U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
            
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998

Commission file number 0-5460
                  ____________________________________________


STOCKER & YALE, INC.
(Name of small business issuer in its charter)


													
	Massachusetts  04-2114473
(State or other jurisdiction of incorporation or organization)      
(I.R.S. employer identification no.)

32 Hampshire Road
     Salem, New Hampshire 03079
(Address of principal executive offices)           (Zip Code)

(603) 893-8778
(Issuer's telephone number)

                                                                   
________________________________________________________________________
Check whether the issuer (1) filed all reports required to be filed by 
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for 
such shorter period that the registrant was required to file such 
reports), and 
(2) has been subject to such filing requirements for the past 90 days.    
___X___Yes   ________No

As of August 18, 1998 there were 3,364,340 shares of the issuer's common 
stock outstanding.

Transitional Small Business Disclosure Format (check one):  _______Yes     
____X___No


Page 1 of 9


<PAGE>




PART I FINANCIAL STATEMENTS
    Item 1.1  CONSOLIDATED BALANCE SHEETS
STOCKER & YALE, INC.
<TABLE>

<S>                                  <C>               <C>           
Assets    	                				June 30, 1998  December 31,1997
							                         (unaudited)        (audited)

Current assets:				

Cash	                       						$  176,021  		$ 73,520
Accounts receivable				            2,262,624		 1,860,624
Prepaid taxes					                   491,479		   579,332
Inventory						                    6,134,765		 4,957,095
Prepaid expenses				                 321,289		   117,354

Total current assets			            9,386,178 	 7,587,925

Property, plant and 			            4,258,868 	 3,857,504
equipment, net

Note receivable			              	        -  		 1,000,000

Goodwill, net of 				              2,602,272		 8,453,000
accumulated amortization

Other intangible assets			         3,038,248			    -

Other assets					                     95,175		    92,322

Total assets				                 $19,380,741 $20,990,751



Liabilities and Stockholders' Investment

Current liabilities:
 
Current portion of long-term    	$   215,912		$  443,334
debt
Short term debt				                  750,000		         -
Accounts payable				               2,986,313		 1,858,936
Accrued expenses				                 872,430		   541,668
Withheld taxes					                   36,248		         -
Accrued taxes					                    10,573		         -
Current lease obligations		          197,061		     89,771

Total current liabilities		        5,068,537		  2,933,709

Long-term debt					                5,222,253		  3,809,658

Long-term lease obligations 	        691,106		    223,575

Other long-term liabilities		        564,688		    564,688

Subordinated notes				             1,350,000		  1,350,000

Deferred income taxes			           1,858,270		    876,904

Stockholders' investment
Common stock, par value $0.001
Authorized--10,000,000
Issued and outstanding-
3,364,430 shares at June 30,
1998 and 2,567,894 shares at 
December 31, 1997				                  3,364			     2,568

Cumulative translation 
adjustment					                      (26,028)			     -

Paid in capital				               13,688,913		 10,822,705

Retained earnings/
(accumulated deficit)    		       (9,040,362)		   406,944

Total stockholders' investment	    4,625,887		 11,232,217

Total liabilities and 
stockholders' investment		       $19,380,741  $20,990,751



</TABLE>
<PAGE>

PART I FINANCIAL STATEMENTS
Item 1.2     CONSOLIDATED STATEMENTS OF OPERATIONS
STOCKER & YALE, INC.
(UNAUDITED)
<TABLE>

<S>                   <C>                       <C>        	            
	 
                            Three Months Ended	     Six Months Ended
                            June 30,	              June 30, 
                        1998          1997        1998        1997

Net sales	          $3,057,442   $2,804,280    $5,492,783  $5,537,942
Cost of sales        1,899,813    1,614,438     3,549,839   3,256,883
Gross profit         1,157,629    1,189,842     1,942,944   2,281,059

Selling expenses       419,297      410,447       765,809     839,357

General and admin-
istrative expenses     959,304      467,458     1,513,031     852,243

Research and
development            196,746      157,241       386,491     331,525

Goodwill Impairment  7,365,662           -      7,365,662           -

Acquired in process
research and 
development          1,087,914            -     1,087,914           -


Operating income    (8,871,294)     154,696    (9,175,963)    257,934
/(loss)
Interest expense      (136,080)     (86,871)     (250,752)  (164,304)

Income/(loss) before
income taxes        (9,007,374)      67,825    (9,426,715)    93,630

Income tax expense     160,591       54,500        20,591     92,000

Net income/(loss)   (9,167,965)      13,325    (9,447,306)     1,630

Per share information 
(1): Basic net income
/(loss) per common
share                 $ (3.06)       $0.01       $ (3.39)     $0.00

Weighted-average
number of common shares 
outstanding	      2,997,812    2,567,894     2,784,790   2,567,894

(2): Diluted net income
/(loss) per common
and dilutive potential
common shares 
outstanding           $ (3.06)       $0.01       $ (3.39)      $0.00


Weighted-average number
of common and dilutive
potential common shares
outstanding          2,997,812    2,567,894     2,784,790   2,567,894




</TABLE>
<PAGE>

PART I  FINANCIAL STATEMENTS
Item 1.3       CONSOLIDATED STATEMENTS OF CASH FLOWS
STOCKER & YALE, INC.

<TABLE>
<S>                                          <C>        <C>
                                             Six Months Ended
                                                 June 30
1998	1997

Cash flows from operating activities:
Net income/(loss)                        (9,447,306)      1,630
Adjustments to reconcile net cash
used in operating activities
Acquired in process research and
development                               1,087,914          -
Goodwill impairment                       7,365,662          -
Depreciation and amortization               372,499     278,151
Deferred income taxes                      (272,666)   (100,000)
Other changes in assets and 
liabilities-
Accounts receivable, net                    272,244    (462,899)
Inventories                                (374,058)   (907,371)
Prepaid expenses                           (195,555)   (133,459)
Prepaid taxes                               212,758          -
Accounts payable                            630,510      40,675
Accrued expenses                            207,901     (66,060)
Other assets                                      -     (52,166)
Accrued and refundable taxes                 10,573          -
Net cash used in 
operating activities                       (129,524)  (1,401,499)

Cash flows from investing activities:
Purchases of property, plant and 
Equipment                                  (388,099)    (323,602)
Acquisition of Lasiris                   (3,815,234)     ______-
Net cash used in investing activities    (4,203,333)    (323,602)

Cash flows from financing activities:
Line of credit advances                     522,000    1,307,053
Danvers Savings Bank financing              750,000            -
Toronto Dominion financing                  798,675            -
Proceeds equipment lease financing          503,365      215,450
Payments of bank debt                      (247,491)    (855,457)
Issuance of common stock	                    10,121            -
Private placement of common stock         1,124,716            -
Receipt of Beverly Hospital
note receivable                           1,000,000            -
Net cash provided by financing            4,461,386      667,046
activities
Effect of exchange rate on changes 
in cash                                     (26,028)           -
Net increase/(decrease) in cash and  
cash equivalents                            102,501   (1,058,055)

Cash and cash equivalents, beginning
of period                                    73,520    1,244,418

Cash and cash equivalents, end of period    176,021      186,363

Supplemental disclosure of non-cash
activities           

Cash paid for Interest                      254,144       184,749

Cash paid for Taxes                           5,335        84,200
    
In connection with the acquisition of Lasiris, the Company issued 
444,146 shares of common stock to the selling shareholders of 
Lasiris. 



</TABLE>
<PAGE>




<PAGE>

 

PART 1. FINANCIAL STATEMENTS

Notes to Financial Statements

Note 1. 
General 

The interim consolidated financial statements presented 
have been prepared by Stocker & Yale, Inc. (the "Company") 
without audit and, in the opinion of the management, 
reflect all adjustments of a normal recurring nature 
necessary for a fair statement of (a) the results of 
operations for the three month and six month periods ended 
June 30,1998 and June 30,1997 (b) the financial position at 
June 30,1998 and (c) the cash flows for the six month 
periods ended June 30,1998 and June 30,1997. Interim 
results are not necessarily indicative of results for a 
full year.  

The consolidated balance sheet presented as of December 
31,1997 has been derived from the consolidated financial 
statements that have been audited by the Company's 
independent public accountants. The consolidated financial 
statements and notes are condensed as permitted by Form 10-
QSB and do not contain certain information included in the 
annual financial statements and notes of the Company.  The 
consolidated financial statements and notes included herein 
should be read in conjunction with the financial statements 
and notes included in the Company's Annual Report on Form 
10-KSB.

Note 2. Acquisition of Lasiris and Purchase Price 
Allocation 

Overview
On May 13, 1998, Stocker & Yale, Inc. (the "Company") 
acquired Lasiris, Inc. ("Lasiris"),  a Canadian 
manufacturer of industrial lasers for the machine vision 
and industrial inspection industries.  The Company acquired 
Lasiris through Lasiris Holdings, Inc., a newly formed New 
Brunswick corporation and a subsidiary of the Company 
("LHI").  Lasiris will be operated as a wholly-owned 
Canadian subsidiary.

In connection with the acquisition, the stockholders of 
Lasiris received an aggregate of approximately $3.2 million 
in cash and 444,146 shares of LHI's capital stock which are 
exchangeable for shares of the Company's common stock on a 
one for one basis.  The Company financed the cash portion 
of the consideration through (i) a private placement of 
350,000 shares of the Company's common stock at a price of 
$3.50 per share; (ii) a loan in the amount of $750,000 from 
a bank which is secured by a second mortgage interest in 
the Company's headquarters; (iii) a loan of approximately 
$800,000 pursuant to a credit agreement between the Toronto 
Dominion Bank and Lasiris; and (iv) cash in the amount of  
$950,000 received pursuant to the prepayment of a note 
receivable due to the Company.

Allocation of Purchase Price 

The acquisition was accounted for as a purchase, and 
accordingly, the initial purchase price and acquisition 
costs aggregating approximately $5.5 million have 
preliminarily been allocated to the assets acquired, which 
consist of approximately $4.0 million in identifiable 
assets, approximately $0.4 million in goodwill, and 
approximately $1.1 million of in-process research and 
development which was charged to operations in the second 
quarter of 1998.    The purchase price allocations 
represent the fair values determined by an independent 
appraisal. 

The following outlines the allocation of purchase price for 
the acquisition of Lasiris. 
<TABLE>
<S>                                            <C>
Purchased in-process research and
development             	                     $1,087,914   
Developed Patented Technology     	            2,364,122
Trademarks/Tradenames			                         470,732 
Assembled workforce			 	                         240,596 
Goodwill and Deferred Taxes		                  1,669,530                                                 
                                               ---------
	                                              5,832,894
Net book value of assets acquired                944,686	
			                                            ---------                      
								                                       6,777,580
Less deferred taxes		                         (1,230,180)
                                              ----------                  
                                               5,547,400
</TABLE>

Further information about the acquisition of Lasiris may be 
found in the Company's Form 8-K, which was filed with the 
Securities and Exchange Commission (the "SEC") on May 27, 
1998., and amended on Form 8-K/A, filed with the SEC on 
July 27, 1998.

Note 3.  Proforma Financial Information
The following proforma financial information assumes that 
the acquisition of Lasiris took place at the beginning of 
each respective period, including the related expense 
adjustments.
<TABLE>
<S>                        <C>               <C>	
				       Six month periods ended June 30,	
					  	 1998		   1997
Net Revenues              $ 7,063,051      $ 7,351,748   
Net Income                 (9,571,952)        (156,674) 
Earnings per Share            $ (3.08)         $ (0.05)  
Average shares 
outstanding        	        3,108,697        3,012,041
</TABLE>

Note 4.  Write Down of Goodwill

In accordance with the provisions of Statement of Financial 
Standards (SFAS) No. 121 - "Accounting for the Impairment 
of Long-Lived Assets and for Long-Lived Assets to be 
Disposed Of",  the Company periodically assesses the 
realizability of its long-lived assets.  In addition to 
this periodic review, the Company is obliged to initiate 
such an assessment in the event of a change in the 
Company's assets or in the valuation of its assets.  Based 
on its most recent assessment, the Company has recorded a 
non-recurring, non-cash charge of $7.4 million during the 
three months ended June 30, 1998, to write down the carrying 
value of its goodwill to its estimated fair value.  

On July 14, 1998, the Company announced that it had signed 
a non-binding letter of intent to sell its Stilson Division 
("Stilson").  As of June 30, 1998 the carrying value of the 
Stilson's net assets was $2.0 million plus a portion of the 
goodwill recorded in 1989 when Stocker & Yale (the 
"Company"), including Stilson, was acquired.  This proposed 
sale of Stilson required the Company to assess the 
realizability of goodwill.  There was no allocation of 
goodwill to the individual divisions of the Company at the 
time of the acquisition in 1989.  Accordingly, management 
of the Company has evaluated the cash flow generated by 
Stilson for the five years preceding and the five years 
following the acquisition relative to the cash flow of the 
entire Company.  Management has also reviewed their 
expectations, at the time of the 1989 acquisition, of the 
future cash flow of Stilson.  Based on this assessment 
management has allocated approximately 60% of the goodwill 
resulting from the 1989 acquisition to Stilson, $4.9 
million net of amortization at June 30, 1998.  Therefore 
the net assets of Stilson at June 30, 1998 inclusive of 
goodwill was approximately $6.9 million.  The purchase 
price for the net assets of Stilson set forth in the letter of 
intent is $3.0 million.  Accordingly, at June 30, 1998 the 
Company has written down the carrying value of the net 
assets of Stilson to $3.0 million and recorded a charge of 
$3.9 million which is included in the goodwill impairment 
in the three-month period ended June 30, 1998.

After allocating the portion of the goodwill associated 
with Stilson, the Company assessed the realizability of the 
remaining goodwill from the 1989 acquisition, $3.5 million, 
net of amortization as of June 30, 1998. Based upon the 
changes in the Company since 1989 and the recent history of 
losses, the Company has concluded that the realizability of 
the remaining goodwill is uncertain and that the carrying 
value should be written down to zero.  As a result of this 
assessment the Company has recorded a charge of $3.5 
million which is included in the goodwill impairment in the 
three months ended June 30, 1998 to write down the remaining 
goodwill from the 1989 acquisition not allocated to 
Stilson.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND OPERATING RESULTS

This Quarterly Report on Form 10-QSB contains forward-
looking statements within the meaning of Section 27A of the 
Securities Act of 1933 and Section 21E of the Securities 
Exchange Act of 1934.  The Company's actual results could 
differ materially from those set forth in the forward-
looking statements.

Results of Operations

The following discussion should be read in conjunction with 
the attached consolidated financial statements and notes 
thereto and with the Company's audited financial statements 
and notes thereto for the fiscal year ended December 31, 
1997

Three-month periods ended June 30, 1998 and 1997

On May 13, 1998, the Company completed its purchase of all 
of the outstanding stock of Lasiris, Inc., a Canadian 
manufacturer of industrial lasers for the machine vision 
and industrial inspection industries.  The Company acquired 
Lasiris through Lasiris Holdings, Inc., a newly formed New 
Brunswick corporation and a subsidiary of the Company 
("LHI").  The acquisition was accounted for as a purchase, 
and the purchase price was allocated pursuant to an 
independent appraisal.   The three month results include 
the effects of increased goodwill amortization totaling 
$20,196, increased depreciation of acquired assets totaling 
$37,202, as well as the results of Lasiris operations for 
the period since the acquisition date. In addition, 
$1,087,914 of in-process research & development projects of 
Lasiris was charged against income.  This portion of the 
assets acquired were identified as projects that had not 
yet reached technological feasibility and that, until 
completion of the development, have no alternative future 
use. 

In connection with the acquisition, the stockholders of 
Lasiris received an aggregate of approximately $3.2 million 
in cash and 444,146 shares of LHI's capital stock which are 
exchangeable for shares of the Company's common stock on a 
one for one basis.  The Company financed the cash portion 
of the consideration through (i) a private placement of 
350,000 shares of the Company's common stock at a price of 
$3.50 per share; (ii) a loan in the amount of $750,000 from 
a bank which is secured by a second mortgage interest in 
the Company's headquarters; (iii) a loan of approximately 
$800,000 pursuant to a credit agreement with the Toronto 
Dominion Bank and Lasiris; and (iv) cash received of 
$950,000 pursuant to the prepayment of a note receivable 
due to the Company.  The acquisition was accounted for as a 
purchase, and accordingly, the initial purchase price and 
acquisition costs aggregating approximately $5.5 million 
have preliminarily been allocated to the assets acquired, 
which consist of approximately $4.0 million in identifiable 
assets, approximately $0.4 million in goodwill, and 
approximately $1.1 million of in-process research and 
development which was charged to operations in the second 
quarter of 1998.  The purchase price allocations represent 
the fair values determined by an independent appraisal.  

The following outlines the allocation of purchase price for 
the acquisition of Lasiris. 
<TABLE>
<S>                                        <C>
Purchased in-process research and
development				                          $	1,087,914
Developed Patented Technology             	2,364,122 
Trademarks/Tradenames				                    470,732  
Assembled workforce			                       240,596
Goodwill and Deferred Taxes                1,669,530
                                           ---------     	
						                                     5,832,894
Net book value of assets acquired            944,686		
		                                         ---------                         
								                                   6,777,580
Less deferred taxes		                     (1,230,180)	
                                          -----------
							                                    5,547,400
</TABLE>

Consolidated net revenues increased 9% from $2,804,280 in 
the second quarter of 1997 to $3,057,442 in the second 
quarter of 1998.  Despite significantly reduced sales to 
Southeast Asia, Lighting Products revenues increased 72% 
from $1,003,846 to $1,726,119 due to the addition of 
$676,995 in laser lighting revenues contributed by Lasiris 
and $123,214 in microscope lighting revenues contributed by 
the Singapore subsidiary.  Lighting Products revenue 
further benefited from fiber optic lighting sales which 
increased from $81,762 to $187,240.  Sales of the Company's 
Military Products decreased overall from $460,923 in the 
second quarter of 1997 to $109,111 in the second quarter of 
1998.  Civilian sales of Military Products decreased 
$148,987 from $236,693 to $87,706 reflecting the absence in 
the current year of a large contract with a direct mail 
marketing firm which favorably impacted 1997, and also 
reflecting the closing in December, 1997 of the Company's 
Hong Kong subsidiary which sold such products.  Sales of 
Military Products to the U.S. Government decreased $112,531 
from $133,936 in the second quarter 1997 to $21,405 in the 
second quarter 1998, as peacetime demand for military 
supplies continues to diminish.   Sales of Machine Tool and 
Accessories decreased from $1,000,193 in the second quarter 
of 1997, to $833,739 in the second quarter of 1998, due to 
a slowdown in distributor orders. Sales of Printer and 
Recorder Products increased from $339,318 in the second 
quarter of 1997, to $388,473 in the second quarter of 1998.
 
Gross profit decreased $32,213 from $1,189,842 in the 
second quarter of 1997 to $1,157,629 in the second quarter 
of 1998, as personnel costs increased and the Company 
experienced reduced revenues at the Company's Stilson and 
Salem Divisions.  Selling Expenses increased $28,850, with 
Lasiris selling expenses of $101,252 offsetting $72,402 in 
reduced costs of sales personnel in other divisions.   
Research and Development Expenses increased by $39,505 
primarily reflecting the amount of such expenses at 
Lasiris.  General and Administrative costs increased 
$491,844 from $467,458 in the second quarter of 1997 to 
$959,304 in the second quarter of 1998.  $321,335 of this 
increase is attributable to expenses reported by the 
Company's new Singapore and Lasiris subsidiaries and 
associated corporate expenses, with the balance due largely 
to increased personnel costs, legal expenses and bank 
charges.  Interest expense increased $49,209 as a result of 
the Company's increased indebtedness.

In accordance with the provisions of Statement of Financial 
Standards (SFAS) No. 121 - "Accounting for the Impairment 
of Long-Lived Assets and for Long-Lived Assets to be 
Disposed Of",  the Company periodically assesses the 
realizability of its long-lived assets.  In addition to 
this periodic review, the Company is obliged to initiate 
such an assessment in the event of a change in the 
Company's assets or in the valuation of its assets.  Based 
on its most recent assessment, the Company has recorded a 
non-recurring, non-cash charge of $7.4 million during the 
three months ended June 30, 1998, to write down the carrying 
value of its goodwill to its estimated fair value.  

On July 14, 1998, the Company announced that it had signed 
a non-binding letter of intent to sell its Stilson Division 
("Stilson").  As of June 30, 1998 the carrying value of the 
Stilson's net assets was $2.0 million plus a portion of the 
goodwill recorded in 1989 when Stocker & Yale (the 
Company), including Stilson, was acquired.  This proposed 
sale of Stilson required the Company to assess the 
realizability of goodwill.  There was no allocation of 
goodwill to the individual divisions of the Company at the 
time of the acquisition in 1989.  Accordingly, management 
of the Company has evaluated the cash flow generated by 
Stilson for the five years preceding and the five years 
following the acquisition relative to the cash flow of the 
entire Company.  Management has also reviewed their 
expectations, at the time of the 1989 acquisition, of the 
future cash flow of Stilson.  Based on this assessment 
management has allocated approximately 60% of the goodwill 
resulting from the 1989 acquisition to Stilson, $4.9 
million net of amortization at June 30, 1998.  Therefore 
the net assets of Stilson at June 30, 1998 inclusive of 
goodwill was approximately $6.9 million.  The purchase 
price for the net assets of Stilson set forth in the letter of 
intent is $3.0 million.  Accordingly, at June 30, 1998 the 
Company has written down the carrying value of the net 
assets of Stilson to $3.0 million and recorded a charge of 
$3.9 million which is included in the goodwill impairment 
in the three-month period ended June 30, 1998.

After allocating the portion of the goodwill associated 
with Stilson, the Company assessed the realizability of the 
remaining goodwill from the 1989 acquisition, $3.5 million, 
net of amortization as of June 30, 1998. Based upon the 
changes in the Company since 1989 and the recent history of 
losses, the Company has concluded that the realizability of 
the remaining goodwill is uncertain and that the carrying 
value should be written down to zero.  As a result of this 
assessment the Company has recorded a charge of $3.5 
million which is included in the goodwill impairment in the 
three months ended June 30, 1998 to write down the remaining 
goodwill from the 1989 acquisition not allocated to 
Stilson.


Six-month Periods Ended June 30, 1998 and 1997

On May 13, 1998, the Company completed its purchase of all 
of the outstanding stock of Lasiris, Inc., a Canadian 
manufacturer of industrial lasers for the machine vision 
and industrial inspection industries.  The Company acquired 
Lasiris through Lasiris Holdings, Inc., a newly formed New
Brunswick corporation and a subsidiary of the Company
("LHI").   The acquisition was accounted for as a purchase, 
and the purchase price was allocated pursuant to an independent 
appraisal.   The six month results include the effects of 
increased goodwill amortization totaling $20,196, increased 
depreciation of acquired assets totaling $37,202, as well as 
the results of Lasiris' operations for the period since the 
acquisition date. In addition, $1,087,914 of in-process research & 
development projects of Lasiris was charged against income.  
This portion of the assets acquired were identified as 
projects that had not yet reached technological feasibility 
and that, until completion of the development, have no 
alternative future use. 

Consolidated net revenues decreased from $5,537,942 in the 
second quarter of 1997 to $5,492,783 in the second quarter 
of 1998.  Despite significantly reduced sales to Southeast 
Asia, Lighting Products revenues increased 38% from 
$1,966,070 to $2,714,491 due to the addition of $676,995 in 
laser lighting revenues contributed by Lasiris and $123,214 
in microscope lighting revenues contributed by the 
Singapore subsidiary.  Lighting Products revenue further 
benefited from fiber optic lighting sales which increased 
from $129,995 to 371,950.  Sales of the Company's Military 
Products decreased overall from $832,564 in 1997 to 
$206,681 in 1998.  Civilian sales of Military products 
decreased $511,627 from $676,067 in second quarter 1997 to 
$164,440 in the second quarter 1998, reflecting the absence 
in the current year of a large contract with a direct mail 
marketing firm which favorably impacted 1997, and also 
reflecting the closing in December, 1997 of the Company's 
Hong Kong subsidiary which sold such products.  Sales of 
Military Products to the U.S. government decreased $114,256 
from $156,497 in the second quarter 1997 to $42,241 in the 
second quarter 1998, as peacetime demand for military 
supplies continues to diminish.   Sales of Machine Tool and 
Accessories decreased from $1,996,717 in the second quarter 
of 1997 to $1,822,307 in the second quarter of 1998 due to 
a slowdown in distributor orders. Sales of Printer and 
Recorder Products increased from $742,591 in the second 
quarter of 1997 to $749,304 in the second quarter of 1998.

Gross profit decreased $338,115 from $2,281,059 in the 
second quarter of 1997 to $1,942,944 in the second quarter 
of 1998, as personnel costs increased against reduced 
revenues at the Company's Stilson and Salem Divisions.  
Selling Expenses decreased $73,548, as a result of reduced 
selling costs at the Salem and Stilson Divisions, a portion 
of which reduction was offset by the addition of Lasiris 
selling expenses totaling $101,252.  Research and 
Development Expenses increased $54,966 of which $37,216 
resulted from the addition of such expenses at Lasiris.  
General and Administrative costs increased $660,788 from 
$852,243 in the second quarter of 1997 to $1,513,031 in the 
second quarter of 1998.  $321,335 of this increase is 
attributable to expenses reported by the Company's new 
Singapore and Lasiris subsidiaries and associated corporate 
expenses, with the balance due largely to increased 
personnel costs of $199,194, increased legal and audit 
expenses of $143,128, a $50,000 discount granted for the 
prepayment of a note due to the Company, and increased bank 
charges of $42,495.   Interest expense increased $86,448 as 
a result of the Company's increased indebtedness.

Liquidity and Capital Resources

The Company finances its operations primarily through third 
party credit facilities and cash from operations.  Net cash 
used in operations was ($129,524) for the six months ended 
June 30, 1998 and ($1,401,499) for the six months ended 
June 30, 1997.

The Company's primary third party financing relationship is 
with Fleet National Bank of Massachusetts, N.A. (the 
"Bank").  The initial Credit Agreement between the Company 
and the Bank, dated March 6, 1995 (the "Credit Agreement"), 
provided for a Revolving Line of Credit Loan (the 
"Revolving Loan") and a Long Term Loan (the "Term Loan") 
both due March 31, 1998.  The Short Term Loan was paid as 
agreed in August 1995. As of April 1, 1998, the Company and 
the Bank entered into an agreement to extend the maturity 
dates of its Revolving Loan and Term, Loan to January 2, 
1999.  The Revolving Loan and the Long Term Loan bear 
interest at the Bank's base rate plus 1% through June 30, 
1998 and at the Bank's base rate plus 2% from July 1, 1998 
through the maturity date.  At June 30, 1998 there was a 
total of $2,884,454 borrowed under the Credit Agreement, of 
which $1,789,029 pertained to the Revolving Loan.  The 
available credit on the revolving loan as of June 30, 1998 
was $292,156.65.  The Company is exploring financing 
alternatives and intends to refinance before maturity.

Under the terms of the Credit Agreement, the Company is 
required to comply with a quarterly minimum net income 
covenant.  As of June 30, 1998 the Company was not in 
compliance with this covenant, and on July 21, 1998 the 
Bank granted a waiver of the net income covenant for the 
quarter ended June 30, 1998. 

In connection with the Lasiris acquisition, the 
stockholders of Lasiris received 444,146 shares of capital 
stock of Lasiris Holdings, Inc., a newly formed New 
Brunswick corporation and a subsidiary of the Company, 
which are exchangeable for shares of the Company's common 
stock on a one for one basis and cash in an aggregate 
amount of approximately 3.3 million.  The aggregate value 
of the shares was deemed to be $1,732,167 as of May 13, 
1998.  The Company financed a portion of the cash 
consideration paid for Lasiris through a private placement 
of 350,000 shares of the Company's common stock at a price 
of $3.50 per share, which generated net proceeds to the 
Company of $1,124,716 after offering expenses of $100,284.

On May 13, 1998, the Company entered into a $750,000 second 
mortgage loan with Danvers Savings Bank (the "Danvers 
Loan").  This loan bears interest at a rate of 11%, 
requires monthly payments of interest only, and matures on 
May 13, 1999.  The Danvers Loan generated net proceeds 
after expenses of  $731,196, which were used to finance a 
portion of the Lasiris acquisition. 

Also on May 13, 1998, Lasiris entered into a credit 
agreement with Toronto Dominion Bank ("TD Bank").  The 
credit agreement provides for (i) a $1,000,000 CDN 
Operating Line of Credit (the "TD Line of Credit"); (ii) a 
$1,000,000 CDN Term Loan (the "TD 4 Year Term Loan"); (iii) 
a $83,333 CDN Term Loan (the "TD Two Year Term Loan"); and 
(iv) a $4,461 CDN Letter of Guarantee of (the "Letter of 
Guarantee").   The TD Line of Credit bears interest at 1% 
over the TD Bank prime rate, requires monthly payments of 
interest only, and is payable on demand.  As of June 30, 
1998, there were no borrowings on the TD Line of Credit.  
The TD 4 Year Term Loan bears interest at 2% over the TD 
Bank prime rate, matures on May 13, 2002, and requires 
monthly principal payments of $20,833CDN (approximately 
$14,500US) plus interest.  As of June 30, 1998, the 
outstanding balance on the TD 4-Year Term Loan was 
$979,966CDN ($667,650 US).   The TD Two Year Term Loan 
bears interest at 2% over the TD Bank prime rate, matures 
on May 13, 2000, and requires monthly principal payments of 
$4,167 CDN (approximately $2,900US) plus interest.  As of 
June 30, 1998, the outstanding balance on the TD 2-Year 
Term Loan was $79,167CDN ($53,936 US).
 
On May 7, 1998, Beverly Hospital Corporation prepaid its 
$1,000,000 Note Receivable due to the Company, less a 
$50,000 discount for early payment.  The proceeds were used 
to finance a portion of the Lasiris acquisition.  

On May 20, 1997, the Company entered into a one-year 
equipment line of credit agreement with Granite State Bank 
to finance capital equipment related to new product 
development.  Under the terms of this agreement, advances 
under the line will be converted quarterly into a series of 
five year notes, not to exceed $500,000 in the aggregate, 
which will bear interest at the prime rate plus 0.75%.  As 
of June 30, 1998, the Company had outstanding debt of 
$346,929 under this line of credit.  
 
Accounts payable increased $1,110,010 from December 31, 
1997 to June 30, 1998 of which $698,902 results from the 
Lasiris acquisition and the balance is attributable to 
increased payment cycles.  Company expenditures for capital 
equipment were $388,099 in the first six months of 1998 as 
compared to $323,602 in the first six months of 1997.  The 
majority of the 1998 expenditures related to the purchase 
of new CNC machinery at the Company's Stilson Division.

On July 14, 1998, the Company announced that it had signed 
a non-binding letter of intent to sell its Stilson Division 
to De-Sta-Co Industries.  Subject to the execution of a 
definitive purchase and sale agreement and a due diligence 
review of the Stilson Division, De-Sta-Co will acquire the 
assets of Stilson for $3 million cash, assumption of 
approximately $1 million of operating liabilities and semi-
annual payments of 2% of future Stilson product line 
revenues for three years.  Although the parties anticipate 
consummating the sale on or before September 30, 1998, 
there can be no assurance as to when such a transaction 
would close, if at all, or as to the definitive terms of 
such a transaction.

The Company contemplates that it may seek to raise 
additional capital by the issuance of equity the proceeds 
of which may be used among other things in connection with 
refinancing its senior credit facility.  The Company's 
existing Credit Agreement with the Bank will expire on 
January 1, 1999 by its terms.  While the Company is 
currently exploring establishing a replacement credit 
facility with various commercial lenders, the Company can 
give no assurance as to whether such a replacement credit 
facility will be established or as to the terms of such 
credit facility.  Assuming the continued availability of 
the Company's Credit Agreement with the Bank or a 
replacement credit facility, the Company believes that its 
available financial resources are adequate to meet its 
foreseeable working capital, debt service and capital 
expenditure requirements. 

Year 2000 Issues

The Company has undertaken a plan to address the potential 
impact to its business of "year 2000 issues" (i.e., issues 
that may arise as a result of computer programs that use 
only the last two, rather than all four, digits of the 
year).  The plan addresses Internal Matters, which are 
under  the Company's operation and over which the Company 
exercises some control, and External Matters, which are 
outside the Company's control and influence. The Company 
has elected first to address Internal Matters, in the 
belief that most other companies and institutions are 
similarly working to resolve their own mission-critical 
issues and that as a result an early assessment of External 
Matters would be premature.  

The Company has completed a review of its products and 
product components, its information systems, and its 
ancillary systems (such as test equipment, communication 
equipment, and security systems) in order to identify areas 
of exposure to year 2000 issues. The review concluded that 
the Company's products and product components are 
substantially free from year 2000 risks.   The Company's 
Engineering department is working with the suppliers of 
several product components to ascertain whether identified 
potential risks have been addressed and when they will be 
compliant. 
  
The Company's information systems rely upon commercial 
computer software provided by independent software vendors.  
The Company's primary information system software, which 
consists of computer operating system, an integrated 
manufacturing system and a payroll package, was upgraded in 
1997 so that it would function with the Company's upgraded 
computer system hardware.  The cost for the new software 
was approximately $80,000.  The providers of these primary 
information system software packages have represented that 
these systems are fully Year 2000 compliant.   The Company 
also utilizes a number of personal computers which are 
operated independently (i.e.,not linked by a network).  
These computers use a wide variety of different software 
packages and are of various ages.  The Company has compiled 
an inventory of these personal computers, their hardware, 
as well as their operating systems and installed 
application software packages.   This information will be 
assessed initially to determine if  suppliers represent 
that they are year 2000 compliant.  The Company estimates 
that it has completed approximately 75 % of this 
assessment.     Following the assessment phase, the Company 
will undertake to upgrade or replace software and, if 
necessary, will replace personal computers so that all 
equipment and software is represented compliant by the 
providers.  The Company estimates that the cost for such 
upgrades and replacements will not exceed $30,000.  
Subsequent phases will include obtaining written 
certification of year 2000 testing by providers followed by 
our own in-house year 2000 tests.

The Company's ancillary systems are largely provided by 
third parties, most of which have not yet completed their 
own assessments of year 2000 exposure. The Company will 
continue to solicit such information from these third 
parties.  Due to the incompleteness of this information, 
contingency plans have not yet been finalized.

The Company estimates that it has completed approximately 
45% of its year 2000 Plan regarding Internal Matters and 
estimates that it has completed approximately 20% of its 
overall year 2000 plan.
<PAGE>

PART II 

ITEM 3. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The Annual Meeting of Shareholders of Stocker & Yale, Inc. 
was held on Tuesday, May 5, 1998, for the purpose of (i) 
electing the directors of the Company to serve until the 
next Annual Meeting of Shareholders, (ii) increasing by 
150,000 shares the number of shares of common stock of the 
Company authorized and available for issuance under the 
Stocker & Yale 1996 Stock Option and Incentive Plan, and 
(iii) appointing Arthur Andersen LLP as the Company's 
independent public accountants.  The following table 
describes the results of the shareholder votes.

Election of the following directors to serve until the next 
Annual Meeting.
	                   Votes in Favor		Votes Withheld
	Mark W. Blodgett	1,989,200.2			0
	James Bickman		1,989,200.2			0
	Alex W. Blodgett 	1,989,200.2			0
	Clifford L. Abbey	1,989,200.2			0
	Steven E. Karol	1,989,200.2			0
	John M. Nelson		1,989,200.2			0

Increase by 150,000 the number of shares of the Company's 
common stock authorized and available for issuance under 
the Stocker & Yale 1996 Stock Option and Incentive Plan.
Votes in Favor		Votes Against		Votes Abstaining
  1,300,935.2				0			560

Appointment of Arthur Andersen LLP as the Company's 
independent public accountants.
Votes in Favor		Votes Against		Votes Abstaining
  1,988,520.2				60			620



ITEM. 5 OTHER INFORMATION

Recent Events

On July 14, 1998, the Company announced that it had signed 
a non-binding letter of intent to sell its Stilson Division 
to De-Sta-Co Industries.  Subject to the execution of a 
definitive purchase and sale agreement and a due diligence 
review of the Stilson Division, De-Sta-Co will acquire the 
assets of Stilson for $3 million cash, assumption of 
approximately $1 million of operating liabilities and semi-
annual payments of 2% of future Stilson product line 
revenues for three years.  Although the parties anticipate 
consummating the sale on or before September 30, 1998, 
there can be no assurance as to when such a transaction 
would close, if at all, or as to the definitive terms of 
such a transaction.





ITEM. 6 EXHIBITS, LISTS AND REPORTS ON FORM 8-K


(a) 	The following is a complete list of Exhibits filed as 
part of this Form 10-QSB:

Exhibit 
Number					 				                         
Description

* 2.1		Offer of Purchase and Sale by and among 
Stocker & Yale, Inc., Lasiris, Inc., the stockholders of 
Lasiris, Inc. and certain other parties named therein, 
dated March 14, 1998.

10.1 (k)  Amended and Restated Revolving Loan Agreement, 
dated April 1, 1998, by and between Stocker & Yale, Inc. 
and Fleet National Bank

10.1 (l)  Modification and Extension Agreement, dated April 
1, 1998 by and between Stocker & Yale, Inc. and Fleet 
National Bank

10.1 (m)  Third Party Pledge Agreement, dated April 1, 
1998, by and between Stocker & Yale and Fleet National Bank

10.1 (n)	Waiver of Certain Provisions of the Credit 
Agreement dated July 21, 1998.

10.1	(o)	Consent Letter dated May 11, 1998 relating to 
Lasiris Transaction.

10.15(a)  Promissory Note, due May 13, 1999, issued by the 
Company to Danvers Savings Bank

10.15(b)  Mortgage Assignment of Leases and Rents & 
Security Agreement, dated May 13, 1998 granted by the 
Company to Danvers Savings Bank
 
* 10.16(a)	Voting, Support and Exchange Agreement 
between Lasiris Holding, Inc., Stocker & Yale, Inc. and the 
stockholders of Lasiris, Inc. and certain other parties 
named therein, dated as of May 13, 1998.

*  10.16(b)	Employment Agreement by and among Lasiris, 
Inc., Stocker & Yale, Inc. and Alain Beauregard, dated as 
of May 13, 1998.

*  10.16(c)	Employment Agreement by and among Lasiris, 
Inc., Stocker & Yale, Inc. and Luc Many, dated as of May 
13, 1998.

*  10.16(d)	Lasiris, Inc. Executive Incentive 
Compensation Plan

27.1	     Financial Data Schedule

(b) 	The Company's Form 8-K relating to the acquisition of 
Lasiris, Inc. was filed with the Securities and Exchange 
Commission on May 27, 1998.

*	Incorporated by reference to the Company's Form 8K 
filed May 27, 1998.

<PAGE>
SIGNATURES


In accordance with the requirements of the Exchange Act, 
the registrant caused this report to be signed on its 
behalf by the undersigned, thereto duly authorized.

Stocker & Yale, Inc.


August 18, 1998							                                                          
/s/ Mark W. Blodgett
Mark W. Blodgett, Chairman and Chief Executive Officer

August 18, 1998                                                           
/s/ Susan A.H. Sundell
Susan A.H. Sundell, Senior Vice President-Finance and 
Treasurer


<PAGE>




























Exhibit 10.1 (k)


                     AMENDED AND RESTATED 
                     REVOLVING TERM NOTE 
	$2,500,000                        As of April 1, 1998 

                                      Boston, Massachusetts
                                                                            
For value received, the undersigned (the "Borrower ) 
promises to pay to Fleet National Bank ("Bank"), or order, 
the principal amount of Two Million Five Hundred Thousand 
Dollars and Zero Cents ($2,500,000) on or before January 2, 
1999, with interest from the date hereof on the said 
principal balance from time to time outstanding. The 
aggregate principal balance outstanding shall bear interest 
thereon at a per annum rate equal to one percent (1%) above 
the rate from time to time established and made effective 
by the Bank as its Prime Rate (as hereinafter defined) 
through June 30, 1998 and two percent (2%) above such Prime 
Rate thereafter, payable monthly in arrears on the first 
day of each month, commencing May 1, 1998. 

	Prime Rate means the rate per annum from time to 
time established by Bank as the Prime Rate and made 
available by the Bank at its main office or, in the 
discretion of the Bank, the base, reference or other rate 
then designated by Bank for general commercial loan 
reference purposes, it being understood that such rate is a 
reference rate, not necessarily the lowest, established 
from time to time, which serves as the basis upon which 
effective interest rates are calculated for loans making 
reference thereto. The effective interest rate applicable 
to undersigned's loans shall change on the date of each 
change in the Prime Rate. 

	This Note is an amendment and restatement of that 
certain Revolving Note, dated March 6, 1995 (the "Original 
Note"), by the undersigned in favor of the Bank and shall 
be secured to the same extent and with the same priority as 
the Original Note. 
	
	Principal and interest shall be payable at the 
Bank's main office in lawful money of the United States of 
America without set-off, deduction or counterclaim. 
Interest shall be calculated on the basis of actual number 
of days elapsed and a 360-day year. 

	This Note is a revolving note and subject to the 
foregoing the Borrower may, at its option, at any time 
prior to demand borrow, pay, prepay and reborrow hereunder, 
all in accordance with the provisions hereof and of any and 
all other agreements between the Borrower and the Bank 
related hereto; provided, however, that the principal 
balance outstanding shall at no time exceed the face amount 
of the Note. 

	At the option of the holder, this Note shall 
become immediately due and payable without notice or demand 
upon the occurrence at any time of any Event of Default 
under the Credit Agreement dated March 5, 1995, executed by 
Borrower in favor of Bank and hereby incorporated, with all 
of its amendments, by reference. 

	Any payments received by the Bank on account of 
this Note prior to demand shall be applied first, to any 
costs, expenses or charges then owed to the Bank by the 
Borrower, second, to accrued and unpaid interest; and 
third, to the unpaid principal balance hereof. Any payments 
so received after demand shall be applied in such manner as 
the Bank may determine. The Borrower hereby authorizes the 
Bank to charge any deposit account which the Borrower may 
maintain with the Bank for any payment required hereunder. 

	The Borrower represents to the Bank that the 
proceeds of this Note will not be used for personal, family 
or household purposes. 

	Any and all deposits or other sums at any time 
credited by or due to the undersigned or any endorser or 
guarantor hereof from the Bank or any of its banking or 
lending affiliates, or any bank acting as a participant 
under any loan arrangement between the Bank and the 
Borrower, any endorser or guarantor 

<PAGE>
__

hereof, and any cash, securities, instruments or other 
property of the undersigned in the possession of the Bank 
or any of its banking or lending affiliates, or any bank 
acting as a participant under any loan arrangement between 
the Bank and the Borrower, any endorser or guarantor 
hereof, whether for safekeeping or otherwise, or in transit 
to or from the Bank or any of its banking or lending 
affiliates or any such participant, or in the possession of 
any third party acting on the Bank's behalf (regardless of 
the reason the Bank had received same or whether the Bank 
has conditionally released the same) shall at all times 
constitute security for all of the liabilities and 
obligations of the undersigned and any endorser and 
guarantor hereof to the Bank and may be applied or set off 
against such liabilities and obligations of the undersigned 
or any endorser or guarantor hereof to the Bank at any 
time, whether or not such are then due, whether or not 
demand has been made and whether or not other collateral is 
then available to the Bank. 

	No delay or omission on the part of the holder in 
exercising any right hereunder shall operate as a waiver of 
such right or of any other right of such holder, nor shall 
any delay, omission or waiver on any one occasion be deemed 
a bar to or waiver of the same or any other right on any 
future occasion. The Borrower and every other maker and 
every endorser or guarantor of this Note, regardless of the 
time, order or place of signing, waives presentment, 
demand, protest and notices of every kind and assents to 
any extension or postponement of the time of payment or any 
other indulgence, to any substitution, exchange or release 
of collateral, and to the addition or release of any other 
party or person primarily or secondarily liable. The 
Borrower and each endorser and guarantor of this Note waive 
any rights to any homestead exemptions on record as of the 
date of this Note respecting any premises under the 
provisions of Chapter 188, Section 1, of the General Laws 
of Massachusetts. 

	The Borrower and each endorser and guarantor of 
this Note shall indemnify, defend and hold the Bank and its 
directors, officers, employees, agents and attorneys 
harmless against any claim brought or threatened against 
the Bank by the Borrower, by any endorser or guarantor, or 
by any other person (as well as from attorneys' reasonable 
fees and expenses in connection therewith) on account of 
the Bank's relationship with the Borrower or any endorser 
or guarantor hereof (each of which may be defended, 
compromised, settled or pursued by the Bank with counsel of 
the Bank's selection, but at the expense of the Borrower 
and any endorser and/or guarantor), except for any claim 
arising out of the gross negligence or willful misconduct 
of the Bank. 

	The Borrower and each endorser and guarantor of 
this Note agree to pay, upon demand, costs of collection of 
the principal of and interest on this Note, including 
without limitation reasonable attorneys' fees. Upon the 
occurrence of an Event of Default, interest shall accrue at 
a rate per annum equal to the aggregate of eighteen percent 
(18%) plus the rate provided for herein. 

	This Note shall be binding upon the Borrower and 
each endorser and guarantor hereof and upon their 
respective heirs, successors, assigns and legal 
representatives, and shall inure to the benefit of the Bank 
and its successors, endorsees and assigns. 

	The liabilities of the Borrower and any endorser 
or guarantor of this Note are joint and several; provided, 
however, the release by the Bank of the Borrower or any one 
or more endorser or guarantor shall not release any other 
person obligated on account of this Note. Any and all 
present and future debts of the Borrower to any endorser or 
guarantor of this Note are subordinated to the full payment 
and performance of all present and future debts and 
obligations of the Borrower to the Bank. Each reference in 
this Note to the Borrower, any endorser, and any guarantor, 
is to such person individually and also to all such persons 
jointly. No person obligated on account of this Note may 
seek contribution from any other person also obligated, 
unless and until all liabilities, obligations and 
indebtedness to the Bank of the person from whom 
contribution is sought have been satisfied in full. The 
release or compromise by the Bank of any collateral shall 
not release any person obligated on account of this Note. 

	The Borrower and each endorser and guarantor 
hereof each authorizes the Bank to complete this Note if 
delivered incomplete in any respect. A photographic or 
other reproduction of this Note may be made by the Bank, 
and any such reproduction shall be admissible in evidence 
with the same effect of the original itself in any judicial 
or administrative proceeding, whether or not the original 
is in existence. 

	This Note is delivered to the Bank at one of its 
offices in Massachusetts, shall be governed by the 
	 

<PAGE>

laws of the Commonwealth of Massachusetts, and shall take 
effect as a sealed instrument. 

	The Borrower and each endorser and guarantor of 
this Note each irrevocably submits to the nonexclusive 
jurisdiction of any federal or state court sitting in 
Massachusetts, over any suit, action or proceeding arising 
out of or relating to this Note. Each Borrower, endorser or 
guarantor irrevocably waives, to the fullest extent it may 
effectively do so under applicable law, any objection it 
may now or hereafter have to the laying of the venue of any 
such suit, action or proceeding brought in any such court 
and any claim that the same has been brought in an 
inconvenient forum. Each Borrower, endorser or guarantor 
irrevocably appoints the Secretary of State of the 
Commonwealth of Massachusetts as its authorized agent to 
accept and acknowledge on its behalf any and all process 
which may be served in any such suit, action or proceeding, 
consents to such process being served (i) by mailing a copy 
thereof by registered or certified mail, postage prepaid, 
return receipt requested, to such Borrower's, endorser's or 
guarantor's address shown below or as notified to the Bank 
and (ii) by serving the same upon such agent, and agrees 
that such service shall in every respect be deemed 
effective service upon such Borrower, endorser or 
guarantor. 

	EACH BORROWER, ENDORSER AND GUARANTOR AND BANK 
EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY, AND 
AFTER AN OPPORTUNITY TO CONSULT WITH LEGAL COUNSEL, WAIVE 
ANY AND ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR 
PROCEEDING IN CONNECTION WITH THIS NOTE, ALL OF THE 
OBLIGATIONS OF EACH BORROWER TO THE BANK, AND ALL MATTERS 
CONTEMPLATED HEREBY AND DOCUMENTS EXECUTED IN CONNECTION 
HEREWITH. EACH BORROWER, ENDORSER AND GUARANTOR CERTIFIES 
THAT NEITHER THE BANK NOR ANY OF ITS REPRESENTATIVES, 
AGENTS OR COUNSEL HAS REPRESENTED, EXPRESSLY OR OTHERWISE, 
THAT THE BANK WOULD NOT IN THE EVENT OF ANY SUCH PROCEEDING 
SEEK TO ENFORCE THIS WAIVER OF RIGHT TO TRIAL BY JURY. 

	Executed as an instrument under seal as of April 
1, 1998. 

	Witness                                Borrower: 

                                       Stocker & Yale, Inc. 

By:/s/ Doreen Shane                    By:/s/ Susan Sundell 

                                        Susan Hojer Sundell 
                                    Chief Financial Officer 



                                          32 Hampshire Road 
                                       Salem, New Hampshire 
                                               03079 

<PAGE>
Exhibit 10.1(l)
           MODIFICATION AND EXTENSION AGREEMENT 

	This MODIFICATION AND EXTENSION AGREEMENT entered 
into at Boston, Massachusetts, as of April 1, 1998, between 
Stocker & Yale, Inc., a Massachusetts corporation, with an 
address of 32 Hampshire Road, Salem, New Hampshire 03079 
(the "Borrower") and Fleet National Bank, a national 
banking association with an address of One Federal Street, 
Boston, Massachusetts 02211, as successor in interest to 
Shawmut Bank, N.A., (collectively, the term "Bank" shall 
refer to Shawmut Bank, N.A. and its successor in interest, 
Fleet National Bank). 

	WHEREAS, the Bank established a revolving line of 
credit (the "Revolving Loan") for Borrower which matures on 
March 31, 1998 (the "Maturity Date") respecting which Bank 
agreed to Lend to Borrower upon Borrower's request, but 
subject to the terms and conditions set forth in various 
loan documents, up to Four Million and Zero Cents 
($4,000,000) (the "Revolving Loan Amount"). The Revolving 
Loan is evidenced by that certain Revolving Note, dated 
March 6, 1995 (the "Revolving Note"), by the Borrower in 
favor of the Bank in the face amount of the Revolving Loan 
Amount. 

		WHEREAS, the Bank has made a term loan to the 
Borrower in the original principal amount of $2,767,000 
(the "Term Loan") evidenced by that certain Term Note, 
dated March 6, 1995 (the "Term Note"), by the Borrower in 
favor of the Bank in the original principal amount of 
$2,767,000 which matures on March 1, 2000 (the "Term Loan 
Maturity Date"). 

	WHEREAS, in connection with the Revolving Loan 
and the Term Loan, the Borrower executed and delivered to 
the Bank, including without limitation, that certain Credit 
Agreement between Borrower and Bank, dated as of March 6, 
1995 and as amended thereafter (the "Credit Agreement"), 
that certain Security Agreement executed by Borrower in 
favor of Bank, dated as of March 6, 1995 (the "Security 
Agreement"), that certain Patent Assignment executed by 
Borrower in favor of Bank, dated as of March 6, 1995 (the 
"Patent Assignment"), that certain Trademark Assignment 
executed by Borrower in favor of Bank, dated as of March 6, 
1995 (the "Trademark Assignment"), that certain Michigan 
Mortgage granted by Borrower in favor of Bank, dated as of 
March 6, 1995 (the "Michigan Mortgage"), and that certain 
Michigan Assignment of Rents and Leases granted by Borrower 
in favor of Bank, dated as of March 6, 1995 (the "Michigan 
Assignment of Rents and Leases"; and collectively, along 
with the Revolving Note, the Term Note, the Credit 
Agreement, the Security Agreement, the Patent Assignment, 
the Trademark Assignment, the Michigan Mortgage, the 
Michigan Assignment of Rents and Leases and any and all 
other documents, agreements, instruments, certificates, 
amendments or renewals executed and delivered to the Bank 
in connection with the Revolving Loan and/or the Term Loan 
referred to hereinafter as the "Loan Documents." 
	
	WHEREAS, to secure the Borrower's obligations to 
the Bank, including without limitation, under the Revolving 
Note, the Term Note and the other Loan Documents, the 
Borrower pledged to and granted in favor of the Bank a 
security interest, assignment, and/or mortgage in any and 
all goods, assets and properties of the Borrower, including 
without limitation, (a) all accounts receivable; (b) all 
goods, including without limitation, inventory, machinery 
and equipment (subject to rights of certain equipment 
financiers); (c) all general intangibles; (d) all patents; 
(e) all trademarks; and (f) certain real property located 
at 34775 Commerce Road, Fraser, Michigan (collectively, 
along with any other collateral securing the Borrower's 
obligations to the Bank, the "Collateral ) 

	WHEREAS, the Borrower has requested that the Bank 
modify the terms of the Term Note and the Revolving Note as 
set forth herein and extend the Revolving Loan Maturity 
Date until January 2, 1999 (the New Revolving Loan Maturity 
Date"). 

<PAGE>

	WHEREAS, the Bank is willing to modify the terms 
of the Term Note and Revolving Note as set forth herein and 
extend the Revolving Loan Maturity Date until the New 
Revolving Loan Maturity Rate, but only upon the terms and 
conditions set forth in this Agreement.
 
	NOW THEREFORE, for good and valuable 
consideration, the receipt and sufficiency of which are 
hereby acknowledged, the Bank and the Borrower mutually 
agree as follows: 

	1. Ratification. All of the terms, covenants, 
provisions, representations, warranties, and conditions of 
the Loan Documents, as amended or modified hereby, are 
ratified, acknowledged, confirmed, and continued in full 
force and effect as if fully restated herein. 

	2. Collateral. The Borrower confirms and 
ratifies its continuing mortgage, pledge, assignment, 
and/or grant of security interest in the Collateral to and 
in favor of the Bank as set forth in the Loan Documents. 

	3. Principal Balance. The Borrower acknowledges 
and agrees that as of the date hereof the current 
outstanding principal balance respecting the Amended 
Revolving Note is $1,773,284.97 and that the current 
outstanding principal balance respecting the Term Note is 
$1,122,265.00. 

	4. Revolving Loan Maturity Date. The Bank hereby 
agrees to extend the Maturity Date of the Revolving Note 
until the New Revolving Loan Maturity Date and accordingly, 
the Bank shall continue to make advances respecting the 
Revolving Loan, subject to the terms and conditions of the 
Loan Documents, as amended or modified hereby, until the 
New Revolving Loan Maturity Date after which date there 
shall be no further advances respecting the Revolving Note. 
The Borrower hereby agrees to pay to the Bank all payments 
due prior to the New Revolving Loan Maturity Date in 
accordance with the terms of the Amended Revolving Note, 
and that any failure to make any such payments in 
accordance with the terms of the Amended Revolving Note 
shall be a default under this Agreement, the Amended 
Revolving Note and each of the Loan Documents. Unless due 
earlier, on or before the New Revolving Loan Maturity Date, 
the Borrower agrees to pay to the Bank the entire principal 
balance of the Amended Revolving Note then outstanding, 
plus all unpaid interest accrued thereon, and all other 
amounts outstanding in connection therewith, without 
further notice or demand from the Bank. 

	5. Modification to Revolving Note. The Borrower 
and the Bank hereby agree: (i) to reduce the maximum 
principal amount of the Revolving Note to $2,500,000 and 
(ii) to modify the terms of the Note in accordance with an 
amended and restated note (the "Amended Revolving Note") in 
the form attached hereto as Exhibit A. The Amended 
Revolving Note shall be secured by the Collateral to the 
same extent and with the same priority as the Revolving 
Note. 

	6. Interest Rate on Amended Revolving Note and 
Modification to Interest Rate on Term Note. The Borrower 
and Bank agree that, notwithstanding anything to the 
contrary in the Loan Documents, as of the effective date of 
this Agreement, the outstanding principal amounts 
outstanding respecting each of the Term Note and Amended 
Revolving Note, shall bear interest at a per annum rate 
equal to one percent (1%) above the rate from time to time 
established and made effective by the Bank as its Prime 
Rate through June 30, 1998 and two percent (2%) above its 
Prime Rate thereafter. 

	7. Index. Prime Rate means the rate per annum 
from time to time established by Bank as the Prime Rate and 
made available by the Bank at its main office or, in the 
discretion of the Bank, the base, reference or other rate 
then designated by Bank for general commercial loan 
reference purposes, it being understood that such rate is a 
reference rate, not necessarily the lowest, established 
from time to time which serves as the basis upon which 
effective interest rates are calculated for loans making 
reference thereto. The effective rate applicable to the 
undersigned's loans shall change on the date of 
each change in the Prime Rate. 

	8. Release of Bank. By execution of this 
Agreement, the Borrower hereby acknowledges and confirms 
that it does not have any offsets, defenses or claims 
against Bank, its parents, subsidiaries affiliates, or any 
officers, agents, directors or employees whether asserted 
or unasserted. To the extent that they may have such 
offsets, defenses or claims, Borrower and its respective 
successors, assigns, 	 

<PAGE>


predecessors, employees, agents, heirs, executors, as 
applicable releases and forever discharges Bank, its 
parents, subsidiaries, affiliates, and officers, directors, 
employees, agents, attorneys, successors and assigns, both 
present and former (collectively the "Bank Affiliates") of 
and from any and all manner of action and actions, cause 
and causes of action, suits, debts, controversies, damages, 
judgments, executions, claims and demands whatsoever, 
asserted or unasserted, in law or in equity which against 
Bank and/or Bank Affiliates it ever had, now has or which 
any of Borrower's successors, assigns, parents, 
subsidiaries, affiliates, predecessors, employees, agents, 
heirs, executors, as applicable, both present and former 
ever had or now has, upon or by reason of any manner, 
cause, causes or timing whatsoever, including, without 
limitation, any presently existing claim or defense whether 
or not presently suspected, contemplated or anticipated. 

	9. Indemnification of Bank. Borrower agrees to 
indemnify and hold Bank, its parents, subsidiaries, 
affiliates, and directors, officers, employees, agents and 
attorneys harmless against all obligations, demands and 
liabilities, by whomsoever asserted, and against all losses 
in any way suffered, incurred or paid as a result of or in 
any way arising out of or following or consequential to 
transactions with the Borrower, except for any claim 
arising out of the gross negligence or willful misconduct 
of the Bank. 

	10. 	Amendments to Credit Agreement. The Credit 
Agreement is hereby amended as follows: 			   
              	A.    Definitions. 
(1) Section 1.01 of the Credit 
Agreement is amended to read as 
follows: 
"Notes" - Any and all promissory notes 
of the Company payable to the Bank as 
amended, renewed or otherwise modified 
from time to time." 
(2) Section 1.01 of the Credit    
Agreement is amended to read as 
follows:
                    "Borrowing Base" - an amount equal to                 
                        (A) lesser of 
(i) the Committed Revolver 
Amount or 
(ii)	(a) 80% of the net outstanding 
amount of Eligible Receivables 
from time to time, plus 
(b) the lesser of 
                                    (I) $1,300,000 or 
 (II) 32% of Eligible      
      Inventory from   
      Time to time. 
                         (B) less Outstanding letters of  	
		Credit.
                     (3) Section 1.01 of the Credit 
                          Agreement is amended to read as  
                          follows: 
                        "Committed Revolver Amount" - Two 
                         Million Five Hundred Thousand       
                         Dollars ($2,500,000)
 
	B.   Deletion of Debt Service Coverage 
Ratio.           Notwithstanding 
anything to the contrary in the Credit 
Agreement, effective the date of this 
Agreement, the Borrower shall not be 
required to maintain a minimum Debt 
Service Ratio under the Loan Documents.
 
	C. 	Modification of Consolidated Cash 
Expenditures.   Section 6.01(p) of the 
Credit Agreement as amended by a letter 
agreement between Bank and Borrower 
dated November 12, 1997 is further 
amended to read as follows: "(p) The 
Borrower and its subsidiaries will not 
make Capital Expenditures, as such term 
is defined in the Credit Agreement, in 
fiscal year 1998 in excess of 
$500,000." 
	 
<PAGE>
10. New Financial Covenants. In addition to all existing 
financial covenants contained in the Loan Documents, as 
affected hereby, the Borrower shall at all times comply 
with the following additional financial covenants: 
A.	Pretax Profit. The Borrower will not 
fail to have positive net earnings, as 
such term is defined in accordance 
with generally accepted accounting 
principles, consistently applied, 
prior to any tax liability, for the 
month of March 1998 and for each 
fiscal quarter thereafter. 

B.	Limit on Monthly Pretax Losses. The 
Borrower will not incur a net loss in 
excess of $50,000, as such term is 
defined in accordance with generally 
accepted accounting principles 
consistently applied, prior to any tax 
liability, in any calendar month. 

	11. Fees. In addition to all other amounts due 
and payable respecting the Revolving Loan and the Term 
Loan, the Borrower hereby agrees to pay the Bank 
modification and extension fees due and payable as follows 
(on each "Due Date"): $10,000 at the time of the execution 
and delivery of this agreement, $20,000 on June 30, 1998, 
$7,000 on July 31, 1998, $7,000 on August 31, 1998, $7,000 
on September 30, 1998, $10,000 on October 31, 1998, $10,000 
on November 30, 1998, and $10,000 on December 31, 1998. 
Failure to pay any such amounts when due shall be an event 
of default under this Agreement and under each of the Loan 
Documents. In the event that Borrower should pay in full 
all amounts due and payable respecting the Revolving Loan 
and the Term Loan prior to any of the foregoing Due Dates, 
Bank shall waive those modification and extension fees due 
and payable on subsequent Due Dates. 

	12. Year 2000. No modifications are required to 
any of the Borrower's computer systems or computer software 
to assure that such systems and software contain no 
deficiencies relating to formatting for entering dates 
(commonly referred to and referred herein as the 'Year 2000 
Problem"). The Borrower's computer systems and software are 
susceptible to all necessary modification and the Borrower 
has adequate personnel or consultants under contract to 
timely modify (or, as applicable, replace and/or upgrade) 
its own computer systems and software. The Borrower is not 
aware of any inability on the part of any of its customers, 
insurance providers or vendors to timely address the Year 
2000 Problem that will in any manner adversely affect 
borrowers business operations. In addition the Borrower 
will take any and all actions to ensure that its computer 
systems and computer software shall at all times contain no 
deficiencies relating to the Year 2000 Problem; and the 
Borrower hereby indemnifies and holds the Bank harmless 
from any losses the Bank may suffer resulting from any 
deficiencies in the Borrower's computer systems or computer 
software relating to the Year 2000 Problem. 

	13. Set-Off. Regardless of the adequacy of any 
Collateral, any deposits, balances or other sums credited 
by or due from the Bank or any of its affiliates to 
Borrower may, at any time, whether or not an event of 
default has occurred or demand has been made, without 
notice to Borrower, or compliance with any other condition 
precedent now or hereafter imposed by statute, rule of law 
or otherwise (all of which are hereby expressly waived), be 
set off, appropriated and applied by Bank against any and 
all of the obligations of Borrower to the Bank in such 
manner as the Bank in its sole discretion may determine. 

	14. Counsel Fees and Expenses. Borrower agrees 
to pay Bank on demand any and all costs, expenses, losses, 
claims, damages, liabilities, penalties, suits, judgments 
or disbursements of any nature (including without 
limitation expenses and fees for counsel, appraisals, 
consultants, accountants, field examiners, environmental 
engineers) which may be incurred by, imposed on or asserted 
against Bank, as it deems in its sole discretion, in 
connection with: preparation of this Agreement and 
documents relating hereto, or amendments, modifications, 
waivers or the interpretation hereof, any exercise of 
Bank's rights as set forth herein or in the Loan Documents; 
any enforcement, collection or other proceeding resulting 
therefrom or from any negotiations or other measures to 
preserve or enforce Bank's rights hereunder or under the 
Loan Documents; any investigative, administrative or 
judicial proceeding (whether or not Bank is designated as 
party thereto) relating to or arising out of this 
Agreement, or the Loan documents; or any bankruptcy, 
insolvency, or other similar proceedings relating to 
Borrowers, or  

<PAGE>
any collateral securing their obligations to the Bank. 
Borrower specifically authorizes the Bank to pay all such 
fees and expenses and charge the same to any of its loan or 
deposit accounts with the Bank. 

	15. Counterparts. This Agreement may be executed 
in two or more counterparts, each of which shall be an 
original, but all of which shall constitute but one 
agreement. 

	16. Binding Effect of Agreement. All covenants, 
agreements, representations and warranties contained herein 
shall bind and inure to the benefit of the respective 
successors and assigns of the parties hereto, whether 
expressed or not; provided that Borrower may not assign or 
transfer its rights hereunder. 

	17. Further Assurances. Borrower will from time 
to time execute and deliver to the Bank, and take or cause 
to be taken, all such other further action as the Bank may 
request in order to effect and confirm or vest more 
securely in the Bank all rights contemplated hereunder. 

	18. Amendments and Waivers. This Agreement may 
be amended and Borrower may take any action herein 
prohibited, or omit to perform any act herein required to 
be performed by it, if Borrower shall obtain the Bank's 
prior written consent to each such amendment, action or 
omission to act. No delay or omission on the part of Bank 
in exercising any right hereunder shall operate as a waiver 
of such right or any other right and waiver on any one or 
more occasions shall not be construed as a bar to or waiver 
of any right or remedy of Bank on any future occasion. 

	19. Terms of Agreement. This Agreement shall 
continue in force and effect so long as any obligation of 
Borrower to Bank shall be outstanding and is supplementary 
to each and every other agreement between Borrower and Bank 
and shall not be so construed as to limit or otherwise 
derogate from any of the rights or remedies of Bank or any 
of the liabilities, obligations or undertakings of Borrower 
under any such agreement, nor shall any contemporaneous or 
subsequent agreement between Borrower and the Bank be 
construed to limit or otherwise derogate from any of the 
rights or remedies of Bank or any of the liabilities, 
obligations or undertakings of Borrower hereunder, unless 
such other agreement specifically refers to this Agreement 
and expressly so provides.
 
	20. Notices. Any notices under or pursuant to 
this Agreement shall be deemed duly received by the 
Borrower and Bank and effective if delivered in hand to any 
officer or agent of the Borrower or Bank or if mailed by 
registered or certified mail, return receipt requested, 
addressed to the Borrower or Bank at the address set forth 
above or as any party shall provide by written notice to 
the other party. 

	21. Massachusetts Law. This Agreement is intended 
to take effect as a sealed instrument and has been executed 
or completed and is to be performed in Massachusetts, and 
it and all transactions thereunder or pursuant thereto 
shall be governed as to interpretation, validity, effect, 
rights, duties and remedies of the parties thereunder and 
in all other respects by the domestic laws of 
Massachusetts. 

	22. Reproductions. This Agreement and all 
documents which have been or may be hereinafter furnished 
by Borrower to the Bank may be reproduced by the Bank by 
any photographic, photostatic, microfilm, xerographic or 
similar process, and any such reproduction shall be 
admissible in evidence as the original itself in any 
judicial or administrative proceeding (whether or not the 
original is in existence and whether or not such 
reproduction was made in the regular course of business). 

	23. Venue. Borrower irrevocably submits to the 
nonexclusive jurisdiction of any federal or state court 
sitting in Massachusetts, over any suit, action or 
proceeding arising out of or relating to this 
Agreement. Borrower irrevocably waives to the fullest 
extent it may effectively do so under applicable law, any 
objection it may now or hereafter have to the laying of the 
venue of any such suit, action or proceeding brought in any 
such court and any claim that the same has been brought in 
an inconvenient forum. Borrower irrevocably appoints the 
Secretary of State of the Commonwealth of Massachusetts as 
its authorized agent to accept and acknowledge on its 
behalf any and all process which may be served in any such 
suit, action or proceeding, consents to such process being 
served (i) by mailing a copy thereof by registered or 
certified mail, postage prepaid, return receipt requested, 
to Borrower's address shown above or as notified to the 
Bank and (ii) by serving the same upon such agent, and 
agrees that such service shall in every respect be deemed 
effective service upon Borrower. 
 
<PAGE>
24. JURY WAIVER. THE BORROWER AND BANK EACH HEREBY 
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY, AND AFTER AN 
OPPORTUNITY TO CONSULT WITH LEGAL COUNSEL, WAIVE ANY AND 
ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING 
IN CONNECTION WITH THIS AGREEMENT, THE OBLIGATIONS, ALL 
MATTERS CONTEMPLATED HEREBY AND DOCUMENTS EXECUTED IN 
CONNECTION HEREWITH. THE BORROWER CERTIFIES THAT NEITHER 
THE BANK NOR ANY OF ITS REPRESENTATIVES, AGENTS OR COUNSEL 
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE BANK 
WOULD NOT IN THE EVENT OF ANY SUCH PROCEEDING SEEK TO 
ENFORCE THIS WAIVER OF RIGHT TO TRIAL BY JURY. 



	Executed under seal as of the date written above. 

	Witness 	Borrower: 

                                       Stocker & Yale, Inc. 
       
By:/s/ Doreen Shane                   By: /s/ Susan Sundell

                                        Susan Hojer Sundell 
                                    Chief Financial Officer 





	Accepted: Fleet National Bank 

	By: 

	Name: H. Ellery Perkinson 
	Title: Assistant Vice President 


<PAGE>
Exhibit 10.1 (m)
                    THIRD PARTY PLEDGE AGREEMENT 

	This AGREEMENT entered into at Boston, 
Massachusetts, as of April 1, 1998, between Mark W, 
Blodgett, an individual with an address of 37 Chestnut 
Street, Salem, Massachusetts 01970 (the "Pledgor") and 
Fleet National Bank, a national banking association with an 
address of One Federal Street, Boston, Massachusetts 02211 
(the "Bank"). 

1. 	Pledge. In consideration of the Bank's extending 
credit and other financial accommodations to the Pledgor 
and/or Stocker & Yale, Inc. (hereinafter called the 
"Borrower"), whether evidenced by notes or not, the Pledgor 
hereby grants to the Bank a security interest in 
(including, without limitation, a lien on and pledge, 
assignment and delivery of) all of the Pledgor's Collateral 
(as hereinafter defined). The security interest granted by 
this Agreement is given to and shall be held by the Bank as 
security for the payment and performance of all Obligations 
(as hereinafter defined). The Bank shall have the 
unrestricted right from time to time to apply (or to change 
any application already made of) the proceeds of any of the 
Collateral to any of the Obligations, as the Bank in its 
sole discretion may determine. 

2.	Definitions. The following definitions shall apply: 
	
(a)	"Collateral" shall mean all the Pledgor's present and
	future right, title and interest in and to any and all 
of the property listed on Schedule A, attached hereto, 
whether such property is now existing or hereafter 
created, and all products, proceeds, substitutions, 
additions, interest, dividends, and other 
distributions (including, without limitation, stock 
splits and stock dividends) in respect thereto, and 
all books, records, and paper relating to the 
foregoing (all of which is referred to hereinafter as 
the "Collateral"). 

(b)	"Obligation(s)" shall mean all Pledgor's obligations 
to the Bank respecting that certain Limited Guaranty 
executed of even date herewith by Mark W. Blodgett in 
favor of the Bank. Said term shall also include all 
interest and other charges chargeable to the Borrower 
or Pledgor or due from the Borrower or Pledgor to the 
Bank from time to time and all costs and expenses 
referred to in this Agreement. 

(c)	"Person" or "party" shall include individuals, firms, 
corporations and all other entities. 

(d)	"Event of Default" shall mean the occurrence of any 
one or more of the following events: 

(i)	default of any liability, obligation or
undertaking of the Borrower or Pledgor to 
the  Bank, hereunder or otherwise, including 
failure  to pay in full and when due any 
installment of principal or interest; 

(ii) failure of the Borrower or Pledgor to 
maintain aggregate collateral security value 
	satisfactory to the Bank; 

(iii) default of any material liability, 
obligation or undertaking of the Borrower or 
Pledgor to any other party; 


<PAGE>
(iv) if any statement, representation or 
warranty heretofore, now or hereafter made 
in connection with this Agreement or in any 
supporting financial statement of the 
Borrower or Pledgor shall be determined by 
Bank to have been false in any material 
respect when made; 

(v) if the Borrower or Pledgor or any 
guarantor is a corporation , trust or 
partnership, the liquidation, termination or 
dissolution of any such organization, or the 
merger or consolidation of such organization 
into another entity, or its ceasing to carry 
on actively its present business or the 
appointment of a receiver for its property; 

(vi) the death of the Borrower or Pledgor or 
of any    guarantor of the Obligations and, 
if any of the Borrower or Pledgor or any 
guarantor of the Obligations is a 
partnership, the death of any partner; 

(vii) the institution by or against the 
Borrower or Pledgor or any guarantor of the 
Obligations of any proceedings under the 
Bankruptcy Code, 11 USC $101 et seq. or any 
other law in which the Borrower or Pledgor 
or any guarantor of the Obligations is 
alleged to be insolvent or unable to pay 
their respective debts as they mature, or 
the making by the Borrower or Pledgor or any 
guarantor of the Obligations of an 
assignment for the benefit of creditors or 
the granting by the Borrower or Pledgor or 
any guarantor of the Obligations of a trust 
mortgage for the benefit of creditors; 

(viii) the service upon the Bank hereof of a 
writ in which the Bank is named as trustee 
of the Borrower or Pledgor or of any 
guarantor of the Obligations; 

(ix) a judgment or judgments for the payment 
of money shall be rendered against the 
Pledgor or Borrower or guarantor hereof, and 
any such judgment shall remain unsatisfied 
and in effect for any period of thirty (30) 
consecutive days without a stay of 
execution; 

(x) any levy, seizure, attachment, execution 
or similar process shall be issued or levied 
on any of the property of the Pledgor or 
Borrower or guarantor hereof; 

(xi) the termination of any guaranty of the 
Obligations; or 

(xii) the occurrence of such a change in the 
condition or affairs (financial or 
otherwise) of the Borrower or Pledgor or any 
guarantor or other surety for any of the 
Obligations or the occurrence of any event 
or circumstance such that the Bank, in its 
sole discretion, deems that it is insecure 
or that the prospects for timely or full 
payment or performance of any of the 
Obligations has been or may be impaired. 

	All words and terms used in this Agreement other 
than those specifically defined herein shall have the 
meanings accorded to them in the Massachusetts Uniform 
Commercial Code (General Law, Chapter 106), as amended from 
time to time (herein the "Code"). 

3.	Costs and Expenses. The Pledgor shall pay to the Bank 
any and all costs and expenses (including, without 
limitation, reasonable attorneys' fees, court costs, 
litigation and other expenses) incurred or paid by 
the Bank in establishing, maintaining, protecting or 
enforcing any of the Bank's rights or the 
Obligations, including, without limitation, any and 
all such costs and expenses incurred or paid by the 
Bank in defending the Bank's security interest in, 
title or right to the Collateral or in collecting or 
attempting to collect or enforcing or attempting to 
enforce payment of the Collateral. 

4.	 Title. The Pledgor represents that the Collateral is 
held and owned by the Pledgor free and clear of all liens, 
encumbrances, attachments, security interests, pledges and 
charges, and, if the Collateral is 
	 
<PAGE>

securities, is fully paid for and nonassessable. 

5. Affirmative Covenants. The Pledgor shall: 

(a) execute all such instruments, documents and papers, and 
will do ail such acts as the Bank may request from time to 
time to carry into effect the provisions and intent of this 
Agreement, including without limitation, the execution of 
stock transfer orders, stock powers, notifications to 
obligors on the Collateral, the providing of notification 
in connection with book entry securities or general 
intangibles and the providing of instructions to the 
issuers of uncertificated securities or financial 
intermediaries, and will do all such other acts as the Bank 
may request with respect to the perfection and protection 
of the security interest granted herein and the assignment 
effected hereby; 

(b) keep the Collateral free and clear of all liens, 
encumbrances, attachments, security interests, pledges and 
charges; 

(c) deliver to the Bank, if and when received by the 
Pledgor, any item representing or constituting any of the 
Collateral, including, without limitation, all cash 
dividends and all stock certificates whether now existing 
or hereafter received as a result of any stock dividends, 
stock splits or otherwise; 

(d) upon the request of the Bank, cause the issuer of any 
uncertificated securities comprising any of the Collateral 
to issue certificates with respect thereto; 

(e) upon the request of the Bank, cause certificated 
securities comprising any of the Collateral to be issued in 
the name of the Bank, as pledgee; 

(f) not cause or permit any of the Collateral presently 
evidenced by a written certificate to be converted to 
uncertificated securities; 

(g) not exercise any right with respect to the Collateral 
which would dilute or adversely affect the Bank's rights in 
the Collateral; 

(h) not file any affidavit for replacement of lost stock 
certificate or bonds; and 

(i) not vote the Collateral in favor of or consent to any 
resolution which might: 

(i)	impose any restrictions upon the sale, 
transfer or disposition of the 
Collateral; or 

(ii)	result in the issuance of any 
additional shares of stock of any 
class; or 

(iii)vest additional powers, privileges, 
preferences or priorities to any other 
class of 	stock. 

6. Power of Attorney. The Pledgor hereby irrevocably 
constitutes and appoints the Bank as the Pledgor's true and 
lawful attorney, with full power of substitution at the 
sole cost and expense of the Pledgor but for the sole 
benefit of the Bank, to endorse in favor of the Bank any of 
the Collateral; cause the transfer of any of the Collateral 
in such name as the Bank may, from time to time, determine; 
cause the issuance of certificates for book entry and/or 
uncertificated securities; provide notification in 
connection with book entry securities or general 
intangibles and/or provide instructions to the issuers of 
uncertificated securities or financial intermediaries, as 
necessary; to renew, extend or roll over any Collateral; 
and make demand and initiate actions to enforce any of the 
Collateral. The Bank may take such action with respect to 
the Collateral as the Bank may reasonably determine to be 
necessary to protect and preserve its interests in the 
Collateral. The Bank shall also have and may exercise at 
any time  

<PAGE>
all rights, remedies, powers, privileges and discretions of 
the Pledgor with respect to and under the Collateral, 
provided, however, the Bank shall have no right until an 
Event of Default has occurred to exercise any voting rights 
available to the Pledgor at any time the Collateral is held 
by the Bank solely as pledgee hereunder. Except as limited 
above, all the rights, remedies, powers, privileges and 
discretions included in this Paragraph may be exercised by 
the Bank whether or not any of the Obligations are then due 
and whether or not an Event of Default has occurred. The 
within designation, being coupled with an interest, is 
irrevocable until the within Agreement is terminated by a 
written instrument executed by a duly authorized officer of 
the Bank. The power of attorney shall not be affected by 
subsequent disability or incapacity of the Pledgor. The 
Bank shall not be liable for any act or omission to act 
pursuant to this Paragraph except for any act or omission 
to act which is in actual bad faith. 

7. Default. If an Event of Default shall occur, at the 
election of the Bank, all Obligations shall become 
immediately due and payable without notice or demand, 
except with respect to Obligations payable on demand, which 
shall be due and payable on demand, whether or not an Event 
of Default has occurred. 

	The Bank is hereby authorized, at its election, 
after an Event of Default or after demand, without any 
further demand or notice except to such extent as notice 
may be required by applicable law, to sell or otherwise 
dispose of all or any of the Collateral at public or 
private sale and/or enforce and collect the Collateral 
(including, without limitation, the liquidation of debt 
instruments or securities and the exercise of conversion 
rights with respect to convertible securities, whether or 
not such instruments or securities have matured and whether 
or not any penalties or other charges are imposed on 
account of such action); and the Bank may also exercise any 
and all other rights and remedies of a secured party under 
the Code or which are otherwise accorded to it by 
applicable law, all as the Bank may determine. If notice of 
a sale or other action by the Bank is required by 
applicable law, the Pledgor agrees that five (5) days' 
written notice to the Pledgor, or the shortest period of 
written notice permitted by law, whichever is larger, shall 
be sufficient notice; and that to the extent permitted by 
law, the Bank, its officers, attorneys and agents may bid 
and become purchasers at any such sale, if public, and may 
purchase at any private sale any of the Collateral that is 
of a type customarily sold on a recognized market or which 
is the subject of widely distributed standard price 
quotations. Any sale (public or private) shall be free from 
any right of redemption, which the Pledgor hereby waives 
and releases. No purchaser at any sale (public or private) 
shall be responsible for the application of the purchase 
money. Any balance of the net proceeds of sale remaining 
after paying all Obligations of the Pledgor to the Bank 
shall be returned to the Pledgor or to such other party as 
may be legally entitled thereto; and if there is a 
deficiency, the Pledgor shall be responsible for the same, 
with interest. The Pledgor acknowledges that any exercise 
by the Bank of the Bank's rights upon default may be 
subject to compliance by the Bank with any statute, 
regulation, ordinance, directive or order of any federal, 
state, municipal or other governmental authority and may 
impose, without limitation, any of the foregoing 
restricting the sale of securities. The Bank, in its sole 
discretion at any such sale, may restrict the prospective 
bidders or purchasers as to their number, nature of 
business and investment intentions, and may impose, without 
limitation, a requirement that the persons making such 
purchases represent and agree, to the satisfaction of the 
Bank, that they are purchasing the Collateral for their own 
account, for investment, and not with a view to the 
distribution or resale thereof. The proceeds of any 
collection or of any sale or disposition of the Collateral 
held pursuant to this Agreement shall be applied towards 
the Obligations in such order and manner as the Bank 
determines in its sole discretion, any statute, custom or 
usage to the contrary notwithstanding. 

8. Safe Custody and Exclusivity. The Bank shall have no 
duty as to the Collateral or protection of the Collateral 
or any income or distribution thereon, beyond the safe 
custody of such of the Collateral as may come into the 
possession of the Bank, and shall have no duty as to the 
preservation of rights against prior parties or any other 
rights pertaining thereto. The Bank's Rights and Remedies 
(as defined herein) may be exercised without resort or 
regard to any other source of satisfaction of the 
Obligations. 

9. Indemnification. The Pledgor shall indemnify, defend and 
hold the Bank harmless of and from any claim brought or 
threatened against the Bank by the Pledgor, Borrower or any 
guarantor or endorser of 
	 
<PAGE>
the Obligations, or any other person (as well as from 
attorneys' reasonable fees and expenses in connection 
therewith) on account of the Bank's relationship with the 
Pledgor, Borrower or any guarantor or endorser of the 
Obligations (each of which may be defended, compromised, 
settled or pursued by the Bank with counsel of the Bank's 
election, but at the expense of the Pledgor), except for 
any claim arising out of the gross negligence or willful 
misconduct of the Bank. The within indemnification shall 
survive payment of the Obligations, and/or any termination, 
release or discharge executed by the Bank in favor of the 
Pledgor. 

10. Waivers. The Pledgor waives notice of nonpayment, 
demand, presentment, protest or notice of protest of the 
Collateral, and all other notices, consents to any renewals 
or extensions of time of payment thereof, and generally 
waives any and all suretyship defenses and defenses in the 
nature thereof. No delay or omission of the Bank in 
exercising or enforcing any of its rights, powers, 
privileges, remedies, immunities or discretions (all of 
which are hereinafter collectively referred to as "the 
Bank's Rights and Remedies") hereunder shall constitute a 
waiver thereof; and no waiver by the Bank of any default of 
the Pledgor hereunder or of any demand hereunder shall 
operate as a waiver of any other default hereunder or any 
other demand hereunder. No term or provision hereof shall 
be waived, altered or modified except with the prior 
written consent of the Bank, which consent makes explicit 
reference to this Agreement. Except as provided in the 
preceding sentence, no other agreement or transaction, of 
whatsoever nature, entered into between the Bank and the 
Pledgor at any time (whether before, during or after the 
effective date or term of this Agreement) shall be 
construed in any particular as a waiver, modification or 
limitation of any of the Bank's Rights and Remedies under 
this Agreement (nor shall anything in this Agreement be 
construed as a waiver, modification or limitation of any of 
the Bank's Rights and Remedies under any such other 
agreement or transaction) but all the Bank's Rights and 
Remedies not only under the provisions of this Agreement 
but also under any such other agreement or transaction 
shall be cumulative and not alternative or exclusive, and 
may be exercised by the Bank at such time or times and in 
such order of preference as the Bank in its sole discretion 
may determine. 

	11. Severability. If any provision of this Agreement or 
portion of such provision or the application thereof to any 
person or circumstance shall to any extent be held invalid 
or unenforceable, the remainder of this Agreement (or the 
remainder of such provision) and the application thereof to 
other persons or circumstances shall not be affected 
thereby. 

	12. Binding Effect of Agreement. This Agreement shall be 
binding upon and inure to the benefit of the respective 
heirs, executors, administrators, legal representatives, 
successors and assigns of the parties hereto, and shall 
remain in full force and effect (and the Bank shall be 
entitled to rely thereon) until terminated as to future 
transactions by written notice from either party to the 
other party of the termination hereof; provided that any 
such termination shall not release or affect any Collateral 
in which the Bank already has a security interest or any 
Obligations incurred or rights accrued hereunder prior to 
the effective date of such notice (as hereinafter defined) 
of such termination. Notwithstanding any such termination, 
the Bank shall have a security interest in all Collateral 
to secure the payment and performance of Obligations 
arising after such termination as a result of commitments 
or undertakings made or entered into by the Bank prior to 
such termination. The Bank may transfer and assign this 
Agreement and deliver the Collateral to the assignee, who 
shall thereupon have all of the Bank's Rights and Remedies; 
and the Bank shall then be relieved and discharged of any 
any responsibility or liability with respect to this 
Agreement and the Collateral. 

	13. Notices. Any notices under or pursuant to this 
Agreement shall be deemed duly received and effective if 
delivered in hand to any officer or agent of the Pledgor or 
Bank, or if mailed by registered or certified mail, return 
receipt requested, addressed to the Pledgor or Bank at 
address set forth in this Agreement or as any party may 
from time to time designate by written notice to the other 
party. 

	14. Reproductions. This Agreement and all documents 
which have been or may be hereinafter furnished by Pledgor 
to the Bank may be reproduced by the Bank by any 
photographic, photostatic, 

<PAGE> 
microfilm, xerographic or similar process, and any such 
reproduction shall be admissible in evidence as the 
original itself in any judicial or administrative 
proceeding (whether or not the original is in existence and 
whether or not such reproduction was made in the regular 
course of business). 

15. Massachusetts Law. This Agreement is intended to take 
effect as a sealed instrument and has been executed or 
completed and is to be performed in Massachusetts, and it 
and all transactions thereunder or pursuant thereto shall 
be governed as to interpretation, validity, effect, rights, 
duties and remedies of the parties thereunder and in all 
other respects by the domestic laws of Massachusetts. 

16. Jurisdiction and Venue. Pledgor irrevocably submits to 
the nonexclusive jurisdiction of any federal or state court 
sitting in Massachusetts, over any suit, action or 
proceeding arising out of or relating to this Agreement. 
Pledgor irrevocably waives, to the fullest extent it may 
effectively do so under applicable law, any objection it 
may now or hereafter have to the laying of the venue of any 
such suit, action or proceeding brought in any such court 
and any claim that the same has been brought in an 
inconvenient forum. Pledgor irrevocably appoints the 
Secretary of State of the Commonwealth of Massachusetts as 
its authorized agent to accept and acknowledge on its 
behalf any and all process which may be served in any such 
suit, action or proceeding, consents to such process being 
served (i) by mailing a copy thereof by registered or 
certified mail, postage prepaid, return receipt requested, 
to Pledgor's address shown in this Agreement or as notified 
to the Bank and (ii) by serving the same upon such agent, 
and agrees that such service shall in every respect be 
deemed effective service upon Pledgor. 

	17. JURY WAIVER. THE PLEDGOR AND BANK EACH HEREBY 
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY, AND AFTER AN 
OPPORTUNITY TO CONSULT WITH LEGAL COUNSEL, WAIVE ANY AND 
ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING 
IN CONNECTION WITH THIS AGREEMENT, THE OBLIGATIONS, ALL 
MATTERS CONTEMPLATED HEREBY AND DOCUMENTS EXECUTED IN 
CONNECTION HEREWITH. THE PLEDGOR CERTIFIES THAT NEITHER THE 
BANK NOR ANY OF ITS REPRESENTATIVES, AGENTS OR COUNSEL HAS 
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE BANK WOULD 
NOT IN THE EVENT OF ANY SUCH PROCEEDING SEEK TO ENFORCE 
THIS WAIVER OF RIGHT TO TRIAL BY JURY. 

       Executed under seal and dated as of April 1, 1998. 

	Witness 							Pledgor:
 
By:/s/ Susan Sundell                By:/s/ Mark W. Blodgett

	Mark W. Blodgett 

	Accepted: Fleet National Bank 


	By: 
	Name: H. Ellery Perkinson 
	Title: Assistant Vice President 


<PAGE> 
                    SCHEDULE A 

                           Pledged Collateral 



	Two Hundred Twenty Eight Thousand Thirty-Seven 
(228,037) shares of the Common Stock of the Stocker & Yale, 
Inc. registered in the name of Mark W. Blodgett and 
represented by Certificate Nos.: 18, 20, 34, 83, 394. 

<PAGE>

	 [Stock Power] 
FOR VALUE RECEIVED, 

Mark W. Blodgett hereby sells, assigns and transfers unto 
Fleet National Bank Two Hundred Twenty Eight Thousand 
Thirty-Seven (228,037) shares of the Common Stock of the 
Stocker & Yale, Inc. (the "Corporation") registered in the 
name of Mark W. Blodgett and represented by Certificate 
Nos.: 18, 20, 34, 83, 394, and do hereby irrevocably 
constitute and appoint Fleet National Bank as its attorney 
to transfer the said stock on the books of the Corporation 
with full power of substitution. 

Dated as of April 1, 1998. 



	Witness 	Pledgor: 
	 
By:/s/ Susan Sundell               By:/s/ Mark W. Blodgett

                                          Mark W. Blodgett	


<PAGE>
Exhibit 10.1(n) 

  WAIVER OF CERTAIN PROVISIONS OF THE CREDIT AGREEMENT                    
                     DATED JULY 21, 1998		

					Andrew J. Maidman 
					Vice President
					Managed Assets Division

			        	Fleet Corporate Administration 

					Mail Stop: CT MO H21A
					777 Main Street
					Hartford, CT 06115	
July 21, 1998			860-986-4572
					Fax 860-986-2435
								
			
Stocker & Yale, Inc. (the "Company") 
32 Hampshire Road 
Salem, NH 03079 
Attn.: Susan Sundell 

RE: 	Credit Arrangements with Fleet National Bank 

Dear Mr. Blodgett: 

	Reference is hereby made to that certain Credit 
Agreement, dated as of March 6, 1995 (the "Credit 
Agreement") by the Company in favor of Fleet National Bank, 
as successor to Shawmut Bank, N.A. (collectively, the 
"Bank"), as amended by that certain Modification and 
Extension Agreement, dated as of April 1, 1998 (the 
"Modification Agreement"), between the Company and the 
Bank. 

	The Company has requested that the Bank agree to waive 
compliance with Section 10(B) of the Modification Agreement 
for the quarter ending June 30, 1998. Subject to the terms 
of this letter and the Company's acknowledgment below 
indicating the Company's agreement with such terms, and the 
satisfaction of the following conditions, the Bank agrees 
to waive compliance with Section 10(B) of the Modification 
Agreement but only for the quarter ending June 30, 1998, 
and for the months of May and June 1998:

1. payment of $25,000 to the Bank upon execution and 	    
delivery of this letter agreement as a waiver fee 
which shall be in addition to all amounts due, owing 
and payable pursuant to the Credit Agreement and shall 
not be applied to any amounts currently outstanding; 

2. reimbursement of all of the Bank's legal expenses 
in connection with the preparation of this letter 
agreement. 

	By execution of this letter agreement the Company 
hereby acknowledges and confirms that it does not have any 
offsets, defenses or claims against the Bank, its parents, 
subsidiaries, affiliates, or any officers, agents directors 
or employees whether asserted or unasserted. To the extent 
that they may have such offsets, defenses or claims, the 
Company and its respective successors, assigns, 
predecessors, employees, agents, heirs, executors, as 
applicable releases and forever discharges Bank, its 
parents, subsidiaries, affiliates, and officers, directors, 
employees, agents attorneys, successors and assigns, both 
present and former (collectively the "Bank Affiliates") of 
and from any and all manner of action and actions, cause 
and causes of action, suits, debts, controversies, damages, 
judgments, executions, claims and demands whatsoever, 
asserted or unasserted, in law or in equity which against 
Bank and/or Bank Affiliates it ever had, now has or which 
any of Company's successors, assigns, parents, 
subsidiaries, affiliates, predecessors, employees, agents, 
heirs, executors, as applicable, both present and former 
ever has or now has, upon or by reason of any manner, 
cause, causes or thing whatsoever, including, without 
limitation, any presently existing claim or defense whether 
or not presently suspected, contemplated or anticipated. 

	By execution of this letter agreement and except as 
otherwise modified or agreed herein, the Company (I) hereby 
affirms and ratifies all of the terms, covenants, 
provisions, conditions agreements, warranties and 
representations contained in the Credit Agreement and 
Modification Agreement and all loan documents executed in 
connection therewith; (ii) hereby agrees to make all 
payments due and payable and to perform all of its 
obligations pursuant to the Credit Agreement and 
Modification and this letter agreement; (iii) hereby agrees 
to indemnify and hold the Bank harmless from any costs, 
expenses,

<PAGE>
claims, losses as a result of the agreements contained 
herein; (iv) hereby agrees that in addition to the events 
of default specified in the Credit Agreement and 
Modification Agreement, failure to comply with its 
obligations respecting this letter agreement shall 
constitute an event of default under the Credit Agreement 
and Modification Agreement; (v) hereby agrees that the 
Credit Agreement and Modification Agreement and this letter 
agreement are fully enforceable against it and, except as 
modified hereby, the Credit Agreement and Modification 
Agreement and all loan documents delivered in connection 
with either the Credit Agreement or Modification Agreement 
remain in full force and effect; (vi) hereby confirms that 
all collateral granted to or assigned to the Bank with 
respect to payment, performance and observance of all 
liabilities, obligations and covenants on the Company's 
part to be performed or observed pursuant to the Credit 
Agreement and Modification Agreement and this letter 
agreement; (vii) hereby represents and warrants that no 
event has occurred which is, or with the passage of time or 
with the giving of notice or both would be an event of 
default under the Credit Agreement and Modification 
Agreement, as affected by this letter agreement; and (viii) 
hereby agrees that the Bank has no obligation to extend 
further credit to it except as specifically provided under 
the terms of the Credit Agreement and Modification 
Agreement or this letter agreement.

	If the foregoing is acceptable to you, please 
acknowledge your acceptance by signing the space provided 
below. 

								Very truly yours, 




								FLEET NATIONAL BANK 



								By:/s/Andy Maidman 


	Agreed and Accepted: 

	STOCKER & YALE, INC. 



	By: 

	Its: 
	Acknowledgment by Guarantor 


	Mark W. Blodgett, individually

<PAGE>
Exhibit 10.1(o)

CONSENT LETTER DATED MAY 11, 1998 RELATING TO LASIRIS 
				TRANSACTION

May 11, 1998

Mark W. Blodgett
Chairman and Executive Officer
Stocker & Yale, Inc. (the "Company")
32 Hampshire Road
Salem, New Hampshire 03079

RE: Credit Arrangements with Fleet National Bank, N.A.	
				(the "Bank")


Dear Mr. Blodgett,

	Reference is hereby made to that certain Credit 
Agreement between the Company and the Bank, dated as of 
March 6, 1995, as modified and extended by that certain 
Modification and Extension Agreement, dated as of April 1, 
1998 (as modified and extended, the "Credit Agreement"). 
The Credit Agreement provides, without limitation, that the 
Company shall not incur additional Indebtedness (as defined 
in the Credit Agreement) or grant junior security interests 
or second mortgages on any of its property without the 
express prior written consent of the Bank. Capitalized 
terms used herein and not defined herein shall have the 
meanings set forth in the Credit Agreement.

I.	BACKGROUND

	The Company has entered into an agreement (the 
"Purchase Agreement") pursuant to which the Company will 
(i) cause the formation of a new subsidiary, Lasiris 
Holding Corp. ("Holding"), formed under the laws of New 
Brunswick, Canada and (ii) Holding will acquire all of the 
issued and outstanding capital stock of Lasiris, Inc., a 
Canadian corporation ("Lasiris"). In connection with the 
financing of such acquisition, the Company will consummate 
the private placement of 350,000 shares of the Company's 
common stock, par value $0.001 per share (the "Common 
Stock"), will cause the prepayment of certain amounts owed 
to it by Beverly Hospital Corporation (the "Beverly 
Hospital Debt") at a five percent (5%) discount to the 
aggregate outstanding principal amount of such indebtedness 
and will incur indebtedness (the "Danvers Loan") to Danvers 
Savings Bank ("Danvers") in a principal amount of $750,000 
which will be secured by a second mortgage interest in the 
Company's headquarters facility located at 32 Hampshire 
Road, Salem, New Hampshire (the "New Hampshire Facility") 
to be granted to Danvers by the Company. In addition, 
Lasiris will enter into a credit agreement (the "Lasiris 
Credit Agreement") with the Toronto-Dominion Bank ("TDB") 
which will provide aggregate availability of $2,000,000 
(CDN) of which up to $1,400,000 (CDN) may be used in 
connection with the acquisition of Lasiris and the 
remaining amounts available thereunder are to be used for 
general working capital purposes of Lasiris (such loans, 
the "Lasiris Loans"). The Lasiris Loans will be secured by 
a blanket lien on Lasiris' assets in favor of TDB and 
guaranteed by the Company. The transaction contemplated in 
the Purchase Agreement and respecting the Danvers Loan as a 
giving loan shall be hereafter referred to as the "Lasiris 
Transaction." You have
	
<PAGE>

requested our consent to the Lasiris Transaction and you 
will understand that we are willing to grant the consents 
set forth below subject to the terms and conditions of this 
letter.


TERMS OF CONSENT: The Bank is willing to consent to
the Lasiris Transaction herein, but only upon your 
agreement with and satisfaction of, each of the following 
terms and conditions:

	A.	Amendments to Credit Agreement: The Credit 
Agreement is hereby amended as follows:
	
    	(1)	Section 1.01 of the Credit Agreement
		Regarding Eligible Inventory is amended to
	     read as follows:

			""Eligible Inventory"-All raw material of 
the Company, but excluding (i) raw material 
located outside the United States, (ii) any 
raw material in which the bank does not have 
a fully perfected first priority security 
interest, (iii) any used material, (iv) raw 
material not located at the Premises, (v) 
and samples, returnables, damaged items, 
overstock items, obsolete items, items 
against which the Company had established 
reserves, defective items, or any other 
items designated as unsatisfactory by the 
Bank from time to time."

	    (2)	Section 1.01 of the Credit Agreement 
		Regarding Borrowing Base is amended to read as
		Follows:
		
			""Borrowing Base"-an amount equal to
			
	(A)	lesser of
			
	(i)	the Committed Revolver Amount or
	(ii)	(a)	80% of the net 
outstanding amount of Eligible 
Receivables from time to time, 
plus
				
	(b)	the lesser of
	(i) $1,150,000 or
	(ii) 32% of Eligible 
Inventory from 
time to time.
							
	(B)	less outstanding Letters of Credit."
			
	B.	Ratification and Confirmation: Except as hereby
	modified and amended, the Company ratifies and 
confirms the validity and effect of the Credit 
Agreement and Loan Documents.
	
	<PAGE>


	Guaranty by Mark W. Blodgett: Mark W. Blodgett
	shall Execute and deliver simultaneously with the 
execution and delivery of this letter an Unlimited 
Guaranty in the form attached hereto as Exhibit A 
which shall replace that certain Limited Guaranty by 
Mark W. Blodgett in favor of the Bank, dated as of 
April 1, 1998.
	
	D.	Amended and Restated Third Part Pledge Agreement: 
	Mark W. Blodgett shall execute and deliver 
simultaneously with the execution and delivery of this 
letter an Amended and Restated Third Party Pledge 
Agreement in the form attached hereto as Exhibit B 
which shall amend and restate that certain Third Party 
Pledge Agreement by Mark W. Blodgett in favor of the 
Bank, dated as of April 1, 1998. The obligations 
secured by assets pledged pursuant to the Amended and 
Restated Third Party Pledge shall be limited to one 
million dollars ($1,000,000( as provided in such 
pledge agreement.

	E.	Legal Fees: The Company shall have paid all of 
the 
	Bank's legal fees and expenses incurred in issuing 
this letter agreement and the transactions 
contemplated hereby.
	

	Release of Bank: The Company hereby acknowledges
	and confirms that it does not have any offsets, 
defenses or claims against the Bank, its parents, 
subsidiaries, affiliates, or any officers, agents 
directors or employees (collectively, the "Bank 
Affiliates") whether asserted or unasserted. To the 
extent that they may have such offsets, defenses or 
claims, Company and any of its respective successors, 
assigns, predecessors, employees, agents, heirs, 
executors, as applicable releases and forever 
discharges Bank and the Bank Affiliates of and from 
any and all manner of action and actions, cause and 
causes of action, suit, debts, controversies, damages, 
judgements, executions, claims and demands whatsoever, 
asserted or unasserted, in law or equity which against 
Bank and/or Bank Affiliates it ever had, now has or 
which any of Company's successors, assigns, 
predecessors, employees, agents, heirs, executors, as 
applicable, both present and former ever had or now 
has, upon or by reason of any manner, cause, causes or 
thing whatsoever, including without limitation, any 
presently existing claim or defense whether or not 
presently suspected, contemplated or anticipated.
		
	Execution and Delivery: The Company's execution
	and delivery of this letter agreement indicates the 
agreement of the Company with all of the terms and 
conditions of this letter agreement.

	Massachusetts Law Governs: This letter, with its
	Exhibits, is intended to take effect as a sealed 
instrument and had been executed or completed and is 
to be performed in Massachusetts, and it and all 
transactions thereunder or pursuant thereto shall be 
governed as to interpretation, validity, effect, 
rights, duties and remedies of the parties thereunder 
and in all other respects by the domestic laws of 
Massachusetts.

	<PAGE>

III.	CONSENT

	The Bank hereby consents to the Lasiris Transaction, 
including the following specific consents respecting 
the Credit Agreement:
	
	A.	Consent under Section 6.02(a) of the Credit 
Agreement to your incurring Indebtedness pursuant 
to the Danvers Loan in an amount not exceeding 
$750,000;
	
	B.	Consent under Section 6.02(a) of the Credit 
Agreement to Holding's incurring Indebtedness 
pursuant to its execution and delivery of the 
Lasiris Credit Agreement;

	C.	Consent under Section 6.02(a) of the Credit 
Agreement to Lasiris' incurring Indebtedness 
pursuant to the Lasiris Credit Agreement;

	D.	Consent under Section 6.02(b) of the Credit 
Agreement and under any negative pledge pursuant 
to which the Company has agreed not to convey any 
interest in its real property to our granting to 
Danvers a second mortgage interest in the New 
Hampshire Facility to secure the Danvers Loan;

	E.	Consent under Section 6.02(b) of the Credit 
Agreement to Lasiris's granting to TDB a blanket 
security interest in its assets to secure the 
Lasiris Loans;

	F.	Consent under Section 6.02(c) of the Credit 
Agreement to your intervening in the Lasiris 
Credit Agreement and guaranteeing the payment by 
Lasiris of all borrowing thereunder;

	G.	Consent under Section 6.02(e) of the Credit 
Agreement to the prepayment of the Beverly 
Hospital Debt and the use of the amounts received 
from Beverly Hospital Corporation in respect 
thereof in connection with the acquisition of 
Lasiris;

	H.	Consent under Section 6.02(f) of the Credit 
Agreement to the acquisition of all of the issued 
and outstanding capital stock of Lasiris;

	I.	Consent under Section 6.02(l) of the Credit 
Agreement to the formation of Holding under the 
laws of the Province of New Brunswick, Canada and 
the issuance of shares of Holding's Class B 
Common Stock or its Class C Common Stock to the 
holders of the capital stock of Lasiris;and

	J.	Consent under Section 6.02(m) of the Credit 
Agreement in connection with writing up the value 
of certain assets of Lasiris following 
consummation of the acquisition.

	Except as for the consents specifically set forth in
this letter, nothing herein shall constitute an agreement 
by the Bank to waive any of the terms and conditions of the 
Credit Agreement.

<PAGE>

IV.	REPRESENTATION AND WARRANTIES

	The Company hereby represents and warrants that except
As previously disclosed to the Bank (a) no Default or Event 
of Default has occurred and is continuing, (b) each of its 
representations and warranties in the Credit Agreement are 
true and correct, (c) the liens granted to it under the 
Security Agreement are valid and (d) this Consent 
constitutes its legal, valid and binding obligation, 
enforceable in accordance with its terms.

V.	OTHER PROVISIONS STILL EFFECTIVE

	All other provisions of the Credit Agreement and each 
other agreement, document or instrument executed in 
connection therewith (as any of the foregoing may have 
been amended as of the date hereof) shall remain in 
full force and effect.



Very Truly Yours,

FLEET NATIONAL BANK, N.A.

By:/s/ Thomas J. Gardiner
Its:   Senior Vice President

MS CT MO H21A
777 Main Street
Hartford, CT 06115

Agreed to:
STOCKER & YALE, INC.

By:

Its:
Dated:

<PAGE>	

10.15 (a)

	  DS2.338050.1
	   2001579-0002 
                    PROMISSORY NOTE 


	$750,000.00                   Boston, Massachusetts 

                                                May 13,1998 

	FOR VALUE RECEIVED, the undersigned (the "Maker"), 
hereby promises to pay to the order of DANVERS SAVINGS 
BANK, at its office One Conant Street, Danvers, 
Massachusetts (the "Lender"), the sum of SEVEN HUNDRED 
FIFTY THOUSAND and xx/100 DOLLARS ($750,000.00), or the 
aggregate principal amount outstanding on the date this 
Note becomes due and payable in full provided herein, 
together with interest on the unpaid principal amount from 
time to time outstanding prior to maturity at a fixed rate 
per annum equal to Eleven Percent (11%) (the "Interest 
Rate"). Interest shall be payable in arrears on the first 
day of each month commencing on June 1, 1998 and on the 
date the principal amount of this note becomes due and 
payable in full. Once repaid, amounts borrowed hereunder 
may not be reborrowed. The entire balance of principal, 
accrued interest and other fees and charges shall be due 
and payable on the earlier of (a) acceleration by the 
Lender hereunder, or (b) May 13, 1999. In addition, if the 
entire balance of principal, accrued interest and other 
fees and charges is not paid in full on or before September 
30, 1998, on October 1, 1998 the Maker shall also pay the 
Lender an additional fee of Six Thousand Two Hundred Fifty 
Dollars ($6,250.00) (the "Fee"). 

	After maturity (whether by acceleration or 
otherwise), interest shall be payable on the unpaid 
principal balance from time to time outstanding at a rate 
per annum equal to the Sixteen Percent (16%) (the "Default 
Rate"), until fully paid. Any payment hereunder not paid 
within fifteen (15) days after the date such payment is due 
shall be subject to a late fee equal to five percent (5%) 
of the amount overdue. 

	Interest and fees shall be calculated on the basis 
of a 360-day year times the actual number of days elapsed. 
All payments will be applied first to any charges, costs, 
expenses or late fees then owed by the Maker to the Lender, 
next to unpaid accrued interest, with any balance applied 
to principal. In no event shall interest payable hereunder 
exceed the highest rate permitted by applicable law. To the 
extent any interest received by the Lender exceeds the 
maximum amount permitted, such payment shall be credited to 
principal, and any excess remaining after full payment of 
principal shall be refunded to the Maker. The Maker may 
	prepay principal in whole or in part, without penalty or 
premium. 

	Upon the occurrence of any one or more of the 
following events (each, an "Event of Default") the 
obligations under this Note shall become immediately due 
and payable without further notice or demand: (i) the 
Maker's failure to (x) make any payment when due of the 
Fee or any principal or interest on this Note or any part 
thereof when such payment is due 


<PAGE>
any principal or interest on this Note or any part thereof 
when such payment is due hereunder or (y) to pay or perform 
any other obligation, now existing or hereafter arising, to 
the Lender which continues for ten (10) days there after; 
(ii) the Maker's failure to pay any indebtedness to any 
others when due or any default under the obligations of the 
Maker to any other creditor; (iii) if any representation, 
warranty, statement or certificate made to the Lender by 
the Maker is determined by the Lender to have been or 
becomes untrue in any material respect when made; (iv) the 
death, termination of existence or dissolution of the 
Maker; (v) with respect to the Maker, the commencement, 
whether voluntary or involuntary, of a case under the 
United States bankruptcy Code or any other proceeding or 
action seeking reorganization, liquidation, dissolution or 
other relief under federal or state bankruptcy or 
insolvency statutes or similar laws, or seeking the 
appointment of a receiver, trustee or custodian for the 
Maker or all or a part of its assets, and if involuntary, 
which is not dismissed within sixty (60) days; (vi) if the 
Maker makes an assignment for the benefit of creditors, or 
is unable to pay its debts as they mature; (vii) the entry 
of any judgment against the Maker, which judgment is not 
satisfied or appealed from (with execution or similar 
process stayed) within thirty (30) days of entry; (viii) 
the service of any process upon the Lender seeking to 
attach any funds of the Maker on deposit with the Lender; 
(ix) or if there shall occur any other breach (i.e., not 
otherwise addressed in the Note under any of the other 
documents and/or agreements delivered to the Lender at the 
time of or in connection with this Note and all 
replacements, renewals and extensions thereof, which is not 
cured within twenty (20) days after written notice thereof 
from the Lender is received or deemed received; provided, 
however, that such twenty (20) day period shall, if such 
default is not susceptible of cure within such twenty (20) 
day period, be extended for such additional number of days, 
not to exceed sixty (60), as may be required to cure the 
same if the Maker commences such cure within the initial 
twenty (20) day period and thereafter diligently pursues 
the same to completion; or (x) any of the foregoing events 
occur with respect to any guarantor or endorser hereof. 

	As additional security for the payment and 
performance of the Maker's obligations or the obligations 
of any guarantor or endorser hereof to the Lender, now 
existing or hereafter arising, the Lender is hereby granted 
a lien and security interest in and to any and all deposits 
or other sums at any time credited by or due from the 
Lender to the Maker or any guarantor or endorser, whether 
in regular or special depository accounts or otherwise, and 
all moneys, securities and other property and the proceeds 
thereof, now or hereafter held or received by the Lender, 
whether for safekeeping, custody, pledge, collection or 
otherwise. Upon the occurrence of an Event of Default, in 
addition to and not in limitation of any and all rights and 
remedies of the Lender, hereunder or otherwise, all of such 
rights and remedies being cumulative, the Lender may set 
off any such deposits, other sums, moneys, securities and 
other property and the proceeds thereof against any or all 
of the obligations of the Maker, guarantors or endorsers to 
the Lender, without prior notice or demand, and regardless 
of whether or not such obligations are secured by any other 
collateral, and regardless of the adequacy of any such 
other collateral. 

	The Maker agrees to pay all costs and expenses, 
including, without limitation, reasonable attorneys' fees 
and expenses incurred, or which may be incurred, by the 
Lender in connection  

<PAGE>
with the negotiation, documentation, administration, 
enforcement and collection of this Note and any other 
agreements, instruments and documents executed in 
connection herewith. 

	The Maker and all guarantors and endorsers hereby 
waive presentment, demand, notice, protest, and all other 
demands and notices in connection with the delivery, 
acceptance, performance and enforcement of this Note, and 
assent to extensions of the time of payment or forbearance 
or other indulgence without notice. No delay or omission of 
the Lender in exercising any right or remedy hereunder 
shall constitute a waiver of any such right or remedy. 
Acceptance by the Lender of any payment after demand shall 
not be deemed a waiver of such demand. A waiver on one 
occasion shall not operate as a bar to or waiver of any 
such right or remedy on any future occasion. 

	The liabilities of the Maker and any endorser or 
guarantor of this Note are joint and several; provided, 
however, the release by the Lender of the Maker or any 
endorser or guarantor shall not release any other party 
obligated on account of this Note. No party obligated on 
account of this Note may seek contribution from any other 
party also obligated unless and until all liabilities to 
the Lender of the party from whom contribution is sought 
have been satisfied in full. 

	This Note is delivered to the Lender at its office 
in the Commonwealth of Massachusetts, and shall be governed 
by Massachusetts law. For purposes of any action or 
proceeding involving this note, the Maker hereby expressly 
submits to the jurisdiction of all federal and state courts 
located in the Commonwealth of Massachusetts. THE MAKER AND 
THE LENDER EACH HEREBY KNOWINGLY, VOLUNTARILY AND 
INTENTIONALLY WAIVES (TO THE EXTENT PERMITTED BY APPLICABLE 
LAW) ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY OF ANY 
DISPUTE ARISING UNDER OR RELATING TO THIS NOTE AND AGREES 
THAT ANY SUCH DISPUTE SHALL BE TRIED BEFORE A JUDGE SITTING 
WITHOUT A JURY. 

	Executed as an instrument under seal as of the date 
first above written. 




	WITNESS: 	MAKER: 
                                    STOCKER & YALE, INC., a 
                                  Massachusetts corporation 

By:/s/ John Evan Jones             By:/s/ Mark W. Blodgett

<PAGE>

Exhibit 10.15 (b)
                                              


	MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, 
                    	SECURITY AGREEMENT 
			  AND FINANCING STATEMENT 

THIS MORTGAGE, SECURITY AGREEMENT AND FINANCING STATEMENT 
(this "Mortgage" or this "Agreement") is made as of May 13, 
1998 by STOCKER & YALE, INC., Massachusetts corporation 
("Mortgagor"), having an address at 32 Hampshire Road, 
Salem, New Hampshire to DANVERS SAVINGS BANK, a 
Massachusetts banking corporation, ("Mortgagee") having its 
principal office a One Conant Street, Danvers, 
Massachusetts. 

	WITNESSETH 


	WHEREAS, Mortgagor has executed and delivered to 
Mortgagee a Promissory Note (the "Note") of even date 
herewith made payable to the order of Mortgagee in the 
original principal sum of SEVEN HUNDRED FIFTY THOUSAND 
DOLLARS ($750,000.00), bearing interest and payable as set 
forth therein; 

	NOW, THEREFORE, to secure the payment of the 
principal indebtedness under the Note and interest and fees 
thereon (and all replacements, renewals and extensions 
thereof, in whole or in part) according to its tenor and 
elect, and to secure the payment of all other sums which 
may be at any time due and owing or required to be paid 
under the Note, this Mortgage, any of the other documents 
evidencing, creating and/or securing the loan transaction 
of which the Note is a part (collectively the "Loan 
Documents"), and all replacements, renewals and extensions 
thereof, in whole or in part; and to secure the performance 
and observance of all the covenants, agreements and 
provisions contained in this Mortgage, the Note, and the 
other Loan Documents, and to charge the properties, 
interests and rights hereinafter described with such 
payment, performance and observance (the foregoing 
collectively, the "Indebtedness Hereby Secured"), and for 
other valuable consideration, the receipt and sufficiency 
whereof are hereby acknowledged, Mortgagor DOES HEREBY 
GRANT, REMISE, RELEASE, LIEN, MORTGAGE AND CONVEY unto 
Mortgagee, its successors and assigns forever, with 
MORTGAGE COVENANTS, the Land (as hereinafter defined) 
together with the following described property, rights and 
interests all of which are hereby pledged primarily and on 
a parity with the Land and not secondarily (and are, 
together with the Land, the "Mortgaged Premises"): 

	THE PARCEL OF LAND locally known as 32 Hampshire 
Road, Salem, New Hampshire as more particularly described 
on EXHIBIT A attached hereto and made a part hereof (herein 
collectively as well as respectively, the "Land") (As used 
herein, references to the "Land" shall be construed to mean 
and be to the "Land and/or any portion thereof," as the 
context may admit); 

	TOGETHER WITH all buildings, structures and 
improvements of every nature whatsoever now or hereafter 
situated on the Land (including but not limited to any and 
all underground and other parking facilities located in or 
on the Land, all landscaped areas, and 

<PAGE>
areas utilized for recreational activities) and all 
fixtures, machinery, appliances, equipment, furniture, and 
personal property of every nature whatsoever now or 
hereafter owned by Mortgagor and located in or on, or 
attached to, or used or intended to be used in connection 
with or with the operation of, the Land, buildings, 
structures or other improvements, or in connection with any 
construction which may be conducted thereon, including all 
extensions, additions, improvements, betterments, renewals, 
substitutions, and replacements to and proceeds of any of 
the foregoing and all of the right, title and interest of 
Mortgagor in and to any such personal property or fixtures 
together with the benefit of any deposits or payments now 
or hereafter made on such personal property or fixtures by 
Mortgagor or on its behalf (the "Improvements"); 

	TOGETHER WITH all easements, rights of way, strips, 
gores of land, streets, ways, alleys, passages, sewer 
rights, waters, water courses, water rights and powers, and 
all estates, rights, titles, interests, privileges, 
liberties, tenements, hereditaments and appurtenances 
whatsoever, in any way belonging, relating or appertaining 
to the Land, or which hereafter shall in any way belong, 
relate or be appurtenant thereto, whether now owned or 
hereafter acquired by Mortgagor, and the reversion and 
reversions, remainder and remainders, rents, issues and 
profits thereof, and all the estate, right, title, 
interest, property, possession, claim and demand 
whatsoever, at law as well as in equity, of Mortgagor of, 
in and to the same; 

	TOGETHER WITH all rents, royalties, issues, profits, 
revenue, income and other benefits from the Mortgaged 
Premises to be applied against the Indebtedness Hereby 
Secured, provided, however, that permission is hereby given 
to Mortgagor so long as no Event of Default (as hereinafter 
defined) has occurred to collect, receive, take, use and 
enjoy such rents, royalties, issues, profits, revenue, 
income and other benefits as they become due and payable, 
but not more than one (1) month in advance thereof; 

	TOGETHER WITH all right, title and interest of 
Mortgagor in and to any and all leases now or hereafter on 
or affecting the Mortgaged Premises or any part thereof 
whether written or oral and all agreements for use of the 
Mortgaged Premises or any part thereof (the "Leases"), 
together with all security therefor and all monies payable 
thereunder, subject, however, to the conditional permission 
hereinabove given to Mortgagor to collect the rentals under 
any such Lease; 

	TOGETHER WITH all fixtures and articles of personal 
property now or hereafter owned by Mortgagor and forming a 
part of or used in connection with the Land or the 
Improvements of the operation thereof (except that this 
Mortgage shall not create a lien on any items of personal 
property which (i) are owned by tenants who are in 
possession pursuant to a Lease and (ii) may be removed by 
such tenants at the expiration or termination of such 
Lease), including, but without limitation, any and all air 
conditioners, antennae, appliances, apparatus, awnings, 
basins, bathtubs, bidets, boilers, bookcases, cabinets, 
carpets, coolers, curtains, dehumidifiers, disposals, 
doors, drapes, dryers, ducts, dynamos, elevators, engines, 
equipment, escalators, fans, fittings, floor coverings, 
furnaces, furnishings, furniture, hardware, heaters, 
humidifiers, incinerators, lighting, machinery, motor 
vehicles, motors, ovens, pipes, plumbing, pumps, radiators, 
ranges, recreational facilities, refrigerators, screens, 
security systems, shades, shelving, sinks, sprinklers, 
stokers, stoves, toilets, ventilators, wall coverings, 
washers, windows, window coverings, wiring, and all 
renewals, replacements or proceeds thereof or articles in 
substitution therefor, whether or 

<PAGE>
not the same are or shall be attached to the Land or the 
Improvements in any manner; it being mutually agreed that 
all of the aforesaid property owned by Mortgagor and placed 
on the Land or the Improvements shall, so far as permitted 
by law, be deemed to be fixtures, a part of the realty, and 
security for the Indebtedness Hereby Secured; 
notwithstanding the agreement and declaration hereinabove 
expressed that certain articles of property form a part of 
the realty covered by this Mortgage and be appropriated to 
its use and deemed to be realty, to the extent that such 
agreement and declaration may not be effective and that any 
of said articles may constitute goods (as said term is used 
in the Uniform Commercial Code of The State of New 
Hampshire), this instrument shall constitute a security 
agreement, creating a security interest in such goods, as 
collateral, in Mortgagee as a secured party and Mortgagor 
as debtor, all in accordance with said Uniform Commercial 
Code as more particularly set forth in Paragraph 16 hereof; 

	TOGETHER WITH all proceeds of the foregoing 
including without limitation all judgments, awards of 
damages and settlements hereafter made resulting from 
condemnation proceeds or the taking of the Mortgaged 
Premises and/or the Improvements or any portion thereof 
under the power of eminent domain, any proceeds of any 
policies of insurance maintained with respect to the 
Mortgaged Premises and/or the Improvements or proceeds of 
any sale, option or contract to sell the Mortgaged Premises 
and/or the Improvements or any portion thereof or any 
franchise agreement relating thereto; and Mortgagor hereby 
authorizes, directs and empowers Mortgagee, at its option, 
on behalf of Mortgagor, or the successors or assigns of 
	Mortgagor, to adjust, compromise, claim, collect and 
receive such proceeds, to give proper receipts and 
acquittances therefor, and, after deducting expenses of 
collection, to apply the net proceeds as a credit upon any 
portion, as selected by Mortgagee, of the Indebtedness 
Hereby Secured, notwithstanding the fact that the same may 
not then be due and payable or that the Indebtedness Hereby 
Secured is otherwise adequately secured; and 

	TOGETHER WITH all right, title, and interest of 
Mortgagor in and to all executory contracts affecting the 
ownership, possession, operation, control and services 
furnished to the Mortgaged Premises or any part thereof 
(collectively, the "Contracts"), provided, however, that 
permission is hereby given to Mortgagor so long as no Event 
of Default has occurred to exercise the rights and powers 
under the Contracts and to enjoy the benefits thereunder; 

	TO HAVE AND TO HOLD the same, unto Mortgagee, its 
successors and assigns, forever, for the purposes and upon 
the uses herein set forth, together with all right to 
possession of the Mortgaged Premises after the occurrence 
of any Event of Default; 

	PROVIDED, NEVERTHELESS, that if Mortgagor shall pay 
in full when due the Indebtedness Hereby Secured and shall 
duly and timely perform and observe all of the terms, 
provisions, covenants and agreements herein and in the Note 
and the other Loan Documents provided to be performed and 
observed by Mortgagor, then the Mortgage and the estate, 
right and interest of Mortgagee in the Mortgaged Premises 
shall cease and become void and of no effect. 


<PAGE>
MORTGAGOR FURTHER COVENANTS AND AGREES AS FOLLOWS: 


	1. Payment of Indebtedness and Performance of 
Covenants. Mortgagor shall (a) pay when due the 
Indebtedness Hereby Secured; and (b) duly and punctually 
perform and observe all of the terms, provisions, 
conditions, covenants and agreements on Mortgagor's part to 
be performed or observed as provided in the Note, this 
Mortgage, and the other Loan Documents. 

	2. Representation of Title. At the time of the 
delivery of these presents, Mortgagor owns record, fee 
simple absolute title to the portion of the Mortgaged 
Premises which constitutes real property and Mortgagor owns 
good title to the portion of the Mortgaged Premises which 
constitutes personal property, subject only to the prior 
mortgage from the Mortgagor to Primary Bank dated as of 
August 29, 1996 to secure the payment of One Million Five 
Hundred Thousand Dollars ($1,500,000.00) and recorded in 
the Rockingham Registry of Deeds in Book 3174, Page 188 
(the "Prior Mortgage") and to matters set forth in EXHIBIT 
B attached hereto and hereby made a part hereof and any 
additional matters approved in writing by Mortgagee; and 
has good right, full power and lawful authority to convey 
and mortgage and grant a security interest in the same, in 
the manner and form aforesaid; that, except as set forth on 
EXHIBIT B hereto or consented to in writing by Mortgagee, 
the same is free and clear of all liens, charges, 
easements, covenants, conditions, restrictions and 
encumbrances whatsoever, including, as to the personal 
property and fixtures, security agreements, conditional 
sales contracts and anything of a similar nature; and that 
Mortgagor shall and will warrant and forever defend the 
title to the Mortgaged Premises against the claims of all 
persons whatsoever claiming by, through or under Mortgagor. 

	3. Maintenance, Repair, Compliance with Law, Use. 
Mortgagor shall (a) promptly repair, restore, replace or 
rebuild (pursuant to plans and specifications approved by 
Mortgagee) any portion of the Improvements which may become 
damaged or be destroyed to be of at least equal value and 
of substantially the same character as prior to such damage 
or destruction (whether or not proceeds of insurance are 
available or sufficient for that purpose, unless the reason 
any such proceeds are not available is that Mortgagee has 
applied such proceeds to reduce the Indebtedness Hereby 
Secured, as contemplated by subparagraph 10(b)(i) hereof, 
and in such event Mortgagor shall be relieved of its 
restoration obligation to the extent of the restoration of 
that part of the Improvements damaged by the hazard with 
respect to which insurance proceeds are received and 
applied by Mortgagee as aforesaid, except to the extent 
required to provide adequate safety and security to the 
remaining portions of the Improvements); (b) keep the 
Mortgaged Premises in good condition and repair, free from 
waste; (c) pay all operating costs of the Mortgaged 
Premises; (d) complete, within a reasonable time, any 
building or buildings or other Improvements now or at any 
time in the process of erection upon the Mortgaged 
Premises; (e) comply with all requirements of statutes, 
ordinances, rules, regulations, orders, decrees and 
other requirements of law relating to the Mortgaged 
Premises or any part thereof by any federal, state or local 
authority; (f) refrain from any action and correct any 
condition which would increase the risk of fire or other 
hazard to the Improvements or any portion thereof; (g) 
comply with any restrictions and covenants of record with 
respect to the Mortgaged Premises and the use thereof, and 
observe and comply with any conditions and requirements 
necessary to preserve and extend any and all rights, 
licenses, permits (including without limitation zoning 
variances,  

<PAGE>
special exceptions and nonconforming uses), privileges, 
franchises and concessions that are applicable to the 
Mortgaged Premises or its use and occupancy; and (h) cause 
the Mortgaged premises to be managed in a competent and 
professional manner. Without the prior written consent of 
Mortgagee, Mortgagor shall not cause, or effect (t) any 
material alterations of the mortgaged Premises or the 
Improvements (including without limitation, landscaped and 
recreation areas and underground on-site paved parking 
areas and parking pavilion and/or structures) except as 
required by law or ordinance or except as permitted or 
required to be made by the terms of any Leases approved by 
Mortgagee; (u) any change in the intended use or occupancy 
of the Mortgaged Premises for which the Improvements have 
been constructed including, without limitation, any change 
which would increase any fire or other hazard; (v) any 
zoning reclassification with respect to the Mortgaged 
Premises; (w) any unlawful use of, or nuisance to exist 
upon, the Mortgaged Premises; (x) any granting of any 
easements, licenses, covenants, conditions or declarations 
of use against the Mortgaged Premises, other than use 
restrictions contained or provided for in Leases approved 
by Mortgagee; or (y) any buildings or additions to any 
existing buildings or other structures to be erected on the 
Mortgaged Premises. 
     
       4. Liens. 

	A. Prohibition. Subject to the provisions of 
Paragraph 5 hereof respecting Taxes (as hereinafter 
defined), Mortgagor shall not create or suffer or permit 
any mortgage, lien, charge or encumbrance to attach to or 
be filed against the Mortgaged Premises, whether such lien 
or encumbrance is inferior, at parity with or superior to 
the lien of this Mortgage, including mechanic's liens, 
materialmen's liens, or other claims for lien made by 
parties claiming to have provided labor or material with 
respect to the Mortgaged Premises (collectively, 
"Mechanic's Liens") and excepting only the lien of real 
estate taxes and assessments not due or delinquent, the 
liens and encumbrances set forth on EXHIBIT B hereto and 
any liens and encumbrances of Mortgagee pursuant to this 
Mortgage and the other Loan Documents. 

	B. Contest of Mechanic's Liens Claims. 
Notwithstanding the foregoing prohibition against 
Mechanic's Liens, Mortgagor, or any party obligated to 
Mortgagor to do so, may in good faith and with due 
diligence contest the validity or amount of any Mechanic's 
Lien and defer payment and discharge thereof during the 
pendency of such contest, provided that: (i) such contest 
shall have the effect of preventing the sale or forfeiture 
of the Mortgaged Premises or any part thereof, or any 
interest therein, to satisfy such Mechanic's Lien; (ii) 
within ten (10) days after Mortgagor has been notified of 
the filing of such Mechanic's Lien, Mortgagor shall have 
notified Mortgagee in writing of Mortgagor's intention to 
contest such Mechanic's Lien or to cause such other party 
to contest such Mechanic's Lien; and (iii) Mortgagor either 
shall have obtained a title insurance endorsement over such 
Mechanic's Liens insuring Mortgagee against loss or damage 
by reason of the existence of such Mechanic's Liens or, at 
the option of Mortgagee, Mortgagor shall have deposited or 
caused to be deposited with Mortgagee at such place as 
Mortgagee may from time to time in writing appoint, and in 
the absence of such appointment, then at the place of 
payment designated in the Note, a sum of money which shall 
be sufficient in the reasonable judgment of Mortgagee to 
pay in full such Mechanic's Lien and all interest which 
might become due thereon, and shall keep on deposit an 
amount so sufficient at all  

<PAGE>
times, increasing such amount to cover additional interest 
whenever, in the judgment of Mortgagee, such increase is 
advisable. Such deposits are to be held without any 
allowance of interest. If Mortgagor shall fail to maintain 
or cause to be maintained sufficient funds on deposit as 
hereinabove provided, shall fail to prosecute such contest 
or cause such contest to be prosecuted with due diligence 
or shall fail to pay or cause to be paid the amount of the 
Mechanic's Lien plus any interest finally determined to be 
due upon the conclusion of such contest, to the extent such 
amount exceeds the amount on deposit with Mortgagee, 
Mortgagee may, at its option, apply the money as deposited 
in payment of or on account of such Mechanic's Lien, or 
that part thereof then unpaid, together with all interest 
thereon. If the amount of money so deposited shall be 
insufficient for the payment in full of such Mechanic's 
Lien, together with all interest thereon, Mortgagor shall 
forthwith, upon demand, deposit with Mortgagee a sum which, 
when added to the funds then on deposit, shall be 
sufficient to make such payment in full. If the contest of 
the Mechanic's Lien claim is ultimately resolved in favor 
of the claimant, Mortgagee shall apply the money so 
deposited in full payment of such Mechanic's Lien or that 
part thereof then unpaid, together with all interest 
thereon (provided Mortgagor is not then in default 
hereunder) when furnished with evidence satisfactory to 
Mortgagee of the amount of payment to be made. Any surplus 
remaining in the control of Mortgagee shall be paid to 
Mortgagor, provided Mortgagor is not then in default 
hereunder. 

	5. Taxes. 


	A. Payment. Mortgagor shall pay or cause to be paid 
when due and before any penalty attaches, all general and 
special taxes, assessments, water charges, sewer charges, 
and other fees, taxes, charges and assessments of every 
kind and nature whatsoever levied or assessed against the 
Mortgaged Premises or any part thereof or any interest 
therein or any obligation or instrument secured hereby, and 
all installments thereof (collectively, "Taxes"), whether 
or not assessed against Mortgagor, and, upon request, 
Mortgagor shall furnish to Mortgagee receipts therefor as 
soon as reasonably possible, but in any event within thirty 
(30) days after the date the same are due; and shall 
discharge any claim or lien relating to Taxes upon the 
Mortgaged Premises, other than matters expressly permitted 
by the terms hereof. Mortgagor hereby covenants and agrees 
that no owner of the Mortgaged Premises shall be entitled 
to any credit by reason of the payment of any Taxes 
thereon. In no event shall Mortgagor be considered in 
default of this Section 5.A. if Mortgagor has timely made 
all Required Deposits under subsection 9(a) hereof and is 
at such time entitled to have the Taxes paid pursuant to 
the first sentence of subsection 9(b) hereof. 

	B. Contest. Mortgagor may, in good faith and with due 
diligence, contest or cause to be contested the validity or 
amount of any such Taxes, provided that: 

	(a) such contest shall have the effect of 
preventing the collection of the Taxes so contested and the 
sale or forfeiture of the Mortgaged Premises or any part 
thereof or interest therein to satisfy the same; 

<PAGE>
	(b) Mortgagor has notified Mortgagee in writing 
of the intention of Mortgagor to contest the same or to 
cause the same to be contested before any Tax has been 
increased by any interest, penalties, or costs; and 

	(c) Mortgagor has deposited or caused to be 
deposited with Mortgagee, at such place as Mortgagee may 
from time to time in writing designate, a sum of money (or 
other security acceptable to Mortgagee) that, when added to 
the monies or other security, if any, deposited with 
Mortgagee pursuant to Paragraph 9 hereof, is sufficient, in 
Mortgagee's reasonable judgment, to pay in full, or provide 
for payment in full of, such contested Tax and all 
penalties and interest that might become due thereon, and 
shall keep on deposit an amount or other security 
sufficient, in Mortgagee's reasonable judgment, to pay in 
full, or provide for payment in full of, such contested 
Tax, increasing such amount or other security to cover 
additional penalties and interest whenever, in Mortgagee's 
judgment, such increase is advisable. 

If Mortgagor fails to prosecute such contest with due 
diligence or fails to maintain sufficient funds or security 
on deposit as hereinabove provided, Mortgagee may, at its. 
option, within ten (10) days following Mortgagee's written 
notice to Mortgagor (or such shorter period of time 
necessary in Mortgagee's reasonable opinion to prevent the 
collection of Taxes or the sale or forfeiture of the 
Mortgaged Premises or any part thereof or interest 
therein), apply the monies and liquidate any securities 
deposited with Mortgagee, in payment of, or on account of, 
such Taxes, or any portion thereof then unpaid, including 
all penalties and interest thereon. If the amount of the 
money and any such security so deposited is insufficient 
for the payment in full of such Taxes, together with all 
penalties and interest therein, Mortgagor shall forthwith, 
upon demand, either deposit with Mortgagee a sum that, when 
added to such funds then on deposit, is sufficient to make 
such payment in full, or, if Mortgagee has applied funds on 
deposit on account of such Taxes, restore such deposit to 
an amount satisfactory to Mortgagee. Provided that if an 
Event of Default has not occurred, Mortgagee shall, if so 
requested in writing by Mortgagor, after final disposition 
of such contest and upon Mortgagor's delivery to Mortgagee 
of an official bill for such Taxes, apply the money or 
security so deposited in full payment of such Taxes or that 
part thereof then unpaid, together with all penalties and 
interest thereon and return any excess to Mortgagor, unless 
Mortgagor has paid all such Taxes, together with all 
penalties and interest thereon, and has provided Mortgagee 
with evidence reasonably satisfactory to Mortgagee of such 
payment, in which event Mortgagee shall return such money 
or security to Mortgagor. All money held by Mortgagee 
pursuant to this Paragraph 5.B. shall be held without any 
allowance of interest thereon. 

	6. Prior Mortgage. This Mortgage is a second mortgage 
subject and subordinate to only the Prior Mortgage but not 
to any modification, extension, replacement, or renewal 
thereof and only to the amounts from time to time remaining 
unpaid thereon. 

	The Mortgagor hereby represents, warrants, covenants 
and agrees that: 

<PAGE>
(a)	This Mortgage is lawfully executed and delivered in 
conformity with the Prior Mortgage. 

	(b) 	The Mortgagor will promptly pay, when due and 
payable, the interest, installments of principal, 
and all other sums and charges mentioned in and 
made 	payable by the Prior Mortgage. 

	(c)	 	The Mortgagor will promptly perform and observe 
all of the terms, covenants, and conditions 
required to be performed and observed by the 
Mortgagor under the Prior Mortgage, within the 
periods (exclusive of grace periods) provided in 
the Prior Mortgage, and will do all things 
necessary to preserve and to keep the Prior 
          Mortgage free from default. 

  (d) 	The Mortgagor will promptly notify the Mortgagee   
in writing of any default by the Mortgagor in the 
performance or observance of any of the terms, 
covenants or conditions on the part of the 
Mortgagor to be performed under the Prior 
	Mortgage. 

	(e) 		The Mortgagor will (i) promptly notify the 
Mortgagee in writing of the receipt by 
the Mortgagor of any notice (other than notices 
customarily sent on a regular periodic basis) 
from the Mortgagee under the Prior Mortgage and 
of any notice claiming default by the Mortgagor 
in the performance or observance of any of the 
terms, covenants or conditions on the part of the 
Mortgagor to be performed or observed under the 
Prior Mortgage, and (ii) promptly cause a copy of 
each such notice received by the Mortgagor from 
the Mortgagee under the Prior Mortgage to be 
delivered to the Mortgagee. 

	(f) 		The Mortgagor will not, without the prior written 
consent of the Mortgagee, enter into any 
agreement or accept the benefit of any 
arrangement whereby the holder of the Prior 
Mortgage waives, postpones, extends, reduces or 
modifies the payment of any installment of 
principal or interest or any other item or amount 
now required to be paid under the terms of the 
Prior Mortgage or modifies any provision thereof. 

  (g)     The Mortgagor will, within ten (10) days after 
written demand from the Mortgagee, use its best 
efforts to obtain from the Mortgagee under the 
Prior Mortgage and deliver to the Mortgagee a 
certificate stating that such Prior Mortgage is 
in full force and effect, is unmodified, that no 
notice of default thereunder has been served on 
the Mortgagor thereunder and stating whether or 
not there are any defaults thereunder, and 
specifying the nature of such defaults, if any. 


<PAGE>
  (h)	 	The Mortgagor will furnish to the Mortgagee, 
upon demand, proof of payment-of all items 
which are required to be paid by the Mortgagor 
pursuant to the Prior 	Mortgage and proof of 
payment of which is required to be given to the 
Mortgagee under the Prior Mortgage. 
  
  (i)	The Mortgagor shall execute and deliver, on 
request of the Mortgagee, such instruments as 
the Mortgagee may deem useful or required to 
permit the Mortgagee to cure any default under 
the Prior Mortgage or permit the Mortgagee to 
take such other action as the Mortgagee 
considers desirable to cure or remedy the 
matter in default and preserve the interest of 
the Mortgagee in the Mortgage Property. 

  (j)	 	If Mortgagor shall default in making any 
required payment required under the 
Prior Mortgage including, without limitation, 
payments of principal and/or interest, 
Mortgagor shall have the right to advance the 
funds necessary to cure such default and all 
funds so advanced by Mortgagee together with 
interest thereon at the Default Rate shall be 
due together with the interest and principal, 
	due under the Note secured by this Mortgage. 

  (k)	 	At the request of the Mortgagee, Mortgagor 
agrees to pay Mortgagee any sums required to be 
paid to the holder of the Prior Mortgage at 
least ten (10) days prior to the last day under 
the Prior Mortgage that such payments may be 
made without	constituting a default thereunder 
and Mortgagee agrees to promptly remit such 
sums so paid to Mortgagee by Mortgagor to the 
holder of the Prior Mortgage in payment of such 
sums due under such mortgage. 

  (l)	It shall be deemed an Event of Default under         
this Mortgage if the Mortgagor fails to make 
any payment due under the Prior Mortgage 
including, without limitation, any installment 
of principal or interest due under the Prior 
Mortgage, when due, or if the Mortgagor fails 
to keep, observe, or perform any of the other 
covenants, conditions or agreements contained 
in the Prior Mortgage or if the Mortgagor fails 
to repay to the Mortgagee on demand any amount 
which the Mortgagee may have paid on the Prior 
Mortgage with interest thereon; or any suit to 
foreclose the Prior Mortgage should be 
commenced. 

	To the extent the particular obligations imposed 
upon the Mortgagor by section 9 are also required of 
Mortgagor under the Prior Mortgage, these obligations shall 
be deemed fulfilled so long as Mortgagor compiles with the 
requirements of the Prior Mortgage. 

7.	Insurance Coverage. 

	A. Mortgagor will insure the Mortgaged Premises 
against such perils and hazards, and in such amounts and 
with such limits, as Mortgagee may from time to time 
require, and in any 

<PAGE>
event will continuously maintain the following described 
policies of insurance without cost to Mortgagee (the 
"Insurance Policies"): 

       i.	property insurance against loss and damage 
by risk of physical loss or damage, 
including fire, lightening, sprinkler 
leakage, windstorm, hail, explosion, 
aircraft, vandalism and other risks 
covered by the so-called extended coverage 
endorsement covering the Mortgaged 
Premises at the replacement cost of the 
Improvements thereon provided that such 
amount 	must be sufficient to prevent 
Mortgagor from becoming a co-insurer under 
	such policies and naming Mortgagee as loss 
payee; 

       ii.		commercial general liability insurance 
against any loss, liability or damage on, 
about, or relating to the Mortgaged 
Premises including death or injury subject 
to combined single limits per occurrence 
of not less than One Million Dollars 
($1,000,000) including a waiver of 
subrogation clause, with a broad form 
coverage endorsement and naming the 
	Mortgagee, its successors and assigns, as 
their interests may appear as 
	additional insured;        

iii.	insurance of the type necessary to insure
such other risks and in such other amounts
as Mortgagee may reasonably require; and

iv.	    such other types and amounts of coverage as 
are customarily (x) maintained by owners 
or operators of like properties, or (y) 
reasonably required by sophisticated 
institutional lenders in like 
transactions. 

	B. In addition to the Insurance Policies, in the 
event that Mortgagor has not paid on or before September 
30, 1998 the Indebtedness Hereby Secured in full, Mortgagor 
shall deliver to Mortgagee no later than. 5:00 P.M. on 
September 30, 1998, an environmental impairment or risk 
insurance policy (the "Environmental Insurance") in form 
acceptable to the Mortgagee in the exercise of its sole 
discretion, but which at a minimum shall: 

i.	be issued by an insurer rated A+ or higher by 
      Best's and which has a financial class of 15 
      Higher; 

ii.	name Mortgagee as an insured under a secured
creditor or provide equivalent coverage 
protecting Mortgagee as a secured lender, and 
which insures against losses associated with 
all known and unknown conditions existing at 
the Mortgaged Premises on or after September 
30, 1998; 

       iii.  have total aggregate coverage of at least Two
      Million Dollars ($2,000,000), a term of no 
      Less than five (5) years, and a deductible no
      Greater then Fifty Thousand Dollars ($50,000);
      and

<PAGE>
iv.	be effective as of September 30, 1998. 

	From and after September 30, 1998, the Environmental 
Insurance shall be included within the definition of 
Insurance Policies above. Notwithstanding anything else in 
this Mortgage or the Note to the contrary, the failure of 
the Mortgagor to comply with the obligations of this 
Section 7(B) shall constitute an immediate Event of 
Default, without any grace period or notice. In addition, 
Mortgagor shall be entitled to exercise all of its other 
rights and remedies under the Note, this Mortgage and the 
other Loan Documents, including without limitation, its 
rights under Section 8 hereof. 

	8. Insurance Policies. All Insurance Policies shall 
be in form, companies and amounts satisfactory to Mortgagee 
from time to time. Unless otherwise expressly agreed to by 
Mortgagee, an insurance company shall not be satisfactory 
unless such insurance company is licensed in the State of 
New Hampshire and has actively been in business for at 
least five (5) years; (c) if it is a mutual company, is a 
nonassessable company; and (d) does not provide insurance 
on any one building in excess of Ten Percent (10%) of its 
policyholders' surplus (including capital). All Insurance 
Policies insuring against casualty and other appropriate 
policies shall include non-contributing mortgagee 
endorsements in favor of and with loss payable to 
Mortgagee, and all Insurance Policies insuring against 
liability shall name the Mortgagee as additional insured 
thereunder; all Insurance Policies shall include, as well, 
standard waiver of subrogation endorsements, and shall 
provide that the coverage shall not be terminated or 
materially modified, nor a risk materially changed without 
twenty (20) days' advance written notice to Mortgagee and 
shall provide that no claims shall be paid thereunder 
without ten (10) days' advance written notice to Mortgagee. 
If a blanket policy is issued, a certified copy of said 
policy shall be furnished, together with a certificate 
indicating that Mortgagee is an additional insured under 
such policy in the designated amount. Mortgagor will 
deliver all Insurance Policies to Mortgagee and, in case of 
Insurance Policies about to expire, Mortgagor will deliver 
renewal or replacement policies not less than thirty (30) 
days prior to the date of expiration. The requirements of 
the preceding sentence shall apply to any separate policies 
of insurance taken out by Mortgagor concurrent in form or 
contributing in the event of loss with the Insurance 
Policies. If any such insurance policy is not so delivered 
to Mortgagee, or in the event any such insurance policy is 
canceled, whether or not Mortgagee has the policy in its 
possession, and no reinstatement or replacement policy is 
received prior to termination of insurance, Mortgagee, 
without notice to or demand upon Mortgagor, may (but shall 
not be obligated to) obtain such insurance with such 
company as Mortgagee may deem satisfactory, and pay the 
premium therefor, and the amount of any premium so paid 
shall be charged to and promptly paid by Mortgagor or at 
the option of the Mortgagee, may be added to the 
Indebtedness Hereby Secured. 

	9. Deposits for Taxes and Insurance Premiums. Upon 
and during the occurrence and continuation of an Event of 
Default, in order to assure the payment of Taxes and 
Premiums payable with respect total Insurance Policies 
("Premiums") as and when the same shall become due and 
payable: 

<PAGE>
(a)	 Mortgagor shall deposit with Mortgagee on the 
first business day of each and every month, an amount equal 
to one-twelfth (1/12) of the Taxes and, if required by 
Mortgagee, Premiums, (to become due) upon the Mortgaged 
Premises between one and thirteen months after the date of 
such deposit; provided that in the case of the first such 
deposit, there shall be deposited in addition an amount 
which, when added to the aggregate amount of monthly 
deposits to be made hereunder with respect to Taxes, and if 
required by Mortgagee, Premiums, to become due and payable 
within thirteen months after such first deposit, will 
provide (without interest) a sufficient fund to pay such 
amounts, one month prior to the date when they are due and 
payable. The amounts of such deposits (herein generally 
called "Required Deposits") shall be based upon Mortgagee's 
estimate as to the amount of Taxes and, if required to be 
so collected, Premiums. Mortgagor shall promptly, upon the 
demand of Mortgagee, make additional Required Deposits as 
Mortgagee may from time to time require due to (i) failure 
of Mortgagee to require, or failure of Mortgagor to make, 
Required Deposits in previous months, (ii) underestimation 
of the amounts of Taxes and/or Premiums (if so required), 
(iii) the particular due dates and amounts of Taxes and/or 
Premiums (if so required), or (iv) application of the 
Required Deposits pursuant to Paragraph 9(c) hereof. The 
preceding sentence is not intended and shall not be 
construed to constitute a waiver of an Event of Default 
occurring by virtue of Mortgagor's breach of its 
obligations to fund Required Deposits set forth above in 
this subparagraph 9(a). All Required Deposits shall be held 
in one or more interest-bearing accounts, with interest 
thereon being paid to Mortgagor annually on the anniversary 
date hereof, provided that there does not then exist any 
Event of Default (or circumstances which whether with the 
giving of notice, the passage of time, or both, might ripen 
into an Event of Default). 

	(b) Subject to the succeeding clause (c), 
Mortgagee will, out of the Required Deposits, upon the 
presentation to Mortgagee by Mortgagor of the bills 
therefor, pay the Taxes and, if amounts for Premiums have 
been collected, the Premiums. If the total Required 
Deposits on hand shall not be sufficient to pay all of the 
Taxes and Premiums, if such Premiums are to be paid from 
the Deposits, when the same shall become due, then 
Mortgagor shall pay to Mortgagee on demand the amount 
necessary to make up the deficiency. 

	(c) Upon the occurrence of an Event of Default, 
Mortgagee may, at its option, without being required to do 
so, apply any Required Deposits on hand to any of the 
Indebtedness Hereby Secured, in such order and manner as 
Mortgagee may elect. When the Indebtedness Hereby Secured 
has been fully paid, any remaining Required Deposits 
shall be paid to Mortgagor or to the party legally entitled 
thereto. All Required Deposits are hereby pledged as 
additional security for the Indebtedness Hereby Secured, 
and shall be held by Mortgagee irrevocably to be applied 
for the purposes for which made as herein provided, and 
shall not be subject to the direction or control of 
Mortgagor. 

	(d) Notwithstanding anything herein to the contrary, 
Mortgagee, or its successors and assigns, shall not be 
liable for any failure to apply the Required Deposits 

<PAGE>

unless Mortgagor, while there exists no Event of Default 
(or circumstances which, whether with the giving of notice, 
the passage of time, or otherwise, would constitute an 
Event of Default), shall have requested Mortgagee in 
writing to make application of such Required Deposits on 
hand to the payment of the Taxes or, if amounts for 
Premiums have been collected, the Premiums, for the payment 
of which such Required Deposits were made, accompanied by 
the bills therefor. 

	(e) The provisions of this Mortgage are for the 
benefit of Mortgagor and Mortgagee alone. No provision of 
this Mortgage shall be construed as creating in any party 
other than the Mortgagor and Mortgagee, any rights in and 
to the Required Deposits or any rights to have the Required 
Deposits applied to payment of Taxes and Premiums. 
Mortgagee shall have no obligation or duty to any third 
party to collect Required Deposits. 

	10. Proceeds of Insurance. Mortgagor will give 
Mortgagee prompt notice of any loss or damage to the 
Mortgaged Premises, and; 

	(a) In case of loss or damage in excess of 
Twenty-Five Thousand Dollars ($25,000.00) covered by any of 
the Insurance Policies, Mortgagee (or, after entry of 
decree of foreclosure, the purchaser at the foreclosure 
sale or decree creditor, as the case may be) is hereby 
authorized at its option either (i) to settle and adjust 
any claim under such Insurance Policies without the consent 
of Mortgagor or (ii) allow Mortgagor to settle and adjust 
such claim without the consent of Mortgagee; provided that 
in either case Mortgagee shall, and is hereby authorized 
to, collect and receipt for any such insurance proceeds; 
and the expenses incurred by Mortgagee in the adjustment 
and collection of insurance proceeds shall be so much 
additional Indebtedness Hereby Secured, and shall be 
reimbursed to Mortgagee upon demand or, in the event and to 
the extent sufficient proceeds are available, shall be 
deducted by Mortgagee from said insurance proceeds prior to 
any other application thereof. Each insurance company 
which has issued an Insurance Policy is hereby authorized 
and directed to make payment for all losses covered by an 
Insurance Policy to Mortgagee alone, and not to Mortgagee 
and Mortgagor jointly; 

	(b) Mortgagee shall have the option (which, 
subject to the provisions of Paragraph 11 below, shall be 
exercisable by Mortgagee in its sole discretion) to apply 
the proceeds of Insurance Policies consequent upon any 
casualty in excess of Twenty-Five Thousand Dollars 
($25,000.00) either (i) to reduce the Indebtedness Hereby 
Secured; or (ii) to reimburse Mortgagor for the cost of 
restoring, repairing, replacing or rebuilding the loss or 
damage of the casualty, subject to such conditions as 
Mortgagee may reasonably impose (which, in any event, and 
without limitation will include the provisions and 
conditions set forth in Paragraph 11 hereof). If Mortgagee 
elects to apply the proceeds of Insurance Policies to the 
Indebtedness Hereby Secured and such proceeds do not 
discharge that indebtedness in full at Mortgagee's option, 
the entire Indebtedness Hereby 

<PAGE>
Secured shall become immediately due and payable with 
interest thereon at the Default Rate (as defined in the 
Note). 

	(c) Whether or not insurance proceeds are 
available or sufficient for such purpose (unless the reason 
any such proceeds are not available is that Mortgagee has 
applied such proceeds to reduce the Indebtedness Hereby 
Secured, as contemplated by subparagraph 10(b)(i), or the 
proceeds have been applied to reduce the indebtedness 
secured by the Prior Mortgage and in such event Mortgagor 
shall be relieved of its restoration obligation to the 
extent of restoration of that part of the Improvements 
damaged by the hazard with respect to which insurance 
proceeds are received and applied by Mortgagee as 
aforesaid, except to the extent required to provide 
adequate safety and security to the remaining portions of 
the Improvements), Mortgagor hereby covenants to restore, 
repair, replace or rebuild the Improvements, to be of at 
least equal value, and of substantially the same character 
as prior to such loss or damage (herein, "Restoring"), all 
to be effected in accordance with plans, specifications and 
procedures to be first submitted to and approved by 
Mortgagee, and Mortgagor shall pay all costs of such 
restoring, repairing, replacing or rebuilding. 

	(d) Any portion of the insurance proceeds 
remaining after payment in full of the Indebtedness Hereby 
Secured shall be paid to Mortgagor or as ordered by a court 
of competent jurisdiction. 

	(e) No interest shall be payable by Mortgagee on 
account of any insurance proceeds at any time held by 
Mortgagee. 

	(f) In the event of foreclosure of the Mortgage 
or other transfer or title to the Mortgaged Premises in 
extinguishment of the Indebtedness Hereby Secured, all 
right, title and interest of Mortgagor in and to any 
insurance policies then in force shall pass to the 
purchaser of the Mortgaged Premises in foreclosure or the 
grantee of a deed in lieu of foreclosure, and Mortgagor 
hereby appoints Mortgagee its attorney-in-fact, in 
Mortgagor's name, to assign and transfer all such policies 
and proceeds to such purchaser or grantee. 

	11. Non-Exclusive Conditions to Disbursement of 
Insurance Proceeds. A. In the event Mortgagee shall elect 
to make the proceeds of hazard insurance available for 
restoration of the Improvements, or that part thereof, 
damaged by fire or other casualty with respect to which 
	insurance is paid, the following non-exclusive conditions 
shall apply: 

(i)	 the insurance proceeds must be sufficient,     
in the reasonable judgment of Mortgagee, to 
pay for the repair or restoration of the 
damaged portion of the Improvements (or if 
determined to be insufficient, Mortgagor 
must deposit with Mortgagee an amount that 
is, in Mortgagee's reasonable judgment, 
sufficient) and any such repair or 
restoration may be effected in compliance 
with applicable laws and regulations 
(including, without 

<PAGE>

limitation, zoning and similar laws and 
regulations respecting dimensional 
	and use requirements); 

(ii)	Mortgagor establishes to the reasonable 
satisfaction of Mortgagee, on the basis of 
certifications from engineers and 
architects acceptable to Mortgagee, that 
repair and restoration can be completed 
prior to the Maturity Date; 

(iii)	at all times there shall exist no Event of 
Default; 

	(iv) 	all Leases shall be and remain in full 
force and effect upon and following 
the occurrence of such casualty, and the 
Mortgagor shall not be in default under the 
terms thereof; 

	(v) 	following the Mortgagee's request, the 
Mortgagor shall execute and deliver to 
Mortgagee such instruments as Mortgagee 
reasonably deems necessary and appropriate 
in respect of the restoration and repair of 
the 	Improvements within ten (10) days 
following Mortgagee's request for 	same; 

	(vi)	the Mortgagor shall complete the restoration 
and repair of the Improvements to the 
Mortgagee's satisfaction, not later than one 
(1) year from the date of the occurrence of 
such damage or destruction; and 

	(vii)	Mortgagor shall establish to the reasonable 
satisfaction of Mortgagee that, upon full 
performance and completion of such 
restoration and repair, the Improvements 
shall be restored to an architectural unit 
comparable to and not less valuable than 
that which existed prior to such fire or 
other casualty. 

	B. In the event Mortgagor shall elect to make 
available the proceeds of Insurance Policies consequent 
upon any casualty to the cost of Restoring as aforesaid, 
such insurance proceeds held by Mortgagee for Restoring of 
the Mortgaged Premises shall be disbursed from time to time 
upon Mortgagee being furnished with (i) evidence reasonably 
satisfactory to it of the estimated cost of completion of 
the Restoring, (ii) funds (or assurance satisfactory to 
Mortgagee that such funds are available) sufficient in 
addition to the proceeds of insurance, to complete and 
fully pay for the completion of the Restoring, and (iii) 
such architect's certificates, waivers of lien, 
contractor's sworn statements, title insurance 
endorsements, plats of survey and such other evidences of 
cost, payment and performance as Mortgagee may reasonably 
require and approve; and Mortgagee, in any event, may 
require that all plans and specifications for such 
Restoring be submitted to and approved by Mortgagee prior 
to commencement of work. No payment made prior to the final 
completion of the Restoring shall exceed ninety percent 
(90%) of the value of the work performed from time to time, 
as such value shall be determined by Mortgagee in its sole 
and exclusive judgment; funds other than proceeds of 
insurance shall be 

<PAGE>
disbursed prior to disbursement of such proceeds, except as 
may otherwise be provided herein; and at all times the 
undisbursed balance of such proceeds remaining in the hands 
of Mortgagee, together with funds deposited or irrevocably 
committed to the satisfaction of Mortgagee by or on behalf 
of Mortgagor to pay the cost of completion of the 
Restoring, shall be at least sufficient in the reasonable 
judgment of Mortgagee to pay the entire unpaid cost of the 
completion of the Restoring, free and clear of all liens or 
claims for lien. Disbursements of proceeds shall be made on 
a construction loan basis, and shall be upon such 
additional conditions as Mortgagee may reasonably impose. 
Subject to the next succeeding sentence, any surplus which 
may remain out of insurance proceeds held by Mortgagee 
after payment of such costs of Restoring shall be paid to 
Mortgagor. If there is or has occurred an Event of Default 
while Mortgagee is holding funds for Restoring, Mortgagee 
may at its sole option apply such funds against the 
Indebtedness Hereby Secured, in such order of manner as 
Mortgagee may elect. No interest shall be allowed to 
Mortgagor on account of any proceeds of insurance or other 
funds held by Mortgagee. 

	C. Mortgagee agrees that upon the conditions that: 
(i) so long as no Event of Default has occurred, and no 
facts or circumstances exist that with the passage of time 
or the giving of notice, or both, would constitute an Event 
of Default, and (ii) the cost of restoring shall not 
exceed, in the aggregate, Twenty-Five Thousand Dollars 
($25,000.00), Mortgagee agrees to make the proceeds 
available for restoration in accordance with the terms and 
conditions set forth above. Specification in this Paragraph 
11 of the non-exclusive conditions which Mortgagee may 
impose in connection with disbursement of proceeds is not 
intended, and shall not be construed, to derogate from the 
parties' agreement (set forth in subparagraph 10(b) hereof) 
that, except as expressly set forth in this Paragraph 11.C, 
Mortgagee shall in its sole discretion have the right to 
determine whether to proceed under 10(b)(i) hereof as 
opposed to 10(b)(ii) hereof. 

	12. Condemnation and Eminent Domain. Any and all 
awards (the "Awards") heretofore or hereafter made or to be 
made to the present, or any subsequent, owner of the 
Mortgaged Premises, by any governmental or other lawful 
authority for the taking by condemnation or eminent domain, 
of all or any part of the Mortgaged Premises (including any 
award from the United States government at any time after 
the allowance of a claim therefor, the ascertainment of the 
amount thereto, and the issuance of a warrant for payment 
thereof), or the proceeds from a sale in lieu of such 
condemnation or eminent domain are hereby assigned by 
Mortgagor to Mortgagee, which Awards Mortgagee is hereby 
authorized to collect and receive from the condemnation 
authorities, and Mortgagee is hereby authorized to give 
appropriate receipts and acquittances therefor. Mortgagor 
shall give Mortgagee immediate notice of the actual or 
threatened commencement of any condemnation or eminent 
domain proceedings affecting all or any part of the 
Mortgaged Premises and shall deliver to Mortgagee copies of 
any and all papers served in connection with any such 
proceedings. Mortgagor further agrees to make, execute, and 
deliver to Mortgagee, at any time upon request, free, clear 
and discharged of any encumbrance of any kind whatsoever, 
any and all further assignments and other instruments 
deemed reasonably necessary by Mortgagee for the purpose of 
validly and sufficiently assigning all Awards and other 
compensation heretofore and hereafter made to Mortgagor for 
any taking, either permanent or temporary, under any such 
proceeding. If any portion of or interest in the Mortgaged 
Premises is taken by condemnation or eminent domain, either 
temporarily or 

<PAGE>

permanently, and the remaining portion of the Mortgaged 
Premises is not, in the reasonable judgment of Mortgagee, 
an architectural and economic unit of the same character 
and not less valuable than the same was prior to the 
taking, then, at the option of Mortgagee, the entire 
Indebtedness Hereby Secured shall immediately become due 
and payable. After deducting from the Award for such taking 
all of its expenses incurred in the collection and 
administration of the Award, including reasonable 
attorney's fees, Mortgagee shall be entitled to apply the 
net proceeds toward repayment of such portion of the 
Indebtedness Hereby Secured as it deems appropriate without 
affecting the lien of this Mortgage. In the event of any 
partial taking of the Mortgaged Premises or any interest in 
the Mortgaged Premises which in the judgment of Mortgagee 
leaves the Mortgaged Premises as an architectural and 
economic unit of the same character and not less valuable 
than the same was prior to the taking, and provided no 
Event of Default has occurred, the Award shall be applied 
to reimburse Mortgagor for the cost of restoration and 
rebuilding the Mortgaged Premises in accordance with plans, 
specifications and procedures which must be submitted to 
and approved by Mortgagee, and such Award shall be 
disbursed in the same manner as is provided in Paragraph 
11.B hereof for the application of insurance proceeds, 
provided that any surplus after payment of such costs shall 
be applied on account of the Indebtedness Hereby Secured. 
If the Award is not applied for reimbursement of such 
restoration costs, the Award shall be applied against the 
Indebtedness Hereby Secured, in such order or manner as 
Mortgagee shall elect. 

	13. Assignment of Leases and Rents. 

	A. Mortgagor hereby absolutely and presently sells, 
assigns and transfers unto Mortgagee all of the rents, 
royalties, issues, profits, revenue, income and other 
benefits from the Mortgaged Premises (collectively the 
"Revenues") and all of the rents, leases, issues and 
profits now due and which may hereafter become due under or 
by virtue of any Leases which may have been heretofore or 
may be hereafter made or agreed to by Mortgagor or the 
agents of the Mortgagor or which may be made or agreed to 
by Mortgagee under the powers herein granted, it being the 
intention hereby to establish an absolute transfer and 
assignment of all such Revenues and Leases to Mortgagee and 
not merely the granting of a security interest. Subject to 
the foregoing and to the remaining provisions of this 
Paragraph 13, Mortgagee hereby grants to Mortgagor a 
revocable license to collect and retain the Revenues. In 
any event, upon the occurrence of an Event of Default, the 
license to Mortgagor from Mortgagee contemplated by this 
Agreement shall terminate automatically and thereafter 
Mortgagee shall be entitled to take possession of the 
Mortgaged Premises, and subject to the effect of any 
Leases, remove all persons therefrom and rent the Mortgaged 
Premises for Mortgagor's account and employ such agents and 
attorneys as may be necessary with respect thereto. 
Likewise, upon the occurrence of an Event of Default, and 
without any requirement that notice first be given to 
Mortgagor, Mortgagee shall be entitled to the immediate 
appointment of a receiver of the Mortgaged Premises, 
without regard to the value of the Mortgaged Premises or 
the solvency of any person or persons primarily or 
contingently liable for the payment of the Indebtedness 
Hereby Secured, whether or not Mortgagee has an adequate 
remedy at law and whether or not Mortgagor has committed 
fraud or waste; and upon any such Event of Default, whether 
or not a receiver has been sought or appointed, Mortgagee 
may collect all Revenues, and apply the Revenues so 

<PAGE>
collected in their entirety to the extent of the 
Indebtedness Secured Hereby, after deducting Mortgagee's 
costs and expenses of collection of such Revenues 
(including, without limitation, attorneys' fees and the 
costs and expenses of litigation). Upon payment in full and 
satisfaction of the Indebtedness Hereby Secured, this 
assignment of Revenues shall terminate automatically. 
Mortgagor hereby irrevocably appoints Mortgagee its agent 
in its name and stead (with or without taking possession of 
the Mortgaged Premises as provided in Paragraph 20 hereof) 
to rent, lease or let all or any portion of the Mortgaged 
Premises to any party or parties at such rental and upon 
such terms as Mortgagee shall, in its reasonable 
discretion, determine, and to collect all of said revenues 
arising from or accruing at any time hereafter, and all now 
due or that may hereafter become due under each and every 
of the Leases, written or oral, or other tenancy existing, 
or which may hereafter exist on the Mortgaged Premises, 
with the rights and powers and subject to the same 
immunities, exoneration of liability and rights of recourse 
and indemnity as Mortgagee would have upon taking 
possession pursuant to the provisions of Paragraph 20 
hereof; provided, however, that Mortgagee shall not act 
pursuant to such appointment prior to the occurrence of an 
Event of Default. Mortgagor represents and agrees that no 
rent has been or will be paid by any person in possession 
of any portion of the Mortgaged Premises for more than one 
installment in advance (other than security deposits) and 
that the payment of none of the rents to accrue for any 
portion of said Mortgaged Premises has been or will be 
waived, released, reduced, discounted or otherwise 
discharged or compromised by Mortgagor unless a tenant is 
in default and the discharge or compromise is made in 
connection with a lease termination by Mortgagor. From and 
after the date hereof, Mortgagor will not assign any of the 
rents or profits of the Mortgaged Premises except to 
Mortgagee. Nothing herein contained shall be construed as 
constituting Mortgagee a "mortgagee-in-possession" in the 
absence of the taking of actual possession of the Mortgaged 
Premises by Mortgagee pursuant to Paragraph 20 hereof. 
Possession by a court-appointed receiver shall not be 
considered possession by Mortgagee. In the exercise of the 
powers herein granted Mortgagee, no liability shall be 
asserted or enforced against Mortgagee, all such liability 
being expressly waived and released by Mortgagor (other 
than liability for extraordinary negligence or willful 
misconduct). Mortgagor further agrees to assign and 
transfer to Mortgagee all future Leases upon all or any 
part of the Mortgaged Premises and to execute and deliver, 
at the request of Mortgagee, all such further assurances 
and assignments in the Mortgaged Premises as Mortgagee 
shall from time to time require. From time to time, 
following Mortgagee's written request therefor, Mortgagor 
will furnish Mortgagee with executed copies of each of the 
Leases and with estoppel letters from each tenant under 
each of the Leases, which estoppel letters shall be in a 
form reasonably satisfactory to Mortgagee. 

	B. Mortgagor shall submit to the Mortgagee for 
Mortgagee's examination and approval any and all Leases 
(and amendments thereto) prior to the execution, delivery 
and commencement thereof. Mortgagee's approval rights are 
for the sole benefit of Mortgagee and shall in no way be 
construed to impose upon Mortgagee any obligation with 
respect to the leases to be reviewed, including the value 
of any lease or credit-worthiness of any tenant or 
occupant. Any such leases, tenancies and occupancies not so 
approved, shall not be valid; and Mortgagor at its cost and 
expense, upon request of Mortgagee, shall cause any parties 
in possession of the Mortgages Premises under any such 
leases, tenancies and occupancies, not so approved, to 
vacate the Mortgaged Premises immediately; and Mortgagor 
acknowledges that Mortgagee may 

<PAGE>
from time to time at its option enter upon the Mortgaged 
Premises and take any other action in court or otherwise to 
cause such parties to vacate the Mortgaged Premises; the 
costs and expenses of Mortgagee in so doing shall be paid 
by Mortgagor to Mortgagee on demand thereof and shall be 
part of the indebtedness secured by this Mortgage; such 
rights of Mortgagee shall be in addition to all its other 
rights as Mortgagee, including the right of foreclosure. 
Mortgagor agrees to provide a true and complete copy of 
each lease, or other agreement for tenancy or occupancy, to 
Mortgagee within ten (10) business days after the execution 
and delivery thereof. 

	14. Observance of Leases Assigned. Mortgagor expressly 
covenants and agrees that if Mortgagor, as lessor under any 
of the Leases hereby assigned to Mortgagee, shall fail to 
perform and fulfill any term, covenant, condition or 
provision in said Lease, on its part to be performed or 
fulfilled at the times and in the manner in said Lease 
provided (giving effect to any applicable grace or cure 
periods contained therein) or if Mortgagor shall cancel, 
terminate, amend, modify or void any of the Leases without 
Mortgagee's prior written consent (which consent shall not 
be unreasonably withheld or delayed), then and in any such 
event, such action shall constitute an Event of Default 
hereunder and at the option of Mortgagee, the Indebtedness 
Secured Hereby shall become due and payable as in the case 
of other Events of Default. 

	15. Mortgagee's Performance of Mortgagor's 
Obligations. In case of an Event of Default, Mortgagee, 
either before or after acceleration of the Indebtedness 
Hereby Secured or the foreclosure of the lien hereof or 
foreclosure sale, may, but shall not be required to, make 
any payment or perform any act herein required of Mortgagor 
(whether or not Mortgagor is personally liable therefor) in 
any form and manner deemed expedient by Mortgagee. Upon any 
such payment or performance of any such act, Mortgagee 
shall as soon as reasonably possible provide notice thereof 
to Mortgagor but its failure to do so shall not affect the 
rights of Mortgagee and the obligation of Mortgagor 
hereunder. Mortgagee may, but shall not be required to, 
complete construction, furnishing and equipping of the 
Improvements and rents, operate and manage the Mortgaged 
Premises and such Improvements and pay operating costs and 
expenses, including management fees, of every kind and 
nature in connection therewith, so that the Mortgaged 
Premises shall be operational and usable for their intended 
purposes. All monies paid, and all expenses paid or 
incurred in connection therewith, including attorneys' fees 
and other monies advanced by Mortgagee to protect the 
Mortgaged Premises and the lien hereof, or to complete 
construction, furnishing and equipping or to rent, operate 
and manage the Mortgaged Premises or to pay any such 
operating costs and expenses thereof or to keep the 
Mortgaged Premises operational and usable for their 
intended purpose shall be so much additional Indebtedness 
Hereby Secured, whether or not the Indebtedness Hereby 
Secured, as a result thereof, shall exceed the face amount 
of the Note, and shall become immediately due and payable 
in demand, and with interest thereon at the Default Rate. 
Inaction of Mortgagee shall never be considered as a waiver 
of any right accruing to it on account of any Event of 
Default nor shall the provisions of this Paragraph or any 
exercise by Mortgagee of its rights hereunder prevent any 
breach from constituting an Event of Default. Mortgagee, in 
making any payment hereby authorized (a) relating to Taxes, 
may do so according to any bill, statement or estimate, 
without inquiry into the validity of any tax, assessment, 
sale, forfeiture, tax lien or title or claim thereof; (b) 
for the purchase, discharge, compromise or settlement of 
any lien, may do so without 

<PAGE>
inquiry as to the validity or amount of any claim for lien 
which may be asserted; or (c) in connection with the 
completion of construction, furnishing or equipping of the 
Mortgaged Premises or rental, operation, or management of 
the Mortgaged Premises or the payment of operating costs 
and expenses thereof, may do so in such amounts and to such 
persons as Mortgagee may deem appropriate. Nothing 
contained herein shall be construed to require Mortgagee to 
advance or expand monies for any purpose mentioned herein, 
or for any other purpose. 

	16. Security Agreement. Mortgagee and Mortgagor agree 
that this Mortgage shall constitute a Security Agreement 
within the meaning of the New Hampshire Uniform Commercial 
Code (hereinafter the "Code") with respect to (i) any and 
all sums at any time on deposit for the benefit of 
Mortgagee or held by Mortgagee (whether deposited by or on 
behalf of Mortgagor or anyone else) pursuant to any of the 
provisions of the Mortgage and (ii) with respect to any 
personal property included in the granting clauses of this 
Mortgage and EXHIBIT C hereto, which personal property may 
not be deemed to be affixed to the Mortgaged Premises 
or may not constitute a "fixture" (as such term is defined 
in the Code), (which property is hereinafter referred to as 
"Personal Property") and all replacements of such Personal 
Property, substitutions for such Personal Property, 
additions to such Personal Property, and the proceeds 
thereof (all of said Personal Property and the 
replacements, substitutions and additions thereto and the 
proceeds thereof being sometimes hereinafter collectively 
referred to as the "Collateral"), and that a security 
interest in and to the Collateral is hereby granted to 
Mortgagee, and the Collateral and all of Mortgagor's right, 
title and interest therein are hereby assigned to 
Mortgagee, all to secure payment of the Indebtedness Hereby 
Secured. All of the terms, provisions, conditions and 
agreements contained in this Mortgage pertain and apply to 
the Collateral as fully and to the same extent as to any 
other property comprising the Mortgaged Premises; and the 
following provisions of this Paragraph shall not limit the 
applicability of any other provisions of this Mortgage but 
shall be in addition thereto: 

(a) Mortgagor (being the Debtor as that term is 
used in the Code) is and will be the true and 
lawful owner of the Collateral, subject to no 
liens, charges or encumbrances other than the 
lien hereof, other liens and encumbrances 
benefiting Mortgagee and no other party, and 
liens and encumbrances, if any, expressly 
permitted by this Mortgage (including, without 
limitation, those certain liens and 
encumbrances, if any, set forth on EXHIBIT B 
hereto) or otherwise expressly consented to in 
writing by Mortgagee. 

	(b) The Collateral is to be used by Mortgagor 
solely for business purposes. 

	(c) The Collateral will be kept at the Mortgaged 
Premises, and, except for Obsolete Collateral 
(as hereinafter defined), will not be removed 
therefrom without the consent of Mortgagee 
(being the Secured Party as that term is used in 
the Code). The Collateral may be affixed to the 
Mortgaged Premises but will not be affixed to 
any other real estate. 

<PAGE>
	(d) The only persons having any interest in the 
Collateral are Mortgagor, Mortgagee and holders 
of interests, if any, expressly permitted hereby 
or otherwise expressly consented to in writing by 
Mortgagee. 

	(e) No Financing Statement (other than Financing 
Statements showing Mortgagee as the sole secured 
party, or with respect to liens or encumbrances, 
if any, expressly permitted by this Mortgage or 
otherwise expressly consented to in writing by 
Mortgagee) covering any of the Collateral or any 
proceeds thereof is on file in any public office 
except pursuant hereto or as set forth on EXHIBIT 
B; and Mortgagor will at its own cost and 
expense, upon demand, furnish to Mortgagee such 
further information and will execute and deliver 
to Mortgagee such financing statements and other 
documents in form satisfactory to Mortgagee and 
will do all such acts and things as Mortgagee may 
at any time or from time to time request or as 
may be necessary or appropriate to establish and 
maintain a perfected security interest in the 
Collateral as security for the Indebtedness 
Hereby Secured, subject to no other liens or 
encumbrances, other than liens or encumbrances 
benefiting Mortgagee and no other party and liens 
and encumbrances (if any) expressly permitted by 
this Mortgage; and Mortgagor will pay the cost of 
filing or recording such financing statements or 
other documents, and this instrument, in all 
public offices wherever filing or recording is 
deemed by Mortgagee to be necessary or desirable. 

	(f) Upon an Event of Default, Mortgagee shall 
have the remedies of a secured party under the 
Code, including without limitation, the right to 
take immediate and exclusive possession of the 
Collateral, or any part thereof, and for that 
purpose may, so far as Mortgagor can give 
authority therefor, with or without judicial 
process, enter (if this can be done without 
breach of the peace), upon any place which the 
Collateral or any part thereof may be situated 
and remove the same therefrom (provided that if 
the Collateral is affixed to real estate, such 
removal shall be subject to the conditions stated 
in the Code); and Mortgagee shall be entitled to 
hold, maintain, preserve and prepare the 
Collateral for sale, until disposed of, or may 
propose to retain the Collateral subject to 
Mortgagor's right of redemption in satisfaction 
of Mortgagor's obligations, as provided in the 
Code. Mortgagee may render the Collateral 
unusable without removal and may dispose of the 
Collateral on the Mortgaged Premises. Mortgagee 
may require Mortgagor to assemble the Collateral 
and make it available to Mortgagee for its 
possession at a place to be designated by 
Mortgagee. Mortgagee will give Mortgagor 
reasonable notice of the time and place of any 
public sale of the Collateral or of the time 
after which any private sale or any other 
intended disposition thereof is to be made. The 
requirements of reasonable notice shall be met if 
such notice is mailed, by certified United States 
mail or equivalent, postage prepaid, to the 
address of Mortgagor hereinafter set forth at 
least ten (10) days before the time of the sale 
or disposition. Mortgagee may buy at any public 
sale and, if the Collateral is of a type 
customarily sold in a recognized market or is of 
a type which is the subject of widely distributed 
standard price quotations, Mortgagee may buy at 
private sale. Any such sale may be held as part 
of and in conjunction with any foreclosure sale 
of the Mortgaged Premises, the Mortgaged Premises 
including the Collateral to be sold as one lot if 
Mortgagee so elects. The net proceeds realized 
upon 

<PAGE>
A. For purposes of this Mortgage: the term "Event of 
Default" shall have the meaning ascribed to such term in 
the Note; and the term "default," as used in the STATUTORY 
POWER OF SALE, shall mean an Event of Default as defined in 
the Note. 

	B. Upon occurrence of an Event of Default, Mortgagee 
is hereby authorized and empowered, at its option and 
without affecting the lien hereby created or the priority 
of said lien or any other right of Mortgagee hereunder, to 
declare, without further notice, all Indebtedness Hereby 
Secured to be immediately due and payable with interest 
thereafter at the Default Rate, and Mortgagee may 
immediately proceed to foreclose this Mortgage and/or to 
exercise any right, power or remedy provided by this 
Mortgage, the Note, or any of the other Loan Documents or 
by law or in equity or any other document or instrument 
regulating, evidencing, securing or guarantying any of the 
Indebtedness Hereby Secured. This Mortgage is upon the 
STATUTORY CONDITIONS and upon the further condition that 
all covenants and agreements on the part of Mortgagor 
contained herein or in any of the other Loan Documents 
shall be kept and performed, for any breach of which 
Mortgagee shall have the STATUTORY POWER OF SALE, as well 
as all other rights and remedies provided hereunder, under 
any of the other Loan Documents, or otherwise available at 
law or in equity. 

	19. Foreclosure. When the Indebtedness Hereby 
Secured, or any part thereof, shall become due, whether by 
acceleration or otherwise, Mortgagee shall have the right 
to foreclose the lien hereof in accordance with the laws of 
the state in which the Premises are located including, 
without limitation, the STATUTORY POWER OF SALE, and to 
exercise any other remedies of Mortgagee provided in the 
Note, this Mortgage, or any of the other Loan Documents, or 
which Mortgagee may have at law, at equity or otherwise. In 
any suit to foreclose the lien hereof, there shall be 
allowed and included as additional Indebtedness Hereby 
Secured in the decree of sale, all expenditures and 
expenses which may be paid or incurred by or on behalf of 
Mortgagee for attorneys' fees, appraiser's fees, outlays 
for documentary and expert evidence, stenographer's 
charges, publication costs, and costs (which may be 
estimated as to item to be expended after entry of the 
decree) of procuring all such abstracts of title, title 
searches and examinations, title insurance policies, and 
similar data and assurances with respect to title as 
Mortgagee may deem necessary either to prosecute such suit 
or to evidence to bidders at sales which may be had 
pursuant to such decree the true conditions of the title to 
or the value of the Mortgaged Premises. All expenditures 
and expenses of the nature mentioned in this Paragraph, and 
such other expenses and fees as may be incurred in the 
protection of the Mortgaged Premises and rents and income 
therefrom and the maintenance of the lien of this Mortgage, 
including the fees of any attorney employed by Mortgagee in 
any litigation or proceedings affecting this Mortgage, the 
Note, the other Loan Documents or the Mortgaged Premises, 
including probate and bankruptcy proceedings, or in 
preparation of the commencement or defense of any 
proceedings or threatened suit or proceeding, or otherwise 
in dealing specifically therewith, shall be so much 
additional Indebtedness Hereby Secured and shall be 
immediately due and payable by Mortgagor, with interest 
thereon at the Default Rate until paid. 

	20. Right of Possession. When the Indebtedness Hereby 
Secured shall become due, whether by acceleration or 
otherwise, or in any case in which, under the provisions of 
this 

<PAGE>
Mortgage, Mortgagee has a right to institute foreclosure 
proceedings, Mortgagor shall, forthwith upon demand of 
Mortgagee, surrender to Mortgagee and Mortgagee shall be 
entitled to take actual possession of, the Mortgaged 
Premises or any part thereof, personally, by its agent or 
attorneys or be placed in possession pursuant to court 
order as mortgagee in possession or receiver, and 
Mortgagee, in its discretion, personally, by its agents or 
attorneys or pursuant to court order as mortgagee in 
possession or receiver, may enter upon and take and 
maintain possession of all or any part of the Mortgaged 
Premises, together with all documents, books, records, 
papers, and accounts of Mortgagor or the then owner of the 
Mortgaged Premises relating thereto, and may exclude 
Mortgagor, such owner, and any agents and servants thereof 
wholly therefrom and may, on behalf of Mortgagor or such 
owner, or in its own name as Mortgagee and under the powers 
herein granted: 

	(a) hold, operate, manage, and control all or 
any part of the Mortgaged Premises and conduct 
the business, if any, thereof, either personally 
or by its agents, with full power to use such 
measures, legal or equitable, as in its 
discretion may be deemed proper or necessary to 
enforce the payment or security of the rents, 
issues, deposits, profits, and avails of the 
Mortgaged Premises, including without limitation 
actions for recovery of rent, actions in forcible 
detainer, and actions in distress for rent, all 
without notice to Mortgagor; 

	(b) cancel or terminate any Lease or sublease of 
all or any part of the Mortgaged Premises for any 
cause or on any ground that would entitle 
mortgagor to cancel the same; 

 (c) elect to disaffirm any Lease or sublease of 
all or any part of the Mortgaged  Premises made 
subsequent to this Mortgage without Mortgagee's 
prior written consent; 

	(d) extend or modify any then existing Leases, 
and make new Leases of all or any part of the 
Mortgaged Premises, which extensions, 
modifications, and new Leases may provide for 
terms to expire, or for options to lessees to 
extend or renew terms to expire, beyond the 
maturity date of the loan evidenced by the Note 
and the issuance of a deed or deeds to a 
purchaser or purchasers at a foreclosure sale, it 
being understood agreed that any such Leases, and 
the options or other such provisions to be 
contained therein, shall be binding upon 
Mortgagor as to its interest in the Mortgaged 
Premises, all persons whose interests in the 
Mortgaged Premises are subject to the lien 
hereof, and the purchaser or purchasers at any 
foreclosure sale, notwithstanding any redemption, 
reinstatement, discharge of the Indebtedness 
Hereby Secured, satisfaction of any foreclosure 
decree, or issuance of any certificate of sale or 
deed to any such purchaser; 

	(e) make all necessary or proper repairs, 
decoration renewals, replacements, alterations, 
additions, betterments, and improvements in 
connection with the Mortgaged Premises as may 
seem judicious to Mortgagee, to insure and 
reinsure the Mortgaged Premises and all risks 
incidental to Mortgagee's possession, operation, 
and management thereof, and to receive all rents, 
issues, deposits, profits, and avails therefrom; 
and 

<PAGE>
	(f) apply the net income, after allowing a 
reasonable fee for the collection thereof and for 
the management of the Mortgaged Premises, to the 
payment of Taxes, Insurance Premiums and other 
charges applicable to the Mortgaged Premises, or 
in reduction of the Indebtedness Hereby Secured 
in such order and manner as Mortgagee shall 
select. 

	Nothing herein contained shall be construed as 
constituting Mortgagee a mortgagee in possession in the 
absence of the actual taking of possession of the Mortgaged 
Premises. 

	21. Receiver. Without limiting and in addition to 
Mortgagee's other rights set forth herein or available at 
law or in equity to petition for a receiver, upon the 
filing of a complaint to foreclose this Mortgage or at any 
time thereafter, the court in which such complaint is filed 
may appoint upon petition of Mortgagee, and at Mortgagee's 
sole option, a receiver of the Mortgaged Premises: Such 
appointment may be made either before or after sale, 
without notice, without regard to the solvency or 
insolvency of Mortgagor at the time of application for such 
receiver, and without regard to the then value of the 
Mortgaged Premises or without regard to whether fraud or 
waste has occurred; and Mortgagee hereunder or any employee 
or agent thereof may be appointed as such receiver. Such 
receiver shall have all powers and duties prescribed by 
law, including the power to make leases to be binding upon 
all parties, including Mortgagor as to its interest in the 
Mortgaged Premises, the purchaser at a sale pursuant to a 
judgment of foreclosure and any person acquiring an 
interest in the Mortgaged Premises after entry of a 
judgment of foreclosure. In addition, such receiver shall 
also have the power to extend or modify any then existing 
Leases, which extensions and modifications may provide for 
terms to expire, or for options to lessees to extend or 
renew terms to expire, beyond the maturity date of the Note 
and beyond the date the issuance of a deed or deeds to a 
purchaser or purchasers at a foreclosure sale, it being 
understood and agreed that any such leases, and the options 
or other provisions to be contained therein, shall be 
binding upon Mortgagor and all the persons whose interest 
in the Mortgaged Premises are subject to the lien hereof 
and upon the purchaser or purchasers at any foreclosure 
sale, notwithstanding any redemption, reinstatement, 
discharge of the Indebtedness Hereby Secured, satisfaction 
of any foreclosure judgment, or issuance of any certificate 
of sale or deed to any purchaser. In addition, such 
receiver shall have the power to collect the rents, issues 
and profits of the Mortgaged Premises during the pendency 
of such foreclosure suit end, in case of a sale and 
deficiency, during the full statutory period of redemption, 
if any, whether there be a redemption or not, as well as 
during any further times when Mortgagor, except for the 
intervention of such receiver, would be entitled to 
collection of such rents, issues and profits, and such 
receiver shall have all other powers which may be necessary 
or are usual, in such, cases for the protection, 
possession, control, management and operation of the 
Mortgaged Premises during the whole of said period. The 
court may, from time to time, authorize the receiver to 
apply the net income from the Mortgaged Premises in payment 
in whole or in part of: (a) the Indebtedness Hereby Secured 
or the Indebtedness secured by a decree foreclosing this 
Mortgage, or any tax, special assessment, or other lien 
which may be or become superior to the lien hereof or of 
such decree, provided such application is made prior to the 
foreclosure sale; or (b) the deficiency in case of a sale 
and deficiency. 

<PAGE>
	22. Statutory Condition; Statutory Power of Sale. This 
Mortgage is upon the STATUTORY CONDITIONS and upon the 
further condition that all covenants and agreements on the 
part of Mortgagor herein undertaken shall be kept and fully 
and seasonably performed and that no breach of any other of 
the conditions specified herein shall be permitted, for any 
breach of which covenants or conditions, Mortgagee shall 
have the STATUTORY POWER OF SALE. 

	23. Insurance During Foreclosure. In case of an 
insured loss after foreclosure proceedings have been 
instituted, the proceeds of any Insurance Policy, if not 
applied in rebuilding or restoring the Improvements, as 
aforesaid, shall be used to pay the amount due in 
accordance with any decree of foreclosure that may be 
entered in any such proceedings, and the balance, if any, 
shall be paid as the court may direct. In the case of 
foreclosure of this Mortgage, the court, in its decree, may 
provide that the mortgagee's clause attached to each of the 
casualty Insurance Policies may be canceled and that the 
decree creditor may cause a new loss clause to be attached 
to each of said casualty Insurance Policies making the loss 
thereunder payable to said decree creditor. In the event of 
foreclosure sale, provided such Insurance Policies are 
assignable, Mortgagee is hereby authorized, without the 
consent of Mortgagor, to assign any and all Insurance 
Policies to the purchaser at the sale, provided such 
Insurance Policies are assignable, or to take such other 
steps as Mortgagee may deem advisable to cause the interest 
of such purchaser to be protected by any of the Insurance 
Polices without credit or allowance to Mortgagor for 
prepaid premiums thereon. 

	24. Waiver of Right of Redemption and Other Rights. To 
the full extent permitted by law, Mortgagor hereby 
covenants and agrees that it will not at any time insist 
upon or plead, or in any manner whatsoever claim or take 
any advantage of, any stay, exemption or extension law 
or any so-called "Moratorium Law" now or at any time 
hereafter in force, nor claim, take or insist upon any 
benefit or advantage of or from any law now or hereafter in 
force providing for the valuation or appraisement of the 
Mortgaged Premises, or any part thereof, prior to any sale 
or sales thereof to be made pursuant to any provisions 
herein contained or to any decree, judgment or order of any 
court of competent jurisdiction; or claim or exercise any 
rights under any statute now or hereafter in force to 
redeem the property, or any part thereof, or relating to 
the marshalling thereof, upon foreclosure sale or other 
enforcement hereof. To the full extent permitted by law, 
Mortgagor hereby expressly waives any and all rights to 
reinstatement and redemption, on its own behalf, on behalf 
of all persons claiming or having an interest (direct or 
indirect) by, through or under Mortgagor and on behalf of 
each and every person acquiring any interest in or title to 
the Mortgaged Premises subsequent to the date hereof, it 
being the intent hereof that any and all such rights of 
reinstatement and redemption (except the right to repay the 
Note in full by paying the entire Indebtedness Hereby 
Secured prior to any foreclosure sale or conveyance in lieu 
thereof and thereby obtain a release of this Mortgage) of 
Mortgagor and such other persons, are and shall be deemed 
to be hereby waived to the full extent permitted by 
applicable law. To the full extent permitted by law, 
Mortgagor agrees that it will not, by invoking or utilizing 
any applicable law or laws or otherwise, hinder, delay or 
impede the exercise of any right, power or remedy herein or 
otherwise granted or delegated to Mortgagee, but will 
suffer and permit the exercise of every such right, power 
and remedy as though no such law or laws have been or will 
have been made or enacted, To the full extent permitted by 
law, 

<PAGE>
Mortgagor hereby agrees that no action for the enforcement 
of the lien or any provision hereof shall be subject to any 
defense which would not be good and valid in an action at 
law upon the Note. 

	25. Rights Cumulative. Each right, power and remedy 
herein conferred upon Mortgagee herein or in any of the 
other Loan Documents is cumulative and in addition to every 
other right, power or remedy, express or implied, now or 
hereafter provided by law or in equity, and each and every 
right, power and remedy herein set forth or otherwise so 
existing may be exercised from time to time as often and in 
such order as may be deemed expedient to Mortgagee. The 
exercise of one right, power or remedy shall not be a 
waiver of the right to exercise at the same time or 
thereafter any other right, power or remedy; and no delay 
or omission of Mortgagee in the exercise of any right, 
power or remedy accruing hereunder or arising otherwise 
shall impair any such right, power or remedy, or be 
construed to be a wavier of any default or acquiescence 
therein. Except as otherwise specifically required herein, 
notice of the exercise of any right, remedy or power 
granted to Mortgagee by this Mortgage is not required to be 
given. 

	26. Successors and Assigns. 

	A. Holder of the Note. This Mortgage and each and 
every covenant, agreement and other provision hereof shall 
be binding upon Mortgagor and its successors and assigns 
(including, without limitation, each and every record owner 
from time to time of the Mortgaged Premises or any other 
person having an interest therein), and shall inure to the 
benefit of Mortgagee and its successors and assigns. 
Wherever herein Mortgagee is referred to, such reference 
shall be deemed to include the holder from time to time of 
the Note, whether so expressed or not; and each such holder 
from time to time of the Note shall have and enjoy all of 
the rights, privileges, powers, options and benefits 
afforded hereby and hereunder, and may enforce all and 
every of the terms and provisions hereof, as fully and to 
the same extent and with the same effect as if such holder 
of the Note from time to time were herein by name 
specifically granted such rights, privileges, powers, 
options and benefits and was herein by name designated 
Mortgagee. 

	B. Covenants Run With Land; Successor Owners. All of 
the covenants of this Mortgage shall run with the land and 
be binding on any successor owners of the Mortgaged 
Premises. If the ownership of the Mortgaged Premises or any 
portion thereof becomes vested in a person or persons other 
than Mortgagor, Mortgagee may, without notice to Mortgagor, 
deal with such successor or successors in interest of 
Mortgagor with reference to this Mortgage and the 
Indebtedness Hereby Secured in the same manner as with 
Mortgagor without in any way releasing or discharging 
Mortgagor from its obligations hereunder. Mortgagor will 
give immediate written notice to Mortgagee of any 
conveyance, transfer or change of ownership of the 
Mortgaged Premises, but nothing in this Paragraph shall 
vary or negate the effect of the provisions of Paragraph 17 
hereof. 

<PAGE>

	27. Effect of Extensions and Amendments. If the 
payment of the Indebtedness Hereby Secured, or any part 
thereof, be extended or varied, or if any part of the 
security or guaranties therefor be released, all persons 
now or at any time hereafter liable therefor, or interested 
in the Mortgaged Premises, shall be held to assent to such 
extension, variation or release, and their liability, and 
the lien, and all provisions hereof, shall continue in full 
force and effect; the right of recourse against all such 
persons being expressly reserved by Mortgagee, 
notwithstanding any such extension, variation or release. 
Any person, firm or corporation taking a junior mortgage, 
or other lien upon the Mortgaged Premises or any part 
thereof or any interest therein, shall take the said lien 
subject to the rights of Mortgagee to amend, modify, extend 
or release the Note, this Mortgage, or any other document 
or instrument evidencing, securing or guarantying the 
Indebtedness Hereby Secured, in each and every case without 
obtaining the consent of the holder of such junior lien and 
without the lien of this Mortgage losing its priority over 
the rights of any such junior lien except as otherwise 
expressly provided in any separate subordination agreement 
by and between Mortgagee and the holder of such junior 
lien. 

	28. Future Advances. At all times this Mortgage 
secures as part of the Indebtedness Hereby Secured the 
payment of any and all service charges, damages, attorneys' 
fees, expenses and advances due to or incurred by Mortgagee 
in connection with the Indebtedness Hereby Secured, all in 
accordance with the Note, this Mortgage and the other Loan 
Documents. 

	29. Execution of Separate Security Agreements, 
Financing Statements, Etc. Mortgagor will do, execute, 
acknowledge and deliver or cause to be done, executed, 
acknowledged and delivered all such further acts, 
conveyances, notes, mortgages, security agreements, 
financing statements and assurances as Mortgagee shall 
reasonably require for the better assuring, conveying, 
mortgaging, assigning and confirming unto Mortgagee all 
property mortgaged or conveyed hereby or property intended 
so to be, whether now owned by Mortgagor or hereafter 
acquired. Without limitation of the foregoing, Mortgagor 
will assign to Mortgagee, upon request, as further security 
for the Indebtedness Secured Hereby, its interests in all 
agreements, contracts, licenses and permits affecting the 
Mortgaged Premises, such assignments to be made by 
instruments reasonably satisfactory to Mortgagee, but no 
such assignment shall be construed as a consent by 
Mortgagee to any agreement, contract, license or permit or 
to impose upon Mortgagee any obligations with respect 
thereto. From time to time, Mortgagor will furnish within 
five (5) days after Mortgagee's request a written and duly 
acknowledged statement of the Indebtedness Hereby Secured 
and whether any alleged offsets or defenses exist against 
the Indebtedness Hereby Secured. 

	30. Financial Statements: Other Indebtedness. The 
financial statements heretofore furnished to the Mortgagee 
are, as of the dates specified therein, complete and 
correct and fairly present the financial condition of the 
Mortgage and are prepared in acceptance with generally 
accepted accounting principles. The Mortgagor does not have 
any contingent liabilities, liabilities for taxes, unusual 
forward or long-term commitments or unrealized or 
anticipated losses from any unfavorable commitments that 
are known to the Mortgagor and are reasonably likely to 
have a material adverse effect on the Mortgagor or 
Mortgaged Premises. Since the date of such financial 
statements there has been no materially adverse change in 
the financial 

<PAGE>
condition, operation or business of the Mortgagor from that 
set forth in said financial statements. The Mortgagor shall 
maintain full and accurate books of accounts and other 
records reflecting the results of its operations and shall 
furnish to the Mortgagee within forty five (45) days after 
the end of each calendar quarter, quarterly and year to 
date financial statements prepared for such calendar month 
certified by the Mortgagor to be true and correct. Within 
ninety (90) days following the end of the Mortgagor's 
fiscal year, Mortgagor shall furnish Mortgagee with 
statements of its financial affairs and condition including 
a balance sheet and statement of profit and loss and 
setting forth the financial conditions of the Mortgagor for 
the immediately preceding calendar year prepared by a 
certified public accountant. At any time and from time to 
time the Mortgagor shall deliver to the Mortgagee such 
financial data as Mortgagee or its agents shall reasonably 
request with respect to the Mortgagor. The Mortgagor 
represents that it is in compliance with all of the terms 
and conditions of any and all existing indebtedness owed to 
any other creditors as of the date hereof. 

	31. Option to Subordinate. At the option of 
Mortgagee, this Mortgage shall become subject and 
subordinate, in whole or in part (but not with respect to 
priority of entitlement to insurance proceeds or any award 
in condemnation) to any and all Leases of all or any part 
of the Mortgaged Premises upon the execution by Mortgagee 
and recording, thereof, at any time hereafter, in the 
Registry District in and for the county wherein the 
Mortgaged Premises are situated, of a unilateral 
declaration to that effect. 

	32. Governing Law. This Mortgage shall in all 
respects be governed, construed, applied and enforced in 
accordance with the internal laws of the Commonwealth of 
Massachusetts (being the state in which this Mortgage, the 
Note and the other Loan Documents were executed and 
delivered) without regard to principles of conflicts of 
law. Notwithstanding the foregoing choice of law: 

	(a) the procedures governing the creation, 
perfection and priority of the lien pertaining to real 
property and tangible personal property created by this 
Mortgage and the enforcement by this Mortgagee of its 
foreclosure and other remedies against the Mortgagor under 
the Loan Documents with respect to the Mortgaged Premises, 
including by way of illustration, but not in limitation, 
actions for foreclosure, for injunctive relief or for the 
appointment of a receiver shall be governed by the laws of 
the state where such Mortgaged Premises is located; and 

	(b) the Mortgagee shall comply with applicable law 
in the state where the Mortgaged Premises is located to the 
extent required by the law of such jurisdiction in 
connection with the foreclosure of the liens created under 
the Loan Documents with respect to the Mortgaged Premises. 
Nothing contained herein or in any provisions of the other 
Loan Documents shall be construed to provide that the 
substantive law of the state of where the Mortgage Premises 
is located shall apply to any parties' rights and 
obligations under any of the Loan Documents, 

<PAGE>
which, except as expressly provided in clauses (a) and (b) 
above, are and shall continue to be governed by the 
substantive law of the Commonwealth of Massachusetts. In 
addition, the fact that portions of the Loan Documents may 
include provisions drafted to confirm to the law of the 
State where the Mortgaged Premises is located is not 
intended, nor shall it be deemed, in any way, to derogate 
the parties' choice of law as set forth or referred to in 
the Loan Documents. The parties further agree that the 
Mortgagee may enforce its rights under the Loan Documents 
including, but not limited to, its rights to sue the 
Mortgagor or to collect any outstanding indebtedness in 
accordance with applicable law. 

	Each party hereto hereby consents to personal 
jurisdiction in any state or Federal court located within 
the Commonwealth of Massachusetts, as well as to the 
jurisdiction of all courts from which an appeal may be 
taken from the aforesaid courts, for the purposes of any 
suite, action or other proceeding arising out of, or with 
respect to any of the Loan Documents and expressly waives 
any and all objections it may have as to venue in any of 
such courts. 

	This Mortgage shall be construed and enforced 
according to the laws of the Commonwealth of Massachusetts 
(being the state in which this Mortgage, the Note and the 
other Loan Documents were executed and delivered) without 
reference to the conflicts of law principles of the 
Commonwealth of Massachusetts, except that the laws of the 
state in which the Mortgaged Premises are located, if other 
than the Commonwealth of Massachusetts, shall govern this 
Mortgage to the extent necessary for Mortgage to perfect, 
protect, or enforce the rights and remedies granted to it 
hereunder. 

	33. Inspection of Premises and Records. Mortgagee 
and its representatives and agents shall have the right to 
inspect the Mortgaged Premises upon reasonable prior notice 
(provided that such inspection shall be conducted so as to 
minimize unreasonable disruption to the business operations 
of tenants under approved Leases), and inspect and make 
copies of all books, records, and documents relating 
thereto upon five (5) days prior written notice, at all 
reasonable times, and access shall be permitted for that 
purpose. Mortgagor shall keep and maintain full and correct 
books and records showing in detail the income and expenses 
of the Mortgaged Premises, and shall permit Mortgagee or 
its agents to examine such books, income tax returns and 
records and all supporting vouchers and data upon five (5) 
days prior written notice, at any time and from time to 
time on request at its offices at the address hereinafter 
identified or at such other location as may be mutually 
agreed upon. 

	34. Time of the Essence. Time is of the essence of 
the Note, this Mortgage, and any other document or, 
instrument evidencing or securing the Indebtedness Hereby 
Secured. 

	35. Captions and Pronouns. The captions and headings 
of the various sections of this Mortgage are for 
Convenience only, and are not to be construed as confining 
or limiting in any way the scope or intent of the 
provisions hereof. Whenever the context requires or 
permits, the singular shall include the plural, the plural 
shall include the singular, and the masculine, feminine and 
neuter shall be freely interchangeable. 

<PAGE>
	36. Notices. All notices, demands, requests and 
other communications required pursuant to the provisions of 
this Agreement shall be in writing, and shall be deemed to 
have been received, on the date of receipted delivery (or 
the first business day thereafter if such day of receipted 
delivery is not a business day), if hand delivered or sent 
by commercial courier, or two (2) business days after 
depositing the same in the United States Mails, if sent by 
United States Registered or Certified Mail-Return Receipt 
Requested, postage prepaid, to the respective addresses as 
follows: 

(i) if to the Mortgagor        Stocker & Yale, Inc. 
    then to it at:             32 Hampshire Road 
                               Salem, New Hampshire 
                               Attn: Mark Blodgett 

with a courtesy                Stuart Cable, Esq. 
copy to:                       Goodwin, Procter & Hoar LLP 
                               Exchange Place 
                               Boston, Massachusetts 02109 

(ii) if to the Lender,         Danvers Savings Bank 
     then to it at:            One Conant Street 
                               Danvers, Massachusetts 01923 
                               Attn: Kevin Bottomley 

and a courtesy                 Anne R. Jackowitz, P.C. 
copy to:                       Choate, Hall & Stewart 
                               Exchange Place 
                               53 State Street 
                               Boston, MA 02109 

	Any of the parties may designate a change of 
address by notice in writing to the other parties. In no 
event shall the failure of any party to furnish courtesy 
copies of any notice to legal counsel of the other party as 
specified above render ineffective any such notice 
otherwise given in the manner hereinabove provided. 

	37. Environmental Matters. Mortgagor covenants and agrees 
that it shall not locate, produce, treat, transport, 
incorporate, discharge, emit, release, deposit or dispose 
of any Hazardous Substance in violation of any 
environmental Regulation in, upon, under, over or from 
the Mortgaged Premises, shall not permit any Hazardous 
Substances to be located, produced, treated, transported, 
incorporated, discharged, emitted, released, deposited, 
disposed of or to escape therein, thereupon, thereunder, 
thereover or therefrom in violation of any Environmental 

<PAGE>
Regulation, and shall comply with all Environmental 
Regulations which are applicable to the Mortgaged Premises. 
At any time, and from time to time if Mortgagee so 
requests, Mortgagee shall have the right (and Mortgagor 
shall provide appropriate access to the Mortgaged Premises) 
to commission one or more environmental reviews, audits, 
assessments and/or reports relating to the Mortgaged 
Premises, at Mortgagee's sole cost and expense, by an 
engineer or scientist acceptable to Mortgagee, and in any 
case the scope and extent of the same will be no less than 
that reasonably required by Mortgagee. Mortgagor shall 
defend and indemnify Mortgagee against, shall hold 
Mortgagee harmless from, and shall reimburse Mortgagee for, 
any and all claims, demands, judgments, penalties, fines, 
liabilities, costs, damages and expenses, including court 
costs and attorneys' fees incurred by Mortgagee (prior to 
trial, at trial and on appeal) in any action against or 
involving Mortgagee, resulting (A) from any breach of the 
foregoing covenants, (B) from the untruthfulness of any 
covenant or representation set forth in this Paragraph 37, 
or (C) from the discovery of any Hazardous Substance in, 
upon, under or over, or emanating from, the Mortgaged 
Premises (provided, however, that Mortgagor shall have no 
such indemnification obligation pursuant to this clause (C) 
in the context of a Hazardous Substance which first affects 
the Mortgaged Premises prior to the date of this Mortgage 
or subsequent to any foreclosure of this Mortgage or any 
deed-in-lieu of such foreclosure), it being the intent of 
Mortgagor and Mortgagee that Mortgagee shall have no 
liability or responsibility for damage or injury to human 
health, the environment or natural resources caused by, for 
abatement and/or clean-up of, or otherwise with respect to, 
Hazardous Substances by virtue of the interest of Mortgagee 
in the Mortgaged Premises created hereby or as the result 
of Mortgagee exercising any of its rights or remedies with 
respect thereto hereunder, including but not limited to, 
becoming the owner thereof by foreclosure or conveyance in 
lieu of foreclosure and which was not caused by the act or 
omission of Mortgagor or any affiliate thereof. The 
foregoing representations and covenants of this Paragraph 
37 shall be deemed continuing covenants and representations 
for the benefit of Mortgagee, and any participants or 
purchasers of the indebtedness evidenced by the Note, and 
any affiliate of Mortgagee who or which either purchases at 
a foreclosure of this Mortgage or takes title to the 
Mortgaged Premises in connection with a deed-in-lieu of 
such foreclosure, but not to any other purchasers and/or 
subsequent owners of the Mortgaged Premises, and shall 
survive the satisfaction or release of this Mortgage, any 
foreclosure of this Mortgage and/or any acquisition of 
title to the Mortgaged Premises or any part thereof by 
Mortgagee, or anyone claiming by, through or under 
Mortgagee, by deed in lieu of foreclosure or otherwise. Any 
amounts covered by the foregoing indemnification shall be 
so much additional Indebtedness Hereby Secured and shall 
bear interest from the date incurred at the Default Rate, 
shall be payable on demand, and shall be secured hereby. 

	Mortgagor shall give prompt written notice to 
Mortgagee of: 

	(i) 	any proceeding or inquiry by any 
governmental authority with respect to 
the presence of any Hazardous Substance 
on the Mortgaged Premises or the 
migration thereof from or to other 
property; 

<PAGE>
(ii)	all claims made or threatened by any third 
party against Mortgagor or the Mortgaged 
Premises relating to any loss or injury 
resulting from any Hazardous Substance; 
and 

	(iii) 	Mortgagor's discovery of any occurrence or 
condition on any real property adjoining or 
in the vicinity of the Mortgaged Premises 
that could cause the Mortgaged Premises or 
any part thereof to be subject to any 
restrictions on the ownership, occupancy, 
transferability or use of the Mortgaged 
Premises under any Environmental Regulation 
or to be otherwise subject to any 
restrictions on the ownership, occupancy, 
transferability or use of the Mortgaged 
Premises under any Environmental 
Regulation. 

As used herein, "Environmental Regulations" shall mean all 
present or future federal, state or local laws, rules, 
codes or regulations, or any judicial or administrative 
interpretation thereof, including, without limitation, all 
orders, decrees, judgments and rulings imposed through any 
public or private enforcement proceedings, relating to 
Hazardous Materials or the existence, use, discharge, 
release, containment, transportation or disposal thereof, 
or otherwise regulating or providing for the protection of 
the environment in respect of or against any Hazardous 
Materials, including, without limitation, the Comprehensive 
Environmental Response, Compensation and Liability Act of 
1980, as amended by the Superfund Amendments and 
Reauthorization Act of 1986, and as the same be further 
amended ("CERCLA"), and Massachusetts General Laws 
Chapter 21E, as amended ("21E"), and the New Hampshire RSA 
146-A, RSA 146-C, RSA 147- A, and RSA 147-B, and "Hazardous 
Substance" shall mean and include asbestos, flammable 
materials, explosives, radioactive substances, 
polychlorinated biphenyls, other carcinogens, oil and other 
petroleum products, pollutants, contaminants, and any other 
hazardous or toxic materials, wastes and substances which 
are defined, determined or identified as such in or 
pursuant to any Hazardous Materials Legal Requirements. 

	38. Mortgagee Not A Joint Venture. Any provision 
hereof to the contrary notwithstanding, Mortgagee, by 
virtue of its acceptance of this Mortgage and the making of 
the loan secured hereby and entering into the Note or any 
other Loan Documents, or any action taken pursuant hereto 
or thereto, or contemplated hereby or thereby, shall not be 
deemed to be by such action or ownership a partner or joint 
venture with Mortgagor or any guarantor or any other 
parties. Mortgagor shall indemnify Mortgagee against, shall 
hold Mortgagee harmless from, and shall reimburse Mortgagee 
for, any and all claims, demands, judgments, penalties, 
fines, liabilities, costs, damages and expenses, including 
court costs and attorneys' fees incurred by Mortgagee 
(prior to trial, at trial and on appeal) in any action 
against or involving Mortgagee resulting from such a 
construction of the parties and their relationship or any 
allegations thereof. Any inspection of the Mortgaged 
Premises, any review of any plans, contracts, subcontracts, 
(including, without limitation, environmental reviews, 
audits, assessments and/or reports relating to the 
Mortgaged Premises), or any analysis of the Mortgaged 
Premises made by Mortgagee or any of its agents, architects 
or consultants is intended solely for the benefit of 
Mortgagee and shall not be deemed to create or form the 
basis of any warranty, representation, covenant, 

<PAGE>
implied promise or liability to Mortgagor or any of its 
employees or agents, any guest or invitee upon the 
Mortgaged Premises, or any other person. 

	39. Report of Real Estate Transaction. Mortgagor has 
made or provided for making, on a timely basis, any reports 
or returns required under Section 6045(e) of the Internal 
Revenue Code of 1986 (and any similar reports or returns 
required by state or local law) relating to the Mortgaged 
Premises, notwithstanding the fact that the primary 
reporting responsibility may fall on Mortgagee, counsel for 
Mortgagee, or any other party. Mortgagor's obligations 
under this Paragraph will be deemed to be satisfied if 
proper and timely reports and returns required under this 
paragraph are filed by a title company or real estate 
broker involved in the real estate transaction relating to 
the Mortgaged Premises, but nothing contained herein shall 
be construed to require such returns or reports to be filed 
by Mortgagee or counsel for Mortgagee. 

	40. Expenses: Mortgagor agrees to pay all reasonable 
recording and filing fees, transfer taxes, title insurance 
premiums, escrow and other title company charges, 
attorneys' fees, appraisal and survey fees, environmental 
engineer and consultant fees, consulting architect fees, 
if any, financial consultant fees, fees of other engineers 
and consultants, insurance costs and a11 other expenses in 
connection with the making of the loan evidenced by the 
Note. Mortgagee shall have the right, at its option, to pay 
any such expenses and upon such payment such expenses shall 
be deemed to be a part of the Indebtedness Hereby Secured 
and shall be payable on demand with interest at the Default 
Rate. 

	41. Consent Required of Mortgagee. Any consent by 
Mortgagee in any single instance shall not be deemed or 
construed to be Mortgagee's consent in any like matter 
arising at a subsequent date and the failure of Mortgagee 
to promptly exercise any right, power, remedy, consent or 
approval provided herein or at law or in equity shall not 
constitute or be construed as a waiver of the same nor 
shall Mortgagee be stopped from exercising such right, 
power, remedy, consent or approval at a later date. Any 
consent or approval requested of and granted by Mortgagee 
pursuant hereto shall be narrowly construed to be 
applicable only to Mortgagor and the matter identified in 
such consent or approval and no third party shall claim any 
benefit by reason thereof, and any such consent or approval 
shall not be deemed to constitute Mortgagee a venturer or 
partner with Mortgagor nor shall privity of contract be 
presumed to have been established with any such third 
party. If Mortgagee deems it to be in its best interest to 
retain the assistance of persons, firms or corporations 
(including, but not limited to, attorneys, appraisers, 
engineers, consultants and surveyors) with respect to a 
request for consent or approval, Mortgagor shall reimburse 
Mortgagee for all costs incurred in connection with the 
employment of such persons, firms or corporations. 

	42. Counterparts. This Mortgage may be executed in 
any number of counterparts, all of which taken together 
shall constitute one and the same original, and execution 
of separate counterparts by the parties hereto shall bind 
such parties as if they had each executed the same 
counterpart. 

<PAGE>
	43. Waiver of Homestead. Mortgagor does hereby 
release, discharge and waive all such rights of exemption 
from attachment and levy or sale on execution, and such 
other rights whatsoever in the Mortgaged Premises, 
including Family Homestead, as are reserved or secured 
under and by virtue of any of the Laws of the State of New 
Hampshire, or any other exemption law. 

	NOTICE IS HEREBY GIVEN that for purposes of RSA 479:3 
that this Mortgage secures a maximum amount equal to the 
principal sum of the aforesaid Note, plus advances, if any, 
to protect the security of this Mortgage, plus foreclosure 
costs and expenses, including attorneys fees, if any, plus 
any other costs and expenses authorized by this Mortgage, 
the Note, or the other Loan Documents. 

	[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] 


<PAGE>

	IN WITNESS WHEREOF, Mortgagor has signed, sealed and 
delivered this Mortgage the day and year first above 
written, to take effect as a Massachusetts instrument under 
seal. 

	WITNESSSES: 	MORTGAGOR: 

STOCKER & YALE, INC., a      
Massachusetts corporation 

(Signature illegible) 	By:/s/ Mark W. Blodgett 

	Mark Blodgett, its duly 
authorized Chairman of 
the Board 


	COMMONWEALTH OF MASSACHUSETTS 




	County of Suffolk, ss                        May 13, 1998 

	Before me personally appeared Mark Blodgett, the 
Chairman of the Board of Stocker & Yale, Inc. and 
acknowledged that he executed the foregoing instrument as 
his free act and deed in said capacity, and as the free act 
and deed of said corporation. 


							  By:/s/ John Evan Jones	
	Notary Public 
	My Commission Expires: 
	October 8, 2001 

	Print Name: John Evan Jones 

<PAGE>
	EXHIBIT A 


	Legal Description of Insured Premises 

A certain parcel of land, with the buildings thereon, 
situated in Salem. Rockingham County, State of New 
Hampshire and Methuen. Essex County, Commonwealth of 
Massachusetts, as shown on "Plan of Land in Salem, Hew 
Hampshire for M & D Realty Trust prepared by Kimball 
Chase Company. Inc. and dated March 15. 1983. recorded in 
the Rockingham County Registry of Deeds on even date 
herewith, and more particularly described as follows: 

Beginning at the southwesterly corner of the granted 
premises by the intersection of Garabedian Drive, a public 
way, and Hampshire Road, a public way, at an iron pipe set 
in the ground on the northerly aide of said Hampshire Road 
as shown on said plan: thence running S 84 deg. 19' 15" E, 
58.24 feet, along the northerly side of Hampshire Road to 
an iron pipe sat in the ground on the northerly side of 
Hampshire Road; thence running S 73deg. 45' 25" E, 265.76 
feet. along the northerly side of Hampshire Road to an iron 
pipe set in the ground on the northerly side of Hampshire 
Road; thence running on an arc with & radius of 830 feet 
chord bearing S 49deg. 05' 04" E. 219.70 feet along the 
northerly side of Hampshire Road to an iron pipe set in the 
ground at the intersection of the northerly side of 
Hampshire Road and the Massachusetts - New Hampshire 
boundary line as shown on said plans; thence running S 58 
deg. 35' 27" E, 27.33 feet by the northerly side of said 
Hampshire Road to the point where the northerly side of 
Hampshire Road intersects with the center line of the ditch 
as shown on said plan thence turning and running N 11 deg. 
28' 00" E. 82.10 feet along the center of the ditch to a 
point shown on said plan; thence running N 8 deg. 22' 55" 
E, 762.90 feet along the center of the ditch to a point 
shown on the said plan at the northeasterly corner of the 
granted premises; thence turning and running N 81 deg. 27' 
22 W, 503.90 feet, along land now or formerly of 
Construction Industries, Inc. to an iron pipe set in the 
ground by a fire hydrant on the easterly aide of Garabedian 
Drive as shown on said plan; thence running on an arc with 
a radius of 750 feet, chord bearing S 34 deg. 50' 33" W, 
for a distance of 261.32 feet, along the easterly side of 
the said Garabedian Drive, to an iron pipe set in the 
ground on the easterly side of Garabedian Drive: thence 
proceeding along the easterly side of Garabedian Drive, S 
27 deg. 44' 05" W, 100.26 feet to a nail set in the ground 
on the easterly side of Garabedian Drive; thence proceeding 
on an arc with a radius of 700 feet, chord bearing S 33 
deg. 47' 47" W, 269.46 feet, along the easterly side of 
Garabedian Drive to an iron pipe set in the ground on the 
easterly side of Garabedian Drive; thence running along the 
easterly side of Garabedian Drive. S 05 deg. 40' 45" W 
80.09 feet to an iron pipe met in the ground on the 
easterly side of Garabedian Drive, thence running on an arc 
with a radius of 50 feet, chord bearing S 39 deg. 19' 15" 
E, 78.54 feet to point of beginning. 

<PAGE>
	EXHIBIT C 


	TO 


	FIRST MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, 
	SECURITY AGREEMENT, AND FINANCING STATEMENT 

	Description of Collateral 


All buildings, structures and improvements of every nature 
whatsoever now or hereafter situated on the property known 
as and located at 32 Hampshire Road, Salem, New Hampshire 
as more particularly described on Schedule A attached 
hereto (hereinafter the "Premises") (including but not 
limited to any and all underground and other parking 
facilities located in or on the Premises, all landscaped 
areas, and areas utilized for recreational activities) and 
all fixtures, machinery, appliances, equipment, furniture, 
and personal property of every nature whatsoever now or 
hereafter owned by Debtor and located in or on, or attached 
to, or used or intended to be used in connection with or 
with the operation of, the Premises, buildings, structures 
or other improvements, or in connection with any 
construction which may be conducted thereon, including all 
extensions, additions, improvements, betterments, renewals, 
substitutions, and replacements to and proceeds of any of 
the foregoing and all of the right, title and interest of 
Debtor in and to any such personal property or fixtures 
together with the benefit of any deposits or payments now 
or hereafter made on such personal property or fixtures by 
Debtor or on its behalf (the "Improvements"); 

	TOGETHER WITH all easements, rights of way, strips, 
gores of land, streets, ways, alleys, passages, sewer 
rights, waters, water courses, water rights and powers, and 
all estates, rights, titles, interests, privileges, 
liberties, tenements, hereditaments and appurtenances 
whatsoever, in any way belonging, relating or appertaining 
to the Premises, or which hereafter shall in any way 
belong, relate or be appurtenant thereto, whether now owned 
or hereafter acquired by Debtor, and the reversion and 
reversions, remainder and remainders, rents, issues and 
profits thereof, and all the estate, right, title, 
interest, property, possession, claim and demand 
whatsoever, at law as well as in equity, of Debtor of, in 
and to the same; 

	TOGETHER WITH all rents, royalties, issues, profits, 
revenue, income and other benefits from the Premises; 

	TOGETHER WITH all right, title and interest of Debtor 
in and to any and all leases now or hereafter on or 
affecting the Mortgaged Premises or any part thereof 
whether written or oral and all agreements for use of the 
Mortgaged Premises or any part thereof (the "Leases"), 
together with all security therefor and all monies payable 
thereunder; 

	TOGETHER WITH all fixtures and articles of personal 
property now or hereafter owned by Debtor and forming a 
part of or used in connection with the Premises or the 
Improvements of the operation thereof (except that this 
UCC-1 Financing Statement shall not create a lien on any 
items of personal property which (i) are owned by tenants 
who are in possession pursuant to a 

<PAGE>
Lease and (ii) may be removed by such tenants at the 
expiration or termination of such Lease), including, but 
without limitation, any and all air conditioners, antennae, 
appliances, apparatus, awnings, basins, bathtubs, bidets, 
boilers, bookcases, cabinets, carpets, coolers, curtains, 
dehumidifiers, disposals, doors, drapes, dryers, ducts, 
dynamos, elevators, engines, equipment, escalators, fans, 
fittings, floor coverings, furnaces, furnishings, 
furniture, hardware, heaters, humidifiers, incinerators, 
lighting, machinery, motor vehicles, motors, ovens, pipes, 
plumbing, pumps, radiators, ranges, recreational 
facilities, refrigerators, screens, security systems, 
shades, shelving, sinks, sprinklers, stokers, stoves, 
toilets, ventilators, wall coverings, washers, windows, 
window coverings, wiring, and all renewals, replacements or 
proceeds thereof or articles in substitution therefor, 
whether or not the same are or shall be attached to the 
Premises or the Improvements in any manner; 

	TOGETHER WITH all proceeds of the foregoing, 
including without limitation all judgments, awards of 
damages and settlements hereafter made resulting from 
condemnation proceeds or the taking of the Mortgaged 
Premises and/or the Improvements or any portion thereof 
under the power of eminent domain, any proceeds of any 
policies of insurance maintained with respect to the 
Mortgaged Premises and/or the Improvements or proceeds of 
any sale, option or contract to sell the Mortgaged Premises 
and/or the Improvements or any portion thereof or any 
franchise agreement relating thereto; and 

	TOGETHER WITH all right, title, and interest of 
Debtor in and to all executory contracts affecting the 
ownership, possession, operation, control and services 
furnished to the Mortgaged Premises or any part thereof 
(collectively, the "Contracts"). 

<PAGE>
	 DS2.338058.1
	 2001579-0002
	  
	ASSIGNMENT OF RENTS AND LEASES 




	This Assignment is made this 13th day of May, 1998, 
between STOCKER & YALE, INC., a Massachusetts corporation, 
whose address is 32 Hampshire Road, Salem, New Hampshire 
(herein called the "Assignor") and DANVERS SAVINGS BANK, a 
Massachusetts banking corporation with an address at One 
Conant Street, Danvers, Massachusetts (herein called the 
"Assignee"). 

	Recitals 


	The Assignor has executed and delivered to the 
Assignee its note of even date herewith in the original 
principal amount of $750,000.00 together with all future 
amendments, modification, renewals, and supplements (herein 
called the "Note"). 

	To secure payment of the Note, the Assignor has 
executed and delivered to the Assignee a Mortgage of even 
date herewith (herein, together with all future amendments, 
modifications and supplements thereto, called the 
"Mortgage"), covering certain property (herein called the 
"Mortgaged Property") which, among other things, includes 
the real estate described in Exhibit A attached hereto and 
the buildings, improvements, fixtures and personal property 
now or hereafter located thereon. 

	The Assignee, as a condition to making the loan 
evidenced by the Note, has required the execution of this 
Assignment. 

	ACCORDINGLY, in consideration of the premises and in 
further consideration of the sum of One Dollar paid by the 
Assignee to the Assignor, the receipt of which is hereby 
acknowledged, the Assignor does hereby grant, transfer and 
assign to the Assignee all of the right, title and interest 
of the Assignor in and to (i) any and all present or future 
leases or tenancies, whether written or oral, covering or 
affecting any or all of the Mortgaged Property (all of 
which, together with any and all extensions, modifications 
and renewals thereof, are hereinafter collectively referred 
to as the "Leases" and each of which is referred to as a 
"Lease"), (ii) all security deposits, rents, profits and 
other income or payments of any kind due or payable or to 
become due or payable to the Assignor as the result of any 
use, possession or occupancy of all or any portion of the 
Mortgaged Property or as the result of the use of or lease 
of any personal property constituting a part of the 
Mortgaged Property (all of which are hereinafter 
collectively referred to as "Rents"), whether the Rents 
accrue before or after foreclosure of the Mortgage or 
during the periods of redemption thereof, all for the 
purpose of securing: 

	(a) Payment of all indebtedness evidenced by 
the Note and all other sums secured by the 
Mortgage or this Assignment; and 

	(b) Performance and discharge of each and 
every obligation, covenant and agreement of the 
Assignor contained herein and in the Mortgage. 

<PAGE>
	THE ASSIGNOR WARRANTS AND COVENANTS that it is and 
will remain the absolute owner of the Rents and Leases free 
and clear of all liens and encumbrances other than the lien 
granted herein; that it has not heretofore assigned or 
otherwise encumbered its interest in any of the Rents or 
Leases to any person; that it has the right under 
applicable law, under the Leases, under its organizational 
documents and otherwise to execute and deliver this 
Assignment and keep and perform all of its obligations 
hereunder; that there are no existing defaults under 
the provisions thereof on the part of any party to the 
Leases; that no Rents have been waived, anticipated, 
discounted, compromised or released, except as may be 
stated in the Leases; and that tenants have no defenses, 
setoffs, or counterclaims against Assignor; that it will 
warrant and defend the Leases and Rents against all adverse 
claims, whether now existing or hereafter arising. 

	The Assignor further covenants and agrees with the 
Assignee as follows: 

	1. Performance of Leases. The Assignor will 
faithfully abide by, perform and discharge each and every 
obligation, covenant and agreement which it is now or 
hereafter becomes liable to observe or perform under any 
present or future Lease, and, at its sole cost and expense, 
enforce or secure the performance of each and every 
obligation, covenant, condition and agreement to be 
performed by the tenant under each and every Lease. The 
Assignor will observe and comply with all provisions of law 
applicable to the operation and ownership of the Mortgaged 
Property. The Assignor will give prompt written notice to 
the Assignee of any notice of default on the part of the 
Assignor with respect to any Lease received from the tenant 
thereunder, and will also at its sole cost and expense, 
appear in and defend any action or proceeding arising 
under, growing out of or in any manner connected with any 
Lease or the obligations, duties or liabilities of the 
Assignor or any tenant thereunder. The Assignor will not 
lease or otherwise permit the use of all or any portion of 
the Mortgaged Property for rent that is below the fair 
market rent for such property. Assignor further agrees not 
to cancel, terminate or consent to or acquiesce in any 
surrender or abandonment of any of the Leases without the 
prior written consent of Assignee; not to commence any 
action of ejectment or any summary proceedings for 
dispossession of the tenant under any of the Leases, nor 
exercise any right of recovery of leased property provided 
in any Leases; not to modify or in any way alter the 
covenants, agreements, terms, conditions or obligations of 
any Leases; not to lease any part of the Premises, nor 
renew or extend the term of any Leases of the Premises 
unless an option therefor was originally so reserved by 
tenants in the Leases for a fixed and definite rental; and, 
not to relocate any said tenant within the Premises, nor 
consent to any modification of the express purposes for 
which the Premises have been leased, nor consent to any 
subletting of the Premises or any part thereof or to any 
assignment of the Leases by any tenant thereunder or to any 
further or other assignment or subletting of any sublease, 
without the prior written consent of the Assignee, 
notwithstanding any previous consent of Assignee. 

	2. Collection of Rents. The Assignor will not 
collect or accept any Rents for the use or occupancy of the 
Mortgaged Property for more than one month in advance. 
Security deposits shall not be deemed Rents for purposes of 
this paragraph. 

<PAGE>
	3. Protecting the Security of This Assignment. 
Should the Assignor fail to perform or observe any covenant 
or agreement contained in this Assignment, then the 
Assignee, but without obligation to do so and without 
releasing the Assignor from any obligation hereunder, may 
make or do the same in such manner and to such extent as 
the Assignee may deem appropriate to protect the security 
hereof, including, specifically, without limiting its 
general powers, the right to appear in and defend any 
action or proceeding purporting to affect the security 
hereof or the rights or powers of the Assignee, and also 
the right to perform and discharge each and every 
obligation, covenant and agreement of the Assignor 
contained in the Leases and in exercising any such powers 
to pay necessary costs and expenses, employ counsel and pay 
reasonable attorneys' fees. The Assignor will pay 
immediately upon demand all sums expended by the Assignee 
under the authority of this Agreement, together with 
interest thereon at the Default Rate stated in the Note, 
and the same shall be added to said indebtedness and shall 
be secured hereby and by the Mortgage. 

	4. Present Assignment. This Assignment shall 
constitute a perfected, absolute and present assignment, 
provided that the Assignor shall have the right to collect, 
but not prior to accrual (except as permitted by paragraph 
2 above), all of the Rents, and to retain, use and enjoy 
the same unless and until an Event of Default shall occur 
under the Mortgage or the Assignor shall have breached any 
warranty or covenant in this Assignment. Any security 
deposits received by Assignor prior to an Event of Default 
shall be assigned and paid over to Assignor immediately 
upon the occurrence of the Event of Default. Any Rents 
which accrue prior to an Event of Default under the 
Mortgage but are paid thereafter shall be paid to the 
Assignee. 

	5. Survival of Obligation to Comply with Mortgage 
and This Assignment. This Assignment is given as security 
in addition to the Mortgage. The Assignor covenants and 
agrees to observe and comply with all terms and conditions 
contained in the Mortgage and in this Assignment and to 
prevent any Event of Default from occurring under the 
Mortgage. All of the Assignor's obligations under the 
Mortgage and this Assignment shall survive foreclosure of 
the Mortgage and the Assignor covenants and agrees to 
observe and comply with all terms and conditions of the 
Mortgage and this Assignment and to prevent any Event of 
Default from occurring under the Mortgage throughout any 
period of redemption after foreclosure of the Mortgage. 

	6. Default; Remedies. Upon the occurrence of any 
Event of Default specified in the Mortgage or upon the 
breach of any warranty or covenant in this Assignment, the 
Assignee may, at its option, at any time: 

	(a) in the name, place and stead of the 
Assignor and without becoming a mortgagee in 
possession (i) enter upon, manage and operate the 
Mortgaged Property or retain the services of one 
or more independent contractors to manage and 
operate all or any part of the Mortgaged 
Property; (ii) make, enforce, modify and accept 
surrender of the Leases; (iii) obtain or evict 
tenants, collect, sue for, fix or modify the 
Rents and enforce all rights of the Assignor 
under the Leases; and (iv) perform any and all 
other acts that may be necessary or proper to 
protect the security of this Assignment. 

<PAGE>
	(b) with or without exercising the rights set 
forth in subparagraph (a) above, give or require 
the Assignor to give, notice to any or all 
tenants under the Leases authorizing and 
directing the tenants to pay all Rents under the 
Leases directly to the Assignee. 

	(c) without regard to waste, adequacy of the 
security or solvency of the Assignor, apply for, 
and the Assignor hereby consents to, the 
appointment of a receiver of the Mortgaged 
Property, whether or not foreclosure proceedings 
have been commenced under the Mortgage, and if 
such proceedings have been commenced, whether or 
not a foreclosure sale has occurred. 

The exercise of any of the foregoing rights or remedies and 
the application of the rents, profits and income pursuant-
to Paragraph 7, shall not cure or waive any Event of 
Default (or notice of default) under the Mortgage or 
invalidate any act done pursuant to such notice. 

	7. Application of Rents, Profits and Income. All 
Rents collected by the Assignee or the receiver each month 
shall be applied to or on account of any one or more of the 
following items, the Assignee, in its sole and absolute 
discretion shall elect: 

	(a) to payment of all reasonable fees of the 
receiver approved by the court; 

	(b) to payment of all tenant security deposits 
then owing to tenants under any of the Leases; 

	(c) to payment of all prior or current real 
estate taxes and special assessments with respect 
to the Mortgaged Property, or if the mortgage 
requires periodic escrow payments for such taxes 
and assessments, to the escrow payments then due; 

	(d) to payment of all premiums then due for the 
insurance required by the provisions of the 
Mortgage, or if the Mortgage requires periodic 
escrow payments for such premiums, to the escrow 
payments then due; 

   (e) to payment of expenses incurred for normal 
maintenance of the Mortgaged Property; 

	(f) if received prior to any foreclosure sale 
of the Mortgaged Property, to the Assignee for 
payment of the indebtedness secured by the 
Mortgage or this Assignment, but no such payment 
made after acceleration of the indebtedness shall 
affect such acceleration; 

	(g) if received during or with respect to the 
period of redemption after a foreclosure sale of 
the Mortgaged Property: 

	(1) if the purchaser at the 
foreclosure sale is not the Assignee, 
first to the Assignee to the extent of 
any deficiency of the sale proceeds to 

<PAGE>
repay the indebtedness secured by the 
Mortgage or this Assignment, second 
to the purchaser as a credit to the 
redemption price, but if the Mortgaged 
Property is not redeemed, then to the 
purchaser of the Mortgaged Property; 

	(2) if the purchaser at the 
foreclosure sale is the Assignee, to 
the Assignee to the extent of any 
deficiency of the sale proceeds to 
repay the indebtedness secured by the 
Mortgage or this Assignment and the 
balance to be retained by the Assignee 
as a credit to the redemption price, 
but if the Mortgaged Property is not 
redeemed, then to the Assignee, whether 
or not any such deficiency exists. 

The rights and powers of the Assignee under this Assignment 
and the application of Rents under this paragraph 7 shall 
continue until expiration of the redemption period from any 
foreclosure sale, whether or not any deficiency remains 
after a foreclosure sale. 

	8. No Liability for Assignee. The Assignee shall not 
be obligated to perform or discharge, nor does it hereby 
undertake to perform or discharge, any obligation, duty or 
liability of the Assignor under the Leases. This Assignment 
shall not operate to place upon the Assignee responsibility 
for the control, care, management or repair of the 
Mortgaged Property or for the carrying out of any of the 
terms and conditions of the Leases. The Assignee shall not 
be responsible or liable for any waste committed on the 
Mortgaged Property, for any dangerous or defective 
condition of the Mortgaged Property, for any negligence in 
the management, upkeep, repair or control of said Mortgaged 
Property or for failure to collect the Rents. 

	9. Assignor's Indemnification. The Assignor shall 
and does hereby agree to	indemnify and to hold the Assignee 
harmless of and from any and all claims, demands, 
liability, loss or damage (including all costs, expenses, 
and reasonable attorney's fees in the defense thereof) 
asserted against, imposed on or incurred by the Assignee in 
connection with or as a result of this Assignment or the 
exercise of any rights or remedies under this Assignment or 
under the Leases or by reason of any alleged obligations or 
undertakings of the Assignee to perform or discharge any of 
the terms, covenants or agreements contained in the Leases. 
Should the Assignee incur any such liability, the amount 
thereof, together with interest thereon at the rate stated 
in the Note, shall be secured hereby and by the Mortgage 
and the Assignor shall reimburse the Assignee therefor 
immediately upon demand. 

	10. Authorization to Tenant. Upon notice from the 
Assignee that it is exercising the remedy set forth in 
paragraph 6(b) of this Assignment, the tenants under the 
Leases are hereby irrevocably authorized and directed to 
pay to the Assignee all sums due under the Leases, and 
the Assignor hereby consents and directs that said sums 
shall be paid to the Assignee without the necessity for a 
judicial determination that a default has occurred 
hereunder or under the Mortgage or that the Assignee is 
entitled to exercise its rights hereunder, and to the 
extent such sums are paid to the Assignee, the Assignor 
agrees that the tenant shall have no further liability to 
the 
	Assignor for the same. The signature of the Assignee 
alone shall be sufficient for the exercise of any rights 
under this Assignment and the receipt of the Assignee alone 
for any sums received shall be a full discharge and release 
therefor to any such tenant or occupant of the Mortgaged 

<PAGE>
Property. Checks for all or any part of the Rents collected 
under this Assignment shall upon notice from the Assignee 
be drawn to the exclusive order of the Assignee. 

	11. Satisfaction. Upon the payment in full of all 
indebtedness secured hereby as evidenced by a recorded 
satisfaction of the Mortgage executed by the Assignee, this 
Assignment shall, without the need for any further 
satisfaction or release, become null and void and be of no 
further effect. 

	12. Assignee an Attorney-In-Fact. The Assignor 
hereby irrevocably appoints the Assignee, and its 
successors and assigns, as its agent and attorney-in-fact, 
which appointment is coupled with an interest, with the 
right but not the duty to exercise any rights or remedies 
hereunder and to execute and deliver during the term of 
this Assignment such instruments as the Assignee may deem-
appropriate to make this Assignment and any further 
assignment effective, including without limiting the 
generality of the foregoing, the right to endorse on behalf 
and in the name of the Assignor all checks frown tenants in 
payment of Rents that are made payable to the Assignor. 

	13. Assignee Not a Mortgagee in Possession. Nothing 
herein contained and no actions taken pursuant to this 
Assignment shall be construed as constituting the Assignee 
a mortgagee in possession. 

	14. Specific Assignment of Leases. Until the 
Indebtedness Secured Hereby shall have been paid in full, 
Assignor will deliver to the Assignee executed copies of 
any and all other and future leases upon all or any part of 
the mortgaged property. The Assignor will transfer and 
assign to the Assignee, upon written notice by the 
Assignee, any and all specific Leases that the Assignee 
requests. Such transfer or assignment by the Assignor shall 
be upon the same or substantially the same terms and 
conditions as are herein contained, and the Assignor will 
properly file or record such assignments, at the Assignor's 
expense, if requested by the Assignee. 

	15. Unenforceable Provisions Severable. All rights, 
powers and remedies provided herein may be exercised only 
to the extent that the exercise thereof does not violate 
any applicable law, and are intended to be limited to the 
extent necessary so that they will not render this 
Assignment invalid, unenforceable or not entitled to be 
recorded, registered or filed under any applicable law. If 
any term of this Assignment shall be held to be invalid, 
illegal or unenforceable, the validity of other terms 
hereof shall in no way be affected thereby. It is the 
intention of the parties hereto, however, that this 
Assignment shall confer upon the Assignee the fullest 
rights, remedies and benefits available pursuant to law. 

	16. Successors and Assigns. The covenants and 
agreements herein contained shall bind, and the rights 
hereunder shall inure to the respective successors and 
assigns of the Assignor and the Assignee, including any 
purchaser at a foreclosure sale. 

	17. Captions; Amendments; Notices. The captions and 
headings of the paragraphs of this Assignment are for 
convenience only and shall not be used to interpret or 
define the provisions of this Assignment. This Assignment 
can be amended only in writing signed by the 

<PAGE>
Assignor and the Assignee. Any notice from the Assignee to 
the Assignor under this Assignment shall be deemed to have 
been given when given by the Assignee in accordance with 
the requirements for notice by the Mortgagee under the 
Mortgage. 

	18. Counterparts. This Assignment may be executed in 
any number of counterparts, each of which shall be an 
original but all of which shall constitute one instrument. 

	19. Notices. Any notice which any party hereto may 
desire or may be required to give to any other party shall 
be given in the manner and to the addresses as provided for 
in the Mortgage. 

	20. Governing Law. Except as may be otherwise 
expressly provided in the Mortgage and in the Note, all 
claims relating, in any way, to the foregoing shall in all 
respects be governed, construed, applied and enforced in 
accordance with the internal laws of the Commonwealth of 
Massachusetts without regard to principles of conflicts of 
law. The Mortgage and the Note together with all other 
documents executed in connection with the foregoing are 
referred to as the "Loan Documents". Notwithstanding the 
foregoing choice of law: 

	(a) the procedures governing the creation, 
perfection and priority of the lien pertaining to real 
property and tangible personal property created by this 
Assignment and the enforcement by this Assignee of its 
foreclosure and other remedies against the Assignor under 
the Loan Documents with respect to the Mortgaged Property, 
including by way of illustration, but not in limitation, 
actions for foreclosure, for injunctive relief or for the 
appointment of a receiver shall be governed by the laws of 
the state where such Mortgaged Property is located; and 

	(b) the Assignee shall comply with applicable 
law in the state where the Mortgaged Property is located to 
the extent required by the law of such jurisdiction in 
connection with the foreclosure of the liens created under 
the Loan Documents with respect to the Mortgaged Property. 

	Nothing contained herein or in any provisions of the 
other Loan Documents shall be construed to provide that the 
substantive law of the state of where the Mortgaged 
Property is located shall apply to any parties' rights and 
obligations under any of the Loan Documents, which, except 
as expressly provided in clauses (a) and (b) above, are and 
shall continue to be governed by the substantive law of the 
Commonwealth of Massachusetts. In addition, the fact that 
portions of the Loan Documents may include provisions 
drafted to conform to the law of the State where the 
Mortgaged Property is located is not intended, nor shall it 
be deemed, in any way, to derogate the parties' choice of 
law as set forth or referred to in the Loan Documents. The 
parties further agree that the Assignee may enforce its 
rights under the Loan Documents including, but not limited 
to, its rights to sue the Assignor or to collect any 
outstanding indebtedness in accordance with applicable law. 

	Each party hereto hereby consents to personal 
jurisdiction in any state or Federal court located within 
the Commonwealth of Massachusetts, as well as to the 
jurisdiction of all courts from which an appeal may be 
taken from the aforesaid courts, for the purposes of any 
suit, 

<PAGE>
	IN WITNESS WHEREOF the Assignor has executed this 
Assignment as of the day and year first-above written. 



                                   STOCKER YALE, INC.

                                   By: /s/ Mark W. Blodgett

Mark Blodgett,    
Chairman of the Board 



	COMMONWEALTH OF MASSACHUSETTS 

	Suffolk, ss.                                 May 13, 1998 

	Then personally appeared the above-named Mark 
Blodgett, who acknowledged himself to be the Chairman of 
the Board of Stocker & Yale, Inc., a Massachusetts 
corporation and acknowledged the foregoing instrument to be 
his free act and deed and the free act and deed of said 
corporation,



								  By:/s/ John Evan Jones	 
 
                                     Notary Public
                                                        My 
commission expires: 	October 8, 2004
	

<PAGE>
	EXHIBIT A 


	Legal Description of Insured Premises 

A certain parcel of land, with the buildings thereon, 
situated in Salem. Rockingham County. State of New 
Hampshire and Methuen. Essex County, Commonwealth of 
Massachusetts, as shown on "Plan of Land in Salem, Hew 
Hampshire for M & D Realty Trust prepared by Kimball 
Chase Company. Inc. and dated March 15. 1983. recorded in 
the Rockingham County Registry of Deeds on even date 
herewith, and more particularly described as follows: 

Beginning at the southwesterly corner of the granted 
premises by the intersection of Garabedian Drive, a public 
way, and Hampshire Road, a public way, at an iron pipe set 
in the ground on the northerly aide of said Hampshire Road 
as shown on said plan: thence running S 84 deg. 19' 15" E, 
58.24 feet, along the northerly side of Hampshire Road to 
an iron pipe sat in the ground on the northerly side of 
Hampshire Road; thence running S 73 deg. 45' 25" E, 265.76 
feet. along the northerly side of Hampshire Road to an iron 
pipe set in the ground on the northerly side of Hampshire 
Road; thence running on an arc with & radius of 830 feet 
chord bearing S 49 deg. 05' 04" E. 219.70 feet along the 
northerly side of Hampshire Road to an iron pipe set in the 
ground at the intersection of the northerly side of 
Hampshire Road and the Massachusetts - New Hampshire 
boundary line as shown on said plans; thence running S 58 
deg. 35' 27" E, 27.33 feet by the northerly side of said 
Hampshire Road to the point where the northerly side of 
Hampshire Road intersects with the center line of the ditch 
as shown on said plan thence turning and running N 11 deg.  
28' 00" E. 82.10 feet along the center of the ditch to a 
point shown on said plan; thence running N 8 deg. 22' 55" 
E, 762.90 feet along the center of the ditch to a point 
shown on the said plan at the northeasterly corner of the y 
anted premises; thence turning and running N 81 deg. 27' 22 
W, 503.90 feet, along land now or formerly of Construction 
Industries, Inc. to an iron pipe set in the ground by a 
fire hydrant on the easterly aide of Garabedian Drive as 
shown on said plan; thence running on an arc with a radius 
of 750 feet, chord bearing S 34 deg. 50' 33" W, for a 
distance of 261.32 feet, along the easterly side of the 
said Garabedian Drive, to an iron pipe set in the ground on 
the easterly side of Garabedian Drive: thence proceeding 
along the easterly side of Garabedian Drive, S 27 deg. 44' 
05" W, 100.26 feet to a nail set in the mound on the 
easterly side of Garabedian Drive; thence proceeding on an 
arc with a radius of 700 feet, chord bearing S 33 deg. 47' 
47" W, 269.46 feet, along the easterly side of Garabedian 
Drive to an iron pipe set in the ground on the easterly 
side of Garabedian Drive; thence running along the easterly 
side of Garabedian Drive. S 05 deg. 40' 45" W 80.09 feet to 
an iron pipe met in the ground on the easterly side of 
Garabedian Drive, thence running on an arc with a radius of 
50 feet, chord bearing S 39 deg. 19' 15" E, 78.54 feet to 
point of beginning. 

<PAGE>
	2001579-0002 
	ds2-337847 



	ENVIRONMENTAL INDEMNITY AGREEMENT 



	Reference is here made to that certain Note dated 
May 13 1998 (as the same may be amended, modified or 
supplemented from time to time, herein the "Note") made 
payable by Stocker A Yale, Inc. (the "Indemnitor") to the 
order of Danvers Savings Bank (the "Lender") in the 
original principal amount of Seven Hundred and Fifty 
Thousand Dollars ($750,000.00). 

	The Indemnitor is executing and delivering this 
Environmental Indemnity Agreement (this "Agreement") to 
induce the Lender to enter into the Note, without which 
Agreement the Lender would not have entered into the Note 
and the transactions contemplated thereby. 

	For good and valuable consideration, the receipt and 
sufficiency of which are hereby acknowledged, the 
Indemnitor hereby covenants, warrants, and agrees as 
follows: 

	1. Definition of Terms. 


	1.1 Certain Definitions. As used in this Agreement, 
the terms set forth below shall have the following 
meanings: 

	(a) "Environmental Problem" shall mean any of the 
following: 

	(i) the presence, suspected presence, or 
alleged presence of any Hazardous Materials on, 
in, under, or above all or any portion of the 
Premises; 

	(ii) the release, suspected release, 
threatened release, or alleged release of any 
     Hazardous Materials from or onto the Premises; 

		(iii) the violation, suspected violation, 
threatened violation, or alleged violation of any 
Hazardous Materials Legal Requirements with 
respect to the Premises; and 
	
		(iv) the failure, suspected failure, 
threatened failure, or alleged failure to 
obtain or to abide by the terms or conditions of 
any permit or approval required under any 
Hazardous Materials Legal Requirements with 
respect to the Premises. 

A condition described above in this clause (a) shall 
constitute an "Environmental Problem" for purposes of this 
Agreement regardless of whether or not any federal, state, 
or local governmental authority or agency, or any private 
party, has taken any action in connection with such Problem 
or with the condition, suspected condition, threatened 
condition, or alleged condition said to give rise to such 
Environmental Problem. 

<PAGE>
	(b) "Environmental Report" shall mean a report 
prepared by a person or entity with expertise in 
identifying and analyzing Environmental Problems which 
details or describes, based in whole or in part on an 
assessment performed by or on behalf of that person or 
entity, Environmental Problems that are or may be in 
existence with respect to the Premises. 

	(c) "Hazardous Materials" shall mean products, 
wastes and substances which, because of their quantitative 
concentration, chemical, radioactive, infectious or other 
characteristics, constitute or may reasonably be expected 
to constitute or contribute to a danger or hazard to public 
health, safety, welfare, or to the environment, including 
asbestos (whether or not friable), flammable materials, 
explosives, radioactive substances, polychlorinated 
biphenyls, other carcinogens, oil and other petroleum 
products, pollutants, solvents and chlorinated oils, 
pesticides, herbicides, radon gas, reactive metals and 
compounds, contaminants, and any other hazardous or toxic 
materials, chemical, biological, radioactive, or other 
wastes and substances which are defined, determined or 
identified as such in or pursuant to any Hazardous 
Materials Legal Requirements. 

	(d) "Hazardous Materials Legal Requirements" shall 
mean any and all applicable, federal, state or municipal 
laws, ordinances, rules and regulations now in force or 
subsequently enacted, modified, or amended pertaining to 
the protection of the environment or to health or 
safety risks arising therefrom, including, but not limited 
to, control of air pollution, water pollution, groundwater 
pollution, and the generation, manufacture, management, 
handling, use, sale, transportation, delivery, discharge, 
release, emission, treatment, storage, disposal or release 
or threatened release of Hazardous Materials. To the extent 
applicable, such laws include, but are not limited to: (a) 
the Clean Air Act, 42 U.S.C. Section 7401, et seq; (b) the 
Clean Water Act, 33 U.S.C. Section 1251, et seq; (c) the 
Safe Drinking Water Act, 42 U.S.C. Section 300f, et seq; 
(d) the Resource Conservation and Recovery Act, 42 U.S.C. 
Section 6901, et seq; (e) the Comprehensive Environmental 
Response, Compensation and Liability Act, 42 U.S.C. Section 
9601, et seq ("CERCLA"); (f) the Toxic Substances Control 
Act, 15 U.S.C. Section 2601, et seq; (g) Title III of the 
Superfund Amendments and Reauthorization Act ("SARA"), also 
known as the Emergency Planning and Community Right-to-Know 
Act, 42 U.S.C. Section 11001; (h) the Hazardous Materials 
Transportation Act, 49 U.S.C. Section 1801 et seq; (i) 
federal regulations promulgated pursuant to any of the 
foregoing statutes; (j) Massachusetts and New Hampshire 
laws and regulations enacted in order to implement federal 
environmental statutes and regulations; (k) the 
Massachusetts Hazardous Waste Management Act, M.G.L. c. 
21C; (l) the Massachusetts Oil and Hazardous Materials 
Release Prevention and Response Act, M.G.L. c. 21E ("21E"); 
(m) the Hazardous Substances Disclosure by Employers Act, 
M.G.L. c. 111F; (n) New Hampshire RSA 146-A, RSA 146-C, RSA 
147-A and RSA 147-B; (o) Massachusetts and New Hampshire 
regulations promulgated pursuant to the authority of 
applicable state environmental laws; and (p) local 
ordinances and regulations including those adopted by local 
emergency planning districts 
pursuant to Title III of SARA and implementing state 
legislation. 

	(e) "Indemnified Expenses" shall have the meaning 
specified in section 2 hereof. 


	(f) "Indemnified Parties" shall have the meaning 
specified in section 2 hereof. 

<PAGE>

	(g) "Mortgage" shall mean that certain Mortgage, 
Assignment of Leases and Rents, Security Agreement and 
Fixture Filing of even date granted by the Indemnitor to 
the Lender recorded with the Rockingham County Registry of 
Deeds. 

	(h) "Obligations" shall mean all of the obligations 
of the Indemnitor under the Note, the Mortgage and other 
Loan Documents. 

	     (i) "Loan Documents" shall mean the Loan Documents 
described and defined in the Mortgage. 

	(j) "Person" shall mean an individual, a 
corporation, an association, a joint-stock company, a 
business trust or similar organization, a partnership, a 
joint venture, a trust, an unincorporated organization, or 
a government or any agency, instrumentality or political 
subdivision thereof. 

(k)	"Premises" shall mean the "Mortgaged Premises" 
described and defined in the Mortgage. 

(l)	"Subject Obligations" shall mean the 
obligations of the Indemnitor under this 
Agreement. 

	1.2. Other Capitalized Terms, Certain Usages and 
Gender. Other capitalized terms used herein without 
definition shall have the meanings ascribed to them in the 
Mortgage. The terms "include" and "including" shall be 
construed as if followed by the phrase "without 
limitation." All terms contained herein shall be construed, 
whenever the context of this Assignment so requires, so 
that the singular number shall include the plural, and the 
plural the singular, and the use of any gender shall 
include all genders. 

	2. Indemnity and Hold Harmless. 

	(a) The Indemnitor hereby irrevocably and 
unconditionally warrants, covenants, and agrees that the 
Indemnitor shall, at the sole cost and expense of the 
Indemnitor, indemnify, defend, protect, and hold harmless 
the Lender and it officers, trustees, directors, 
shareholders, policyholders, employees, and agents 
(collectively, the "Indemnified Parties" or the 
"Indemnitees") against and from any and all damages, 
losses, liabilities, obligations, penalties, claims, sums 
paid in settlement of claims, litigation, demands, 
defenses, judgments, suits, proceedings, costs, 
disbursements, fines, encumbrances, liens, and expenses of 
any kind or of any nature whatsoever (collectively, the 
"Indemnified Expenses") that may at any time (including, 
without limitation, after the repayment of the Obligations 
or after foreclosure of the Mortgage or, subject to 
subsection 2(d) below, conveyance of the Premises in lieu 
of foreclosure) be imposed upon, incurred or suffered by, 
or asserted or awarded against any of the 

<PAGE>
Indemnified Parties, which arise directly or indirectly 
from or out of any Environmental Problem, without regard to 
whether that Environmental Problem arises before or after 
the date hereof or before or after any repayment and 
performance of the Obligations or any conveyance of the 
Premises by foreclosure of the Mortgage, or conveyance in 
lieu of foreclosure, and without regard to whether or not 
(i) the Environmental Problem was disclosed in any 
Environmental Report performed for, or on behalf of, or 
otherwise received by the Lender or any other Indemnitee; 
or (ii) the Lender or any other Indemnitee was otherwise 
aware of the Environmental Problem. 

	(b) Indemnified Expenses shall include, without 
limitation, all of the following: (i) costs incurred in the 
removal of Hazardous Materials, costs incurred in 
investigation, monitoring, clean-up, and containment of 
Hazardous Materials, costs incurred to mitigate damages, 
closure costs, costs incurred for remediation and 
restoration, and other response costs, in any event to the 
extent necessary or appropriate to comply with Hazardous 
Materials Legal Requirements; (ii) costs incurred to cure 
any violations of Hazardous Materials Legal Requirements; 
(iii) damages for personal injury or death, property loss, 
or other loss in connection with an Environmental Problem; 
(iv) civil and criminal fines and penalties in connection 
with an Environmental Problem; (v) costs incurred to remove 
any liens imposed by law in favor of the federal or any 
state or local government or governmental agency or 
authority in connection with an Environmental Problem; (vi) 
attorneys', accountants, consultants', and experts' fees 
and disbursements, administrative costs, and other out-of-
pocket expenses (including without limitation any such 
fees, disbursements, costs, and expenses incurred as a 
result of groundless, false, or fraudulent claims or 
proceedings and/or in connection with investigating or 
evaluating any claim or proceeding) in connection with an 
Environmental Problem; (vii) sums paid to tenants and other 
third parties for indemnification pursuant to leases 
or other agreements wherein such tenants or other third 
parties are entitled to indemnification or payment on 
account of Environmental Problems; (viii) sums paid and any 
other liability to the federal government, any state or 
local government, any federal, state or local governmental 
authority, or any other person or entity for any costs 
described above; (ix) costs incurred under or by virtue of 
the Landlord Indemnity Agreement; (x) sums paid in 
satisfaction of judgments in connection with an 
Environmental Problem; (xi) costs and expenses (including 
attorney's fees) incurred as a result of any allegation by 
any person or entity that, by virtue of exercising any of 
its rights and remedies under any of this Agreement, the 
Note, the Mortgage, or any other Loan Document, the Lender 
(or any other Indemnified Party) became an owner or 
operator of the Premises or otherwise engaged in control of 
the business of the Indemnitor, so as to make the Lender or 
any such other Indemnified Party liable or responsible 
under any Hazardous Materials Legal Requirements; (xii) 
costs to enforce or interpret the obligations of the 
Indemnitor under this Agreement; and (xiii) settlement 
costs in connection with an Environmental Problem. 

	(c) Without limiting the obligations of the 
Indemnitor hereunder but subject to the provisions of 
section 8 hereof, the Lender may, in the exercise of its 
reasonable discretion: (i) by notice to the Indemnitor, 
advise the Indemnitor to correct or ameliorate the 
Environmental Problem in a manner consistent with Hazardous 
Materials Legal Requirements, in which event the Indemnitor 
shall take such action at the expense of the Indemnitor; 
and (ii) in the event the 

<PAGE>
Indemnitor does not diligently pursue to completion any 
corrective or ameliorative action contemplated by the 
preceding clause (i), the Lender may (but shall not be 
obligated to) itself cause to be taken appropriate action 
to correct or ameliorate the Environmental Problem in a 
manner consistent with Hazardous Materials Legal 
Requirements, to the extent not prohibited under the law, 
in which event the Indemnitor shall cooperate with the 
Lender and shall indemnify the Lender and the other 
Indemnified Parties for the costs incurred in taking such 
action in accordance with this Indemnity; but none of the 
Lender or any of the other Indemnified Parties shall have 
any obligation to do any of the foregoing. 

	(d) If the Premises are conveyed by foreclosure of 
the Mortgage, or conveyance to the Lender or its designee 
in lieu of foreclosure, then the indemnity provided for 
under this instrument shall not apply to an Environmental 
Problem where the condition, suspected condition, 
threatened condition, or alleged condition said to give 
rise to such Problem (as distinct from the Trustee's 
gaining of knowledge of such condition) first arises solely 
after and not on or before the date of such conveyance, 
unless the Indemnitor, or any person or entity under the 
control of the Indemnitor, caused, contributed to, or was 
negligent with respect to such condition, suspected 
condition, threatened condition, or alleged condition, and 
in such latter circumstances the indemnity provided for 
under this instrument shall continue to apply 
notwithstanding any such conveyance. In any event the 
indemnity provided for under this instrument shall continue 
to apply to Indemnified Expenses for which the Indemnitor 
is liable hereunder incurred after the date of any such 
conveyance which arise from or relate to any condition, 
suspected condition, threatened condition, or alleged 
condition (said to give rise to an Environmental Problem) 
in existence on or before the date of the conveyance or any 
Environmental Problem otherwise not excluded from coverage 
under the immediately preceding sentence, even if such 
condition, suspected condition, threatened condition, or 
alleged condition is not discovered until after the date of 
such conveyance. 

	The Indemnitor hereby agrees that the Indemnitor's 
liability hereunder is joint and several with any other 
Person(s) (the "Other Indemnitors") who or which may 
provide an indemnity as to the Subject Obligations. 

	This Agreement is an absolute, primary, 
unconditional, irrevocable, present and continuing 
agreement of indemnity, is not subject to any counterclaim, 
setoff, deduction, withholding, diminution, abatement, 
recoupment, suspension, deferment, reduction or defense 
	and is in no way conditioned or contingent upon any attempt 
to collect from the Indemnitor or from any Other Indemnitor 
or upon any other condition or contingency. Payments by the 
	Indemnitor hereunder shall be made in lawful money of the 
United States of America and may be required by any holder 
of the Notes on any number of occasions. 

	This Agreement shall remain in full force and 
effect without regard to, and the obligations of the 
Indemnitor hereunder shall not be affected or impaired by: 
(a) any amendment or modification of or supplement to any 
of the Loan Documents, including, without limitation, any 
amendment, modification and/or supplement which changes the 
timing 

<PAGE>
or amount of any payment (or prepayment) of the principal 
of or premium, if any, or interest on, or any other terms 
of payment of, any of the Obligations; (b) any extension, 
indulgence or other action or inaction in respect of any of 
the Loan Documents; (c) any default by the Indemnitor or 
any Other Indemnitor under, or any invalidity or 
unenforceability of, or any irregularity or other defect 
in, any of the Loan Documents; (d) any exercise or non-
exercise of any right, remedy, power or privilege in 
respect of any of the Loan Documents; (e) any transfer of 
the assets of the Indemnitor or any Other Indemnitor to, or 
any consolidation or merger of the Indemnitor or any Other 
Indemnitor with or into, any other Person; (f) any 
bankruptcy, insolvency, reorganization or similar 
proceeding involving or affecting the Indemnitor or any 
Other Indemnitor; (g) any change in or addition to or 
partial or complete release of any collateral securing the 
Obligations or any partial or complete release of any 
Other Indemnitor or other Person primarily or secondarily 
liable for the Obligations or the Subject Obligations; (h) 
any change of circumstances, whether or not foreseen or 
foreseeable, or any impossibility of performance, whether 
through acts of God, action of any governmental authority 
or agency, change of law, other force majeure or otherwise, 
whether or not beyond the control of the Indemnitor, any 
Other Indemnitor or any other Person; (i) any attachment, 
claim, demand, charge, lien, order, process, encumbrance or 
any other happening or event or reason, or any withholding 
or diminution at the source, by reason of any taxes, 
assessments, expenses, obligations or liabilities of any 
character, foreseen or unforeseen, and whether or not 
valid, incurred-by or against any Person, or any claims, 
demands, charges or liens of any nature, foreseen or 
unforeseen, incurred by any Person, or against any sums 
payable under any of the Loan Documents, so that such sums 
would be rendered inadequate or would be unavailable to 
make the payments therein provided; (j) the failure of the 
Indemnitor to receive any benefit or consideration from or 
as a result of its execution, delivery and performance of 
this Agreement; or (k) any other circumstance or cause, 
whether similar or dissimilar to any of the foregoing, that 
might constitute a legal or equitable discharge or defense 
of the Indemnitor and whether or not the Indemnitor shall 
have had notice or knowledge thereof, it being agreed by 
the Indemnitor that for the purposes hereof, the Subject 
Obligations shall be due and payable and performable when 
and as the Subject Obligations shall be due and payable and 
performable in accordance with the terms hereof 
notwithstanding that collection or enforcement of any of 
the Obligations may be stayed or enjoined under any law or 
may otherwise be impossible and notwithstanding that any 
Obligation may then be or have become invalid, void or 
voidable for any reason. 

	3. Indemnification Procedures. 


	(a) If any action shall be brought against any 
Indemnitee based upon any of the matters for which the 
Indemnitee is indemnified hereunder, the Indemnitee shall 
notify the Indemnitor in writing thereof and the Indemnitor 
shall promptly assume the defense thereof, including, 
without limitation, the employment of counsel acceptable to 
the Indemnitee(s) and the negotiation of any settlement; 
provided, however, that any failure of the Indemnitee(s) to 
notify the Indemnitor of such matter shall not impair or 
reduce the obligations of the Indemnitor hereunder. In the 
event the Indemnitor shall fail to discharge or undertake 
to defend the 

<PAGE>
Indemnitee(s) against any claim, loss or liability for 
which the Indemnitee is indemnified hereunder, the 
Indemnitee may, at its sole option and election, defend or 
settle such claim, loss or liability. The liability of the 
Indemnitor hereunder to the Indemnitee(s) shall be 
conclusively established by such settlement, provided such 
settlement is made in good faith, the amount of such 
liability to include both the settlement consideration and 
the costs and expenses, including, without limitation, 
attorneys' fees and disbursements, incurred by the 
Indemnitee in effecting such settlement. In such event, 
such settlement consideration, costs and expenses shall be 
included in Indemnified Expenses and the Indemnitor shall 
pay the same as hereinafter provided. The good faith of the 
Indemnitee in any such settlement shall be conclusively 
established if the settlement is made on the advice of 
independent legal counsel for the Indemnitee. 

	(b) The Indemnitor shall not, without the prior 
written consent of each affected Indemnitee(s): (i) settle 
or compromise any action, suit, proceeding or claim or 
consent to the entry of any judgment that does not include 
as an unconditional term thereof the delivery by the 
claimant or plaintiff to the Indemnitee(s) of a full and 
complete written release of the Indemnitee(s) (in form, 
scope and substance satisfactory to the Indemnitee in its 
sole discretion) from all liability in respect of such 
action, suit, proceeding or claim and a dismissal with 
prejudice of such action, suit, proceeding or claim; or 
(ii) settle or compromise any action, suit, proceeding or 
claim in any manner that may adversely affect the 
Indemnitee(s) or obligate the Indemnitee(s) to pay any sum 
or perform any obligation as determined by the 
Indemnitee(s) in its sole discretion. 

	(c) All Indemnified Expenses shall be immediately 
reimbursable to the Indemnitee when and as incurred and, in 
the event of any litigation, claim or other proceeding, 
without any requirement of waiting for the ultimate outcome 
of such litigation, claim or other proceeding, and 
Indemnitor shall pay to each Indemnified Party any and all 
Indemnified Expenses within ten (10) days after written 
notice from such Party itemizing the amounts thereof 
incurred to the date of such notice. In addition to any 
other remedy available for the failure of Indemnitor to 
periodically pay such Indemnified Expenses, such 
Indemnified Expenses, if not paid within said ten-day 
period, shall bear interest at the Default Rate (defined in 
the Note). 

	4. Reinstatement of Obligations. If at any time all or 
any part of any payment made by the Indemnitor or received 
by any Indemnitee from the Indemnitor under or with respect 
to this Agreement is or must be rescinded or returned for 
any reason whatsoever (including, but not limited to, the 
insolvency, bankruptcy or reorganization of the 
Indemnitor), then the obligations of the Indemnitor 
hereunder shall, to the extent of the payment rescinded or 
returned, be deemed to have continued in existence, 
notwithstanding such previous payment made by the 
Indemnitor, or receipt of payment by the holder(s), and the 
obligations of the Indemnitor hereunder shall continue to 
be effective or be reinstated, as the case may be, as to 
such payment, all as though such previous payment by the 
Indemnitor had never been made. 

	5. Waivers by Indemnitor. The Indemnitor hereby waives: 
(a) presentment, demand for payment, and protest of non-
payment; (b) notice of acceptance of this Agreement and of 

(PAGE)
presentment, demand, and intent to accelerate and protest; 
(c) notice of any default under any of the Loan Documents 
or any other agreement relating thereto; (d) demand for 
performance or observance of, and any enforcement of any 
provisions of, or any pursuit or exhaustion of rights or 
remedies against the Indemnitor, any other Indemnitor or 
any other Person under any of the Loan Documents and any 
requirements of diligence or promptness on the part of any 
holder of the Obligations or the Subject Obligations in 
connection therewith; and (e) to the extent the Indemnitor 
lawfully may do so, any and all other demands and notices 
of every kind and description with respect to the foregoing 
or which may be required to be given by any statute, or 
rule of law and any defense of any kind (other than the 
defense of payment) which the Indemnitor may now or 
hereafter have with respect to any of the Loan Documents or 
any other agreement relating thereto. Without limiting the 
generality of the foregoing, no Person who is entitled to 
the benefits of this Agreement shall be required to make 
any demand upon, or to pursue or exhaust any of its rights 
or remedies against, the Indemnitor or any Other Indemnitor 
or any other Person or any collateral or other security, 
prior to exercising any right hereunder, and no delay or 
omission on the part of any such Person in exercising any 
right under any of the Loan Documents or any other 
agreement relating thereto shall operate as a waiver or 
relinquishment of such right. 

	The Indemnitor hereby irrevocably grants the Lender 
the full power in the sole discretion of the Lender, 
without notice to the Indemnitor and without in any way 
affecting the liability of the Indemnitor under this 
Agreement: (a) to waive compliance with and any default 
under, and to consent to any amendment or consent to any 
change of any terms of any of the Loan Documents and any 
other agreement relating thereto, including, without 
limitation, any change in the timing or amount of any 
payment (or prepayment) of the principal of or premium, if 
any, or interest on, or any other terms of payment of, any 
of the Obligations or the Subject Obligations; and (b) to 
grant extensions or renewals thereof and other indulgences 
with respect thereto, and to effect releases, compromises 
or settlements with respect thereto. 

	6. Representations and Warranties. The Indemnitor hereby 
represents and warrants the following to and for the 
benefit of each of the Indemnified Parties: 

	6.1. Organization, Standing, Qualification, etc. The 
Indemnitor is a corporation duly organized and validly 
existing under the laws of the Commonwealth of 
Massachusetts, and has all requisite power and authority to 
own, lease and operate its properties, to carry on its 
business as now conducted and now proposed to be conducted, 
to execute and deliver this Agreement, and to perform its 
obligations and undertakings hereunder. The Indemnitor is 
duly qualified or licensed to do business and is in good 
standing in each jurisdiction in which the character of the 
properties owned or leased or the nature of the activities 
conducted makes such qualification or licensing necessary. 

	6.2. Litigation, etc. There is no action, proceeding 
or investigation pending or threatened (or any basis 
therefor known to the Indemnitor) which questions the 
validity of this 

<PAGE>
Agreement or any action taken or to be taken pursuant 
hereto. There is no outstanding judgment, decree or order 
affecting the Indemnitor. 

	6.3. Valid and Binding Obligations; Compliance with 
Other Instruments, etc. This Agreement has been duly 
authorized by the Indemnitor and constitutes the valid and 
legally binding obligation of the Indemnitor, enforceable 
against the Indemnitor in accordance with its terms. The 
Indemnitor is not in violation of or in default under any 
term of its charter, by-laws or other organizational 
document, or of any agreement, document, instrument, 
judgment, decree, order, law, statute, rule or regulation 
applicable to the Indemnitor or any of its properties and 
assets. The execution, delivery and performance of and the 
consummation of the transactions contemplated by this 
Agreement will not violate or constitute a default under, 
or permit any Person to accelerate or to require the 
prepayment of any indebtedness of the Indemnitor pursuant 
to, or result in the creation of any lien upon any of the 
properties or assets of the Indemnitor pursuant to, any 
term of the charter, by-laws or other organizational 
document of the Indemnitor, or any agreement, document, 
instrument, judgment, decree, order, law, statute, rule or 
regulation applicable to the Indemnitor or any of its 
properties and assets. The Indemnitor is not a party to 
or bound by or subject to any charter, by-law or other 
organizational document, or any agreement, document, 
instrument, judgment, decree, order, law, statute, rule or 
regulation, other than laws, statutes, rules and 
regulations applicable to business organizations generally 
under the terms of or pursuant to which its obligation to 
pay all amounts due from it and/or to perform all 
obligations imposed on it and/or to comply with the terms 
applicable to it under this Agreement is in any way 
restricted. 

	6.4. Consents, etc. No consent or filing with, or 
other action by, any Person (including, without limitation, 
any creditor of or lender to the Indemnitor) is required as 
a condition precedent to the valid execution, delivery and 
performance by the Indemnitor of this Agreement or the 
transactions contemplated by this Agreement. 

7.	General Provisions. 

	7.1. No amendment or waiver of any provision of this 
Agreement or consent to any default under, breach of or, 
departure from this Agreement by the Indemnitor shall in 
any event be effective unless the same shall be in writing 
and signed by the Indemnitor and the Lender at the time 
outstanding and then such waiver or consent shall be 
effective only in the specific instance and for the 
specific purpose for which given. 

	7.2. All notices, demands, requests and other 
communications required pursuant to the provisions of this 
Agreement shall be in writing, and shall be deemed to have 
been received, on the date of receipted delivery (or the 
first business day thereafter if such day of receipted 
delivery is not a business day), if hand delivered or sent 
by commercial courier, or two (2) business days after 
depositing the same in the United States Mails, if sent by 
United States Registered or Certified Mail-Return Receipt 
Requested, postage prepaid, to the respective addresses as 
follows: 

<PAGE>
(i) if to the Indemnitor   Stocker & Yale, Inc. 
       then to it at          32 Hampshire Road 
                              Salem, New Hampshire 
                              Attn.: Mark Blodgett 

       with a courtesy        Stuart Cable, Esq. 
       copy to:               Goodwin, Procter & Hoar LLP 
                              Exchange Place 
                              Boston, Massachusetts 02109 


  (ii)if to the Lender,       Danvers Savings Bank 
      then to it at:          One Conant Street 
                              Danvers, Massachusetts 01923 
                              Attn.: Kevin Bottomley 



       and a courtesy         Anne R. Jackowitz, P.C. 
       copy to:               Choate, Hall & Stewart 
                              Exchange Place 
                              53 State Street 
                              Boston, MA 02109 

	Any of the parties may designate a change of 
address by notice in writing to the other parties. In no 
event shall the failure of any party to furnish courtesy 
copies of any notice to legal counsel of the other party as 
specified above render ineffective any such notice 
otherwise given in the manner hereinabove provided. 

	7.3. This Agreement, including the validity hereof and 
the rights and obligations arising hereunder, and all 
amendments and supplements hereof and all waivers and 
consents hereunder (which amendments, supplements, waivers 
and consents, in any event, shall have no efficacy except 
and unless in writing) shall be construed in accordance 
with and governed by the domestic substantive laws of The 
Commonwealth of Massachusetts without giving effect to any 
choice of law or conflicts of law provision or rule that 
would cause the application of the domestic substantive 
laws of any other jurisdiction. The Indemnitor, to the 
extent that the Indemnitor may lawfully do so, hereby 
consents to service of process, and to be sued, in The 
Commonwealth of Massachusetts and consents to the 
jurisdiction of the courts of The Commonwealth of 
Massachusetts and the United States District Court for the 
District of Massachusetts, as well as to the jurisdiction 
of all courts to which an appeal may be taken from 

<PAGE>
any such courts, for the purpose of any suit, action or 
other proceeding arising out of any of the Indemnitor's 
obligations hereunder, and expressly waives any and all 
objections the Indemnitor may have as to venue in any such 
courts. The Indemnitor further agrees that a summons and 
complaint commencing an action or proceeding in any of such 
courts shall be properly served and shall confer personal 
jurisdiction if served personally or by certified mail to 
the Indemnitor or as otherwise provided under the laws of 
The Commonwealth of Massachusetts. Notwithstanding the 
foregoing, the Indemnitor agrees that nothing contained 
herein shall preclude the institution of any such suit, 
action or other proceeding in any jurisdiction other than 
The Commonwealth of Massachusetts. 

	7.4. The obligations of the Indemnitor are independent of 
the obligations of any of the other Indemnitors under any 
of the other Loan Documents. A separate action or actions 
may be brought and prosecuted against the Indemnitor 
hereunder, whether or not an action is brought against the 
Indemnitor or any other Person under any of the other Loan 
Documents. 

	7.5. This instrument shall bind the successors and assigns 
of Indemnitor and inure to the benefit of the respective 
heirs, successors and assigns of the Lender and the other 
Indemnified Parties. 

	7.6. THE INDEMNITOR IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL 
BY JURY IN ANY SUIT, ACTION OR OTHER PROCEEDING INSTITUTED 
BY OR AGAINST THE INDEMNITOR IN RESPECT OF THE INDEMNITOR'S 
OBLIGATIONS HEREUNDER. 

	7.7. This Agreement (together with the other Loan 
Documents) embodies the entire agreement and understanding 
between the Indemnitor (on the one hand) and the Lender (on 
the other) and supersedes all prior agreements and 
understandings relating to the subject matter hereof. In 
case any provision in this Agreement or any of the other 
Loan Documents shall be invalid, illegal or unenforceable, 
the validity, legality and enforceability of the remaining 
provisions hereof and thereof shall not in any way be 
affected or impaired thereby. 

	7.8. All or any of the rights hereunder of the Lender may 
be transferred or assigned at any time and shall be 
transferred and assigned upon the transfer of any interest 
in the Note, whether with or without the consent of or 
notice to the Indemnitor. 

	7.9. The rights of the Indemnified Parties specifically 
granted by this Agreement shall be in addition to any other 
rights and remedies available against the Indemnitor under 
any other document or instrument now or hereafter executed 
by the Indemnitor, or at law or in equity (including, 
without limitation, any right of reimbursement or 
contribution pursuant to CERCLA, Chapter 21E, or any other 
Hazardous Materials Legal Requirements), and shall not in 
any way be deemed a waiver or release of any of such 
rights. 

<PAGE>
	IN WITNESS WHEREOF, the Indemnitor has executed this 
Agreement as of the day and year first written above, to 
take effect as a Massachusetts instrument under seal. 


Witness: 					

By:/s/ John Evan Jones
						    	STOCKER & YALE, INC., 
                             	a Massachusetts corporation 

                              By:/s/ Mark W. Blodgett
 
                              Mark Blodgett 
                              Chairman of the Board 

<PAGE>

	 DS2.337714.1 
	 2001579-0002 



	SETTLEMENT STATEMENT 





	LENDER: 	Danvers Savings Bank 

	MAKER: 	Stocker & Yale, Inc.

	LOAN TYPE: 	Second Mortgage Loan of $750,000.00 
(the "Loan") 

	CLOSING: 	As of May 13, 1998 
	Choate, Hall & Stewart 
	Exchange Place, 53 State Street 
	Boston, MA 02109 


	In connection with the Loan, the undersigned 
hereby authorizes you to disburse the Loan proceeds as 
follows: 

  LOAN AMOUNT                                  $750,000.00 

     Payee: 

       Danvers Savings Bank (fee)               ($3,750.00)

	 
       Title Insurance Premium and 
       Recording Costs                           ($2042.32)

       Choate, Hall' & Stewart - Legal Services (13,030.00)    
       (including disbursements) 	 
	                                 ____________		

       Balance of Loan Proceeds to be
       distributed for acquisition of 
       Lasiris, Inc.                          ($731,195.68)

       By wire to: 
	See Schedule A

                                    STOCKER YALE, INC. 

                                    By:/s/ Mark W. Blodgett 

<PAGE>
BOSTON SAFE DEPOSIT WIRE INSTRUCTIONS 	 


       The following are wire instructions to Boston Safe                      
                        Deposit & Trust

                 Boston Safe Deposit & Trust 
                     One Boston Place 
                     Boston MA 02108 
                     ABA #011-001-234 
              Acct Name. Goodwin, Procter A Hoar 
           Acct Officer: Brian Gregory 617/722-7509 
                      Acct #13-041-9 


            Attention Stocker & Yale - Evan Jones 



<PAGE>