatory repurchase and to the Remarketing Agent, the Bank
and the Borrower, a Notice of Mandatory Repurchase at least 15 days but not more
than 60 days before the Mandatory Repurchase Date.

         (c) PAYMENT FOR PURCHASED NOTES. To the extent that sufficient moneys
are available therefor by 1:45 p.m. on the Optional Tender Date or the Mandatory
Repurchase Date or other day on which Notes have been successfully remarketed,
as applicable (the "Purchase Date"), upon surrender to the Fiscal Agent of Notes
optionally tendered or called for mandatory repurchase as provided herein, the
purchase price therefor (as provided in this Section) shall be paid in
immediately available funds by the Fiscal Agent or the Remarketing Agent not
later than the close of business on the Purchase Date. From and after the
Purchase Date or, if later, the date on which such moneys are made available to
the Remarketing Agent or the Fiscal Agent, as applicable, interest accruing on
such Notes shall cease to be payable to the prior holder thereof, such Notes
shall cease to be entitled to the benefits or security of this Indenture and to
such extent the prior holder has recourse solely to the funds held by the
Trustee, the Fiscal Agent or the Remarketing Agent for the purchase of such
Notes as provided in the Indenture.

         (d) REMARKETING OF PURCHASED NOTES.

         (i) Remarketing Effort. Except as provided in the Indenture, the
         Remarketing Agent will (A) use reasonable best efforts to remarket on
         or prior to any scheduled purchase date all Notes tendered or purchased
         pursuant to the Indenture (a "Scheduled Purchase Date"), and (B) to the
         extent such Notes are not remarketed on the Scheduled Purchase Date,



                                      A-9
<PAGE>   80

         continue to use reasonable best efforts to remarket such Notes, upon
         the terms and subject to the conditions of the Indenture and the
         Remarketing Agreement, for purchase on a Business Day after such
         Scheduled Purchase Date (an "Unscheduled Purchase Date").

         (ii) REMARKETING PROCEEDS. If the Remarketing Agent has received from
         the purchasers thereof Remarketing Proceeds for the remarketing of all
         Notes to be remarketed on a Scheduled Purchase Date, the Remarketing
         Agent shall promptly forward such Remarketing Proceeds by wire transfer
         (or in such other manner as is acceptable to the Remarketing Agent) to
         the owners tendering such Notes for purchase. Except as otherwise
         provided below with respect to Bank Notes, until such transfer, all
         such Remarketing Proceeds shall be deposited in a separate, segregated
         account and until applied toward payment of the purchase price of Notes
         so remarketed, shall be held uninvested in trust for the benefit of the
         holders tendering such Notes for purchase.

                  If the Remarketing Agent has not received Remarketing Proceeds
         with respect to all of the Notes to be remarketed on a Scheduled
         Purchase Date or has received Remarketing Proceeds from the remarketing
         of all or a portion of the Notes to be remarketed on an Unscheduled
         Purchased Date, the Remarketing Agent will promptly forward all of the
         Remarketing Proceeds which it has received, if any, by wire transfer
         (or in such other manner as is acceptable to the Remarketing Agent and
         the Trustee) to the Trustee for delivery to the Fiscal Agent for
         payment to the owners tendering such Notes for purchase or for payment
         to the Bank in the case of Bank Notes. Except as otherwise provided
         below with respect to Bank Notes, upon receipt by the Trustee and the
         Fiscal Agent, all such Remarketing Proceeds shall be deposited in a
         separate, segregated account and, until applied toward payment of the
         purchase price of Notes so remarketed, shall be held in trust for the
         benefit of the owners tendering such Notes for purchase.

         (iii) Delivery of Purchased Notes. Notes purchased with Remarketing
         Proceeds (other than Bank Notes) shall be delivered to the purchasers
         thereof upon receipt of payment therefor. Prior to such delivery the
         Fiscal Agent shall provide for registration of transfer to the Holders,
         as provided in a written notice from the Remarketing Agent.

         (e) LIMITATIONS ON TENDERS.

         (i) The holders of the Notes shall not have the right or be required,
         as the case may be, to tender any Note for purchase on an Optional
         Tender Date or a Mandatory Repurchase Date (other than a mandatory
         tender in lieu of redemption at the direction of the Bank pursuant to
         subsection 2(b)(iv) above or a mandatory tender for purchase at the
         direction of the Bank after acceleration of the Notes pursuant to the
         terms of the Indenture) if on such date, following the occurrence of an
         Event of Default, the Trustee has declared the principal of and
         interest on the Notes to be immediately due and payable as provided in
         the Indenture.

         (ii) Holders of Notes called for redemption or mandatory repurchase
         shall not have the right (without the prior consent of the Remarketing
         Agent) to tender such Notes for purchase on an Optional Tender Date if
         such Optional Tender Date will occur on or after 


                                      A-10
<PAGE>   81

         the tenth (10th) day prior to the date fixed for redemption or
         mandatory repurchase. Notwithstanding the foregoing, holders of Notes
         called for redemption shall not have the right in any event to tender
         such Notes for purchase on an Optional Tender Date if such Optional
         Tender Date will occur on or after the second (2nd) day prior to the
         date fixed for redemption.

         4. MISCELLANEOUS. Upon the occurrence of certain events, and on the
conditions, in the manner and with the effect set forth in the Indenture, the
principal of all Notes then Outstanding under the Indenture may become or may be
declared due and payable before the stated maturity thereof, together with
interest accrued thereon. The Indenture directs the Trustee to declare an
acceleration upon notice by the Bank of the occurrence and continuance of an
event of default under the Reimbursement Agreement, and upon the occurrence of
certain other Events of Default under the Indenture. The Trustee has the right
to accelerate the outstanding balance due under the Indenture and the principal
of the Notes in certain events only with the Bank's consent, all as provided in
more detail in the Indenture to which reference is hereby made.

         The owner of this Note has no right to enforce the provisions of the
Indenture or to institute action to enforce the covenants therein, or to take
any action with respect to any Event of Default under the Indenture, or to
institute, appear in or defend any suit or other proceeding with respect
thereto, except as provided in the Indenture and except that any registered
owner may institute action to enforce the payment of the principal of or
interest on his Note.

         Modifications or alterations of the Indenture may be made only to the
extent and in the circumstances permitted by the Indenture.

         Executed counterparts of the Indenture are on file at the principal
corporate trust office of the Trustee. The holder of this Note, by acceptance
hereof, consents to all of the terms and provisions of the Indenture.

         It is hereby certified that all acts, conditions and things required to
happen, exist and be performed under the laws of the State of Florida, and under
the Indenture precedent to and in the issuance of this Note have happened, exist
and have been performed as so required, and that the issuance, authentication
and delivery of this Note have been duly authorized by the Borrower.

         Unless the Certificate of Authentication hereon has been executed by
the Fiscal Agent by manual signature of one of its authorized signers, this Note
shall not be entitled to any benefit under the Indenture, or be valid or
obligatory for any purpose.




                         [Signatures on following page.]



                                      A-11
<PAGE>   82

         IN WITNESS WHEREOF, Kellstrom Industries, Inc. has caused this Note to
be executed in its name and on its behalf by the manual or facsimile signature
of its President or Vice President or other authorized officer and its corporate
seal to be impressed or imprinted hereon and attested by the manual or facsimile
signature of its Secretary or Assistant Secretary, all as of the Issue Date set
forth above.

                                       KELLSTROM INDUSTRIES, INC.



                                       By:
                                          --------------------------------------
                                          Title:
                                                --------------------------------

(CORPORATE SEAL)

ATTEST:




-------------------------------
         Secretary





                                      A-12
<PAGE>   83


                          CERTIFICATE OF AUTHENTICATION

         This Note is one of the Notes issued under the provisions of the
within-mentioned Indenture.

                                       NORWEST BANK MINNESOTA, N.A.



                                       By:
                                          --------------------------------------
                                                  Authorized Representative

Date of Authentication:



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



                                      A-13
<PAGE>   84


                                   ASSIGNMENT

         FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto __________________________________________________________________________
(Please print or type the name and address, including the zip code of the
transferee, and the Federal Taxpayer Identification or Social Security Number)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints _________________________ Attorney to transfer the within Note on
the books kept for registration and transfer thereof, with full power of
substitution in the premises.

Dated:                     
      ------------------


                                              By:
                                                 -------------------------------

                                              NOTICE: The signature of the 
                                              Registered Owner above must 
                                              correspond with the name of the 
                                              Registered Owner as it appears on
                                              the registration books maintained
                                              by the Fiscal Agent.

Signature Guaranteed


By:                                 
   -----------------------------

NOTICE:  Signature(s) must be guaranteed by a member firm of the STAMP,  
         SEMP or MSP signature guaranty medallion program.



                                      A-14