CIRCOR INTERNATIONAL INC
TRUST INDENTURE
<DOCUMENT>
<TYPE>EX-10.11
<SEQUENCE>6
<FILENAME>dex1011.txt
<DESCRIPTION>TRUST INDENTURE
<TEXT>
<PAGE>

                                  EXHIBIT 10.11
                                 TRUST INDENTURE

              HILLSBOROUGH COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY

                                       and

                       THE FIRST NATIONAL BANK OF BOSTON,
                                   as Trustee

                                  securing the

                                   $4,765,000
              Hillsborough County Industrial Development Authority
                 Industrial Development Revenue Refunding Bonds
                  (Leslie Controls, Inc. Project), Series 1994

                            DATED AS OF July 1, 1994

<PAGE>

                                TABLE OF CONTENTS

                                                                          Page

Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     1
Recitals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     1

Forms:
     Form of Bond. . . . . . . . . . . . . . . . . . . . . . . . . . . .     2
     Form of Bondholder's Optional Retention Notice. . . . . . . . . . .    17

ARTICLE I           DEFINITIONS AND RULES OF CONSTRUCTION. . . . . . . .    18

     Section 101.   Definitions. . . . . . . . . . . . . . . . . . . . .    18
     Section 102.   Rules of Construction. . . . . . . . . . . . . . . .    28

ARTICLE II          THE BONDS . . . . . . . . . . . . . . . . . . . . . .   28

     Section 201.   Amount, Terms, and Issuance of the Bonds . . . . . .    28
     Section 202.   Designation, Denominations, Maturity Date and
                    Interest Rates of the Bonds. . . . . . . . . . . . .    29
     Section 203.   Optional Tender Provisions of the Bonds. . . . . . .    32
     Section 204.   Registered Bonds Required; Bond Registrar and
                    Bond Register. . . . . . . . . . . . . . . . . . . .    33
     Section 205.   Transfer and Exchange. . . . . . . . . . . . . . . .    34
     Section 206.   Execution. . . . . . . . . . . . . . . . . . . . . .    35
     Section 207.   Authentication; Authenticating Agent . . . . . . . .    35
     Section 208.   Payment of Principal and Interest; Interest
                    Rights Preserved . . . . . . . . . . . . . . . . . .    36
     Section 209.   Persons Deemed Owners. . . . . . . . . . . . . . . .    37
     Section 210.   Mutilated, Destroyed, Lost, Stolen or Undelivered
                    Bonds. . . . . . . . . . . . . . . . . . . . . . . .    37
     Section 211.   Temporary Bonds. . . . . . . . . . . . . . . . . . .    38
     Section 212.   Cancellation of Surrendered Bonds. . . . . . . . . .    38
     Section 213.   Conditions of Issuance . . . . . . . . . . . . . . .    38

ARTICLE III         PURCHASE AND REMARKETING OF TENDERED BONDS . . . . .    40

     Section 301.   Remarketing of Tendered Bonds. . . . . . . . . . . .    40
     Section 302.   Purchase of Bonds Delivered to the Tender Agent. . .    41
     Section 303.   Delivery of Purchased Bonds. . . . . . . . . . . . .    42
     Section 304.   Delivery of the Proceeds of the Sale of
                    Remarketed Bonds . . . . . . . . . . . . . . . . . .    43
     Section 305.   No Remarketing After Certain Events. . . . . . . . .    43

ARTICLE IV          REFUNDING OF PRIOR BONDS. . . . . . . . . . . . . . .   43

     Section 401.   Refunding of Prior Bonds . . . . . . . . . . . . . .    43

ARTICLE V           REVENUES AND APPLICATION THEREOF. . . . . . . . . . .   44

     Section 501.   Revenues to be Paid Over to Trustee. . . . . . . . .    44
     Section 502.   The Bond Fund. . . . . . . . . . . . . . . . . . . .    44
     Section 503.   Revenues to Be Held for All Bondholders; Certain
                    Exceptions . . . . . . . . . . . . . . . . . . . . .    46
     Section 504.   Rebate Fund. . . . . . . . . . . . . . . . . . . . .    46

ARTICLE VI          DEPOSITARIES OF MONEYS, SECURITY FOR DEPOSITS AND
                    INVESTMENT OF FUNDS; THE CREDIT FACILITY . . . . . .    47

     Section 601.   Security for Deposits. . . . . . . . . . . . . . . .    47
     Section 602.   Investment of Moneys . . . . . . . . . . . . . . . .    47
     Section 603.   The Credit Facility. . . . . . . . . . . . . . . . .    48

ARTICLE VII         REDEMPTION OR PURCHASE OF THE BONDS. . . . . . . . .    51

     Section 701.   Redemption or Purchase Dates and Prices. . . . . . .    51
     Section 702.   Company to Direct Optional Redemption. . . . . . . .    52
     Section 703.   Selection of Bonds to be Called for Redemption . . .    53
     Section 704.   Notice of Redemption or Purchase . . . . . . . . . .    53
     Section 705.   Bonds Redeemed or Purchased in Part. . . . . . . . .    54

ARTICLE VIII        PARTICULAR COVENANTS AND PROVISIONS. . . . . . . . .    54

     Section 801.   Covenant to Pay the Bonds; Bonds Limited
                    Obligations of the Issuer. . . . . . . . . . . . . .    54
     Section 802.   Covenants to Perform Obligations Under this
                    Indenture. . . . . . . . . . . . . . . . . . . . . .    55

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     Section 803.   Covenant to Perform Obligations Under the Loan
                    Agreement. . . . . . . . . . . . . . . . . . . . . .    55
     Section 804.   Trustee May Enforce the Issuer's Rights Under the
                    Loan Agreement . . . . . . . . . . . . . . . . . . .    56
     Section 805.   Covenant Against Arbitrage . . . . . . . . . . . . .    56
     Section 806.   Inspection of the Bond Register. . . . . . . . . . .    56
     Section 807.   Priority of Pledge and Security Interest . . . . . .    56
     Section 808.   Insurance and Condemnation Proceeds. . . . . . . . .    57

ARTICLE IX          DEFAULT AND REMEDIES . . . . . . . . . . . . . . . .    57

     Section 901.   Defaults . . . . . . . . . . . . . . . . . . . . . .    57
     Section 902.   Acceleration and Annulment Thereof . . . . . . . . .    58
     Section 903.   Other Remedies . . . . . . . . . . . . . . . . . . .    59
     Section 904.   Legal Proceedings by the Trustee . . . . . . . . . .    59
     Section 905.   Discontinuance of Proceedings by the Trustee . . . .    60
     Section 906.   Credit Facility Issuer or Bondholders May Direct
                    Proceedings. . . . . . . . . . . . . . . . . . . . .    60
     Section 907.   Limitations on Actions by the Bondholders. . . . . .    60
     Section 908.   Trustee May Enforce Rights Without Possession of
                    the Bonds. . . . . . . . . . . . . . . . . . . . . .    61
     Section 909.   Remedies Not Exclusive . . . . . . . . . . . . . . .    61
     Section 910.   Delays and Omissions Not to Impair Rights. . . . . .    61
     Section 911.   Application of Moneys in the Event of Default. . . .    61
     Section 912.   Trustee and Bondholders Entitled to All Remedies
                    Under the Act. . . . . . . . . . . . . . . . . . . .    62
     Section 913.   Trustee May File Claim in Bankruptcy . . . . . . . .    62
     Section 914.   Receiver . . . . . . . . . . . . . . . . . . . . . .    63

ARTICLE X           CONCERNING THE TRUSTEE. . . . . . . . . . . . . . . .   63

     Section 1001.  Acceptance of the Trusts . . . . . . . . . . . . . .    63
     Section 1002.  Trustee to Give Notice . . . . . . . . . . . . . . .    65
     Section 1003.  Trustee Entitled to Indemnity. . . . . . . . . . . .    65
     Section 1004.  Trustee Not Responsible for Insurance, Taxes,
                    Execution of this Indenture, Acts of the Issuer
                    or Application of the Moneys Applied in
                    Accordance with this Indenture . . . . . . . . . . .    66
     Section 1005.  Compensation . . . . . . . . . . . . . . . . . . . .    67
     Section 1006.  Trustee to Preserve Records. . . . . . . . . . . . .    67
     Section 1007.  Trustee May Be a Bondholder. . . . . . . . . . . . .    67
     Section 1008.  Trustee Not Responsible for Recitals . . . . . . . .    68
     Section 1009.  No Trustee Responsibility for Recording or Filing. .    68
     Section 1010.  Trustee May Require Information. . . . . . . . . . .    68
     Section 1011.  Trustee May Rely on Certificates . . . . . . . . . .    68
     Section 1012.  Trustee Bond . . . . . . . . . . . . . . . . . . . .    69
     Section 1013.  Segregation of Funds; Interests. . . . . . . . . . .    69
     Section 1014.  Qualification of the Trustee . . . . . . . . . . . .    69
     Section 1015.  Resignation and Removal of the Trustee . . . . . . .    69
     Section 1016.  Successor Trustee. . . . . . . . . . . . . . . . . .    70
     Section 1017.  Co-Trustee . . . . . . . . . . . . . . . . . . . . .    71
     Section 1018.  Notice to Moody's or S&P . . . . . . . . . . . . . .    72
     Section 1019.  Filing of Certain Continuation Statements. . . . . .    72

ARTICLE XI          EXECUTION OF INSTRUMENTS BY THE BONDHOLDERS
                    AND PROOF OF OWNERSHIP OF THE BONDS . . . . . . . . .   73

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     Section 1101.  Execution of Instruments by the Bondholders and
                    Proof of Ownership of the Bonds. . . . . . . . . . .    73
     Section 1102.  Preservation of Information. . . . . . . . . . . . .    73

ARTICLE XII         THE REMARKETING AGENT; THE
                    TENDER AGENT; THE PLACEMENT AGENT . . . . . . . . . .   74

     Section 1201.  The Remarketing Agent. . . . . . . . . . . . . . . .    74
     Section 1202.  The Tender Agent . . . . . . . . . . . . . . . . . .    75
     Section 1203.  The Placement Agent. . . . . . . . . . . . . . . . .    75
     Section 1204.  Notices. . . . . . . . . . . . . . . . . . . . . . .    75

ARTICLE XIII        AMENDMENTS AND SUPPLEMENTS . . . . . . . . . . . . .    76

     Section 1301.  Amendments and Supplements Without the
                    Bondholders' Consent . . . . . . . . . . . . . . . .    76
     Section 1302.  Amendments With the Bondholders' and the Credit
                    Facility Issuer's Consent. . . . . . . . . . . . . .    77
     Section 1303.  Supplemental Indentures Affecting the Rights of
                    the Credit Facility Issuer . . . . . . . . . . . . .    77
     Section 1304.  Amendment of the Loan Agreement. . . . . . . . . . .    77
     Section 1305.  Amendment of the Loan Agreement Requiring the
                    Consent of the Credit Facility Issuer. . . . . . . .    78
     Section 1306.  Amendment of the Credit Facility . . . . . . . . . .    78
     Section 1307.  Trustee Authorized to Join in Amendments and
                    Supplements; Reliance on Counsel . . . . . . . . . .    79

ARTICLE XIV         DEFEASANCE; OTHER PAYMENTS . . . . . . . . . . . . .    79

     Section 1401.  Defeasance . . . . . . . . . . . . . . . . . . . . .    79
     Section 1402.  Deposit of Funds for Payment of the Bonds. . . . . .    81
     Section 1403.  Effect of Purchase of the Bonds. . . . . . . . . . .    81

ARTICLE XV          MISCELLANEOUS PROVISIONS. . . . . . . . . . . . . . .   81

     Section 1501.  Covenants of the Issuer to Bind its Successors . . .    81
     Section 1502.  Notices. . . . . . . . . . . . . . . . . . . . . . .    82
     Section 1503.  Trustee as the Paying Agent and the Bond
                    Registrar. . . . . . . . . . . . . . . . . . . . . .    83
     Section 1504.  Rights Under this Indenture. . . . . . . . . . . . .    83
     Section 1505.  Form of Certificates and Opinions. . . . . . . . . .    83
     Section 1506.  Severability . . . . . . . . . . . . . . . . . . . .    83
     Section 1507.  Covenants of the Issuer Not Covenants of
                    Officials Individually . . . . . . . . . . . . . . .    84
     Section 1508.  State Law Governs. . . . . . . . . . . . . . . . . .    84
     Section 1509.  Payments Due on Days Other Than Business Days. . . .    84
     Section 1510.  Execution in Counterparts. . . . . . . . . . . . . .    85

EXHIBIT A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    86

EXHIBIT B. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    88

<PAGE>

                                 TRUST INDENTURE

     This TRUST INDENTURE, dated as of July 1, 1994, between Hillsborough County
Industrial Development Authority (the "Issuer"), a public body corporate and
politic and a public instrumentality created pursuant to the laws of the State
of Florida, and The First National Bank of Boston, a national banking
association, having its principal office in Boston, Massachusetts (in its
capacity as trustee to be hereinafter referred to as the "Trustee").

                              W I T N E S S E T H:

     WHEREAS, the Issuer intends to (a) issue and sell its variable rate
industrial revenue refunding bonds in the aggregate principal amount of
$4,765,000 (the "Bonds"); (b) pursuant to a Loan Agreement (the "Loan
Agreement") of even date herewith, loan the proceeds of the Bonds to Leslie
Controls, Inc. (the "Company") to be used to refund the outstanding principal
amount of Issuer's $7,200,000 Hillsborough County Industrial Development
Authority Industrial Development Revenue Bonds (Leslie Controls, Inc. Project),
Series 1986 Bonds (the "Prior Bonds"); and (c) to secure the repayment of the
Bonds by (1) the assignment contained herein from the Issuer to the Trustee,
pursuant to which the Issuer assigns to the Trustee for the benefit of the
Bondholders (hereinafter defined) certain of its rights under the Loan
Agreement, endorses without recourse to the order of, and pledges and assigns
to, the Trustee, the Note of even date herewith issued by the Company pursuant
to the Loan Agreement (the "Note"), and (2) the delivery to the Trustee of an
irrevocable direct pay letter of credit dated the date of issuance of the Bonds
in the amount of $5,003,250 issued by First Union National Bank of North
Carolina;

     WHEREAS, as security for the payment of the Bonds, the Issuer has agreed to
assign and pledge to the Trustee all right, title and interest of the Issuer in
(a) the Loan Agreement (except certain rights reserved by the Issuer under the
terms of this Indenture), (b) the "Pledged Revenues" (hereinafter defined), (c)
all amounts on deposit from time to time in the "Bond Fund" (hereinafter
defined), but excluding any amounts on deposit in the "Rebate Account"
(hereinafter defined) and (d) all amounts or deposit from time to time in the
"Redemption Fund" (hereinafter defined); and

     WHEREAS, the Company and First Union National Bank of North Carolina, a
national banking association (the "Bank") have entered into a Letter of Credit
and Reimbursement and Guaranty Agreement, dated as of July 1, 1994 (the
"Reimbursement Agreement") pursuant to which the Bank has agreed to issue its
irrevocable direct-pay letter of credit, dated the date of the delivery of the
Bonds (the "Letter of Credit"), in favor of the Trustee, for the account of the
Company obligating the Bank to pay the Trustee upon draws made by the Trustee in
accordance with the terms thereof, up to (i) an amount equal to the aggregate
principal amount of the Bonds then Outstanding (as hereinafter defined) to be
used by the Trustee (a) to pay the principal of such Bonds whether at maturity,
upon redemption, acceleration or otherwise, and (b) to pay the portion of the
purchase price equal to the principal amount of any such Bonds delivered to the
Tender Agent (hereinafter defined) for purchase, plus (ii) an amount equal to up
to one hundred twenty (120) days' accrued interest on the Bonds at the maximum
interest rate of fifteen percent (15%) per annum, to be used by the

<PAGE>

Trustee to pay accrued interest on the Bonds and to pay the portion of the
purchase price of tendered Bonds equal to the accrued interest, if any, on any
such Bonds; and

     WHEREAS, all things necessary to make the Bonds, when authenticated by the
Trustee and issued and delivered as provided in this Indenture, the legal,
valid, binding and enforceable limited obligations of the Issuer, according to
the import thereof, and to create a valid assignment and pledge of the Pledged
Revenues to the payment of the principal of, and the redemption premium (if any)
and the interest on, the Bonds and a valid assignment of certain of the rights,
title and interest of the Issuer in the Loan Agreement and the Note, have been
done and performed, and the execution, issuance and delivery of the Bonds,
subject to the terms hereof, have in all respects been authorized; and

     WHEREAS, the Trustee has accepted the trusts created by this Indenture and
in evidence thereof has joined in the execution hereof; and

     WHEREAS, the Issuer has determined that the Bonds to be issued hereunder
shall be substantially in the following form, with such variations, omissions
and insertions as are required or permitted by this Indenture:

                                 [Form of Bond]
                                                                CUSIP 432321-DF1

THE ISSUER IS NOT OBLIGATED TO PAY THE PRINCIPAL OF, REDEMPTION PREMIUM, IF ANY,
OR INTEREST ON THIS BOND EXCEPT FROM THE REVENUES AND PROCEEDS PLEDGED THEREFOR
PURSUANT TO THE INDENTURE, AND NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER
OF THE ISSUER OR OF THE STATE OF FLORIDA OR OF ANY POLITICAL SUBDIVISION THEREOF
IS PLEDGED TO THE PAYMENT THEREOF. THIS BOND SHALL NOT BE DEEMED TO CONSTITUTE A
DEBT, LIABILITY OR OBLIGATION OF THE ISSUER, HILLSBOROUGH COUNTY OR OF THE STATE
OF FLORIDA OR ANY POLITICAL SUBDIVISION THEREOF WITHIN THE MEANING OF ANY
PROVISION OF THE CONSTITUTION OR LAWS OF THE STATE AND SHALL NOT CONSTITUTE OR
GIVE RISE TO A PECUNIARY LIABILITY OF THE ISSUER OR OF THE STATE OR ANY
POLITICAL SUBDIVISION THEREOF.

THIS BOND MAY BE TENDERED FOR PURCHASE AS DESCRIBED HEREIN. DELIVERY OF AN
OPTIONAL TENDER NOTICE WITH RESPECT TO THIS BOND CONSTITUTES AN IRREVOCABLE
OFFER TO SELL THIS BOND ON THE DATE SPECIFIED THEREIN AND IS BINDING ON
SUBSEQUENT OWNERS OF THIS BOND. IN THE EVENT THE OWNER OF THIS BOND FAILS TO
DELIVER THIS BOND TO THE TENDER AGENT ON THE SPECIFIED DATE, THE OWNER HEREOF
SHALL THEREAFTER BE ENTITLED ONLY TO PAYMENT OF THE PURCHASE PRICE AND NOT TO
THE BENEFITS OF THE INDENTURE. THIS BOND ALSO IS SUBJECT TO MANDATORY TENDER AND
PURCHASE AS DESCRIBED HEREIN.

              HILLSBOROUGH COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY
                  INDUSTRIAL DEVELOPMENT REVENUE REFUNDING BOND
                  (LESLIE CONTROLS, INC. PROJECT), SERIES 1994

                                                                 No. R-_________

Registered Owner:  __________________________

Principal Amount:  __________________________

<PAGE>

Maturity Date:  First Business Day of August, 2019

Initial Interest Rate:  3.15 %

Interest Payment Dates:  The first Business Day of each March, June, September
                         and December, commencing the first Business Day of
                         September, 1994, the Conversion Date (hereinafter
                         defined) and the Maturity Date.

Original Delivery Date:  August 4, 1994

     HILLSBOROUGH COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY (herein called the
"Issuer"), a public body corporate and politic and a public instrumentality
created pursuant to the laws of the State of Florida (herein called the
"State"), for value received, hereby promises to pay (but only from the sources
hereinafter mentioned) to the Registered Owner set forth above, or registered
assigns, the Principal Amount set forth above on the Maturity Date set forth
above and to pay (but only from the sources hereinafter mentioned) interest
thereon from the Interest Payment Date immediately preceding the Date of
Authentication endorsed hereon, unless this Bond is authenticated on an Interest
Payment Date in which event it will bear interest from such date or unless it is
authenticated prior to the first Business Day of September, 1994, in which event
it will bear interest from the Date of Authentication, payable on each Interest
Payment Date, until payment of said principal sum has been made or provided for,
at the rate or rates per annum set forth below. Principal and interest and
premium, if any, will be paid in any coin or currency of the United States of
America which, at the time of payment, is legal tender for the payment of public
and private debts. Interest will be paid by check mailed on the Interest Payment
Date to the person in whose name this Bond is registered at the close of
business on the Regular Record Date (as hereinafter defined) immediately
preceding such Interest Payment Date; provided, however, that while the Bonds
(as hereinafter defined) bear interest at the Variable Rate (as hereinafter
defined) interest will also be payable by wire transfer to the account at a
member bank of the Federal Reserve System of any registered owner of Bonds in
the aggregate principal amount of One Million Dollars ($1,000,000) or more at
the written request (identifying such account by number) of such owner received
by the Trustee (as hereinafter defined) on or before the Regular Record Date.
While the Bonds bear interest at the Variable Rate (as hereinafter defined), the
Regular Record Date will be the close of business on the Business Day
immediately preceding each Interest Payment Date. While the Bonds bear interest
at the Fixed Rate (as hereinafter defined), the Regular Record Date will be the
fifteenth (15th) day of the calendar month immediately preceding each Interest
Payment Date. Any such interest not so punctually paid or duly provided for will
forthwith cease to be payable to the owner on such Regular Record Date, and may
be paid to the person in whose name this Bond is registered at the close of
business on a Special Record Date (as defined in the Indenture (hereinafter
defined)) for the payment of such defaulted interest to be fixed by the Trustee,
or may be paid at any time in any other lawful manner, all as more fully
provided in the Indenture. Principal and redemption price will be paid upon
surrender of this Bond at the principal corporate trust office of The First
National Bank of Boston, as Trustee (said banking institution and any successor
trustee or co-trustee under the Indenture being herein called the "Trustee"), in
the Town of Canton, Massachusetts. Payment of the purchase price of Bonds

<PAGE>

purchased as described herein will be paid, upon surrender of such Bonds, at the
office of The First National Bank of Boston, in the Town of Canton,
Massachusetts (in such capacity, herein called the "Tender Agent").

     This Bond is issued under and pursuant to the Constitution and laws of the
State of Florida (the "State"), particularly the Florida Industrial Development
Financing Act, Parts II and III of Chapter 159, Florida Statutes, as amended
from time to time, and the resolution of the Board of County Commissioners of
Hillsborough County, Florida adopted on October 27, 1971 organizing the Issuer
(collectively the "Act"), and under and pursuant to a resolution duly adopted by
the Issuer on July 25, 1994. This Bond and the issue of which it is a part and
the purchase price thereof, the premium, if any, and interest thereon are
limited obligations of the Issuer payable by the Issuer solely from the revenues
and receipts derived from the Loan Agreement (as hereinafter defined), including
payments received under the Note (as hereinafter defined), which revenues and
receipts have been pledged and assigned to the Trustee to secure payment thereof
and from amounts received pursuant to the Credit Facility (as hereinafter
defined). This Bond and the interest hereon will not constitute an indebtedness
or a charge against the general credit or taxing powers of the Issuer,
Hillsborough County, the State of Florida or any political subdivision thereof
within the meaning of any constitutional provision or statutory limitation and
shall never constitute nor give rise to any pecuniary liability of the Issuer,
but will be a limited obligation of the Issuer payable solely from the revenues
and other funds pledged therefor and will not be payable from any assets or
funds of the Issuer other than the revenues and other funds pledged therefor,
and neither the faith and credit nor the taxing power of the State or any
political subdivision or any agency thereof is pledged to the payment of the
principal of or the interest on this Bond.

     This Bond is one of the Bonds of a duly authorized issue of variable rate
industrial revenue bonds of the Issuer in the aggregate original principal
amount of $4,765,000 and designated "Hillsborough County Industrial Development
Authority Industrial Development Revenue Refunding Bonds (Leslie Controls, Inc.
Project), Series 1994" (the "Bonds").

     The Bonds are being issued for the purpose of refunding in whole the
outstanding principal amount of the $7,200,000 Hillsborough County Industrial
Development Authority Industrial Development Revenue Bonds (Leslie Controls,
Inc. Project), Series 1986 (the "Prior Bonds"), the proceeds of which were used
to finance, in whole or in part, the cost of acquiring, constructing and
installing a certain project in Hillsborough County owned and operated by the
Company (the "Project").

     This Bond is issued under and pursuant to a Trust Indenture dated as of
July 1, 1994 (said Trust Indenture, together with all such supplements and
amendments thereto as therein permitted, being herein called the "Indenture"),
by and between the Issuer and The First National Bank of Boston, as trustee
(said banking institution and any successor trustee or co-trustee under the
Indenture being herein called the "Trustee"). An executed counterpart of the
Indenture is on file at the principal corporate trust office of the Trustee.
Reference is hereby made to the Indenture for the provisions, among others, with
respect to the custody and application of the proceeds of the Bonds; the
collection and disposition of revenues; a description of the funds charged with
and pledged to the payment of the principal of and interest on and any other
amounts payable under the Bonds;

<PAGE>

the nature and extent of the security; the terms and conditions under which the
Bonds are or may be issued; and the rights, duties and obligations of the Issuer
and of the Trustee and the rights of the owners of the Bonds, and, by the
acceptance of this Bond, the owner hereof assents to all of the provisions of
the Indenture.

     The Issuer has entered into a Loan Agreement dated as of July 1, 1994
(herein called the "Loan Agreement"), with Leslie Controls, Inc., a New Jersey
corporation (herein called the "Company"), under which the Issuer has agreed to
lend to the Company the proceeds of this bond (the "Loan") and in consideration
and as evidence of the Loan, the Company has agreed to issue its promissory note
(herein called the "Note") in the principal amount, payable in installments,
bearing interest at a rate or rates and payable at times corresponding to the
principal amount of, installments of principal of, interest rates on and due
dates of the Bonds. The Loan Agreement also provides for the payment by the
Company of certain fees and expenses of the Issuer and the Trustee, and the Loan
Agreement further obligates the Company (a) to pay the cost of maintaining the
Project in good repair in all material respects and keeping the same properly
insured and (b) to maintain a Credit Facility (as hereinafter defined) during
the period of time the Bonds bear interest at the Variable Rate (herein called
the "Variable Rate Period").

     As security for the payment of the Bonds, all right, title and interest of
the Issuer in (a) the Loan Agreement (except certain rights reserved by the
Issuer under the terms of the Indenture), together with the Loan Agreement, (b)
the Pledged Revenues, (c) all amounts on deposit from time to time in the Bond
Fund (defined in the Indenture), but excluding any amounts on deposit in the
"Rebate Account" (defined in the Indenture), and (d) all amounts on deposit from
time to time in the Redemption Fund (defined in the Indenture) have been
assigned to the Trustee under the Indenture and pledged to the payment of the
principal of, and the redemption premium (if any) and the interest on, the
Bonds. The Issuer shall not be vested with any interest in the Project by virtue
of the issuance of the Bonds, and the Project shall not otherwise constitute any
part of the security for the payment of the Bonds.

     Reference to the Indenture is hereby made for a description of the
aforesaid Bond Fund which is charged with, and pledged to, the payment of the
principal of, and the redemption premium (if any) and the interest on, the
Bonds, the nature and extent of the security, the rights, duties and obligations
of the Issuer, the Company and the Trustee, the rights of the owners of the
Bonds, the terms and conditions under and upon the occurrence of which the
Indenture and the Loan Agreement may be modified and the terms and conditions
under and upon the occurrence of which the lien of the Indenture may be defeased
as to this Bond prior to the maturity or redemption date hereof, to all of the
provisions of which the owner hereof, by the acceptance of this Bond, assents.

     Credit Facility. The Company has entered into a Letter of Credit,
Reimbursement and Guaranty Agreement dated as of July 1, 1994 (herein called the
"Reimbursement Agreement") by and among the Company, Watts Industries, Inc, as
guarantor and First Union National Bank of North Carolina (in such capacity,
herein called the "Bank").

     Pursuant to the Reimbursement Agreement, the Company has caused a Letter of
Credit issued by the Bank (herein called the "Letter of Credit";

<PAGE>

such Letter of Credit and any extensions or renewals thereof or any amendment
thereto and any Alternate Credit Facility (as hereinafter defined) referred to
herein as the "Credit Facility"), to be delivered to the Trustee. The Trustee
will be entitled under the Letter of Credit to draw up to an amount of
$5,003,250, of which (a) $4,765,000 will be available for the payment of
principal or that portion of the purchase price corresponding to principal of
the Bonds and (b) $238,250 will support the payment of up to one hundred twenty
(120) days' interest or that portion of the purchase price corresponding to
interest on the Bonds at a maximum rate of fifteen percent (15%) per annum.
Subject to the provisions of the Indenture, the Company is required during the
Variable Rate Period to provide an alternate credit facility with terms and
provisions substantially the same as those of the Letter of Credit (an
"Alternate Credit Facility") prior to the termination of Letter of Credit.
During the Variable Rate Period unless the Letter of Credit or the then current
Alternate Credit Facility is replaced prior to its expiration in accordance with
the terms of the Indenture, this Bond will become subject to mandatory
redemption as provided in the Indenture.

     Source of Funds. The principal of, premium, if any, and interest on the
Bonds are payable solely from payments on the Note, under the Loan Agreement and
from any other moneys held by the Trustee under the Indenture for such purpose,
including, with respect to principal and interest only, moneys drawn by the
Trustee under the Letter of Credit or Alternate Credit Facility for the benefit
of the Bondholders (the Bank as the issuer of the Letter of Credit and the
institution issuing any Alternate Credit Facility are herein called the "Credit
Facility Issuer"). Except as otherwise specified in the Indenture, this Bond is
entitled to the benefits of the Indenture equally and ratably both as to
principal (and redemption and purchase price) and interest with all other Bonds
issued under the Indenture.

                                 INTEREST RATES

     Initial Interest Rate.

     The Bonds will bear interest from the Original Delivery Date to August 10,
1994 at the Initial Interest Rate.

     Variable Rate.

     After August 10, 1994, prior to (and including) the Conversion Date
(hereinafter defined), the Bonds will bear interest at a rate equal to a
floating rate established as hereinafter provided (herein called the "Variable
Rate"). The Variable Rate will be equal to the rate of interest certified to the
Trustee by First Union National Bank of North Carolina as remarketing agent for
the Bonds (herein, with its successors in such capacity, called the "Remarketing
Agent") on and as of each Wednesday (or the next succeeding Business Day (as
defined in the Indenture) if such Wednesday is not a Business Day) (herein
called the "Determination Date") as the minimum rate of interest necessary, in
the judgment of the Remarketing Agent taking into account market conditions
prevailing on the Determination Date, to enable the Remarketing Agent to arrange
for the sale of all of the Bonds on the Determination Date in the secondary
market at a price equal to the principal amount thereof (plus interest accrued
to the date of settlement). If the Remarketing Agent fails to certify such rate,
the Variable Rate for the next Calculation Period or Periods (hereinafter

<PAGE>

defined) until thereafter certified by the Remarketing Agent will remain the
same as that most recently established and certified by the Remarketing Agent.
In the event the Remarketing Agent fails to certify such rate for four (4)
consecutive Calculation Periods, the rate for each Calculation Period thereafter
(if none is certified by the Remarketing Agent) will be ninety percent (90%) of
the yield for United States Treasury bills maturing approximately thirty (30)
days after the Determination Date as published by The Wall Street Journal on
such Determination Date (or, if The Wall Street Journal is no longer published,
then any reasonably equivalent financial publication selected by the Remarketing
Agent) (or the next preceding Business Day on which The Wall Street Journal is
published if not published on the Determination Date). For purposes hereof,
"Calculation Period" shall mean the period from and including the day following
the Determination Date of each week (even if not a Business Day) to and
including the following Determination Date; provided that if during the Variable
Period the Determination Date at the end of such Calculation Period is a Regular
Record Date, such Calculation Period will extend until the Business Day
following such Determination Date. If, for any reason, the Variable Rate is not
determined as described above or is held to be invalid or unenforceable by a
court of competent jurisdiction for any period, the interest rate for each such
period will be equal to eight percent (8.00%) per annum. Notwithstanding
anything to the contrary contained herein or in the Indenture, the Variable Rate
will not be a rate of interest in excess of fifteen percent (15.00%) per annum.
Interest prior to the Conversion Date (hereinafter defined) will be computed on
the basis of a three hundred sixty-five (365) or three hundred sixty-six (366)
day year, as applicable, for the number of days actually elapsed, and will be
payable on each Interest Payment Date.

     Fixed Rate.

     (a)  The interest rate on this Bond will be converted to the Fixed Rate
upon an election by the Company pursuant to the Indenture to convert the rate of
interest on all Bonds then outstanding from the Variable Rate to the Fixed Rate
upon satisfaction of certain conditions and notice given by the Company and by
the Trustee in accordance with the requirements of the Indenture, and the Bonds
shall be subject to mandatory tender for purchase by the owners thereof on the
Conversion Date, which shall be an Interest Payment Date. On and after the
Conversion Date the owners of the Bonds will not be entitled to tender Bonds for
purchase. On or before the Conversion Date, the Placement Agent will determine
the Fixed Rate in the manner described in subsection (c) below, and will
promptly notify the Company and the Trustee of the Fixed Rate.

     (b)  At least twenty (20) but not more than thirty (30) days prior to the
Conversion Date, a notice will be mailed by the Trustee to each registered owner
of Bonds stating, among other things, (1) the Conversion Date, (2) the name and
address of the placement agent which has agreed to use its best efforts to
arrange for the sale of any Bonds to be tendered or deemed tendered for purchase
on the Conversion Date (herein called the "Placement Agent"), (3) that after the
seventeenth (17th) day preceding the Conversion Date, the owner will not be
entitled to deliver an Optional Tender Notice and that after the tenth (10th)
day preceding the Conversion Date, the owner will not be entitled to tender this
Bond for purchase as described below, (4) that this Bond will be deemed tendered
for purchase on the Conversion Date, (5) that in order to receive payment of the
purchase price of any Bond which is deemed to have been tendered, the registered

<PAGE>

owner of such Bond must deliver such Bond to the office of the Tender Agent
before 10 a.m. Eastern time on the Conversion Date, and (6) that interest on any
Bond will be payable only to (but not including) the Conversion Date.

     Any Bonds not so tendered on the Conversion Date ("Undelivered Bonds"), for
which there has been irrevocably deposited in trust with the Trustee an amount
of moneys sufficient to pay the purchase price of the Undelivered Bonds, shall
be deemed to have been tendered and purchased at the purchase price. IN THE
EVENT OF A FAILURE BY AN OWNER OF BONDS TO TENDER ITS BONDS ON OR PRIOR TO THE
CONVERSION DATE, SAID OWNER SHALL NOT BE ENTITLED TO ANY PAYMENT (INCLUDING ANY
INTEREST TO ACCRUE SUBSEQUENT TO THE CONVERSION DATE) OTHER THAN THE PURCHASE
PRICE FOR SUCH UNTENDERED BONDS, AND ANY UNTENDERED BONDS SHALL NO LONGER BE
ENTITLED TO THE BENEFITS OF THE INDENTURE, EXCEPT FOR THE PURPOSE OF PAYMENT OF
THE PURCHASE PRICE THEREFOR.

     (c)  Upon the Conversion Date stated in such notice, the Fixed Rate to be
borne by the Bonds for the period beginning on the Conversion Date and ending on
the Maturity Date or prior redemption of the Bonds (the "Fixed Rate"), will be
the interest rate per annum which, in the sole judgment of the Placement Agent,
taking into account prevailing financial market conditions, would be the minimum
interest rate required to sell such Bonds on the Conversion Date at a price
equal to 100% of the principal amount thereof. The Fixed Rate shall be
determined by the Placement Agent on or before the Conversion Date, and the
Placement Agent shall notify the Trustee and the Company thereof by telephone or
such other manner as may be appropriate by not later than 2:00 p.m., Eastern
time on such date, which notice shall be promptly confirmed in writing.

     (d)  If, for any reason, the Fixed Rate is held to be invalid or
unenforceable by a court of competent jurisdiction, the Fixed Rate will be eight
percent (8.00%) per annum. Notwithstanding anything to the contrary contained
herein or in the Indenture, the Fixed Rate will not be a rate of interest in
excess of fifteen percent (15.00%) per annum.

     (e)  The Fixed Rate will be computed on the basis of a three hundred sixty
(360)-day year, computed for the actual number of days elapsed, and will be
payable on each Interest Payment Date after the Conversion Date until the
principal of, and premium, if any, and interest on the Bonds shall have been
paid in full.

     Interest Rate Determination Binding.

     The determination of the interest rate on the Bonds by the Remarketing
Agent or Placement Agent, as appropriate, in accordance with the terms of the
Indenture will be conclusive and binding upon the registered owners of the
Bonds, the Issuer, the Company, the Trustee, the Remarketing Agent, the
Placement Agent, the Tender Agent and the Credit Facility Issuer.

                               REDEMPTION OF BONDS

     Optional Redemption.

     (a)  While the Bonds bear interest at the Variable Rate, the Bonds will be
subject to redemption upon the written direction of the Issuer, given at the
request of the Company, on any Interest Payment Date and on

<PAGE>

the Conversion Date, in whole or in part, at a redemption price equal to one
hundred percent (100%) of the principal amount thereof without premium plus
interest accrued to the redemption date.

     (b)  While the Bonds bear interest at the Fixed Rate, the Bonds will be
subject to redemption upon the written direction of the Issuer, given at the
request of the Company, in whole or in part, on any Interest Payment Date
occurring on or after the dates set forth below, at the redemption prices (with
a premium expressed as a percentage of principal amount to be redeemed) set
forth below plus interest accrued to the redemption date as follows:

          Commencement of
          Redemption Period         Redemption Price

          The Business Day four     103%, declining by 1/2% on each succeeding
          (4) years from the        anniversary of the first day of the
          Conversion Date           redemption period until reaching 100% and
                                    thereafter at 100%

     (c)  The Bonds will be subject to redemption upon the written direction of
the Issuer, given at the request of the Company, at any time in whole or in part
at a redemption price equal to one hundred percent (100%) of the principal
amount thereof plus interest accrued to the redemption date in the event of
damage, destruction or condemnation of the Project, all as more fully described
in Section 701(b) of the Indenture.

     Mandatory Redemption.

     (a)  The Bonds will be subject to mandatory redemption in whole on any date
at a redemption price equal to one hundred percent (100%) of the principal
amount thereof plus accrued interest to the redemption date within one hundred
eighty (180) days after receipt by the Trustee of a written notice of a
Determination of Taxability (as defined in the Loan Agreement).

     (b)  During the Variable Rate Period, the Bonds will be subject to
mandatory redemption in whole on the Interest Payment Date occurring closest to
but not after fifteen (15) days prior to the date of expiration of the then
current Credit Facility unless prior to such date an Alternate Credit Facility
has been provided in accordance with the Indenture, at a redemption price or
purchase price equal to one hundred percent (100%) of the principal amount
thereof, without premium, plus interest accrued to the redemption date.

     Notice of Redemption and Selection of Bonds.

     Any notice of redemption, identifying the Bonds or portions thereof to be
redeemed, will be given not more than sixty (60) days and not less than twenty
(20) days prior to the redemption date, by mailing a copy of the redemption
notice by first class mail to the owner of each Bond to be redeemed in whole or
in part at the address shown on the Bond Register maintained by the Bond
Registrar. Notice of optional redemption may be conditioned upon the deposit of
moneys with the Trustee before the date fixed for redemption and such notice
will be of no effect unless such moneys are so deposited. All Bonds so called
for redemption, including Bonds purchased by the Company as provided in the
Indenture but not yet

<PAGE>

surrendered for payment of the purchase price, will cease to bear interest on
the specified redemption date provided funds for their redemption price and any
accrued interest payable on the specified redemption date are on deposit at the
principal place of payment at that time. If less than all the Bonds are to be
redeemed, the particular Bonds to be called for redemption will be selected in
the following order of priority: first, Bonds pledged to the Credit Facility
Issuer; second, Bonds owned by the Company and third, Bonds selected by any
random or other method determined by the Trustee in its sole discretion.

     Mandatory Purchase Upon Conversion to Fixed Rate.

     The Bonds will be subject to mandatory purchase in whole (and not in part)
on the Conversion Date at a purchase price equal to one hundred percent (100%)
of the principal amount thereof plus interest accrued thereon to the date of
purchase.

     THE OWNER OF THIS BOND, BY ACCEPTANCE HEREOF, AGREES TO THE MANDATORY
PURCHASE OF THIS BOND AS PROVIDED IN THE INDENTURE, AND AGREES THAT THIS BOND
WILL BE PURCHASED ON THE DATE SPECIFIED UPON DEPOSIT WITH THE TRUSTEE OF AN
AMOUNT SUFFICIENT TO PAY THE PURCHASE PRICE HEREOF. THE OWNER OF THIS BOND ALSO
UNDERSTANDS AND AGREES THAT IN THE EVENT THE OWNER FAILS TO DELIVER THIS BOND,
PROPERLY ENDORSED FOR TRANSFER, TO THE TRUSTEE ON THE DATE SPECIFIED, INTEREST
WILL CEASE TO ACCRUE HEREON ON SUCH SPECIFIED DATE AND THE OWNER HEREOF WILL
THEREAFTER BE ENTITLED ONLY TO PAYMENT OF THE PURCHASE PRICE AND NOT TO THE
BENEFIT OF THE INDENTURE.

     Purchase at Option of the Owner During Variable Rate Period.

     While the Bonds bear interest at the Variable Rate, any Bond or portion
thereof in an authorized denomination will be purchased on the demand of the
owner thereof, on any Business Day at a purchase price equal to one hundred
percent (100%) of the principal amount thereof plus interest accrued to the date
of purchase upon delivery to the Tender Agent of an Optional Tender Notice in
the form attached hereto as Exhibit A (herein called the "Optional Tender
Notice") specifying the date on which such Bond will be purchased, which date
will be a Business Day not prior to the seventh (7th) day after the date of
delivery of the Optional Tender Notice. To receive payment of the purchase
price, the owner will be required to deliver such Bond to the Tender Agent,
accompanied by an executed form of assignment and any other instruments of
transfer satisfactory to the Trustee, not less than five (5) days prior to the
purchase date specified in such notice as provided in the Indenture; provided,
however, that any owner which is an investment company registered pursuant to
the Investment Company Act of 1940 may deliver such Bond to the Tender Agent at
or prior to 10:00 a.m. on the date of purchase. No purchase of Bonds at the
option of the owner thereof or on the Conversion Date will be deemed to be a
payment or redemption of the Bonds or any portion thereof. Notwithstanding the
foregoing, no owner will have a right to tender its Bond(s) for purchase as
described in this paragraph following acceleration of the payment of the Bonds
pursuant to the terms of the Indenture or after the Conversion Date.

THE OWNER OF THIS BOND, BY ACCEPTANCE HEREOF, AGREES THAT DELIVERY OF THE
WRITTEN NOTICE DESCRIBED IN THE PRECEDING PARAGRAPH BY THE OWNER CONSTITUTES AN
IRREVOCABLE OFFER TO SELL THIS BOND ON THE DATE SPECIFIED, AND THAT THIS BOND
WILL BE PURCHASED ON SUCH DATE UPON DEPOSIT WITH THE

<PAGE>

TENDER AGENT OF AN AMOUNT SUFFICIENT TO PAY THE PURCHASE PRICE HEREOF. THE OWNER
OF THIS BOND ALSO UNDERSTANDS AND AGREES THAT IN THE EVENT THE OWNER FAILS TO
DELIVER THIS BOND, PROPERLY ENDORSED FOR TRANSFER, TO THE TENDER AGENT ON THE
DATE SPECIFIED IN THE NOTICE, THIS BOND WILL BE HELD BY THE OWNER AS AGENT FOR
THE COMPANY, INTEREST WILL CEASE TO ACCRUE HEREON AS OF THE DATE SPECIFIED IN
THE NOTICE AND THE OWNER HEREOF WILL THEREAFTER BE ENTITLED ONLY TO PAYMENT OF
THE PURCHASE PRICE AND NOT TO THE BENEFITS OF THE INDENTURE AND THE ISSUER WILL,
TO THE EXTENT PERMITTED BY LAW, EXECUTE AND THE TRUSTEE WILL AUTHENTICATE AND
DELIVER A SUBSTITUTE BOND IN LIEU OF THE UNDELIVERED BOND.

     Tender Agent.

     The Issuer has appointed The First National Bank of Boston as Tender Agent.
The Tender Agent may be changed at any time by the Company with the consent of
the Trustee.

     Authorized Denominations.

     Subject to the provisions of the Indenture, the Bonds are issuable as
registered Bonds in the denomination of One Hundred Thousand Dollars ($100,000)
or any integral multiple of $5,000 in excess thereof; provided that if less than
$100,000 in principal amount of Bonds is Outstanding, one Bond shall be issued
in such smaller denomination; and provided further, that subsequent to the
initial issuance of the Bonds, replacement or substitution Bonds or Bonds issued
in exchange in accordance with the provisions of Section 205 of the Indenture
may be issued in denominations of $5,000 or integral multiples thereof. Subject
to the limitations provided in the Indenture and upon payment of any tax or
governmental charge, if any, Bonds may be exchanged for a like aggregate
principal amount of Bonds of other authorized denominations.

     Transfer.

     This Bond is transferable by the registered owner hereof or his duly
authorized attorney at the principal corporate trust office of The First
National Bank of Boston, as Bond Registrar, in Canton, Massachusetts, in
compliance with the terms and conditions set forth in the Indenture and upon
surrender of this Bond, provided that transfers in connection with the
remarketing hereof will be made at the corporate trust office of the Trustee in
Canton, Massachusetts, accompanied by a duly executed instrument of transfer in
form satisfactory to the Bond Registrar, subject to such reasonable regulations
as the Issuer, the Bond Registrar or the Trustee may prescribe and upon payment
of any tax or other governmental charge incident to such transfer, PROVIDED THAT
IF MONEYS FOR THE PURCHASE OF THIS BOND HAVE BEEN PROVIDED PURSUANT TO A DRAW
UNDER THE CREDIT FACILITY, THIS BOND IS NOT TRANSFERABLE TO ANYONE OTHER THAN
THE COMPANY OR ITS ASSIGNEE OR PLEDGEE. Upon any such transfer, the Trustee
shall cause a new Bond or Bonds registered in the name of the transferee or
transferees in denominations authorized by the Indenture and in the same
aggregate principal amount as the principal amount of this Bond (and of the same
maturity and bearing interest at the same rate) will be issued to the
transferee. Except as set forth in this Bond and as otherwise provided in the
Indenture, the person in whose name this Bond is registered will be deemed the
owner hereof for all purposes, and the Issuer, the Bond Registrar and the
Trustee will not be affected by any notice to the contrary.

<PAGE>

     The owner of this Bond will have 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.

     In certain events, on the conditions, in the manner and with the effect set
forth in the Indenture, the principal of this Bond may become or may be declared
due and payable before the stated maturity hereof, together with the interest
accrued hereon.

     Modifications or alterations of the Loan Agreement and the Indenture and
any supplement or amendment thereto may be made only to the extent and in the
circumstances permitted by the Indenture and may be made in certain cases
without the consent of the owners of the Bonds.

     Anything herein or in the Indenture to the contrary notwithstanding, the
obligations of the Issuer hereunder will be subject to the limitation that
payment of interest to the owner of this Bond will not be required to the extent
that receipt of any such payment by the owner of this Bond would be contrary to
the provisions of law applicable to such Bond which limits the maximum rate of
interest which may be charged or collected by such owner.

     In any case where the date of maturity of interest on or principal of the
Bonds or the date fixed for redemption of the Bonds shall be in the city of
payment a day other than a Business Day, then payment of interest or principal
need not be made on such date but may be made on the next succeeding Business
Day with the same force and effect as if made on the date of maturity or the
date fixed for redemption, provided that interest will accrue for the period of
any such extension.

     This Bond will be governed by and construed in accordance with the laws of
the State of Florida.

     All acts, conditions and things required to happen, exist and be performed
precedent to and in the issuance of this Bond and the execution of the Indenture
have happened, exist and have been performed as so required.

     IN WITNESS WHEREOF, the Issuer has caused this Bond to be executed with the
manual or facsimile signature of the Chairman or Vice Chairman of the Issuer,
its official seal to be impressed or imprinted hereon and the same to be
attested by the manual or facsimile signature of the Secretary or Assistant
Secretary of the Issuer, all as of __________ ___, 1994.

                                        HILLSBOROUGH COUNTY INDUSTRIAL
                                        DEVELOPMENT AUTHORITY

                                        By:
                                           Chairman

(Seal)

Attest:

<PAGE>

By:
   Secretary

                            *     *     *     *     *

                          CERTIFICATE OF AUTHENTICATION

     This Bond is one of the Bonds of the series designated therein and issued
under the provisions of the within-mentioned Indenture.

                                           The First National Bank of Boston, as
                                              Trustee

                                           By:
                                              Its:   Authorized Signatory

Date of Authentication:  ________, 1994

                            *     *     *     *     *

                               [FORM OF ASSIGNMENT
                          TO APPEAR ON REVERSE OF BOND]

                               FORM OF ASSIGNMENT

     FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto

PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE

the within bond of the _______________________________ and does hereby
constitute and appoint _________________ ______________ attorney to transfer the
said bond on the books of the within named Issuer, with full power of
substitution in the premises.

Dated:

In the presence of:
                                   Bondholder

Signature Guaranteed:

                              [End of Form of Bond]

<PAGE>

; and

     NOW, THEREFORE, in consideration of the premises, of the acceptance by the
Trustee of the trusts hereby created, and of the purchase and acceptance of the
Bonds by the Bondholders, and also for and in consideration of the sum of One
Dollar to the Issuer in hand paid by the Trustee at or before the execution and
delivery of this Indenture, the receipt of which is hereby acknowledged, and for
the purpose of fixing and declaring the terms and conditions upon which the
Bonds are to be issued, delivered, secured and accepted by the Bondholders and
any and all other persons who shall from time to time be or become owners
thereof, and in order to secure the payment of the Bonds at any time issued and
outstanding hereunder and the interest thereon according to their tenor, purport
and effect, and in order to secure the performance and observance of all the
covenants, agreements and conditions therein and herein contained;

     THE ISSUER DOES HEREBY PLEDGE AND ASSIGN, and grant a security interest
unto the Trustee and its successors and assigns for the benefit of the owners of
the Bonds all right, title and interest of the Issuer presently owned or
hereafter acquired in and to the following (collectively, the "Trust Estate"):

          (a)  The Loan Agreement (as the same may from time to time be
     supplemented or amended), including, but not limited to, all payments or
     installment purchase obligations due and to become due under the Note and
     the Loan Agreement whether made at their respective due dates or as
     prepayments permitted or required by the Loan Agreement together with full
     power and authority, in the name of the Issuer or otherwise, to demand,
     receive, enforce, collect or receipt for any or all of the foregoing, to
     endorse or execute any checks or other instruments or orders, to file any
     claims and to take any action which the Trustee may deem necessary or
     advisable in connection therewith, and the Issuer hereby irrevocably
     appoints the Trustee attorney-in-fact of the Issuer for such purposes,
     which appointment is coupled with an interest and is irrevocable; provided,
     however, that the Issuer shall continue to have all the rights, together
     with the Trustee, contained in the following sections of the Loan
     Agreement:

                (i)   Section 7.1 (pertaining to the Issuer's right of access to
          the Project (as defined in the Loan Agreement));

               (ii)   Section 7.5 (pertaining to the Issuer's right to receive
          payment for certain costs and expenses);

              (iii)   Section 7.6 (pertaining to the Issuer's right to certain
          indemnities);

               (iv)   Section 7.7 (pertaining to the Issuer's right to

<PAGE>

          release and indemnification);

                (v)   Section 7.8 (pertaining to the Issuer's right to receive
          certain information);

               (vi)   Section 8.1 (pertaining to the Issuer's right to consent
          or withhold consent to assignment of rights of the Company under the
          Loan Agreement or lease or sale of the Project);

              (vii)   Sections 9.2(b), 9.3 and 9.5 (pertaining to the Issuer's
          right to reimbursement of expenses incurred upon a default);

             (viii)   Sections 10.1(c), 10.2 and 10.3 (pertaining to the
          Issuer's right to notice of prepayments and rights upon the occurrence
          of certain events;

               (ix)   Section 12.5 (pertaining to the Issuer's right to receive
          notices); and

                (x)   Sections 12.12, 12.13 and 12.14 (pertaining to the
          limitations on the liability of the Issuer).

          (b)  The Note of even date herewith of the Company to the Issuer in
     the original principal amount of $4,765,000 evidencing the Company's
     obligation to pay the purchase price pursuant to the Loan Agreement,
     together with interest thereon and other amounts with respect thereto, as
     provided for in the Loan Agreement, the Issuer having on this date
     endorsed, pledged and assigned the Note without recourse to the order of,
     and delivered the same to, the Trustee as security for the obligations of
     the Issuer to the Trustee hereinafter referred to.

          (c)  All money or securities at any time on deposit in, in transit to
     or credited to any account or Fund created hereunder, including without
     limitation the Bond Fund and the Redemption Fund but excluding the Rebate
     Fund;

          (d)  Revenues (as hereinafter defined);

and it is so mutually agreed and covenanted by and between the parties hereto
for the equal and proportionate benefit and security of the Bondholders without
preference, priority or distinction as to lien or otherwise, except as
hereinafter provided, of any one Bond over any other Bond, by reason of priority
in the issue, sale or negotiation thereof or otherwise, for the benefit of the
Bondholders and as security for the fulfillment of the obligations of the Issuer
hereunder;

     TO HAVE AND TO HOLD the same forever, subject, however, to the exceptions,
reservations and matters therein and herein recited but IN TRUST, nevertheless,
for the benefit and security of the owners from time to time of the Bonds
delivered hereunder and issued by the Issuer and outstanding or, to the extent
set forth herein, for the benefit of the Credit Facility Issuer, so long as a
Credit Facility is in place in respect of the Bonds;

<PAGE>

     PROVIDED, HOWEVER, that if, after the right, title and interest of the
Trustee in and to the Trust Estate pledged and assigned to it under this
Indenture shall have ceased, terminated and become void in accordance with
Article XIV hereof, the principal of and interest on the Bonds and any other
obligations arising hereunder shall have been paid to the Bondholders or shall
have been paid by the Company pursuant to Article XIV hereof, then, this
Indenture and all covenants, agreements and other obligations of the Issuer
hereunder shall cease, terminate and be void, and thereupon the Trustee shall
cancel and discharge this Indenture and execute and deliver to the Issuer and
the Company such instruments in writing as shall be required to evidence the
discharge hereof; otherwise, this Indenture shall be and remain in full force
and effect.

     THIS INDENTURE FURTHER WITNESSETH, and it is expressly declared, that the
Bonds issued and secured hereunder are to be issued and delivered and the trust
estate and other revenues and funds herein pledged and assigned are to be dealt
with and disposed of under, upon and subject to the terms, conditions,
stipulations, covenants, agreements, trusts, uses and purposes as hereinafter
expressed, and the Issuer has agreed and covenanted, and does hereby agree and
covenant, with the Trustee and with the owners of said Bonds, as follows, that
is to say:

                                    ARTICLE I

                      DEFINITIONS AND RULES OF CONSTRUCTION

     Section 101.   Definitions.

     All words and terms defined in Article I of the Loan Agreement shall have
the same meanings in this Indenture, unless otherwise specifically defined
herein. In addition, the following words and terms as used in this Indenture
shall have the following meanings unless some other meaning is plainly intended:

     "Act" shall mean all applicable provisions of the Constitution and laws of
the State of Florida, including without limitation the Florida Industrial
Development Financing Act, Parts II and III of Chapter 159, Florida Statutes, as
amended from time to time, and the resolution of the Board of County
Commissioners of Hillsborough County, Florida adopted on October 27, 1971
organizing the Issuer.

     "Alternate Credit Facility" shall mean an irrevocable direct pay letter of
credit, insurance policy or similar credit enhancement or support facility for
the benefit of the Trustee, the terms of which Alternate Credit Facility shall,
in all respects material to the Bondholders, be the same (except for the term of
such Alternate Credit Facility) as the Credit Facility that is replaced by such
Alternate Credit Facility as set forth in Section 603 hereof.

     "Authenticating Agent" shall mean the Trustee and any agent so appointed
pursuant to Section 207 hereof.

     "Available Moneys" shall mean:

          (a)  any moneys which have been paid to the Trustee by the

<PAGE>

     Company and which have been on deposit with the Trustee for at least three
     hundred sixty-seven (367) days during and prior to which no Event of
     Bankruptcy shall have occurred, and the proceeds from the investment of
     such moneys after such moneys have become Available Moneys, and

          (b)  moneys on deposit with the Trustee representing proceeds from the
     resale by the Remarketing Agent of Bonds to persons other than the Issuer
     or the Company as described in Article III hereof, which, in each case,
     were at all times since their deposit with the Trustee held in a separate
     and segregated account or accounts or sub-account or sub-accounts in which
     no moneys were which were not Available Moneys were at any time held, and
     the proceeds from the investment thereof, and

          (c)  moneys drawn under a Credit Facility which in each case were at
     all times since their deposit with the Trustee held in a separate and
     segregated account or accounts or sub-account or sub-accounts in which no
     moneys (other than those drawn under a Credit Facility) were at any time
     held.

     "Bank" shall mean First Union National Bank of North Carolina as the issuer
of the Letter of Credit, and its successors and assigns.

     "Bank Account" shall mean the account of that name established in the Bond
Purchase Fund pursuant to Section 302 hereof.

     "Bond" or "Bonds" shall mean any bond or bonds authenticated and delivered
under this Indenture.

     "Bond Counsel" shall mean an attorney-at-law or a firm of attorneys of
nationally recognized standing in matters pertaining to the tax-exempt nature of
interest on bonds issued by states and their political subdivisions, duly
admitted to the practice of law before the highest court of any state of the
United States of America and approved by the Issuer.

     "Bond Fund" shall mean the trust fund so designated which is established
pursuant to Section 502(a) hereof.

     "Bond Purchase Fund" shall mean the trust fund so designated which is
established pursuant to Section 302 hereof.

     "Bond Register" shall have the meaning provided in Section 204 hereof.

     "Bond Registrar" shall mean the Bond Registrar as designated in Section 204
hereof.

     "Bondholder" or "Bondholders" or "owner" or "owners" shall mean the initial
owner or owners and any future owner or owners of the Bond or Bonds as
registered on the books and records of the Bond Registrar pursuant to Section
204 hereof.

     "Business Day" shall mean a day upon which banks in the State and in the
States of Massachusetts and North Carolina are open for the transaction of
business of the nature required pursuant to the Loan Agreement and this
Indenture.

<PAGE>

     "Calculation Period" shall mean the period from and including the day
following the Determination Date of each week (even if not a Business Day) to
and including the following Determination Date; provided, that if the
Determination Date at the end of a Calculation Period is a Regular Record Date,
such Calculation Period will extend until the Business Day following such
Determination Date.

     "Company" shall mean Leslie Controls, Inc., a New Jersey corporation, and
its successor or assigns and any surviving, resulting or transferee corporation
or other entity.

     "Conversion Date" shall mean that Business Day elected by the Company in
accordance with Section 202(e) of the Indenture as the effective date of
conversion of the interest rate on the Bonds from the Variable Rate to the Fixed
Rate, which date shall be an Interest Payment Date.

     "Counsel" shall mean an attorney or firm of attorneys acceptable to the
Trustee (who may, but need not be, counsel to the Issuer or the Company).

     "Credit Facility" shall mean the Letter of Credit or any Alternate Credit
Facility delivered to the Trustee pursuant to Article VI hereof.

     "Credit Facility Account" shall mean the account of that name established
in the Bond Fund pursuant to Section 502 hereof.

     "Credit Facility Issuer" shall mean the Bank with respect to the Letter of
Credit and the institution issuing any Alternate Credit Facility.

     "Defaulted Interest" has the meaning provided in Section 208 hereof.

     "Determination Date" shall mean Wednesday of each week or if Wednesday is
not a Business Day then the next succeeding Business Day.

     "Event of Bankruptcy" shall mean a petition by or against the Company or
the Issuer under any bankruptcy act or under any similar act which may be
enacted which shall have been filed (other than bankruptcy proceedings
instituted by the Company or the Issuer against third parties) unless such
petition shall have been dismissed and such dismissal shall be final and not
subject to appeal.

     "Event of Default" shall mean any of the events specified in Section 901
hereof to be an Event of Default.

     "Fixed Rate" shall mean the fixed annual rate of interest on the bonds
determined by the Placement Agent pursuant to Section 202(e) hereof. If, for any
reason, the Fixed Rate is held to be invalid or unenforceable by a court of
competent jurisdiction, the Fixed Rate shall be equal to eight percent (8.00%)
per annum. The Fixed Rate shall in no event exceed fifteen percent (15.00%).

     "Fixed Rate Period" shall mean the period during which the Fixed Rate is in
effect, which shall be the period beginning on the Conversion Date and ending on
the Maturity Date.

     "Governmental Obligations" shall mean:

<PAGE>

       (i)     direct obligations of the United States of America for the full
and timely payment of which the full faith and credit of the United States of
America is pledged,

      (ii)     obligations issued by a Person controlled or supervised by and
acting as an instrumentality of the United States of America, the full and
timely payment of which is unconditionally guaranteed as a full faith and credit
obligation of the United States of America, and

     (iii)     securities or receipts evidencing ownership interests in
obligations or specified portions (such as principal or interest) of obligations
described in clause (i) or (ii) above the full and timely payment of which
securities, receipts or obligations is unconditionally guaranteed by the United
States of America, which obligations, securities or receipts are not subject to
redemption prior to maturity at less than par at the option of anyone other than
the holder thereof.

     "Indenture" shall mean this Indenture as amended or supplemented at the
time in question.

     "Initial Interest Rate" shall mean the initial rate of interest of 3.15 %
per annum on the Bonds.

     "Initial Rate Period" shall mean from and including the Original Delivery
Date to and including August 10, 1994.

     "Interest Payment Date" shall mean the first Business Day of each March,
June, September and December commencing on the first Business Day of September,
1994, and ending on the Maturity Date of the Bonds.

     "Investment Obligations" shall mean:

          (a)  any Government Obligations;

          (b)  any bonds or other obligations of the United States of America
     which as to principal and interest constitute direct obligations of the
     United States of America, or any obligations of subsidiary corporations of
     the United States of America fully guaranteed as to payment by the United
     States of America;

          (c)  obligations of the Federal Land Bank;

          (d)  obligations of the Federal Home Loan Bank;

          (e)  obligations of the Federal Intermediate Credit Bank;

          (f)  bonds or obligations issued by any public housing agency or
     municipal corporation in the United States of America, which such bonds or
     obligations are fully secured as to the payment of both principal and
     interest by a pledge of annual contributions under an annual contributions
     contract or contracts with the United States government, or project notes
     issued by any public housing agency, urban renewal agency, or municipal
     corporation in the United States of America which are fully secured as to
     payment of both principal and interest by a requisition, loan, or payment
     agreement with the United States government;

<PAGE>

          (g)  interest-bearing savings accounts (including that of the
     Trustee), interest-bearing certificates of deposit or interest-bearing time
     deposits or any other investments constituting direct obligations of any
     bank which has deposits insured by the Federal Deposit Insurance
     Corporation; provided that such accounts, certificates of deposits, time
     deposits, or investments are either (a) insured by the Federal Deposit
     Insurance Corporation, or (b) secured by the deposit with any national or
     state bank located within the State of any Government Obligation;

          (h)  short term obligations of corporations organized under the laws
     of any state with assets exceeding $500,000,000 if (i) such obligations are
     rated within the two (2) highest categories established by Moody's and S&P
     and which mature no later than one hundred eighty (180) days from the date
     of purchase and (ii) the purchases do not exceed ten (10%) percent of such
     corporation's outstanding obligations;

          (i)  money market mutual funds registered under the Investment Company
     Act of 1940, as amended, provided that the portfolio of any such money
     market fund is limited to Government Obligations and to agreements to
     purchase Government Obligations; and

          (j)  repurchase agreements with respect to obligations included in
     subsections (a) through (i) above and any other investments to the extent
     at the time permitted by then applicable law for the investment of public
     funds.

     "Issuer" shall mean the Hillsborough County Industrial Development
Authority, a corporate governmental agency, constituting a public benefit
corporation and existing pursuant to the constitution and laws of the State
including the Act.

     "Letter of Credit" shall mean the irrevocable direct pay letter of credit
dated August 4, 1994, in the amount of $5,003,250 issued by the Bank, including
any extensions thereof.

     "Loan Agreement" shall mean the Loan Agreement of even date herewith
between the Issuer and the Company and any amendments or supplements thereof
permitted by this Indenture.

     "Majority of the Bondholders" shall mean the owners of a majority of the
aggregate principal amount of the Outstanding Bonds.

     "Maturity Date" shall mean the first business day of August, 2019.

     "Moody's" shall mean Moody's Investors Service, Inc. a Delaware
corporation, its successors and assigns, and, if such corporation shall be
dissolved or liquidated or shall no longer perform the functions of a securities
rating agency, "Moody's" shall be deemed to refer to any other nationally
recognized securities rating agency designated by the Trustee, with the consent
of the Company and the Credit Facility Issuer.

     "Note" shall mean the promissory note given by the Company pursuant to the
provisions of the Loan Agreement, substantially in the form attached thereto.

<PAGE>

     "Optional Tender Notice" shall mean a notice from the owner of a Bond to
the Tender Agent in the form attached to the Bond as Exhibit A.

     "Original Delivery Date" shall mean August 4, 1994.

     "Outstanding" in connection with Bonds shall mean, as of the time in
question, all Bonds authenticated and delivered under the Indenture,
except:

       (i)     Bonds theretofore canceled or required to be cancelled under
     Section 212 hereof;

      (ii)     Bonds which are deemed to have been paid in accordance with
     Article XIV hereof; and

     (iii)     Bonds in substitution for which other Bonds have been
     authenticated and delivered pursuant to Article II hereof.

In determining whether the owners of a requisite aggregate principal amount of
Bonds Outstanding have concurred in any request, demand, authorization,
direction, notice, consent or waiver under the provisions hereof, Bonds which
are held by or on behalf of the Company (unless all of the outstanding Bonds are
then owned by the Company) or an Affiliate of the Company (as defined below)
shall be disregarded for the purpose of any such determination. For the purpose
of this paragraph, an "Affiliate" of any specified entity shall mean any other
entity directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified entity and "control", when used with
respect to any specific entity, shall mean the power to direct the management
and policies of such entity, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.

     "Payments Account" shall mean the account of that name established in the
Bond Fund pursuant to Section 502 hereof.

     "Placement Agent" shall mean the securities dealer, bank or trust company
which is designated by the Company with the consent of the Credit Facility
Issuer and which will agree to establish the Preliminary Fixed Rate and to use
its best efforts to arrange for the sale of Tendered Bonds on the Conversion
Date, all as more particularly described in Section 202(e) hereof.

     "Pledge Agreement" shall mean the Pledge Agreement of even date herewith by
the Company to the Bank, and any amendments or supplements thereof.

     "Pledged Revenues" means and shall include the payments required to be made
by the Company under the Loan Agreement except payments to be made to the
Trustee for services rendered as Trustee under the Indenture and as Bond
Registrar and paying agent for the Bonds and except for expenses,
indemnification and other payments required to be made pursuant to Sections 7.5
and 7.6 of the Loan Agreement.

     "Principal Office" of the Trustee or Bond Registrar shall mean the office
at which, at the time in question, its corporate trust business is principally
conducted.

<PAGE>

     "Prior Bonds" means the $7,200,000 Hillsborough County Industrial
Development Authority Industrial Development Revenue Bonds (Leslie Controls,
Inc. Project), Series 1986.

     "Prior Trustee" means First Florida Bank, N.A., as trustee under a Trust
Indenture dated as of April 18, 1986 between Hillsborough County Industrial
Development Authority and First Florida Bank, N.A.

     "Private Placement Memorandum" shall mean the Private Placement Memorandum
dated August 4, 1994, relating to the Bonds.

     "Regular Record Date" shall mean:

       (i)     in respect of any Interest Payment Date during the Variable Rate
     Period, the close of business on the Business Day immediately preceding
     each such Interest Payment Date, and

      (ii)     in respect of any Interest Payment Date during the Fixed Rate
     Period, the fifteenth (15th) day (whether or not a Business Day) of the
     calendar month immediately preceding each such Interest Payment Date.

     "Reimbursement Agreement" shall mean the Letter of Credit, Reimbursement
and Guaranty Agreement of even date herewith by and among the Company, Watts
Industries, Inc., as guarantor, and the Bank, as the same may be amended from
time to time and filed with the Trustee, and any agreement of the Company with a
Credit Facility Issuer setting forth the obligations of the Company to such
Credit Facility Issuer arising out of any payments under a Credit Facility and
which provides that it shall be deemed to be a Reimbursement Agreement for the
purpose of this Indenture.

     "Remarketing Account" shall mean the account of that name established in
the Bond Purchase Fund pursuant to Section 302 hereof.

     "Remarketing Agent" shall mean First Union National Bank of North Carolina
and its successors as provided in Section 1201 hereof.

     "Remarketing Agreement" shall mean the Remarketing Agreement of even date
herewith between the Company and the Remarketing Agent and any amendments and
supplements thereof.

     "Requisite Bondholders" shall mean the owners of more than two-thirds
(2/3rds) in aggregate principal amount of the Outstanding Bonds.

     "Responsible Officer" when used with respect to the Trustee shall mean the
chairman or vice-chairman of the board of directors, the chairman or
vice-chairman of the executive committee of the board of directors, the
president, any vice president, the secretary, any assistant secretary, the
treasurer, any assistant treasurer, the cashier, any assistant cashier, any
trust officer or assistant trust officer, the controller and any assistant
controller or any other officer of the Trustee customarily performing functions
similar to those performed by any of the above designated officers of banking
institutions with trust powers and also shall mean, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of his knowledge of and familiarity with the particular subject.

<PAGE>

     "Revenues" shall mean:

       (i)     all amounts payable to the Trustee with respect to the principal
     or redemption price of, or interest on the Bonds (a) by the Company under
     the Note, and (b) by the Credit Facility Issuer under a Credit Facility,
     and

      (ii)     investment income with respect to any moneys held by the Trustee
     in the Bond Fund or the Redemption Fund.

     "Security interest" or security interests" refers to the security interests
created herein and in the Security Instruments and shall have the meaning set
forth in the Uniform Commercial Code.

     "S&P" shall mean Standard & Poor's Corporation, a New York corporation, its
successors and assigns, and, if such corporation shall be dissolved or
liquidated or shall no longer perform the functions of a securities rating
agency, "S&P" shall be deemed to refer to any other nationally recognized
securities rating agency designated by the Trustee, with the consent of the
Company and the Credit Facility Issuer.

     "Special Record Date" shall mean for purpose of payment of Defaulted
Interest on the Bonds, the date fixed by the Trustee pursuant to Section 208
hereof.

     "State" shall mean the State of Florida.

     "Subsidiary" shall mean any corporation, association or other business
entity of which more than fifty percent (50%) of the issued and outstanding
stock or equivalent thereof having ordinary voting power is, at the time at
which any determination is being made, owned or controlled by the Company or by
one or more Subsidiaries or other affiliates of the Company.

     "Tender Agent" shall mean The First National Bank of Boston and its
successors as provided in Section 1202 hereof.

     "Tender Agency Agreement" shall mean the Tender Agency Agreement of even
date herewith among the Company, the Trustee and the Tender Agent.

     "Tendered Bonds" shall mean those Bonds tendered or deemed tendered by the
owners for purchase pursuant to an Optional Tender Notice or on the Conversion
Date.

     "Trustee" shall mean The First National Bank of Boston and its successor in
the trust hereunder.

     "Undelivered Bond" shall mean:

       (i)     any Bond for which an Optional Tender Notice has been given
     pursuant to Section 203 hereof and which has not been delivered to the
     Tender Agent on the date specified for purchase and

      (ii)     any Bond which has not been delivered to the Trustee for
     redemption or purchase on any mandatory redemption or purchase date or the
     Conversion Date; provided that in either case the Trustee has on hand and
     available on such date funds sufficient to purchase or redeem

<PAGE>

     said Bond.

     "Variable Rate" shall mean a variable interest rate established after the
Initial Rate Period as the rate of interest determined by the Remarketing Agent
on and as of each Determination Date as the minimum rate of interest necessary,
in the judgment of the Remarketing Agent, taking into account market conditions
prevailing on the Determination Date, to enable the Remarketing Agent to arrange
for the sale of all of the Bonds on the Determination Date in the secondary
market at a price equal to the principal amount thereof (plus interest accrued
to the date of settlement). If the Remarketing Agent fails to certify such rate,
the Variable Rate for the next succeeding Calculation Period or Periods until
thereafter certified by the Remarketing Agent shall remain the same as that most
recently established and certified by the Remarketing Agent until thereafter
certified by the Remarketing Agent or adjusted as set forth in the next
succeeding sentence. In the event the Remarketing Agent fails to certify such
rate for four (4) consecutive Calculation Periods, such rate for each
Calculation Period thereafter (if none is certified by the Remarketing Agent)
shall be ninety percent (90%) of the yield for United States Treasury bills
maturing approximately thirty (30) days after the Determination Date for such
Calculation Period as published by The Wall Street Journal on such Determination
Date (or the next Business Day on which The Wall Street Journal is published if
not published on the Determination Date) (or, if The Wall Street Journal is no
longer published, then any reasonably equivalent financial publication selected
by the Remarketing Agent); provided that if during the Variable Period the
Determination Date at the end of each such Calculation Period is a Regular
Record Date, such Calculation Period will extend until the Business Day
following such Determination Date. A Bondholder may request the Variable Rate in
effect from time to time with respect to the Bonds from the Trustee or the
Remarketing Agent. If, for any reason, the Variable Rate is not determined as
described above or is held to be invalid or unenforceable by a court of
competent jurisdiction for any period, the interest rate for each such period
shall be equal to eight percent (8.00%) per annum. The Variable Rate shall not
be a rate in excess of fifteen percent (15.00%) per annum.

     "Variable Rate Period" shall mean that period during which a Variable Rate
is in effect on the Bonds.

     "Variable Rate Purchase Date" shall mean while the Bonds bear interest at
the Variable Rate, any Business Day (prior to and including the date which is
the tenth day preceding the Conversion Date) on which the Bonds may be tendered
for purchase at the option of the owner thereof in accordance with Section 203
hereof.

     Section 102.   Rules of Construction.

     (a)  Words of the masculine gender shall be deemed and construed to include
correlative words of the feminine and neuter genders. Unless the context shall
otherwise indicate, the words "Bond, "owner", "Bondholder", "Bondholder of
Record" and "person" shall include the plural as well as the singular number;
the word "person" shall include any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof; and the word
"Bondholder" when used herein with respect to the Bonds shall mean the
registered owner of any of the Bonds.

<PAGE>

     (b)  Words importing the redemption or calling for redemption of the Bonds
shall not be deemed to refer to or connote payment of Bonds at their stated
maturity.

     (c)  The Table of Contents, captions and headings in this Indenture are for
convenience only and in no way limit the scope or intent of any provision or
section of this Indenture.

     (d)  All references herein to particular articles or sections are
references to articles or sections of this Indenture unless some other reference
is indicated.

     (e)  All references herein to the Code or the 1954 Code or any particular
provision or section thereof shall be deemed to refer to any successor, or
successor provision or section, thereof, as the case may be.

     (f)  All references herein to time shall be Charlotte, North Carolina time.

                                   ARTICLE II

                                    THE BONDS

     Section 201.   Amount, Terms, and Issuance of the Bonds.

     (a)  The Bonds shall be limited to $4,765,000 in aggregate principal amount
and shall contain substantially the terms recited in the form of Bond above and
as set forth in this Indenture. No Bonds may be issued under this Indenture
except in accordance with this Article II. No additional bonds shall be issued
under this Indenture.

     (b)  The Issuer may cause a copy of the text of the opinion of Bond Counsel
delivered in connection with the issuance of the Bonds to be printed on any of
the Bonds. The Bonds may bear such endorsement or legend satisfactory to the
Trustee as may be required to conform to usage or law with respect thereto,
including the imposition of CUSIP or other identifying numbers.

     (c)  Upon satisfaction of the conditions set forth in Section 213 hereof,
the Issuer shall issue the Bonds, and the Trustee shall, at the Issuer's
request, authenticate the Bonds and deliver them as specified in the request.

     Section 202.   Designation, Denominations, Maturity Date and Interest
                    Rates of the Bonds.

     (a)  Designation, Denominations, Maturity Date. The Bonds shall be
designated "$4,765,000 Hillsborough County Industrial Development Authority
Industrial Development Revenue Refunding Bonds (Leslie Controls, Inc. Project),
Series 1994." The Bonds shall be issuable as fully registered Bonds in the
denominations of $100,000 or any integral multiple of $5,000 in excess thereof;
provided that if less than One Hundred Thousand Dollars ($100,000) principal
amount of Bonds is outstanding one Bond shall be issued in such smaller
denomination; and provided further, that subsequent to the initial issuance of
the Bonds, replacement or substitution Bonds or

<PAGE>

Bonds issued in exchange in accordance with the provisions of Section 205 hereof
may be issued in denominations of $5,000 and integral multiples thereof. All
Bonds shall bear the date of their authentication, shall bear interest from the
most recent date to which interest has been paid or duly provided for, or, if
authenticated on an Interest Payment Date, from that date, or, if no interest
has been paid or duly provided for, from the date of authentication, and shall
mature, subject to prior redemption as provided in Article VII hereof, on the
first business day of August, 2019. The Bonds shall be numbered from "1"
consecutively upwards prefixed by the letter "R".

     (b)  Interest Rates. The Bonds shall bear interest at the applicable rate
provided below. On each Interest Payment Date, interest accrued through the day
immediately preceding such Interest Payment Date shall be payable. While the
Bonds bear interest at a Variable Rate interest on the Bonds shall be computed
on the basis of a year of three hundred sixty-five (365) or three hundred
sixty-six (366) days, as applicable, for the number of days actually elapsed.
From and including the Conversion Date, and thereafter, interest on the Bonds
shall be computed on the basis of a three hundred sixty (360) day year for the
number of days actually elapsed.

     (c)  Initial Interest Rate. For the Initial Rate Period, the Bonds shall
bear interest at the Initial Interest Rate.

     (d)  Variable Rate. Following the Initial Rate Period and until the
Conversion Date, the Bonds shall bear interest at the Variable Rate. During the
Variable Rate Period, the Remarketing Agent shall determine the interest rate
for the Bonds on each Determination Date. The Remarketing Agent shall give
notice by telephone, telecopier, telex, telegram or other telecommunication
device, and upon request shall confirm in writing, on the Determination Date to
the Trustee and the Company of the interest rate to be in effect for the
following Calculation Period. The determination of the Variable Rate by the
Remarketing Agent shall be conclusive and binding upon the Bondholders, the
Issuer, the Company, the Trustee, the Tender Agent and the Remarketing Agent.
Any owner may request the Variable Rate in effect from time to time with respect
to the Bonds from the Trustee or the Remarketing Agent.

     (e)  Fixed Rate; Conversion to Fixed Rate.

          (1)  The Company has a one-time option to convert the interest rate
     payable on the Bonds from the Variable Rate to the Fixed Rate effective on
     an Interest Payment Date following compliance by the Company with the
     provisions of this Section 202(e). The Bonds shall be subject to mandatory
     tender for purchase by the Owners thereof on the Conversion Date. To
     exercise the option to convert, the Company shall deliver or mail by first
     class mail (i) a notice to the Trustee and the Credit Facility Issuer with
     respect to the determination of the Company to convert the interest rate on
     the Bonds from the Variable Rate to the Fixed Rate, which notice shall be
     delivered to the Trustee at least thirty (30) but not more than forty-five
     (45) days prior to the Conversion Date, and (ii) the opinion of Bonds
     Counsel described in Section 202(f) hereof. The Trustee shall then deliver
     or mail by first class mail a notice in substantially the form attached
     hereto as Exhibit B at least twenty (20) days but not more than thirty (30)
     days prior to the Conversion Date to the Owner of each Bond at the address
     shown on the registration books of the

<PAGE>

     Issuer. Any notice given by the Trustee as provided in this Section shall
     be conclusively presumed to have been duly given, whether or not the Owner
     receives the notice. Failure to mail any such notice, or the mailing of
     defective notice, to any Owner, shall not affect the proceeding for
     purchase as to any Owner to whom proper notice is mailed. Said notice shall
     state, among other things, (1) the Conversion Date, (2) the name and
     address of the placement agent which has agreed to use its best efforts to
     arrange for the sale of any bonds to be tendered or deemed tendered for
     purchase on the Conversion Date (herein called the "Placement Agent"), (3)
     that after the seventeenth (17th) day preceding the Conversion Date, the
     owner will not be entitled to deliver an Optional Tender Notice and that
     after the tenth (10th) day preceding the Conversion Date, the owner will
     not be entitled to tender this Bond for purchase as described below, (4)
     that this Bond will be deemed tendered for purchase on the Conversion Date,
     (5) that in order to receive payment of the purchase price of any Bond
     which is deemed to have been tendered, the registered owner of such Bond
     must deliver such Bond to the office of the Tender Agent before 10 a.m.
     Eastern time on the Conversion Date specifying such address, and (6) that
     interest on any Bond will be payable only to (but not including) the
     Conversion Date.

     As described above, Owners of Bonds shall be required to tender their Bonds
on the Conversion Date to the Tender Agent for purchase at the purchase price,
and any such Bonds not so tendered on the Conversion Date ("Undelivered Bonds"),
for which there has been irrevocably deposited in trust with the Trustee an
amount of moneys sufficient to pay the Purchase Price of the Untendered Bonds,
shall be deemed to have been tendered and purchased pursuant to this Section
202(e). IN THE EVENT OF A FAILURE BY AN OWNER OF BONDS TO TENDER ITS BONDS ON OR
PRIOR TO THE CONVERSION DATE, SAID OWNER SHALL NOT BE ENTITLED TO ANY PAYMENT
(INCLUDING ANY INTEREST TO ACCRUE SUBSEQUENT TO THE CONVERSION DATE) OTHER THAN
THE PURCHASE PRICE FOR SUCH UNTENDERED BONDS, AND ANY UNTENDERED BONDS SHALL NO
LONGER BE ENTITLED TO THE BENEFITS OF THIS INDENTURE, EXCEPT FOR THE PURPOSE OF
PAYMENT OF THE PURCHASE PRICE THEREFOR.

          (2)  On or before the proposed Conversion Date, the Placement Agent
     shall determine the Fixed Rate as of such date in the manner described in
     subsection (4) below and shall notify the Trustee and the Company of the
     Fixed Rate by telephone, telecopier, telex, telegram or other
     telecommunication device and upon request, shall confirm such notice in
     writing.

          (3)  Any owner of Bonds to be converted to a Fixed Rate shall be
     deemed to have tendered its Bonds to the Tender Agent. Said owner shall not
     be entitled to any payment (including any interest to accrue subsequently
     to the Conversion Date) other than the purchase price for such Bonds which
     shall be equal to the unpaid principal amount of such Bonds, and any such
     Bonds shall no longer be entitled to the benefits of this Indenture, except
     for the purpose of payment of the purchase price therefor and interest
     payable on the Conversion Date. Payment of the purchase price of any such
     Bonds shall be made only upon the presentment and surrender of such Bonds
     to the Tender Agent. Upon request, the Trustee shall provide the Tender
     Agent with the address set forth on the Bond Register for such owner. In
     the case of any Bond deemed tendered, the Issuer shall cause to be
     executed, and the Trustee shall authenticate and deliver to the new owner
     as provided in

<PAGE>

     Section 301 hereof a new Bond of like date and tenor in lieu of and in
     substitution for such Bond deemed to be tendered.

          (4)  On or before the Conversion Date, the Fixed Rate shall be the
     interest rate per annum which, in the sole judgment of the Placement Agent,
     taking into account prevailing financial market conditions, would be the
     minimum interest rate required to sell such Bonds on the Conversion Date at
     a price equal to the 100% of the principal amount thereof. The Fixed Rate
     shall be determined by the Placement Agent on or before the Conversion
     Date, and the Placement Agent shall notify the Trustee and the Company
     thereof by telephone or such other manner as may be appropriate by not
     later than 2:00 p.m., Eastern time, on the Conversion Date, which notice
     shall be promptly confirmed in writing.

     (f)  Condition to Conversion; Additional Notices.

          (1)  As a condition to the giving of notice as provided in Section
     202(e) above, the Company shall provide the Trustee with an opinion of Bond
     Counsel to the effect that the proposed conversion of the interest rate on
     the Bonds will not cause the interest on the Bonds to be includable in the
     gross income of the owners thereof for federal income tax purposes.

          (2)  The delivery by the Company to the Trustee of a letter from Bond
     Counsel confirming the opinion required prior to the notification described
     above on such Conversion Date is a condition precedent to any such
     Conversion. In the event that the Company fails to deliver to the Trustee
     the letter of Bond Counsel referred to in the preceding sentence, such
     Conversion shall not take effect, and the Bonds shall continue to bear
     interest at the Variable Rate.

          (3)  The Trustee shall provide the Tender Agent with a copy of any
     notice delivered to the owners of the Bonds pursuant to Section 202 hereof.

     Section 203.   Optional Tender Provisions of the Bonds.

     (a)  While the Bonds bear interest at the Variable Rate, any Bond or
portion thereof in an authorized denomination (other than a Bond registered in
the name of the Company) shall be purchased on the demand of the owner thereof,
on any Business Day at a purchase price equal to one hundred percent (100%) of
the principal amount thereof plus interest accrued to the date of purchase, if
the owner of such Bond delivers to the Tender Agent at its address filed with
the Trustee an Optional Tender Notice at least seven (7) days prior to the
Variable Rate Purchase Date specified in such Notice.

     (b)  Any Optional Tender Notice delivered pursuant to the preceding
subsection shall automatically constitute: (1) an irrevocable offer to sell such
bond on the Variable Rate Purchase Date at a price equal to one hundred percent
(100%) of the principal amount of such Bond plus interest accrued to the
Variable Rate Purchase Date; and (2) an irrevocable authorization and
instruction to the Bond Registrar to effect transfer of such Bond to the
purchaser thereof on the Variable Rate Purchase Date. No purchase of Bonds
pursuant to the provisions of this Section 203 shall be deemed a redemption
thereof.

<PAGE>

     (c)  Any owner who delivers an Optional Tender Notice pursuant to this
Section 203 shall deliver such Bond to the Tender Agent, at its address filed
with the Trustee, not less than five (5) days prior to the Variable Rate
Purchase Date specified in the aforesaid Optional Tender Notice; provided,
however, that any Bond owner which is an investment company registered under the
Investment Company Act of 1940 may deliver Bonds owned by it to the Tender Agent
at its address filed with the Trustee, at or prior to 10:00 a.m. on the Variable
Rate Purchase Date. All Bonds delivered to the Tender Agent pursuant to this
Section 203 must be duly endorsed for transfer in blank in form satisfactory to
the Trustee.

     (d)  If a Bondholder who gives the Optional Tender Notice shall fail to
deliver the Bond or Bonds identified in the Optional Tender Notice to the Tender
Agent at or prior to 10:00 a.m. on the Variable Rate Purchase Date, such
Undelivered Bond shall be purchased and shall cease to accrue interest on such
Variable Rate Purchase Date and the owner thereof shall thereafter be entitled
only to payment of the purchase price therefor and not to the benefits of this
Indenture, and the Issuer, to the extent permitted by law, shall execute and the
Trustee or the Authenticating Agent shall authenticate and deliver a substitute
Bond or Bonds in lieu of the Undelivered Bond and the Bond Registrar shall
register such Bond in the name of the purchaser or purchasers thereof pursuant
to Section 205 hereof. The Tender Agent shall notify the Trustee and the Bond
Registrar of any Undelivered Bonds. The Trustee shall (1) notify the Remarketing
Agent of such Undelivered Bond and (2) place a stop transfer against such
Undelivered Bonds until the Undelivered Bonds are properly delivered to the
Tender Agent. Payment of the purchase price of any such Undelivered Bonds shall
be made only upon the presentment and surrender of such Bonds to the Tender
Agent. Upon notice of such delivery, the Bond Registrar shall make any necessary
adjustment to the Bond Register.

     (e)  Notwithstanding anything to the contrary contained herein, the rights
of the owners to tender Bonds pursuant to this Section 203 shall cease
immediately and without further notice from and including the date payment of
the Bonds is accelerated following an Event of Default pursuant to Article IX
hereof.

     Section 204.   Registered Bonds Required; Bond Registrar and Bond
                    Register.

     (a)  All Bonds shall be issued in fully registered form. The Bonds shall be
registered upon original issuance and upon subsequent transfer or exchange as
provided in this Indenture.

     (b)  The Issuer shall designate one or more persons to act as "Bond
Registrar" for the Bonds, provided that the Bond Registrar appointed for the
Bonds shall be either the Trustee or a person which would meet the requirements
for qualification as a successor trustee imposed by Section 1014 hereof. The
Issuer hereby appoints The First National Bank of Boston as its Bond Registrar
in respect of the Bonds. Any person other than the Trustee undertaking to act as
Bond Registrar shall first execute a written agreement, in form satisfactory to
the Trustee, to perform the duties of a Bond Registrar under this Indenture,
which agreement shall be filed with the Trustee and the Tender Agent.

     (c)  The Bond Registrar shall act as registrar and transfer agent for the
Bonds. There shall be kept at an office of the Bond Registrar a

<PAGE>

register (herein sometimes referred to as the "Bond Register") in which, subject
to such reasonable regulations as the Issuer, the Trustee or the Bond Registrar
may prescribe, there shall be provisions for the registration of the Bonds and
for the registration of transfers of the Bonds. The Issuer shall cause the Bond
Registrar to designate, by a written notification to the Trustee, a specific
office location (which may be changed from time to time, upon similar
notification) at which the Bond Register is kept. In the absence of a specific
designation by the Bond Registrar, the principal corporate trust office of the
Trustee in Canton, Massachusetts shall be deemed such office in respect of the
Bonds for which the Trustee is acting as Bond Registrar.

     Section 205.   Transfer and Exchange.

     (a)  Upon surrender for transfer of any Bond at the office of the Bond
Registrar, the Issuer shall execute and the Trustee or its Authenticating Agent
shall authenticate and deliver in the name of the transferee or transferees, one
or more new fully registered Bonds of authorized denomination for the aggregate
principal amount which the new owner is entitled to receive; provided that if
moneys for the purchase of such Bond have been provided pursuant to a draw under
the Credit Facility, such Bond shall not be transferable to any one other than
the Company or its assignee or pledgee. Except for transfers in connection with
the purchase of Bonds pursuant to Section 203 hereof and the remarketing thereof
pursuant to Article III, which shall be effected at the office of the Tender
Agent in Canton, Massachusetts, Bonds shall be surrendered for transfer at the
principal corporate trust office of the Trustee in Canton, Massachusetts. Also,
the Issuer shall execute and the Trustee or its Authenticating Agent shall
authenticate and deliver Bonds in lieu of Undelivered Bonds.

     (b)  Bonds may be exchanged for other Bonds of any other authorized
denomination, of a like aggregate principal amount, upon surrender of the Bonds
to be exchanged at the principal corporate trust office of the Bond Registrar or
Trustee; provided, however, that in connection with the purchase of Bonds
tendered for purchase and the remarketing thereof pursuant to Article III
hereof, Bonds may be exchanged at the principal office of the Tender Agent, or
any office of any agent designated by, the Trustee. Whenever any Bonds are so
surrendered for exchange, the Issuer shall execute, and the Trustee or its
Authenticating Agent shall authenticate and deliver, the Bonds which the
Bondholder making the exchange is entitled to receive.

     (c)  All Bonds presented for transfer, exchange, redemption or payment (if
so required by the Issuer, the Bond Registrar or the Trustee) shall be
accompanied by a written instrument or instruments of transfer or authorization
for exchange, in form satisfactory to the Bond Registrar, which may include a
signature guarantee, duly executed by the owner or by his attorney duly
authorized in writing.

     (d)  No service charge shall be made to a Bondholder for any exchange or
transfer of Bonds, but the Issuer or the Bond Registrar may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in relation thereto.

     (e)  Except in connection with the purchase of Bonds pursuant to Section
203 hereof and the remarketing thereof pursuant to Article III hereof, neither
the Issuer nor any Bond Registrar on behalf of the Issuer

<PAGE>

shall be required to issue, transfer or exchange any Bond selected for
redemption in whole or in part.

     (f)  New Bonds delivered upon transfer or exchange shall be valid
obligations of the Issuer, evidencing the same debt as the Bond surrendered,
shall be secured by this Indenture and shall be entitled to all of the security
and benefits hereof to the same extent as the Bonds surrendered;

     Section 206.   Execution.

     (a)  The Bonds shall be executed by the manual or facsimile signature of
the Chairman, the seal of the Issuer shall be affixed, imprinted, lithographed
or reproduced thereon and the same shall be attested by the manual or facsimile
signature of the Secretary.

     (b)  Bonds executed as above provided may be issued and shall, upon request
of the Issuer, be authenticated by the Trustee or the Authenticating Agent,
notwithstanding that any officer signing such Bonds or whose facsimile signature
appears thereon shall have ceased to hold office at the time of issuance or
authentication or shall not have held office at the date of the Bond.

     Section 207.   Authentication; Authenticating Agent.

     (a)  No Bond shall be valid for any purpose until the Trustee's Certificate
of Authentication thereon shall have been duly executed as provided in this
Indenture, and such authentication shall be conclusive proof that such Bond has
been duly authenticated and delivered under this Indenture and that the owner
thereof is entitled to the benefit of the trust hereby created subject to the
provisions of Section 203(d) and Article XIV hereof.

     (b)  If the Bond Registrar is other than the Trustee, the Trustee may
appoint the Bond Registrar as an Authenticating Agent with the power to act on
the Trustee's behalf and subject to its direction in the authentication and
delivery of Bonds in connection with transfers and exchanges under Section 205
hereof, and the authentication and delivery of Bonds by an Authenticating Agent
pursuant to this Section shall, for all purposes of this Indenture, be deemed to
be the authentication and delivery "by the Trustee". The Trustee shall, however,
itself authenticate all Bonds upon their initial issuance. The Authenticating
Agent may authenticate Bonds in substitution for Undelivered Bonds. The
Authenticating Agent shall be entitled to reasonable compensation from the
Company for its services.

     (c)  Any corporation into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any Authenticating Agent
shall be a party, or any corporation succeeding to the corporate trust business
of any Authenticating Agent, shall be the successor of the Authenticating Agent
hereunder, if such successor corporation is otherwise eligible as a Bond
Registrar under Section 204 hereof, without the execution or filing of any
further document on the part of the parties hereto or the Authenticating Agent
or such successor corporation.

     (d)  Any Authenticating Agent may at any time resign by giving written

<PAGE>

notice of resignation to the Trustee, the Issuer, the Remarketing Agent and the
Company. The Trustee may at any time terminate the agency of any Authenticating
Agent by giving written notice of termination to such Authenticating Agent, the
Issuer and the Company. Upon receiving such a notice of resignation or upon such
a termination, or in case at any time any Authenticating Agent shall cease to be
eligible under this Section, the Trustee shall promptly appoint a successor
Authenticating Agent, shall give written notice of such appointment to the
Issuer and the Company, and shall mail notice of such appointment to all owners
of Bonds as the names and addresses of such owners appear on the Bond Register.

     Section 208.   Payment of Principal and Interest; Interest Rights
                    Preserved.

     (a)  The principal and redemption price of any Bond shall be payable, upon
surrender of such Bond, at the office of the Trustee or other paying agent
appointed pursuant to this Indenture. Interest on each Interest Payment Date
shall be payable by check, mailed on the Interest Payment Date to the address of
the person entitled thereto on the Regular Record Date or, if applicable, the
Special Record Date, as such address shall appear in the Bond Register. While
the Bonds bear interest at a Variable Rate, Interest shall also be payable by
wire transfer to the account of a member bank of the Federal Reserve System of
any owner of Bonds in the aggregate principal amount of $1,000,000 or more at
the written request (identifying such account by number) of such owner received
by the Trustee on or prior to the Regular Record Date or Special Record Date.

     (b)  Interest on any Bond which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the person in whose
name that Bond is registered at the close of business on the Regular Record Date
for such interest.

     (c)  Any interest on any Bond which is payable, and is not punctually paid
or duly provided for, on any Interest Payment Date (herein called "Defaulted
Interest") shall forthwith cease to be payable to the owner of such Bonds on the
relevant Regular Record Date solely by virtue of such registered owner having
been such record owner on the Regular Record Date, and such Defaulted Interest
shall be paid, pursuant to Section 911 hereof, to the person in whose name the
Bond is registered at the close of business on a Special Record Date to be fixed
by the Trustee, such date to be not more than fifteen (15) nor less than ten
(10) days prior to the date of proposed payment. The Trustee shall cause notice
of the proposed payment of such Defaulted Interest and the Special Record Date
therefor to be mailed, first class postage prepaid, to each Bondholder, at its
address as it appears in the Bond Register, not less than ten (10) days prior to
such Special Record Date.

     (d)  Subject to the foregoing provisions of this Section 208, each Bond
delivered under this Indenture, upon transfer of or exchange for or in lieu of
any other Bond shall carry the rights to interest accrued and unpaid, and to
accrue, as such other Bond.

     All payments of principal and redemption price of and interest on the
Bonds, whether upon redemption, acceleration, maturity or otherwise, shall be
made first, pursuant to draws under the Credit Facility in accordance with its
terms on the dates when due; second, from other Available Moneys on deposit with
the Trustee and not held in trust for the benefit of the

<PAGE>

owners of the Bonds pursuant to the provisions of Article XIV hereof; and then
from other collected funds available to the Trustee hereunder for such payments.

     Section 209.   Persons Deemed Owners.

     The Issuer, the Trustee, the Bond Registrar and the Authenticating Agent
may deem and treat the person in whose name any Bond is registered as the
absolute owner thereof (whether or not such Bond shall be overdue and
notwithstanding any notation of ownership or other writing thereon made by
anyone other than the Issuer, the Trustee, the Bond Registrar or the
Authenticating Agent) for the purpose of receiving payment of or on account of
the principal of (and premium, if any, on), and (subject to Section 208 hereof)
interest on such Bond, and for all other purposes, and neither the Issuer, the
Trustee, the Bond Registrar, nor the Authenticating Agent shall be affected by
any notice to the contrary. All such payments so made to any such registered
owner, or upon his order, shall be valid and, to the extent of the sum or sums
so paid, effectual to satisfy and discharge the liability for moneys payable
upon any such Bond.

     Section 210.   Mutilated, Destroyed, Lost, Stolen or Undelivered
                    Bonds.

     (a)  If any Bond shall become mutilated, the Issuer shall execute, and the
Trustee or its Authenticating Agent shall thereupon authenticate and deliver, a
new Bond of like tenor and denomination in exchange and substitution for the
Bond so mutilated, but only upon surrender to the Trustee of such mutilated Bond
for cancellation, and the Issuer and the Trustee may require reasonable
indemnity therefor. If any Bond shall be reported lost, stolen or destroyed,
evidence as to the loss, theft or destruction thereof shall be submitted to the
Issuer and the Trustee; and if such evidence shall be satisfactory to both and
indemnity satisfactory to both shall be given, the Issuer shall execute, and
thereupon the Trustee or its Authenticating Agent shall authenticate and
deliver, a new Bond of like tenor and denomination. The cost of providing any
substitute Bond under the provisions of this Section shall be borne by the
Bondholder for whose benefit such substitute Bond is provided. If any such
mutilated, lost, stolen or destroyed Bond shall have matured or be about to
mature, the Issuer may, with the consent of the Trustee, pay to the owner the
principal amount of such Bond upon the maturity thereof and the compliance with
the aforesaid conditions by such owner, without the issuance of a substitute
Bond therefor.

     (b)  The Issuer shall execute and the Trustee or its Authenticating Agent
shall authenticate and deliver a substitute Bond in lieu of each Undelivered
Bond.

     (c)  Every substituted Bond issued pursuant to this Section 210 shall
constitute an additional contractual obligation of the Issuer, whether or not
the Bond alleged to have been destroyed, lost or stolen shall be at any time
enforceable by anyone, and shall be entitled to all of the benefits of this
Indenture equally and proportionately with any and all other Bonds duly issued
hereunder.

     (d)  All Bonds shall be held and owned upon the express condition that the
foregoing provisions are, to the extent permitted by law, exclusive with respect
to the replacement or payment of mutilated, destroyed, lost,

<PAGE>

stolen or Undelivered Bonds and shall preclude any and all other rights or
remedies.

     Section 211.   Temporary Bonds.

     Pending preparation of definitive Bonds, or by agreement with the
purchasers of all Bonds, the Issuer may issue, and, upon its request, the
Trustee shall authenticate, in lieu of definitive Bonds one or more temporary
printed or typewritten Bonds of substantially the tenor recited above in any
denomination authorized under Section 202 hereof. Upon request of the Issuer,
the Trustee shall authenticate definitive Bonds in exchange for and upon
surrender of an equal principal amount of temporary Bonds. Until so exchanged,
temporary Bonds shall have the same rights, remedies and security hereunder as
definitive Bonds.

     Section 212.   Cancellation of Surrendered Bonds.

     Bonds surrendered for payment, redemption, transfer or exchange and Bonds
surrendered to the Trustee by the Issuer or by the Company for cancellation
shall be cancelled by the Trustee and a certificate evidencing such cancellation
shall be furnished by the Trustee to the Issuer and the Company. Bonds purchased
pursuant to Section 203 hereof shall not be surrendered Bonds and, unless
otherwise specifically provided in this Indenture, shall be Outstanding Bonds.

     Section 213.   Conditions of Issuance.

     (a)  Prior to or simultaneously with the authentication and delivery of the
Bonds by the Trustee, the Trustee shall have received notice that the conditions
for the issuance of the Letter of Credit as set forth in Article VIII of the
original Reimbursement Agreement have been satisfied and there shall be filed
with the Trustee such documents, certificates and opinions as Trustee may
require, including, the following:

          (1)  A copy, certified by the Secretary, of the resolution of the
     Issuer authorizing the issuance of the Bonds, awarding the Bonds and
     directing the authentication and delivery of the Bonds to or upon the order
     of the purchaser(s) therein named upon payment of the purchase price
     therein set forth.

          (2)  Executed counterparts of this Indenture, the Loan Agreement, the
     Note (endorsed without recourse by the Issuer to the Trustee), the Letter
     of Credit, the Reimbursement Agreement, the Tender Agency Agreement and the
     Remarketing Agreement.

          (3)  An opinion of Counsel to the Issuer, to the effect that the
     execution and delivery of the Loan Agreement and this Indenture have been
     duly authorized by the Issuer, the Loan Agreement and this Indenture have
     been duly executed by the Issuer and that, assuming proper authorization
     and execution of this Indenture by the Trustee and of the Loan Agreement by
     the Company, the Loan Agreement and this Indenture are the valid and
     binding agreements of the Issuer enforceable in accordance with their
     respective terms, subject to the qualification that enforceability thereof
     may be limited by bankruptcy, insolvency, reorganization, moratorium or
     similar laws affecting enforcement of creditors' rights generally and by
     the exercise of judicial discretion in accordance with general equitable

<PAGE>

     principles.

          (4)  An opinion of Counsel to the Company to the effect that the
     execution and delivery of the Loan Agreement, the Note, the Reimbursement
     Agreement, the Remarketing Agreement and the Tender Agency Agreement have
     been duly authorized by the Company, that the Loan Agreement, the Note, the
     Reimbursement Agreement, the Remarketing Agreement and the Tender Agency
     Agreement have been duly executed and delivered by the Company, and that
     the Loan Agreement, the Note, the Reimbursement Agreement, the Remarketing
     Agreement and the Tender Agency Agreement, assuming due authorization,
     execution and delivery thereof by the other parties thereto, if any, are
     valid, binding and enforceable against the Company in accordance with their
     terms, subject to the qualification that enforceability thereof may be
     limited by bankruptcy, insolvency, reorganization, moratorium or similar
     laws affecting enforcement of creditors' rights generally and by the
     exercise of judicial discretion in accordance with general equitable
     principles.

          (5)  An opinion of Counsel to the Company to the effect that copies of
     such instruments and financing statements (described in such opinion) as
     are necessary have been recorded and filed in the manner and places
     required by State law with the effect that (i) the lien on this Indenture
     has been perfected and creates, as to the rights of the Issuer under the
     Loan Agreement assigned under this Indenture, a valid security interest;
     and (ii) that the Issuer's endorsement and pledge of the Note to the
     Trustee and the Trustee's possession thereof creates a valid, perfected,
     first priority security interest in the Note, subject to no equal or prior
     liens.

          (6)  An opinion of Counsel to the Issuer, to the effect that the
     issuance of the Bonds and the execution of this Indenture have been duly
     and validly authorized by the Issuer, that all conditions precedent to the
     delivery of the Bonds have been fulfilled and that the Bonds and this
     Indenture are valid and binding agreements of the Issuer enforceable in
     accordance with their terms, subject to the qualification that
     enforceability thereof may be limited by bankruptcy, insolvency,
     reorganization, moratorium or similar laws affecting enforcement of
     creditors' rights generally and by the exercise of judicial discretion in
     accordance with general equitable principles.

          (7)  A written request and authorization of the Issuer addressed to
     the Trustee directing the Trustee to authenticate and deliver the Bonds.

          (8)  Such other documents as the Trustee may reasonably require.

          (9)  A favorable opinion of Bond Counsel as to the tax-exempt status
     of interest on the Bonds.

     (b)  When the documents mentioned in paragraphs (1) through (9) of
subsection (a) of this Section shall have been filed with the Trustee and when
the Bonds shall have been executed as required by this Indenture, the Trustee
shall authenticate the Bonds and deliver them to or upon the order of the
purchaser(s) named in the resolution mentioned in paragraph (1) thereof, but
only upon payment to the Trustee for the account of the Issuer

<PAGE>

of the purchase price of the Bonds. The Trustee shall be entitled to rely
conclusively upon such resolution or resolutions, or document approved thereby,
as to the name of the purchasers and the amount of such purchase price.

     (c)  Simultaneously with the delivery of the Bonds, the Trustee shall apply
the proceeds of the Bonds in accordance with Article IV of this Indenture.

                                   ARTICLE III

                   PURCHASE AND REMARKETING OF TENDERED BONDS

     Section 301.   Remarketing of Tendered Bonds.

     (a)  Not later than the close of business on the date the Tender Agent
receives an Optional Tender Notice, the Tender Agent shall notify the
Remarketing Agent and the Company by telephone, telex or telecopier, confirmed
in writing if requested, specifying the Variable Rate Purchase Date.

     (b)  Not later than the close of business on the ninth (9th) day prior to
the Conversion Date, the Trustee shall notify the Placement Agent and the
Company by telephone, telex or telecopier, confirmed in writing if requested,
specifying the aggregate principal amount of Bonds deemed tendered for mandatory
purchase on the Conversion Date.

     (c)  Except as provided in subsection (d) below and Section 305 hereof,
upon receipt by the Remarketing Agent of notice from the Tender Agent pursuant
to Section 301(a) hereof and by the Placement Agent of notice from the Trustee
pursuant to Section 301(b) hereof, the Remarketing Agent or the Placement Agent,
as the case may be, shall use its best efforts to arrange for the sale, at par
plus accrued interest, if any, of such Bonds tendered or deemed tendered for
settlement on the Variable Rate Purchase Date or the Conversion Date,
respectively. At or before 4:00 p.m. on the Business Day immediately preceding
the Variable Rate Purchase Date or the Conversion Date, the Remarketing Agent or
the Placement Agent, respectively, shall give notice by telephone, telecopier or
telex, promptly confirmed in writing if requested, to the Trustee and the Tender
Agent specifying the principal amount of such Bonds, if any, placed by it and to
the Trustee the names, addresses and social security numbers or other tax
identification numbers of the proposed purchasers thereof.

     (d)  Notwithstanding the provisions of subsection (c) above, any Bond
purchased pursuant to the terms of this Indenture from the date notice of
redemption or conversion is given shall not be remarketed except to a buyer who
agrees at the time of such purchase to tender such Bond for redemption or
purchase on the redemption or purchase date.

     (e)  During the Variable Rate Period, the Remarketing Agent shall continue
to use its best efforts to arrange for the sale, at the best price available,
but not less than the principal amount thereof plus accrued interest, of any
Bonds purchased with moneys advanced under the Credit Facility pursuant to
Section 302(a)(2) hereof; provided that Bonds purchased with moneys advanced
under the Credit Facility shall not be released for delivery to the purchasers
unless the Credit Facility has been

<PAGE>

reinstated by the sum of (a) the amount drawn thereunder to pay the purchase
price for such Bonds and (b) interest on such portion for 120 days at a maximum
rate of 15%, and the Trustee has received the executed reinstatement certificate
required to be delivered by such Credit Facility Issuer. The Trustee agrees to
advise the Tender Agent immediately upon receipt of such reinstatement
certificate.

     Section 302.   Purchase of Bonds Delivered to the Tender Agent.

     (a)  There is hereby established with the Tender Agent a Bond Purchase Fund
out of which the purchase price for Bonds tendered for purchase on a Variable
Rate Purchase Date, the Conversion Date or on such other date on which Bonds are
remarketed shall be paid. There are hereby established in the Bond Purchase Fund
two separate and segregated accounts, to be designated the "Remarketing Account"
and the "Bank Account". Funds received from purchasers of Tendered Bonds (other
than the Company or the Credit Facility Issuer) shall be deposited by the
Remarketing Agent or the Placement Agent, as the case may be, in the Remarketing
Account. At or prior to 10:00 a.m. on each Variable Rate Purchase Date or the
Conversion Date, the Remarketing Agent or the Placement Agent, as the case may
be, shall deliver to the Tender Agent for deposit in the Remarketing Account of
the Bond Purchase Fund immediately available funds, payable to the order of the
Tender Agent, in an amount equal to the purchase price of the Bonds to be
delivered to the Tender Agent that have been remarketed by the Remarketing Agent
or placed by the Placement Agent as specified in the notice delivered pursuant
to Section 301(c) hereof. Funds, if any, drawn by the Trustee under the Credit
Facility pursuant to Section 302(b) below in an amount equal to the aggregate
purchase price of Bonds tendered for purchase less the amount available in the
Remarketing Account shall, at the direction of the Trustee, be delivered by the
Credit Facility Issuer to the Tender Agent for deposit in the Bank Account of
the Bond Purchase Fund. On each Variable Rate Purchase Date and on the
Conversion Date, the Tender Agent shall effect the purchase, but only from the
funds listed below, of such Bonds from the owners thereof at a purchase price
equal to the principal amount thereof, plus interest accrued, if any, to the
date of purchase and such payment shall be made in immediately available funds.
Funds from the payment of such purchase price shall be derived from the
following sources in the order of priority indicated:

          (1)  proceeds of the remarketing of such Bonds pursuant to Section
     301(c) hereof which constitute Available Moneys.

          (2)  moneys furnished by the Trustee to the Tender Agent representing
     proceeds of a drawing by the Trustee under the Credit Facility; and

          (3)  any other moneys available for such purposes.

     (b)  The Tender Agent shall advise the Trustee by telex or telecopier and
shall advise the Credit Facility Issuer and the Company by telephone, in each
case, no later than 10:30 a.m. on each Variable Rate Purchase Date or the
Conversion Date, as the case may be, of the amount of any drawing under the
Credit Facility necessary to make timely payments hereunder. The Trustee shall
promptly (and in no event later than 11:00 a.m.) take all action necessary to
draw on the Credit Facility the specified amount. All amounts received by the
Trustee from a drawing under the Credit Facility shall be transferred to the
Tender Agent and held by the Tender Agent in

<PAGE>

the Bank Account pending application of such moneys as provided in this Article
III. The Trustee shall provide to the Tender Agent the funds referred to in
paragraph (2) of Section 302(a) prior to the time the Tender Agent is required
to apply such funds to effect the purchase of Bonds and shall notify the Tender
Agent promptly after receipt of notice from the Credit Facility Issuer
reinstating the Credit Facility. The Remarketing Agent shall deliver funds from
the sale of Bonds held by the Credit Facility Issuer as pledgee of the Company
pursuant to Section 301(e) hereof to the Tender Agent for deposit in the
Remarketing Account, which funds shall be promptly paid by the Tender Agent on
behalf of the Company to the Credit Facility Issuer as reimbursement under the
Reimbursement Agreement. The Tender Agent shall notify the Trustee of any such
reimbursement, and the Trustee shall promptly deliver to the Credit Facility
Issuer any reinstatement certificate and the form of transfer certificate
required by the Credit Facility.

     Section 303.   Delivery of Purchased Bonds.

     (a)  Bonds purchased shall be delivered as follows:

          (1)  Bonds placed by the Remarketing Agent or the Placement Agent
     pursuant to Section 301 hereof shall be delivered by the Tender Agent to
     the Remarketing Agent or the Placement Agent, as the case may be, on behalf
     of the purchasers thereof.

          (2)  Bonds purchased with moneys described in Section 302(a)(2) shall
     be delivered to the Credit Facility Issuer as pledgee of the Company
     pursuant to the terms of the Reimbursement Agreement and the Pledge
     Agreement or the Credit Facility Issuer designee.

     (b)  Except as otherwise set forth herein, Bonds delivered as provided in
this Section 303 shall be registered by the Bond Registrar in the manner
directed by the recipient thereof.

     (c)  In the event that any Bond to be delivered to the Tender Agent is not
delivered by the owner thereof properly endorsed for transfer on or prior to the
Variable Rate Purchase Date or the Conversion Date, as the case may be, and
there has been irrevocably deposited with the Tender Agent an amount sufficient
to pay the purchase price thereof, which amount may be held by the Tender Agent
in a non-interest bearing account, the Issuer shall execute and the Trustee or
its Authenticating Agent shall authenticate and deliver a substitute Bond in
lieu of the Undelivered Bond and the Bond Registrar shall register such Bond in
the name of the purchaser thereof. Thereafter, interest on such Undelivered Bond
shall cease to accrue, and the holder thereof shall be entitled only to payment
of the purchase price therefor and not to the benefits of the Indenture.

     (d)  Notwithstanding the foregoing, Bonds purchased with funds identified
in Section 302(a)(2) hereof shall be held by the Credit Facility Issuer or the
Tender Agent and shall not be delivered to subsequent purchasers thereof or any
other person until the Trustee has notified the Tender Agent that the Credit
Facility has been reinstated to the extent of the purchase price of such Bonds
and interest thereon.

     Section 304.   Delivery of the Proceeds of the Sale of Remarketed
                    Bonds.

<PAGE>

     The proceeds of the placement of the Bonds by the Remarketing Agent of any
Bonds delivered to the Tender Agent or by the Placement Agent of Bonds on the
Conversion Date shall be paid first, to the tendering Bondholders of such Bonds;
second, to the Credit Facility Issuer, to the extent of any amounts drawn under
the Credit Facility in connection with the payment of the purchase price for
such Bonds and not reimbursed to the Credit Facility Issuer as of the time of
sale of such Bonds; and third, to the Company.

     Section 305.   No Remarketing After Certain Events.

     Anything in this Indenture to the contrary notwithstanding, there shall be
no remarketing of Bonds pursuant to this Article III after the Conversion Date
or the principal of the Bonds shall have been accelerated pursuant to Section
902 hereof.

                                   ARTICLE IV

                            REFUNDING OF PRIOR BONDS

     Section 401.   Refunding of Prior Bonds.

     (a)  A special fund is hereby created and designated the Hillsborough
County Industrial Development Authority Industrial Development Revenue Refunding
Bonds (Leslie Controls, Inc. Project), Series 1994 Redemption Fund (the
"Redemption Fund"). The moneys received by the Issuer from the proceeds of the
sale of the Bonds shall be deposited to the Redemption Fund.

     (b)  Moneys held in the Redemption Fund shall be invested and reinvested by
the Trustee, at the written direction of the Company in Investment Obligations
which shall mature not later than November 1, 1994. Obligations so purchased as
an investment of moneys in the Redemption fund shall be deemed at all times to
be part of the Redemption Fund, and the interest accruing thereon and any profit
realized from such investment shall be credited to the Redemption Fund, and any
loss resulting from such investment shall be charged to the Redemption Fund. The
Trustee shall sell at market price or present for redemption any obligation so
purchased whenever it shall be necessary so to do in order to provide cash to
meet any payment or transfer from the Redemption Fund. Neither the Trustee nor
the Issuer shall be liable or responsible for loss resulting from any such
investment or the sale of any such investment made pursuant to the terms of this
Section. The Trustee may make any and all investments permitted by this Section
through its own bond or investment department, unless otherwise directed in
writing by the Company.

     (c)  The moneys in the Redemption Fund shall be held by the Trustee in
trust and shall, on November 1, 1994 or such earlier date as directed by the
Company, be applied, together with additional funds contributed by the Company
or by Watts Industries, Inc., to the payment in full of the outstanding
principal amount of the Prior Bonds.

     (d)  Simultaneously with payment by the Trustee as described in (c) above,
the Company shall pay all additional amounts sufficient to pay the principal of
and interest on the Prior Bonds to the date of redemption thereof and to pay
directly all fees, charges and expenses of the holders of the Prior Bonds and of
the Prior Trustee in connection with the

<PAGE>

redemption of the Prior Bonds. Following such payments, the Trustee shall
receive from the holder of the Prior Bonds or the Prior Trustee a certificate to
the effect that the Prior Bonds have been redeemed and paid in full and evidence
that the Prior Bonds have been cancelled.

                                    ARTICLE V

                        REVENUES AND APPLICATION THEREOF

     Section 501.   Revenues to be Paid Over to Trustee.

     The Issuer has caused the Revenues to be paid directly to the Trustee. If,
notwithstanding these arrangements, the Issuer receives any payments on account
of the Note or a Credit Facility with respect to the principal or redemption
price of or interest on the Bonds, the Issuer shall immediately pay over the
same to the Trustee to be held as Revenues.

     Section 502.   The Bond Fund.

     (a)  There is hereby established with the Trustee a special fund to be
designated "Hillsborough County Industrial Development Authority Industrial
Development Revenue Refunding Bonds (Leslie Controls, Inc. Project), Series 1994
Bond Fund" (the "Bond Fund"), the moneys in which, in accordance with Section
502(c) hereof, the Trustee shall apply to (1) the principal or redemption price
of Bonds as they mature or become due, upon surrender thereof, and (2) the
interest on Bonds as it becomes payable. There are hereby established with the
Trustee within the Bond Fund two separate and segregated accounts, to be
designated the "Payments Account" and the "Credit Facility Account".

     (b)  There shall be deposited into the various accounts of the Bond Fund
from time to time the following:

          (1)  into the Payments Account, (A) all payments of principal or
     redemption price (including premium) of or interest on the Note, and (B)
     all other moneys received by the Trustee under and pursuant to the
     provisions of this Indenture or any of the provisions of the Note or the
     Loan Agreement, when accompanied by written directions from the person
     depositing such moneys that such moneys are to be paid into such account of
     the Bond Fund. All amounts deposited in the Payments Account shall be
     segregated and held, with the earnings thereon, separate and apart from
     other funds in the Bond Fund until such amounts become Available Moneys. At
     such time as funds deposited in the Payments Account become Available
     Moneys, they may be commingled with other Available Moneys in the Payments
     Account; and

          (2)  into the Credit Facility Account, all moneys drawn by the Trustee
     under the Credit Facility to pay principal or redemption price (excluding
     any premium) of the Bonds and interest on the Bonds.

     (c)  Except as provided in Section 911 hereof, moneys in the Bond Fund
shall be used solely for the payment of the principal or redemption price of the
Bonds and interest on the Bonds from the following sources but only in the
following order of priority;

          (1)  moneys held in the Credit Facility Account, provided that in

<PAGE>

     no event shall moneys held in the Credit Facility Account be used to pay
     any amounts due on Bonds which are held by or for the Company, including
     without limitation, Bonds pledged to the Credit Facility Issuer, or to pay
     any portion of the redemption premiums required pursuant to Section
     701(a)(2) hereof; and

          (2)  moneys held in the Payments Account to the extent such amounts
     qualify as Available Moneys (except with respect to moneys paid on Bonds
     that are held by or for the Company, including without limitation, Bonds
     pledged to the Credit Facility Issuer, which moneys need not qualify as
     Available Moneys).

     (d)  Not later than 10:00 a.m. on the third (3rd) Business Day preceding
the date on which principal or redemption price of or interest on the Bonds is
due and payable (the "Payment Date"), the Trustee shall have notified the
Company and the Credit Facility Issuer of the amounts of principal and interest
due on the Bonds on the Payment Date. Not later than 11:00 a.m. on each Payment
Date, the Trustee shall present a draft or drafts under the Credit Facility in
the amounts due and payable on the Bonds. Such funds shall be wired by the Bank
to be deposited in the Credit Facility Account and payments due under the Bonds
shall be made by the Trustee in accordance with Section 208 and Section 502(c)
hereof. Following such payment to the Bondholders, the Trustee shall, on behalf
of the Company, promptly pay moneys on deposit in the Payments Account in an
amount equal to the amounts of such drawing or drawings to the Bank as
reimbursement to the Bank under the terms of the Reimbursement Agreement. If no
amounts are owed by the Company to the Credit Facility Issuer under the
Reimbursement Agreement, any amounts remaining in the Payments Account on the
Business Day immediately following a Payment Date shall be paid to the Company
upon request with the consent of the Credit Facility Issuer.

     (e)  Except as provided in the following sentence, the Bond Fund shall be
depleted at least once each year, except for a reasonable carryover amount (not
to exceed the greater of one year's earnings on the Bond Fund or one-twelfth
(1/12th) of annual debt service). Any money deposited in the Bond Fund shall be
spent within a thirteen (13) month period beginning on the date of deposit, and
any amount received from investment of money held in the Bond Fund shall be
spent within a one (1) year period beginning on the date of receipt. Any amounts
remaining in the Bond Fund after payment in full of the principal or redemption
price of and interest on the Bonds (or provisions for payment thereof) shall be
paid to the Company at the written request of the Company therefor or as
otherwise required by law; provided, that if any payments have been received by
the Trustee from the Credit Facility in connection with such payment of the
Bonds, any remaining amounts shall be paid to the Credit Facility Issuer to the
extent of such payments.

     Section 503.   Revenues to Be Held for All Bondholders; Certain
                    Exceptions.

     Revenues shall, until applied as provided in this Indenture, be held by the
Trustee in trust for the benefit of the owners of all Outstanding Bonds, except
that any portion of the Revenues representing principal or redemption price of
any Bonds, and interest on any Bonds previously matured or called for redemption
in accordance with Article VII of this Indenture, shall be held for the benefit
of the owners of such Bonds only.

<PAGE>

     Section 504.   Rebate Fund.

     In the event that the Company provides for the deposit of amounts from time
to time for rebate to the United States of America pursuant to the Loan
Agreement, the Trustee is hereby authorized to create a special fund to be
designated as the Rebate Fund. The Rebate Fund shall be held separate and apart
from all other funds under this Indenture and shall not be subject to the lien
and pledge granted hereunder for the benefit of Bondholders. The Trustee shall
remit money deposited in the Rebate Fund to the United States of America or
otherwise as directed in writing by the Company. All moneys deposited in the
Rebate Fund shall be held and invested at the sole direction of the Company. In
making investments hereunder, or in selling or disposing of investments as
required hereby, the Trustee shall have no duty or responsibility to
independently verify compliance with Sections 148(d) and 148(f) of the Code and
the regulations promulgated thereunder and the Trustee shall be fully protected
in relying solely upon the written directions of the Company as aforesaid. Under
no circumstances whatsoever shall the Trustee be liable to the Issuer, the
Company or any holder for any loss of tax-exempt status of the Bonds, or any
claims, demands, damages, liabilities, losses, costs or expenses resulting
therefrom or in any way connected therewith, so long as the Trustee acts only in
accordance with the written directions of the Company as provided hereunder. The
Trustee shall not be responsible for any losses in the investment of money in
the Rebate Fund made at the direction of the Company.

                                   ARTICLE VI

                      DEPOSITARIES OF MONEYS, SECURITY FOR
              DEPOSITS AND INVESTMENT OF FUNDS; THE CREDIT FACILITY

     Section 601.   Security for Deposits.

     All moneys deposited with the Trustee under the provisions of this
Indenture or the Loan Agreement shall be held in trust and applied only in
accordance with the provisions of this Indenture and the Loan Agreement and
shall not be subject to lien (other than the lien created hereby) or attachment
by any creditor of the Trustee, the Issuer or the Company.

     Section 602.   Investment of Moneys.

     (a)  At the request and the direction of the Company (confirmed in
writing), moneys held for the credit of the Bond Fund (including any amount
therein) shall be invested and reinvested by the Trustee in Investment
Obligations which shall mature not later than the respective dates when the
moneys held for the credit of said funds will be required for the purposes
intended, provided that moneys held in the Credit Facility Account of the Bond
Fund shall be invested and reinvested by the Trustee only in Governmental
Obligations which shall mature not later than the date on which such moneys will
be required to be paid; provided further that such investment shall only be made
at the direction of the Company. The Trustee shall be entitled to rely on
instruction from the Company. In making investments hereunder, or in selling or
disposing of investments as required hereby, the Trustee shall have no duty or
responsibility to independently verify compliance with Sections 148(d) and
148(f) of the Code and the regulations promulgated thereunder and the Trustee
shall be fully

<PAGE>

protected in relying solely upon the written directions of the Company as
aforesaid. Under no circumstances whatsoever shall the Trustee be liable to the
Issuer, the Company or any holder for any loss of tax-exempt status of the
Bonds, or any claims, demands, damages, liabilities, losses, costs or expenses
resulting therefrom or in any way connected therewith, so long as the Trustee
acts only in accordance with the written directions of the Company as provided
hereunder.

     (b)  Obligations so purchased as an investment of moneys in any such
fund or account shall be deemed at all times to be a part of such fund or
account, and the interest accruing thereon and any profit realized from
such investment shall be credited to such fund or account, and any loss
resulting from such investment shall be charged to such fund or account.
The Trustee shall sell at market price or present for redemption any
obligation so purchased whenever it shall be necessary so to do in order to
provide cash to meet any payment or transfer from any such fund or account.
Neither the Trustee nor the Issuer shall be liable or responsible for loss
resulting from any such investment or the sale of any such investment made
pursuant to the terms of this Section.

     (c)  For the purpose of the Trustee's determination of the amount on
deposit to the credit of any such fund or account, obligations in which moneys
in such fund or account have been invested shall be valued at the lower of cost
or market.

     (d)  The Trustee may make any and all investments permitted by this Section
through its own bond or investment department, unless otherwise directed in
writing by the Company Representative.

     Section 603.   The Credit Facility.

     (a)  Initial Letter of Credit.

          (1)  The Letter of Credit shall be a direct pay letter of credit and
     shall provide for direct payments to or upon the order of the Trustee as
     hereinafter set forth and shall be the irrevocable obligation of the Bank
     to pay to or upon the order of the Trustee, upon request and in accordance
     with the terms thereof, an amount of up to $5,003,250 of which (A)
     $4,765,000 shall support the payment of principal of the Bonds when due and
     that portion of the purchase price corresponding to principal of Tendered
     Bonds not remarketed on any Variable Rate Purchase Date or sold on the
     Conversion Date, and (B) $238,250 shall support the payment of up to one
     hundred twenty (120) days' interest at a maximum rate of fifteen percent
     (15%) per annum on the Bonds when due and that portion of the purchase
     price corresponding to interest on Tendered Bonds not remarketed on any
     Variable Rate Purchase Date or sold on the Conversion Date.

          (2)  The Letter of Credit shall terminate automatically on the
     earliest of (A) the date on which a drawing under the Letter of Credit has
     been honored upon the maturity or acceleration of the Bonds or redemption
     of all the Bonds, (B) the day on which the Credit Facility Issuer receives
     the notice of the conversion following the Conversion Date, (C) the date on
     which the Bank receives notice from the Trustee that an Alternate Credit
     Facility is substituted for the Letter of Credit and is in effect, (D) the
     date on which the Bank receives notice from the Trustee that there are no
     longer any Bonds Outstanding

<PAGE>

     and (E) the Stated Termination Date described in the Letter of Credit as it
     may be extended pursuant to the terms thereof.

          (3)  The Bank's obligation under the Letter of Credit may be reduced
     to the extent of any drawing thereunder, subject to reinstatement as
     provided therein. The Letter of Credit shall provide that, with respect to
     a drawing by the Trustee solely to pay interest on the Bonds on any
     Interest Payment Date, if the Trustee shall not have received from the Bank
     within ten (10) days from the date of such drawing a notice by telecopier,
     by telex or in writing that the Bank has not been reimbursed, the Trustee's
     right to draw under the Letter of Credit with respect to the payment of
     interest shall be reinstated on or before the eleventh (11th) day following
     such drawing in an amount equal to such drawing. With respect to any other
     drawing by the Trustee, the amount available under the Letter of Credit for
     payment of the purchase price of the Bonds and interest on the Bonds shall
     be reinstated in an amount equal to any such drawing but only to the extent
     that the Bank is reimbursed in accordance with the terms of the
     Reimbursement Agreement for the amounts so drawn.

          (4)  The Letter of Credit shall provide that if, in accordance with
     the terms of the Indenture, the Bonds shall become or be declared
     immediately due and payable pursuant to any provision of the Indenture, the
     Trustee shall be entitled to draw on the Letter of Credit to the extent
     that the amounts are available thereunder to pay the aggregate principal
     amount of the Bonds then Outstanding plus an amount of interest not to
     exceed one hundred twenty (120) days.

          (5)  Upon the termination of the Letter of Credit, the Trustee shall
     return the Letter of Credit to the Bank.

     (b)  Expiration. Unless an Alternate Credit Facility has been provided in
accordance with Section 603(c) hereof at least thirty (30) days before the
Interest Payment Date immediately preceding the fourteenth (14th) day prior to
the expiration date of a Credit Facility, the Trustee shall call the Bonds for
redemption in accordance with the Section 701(c)(2) hereof. If at any time there
shall cease to be any Bonds Outstanding hereunder, the Trustee shall promptly
surrender the then current Credit Facility to the Credit Facility Issuer for
cancellation. The Trustee shall comply with the procedures set forth in the
Credit Facility relating to the termination thereof.

     (c)  Alternate Credit Facilities. While the Bonds bear interest at the
Variable Rate, the Company may, at its option, provide for the delivery to the
Trustee of an Alternate Credit Facility. The Alternate Credit Facility shall
have terms in all respects material to the owners of the Bonds the same as the
Credit Facility being replaced and shall be in form acceptable to the Trustee
and the Tender Agent. On or prior to the date of delivery of an Alternate Credit
Facility to the Trustee, the Company shall furnish to the Trustee:

          (1)  an opinion of Counsel stating that the delivery of such Alternate
     Credit Facility to the Trustee is authorized under this Indenture and
     complies with the terms hereof and that such Alternate Credit Facility is
     enforceable against the Credit Facility Issuer thereof in accordance with
     its terms, and

<PAGE>

          (2)  if the Bonds are rated by Moody's or S&P, written evidence (or
     such other evidence satisfactory to the Trustee) from Moody's, if the Bonds
     are rated by Moody's, and from S&P, if the Bonds are rated by S&P, in each
     case to the effect that such rating agency has reviewed the proposed
     Alternate Credit Facility and that the substitution of the proposed
     Alternate Credit Facility for the then current Credit Facility will not, by
     itself, result in:

               (A)  a permanent withdrawal of its rating of the Bonds, or

               (B)  a reduction of the then current rating of the Bonds,

     or if the Bonds are not rated by Moody's or S&P, written evidence (or such
     other evidence satisfactory to the Trustee in its sole discretion) that
     obligations substantially equivalent in term to the term of the proposed
     Alternate Letter of Credit of the bank or institution issuing the proposed
     Alternate Credit Facility are rated by Moody's or S&P in the same category
     as the obligations of substantially equivalent term of the bank or
     institution which issued the Credit Facility being replaced; provided,
     however, if the Company provides the Trustee with an opinion of Bond
     Counsel that a change in the then current rating on the Bonds or a change
     in the Credit Facility Issuer to a bank or institution the obligations of
     which are rated in a different category than those obligations of
     equivalent term of the issuer of the Credit Facility being replaced will
     not adversely affect the exclusion of the interest on the Bonds from gross
     income from federal tax purposes, then such evidence need not be provided,
     but the Company shall instead provide the Trustee with written evidence (or
     such other evidence as shall be satisfactory to the Trustee) that the
     commercial paper of the bank or institution issuing the proposed Alternate
     Credit Facility is rated P-3 or higher by Moody's or A-3 or higher by S&P.

The Trustee shall then accept such Alternate Credit Facility and surrender the
previously held Credit Facility to the previous Credit Facility Issuer for
cancellation promptly on or before the fifteenth (15th) day after the Alternate
Credit Facility becomes effective, but not later than the fifteenth (15th) day
following the last Interest Payment Date covered by the Credit Facility to be
cancelled.

     (d)  Notices of Substitution or Replacement of Credit Facility.

          (1)  The Trustee shall, at least twenty (20) days prior to the
     proposed replacement of a Credit Facility with an Alternate Credit
     Facility, give notice thereof by mail to the owners of the Bonds, which
     notice shall include the identity of the issuer thereof and the rating, if
     any, to be assigned to the Bonds by Moody's or S&P following the effective
     date of such Alternate Credit Facility or, if the Bonds are not then rated
     by Moody's or S&P, then the rating assigned by Moody's or S&P to the
     obligations substantially equivalent in term to the term of the proposed
     Alternate Credit Facility of the Issuer of such Alternate Credit Facility.

          (2)  The Trustee shall promptly give notice of any replacement of the
     Credit Facility to the Issuer, the Tender Agent and the Remarketing Agent.

<PAGE>

                                   ARTICLE VII

                       REDEMPTION OR PURCHASE OF THE BONDS

     Section 701.   Redemption or Purchase Dates and Prices.

     The Bonds shall be subject to redemption, and, in certain instances, to
purchase, prior to maturity in the amounts, at the times and in the manner
provided in this Article VII. Payments of the redemption price or the purchase
price of any Bond shall be made only upon the surrender to the Trustee or its
agent, as directed, of any Bond so redeemed or purchased.

     (a)  Optional Redemption

          (1)  Optional Redemption During Variable Rate Period. While the Bonds
     bear interest at the Variable Rate, the Bonds shall be subject to
     redemption, upon the written direction of the Issuer, given at the request
     of the Company, on any Interest Payment Date and on the Conversion Date in
     whole or in part, at a redemption price of one hundred percent (100%) of
     the principal amount thereof, without premium, plus interest accrued to the
     redemption date.

          (2)  Optional Redemption With Premium During Fixed Rate Period. While
     the Bonds bear interest at the Fixed Rate, the Bonds shall be subject to
     redemption upon the written direction of the Issuer, given at the request
     of the Company, in whole or in part, on any Interest Payment Date occurring
     on or after the dates set forth below, at the redemption prices (expressed
     as percentages of principal amount to be redeemed) set forth below plus
     interest accrued to the redemption date as follows:

          Commencement of
          Redemption Period                 Redemption Price

          The Business Day four             103% declining by 1/2% on each
          (4) years from the                succeeding anniversary of the
first
          Conversion Date                   day of the redemption period until
                                            reaching 100% and thereafter at 100%

     (b)  Extraordinary Optional Redemption Due to Casualty or Eminent Domain.

          (1)  The Bonds may be redeemed as a whole or in part by the Issuer at
     any time at the written direction of the Company, at a redemption price
     equal to one hundred percent (100%) of the principal amount thereof plus
     interest accrued thereon to the redemption date, without premium, under any
     of the following conditions, the existence of which shall be certified to
     the Trustee by the Company Representative:

               (A)  The Project shall have been damaged or destroyed to such
          extent that the amount of Net Proceeds of insurance exceeds $500,000
          and the Company elects not to rebuild the Project or fails to so elect
          within ninety (90) days of receipt by the

<PAGE>

          Trustee of such Net Proceeds; or

               (B)  Title to, or the temporary use of, all of the Project or any
          substantial portion thereof shall have been taken by Eminent Domain
          and the amount of Net Proceeds from such taking exceeds $500,000 and
          the Company elects not to replace the property so taken or fails so to
          elect within ninety (90) days of receipt by the Trustee of such Net
          Proceeds.

          (2)  Such redemption shall occur on the next Interest Payment Date
     occurring not less than thirty (30) days following the expiration of such
     90-day period referred to in paragraph (1) of this Section 701(b).

     (c)  Mandatory Redemption.

          (1)  Determination of Taxability. The Bonds shall be subject to
     mandatory redemption in whole on any date at a redemption price equal to
     one hundred percent (100%) of the principal amount thereof plus accrued
     interest to the redemption date which shall not be more than one hundred
     eighty (180) days following the receipt by the Trustee of a written notice
     of a Determination of Taxability.

          (2)  Failure to Provide Alternate Credit Facility. The Bonds shall be
     subject to mandatory redemption during the Variable Rate Period at one
     hundred percent (100%) of the principal amount thereof, without premium,
     plus interest accrued, if any, thereon to the date of redemption, on the
     Interest Payment Date occurring closest to but not after fifteen (15) days
     prior to the date of expiration of the then current Credit Facility, unless
     an Alternate Credit Facility has been provided in accordance with Article
     VI hereof.

     (d)  Mandatory Purchase on Conversion Date. The Bonds shall be subject to
mandatory purchase in whole on the Conversion Date at a purchase price equal to
one hundred percent (100%) of the principal amount thereof, without premium,
plus interest accrued, if any, thereon to the date of purchase, on the
Conversion Date.

     Section 702.   Company to Direct Optional Redemption.

     The Issuer shall direct the Trustee in writing to call Bonds for optional
redemption when and only when it shall have been notified by the Company to do
so and the Company has notified the Trustee in writing that the Company has made
or intends to make a corresponding prepayment under the Note. Such direction
from the Issuer to the Trustee shall be given at least forty-five (45) days but
not more than sixty (60) days prior to the redemption date or such shorter
period as shall be acceptable to the Trustee. So long as a Credit Facility is
then held by the Trustee, the Trustee shall only call Bonds for optional
redemption if it has Available Moneys in the Payments Account of the Bond Fund
or has been notified by the Credit Facility Issuer that it will receive moneys
pursuant to the Credit Facility, in the aggregate, sufficient to pay the
redemption price of the Bonds to be called for redemption, plus accrued interest
thereon.

     Section 703.   Selection of Bonds to be Called for Redemption.

     Except as otherwise provided herein or in the Bonds, if less than all

<PAGE>

the Bonds are to be redeemed, the particular Bonds to be called for redemption
shall be selected in the following order of priority: first, Bonds pledged to
the Bank pursuant to the Pledge Agreement, second, Bonds owned by the Company
and third, Bonds selected by any random or other method determined by the
Trustee in its sole discretion to be fair and reasonable. The Trustee shall
treat any Bond of a denomination greater than One Hundred Thousand Dollars
($100,000) as representing that number of separate Bonds each of the
denomination of the minimum denomination of One Hundred Thousand Dollars
($100,000) or any integral multiple of Five Thousand Dollars ($5,000) in excess
thereof as the Trustee shall so determine.

     Section 704.   Notice of Redemption or Purchase.

     (a)  When required to redeem or purchase Bonds under any provision of this
Article VII, or when directed to do so by the Issuer, the Trustee shall cause
notice of the redemption or purchase to be given not more than sixty (60) days
and not less than twenty (20) days prior to the redemption or purchase date by
mailing a copy of all notices of redemption or purchase by first class mail,
postage prepaid, to all registered owners of Bonds to be redeemed or purchased
at their addresses shown on the Bond Register. Failure to mail any such notice
or defect in the mailing thereof in respect of any Bond shall not affect the
validity of the redemption or purchase of any other Bond. Notices of redemption
or purchases shall also be mailed to the Remarketing Agent and the Credit
Facility Issuer, if any. Any such notice shall be given in the name of the
Issuer, shall identify the Bonds to be redeemed or purchased (and, in the case
of partial redemption or purchase of any Bonds, the respective principal amounts
thereof to be redeemed or purchased), shall specify the redemption or purchase
date, and shall state that on the redemption or purchase date, the redemption or
purchase price of the Bonds called for redemption or purchase will be payable at
the principal corporate trust office of the Trustee, or in the case of mandatory
redemptions or purchases pursuant to Section 701(c)(2) or 701(d) hereof at the
office of the Trustee's Paying Agent, if any, and that from that date interest
will cease to accrue. The Trustee may use "CUSIP" numbers in notices of
redemption or purchase as a convenience to Bondholders, provided that any such
notice shall state that no representation is made as to the correctness of such
numbers either as printed on the Bonds or as contained in any notice of
redemption or purchase and that reliance may be placed only on the
identification numbers containing the prefix established under the Indenture.

     (b)  With respect to any notice of redemption or purchase of Bonds in
accordance with Section 701(c)(2) hereof, such notice shall also specify the
date of the expiration of the term of the Credit Facility.

     (c)  After the Conversion Date, if at the time of mailing of notice of any
optional redemption the Issuer shall not have deposited with the Trustee moneys
sufficient to redeem all the Bonds called for redemption, such notice may state
that it is conditional on the deposit of Available Moneys with the Trustee not
later than the redemption date, and such notice shall be of no effect unless
such moneys are so deposited.

     (d)  Upon redemption of less than all of the Bonds, the Trustee shall
furnish to the Credit Facility Issuer a notice in the form specified by the
Credit Facility Issuer to reduce the coverage provided by the Credit Facility
and upon redemption of all of the Bonds, the Trustee shall

<PAGE>

surrender the Credit Facility to the Credit Facility Issuer for cancellation.

     (e)  Purchases under Section 701(d) hereof shall be in accordance with
Section 202(e) hereof.

     Section 705.   Bonds Redeemed or Purchased in Part.

     Any Bond which is to be redeemed or purchased only in part shall be
surrendered at a place stated in the notice provided for in Section 704 hereof
(with due endorsement by, or a written instrument of transfer in form
satisfactory to the Trustee duly executed by, the owner thereof or his attorney
duly authorized in writing) and the Issuer shall execute and the Trustee or its
Authenticating Agent shall authenticate and deliver to the owner of such Bond
without service charge, a new Bond or Bonds, of any authorized denomination as
requested by such owner in an aggregate principal amount equal to and in
exchange for the unredeemed and unpurchased portion of the principal of the Bond
so surrendered.

                                  ARTICLE VIII

                       PARTICULAR COVENANTS AND PROVISIONS

     Section 801.   Covenant to Pay the Bonds; Bonds Limited Obligations of
                    the Issuer.

     (a)  The Issuer covenants that it will promptly pay the principal of and
interest on and other amounts payable under the Bonds at the places, on the
dates and in the manner provided herein and in the Bonds according to the true
intent and meaning thereof. Such principal and interest and other amounts are
payable solely from the payments made by the Company on the Note and other
Revenues.

     (b)  The Issuer shall not in any event be liable for the payment of the
principal of or interest on the Bonds, or for the performance of any pledge,
mortgage, obligation or agreement of any kind whatsoever which may be undertaken
by the Issuer, and neither the Bonds nor any of the agreements or obligations of
the Issuer shall be construed to constitute an indebtedness of the Issuer within
the meaning of any constitutional or statutory provision whatsoever. The Bonds
and the interest thereon shall never constitute an indebtedness or a charge
against the general credit of the Issuer within the meaning of any
constitutional provision or statutory limitation and shall never constitute nor
give rise to any pecuniary liability of the Issuer, but shall be limited
obligations of the Issuer payable solely from the revenues and other funds
pledged therefor and shall not be payable from any other assets or funds of the
Issuer, and neither the faith and credit nor the taxing power of the State or
any political subdivision or any agency thereof is pledged to the payment of the
principal of or the interest on the Bonds.

     Section 802.   Covenants to Perform Obligations Under this Indenture.

     The Issuer covenants that it will faithfully perform at all times any and
all covenants, undertakings, stipulations and provisions contained in this
Indenture, in the Bonds executed and delivered hereunder and in all proceedings
of the Issuer pertaining thereto and will faithfully observe

<PAGE>

and perform at all times any and all covenants, undertakings, stipulations and
provisions of the Loan Agreement on its part to be observed or performed. The
Issuer covenants that it is duly authorized under the Constitution and laws of
the State, including particularly and without limitation the Act, to issue the
Bonds authorized hereby and to enter into this Indenture, to endorse the Note to
the Trustee, to pledge the payments on the Note and other Revenues in the manner
and to the extent herein set forth, and to assign its interest in the Note and
the Loan Agreement to the Trustee; and that all action on its part for the
issuance of the Bonds issued hereunder and the execution and delivery of this
Indenture has been duly and effectively taken; and that the Bonds in the hands
of the owners thereof are and will be the valid and binding obligations of the
Issuer according to the tenor and import thereof.

     Section 803.   Covenant to Perform Obligations Under the Loan
                    Agreement.

     Subject to the provisions of Section 804 of this Article, the Issuer
covenants and agrees that it will not suffer, permit or take any action or do
anything or fail to take any action or fail to do anything which may result in
the termination or cancellation of the Loan Agreement so long as any Bond is
Outstanding; that it will punctually fulfill its obligations and will require
the Company to perform punctually its duties and obligations under the Loan
Agreement; that it will not execute or agree to any change, amendment or
modification of or supplement to the Loan Agreement or this Indenture except by
a supplement or an amendment duly executed by the Issuer and the Company with
the approval of the Trustee and upon the further terms and conditions set forth
in Article XIII of this Indenture; that it will not agree to any abatement,
reduction, abrogation, waiver, diminution or other modification in any manner or
to any extent whatsoever of the obligation of the Company to pay the Note and to
meet its other obligations as provided in the Loan Agreement; and that it will
promptly notify the Trustee in writing of any actual or alleged Event of Default
under the Loan Agreement, whether by the Company or the Issuer, that comes to
the attention of the Issuer, and will further notify the Trustee at least thirty
(30) days before the proposed date of effectiveness of any proposed termination
or cancellation of the Loan Agreement.

     Section 804.   Trustee May Enforce the Issuer's Rights Under the Loan
                    Agreement.

     The Loan Agreement, a duly executed counterpart of which has been filed
with the Trustee, sets forth the covenants and obligations of the Issuer and the
Company, including a provision in Section 12.9 thereof that subsequent to the
issuance of the Bonds and prior to Payment of the Bonds (as defined in the Loan
Agreement) the Loan Agreement and the Note may not be effectively amended,
changed, modified, altered or terminated except as provided in Article XIII of
this Indenture, and reference is hereby made to the Loan Agreement for a
detailed statement of said covenants and obligations of the Company under the
Loan Agreement, and the Issuer agrees that the Trustee, subject to the
provisions of the Loan Agreement and this Indenture reserving certain rights to
the Issuer and respecting actions by the Trustee in its name or in the name of
the Issuer, may enforce all rights of the Issuer and all obligations of the
Company under and pursuant to the Loan Agreement for and on behalf of the
Bondholders whether or not the Issuer is in default hereunder.

<PAGE>

     Section 805.   Covenant Against Arbitrage.

     The Issuer covenants and agrees that it will not make or authorize any use,
and directs the Trustee not to make or permit any use, of the proceeds of the
Bonds which would cause any Bond to be an "arbitrage bond" within the meaning of
Section 148 of the Code and the applicable regulations promulgated from time to
time thereunder, and further covenants that it will observe and not violate the
requirements of Section 148 of the Code and any such applicable regulations to
the extent necessary so that the interest on the Bonds will not cease to be
excluded from the gross income of the recipients thereof for federal income tax
purposes by reason of such use of proceeds; provided that neither the Issuer nor
the Trustee shall be liable for any investment of moneys under this Indenture
made at the direction of the Company Representative.

     Section 806.   Inspection of the Bond Register.

     At reasonable times and upon reasonable regulations established by the Bond
Registrar, the Bond Register may be inspected and copied by and at the expense
of the Company or any Bondholder.

     Section 807.   Priority of Pledge and Security Interest.

     The pledge herein made of the Trust Estate and the security interest
created herein with respect thereto constitutes a first and prior pledge of, and
a security interest in, the Trust Estate. Said pledge and security interest
shall at no time be impaired directly or indirectly by the Issuer or the
Trustee, and the Trust Estate shall not otherwise be pledged and, except as
provided herein and in the Loan Agreement, no persons shall have any rights with
respect thereto.

     Section 808.   Insurance and Condemnation Proceeds.

     Reference is hereby made to Sections 6.4 and 6.5 of the Loan Agreement
whereunder it is provided that under certain circumstances the respective Net
Proceeds of insurance and condemnation awards (or Net Proceeds from a sale in
lieu of condemnation) are to be paid to the Trustee and deposited in separate
trust accounts (but not in the Bond Fund) and to be disbursed and paid out as
therein provided. The Trustee hereby accepts and agrees to perform the duties
and obligations as therein specified.

                                   ARTICLE IX

                              DEFAULT AND REMEDIES

     Section 901.   Defaults.

     Each of the following events is hereby declared to be an "Event of
Default":

     (a)  Payment of interest on any of the Bonds shall not be made when the
same shall become due; or

     (b)  Payment of the principal or redemption price of any of the Bonds shall
not be made when the same shall become due, whether at maturity or upon call for
redemption or otherwise; or

<PAGE>

     (c)  An "Event of Default" under the Loan Agreement shall have occurred and
not have been waived; or

     (d)  The Trustee receives written notice from the Credit Facility Issuer
that an Event of Default under the Reimbursement Agreement has occurred and has
not been waived; or

     (e)  The Trustee receives notice by telecopier, by telex or in writing from
the Credit Facility Issuer that the Credit Facility Issuer has not been
reimbursed for a drawing thereon on or before the close of business on the tenth
(10th) calendar day following a drawing under such Credit Facility to pay
interest on the Bonds and that the interest portion of the Letter of Credit will
not be reinstated for the amount so drawn; or

     (f)  Payment of the purchase price of any Bond tendered pursuant to Section
203 hereof is not made when payment is due; or

     (g)  The Issuer shall fail to duly and punctually perform any of the
covenants, conditions, agreements and provisions contained in the Bonds or in
this Indenture on the part of the Issuer to be performed other than as referred
to in the preceding subsections of this Section;

provided, however, that no failure specified in subsections (c) or (g) of this
Section 901 shall constitute an Event of Default until written notice specifying
such failure and requiring the same to be remedied shall have been given to the
Company and the Issuer by the Trustee, which may give notice in its discretion
and shall give such notice at the written direction of the owners of not less
than twenty-five percent (25%) in aggregate principal amount of Bonds
Outstanding, and the Company and the Issuer shall have had thirty (30) days
after receipt of such notice to correct said failure and shall not have
corrected said failure within the applicable period.

     Section 902.   Acceleration and Annulment Thereof.

     (a)  Subject to the requirement that the consent of the Credit Facility
Issuer to any acceleration must be obtained in the case of an Event of Default
described in subsections (c) or (g) of Section 901 hereof, upon the occurrence
of an Event of Default, the Trustee may, and upon (1) the written request of the
Credit Facility Issuer, or (2) the occurrence of an Event of Default described
in subsection (a), (b), (d), (e) or (f) of Section 901 hereof, the Trustee
shall, by notice to the Issuer, declare the entire unpaid principal of and
interest on the Bonds due and payable; and upon such declaration, the said
principal, together with interest accrued thereon, shall become payable
immediately, without penalty or premium, at the place of payment provided
therein, anything in the Indenture or in the Bonds to the contrary
notwithstanding. The Trustee shall not be permitted to request receipt of
indemnity to its satisfaction prior to such declaration of acceleration. Upon
the occurrence of any acceleration hereunder, the Trustee shall immediately
exercise such rights as it may have as the owner of the Note to declare all
payments thereunder to be due and payable immediately, and to the extent it has
not already done so, shall immediately draw upon the Credit Facility to the
extent permitted by the terms thereof. Interest on the Bonds shall cease to
accrue upon receipt by the Trustee of funds drawn under the Credit Facility.

<PAGE>

     (b)  Immediately after any acceleration because of the occurrence of an
Event of Default under Sections 901(a), (b), (d), (e) or (f), the Trustee shall
(immediately, and in no event within two Business Days thereafter) notify in
writing the Issuer, the Company and the Credit Facility Issuer of the occurrence
of such acceleration. Within five (5) days of the occurrence of any acceleration
hereunder, the Trustee shall notify by first class mail, postage prepaid, the
owners of all Bonds Outstanding of the occurrence of such acceleration.

     (c)  If, after the principal of the Bonds has become due and payable, all
arrears of interest upon the Bonds are paid by the Issuer, and the Issuer also
performs all other things in respect to which it may have been in default
hereunder and pays the reasonable charges of the Trustee and the Bondholders,
including reasonable attorneys' fees, then, and in every such case, the Credit
Facility Issuer or a Majority of the Bondholders by written notice to the Issuer
and to the Trustee, may annul such acceleration and its consequences, and such
annulment shall be binding upon the Trustee and upon all owners of Bonds issued
hereunder; provided, however, that the Trustee shall not annul any declaration
without the written consent of the Credit Facility Issuer unless such
acceleration has resulted from the failure of the Credit Facility Issuer to
honor a proper draw for payment under the Credit Facility. Notwithstanding the
foregoing, the Trustee shall not annul any acceleration which has resulted from
an Event of Default which has resulted in a drawing under the Credit Facility
under Section 901(e) hereof unless the Credit Facility has been reinstated in
accordance with its terms to an amount equal to the principal amount of the
Bonds Outstanding plus one hundred twenty (120) days' interest accrued thereon,
and the Trustee has received written notice of such reinstatement from the
Credit Facility Issuer. The Trustee shall forward a copy of any notice from
Bondholders received by it pursuant to this paragraph to the Company.
Immediately upon such annulment, the Trustee shall cancel, by notice to the
Company, any demand for payment of the Note made by the Trustee pursuant to this
Section 902.

     Section 903.   Other Remedies.

     If any Event of Default occurs and is continuing, the Trustee, before or
after the principal of the Bonds becomes immediately due and payable, may
enforce each and every right granted to it as the owner of the Note and under
the Loan Agreement and any supplements or amendments thereto. In exercising such
rights and the rights given the Trustee under this Article IX, the Trustee shall
take such action as, in the judgment of the Trustee applying the standards
described in Section 1001 hereof, would best serve the interests of the
Bondholders.

     Section 904.   Legal Proceedings by the Trustee.

     (a)  If any Event of Default has occurred and is continuing, the Trustee in
its discretion may, and upon the written request of the Credit Facility Issuer
or the owners of not less than twenty-five percent (25%) in aggregate principal
amount of the Outstanding Bonds and receipt of indemnity to its satisfaction
shall, in its own name:

          (1)  By mandamus, or other suit, action or proceeding at law or in
     equity, enforce all rights of the Bondholders hereunder;

          (2)  Bring suit upon the Bonds, the Credit Facility (but only to

<PAGE>

     the extent the Credit Facility Issuer shall have wrongfully dishonored
     drawings made in strict conformity with the terms hereof) and the Note; and

          (3)  By action or suit in equity seek to enjoin any acts or things
     which may be unlawful or in violation of the rights of the Bondholders.

     (b)  If an Event of Default under Section 901(c) occurs and is continuing,
the Trustee in its discretion may, and upon the written request of the owners of
not less than twenty-five percent (25%) in aggregate principal amount of the
Outstanding Bonds and receipt of indemnity to its satisfaction shall, enforce
each and every right granted to it under the Loan Agreement or as owner of the
Note.

     Section 905.   Discontinuance of Proceedings by the Trustee.

     If any proceeding commenced by the Trustee on account of any Event of
Default is discontinued or is determined adversely to the Trustee, then the
Company, the Credit Facility Issuer, the Issuer, the Trustee and the Bondholders
shall be restored to their former positions and rights hereunder as though no
proceedings had been commenced.

     Section 906.   Credit Facility Issuer or Bondholders May Direct
                    Proceedings.

     Anything to the contrary in this Indenture notwithstanding, either the
Credit Facility Issuer if a Credit Facility is in effect (and no default has
occurred and is continuing under the Credit Facility), or a Majority of the
Bondholders, if there is no Credit Facility in effect, shall have the right,
after furnishing indemnity satisfactory to the Trustee, to direct the method and
place of conducting all remedial proceedings by the Trustee hereunder, provided
that such direction shall not be in conflict with any rule of law or with this
Indenture or unduly prejudice the rights of minority Bondholders.

     Section 907.   Limitations on Actions by the Bondholders.

     (a)  No Bondholder shall have any right to bring suit on the Credit
Facility. No Bondholder shall have any right to pursue any other remedy
hereunder unless:

          (1)  the Trustee shall have been given written notice of an Event of
     Default;

          (2)  the owners of not less than twenty-five percent (25%) in
     aggregate principal amount of the Outstanding Bonds shall have requested
     the Trustee, in writing, to exercise the powers hereinabove granted or to
     pursue such remedy in its or their name or names;

          (3)  the Trustee shall have been offered indemnity satisfactory to it
     against costs, expenses and liabilities, except that no offer of
     indemnification shall be required for a declaration of acceleration under
     Section 902 hereof or for a drawing under the Credit Facility;

          (4)  the Trustee shall have failed to comply with such request within
     a reasonable time; and

<PAGE>

          (5)  prior to the Conversion Date, the Credit Facility Issuer has
     failed to honor a proper draw request under the Credit Facility.

     (b)  Notwithstanding the foregoing provisions of subsection (a) of this
Section 907 or any other provision of this Indenture, the obligation of the
Issuer shall be absolute and unconditional to pay hereunder, but solely from the
Revenues and other funds pledged under this Indenture, the principal or
redemption price of, and interest on, the Bonds to the respective owners thereof
on the respective due dates thereof, and nothing herein shall affect or impair
the right of action, which is absolute and unconditional, of such owners to
enforce such payment.

     Section 908.   Trustee May Enforce Rights Without Possession of the
                    Bonds.

     All rights under this Indenture and the Bonds may be enforced by the
Trustee without the possession of any Bonds or the production thereof at the
trial or other proceedings relative thereto, and any proceedings instituted by
the Trustee shall be brought in its name for the ratable benefit of the owners
of the Bonds.

     Section 909.   Remedies Not Exclusive.

     No remedy herein conferred is intended to be exclusive of any other remedy
or remedies, and each remedy is in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute.

     Section 910.   Delays and Omissions Not to Impair Rights.

     No delays or omission in respect of exercising any right or power accruing
upon any default shall impair such right or power or be a waiver of such
default, and every remedy given by this Article IX may be exercised from time to
time and as often as may be deemed expedient.

     Section 911.   Application of Moneys in the Event of Default.

     (a)  Any moneys received by the Trustee under this Article IX shall be
applied in the following order; provided that any moneys received by the Trustee
from a drawing under the Credit Facility shall be applied to the extent
permitted by the terms thereof only as provided in paragraph (3) below with
respect to the principal of, and interest accrued on, Bonds other than Bonds
held by or for the Company:

          (1)  To the payment of the reasonable costs of the Trustee, including
     counsel fees and any disbursements of the Trustee with interest thereon at
     the per annum rate equal to the "Prime" or "Base" rate of the Credit
     Facility Issuer and to the payment of reasonable costs and expenses of the
     Issuer, including counsel fees, incurred in connection with the Event of
     Default; and

          (2)  To the payment of principal or redemption price (as the case may
     be) and interest on the Bonds, and in case such moneys shall be
     insufficient to pay the same in full, then to payment of principal or
     redemption price and interest ratably, without preference or priority of
     one over another or of any installment of interest over any other

<PAGE>

     installment of interest.

     (b)  The surplus, if any, shall be paid to the Company or the person
lawfully entitled to receive the same as a court of competent jurisdiction may
direct; provided that, if the Trustee has received payments on the Credit
Facility following the Event of Default, the surplus shall be paid to the Credit
Facility Issuer to the extent of such payments to the extent the Credit Facility
Issuer has not been reimbursed for such payments and its fees and expenses
related thereto.

     Section 912.   Trustee and Bondholders Entitled to All Remedies Under
                    the Act.

     It is the purpose of this Article IX to provide such remedies to the
Trustee and the Bondholders as may be lawfully granted under the provisions of
the Act, but should any remedy herein granted be held unlawful, the Trustee and
the Bondholders shall nevertheless be entitled to every remedy provided by the
Act. It is further intended that, insofar as lawfully possible, the provisions
of this Article shall apply to and be binding upon any trustee or receiver
appointed under applicable law.

     Section 913.   Trustee May File Claim in Bankruptcy.

     (a)  In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
similar judicial proceeding relating to the Issuer, the Company or any other
obligor upon the Loan Agreement or the Bonds or to property of the Issuer, the
Company, or such other obligor or the creditors of any of them, the Trustee
(irrespective of whether the principal of the Bonds shall then be due and
payable as therein expressed or by declaration or otherwise and irrespective of
whether the Trustee shall have made any demand on the Company for the payment on
the Note of an amount equal to overdue principal or interest or additional
interest) shall be entitled and empowered, by intervention in such proceedings
or otherwise;

          (1)  to file and prove a claim for the whole amount of principal and
     interest owing and unpaid in respect of the Bonds and to file such other
     papers or documents as may be necessary or advisable in order to have the
     claims of the Trustee (including any claim for the reasonable compensation,
     expenses, disbursements and advances of the Trustee, its agents and
     counsel) and of the Bondholders allowed in such judicial proceeding; and

          (2)  to collect and receive any moneys or other property payable or
     deliverable on any such claims and to distribute the same;

and any receiver, assignee, trustee, liquidator, sequestrator (or other similar
official) in any such judicial proceeding is hereby authorized by the
Bondholders to make such payments to the Trustee, and in the event that the
Trustee shall consent to the making of such payments directly to the
Bondholders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 911 hereof.

     (b)  Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept, or adopt on behalf of the

<PAGE>

Bondholders, any plan of reorganization, arrangement, adjustment or composition
affecting the Bonds or the rights of any Bondholder thereof, or to authorize the
Trustee to vote in respect of the claim of the Bondholders in any such
proceeding.

     (c)  All moneys received by the Trustee pursuant to any right given or
action taken under this Indenture shall, after payment of the costs and expenses
of the proceedings resulting in the collection of such moneys and the fees and
expenses of the Trustee, be deposited in the Bond Fund and applied to the
payment of the principal of, redemption premium, if any, and interest then due
and unpaid on the Bonds in accordance with the provisions of this Indenture.

     Section 914.   Receiver.

     Upon the occurrence of an Event of Default and upon the filing of a suit or
other commencement of judicial proceedings to enforce the rights of the Trustee
and of the Bondholders under this Indenture, the Trustee shall be entitled, as a
matter of right, to the appointment of a receiver or receivers of the amounts
payable on the Note or otherwise under the Loan Agreement and assigned to the
Trustee under this Indenture pending such proceedings, with such powers as the
court making such appointment shall confer, whether or not any such amounts
payable shall be deemed sufficient ultimately to satisfy the Bonds.

                                    ARTICLE X

                             CONCERNING THE TRUSTEE

     Section 1001.  Acceptance of the Trusts.

     The Trustee hereby represents and warrants to the Issuer (for the benefit
of the Company and the Bondholders as well as the Issuer) that it is a national
banking association and that it is duly authorized under the laws of the United
States of America to accept and execute trusts of the character herein set out.

     The Trustee accepts and agrees to execute the trusts imposed upon it by
this Indenture, but only upon the terms and conditions set forth in this Article
and subject to the provisions of this Indenture including the following express
terms and conditions, to all of which the parties hereto and the Bondholders
agree:

     (a)  Except during the continuance of an Event of Default, the Trustee
undertakes to perform such duties and only such duties as are specifically set
forth in this Indenture, and no implied covenants or obligations shall be read
into this Indenture against the Trustee.

     (b)  In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.

     (c)  The Trustee may execute any of the trusts or powers hereof and perform
any of its duties by or through attorneys, agents, receivers or

<PAGE>

employees and it shall not be responsible for any misconduct or negligence of
any such attorney, agent or receiver appointed by it upon due care, and shall be
entitled to act upon the opinion or advice of its counsel concerning all matters
of trust hereof and the duties hereunder, and may in all cases be reimbursed
hereunder for reasonable compensation paid to all such attorneys, agents,
receivers and employees as may reasonably be employed in connection with the
trust hereof. The Trustee may conclusively rely upon an opinion of counsel and
shall not be responsible for any loss or damage resulting from any action or
non-action by it taken or omitted to be taken in good faith in reliance upon
such opinion of counsel.

     (d)  Except as is specifically provided in Section 1019 with respect to the
filing of continuation statements, the Trustee shall not be responsible for any
recital herein, or in the Bonds (except in respect to the authentication
certificate of the Trustee endorsed on the Bonds), or for insuring the Trust
Estate or any part of the Project or collecting any insurance moneys, or for the
validity of the execution hereof by the Issuer or of any supplements hereto or
instruments of further assurance, or for the sufficiency of the security for the
Bonds; and the Trustee shall not be bound to ascertain or inquire as to the
performance or observance of any agreements or conditions on the part of the
Issuer or on the part of the Company under the Loan Agreement, except as
hereinafter set forth; but the Trustee may require of the Issuer or the Company
full information and advice as to the performance of the agreements and
conditions aforesaid and as to the condition of the Trust Estate.

     (e)  The Trustee shall not be liable in connection with the performance or
non-performance of its duties under this Indenture except for its own grossly
negligent action, its own grossly negligent failure to act, or its own willful
misconduct, except that:

          (1)  this subsection shall not be construed to limit the effect of
     subsection (a) of this Section 1001;

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

          (3)  The Trustee shall not be liable with respect to any action taken
     or omitted to be taken by it in good faith in accordance with the direction
     of a Majority of the Bondholders relating to the time, method and place of
     conducting any proceeding for any remedy available to the Trustee, or
     exercising any trust or power conferred upon the Trustee under this
     Indenture.

     (f)  Whether or not therein expressly so provided, every provision of this
Indenture that in any way relates to the Trustee, including without limitation
Sections 1003 and 1004 hereof, shall be subject to the provisions of this
Section 1001.

     Section 1002.  Trustee to Give Notice.

     (a)  The Trustee shall not be required to take notice or be deemed to have
notice of any default hereunder, except failure by the Issuer to cause to be
made any of the payments to the Trustee required to be made by Article V or
failure by the Issuer or the Company to file with the Trustee

<PAGE>

any document required by this Indenture or the Loan Agreement to be so filed,
unless the Trustee shall be notified of such default by the Issuer or by the
holders of 25% in aggregate principal amount of Bonds then Outstanding or unless
a responsible corporate trust officer of the Trustee charged with the
responsibility for the management of the trusts conferred by this Indenture
shall have actual knowledge of such default.

     (b)  If a responsible trust officer of the Trustee charged with the
responsibility for the management of the trusts conferred by this Indenture
shall have actual knowledge of any Event of Default continuing hereunder, the
Trustee shall give to all Bondholders and to the Credit Facility Issuer written
notice of all such defaults within thirty (30) days after receipt of such
information.

     (c)  Promptly upon receipt of notice of the occurrence of a Determination
of Taxability, the Trustee shall give notice thereof to the Company, the Issuer,
the Bondholders and former Bondholders and to the Credit Facility Issuer.

     Section 1003.  Trustee Entitled to Indemnity.

     (a)  The Company shall indemnify the Trustee its officers, directors and
employees against any loss, liability or expense incurred by it arising out of
or in connection with the acceptance or administration of its duties under this
Indenture, except as set forth in subsection (b) below. The Trustee shall notify
the Company promptly of any claim for which it may seek indemnity. Except where
the Company is the claimant, the Company shall have full and sole right to
defend the claim, and the Trustee shall cooperate in the defense. If the Trustee
engages separate counsel, the Trustee shall pay all fees and expenses of such
counsel and the Company shall no longer have the obligation to indemnify the
Trustee; provided, however that the Trustee shall have the right to retain
separate counsel, with the fees and expenses to be paid by the Company, if
representation of the Trustee would be inappropriate due to an actual conflict
of interest, as reasonably determined by either party, between the Trustee and
the Company. The Company shall not be responsible for any settlement reached
without the Company's consent.

     (b)  The Company shall not be obligated to reimburse any expense or to
indemnify against any loss or liability incurred by the Trustee through its
gross negligence, willful misconduct or bad faith.

     (c)  To secure the Company's payment obligations in this Section and in
Section 911, the Trustee shall have a lien prior to the lien of the Trustee for
the benefit of the owners of the Bonds on all money or property held or
collected by the Trustee, except for amounts drawn under the Credit Facility and
money and property held in the Rebate Fund, as to which the Trustee shall have
no such lien. Such obligations shall survive the satisfaction and discharge of
this Indenture.

     (d)  When the Trustee or Issuer incurs expenses or renders services after
an Event of Default, the expenses and compensation for the services are intended
to constitute expenses of administration under any applicable bankruptcy law.

     (e)  The Trustee may begin suit, or appear in and defend suit, or do
anything else in its judgment proper to be done by it as such Trustee,

<PAGE>

without indemnity under paragraph (a) above, and in such case the Issuer shall
reimburse the Trustee and the Issuer, on an equal basis, from funds available
therefor under the Loan Agreement for all costs and expenses, outlays and
counsel fees and other reasonable disbursements properly incurred in connection
therewith; provided, however, that the Trustee shall:

          (1)  make all payments hereunder of principal and redemption price of
     and interest on the Bonds and of the purchase price of Bonds tendered at
     the option of the owners thereof or purchased by the Company in lieu of
     redemption,

          (2)  accelerate the Bonds when required to do so hereunder other than
     at the direction of the Bondholders, and

          (3)  draw on the Credit Facility when required to do so hereunder,

each without the necessity of the Bondholders providing security or indemnity to
the Trustee. If the Issuer shall fail to make reimbursement, the Trustee may
reimburse itself from any moneys in its possession under the provisions of this
Indenture other than moneys drawn under the Credit Facility and shall be
entitled with respect thereto to a preference over the Bonds.

     Section 1004.  Trustee Not Responsible for Insurance, Taxes, Execution
                    of this Indenture, Acts of the Issuer or Application of
                    the Moneys Applied in Accordance with this Indenture.

     (a)  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 Company, 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. The Trustee
shall have no responsibility in respect of the validity, sufficiency, due
execution or acknowledgment of this Indenture or any supplements thereto or
instruments of further assurance or the validity or sufficiency of the security
provided hereunder or in respect of the validity of the Bonds or the due
execution or issuance thereof. The Trustee shall not be under any obligation to
see that any duties herein imposed upon any party other than itself, or any
covenants herein contained on the part of any party other than itself to be
performed, shall be done or performed, and the Trustee shall be under no
liability for failure to see that any such duties or covenants are so done or
performed.

     (b)  The Trustee shall not be liable or responsible because of the failure
of the Issuer or of any of its employees or agents to make any collections or
deposits or to perform any act herein required of the Issuer or because of the
loss of any moneys arising through the insolvency or the act or default or
omission of any other depositary in which such moneys shall have been deposited
under the provisions of this Indenture. The Trustee shall not be responsible for
the application of any of the proceeds of the Bonds 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.

<PAGE>

The Trustee shall not be responsible or liable for any loss suffered in
connection with any investment of funds made by it in accordance with Section
602.

     (c)  The permissive right of the Trustee to do things enumerated in this
Indenture shall not be construed as a duty, and the Trustee shall not be
answerable for other than its gross negligence or willful misconduct. The
immunities and exemptions from liability of the Trustee hereunder shall extend
to its directors, officers, employees and agents.

     Section 1005.  Compensation.

     Subject to the provisions of any agreement relating to the compensation of
the Trustee, the Issuer shall cause the Company to pay to the Trustee as
Administrative Expenses its reasonable fees, charges and out-of-pocket expenses
in accordance with Section 7.5 of the Loan Agreement. In computing the Trustee's
compensation, the parties shall not be limited by any law on the compensation of
an express trust. If the Company shall fail to make any payment required by this
Section 1005, the Trustee may, but shall be under no obligation to, make such
payment from any moneys in its possession under the provisions of this Indenture
and shall be entitled to a preference therefor over the Bonds hereunder;
provided that no payments under this Section 1005 shall be made with moneys
drawn under the Credit Facility.

     Section 1006.  Trustee to Preserve Records.

     All records and files pertaining to the Project in the custody of the
Trustee shall be open at all reasonable times to the inspection of the Issuer,
the Credit Facility Issuer and the Company and their agents and representatives.

     Section 1007.  Trustee May Be a Bondholder.

     The institution acting as Trustee under this Indenture, and its directors,
officers, employees or agents, may in good faith buy, sell, own, hold and deal
in the Bonds issued under and secured by this Indenture, and may join in the
capacity of a Bondholder in any action which any Bondholder may be entitled to
take with like effect as if such institution were not the Trustee under this
Indenture. To the extent permitted by law, such institution may also receive
tenders and purchase in good faith Bonds from itself, including any department,
affiliate or subsidiary, with like effect as if it were not the Trustee.

     Section 1008.  Trustee Not Responsible for Recitals.

     The recitals, statements and representations contained herein and in the
Bonds shall be taken and construed as made by and on the part of the Issuer and
not by the Trustee, and the Trustee shall not be under any responsibility for
the correctness of the same.

     Section 1009.  No Trustee Responsibility for Recording or Filing.

     The Trustee shall not be under any obligation to see to the recording or
filing of this Indenture, the Loan Agreement, any financing statements or any
other instrument or otherwise to the giving to any person of notice of the
provisions hereof or thereof.

<PAGE>

     Section 1010.  Trustee May Require Information.

     Except for the obligations of the Trustee under Section 902 and the
obligations of the Trustee to make payments on the Bonds when due and to draw
under the Credit Facility as required hereunder, anything contained in this
Indenture to the contrary notwithstanding, the Trustee shall have the right, but
shall not be required, to demand, as a condition of any action by the Trustee in
respect of the authentication of any Bonds, the withdrawal of any cash, the
release of any property, or any action whatsoever within the purview of this
Indenture, any showings, certificates, opinions, appraisals or other
information, or evidence of corporate authority, in addition to that required by
the terms hereof.

     Section 1011.  Trustee May Rely on Certificates.

     The Trustee shall be protected and shall incur no liability in acting or
proceeding, or in not acting or not proceeding, in good faith and in accordance
with the terms of this Indenture, upon any ordinance, resolution, order, notice,
request, consent, waiver, certificate, statement, instrument, opinion,
affidavit, requisition, bond or other paper or document which it shall in good
faith believe to be genuine and to have been adopted or signed by the proper
board or person or to have been prepared and furnished pursuant to any of the
provisions of the Loan Agreement or this Indenture, or upon the written opinion
of any attorney, engineer, accountant or other expert believed by it to be
qualified in relation to the subject matter, and the Trustee shall not be under
any duty to make any investigation or inquiry as to any statements contained or
matters referred to in any such instrument. 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 giving such authority or
consent is the owner of any Bond shall be conclusive and binding upon all future
owners of the same Bond and upon Bonds issued in exchange therefor or in place
thereof.

     Section 1012.  Trustee Bond.

     The Trustee shall not be required to give any bond or surety in respect to
the execution of its rights and obligations hereunder.

     Section 1013.  Segregation of Funds; Interests:

     All moneys received by the Trustee shall, until used or applied or invested
as herein provided, be held in trust in the manner and for the purposes for
which they were received but need not be segregated from other funds except to
the extent required by this Indenture or law. The Trustee shall not be under any
liability for interest on any moneys received hereunder.

     Section 1014.  Qualification of the Trustee.

     There shall at all times be a Trustee hereunder which shall be an
association or a corporation organized and doing business under the laws of the
United States of America or of any state, authorized under such laws and the
applicable laws of the State to exercise corporate trust powers and act as Bond
Registrar hereunder, having a combined capital and surplus of at least One
Hundred Million Dollars ($100,000,000), and subject to

<PAGE>

supervision or examination by federal or state authority. If such association or
corporation is not a commercial bank or trust company, it shall also have a
rating by Moody's (if the Bonds are then rated by Moody's) of BAA 3/P3 or
higher, or by S&P (if the Bonds are then rated by S&P) of Baa/A3 or higher or
shall otherwise be approved in writing by Moody's or S&P, as the case may be. If
such association or corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising or
examining authority, then for the purposes of this Section 1014, the combined
capital and surplus of such association or corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 1014, it shall resign immediately
in the manner and with the effect specified in Section 1015 hereof.

     Section 1015.  Resignation and Removal of the Trustee.

     (a)  No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 1016 hereof.

     (b)  The Trustee may resign at any time by giving written notice thereof to
the Issuer and the Company. If an instrument of acceptance by a successor
Trustee shall not have been delivered to the Trustee within thirty (30) days
after the giving of such notice of resignation, the retiring Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.

     (c)  The Trustee may be removed at any time by an instrument or instruments
in writing to the Trustee, with copies to the Issuer and the Company, signed by
a Majority of the Bondholders or by their attorneys, legal representatives or
agents and delivered to the Trustee, the Issuer and the Company (such
instruments to be effective only when received by the Trustee).

     (d)  If at any time:

          (1)  the Trustee shall cease to be eligible under Section 1014 hereof,
     and shall fail to resign after written request therefor by the Company or
     by a Majority of the Bondholders, or

          (2)  the Trustee shall become incapable of acting or shall be adjudged
     a bankrupt or insolvent or a receiver of the Trustee or of its property
     shall be appointed or any public officer shall take charge or control of
     the Trustee or of its property or affairs for the purpose of
     rehabilitation, conservation or liquidation,

then, in any such case, the Issuer or the Company may remove the Trustee, or any
Bondholder may petition any court of competent jurisdiction for the removal of
the Trustee and the appointment of a successor.

     (e)  If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Trustee for any cause, the Issuer
with the approval of the Company shall promptly appoint a successor. If no
successor Trustee shall have been so appointed by the Issuer and approved by the
Company or a Majority of the Bondholders and

<PAGE>

accepted appointment in the manner hereinafter provided, any Bondholder, if he
has been a bona fide owner of a Bond for at least six (6) months, may petition
any court of competent jurisdiction for the appointment of a successor Trustee.

     (f)  The Issuer shall give notice of each resignation and each removal of
the Trustee and each appointment of a successor Trustee by mailing written
notice of such event by first-class mail, postage prepaid, to each Bondholder.
Each notice shall include the name and address of the principal corporate trust
office of the successor Trustee.

     Section 1016.  Successor Trustee.

     (a)  Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to its predecessor, and also to the Issuer and the Company, an
instrument in writing accepting such appointment hereunder, and thereupon and
upon transfer of the Credit Facility to the successor Trustee such successor
Trustee without any further act, shall become fully vested with all the rights,
immunities, powers and trusts, and subject to all the duties and obligations, of
its predecessors; but such predecessor shall, nevertheless, on the written
request of its successor or of the Issuer and upon payment of the expenses,
charges and other disbursements of such predecessor which are payable pursuant
to the provisions of Section 1005 hereof, execute and deliver an instrument
transferring to such successor Trustee all the rights, immunities, powers and
trusts of such predecessor hereunder; and every predecessor Trustee shall
deliver all property and moneys held by it hereunder to its successor, subject,
nevertheless, to its preference, if any, provided for in Sections 1003 and 1005
hereof. Should any instrument in writing from the Issuer be required by any
successor Trustee for more fully and certainly vesting in such Trustee the
rights, immunities, powers and trusts hereby vested or intended to be vested in
the predecessor Trustee, any such instrument in writing shall and will, on
request, be executed, acknowledged and delivered by the Issuer. The resignation
of any Trustee and the instrument or instruments removing any Trustee and
appointing a successor hereunder, together with all other instruments provided
for in this Article, shall be filed and/or recorded by the successor Trustee in
each recording office where this Indenture and the Financing Statements have
been filed and/or recorded.

     (b)  Notwithstanding any of the foregoing provisions of this Article, any
bank or trust company having power to perform the duties and execute the trusts
of this Indenture and otherwise qualified to act as Trustee hereunder with or
into which the bank or trust company acting as Trustee may be merged or
consolidated, or to which the assets and business of such bank or trust company
may be sold, shall be deemed the successor of the Trustee.

     Section 1017.  Co-Trustee.

     It is the purpose of this Indenture that there shall be no violation of any
law of any jurisdiction denying or restricting the right of certain banking
corporations or associations to transact business as trustee as contemplated
herein in such jurisdiction. It is recognized that in case of litigation under
this Indenture and in particular in case of the enforcement of the security
interest contained in this Indenture upon the occurrence of an Event of Default,
it may be necessary that the Trustee appoint an additional individual or
institution as a separate Trustee or

<PAGE>

Co-Trustee, which shall be satisfactory to the Company. The following provisions
of this Section 1017 are adapted to these ends:

     (a)  In the event of the incapacity or lack of authority of the Trustee by
reason of any present or future law of any jurisdiction to exercise any of the
rights, powers and trusts herein granted to the Trustee or to hold title to or a
security interest in the Trust Estate or to take any other action which may be
necessary or desirable in connection therewith, 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 Trustee or Co-Trustee but only to the extent necessary to enable
the separate Trustee or Co-Trustee to exercise such rights, powers and trusts,
and every covenant and obligation necessary to the exercise thereof shall run to
and be enforceable by such separate Trustee or Co-Trustee.

     (b)  Should any deed, conveyance or instrument in writing from the Issuer
be required by the separate Trustee or Co-Trustee so appointed by the Trustee in
order to more fully and certainly vest in and confirm to it such properties,
rights, powers, trusts, duties and obligations any and all such deeds,
conveyances and instruments shall, on request, be executed, acknowledged and
delivered by the Issuer. In case any separate Trustee or Co-Trustee or a
successor to either, shall die, be dissolved, become incapable of action, resign
or be removed, all the estates, properties, rights, powers, trusts, duties and
obligations of such separate Trustee or Co-Trustee, so far as permitted by law,
shall vest in and be exercised by the Trustee until the appointment of a new
Trustee or successor to such separate Trustee or Co-Trustee.

     Section 1018.  Notice to Moody's or S&P.

     At any time during which the Bonds are rated by Moody's or S&P, the Trustee
shall notify Moody's or S&P, as applicable, promptly of:

     (a)  any change in the Trustee,

     (b)  the expiration or termination of the Credit Facility during the
Variable Rate Period unless an Alternate Credit Facility is provided to the
Trustee in accordance with the terms of this Indenture,

     (c)  a change in the interest rate borne by the Bonds from a Variable Rate
to a Fixed Rate,

     (d)  the payment of all of the Bonds, or

     (e)  any material change to this Indenture, the Loan Agreement, the
Reimbursement Agreement, the Credit Facility or the Remarketing Agreement.

     Section 1019.  Filing of Certain Continuation Statements.

     From time to time, the Trustee shall file or cause to be filed continuation
statements for the purpose of continuing without lapse the effectiveness of (i)
those Financing Statements which shall have been filed at or prior to the
issuance of the Bonds in connection with the Issuer's assignment to the Trustee
of the Trust Estate pursuant to the authority of the Uniform Commercial Code of
the State of Florida, and (ii) any

<PAGE>

previously filed continuation statements which shall have been filed as herein
required. The Issuer and the Company shall sign and deliver to the Trustee or
its designee such continuation statements as may be requested of it from time to
time by the Trustee. Upon the filing of any such continuation statement the
Trustee shall immediately notify the Issuer that the same has been accomplished.

                                   ARTICLE XI

                   EXECUTION OF INSTRUMENTS BY THE BONDHOLDERS
                       AND PROOF OF OWNERSHIP OF THE BONDS

     Section 1101.  Execution of Instruments by the Bondholders and Proof
                    of Ownership of the Bonds.

     (a)  Any request, direction, consent or other instrument in writing
required or permitted by this Indenture to be signed or executed by a Bondholder
may be signed or executed by the Bondholder or its attorneys or legal
representatives. Proof of the execution of any such instrument and of the
ownership of the Bonds shall be sufficient for any purpose of this Indenture and
shall be conclusive in favor of the Trustee with regard to any action taken by
it under such instrument if made in the following manner:

          The fact and date of the execution by any person of any such
     instrument may be proved by the verification of any officer in any
     jurisdiction who, by the laws thereof, has power to take affidavits within
     such jurisdiction, to the effect that such instrument was subscribed and
     sworn to before him, or by an affidavit of a witness to such execution, and
     where such execution is by an officer of a corporation or association or a
     member of a partnership on behalf of such corporation, association or
     partnership, such verification or affidavit shall also constitute
     sufficient proof of his authority.

     (b)  Nothing contained in this Section 1101 shall be construed as limiting
the Trustee to such proof, it being intended that the Trustee may accept any
other evidence of the matters herein stated which may be sufficient. Any request
or consent of a Bondholder shall bind every future owner of the Bond(s) to which
such request or consent pertains or any Bond(s) issued in lieu thereof in
respect of anything done by the Trustee pursuant to such request or consent.

     (c)  Notwithstanding any of the foregoing provisions of this Section 1101,
the Trustee shall not be required to recognize any person as an owner of Bonds
or to take any action at its request unless the Bonds shall be deposited with
it.

     Section 1102.  Preservation of Information.

     The Trustee shall preserve in the Bond Register, in as current a form as is
reasonably practicable, the name and address of each Bondholder received by the
Trustee in its capacity as Bond Registrar.

<PAGE>

                                   ARTICLE XII

                           THE REMARKETING AGENT; THE
                        TENDER AGENT; THE PLACEMENT AGENT

     Section 1201.  The Remarketing Agent.

     (a)  The Issuer hereby appoints First Union National Bank of North
Carolina, with its corporate office in Charlotte, North Carolina, as Remarketing
Agent under this Indenture. The Remarketing Agent and any successor Remarketing
Agent, by written instrument delivered to the Issuer, the Trustee and the
Company, shall accept the duties and obligations imposed on it under this
Indenture and the Remarketing Agreement.

     (b)  In addition to the other obligations imposed on the Remarketing Agent
hereunder, the Remarketing Agent shall agree to keep such books and records in
connection with its activities as Remarketing Agent hereunder as shall be
consistent with prudent industry practice and make such books and records
available for inspection by the Issuer, the Trustee, the Credit Facility Issuer
and the Company at all reasonable times.

     (c)  The Remarketing Agent shall at all times be a member of the National
Association of Securities Dealers, Inc. and registered as a Municipal Securities
Dealer under the Securities Exchange Act of 1934, as amended, or a national
banking association or a bank or a trust company, in each case authorized by law
to perform its obligations hereunder.

     (d)  If at any time the Remarketing Agent is unable or unwilling to act as
Remarketing Agent, the Remarketing Agent, upon thirty (30) Business Days' prior
written notice to the Issuer, the Trustee, the Tender Agent and the Company, may
resign. The Remarketing Agent may be removed at any time by the Company with the
consent of the Issuer, by written notice signed by the Company delivered to the
Trustee, the Remarketing Agent, the Credit Facility Issuer and the Tender Agent.
Upon resignation or removal of the Remarketing Agent, the Company, with the
consent of the Issuer, shall appoint a substitute Remarketing Agent meeting the
qualifications of Section 1201(c) above.

     (e)  In the event that the Company shall fail to appoint a successor
Remarketing Agent, upon the resignation or removal of the Remarketing Agent or
upon its dissolution, insolvency or bankruptcy, the Trustee may, but is not
required to, appoint a Remarketing Agent or itself act as Remarketing Agent
until the appointment of a successor Remarketing Agent in accordance with this
Section 1201; provided, however, that the Trustee, in its capacity as
Remarketing Agent, shall not be required to sell Bonds or determine the interest
rate on the Bonds pursuant to Section 202 hereof.

     Section 1202.  The Tender Agent.

     (a)  The Issuer hereby appoints as Tender Agent under this Indenture The
First National Bank of Boston, which agent has a corporate trust office at
Canton, Massachusetts. The Tender Agent and any successor Tender Agent, by
written instrument delivered to the Issuer, the Trustee and the Company, shall
accept the duties and obligations imposed on it under this Indenture.

     (b)  The Tender Agent shall at all times be a member of the National
Association of Securities Dealers, Inc. having a capitalization of at least
Fifteen Million Dollars ($15,000,000) and a rating by Moody's (if the Bonds are
then rated by Moody's) of BAA 3/P3 or higher, or a national banking

<PAGE>

association or a bank or a trust company having capital and surplus of at least
$50,000,000, in each case authorized by law to perform its obligations
hereunder.

     (c)  If at any time the Tender Agent is unable or unwilling to act as
Tender Agent, the Tender Agent, upon sixty (60) days' prior written notice to
the Issuer, the Trustee, the Remarketing Agent and the Company, may resign;
provided, however, that in no case shall such resignation become effective until
the appointment of a successor Tender Agent. The Tender Agent may be removed at
any time by the Company with the consent of the Issuer, by written notice signed
by the Company delivered to the Trustee, the Remarketing Agent, the Credit
Facility Issuer and the Tender Agent; provided, however, that in no case shall
such removal become effective until the appointment of a successor Tender Agent.
Upon resignation or removal of the Tender Agent, the Company, with the consent
of the Issuer, shall appoint a substitute Tender Agent meeting the
qualifications of Section 1202(b) above.

     (d)  In the event that the Company shall fail to appoint a successor Tender
Agent, upon the resignation or removal of the Tender Agent or upon its
dissolution, insolvency or bankruptcy, the Trustee may at its discretion, but is
not required to, act as Tender Agent until the appointment of a successor Tender
Agent in accordance with this Section 1202.

     Section 1203.  The Placement Agent.

     The Placement Agent shall be a member of the National Association of
Securities Dealers, Inc. and registered as a Municipal Securities Dealer under
the Securities Exchange Act of 1934, as amended, or a national banking
association or a bank or trust company, in each case authorized by law to
perform its obligations described in Section 202(e) hereof.

     Section 1204.  Notices.

     The Trustee shall, within thirty (30) days of the resignation or removal of
the Remarketing Agent or the Tender Agent or the appointment of the Placement
Agent or a successor Remarketing Agent or Tender Agent, give notice thereof by
first class mail, postage prepaid, to the owners of the Bonds.

                                  ARTICLE XIII

                           AMENDMENTS AND SUPPLEMENTS

     Section 1301.  Amendments and Supplements Without the Bondholders'
                    Consent.

     This Indenture may be amended or supplemented at any time and from time to
time, without the consent of the Bondholders, but with the consent of the Credit
Facility Issuer, if a Credit Facility is in effect (and no default has occurred
and is continuing under the Credit Facility), by a supplemental indenture
authorized by the Issuer filed with the Trustee, for one or more of the
following purposes:

     (a)  to add additional covenants of the Issuer or to surrender any

<PAGE>

right or power herein conferred upon the Issuer;

     (b)  for any purpose not inconsistent with the terms of this Indenture or
to cure any ambiguity or to correct or supplement any provision contained herein
or in any supplemental indenture which may be defective or inconsistent with any
other provision contained herein or in any supplemental indenture, or to make
such other provisions in regard to matters or questions arising under this
Indenture which shall not adversely affect the interests of the owners of the
Bonds or the Company;

     (c)  to permit the Bonds to be converted during the Variable Rate Period to
certificateless securities or securities represented by a master certificate
held in trust, ownership of which, in either case, is evidenced by book entries
on the books of the Bond Registrar, for any period of time;

     (d)  to permit the appointment of a Co-Trustee under this Indenture;

     (e)  to modify, eliminate or add to the provisions of this Indenture to
such extent as shall be necessary to effect the qualification of this Indenture
under the Trust Indenture Act of 1939, or under any similar federal statute
hereafter enacted, and to add to this Indenture such other provisions as may be
expressly permitted by the Trust Indenture Act of 1939;

     (e)  except as otherwise provided in Section 1302 hereof, to modify,
eliminate or add to the provisions of this Indenture to such extent as shall be
necessary to obtain a rating of the Bonds from Moody's or S&P ;

     (f)  to amend the administrative provisions hereof to accommodate the
provisions of an Alternate Credit Facility; and

     (g)  to amend the provisions hereof to reflect the obligation of the
Trustee, the Issuer or the Company to disclose information regarding the Bonds,
the Project, the Issuer, the Company or the issuer of the Letter of Credit as
shall be required or recommended to be disclosed in accordance with applicable
regulations or guidelines established by, among others, the American Bankers
Association Corporate Trust Committee.

     Section 1302.  Amendments With the Bondholders' and the Credit
                    Facility Issuer's Consent.

     (a)  This Indenture may be amended from time to time, except with respect
to:

          (1)  the principal, redemption price, purchase price, or interest
     payable upon any Bonds,

          (2)  the Interest Payment Dates, the dates of maturity or the
     redemption or purchase provisions of any Bonds, and

          (3)  this Article XIII,

by a supplemental indenture consented to by the Credit Facility Issuer if a
Credit Facility is in effect (and no default has occurred and is continuing
under the Credit Facility) and by the Company and approved by a Majority of the
Bondholders which would be affected by the action proposed to be taken.

<PAGE>

     (b)  This Indenture may be amended with respect to the matters enumerated
in paragraphs (1) through (3) of subsection (a) of this Section with the
unanimous consent of all Bondholders, the Credit Facility Issuer if a Credit
Facility is in effect (and there is no default has occurred and is continuing
under the Credit Facility), the Company and the Issuer.

     Notwithstanding the foregoing, the Issuer and the Trustee and, during the
Variable Rate Period, the Credit Facility Issuer if the Credit Facility is in
effect (and no default has occurred and is continuing under the Credit
Facility), may amend the Indenture to such extent as may be necessary to obtain
a rating of the Bonds from Moody's or S&P without providing the opinion of Bond
Counsel specified in paragraph (2) above.

     Section 1303.  Supplemental Indentures Affecting the Rights of the
                    Credit Facility Issuer.

     Anything herein to the contrary notwithstanding, a supplemental indenture
under this Article XIII which in the judgment of the Credit Facility Issuer if a
Credit Facility is in effect (and no default has occurred and is continuing
under the Credit Facility) adversely affects the rights of the Credit Facility
Issuer shall not become effective unless or until the Credit Facility Issuer
shall have consented to the execution and delivery thereof.

     Section 1304.  Amendment of the Loan Agreement.

     (a)  The Company, the Trustee and, during the Variable Rate Period, the
Credit Facility Issuer if a Credit Facility is in effect (and no default has
occurred and is continuing under the Credit Facility), may amend the Loan
Agreement; provided that prior to making any amendment, the Company shall
provide the Trustee and the Credit Facility Issuer with:

          (1)  a copy of the proposed amendment and

          (2)  an opinion of Bond Counsel to the effect that such amendment or
     supplement will not adversely affect the exclusion of the interest on the
     Bonds from the gross income of the recipients thereof for federal income
     tax purposes and unless the Trustee shall have otherwise given its consent
     to such amendment or supplement, to the further effect that such amendment
     or supplement will not otherwise adversely affect the interests of the
     Bondholders.

Notwithstanding the foregoing, the Issuer, the Company, the Trustee, and, during
the Variable Rate Period, the Credit Facility Issuer if a Credit Facility is in
effect (and no default has occurred and is continuing under the Credit
Facility), may amend the Loan Agreement to such extent as may be necessary to
obtain a rating of the Bonds from Moody's or S&P without providing the opinion
of Bond Counsel specified in paragraph (2) above.

     (b)  If the Company proposes to amend the Loan Agreement in such a manner
as would adversely affect the interests of the Bondholders, the Trustee shall
notify Bondholders of the proposed amendment and may consent thereto with the
consent of at least a Majority of the Bondholders which would be affected by the
action proposed to be taken; provided, that the Trustee shall not, without the
unanimous consent of the owners of all Bonds then Outstanding, consent to any
amendment which would:

<PAGE>

          (1)  decrease the amounts payable on the Note,

          (2)  change the due date of principal of or interest on the Note or
     change any of the prepayment provisions of the Note, or

          (3)  change Section 5.3 of the Loan Agreement.

     Section 1305.  Amendment of the Loan Agreement Requiring the Consent
                    of the Credit Facility Issuer.

     Anything herein to the contrary notwithstanding, any amendment, change or
modification of the Loan Agreement which in the judgment of the Credit Facility
Issuer affects the rights of the Credit Facility Issuer shall not become
effective unless or until the Credit Facility Issuer shall have consented to the
execution and delivery of such amendment, change or modification.

     Section 1306.  Amendment of the Credit Facility.

     The initial Credit Facility may be amended to such extent as shall be
necessary to obtain a rating of the Bonds from Moody's or S&P provided that such
amendment or supplement will not adversely affect the interests of the
Bondholders. The Trustee shall notify the Bondholders and the Issuer of any
proposed amendment of the Credit Facility which would adversely affect the
interests of the Bondholders and may consent thereto with the consent of the
Issuer, which consent shall not be unreasonably withheld, and at least a
Majority of the Bondholders which would be affected by the action proposed to be
taken; provided, that the Trustee shall not, without the unanimous consent of
the owners of all Bonds then Outstanding, consent to any amendment which would
decrease the amount payable under the Credit Facility or reduce the term of the
Credit Facility.

     Section 1307.  Trustee Authorized to Join in Amendments and
                    Supplements; Reliance on Counsel.

     The Trustee is authorized to join with the Issuer in the execution and
delivery of any supplemental indenture or amendment permitted by this Article
XIII and in so doing shall be fully protected by an opinion of Counsel that such
supplemental indenture or amendment is so permitted and has been duly authorized
by the Issuer and that all things necessary to make it a valid and binding
agreement have been done; provided that certain amendments may, by agreement
between the Trustee and the Credit Facility Issuer, require the prior consent of
the Credit Facility Issuer.

                                ARTICLE XIV

                        DEFEASANCE; OTHER PAYMENTS

     Section 1401.  Defeasance.

     (a)  When the principal or redemption price (as the case may be) of, and
interest on all Bonds issued hereunder have been paid, including without
limitation the purchase price for Bonds tendered under Section 202 hereof, or
provision has been made for payment of the same, together with the compensation
of the Trustee and all other sums payable hereunder by the

<PAGE>

Issuer, the right, title and interest of the Trustee in and to the Trust Estate
and the security interests shall thereupon cease, and the Trustee, on written
demand of the Issuer, shall release this Indenture and the security interests
and shall execute such documents to evidence such release as may be reasonably
required by the Issuer and shall turn over to the Company or to such person,
body or authority as may be entitled to receive the same all balances then held
by it hereunder; provided, that, if any payments have been received by the
Trustee from the Credit Facility in connection with such release, such balances
shall be paid to the Credit Facility Issuer to the extent of such payments. If
payment or provision therefor is made with respect to less than all of the
Bonds, the particular Bonds (or portion thereof) for which provision for payment
shall have been considered made shall be selected by lot by the Trustee and
thereupon the Trustee shall take similar action for the release of this
Indenture with respect to such Bonds. Notwithstanding anything to the contrary
contained herein, Bonds purchased at the option of the owners thereof with
moneys held by the Trustee pursuant to this Article XIV shall not be remarketed
but shall be cancelled by the Trustee.

     (b)  Provision for the payment of Bonds shall be deemed to have been made
when the Trustee holds in the Bond Fund, in trust and irrevocably set aside
exclusively for such payment, (1) moneys sufficient to make such payment
provided that if a Credit Facility is then held by the Trustee, such moneys
shall constitute Available Moneys or (2) noncallable Governmental Obligations
maturing as to principal and interest in such amounts and at such times as will
provide sufficient moneys without reinvestment to make such payment; provided
that the Trustee shall have received an opinion of Bond Counsel to the effect
that such deposit will not affect the exclusion of the interest on any of the
Bonds from the gross income of the recipients thereof for federal income tax
purposes (e.g. by causing any of the Bonds to be classified as an "arbitrage
bond" within the meaning of Section 148 of the Code), and provided further, that
if a Credit Facility is then held by the Trustee, such Governmental Obligations
shall have been on deposit with the Trustee in a separate and segregated account
for a period of three hundred sixty-seven (367) days during and prior to which
no Event of Bankruptcy has occurred or which Governmental Obligations were
purchased with Available Moneys.

     (c)  No Bonds in respect of which a deposit under subsection (b) above has
been made shall be deemed paid within the meaning of this Article unless the
Trustee is satisfied that the amounts deposited are sufficient to make all
payments that might become due on the Bonds, including purchase price payments
for Bonds tendered at the option of the owners or purchased by the Company in
lieu of redemption, if any. Notwithstanding the foregoing, no delivery to the
Trustee under this subsection (c) shall be deemed a payment of any Bonds which
are to be redeemed prior to their stated maturity until such Bonds shall have
been irrevocably called or designated for redemption on a date thereafter on
which such Bonds may be redeemed in accordance with the provisions of this
Indenture or the Issuer shall have given the Trustee, in form satisfactory to
the Trustee, irrevocable instructions to give notice of redemption. Neither the
obligations nor moneys deposited with the Trustee pursuant to this Section shall
be withdrawn or used for any purpose other than, and shall be segregated and
held in trust for, the payment of the principal of, redemption price of,
purchase price if applicable of, and interest on the Bonds with respect to which
such deposit has been made. In the event that such moneys or obligations are to
be applied to the payment of principal or

<PAGE>

redemption price of any Bonds more than sixty (60) days following the deposit
thereof with the Trustee, the Trustee shall mail a notice stating that such
moneys or obligations have been deposited and identifying the Bonds for the
payment of which such moneys or obligations are being held to all owners of such
Bonds at their addresses shown on the Bond Register.

     (d)  Anything in Article XIV to the contrary notwithstanding, if moneys or
Governmental Obligations have been deposited or set aside with the Trustee
pursuant to this Article for the payment of the principal or redemption price,
including purchase price if applicable, of the Bonds and the interest thereon
and the principal or redemption price, including purchase price if applicable,
of such Bonds and such moneys or Governmental Obligations do not constitute
Available Moneys, no amendment to the provisions of this Article shall be made
without the consent of the owner of each of the Bonds affected thereby.

     (e)  Notwithstanding the foregoing, those provisions relating to the
purchase of Bonds upon the demand of any Bondholders, the maturity of Bonds,
interest payments and dates thereof, and the dates, premiums and notice
requirements for optional and mandatory redemption or purchase and the Trustee's
remedies with respect thereto, and provisions relating to exchange, transfer and
registration of Bonds, replacement of mutilated, destroyed, lost or stolen
Bonds, the safekeeping and cancellation of Bonds, non-presentment of Bonds, the
holding of moneys in trust and repayments to the Company or the Credit Facility
Issuer from the Bond Fund and the duties of the Trustee in connection with all
of the foregoing and the fees, expenses and indemnities of the Trustee, shall
remain in effect and shall be binding upon the Trustee, the Issuer, the Company
and the Bondholders notwithstanding the release and discharge of the lien of
this Indenture until payment in full of all outstanding Bonds.

     Section 1402.  Deposit of Funds for Payment of the Bonds.

     If the principal or redemption price of any Bonds become due, either at
maturity or by call for redemption or otherwise, together with all interest
accruing thereon to the due date, has been paid or provision therefor made in
accordance with Section 1401 hereof, all interest on such Bonds shall cease to
accrue on the due date and all liability of the Issuer with respect to such
Bonds shall likewise cease, except as hereinafter provided. Thereafter the
owners of such Bonds shall be restricted exclusively to the funds so deposited
for any claim of whatsoever nature with respect to such Bonds, and the Trustee
shall hold such funds in trust for such owners.

     Section 1403.  Effect of Purchase of the Bonds.

     No purchase of Bonds pursuant to Section 303 hereof shall be deemed to be a
payment or redemption of such Bonds or any portion thereof and such purchase
will not operate to extinguish or discharge the indebtedness evidenced by such
Bonds.

                                   ARTICLE XV

                            MISCELLANEOUS PROVISIONS

     Section 1501.  Covenants of the Issuer to Bind its Successors.

<PAGE>

     In the event of the dissolution of the Issuer, all of the covenants,
stipulations, obligations and agreements contained in this Indenture by or in
behalf of or for the benefit of the Issuer shall bind or inure to the benefit of
the successor or successors of the Issuer from time to time and any officer,
board, commission, authority, agency or instrumentality to whom or to which any
power or duty affecting such covenants, stipulations, obligations and agreements
shall be transferred by or in accordance with law, and the term "Issuer" as used
in this Indenture shall include such successor or successors.

     Section 1502.  Notices.

     (a)  Any notice, demand, direction, request or other instrument authorized
or required by this Indenture to be given or filed with the Issuer, the Trustee,
the Company or the Credit Facility Issuer shall be in writing and shall be
deemed given or filed for all purposes of this Indenture when delivered by hand
delivery or mailed by first class mail, postage prepaid, registered or certified
mail, addressed as follows:

     (1)  If to the Issuer, to:       Hillsborough County
                                      Industrial Development Authority
                                      c/o Thomas K. Morrison, Esq.
                                      Morrison, Morrison & Mills, D.A.
                                      Suite 100
                                      1200 West Platt Street
                                      Tampa, FL  33606

     (2)  If to the Company, to:      Leslie Controls, Inc.
                                      c/o Watts Industries, Inc.
                                      815 Chestnut Street
                                      North Andover, MA  01845
                                      (Attention:  William C. McCartney,
                                      Corporate Controller); and

          with a copy to:             John R. LeClaire, P.C.
                                      Goodwin, Procter & Hoar
                                      Exchange Place
                                      Boston, MA  02109

     (3)  If to the Trustee, to:      The First National Bank of Boston
                                      150 Royall Street, Mail Stop 45-02-15
                                      Canton, MA 02021
                                      Attention:  Corporate Trust Division

     (4)  If to the Credit Facility
          Issuer, to:                 First Union National Bank of North
                                      Carolina
                                      301 South College Street
                                      T-7
                                      Charlotte, NC 28288
                                      Attention: International Operations
                                      CORP-10.

and if sent by telegraph, telegram or telecopy, addressed as above, at the time
and date appearing on the report of delivery. Notwithstanding the foregoing, the
delivery of Bonds or Optional Tender Notices to the Trustee

<PAGE>

or Tender Agent if made by telegraph, telegram or telecopy, must be made by
delivery of the hard copy by overnight delivery on the date of delivery of such
telegraph, telegram or telecopy and shall not be effective until actual receipt
thereof by the Trustee or the Tender Agent, as the case may be.

     (b)  A duplicate copy of each notice or other communication given hereunder
by either the Issuer or Trustee to the other shall also be given to the Company.

     (c)  All documents received by the Trustee under the provisions of this
Indenture, or photographic copies thereof, shall be retained in its possession
until this Indenture shall be released in accordance with the provisions of the
Indenture, subject at all reasonable times to the inspection of the Issuer and
the Bondholders and the agents and representatives thereof.

     (d)  The Issuer, the Trustee, the Company and the Credit Facility Issuer
may, by notice given hereunder, designate any further or different addresses to
which subsequent notices, certificates or other communications shall be sent.

     Section 1503.  Trustee as the Paying Agent and the Bond Registrar.

     The Trustee is hereby designated and agrees to act as payment agent and
Bond Registrar for and in respect of the Bonds and any amounts received under
the Credit Facility or the Loan Agreement.

     Section 1504.  Rights Under this Indenture.

     Except as herein otherwise expressly provided, nothing in this Indenture
expressed or implied is intended or shall be construed to confer upon any
person, firm or corporation other than the parties hereto, the Company and the
owners of the Bonds issued under and secured by this Indenture, any rights under
this Indenture or any provisions hereof, this Indenture and all its provisions
being intended to be and being for the sole and exclusive benefit of the parties
hereto, the Company and the owners from time to time of the Bonds issued
hereunder.

     Section 1505.  Form of Certificates and Opinions.

     Except as otherwise provided in this Indenture, any request, notice,
certificate or other instrument from the Issuer or the Company to the Trustee
shall be deemed to have been signed by the proper party or parties if signed by
the Issuer Representative or the Company Representative, respectively, and the
Trustee may accept and rely upon a certificate signed by the Issuer
Representative as to any action taken by the Issuer and by the Company
Representative as to any action taken by the Company.

     Section 1506.  Severability.

     In case any one or more of the provisions of this Indenture or of the Bonds
issued hereunder shall for any reason be held to be illegal or invalid, such
illegality or invalidity shall not affect any other provisions of this Indenture
or of the bonds, but this Indenture and the Bonds shall be construed and
enforced as if such illegal or invalid provision had not been contained therein.
In case any covenant,

<PAGE>

stipulation, obligation or agreement of the Issuer contained in this Indenture
or in the Bonds shall for any reason be held to be in violation of law, then
such covenant, stipulation, obligation or agreement of the Issuer shall be
enforced to the full extent permitted by law.

     Section 1507.  Covenants of the Issuer Not Covenants of Officials
                    Individually.

     All covenants, stipulations, obligations and agreements of the Issuer
contained in this Indenture shall be deemed to be covenants, stipulations,
obligations and agreements of the Issuer to the full extent permitted by the
Constitution and laws of the State. No covenant, stipulation, obligation or
agreement contained herein shall be deemed to be a covenant, stipulation,
obligation or agreement of any present or future officer, member, agent or
employee of the Issuer in his individual capacity, and no officer of the Issuer
executing the Bonds shall be liable personally on the Bonds or be subject to any
personal liability or accountability by reason of the issuance thereof. No
officer, agent or employee of the Issuer shall incur any personal liability in
acting or proceeding or in not acting or not proceeding in accordance with the
terms of this Indenture.

     Section 1508.  State Law Governs.

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

     Section 1509.  Payments Due on Days Other Than Business Days.

     In any case where the date of maturity of interest on or principal of the
Bonds or the date fixed for redemption of the Bonds shall be in the city of
payment a day other than a Business Day, then payment of interest or principal
need not be made on such date but may be made on the next succeeding Business
Day with the same force and effect as if made on the date of maturity or the
date fixed for redemption, provided that interest shall accrue for the period of
any such extension.

<PAGE>

     Section 1510.  Execution in Counterparts.

     This Indenture may be executed in multiple counterparts, each of which
shall be regarded for all purposes as an original, and such counterparts shall
constitute but one and the same instrument, and no one counterpart of which need
be executed by all parties.

     IN WITNESS WHEREOF, the HILLSBOROUGH COUNTY INDUSTRIAL DEVELOPMENT
AUTHORITY has caused this Indenture to be executed in its name and on its behalf
by the Chairman or Vice Chairman of the Issuer and to the same to be attested by
the Secretary or Assistant Secretary of the Issuer; and the Trustee has caused
this Indenture to be executed in its name and on its behalf by an authorized
officer and the same to be attested by a responsible officer, all as of the date
and year first above written.

                                           HILLSBOROUGH COUNTY INDUSTRIAL
                                           DEVELOPMENT AUTHORITY


                                           By:  (Signature)
                                              Chairman,


Attest:


By:  (Signature)
   Secretary,

                                           THE FIRST NATIONAL BANK OF BOSTON, as
                                              Trustee


                                           By:  (Signature)
                                             Its:  Account Administrator


Attest:


By:   (Signature)
   Assistant Cashier

</TEXT>
</DOCUMENT>
