SECURED PROMISSORY NOTE


$2,600,000               
Santa Rosa, California
November 8, 1995


     FOR VALUE RECEIVED, the undersigned, OPTICAL
COATING LABORATORY, INC., a Delaware corporation (the
"BORROWER"), hereby promises to pay, in a lawful money
of the United States, in installments as herein stated,
to the order of AID ASSOCIATION FOR LUTHERANS, a
Wisconsin corporation ("HOLDER"), the principal sum of
Two Million Six Hundred Thousand Dollars ($2,600,000)
("THE LOAN") together with interest on the unpaid
principal balance hereof from the "Interest Accrual
Date" (as hereinafter defined) at the rate of eight
percent (8%) per annum (the "INTEREST RATE") in legal
tender of the United States of America until paid in
full.  The "INTEREST ACCRUAL DATE" shall be the date
hereafter endorsed on the first page of this Note.*

     As used herein, the term "Loan Year" shall mean
and refer to each twelve (12) month period starting on
the Adjustment Date (as hereinafter defined).

     Until otherwise directed by the Holder in writing,
the installments as herein stated shall be paid by
preauthorized Automated Clearinghouse transaction (ACH)
initiated by Holder of immediate available federal
funds to Harris Trust and Savings Bank, 111 West Monroe
Street, Chicago, Illinois 60690, Account No. 164-096-0
(Aid Association for Lutherans).

     This Note is secured by (i) a Deed of Trust,
Financing Statement, Fixture Filing and Security
Agreement (With Assignment of Rents) (the "DEED OF
TRUST") of even date herewith executed by Borrower, as
trustor, for Holder, as beneficiary, which is a lien on
property (the "PROPERTY") (and the rents therefrom)
located in the City of Santa Rosa, County of Sonoma,
State of California, all as more particularly described
in the Deed of Trust; (ii) an Assignment of Rents and
Leases (the "ASSIGNMENT") of even date herewith
executed by Borrower, as assignor, in favor of Holder,
as assignee, in which Borrower has absolutely assigned
to Holder (with a license back to Borrower on the terms
and conditions contained therein) the rents, additional
rents, profits, royalties and payments of the Property.
(It being expressly understood and agreed that all
revenues derived from the Property which are received
by Borrower shall be held by Borrower in trust to be
used first for the payments required under this Note
and for legitimate operating expenses of the Property);
and (iii) such other and sundry documents executed by
Borrower to further evidence or secure the Loan.  The
Deed of Trust, the Assignment and all other documents
and agreements now or hereafter executed and delivered
as
* Interest on the within Note to accrue from and after
___________, 1995 (the "INTEREST ACCRUAL DATE").
security for the Loan are referred to collectively as
the "Security Documents."  Reference is hereby made to
the Security Documents for a description of the nature
and extent of such security and such assignment and the
rights of Holder with respect thereto.

     If the Interest Accrual Date is on any day other
than the fifteenth day of a calendar month, Borrower
shall pay, on the fifteenth day of the next calendar
month (such payment date called the "ADJUSTMENT DATE"),
interest accrued on the principal amount from the
Interest Accrual Date to the Adjustment Date, such
payment to be deducted by Holder from the commitment
fee delivered by Borrower to Holder.  If the Interest
Accrual Date is the fifteenth day of a calendar month,
such date shall be deemed to be the Adjustment Date,
and no interest payment shall be made on that date.
From and after the Adjustment Date, except as otherwise
provided herein, principal and interest on this Note
shall be payable in installments of Twenty-Four
Thousand Eight Hundred Forty-Seven Dollars ($24,847) to
be applied, except as otherwise provided herein, first
to the payment of accrued interest and then to the
reduction of principal, commencing on the fifteenth day
of the calendar month following the Adjustment Date and
continuing on the fifteenth day of each calendar month
thereafter through and including the one hundred
seventy-ninth (179th) month after the Adjustment Date.
The remaining principal balance hereof, together with
all accrued interest thereon, shall be due and payable
on the fifteenth day of the one hundred eightieth
(180th) month after the Adjustment Date.

     Interest on this Note will be computed on the
basis of a three hundred sixty (360) day year comprised
of twelve (12) thirty (30) day months.

     Borrower has no right, and no privilege is
reserved, to prepay principal during the first four (4)
Loan Years.

     Commencing on the first day of the fifth (5th)
Loan Year (that is, on the fourth (4th) anniversary of
the Adjustment Date) through the last day of the sixth
(6th) month of the fifteenth (15th) Loan Year (premium
prepayment period), Borrower shall have the privilege
following the giving of at least sixty (60) days' prior
written notice to Holder, of prepaying all (but not
less than all) of the then outstanding principal
balance hereof, together with all interest accrued, but
unpaid thereon to the date of prepayment, and any
expenses then due Holder, upon payment by the Borrower
of a prepayment privilege fee (the "PREPAYMENT
PRIVILEGE FEE") equal to the amount prepaid times the
"Privilege Rate."  As used herein, the term "PRIVILEGE
RATE" shall mean and refer to (a) the difference
between (1) the Interest Rate on the Loan and (2) the
market yield of U.S. Treasury issues (as quoted daily
in The Wall Street Journal), which have the closest
maturity date (month and year) to the date the Loan can
be prepaid at par multiplied by (b) the remaining term
of the premium prepayment period (the remaining term to
be expressed as a fraction equal to the number of days
between the date of prepayment and the last day of the
premium prepayment period over 365).  The Prepayment
Privilege Fee shall be reduced to a present value on a
per period basis discounted at the above Treasury
issues rate.  In no event, however, shall the
Prepayment Privilege Fee be less than one percent (1%)
of the outstanding principal.  Notwithstanding the
above, Borrower agrees that in the event of the
occurrence of an Event of Default followed by
acceleration of the maturity of this Note, a tender of
an amount necessary to satisfy the entire indebtedness
shall be deemed a voluntary prepayment, and to the
extent permitted by law, shall include the foregoing
Prepayment Privilege Fee; provided, however, that if
such tender occurs during the first four (4) Loan
Years, Borrower shall pay a prepayment privilege fee
which is equal to the greater of (i) the amount prepaid
multiplied by the Privilege Rate or (ii) eight percent
(8%) of the amount prepaid.

     Commencing with the first day of the seventh (7th)
month of the fifteenth (15th) Loan Year, Borrower shall
have the right, following the giving of not less than
sixty (60) days' prior written notice to Holder, to
prepay all (and not less than all) of the then
outstanding principal balance of the Loan, together
with interest accrued but unpaid thereon to the date of
prepayment and any expenses then due Holder, with no
prepayment privilege fee, penalty or other similar
charge.

     Anything herein to the contrary notwithstanding,
Borrower shall not be liable for damages or any fee if,
after giving notice of prepayment, Borrower fails to
prepay this Note for any reason; provided, however,
that (a) Borrower's failure shall not relieve Borrower
of any of its obligations under this Note or any of the
Security Documents or any other documents relating
thereto, and (b) Borrower shall immediately reimburse
Holder for any out-of-pocket expenses (including
attorneys' fees and costs) incurred by Holder relating
to the proposed prepayment together with a processing
fee in the amount of One Thousand Dollars ($1,000).

     If Holder should determine, in its sole option and
absolute discretion, to accept a prepayment of less
than all of the outstanding principal balance together
with accrued but unpaid interest thereon, all such
prepayments accepted in Holder's sole option and
absolute discretion shall, except for any prepayment
privilege fee assessed by Holder, first be applied
against accrued interest then due and owing and
thereafter against the principal due hereunder in the
inverse order of principal payments as they mature.
Such partial prepayments, if permitted at Holder's sole
option and absolute discretion, shall not relieve the
obligation of Borrower to pay installments of principal
and interest when due hereunder and any such partial
prepayments shall be subject to a prepayment privilege
fee as determined by Holder in its sole and absolute
discretion.  Holder's consent to any such partial
prepayment will not be a consent to any other or
subsequent partial prepayment or a waiver of the need
for such consent in any future or other instance.

     Notwithstanding anything to the contrary contained
in this Note, if the Deed of Trust specifically and
expressly permits prepayment without prepayment
privilege fee in any instance, no prepayment privilege
fee shall be assessed under this Note.

     Without the prior written consent of Holder (which
consent or the denial thereof shall be in Holder's sole
and absolute discretion), Borrower shall not
hypothecate, pledge, grant a security interest in or
otherwise encumber (whether voluntarily or by operation
of law) all or any portion of the Trust Property (as
defined in the Deed of Trust) (a "PROHIBITED
ENCUMBRANCE").

     Except as otherwise provided in Article 1, Section
1.8 of the Deed of Trust, in the event that without the
prior written consent of Holder, which consent or the
denial thereof shall be in Holder's sole and absolute
discretion, (a) Borrower (or any subsequent holder of
an interest in the Trust Property following a transfer
to which Holder consents or that is otherwise permitted
hereby (a "SUBSEQUENT OWNER")) sells, assigns, conveys,
contracts to sell, leases (other than pursuant to any
existing leases of the Trust Property that have been
approved by Holder) or otherwise transfers all or any
portion of the Trust Property or any interest or estate
therein (whether possessory or nonpossessory), whether
voluntarily or by operation of law; or (b) there occurs
a transfer, in the aggregate, of more than fifty
percent (50%) of the shares in Borrower to one person
or entity and any affiliates of any such person or
entity (the occurrence of an event described in (a) or
(b) that occurs without Holder's consent being referred
to herein as a "PROHIBITED TRANSFER"), then, at
Holder's election in its sole and absolute discretion,
without any notice to Borrower, Holder may declare the
whole of the principal balance of this Note and all
accrued but unpaid interest thereon immediately due and
payable, together with a transfer privilege fee of (a)
four percent (4%) of said principal balance if such
Prohibited Transfer occurs during the first four (4)
Loan Years, or (b) the greater of (i) one-half (1/2) of
the amount that would be the Prepayment Privilege Fee
and (ii) one percent (1%) of said principal balance if
such Prohibited Transfer occurs at any time after the
first four (4) Loan Years through the sixth (6th) month
of the fifteenth (15th) Loan Year.  Commencing with the
seventh (7th) month of the fifteenth (15th) Loan Year,
there will be no transfer privilege fee.  Any payment
of the amount necessary to satisfy this Note pursuant
to the terms of this paragraph shall be deemed to be a
voluntary prepayment of this Note.

     Notwithstanding anything to the contrary contained
in the preceding paragraph, the occurrence of (a) a
Prohibited Encumbrance, or (b) a Prohibited Transfer
where (i) Borrower retains any interest in the property
so transferred, (ii) Borrower has any agreement or
understanding with the transferee of such property with
respect to the retransfer of such property to Borrower,
or (iii) Borrower has any interest in the transferee of
such property, shall be deemed an Event of Default, and
Holder shall have all of its rights and remedies in
such event, including, without limitation, the right to
declare the entire unpaid principal balance of this
Note and all accrued but unpaid interest thereon
immediately due and payable, together with the
Prepayment Privilege Fee due pursuant to the terms of
this Note upon the occurrence of an Event of Default
followed by acceleration of the maturity of this Note,
and to charge interest at the rate of thirteen percent
(13%) per annum on such sum from the date of such
Prohibited Transfer or Prohibited Encumbrance until
such sum is paid in full.

     Upon the occurrence of any of the following
events, which events shall constitute events of default
hereunder ("EVENTS OF DEFAULT"), Holder hereof may, at
its sole option and in its absolute discretion, to be
exercised at any time thereafter, without notice to
Borrower, any right to which is hereby waived, declare
the entire unpaid principal balance hereof and accrued
but unpaid interest hereon immediately due and payable:

          (a)  Failure of Borrower to make any payment
of principal and/or interest on this Note within ten
(10) days after the date when due;

          (b)  Failure of Borrower to comply with any
other provision contained in this Note or to perform
any other obligation of Borrower hereunder pursuant to
the terms hereof, or the breach of any representations,
warranties, agreements or covenants contained in the
Note or any Security Document, and such failure or
breach (and the consequences that the delay in such
performance may have caused) are not cured and/or
remedied within fifteen (15) days after notice of such
failure or breach is given to Borrower from Holder;
provided, however, if such failure or breach cannot, in
the sole and absolute discretion of Holder exercised in
good faith, reasonably be cured and/or remediated
within said fifteen (15) day period, Borrower shall
have an additional sixty (60) days to cure such failure
or breach so long as Borrower is diligently pursuing
such cure and/or remediation; provided, further, that
in no event shall any cure and/or remediation period
exceed seventy five (75) days.  Notwithstanding the
foregoing, any such failure or breach shall be deemed
an Event of Default upon the occurrence thereof (for
which no notice shall be required and no cure period
shall be available to Borrower) if (i) such failure or
breach is the third (3rd) default to occur within any
period of twelve (12) consecutive months and notice of
the first two (2) defaults has been sent to Borrower,
regardless of whether the same or different defaults
are involved and notwithstanding that Borrower may have
cured within any applicable cure period any previous
defaults occurring within such twelve (12) month period
or (ii) in the reasonable discretion of Holder, such
failure or breach constitutes or creates a clear and
present emergency or threat to the Trust Property (as
defined in the Deed of Trust);

          (c)  A Prohibited Encumbrance or a Prohibited
Transfer occurs; or

          (d)  An Event of Default (as defined in the
Deed of Trust or any other Security Document).

     Commencing after an Event of Default occurs and
continuing for as long thereafter as the Event of
Default shall exist, the unpaid principal balance
together with interest accrued to such maturity shall
bear interest at an annual rate of interest equal to
thirteen percent (13%).

     All notices, requests, demands and other
communications hereunder shall be in writing and shall
be deemed to have been duly given when personally
delivered, or, if mailed, on the date which is three
(3) business days after mailing by United States
certified mail, postage prepaid, return receipt
requested, to the parties at the following addresses
(until such addresses are changed by notice pursuant to
these notice provisions):

          Borrower:

               Optical Coating Laboratory, Inc.
               2789 North Point Parkway
               Santa Rosa, California  95407-7397
               Attention:  Mr. Jeff Ryan, Assistant
Treasurer

          Holder:

               Aid Association for Lutherans
               4321 North Ballard Road
               Appleton, Wisconsin  54919
               Attention:  Director of Investments

          with copies to:

               Aid Association for Lutherans
               4321 North Ballard Road
               Appleton, Wisconsin  54919
               Attention:  Law Department

          and:

               Pircher, Nichols & Meeks
               1999 Avenue of the Stars, Suite 2600
               Los Angeles, California  90067
               Attention:  Real Estate Notices (DLP)

     All persons or entities now or at any time liable,
whether primarily or secondarily, for payment of the
indebtedness hereby evidenced, for themselves, their
heirs, legatees, devisees, legal representatives,
executors, administrators, conservators, successors and
assigns, respectively, expressly waive presentment for
payment, notice of dishonor, protest, notice of protest
and diligence in collection, and consent that the time
of said payments or any part thereof may be extended by
Holder and that additional security may be accepted by
Holder and further consent that the real or collateral
security or any part thereof now or hereafter securing
this Note may be released by Holder without in any way
modifying, altering, releasing, affecting, or limiting
their respective liability.  Borrower further waives,
to the full extent permitted by law, the right to plead
any and all statutes of limitations as a defense to any
demand on this Note, or on any deed of trust, security
agreement, lease assignment, guaranty or other
agreement now or hereafter securing this Note.

     The parties hereto intend and believe that each
provision in this Note comports with all applicable
local, state and federal laws and judicial decisions.
However, if any provision or provisions, or if any
portion of any provision or provisions, in this Note is
found by a court of law to be in violation of any
applicable local, state or federal ordinance, statute,
law, administrative or judicial decision, or to be
illegal, invalid, unlawful, void or unenforceable as
written, then it is the intent of all parties hereto
that such portion, provision or provisions shall be
given force to the fullest possible extent that they
are legal, valid and enforceable, that the remainder of
this Note shall be construed as if such illegal,
invalid, unlawful, void or unenforceable portion,
provision or provisions were not contained therein, and
that the rights, obligations and interest of Borrower
and Holder under the remainder of this Note shall
continue in full force and effect.

     All agreements herein are expressly limited so
that in no contingency or event whatsoever, whether by
reason of advancement of the proceeds hereof,
acceleration of maturity of the unpaid principal
balance hereof, or otherwise, shall the amount paid or
agreed to be paid to Holder for the use, forbearance or
detention of the money to be advanced hereunder exceed
the highest lawful rate permissible under applicable
usury laws.  If, from any circumstances whatsoever,
fulfillment of any provision in this Note or in the
Security Documents, at the time performance of such
provision shall be due, shall involve transcending the
limit of validity prescribed by law that a court of
competent jurisdiction may deem applicable hereto,
then, ipso facto, the obligation to be fulfilled shall
be reduced to the limit of such validity and if from
any circumstance the Holder shall ever receive as
interest an amount that would exceed the highest lawful
rate, such amount that would be excessive interest
shall be applied to the reduction of the unpaid
principal balance due hereunder in the inverse order of
maturity and not to the payment of interest.

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

     If, by the laws of the United States of America,
or of any state or local jurisdiction having
jurisdiction over Borrower, any tax is due or becomes
due in respect of the issuance of this Note or the
issuance or recording of the Security Documents or any
security interest created thereby, Borrower covenants
and agrees to pay such tax in the manner required by
any such law.  Borrower further covenants to hold
harmless and agrees to indemnify Holder against any
liability incurred by reason of the imposition of any
tax on the issuance of this Note or the issuance or
recording of the Security Documents or any security
interest created thereby.  Notwithstanding the
foregoing provisions of this paragraph, Borrower shall
not be required to indemnify Holder for any income
taxes incurred by Holder relating to this Note.

     Time is of the essence with respect to each and
every obligation of Borrower set forth in this Note.
In the event that any monthly installment of this Note
is not received by Holder when due, then in addition to
all other rights set forth herein Borrower shall be
liable to Holder for a late payment privilege fee equal
to the greater of three percent (3%) of the overdue
payment or Five Hundred and No/Dollars ($500.00), which
fee, at Holder's option, may be either required in
addition to the monthly installment or added to
principal.  Borrower acknowledges that this fee is a
good faith, reasonable and fair estimate under the
circumstances existing at the time this Note is
executed of the amount necessary to compensate Holder
for its additional costs and expenses incident to the
handling of such delinquent installment, including,
without limitation, disruption of Holder's accounting
and bookkeeping operations caused by Borrower's failure
to make payment when due, and the loss of Holder's
ability to promptly reinvest the payments.
Notwithstanding anything to the contrary contained in
this Note, any payment received while any late fees are
owed shall be applied first to such late fees unless
Holder has elected that such late fees be added to
principal.

     No delay or omission on the part of Holder or
other holder hereof under this Note or under any
security agreement given to secure this Note (including
the Deed of Trust and Assignment) shall operate as a
waiver of such right or of any other right hereunder or
under said Deed of Trust or Assignment.

     If Borrower fails to perform any of its covenants
or agreements contained in this Note or in any other
Security Document, then Borrower shall pay all out-of-
pocket expenses of Holder (including but not limited to
actual fees and disbursements of counsel) incurred by
reason of or in response to such nonperformance,
together with interest thereon at the rate of thirteen
percent (13%) per annum from the date such expenses are
incurred until paid.

     Except as otherwise provided in this paragraph,
Borrower shall not have any personal liability under
this Note, and, in the event of a foreclosure of the
security interest in the Trust Property, no deficiency
judgement may be obtained against Borrower and in the
event of an Event of Default hereunder, Holder shall
look solely to the Trust Property and any other
collateral under the Security Documents for recovery of
Holder's losses or damages.  If, however, there is a
Prohibited Encumbrance or a Prohibited Transfer, or the
filing of a voluntary petition by Borrower in
bankruptcy or any other petition under any section or
chapter of the Bankruptcy Code or any similar law,
whether state, federal, foreign, provincial or
otherwise, for relief of debtors, or if Holder is
permanently prevented from acquiring title in the Trust
Property following an Event of Default and is
unsuccessful in collecting on its title insurance
policy relating to the Trust Property, the Borrower
shall have personal liability on this Note and in the
event of a foreclosure of the security interest in the
Trust Property, a deficiency judgment may be obtained
against Borrower.  Borrower shall also have personal
liability for all actual attorneys' fees and other
costs incurred by Holder in order to recover from
Borrower any of the amounts for which Borrower has
personal liability hereunder.  Further, it is expressly
understood and agreed that nothing contained in this
paragraph shall impair, in any manner, any rights,
remedies or recourse Holder may have against any person
or entity other than Borrower or, in any manner or way,
constitute or be deemed a release of the debt evidenced
by this Note or otherwise affect or impair the
enforceability of the liens, deed of trust,
assignments, rights and security interests created by
the Deed of Trust or any other Security Documents or
any other instrument or agreement evidencing, securing,
or relating to the indebtedness evidenced by this Note.
Nothing in this paragraph shall preclude Holder from
foreclosing the Deed of Trust or from enforcing any of
its rights and remedies at law or in equity against
Borrower except as stated in this paragraph.  Further,
Borrower shall indemnify and hold harmless Holder from,
and be personally liable for, any damage, loss,
liability or expense (including, without limitation,
actual attorney's fees and costs) incurred by Holder as
a result of (i) any abusive or destructive act that
Borrower may take or permit that diminishes the value
of the Trust Property or any other security under the
Deed of Trust (to the extent of such diminution in
value); (ii) the collection of any revenue received (a)
after Borrower has failed to pay Holder any sum then
due and payable or (b) after an Event of Default from
or because of lease of the Trust Property that are not
applied against the Note or to normal and necessary
operating expenses for the Trust Property together with
interest thereon from the date Borrower collects such
revenue at the rate of thirteen percent (13%) per
annum; (iii) any material misrepresentations contained
in any of the Security Documents, in any certificate,
document or instrument delivered to Holder by Borrower
or otherwise made to Holder by Borrower or any officer
of Borrower; (iv) any and all tenant security deposits
and rents collected more than one (1) month in advance
of their due date or after the occurrence of any Event
of Default, or any event that, with the passage of time
and/or the giving of notice, would constitute such an
Event of Default, together with interest on such amount
thereon from the date Borrower collects such rents at
the rate of thirteen percent (13%) per annum; (v) any
real estate taxes, assessments, or any other charges by
any governmental entity that are delinquent or the pro
rata amount of any such real estate taxes, assessments
or other charges that constitute a lien upon the Trust
Property or any portion thereof at such time as Holder
(or any successors or assigns of Holder) becomes owner
of the Trust Property; (vi) any amounts necessary to
satisfy any construction liens, mechanics' liens and
materialmen's liens arising out of the acts or
omissions of Borrower, provided, however, that Borrower
shall have the right to contest the amount or validity
of any such lien, by appropriate legal proceedings if:
(x) the legal proceedings shall operate to prevent the
collection of such lien, so contested and the sale of
the Trust Property to satisfy the same, and (y)
Borrower shall deposit with Holder or with the
appropriate court or other governmental authority or
title insurance company satisfactory to Holder a bond
or an amount, with such subsequent additions thereto as
may be necessary or sufficient in Holder's opinion to
pay such liens, together with all estimated interest
and penalties in connection therewith; (vii) any act or
omission constituting fraud; (viii) the use of any
condemnation or insurance proceeds relating to the
Trust Property for any purpose not approved in writing
by Holder or allowed under the Security Documents, or
the misapplication of any security deposits together
with interest thereon from the date of such use or
misapplication at the rate of thirteen percent (13%)
per annum; and (ix) fees required to be paid to any
government entity for the transfer of title to the
Trust Property (or any portion thereof).
Notwithstanding the foregoing, Borrower's liability
under this Note shall not extend to that portion of any
damage, loss, liability or expense that is payable by
Borrower to Holder under that certain Environmental
Indemnity Agreement of even date herewith executed by
Borrower in favor of Holder.  Nothing in this paragraph
shall be construed to be an election by Holder to have
Borrower's obligations to Holder be treated as recourse
debt or nonrecourse debt for purposes of Section
1111(b) of the Bankruptcy Code or any successor
thereto.

     In the event of any inconsistency between
provisions of this Note and those of the Security
Documents, the provisions of this Note shall control.

     IN WITNESS WHEREOF, this Note is executed as of
the date set forth above.
                            
   
                            OPTICAL COATING
                            LABORATORY, INC.,
                            a Delaware corporation
                            
                            
                            By:
                            __________________________
                           
                                 Name:
                            _____________________
                                 Title:
                            ____________________



When recorded mail to:

Pircher, Nichols & Meeks
1999 Avenue of the Stars
Suite 2600
Los Angeles, California  90067
Attn:  David L. Packer, Esq.


             DEED OF TRUST, FINANCING STATEMENT,

            FIXTURE FILING AND SECURITY AGREEMENT

                  (WITH ASSIGNMENT OF RENTS)


     This DEED OF TRUST, FINANCING STATEMENT, FIXTURE
FILING AND SECURITY AGREEMENT (With Assignment of
Rents) (this "Deed of Trust") is dated as of November
8, 1995, by and among OPTICAL COATING LABORATORY, INC.,
a Delaware corporation (hereinafter called "Trustor"),
Commonwealth Land Title Insurance Company (hereinafter
called "Trustee"), and AID ASSOCIATION FOR LUTHERANS, a
Wisconsin corporation (hereinafter called
"Beneficiary").


                     W I T N E S S E T H


     WHEREAS, for value received, Trustor has executed
and delivered to Beneficiary its original promissory
note of even date herewith payable to the order of
Beneficiary in the principal amount of Two Million Six
Hundred Dollars ($2,600,000), and Trustor has agreed to
execute and deliver to Beneficiary, as security for the
payment of said note and any and all extensions,
substitutions, replacements, rearrangements,
modifications, and/or renewals thereof (the "Note"),
this Deed of Trust respecting the Trust Property (as
hereinafter defined); and

     WHEREAS, all things necessary have been done and
performed to make the Note the duly authorized, valid
and legally binding obligation of Trustor and to
constitute this instrument the duly authorized and,
when executed and delivered by Trustor, valid and
legally binding first Deed of Trust on the Trust
Property, in order to secure the Note as hereinafter
provided;


     NOW, THEREFORE, Trustor, in consideration of the
loan of the principal sum of Two Million Six Hundred
Thousand Dollars ($2,600,000) to Trustor (the "Loan"),
receipt of which is hereby acknowledged, and in order
to secure repayment of all indebtedness evidenced by
the Note with interest, according to its tenor and
effect, to secure the performance and observance by
Trustor of all covenants, representations, warranties,
conditions and agreements contained in the Note, and to
secure the performance and observance by Trustor of all
covenants, representations, warranties, conditions and
agreements herein contained, does hereby irrevocably
grant, transfer, assign, exercise, release, alienate,
convey and pledge to Trustee in trust, with power of
sale and right of entry and possession as provided
below, all of its present and future estate (whether
now owned or hereafter acquired), right, title and
interest  in and to the following described property
and all rents, additional rents, issues, payments and
profits thereof:

     A.  The real property (the "Property") described
in the attached Exhibit A which is hereby incorporated
into this Deed of Trust by reference, and all minerals,
oil, gas and other hydrocarbon substances on, in and
under the Property, as well as all development rights,
air rights, water, water rights, water stock, parking
rights and general intangibles relating to, generated
from, arising out of or incidental to the Property, its
ownership, development or use.  The Property described
in the attached Exhibit A is commonly known as 1405
Thunderbolt Way, Santa Rosa, California;

     B.   All structures, buildings, improvements and
fixtures of any kind now or hereafter located on the
Property, including, without limitation, all apparatus,
equipment and appliances used to supply air cooling,
air conditioning, heat, gas, water, light, power,
refrigeration, ventilation, laundry, drying,
dishwashing, garbage disposal, waste removal,
recreation or other services on the Property; and all
elevators, escalators, and related machinery and
equipment, fire prevention and extinguishing apparatus,
security and access control apparatus, partitions,
ducts, compressors, plumbing, ovens, refrigerators,
dishwashers, disposals, washers, dryers, awnings, storm
windows, storm doors, screens, blinds, shades, curtains
and curtain rods, mirrors, cabinets, paneling, rugs,
attached floor coverings, furniture, pictures,
antennas, pools and spas and pool and spa operation and
maintenance equipment and apparatus; and all trees and
plants located on the Property (collectively, the
"Improvements"), all of which, including replacements
and additions thereto, shall conclusively be deemed to
be affixed to and be part of the real property conveyed
to Trustee under this Deed of Trust;

     C.   All easements, rights-of-way and rights used
in connection with the Property or as a means of access
thereto, and all tenements, hereditaments and
appurtenances of and to the Property;

     D.   All of the rents, additional rents, revenues,
issues, earnings, products, royalties, profits and
income of the Property and/or the Improvements, subject
to the limited and revocable right, power and authority
hereinafter given to and conferred upon Trustor to
collect and apply such rents, revenues, issues,
earnings, products, royalties, profits, incomes and
other benefits;

     E.   All present and future leases, subleases and
tenancy agreements affecting the Property and/or
Improvements, including, without limitation, any
security deposits, advance rentals and deposits or
payments of a similar nature;

     F.   All proceeds, causes of action and claims,
both in law and in equity, arising on account of any
damage to or taking of the Property and/or the
Improvements, including but not limited to insurance
proceeds and condemnation proceeds, and all claims
arising on account of any damage to or taking of the
Property or the Improvements, and all proceeds, causes
of action and claims for any loss or diminution in
value of the Property and/or the Improvements;

     G.   All "Equipment," "Farm Products,"
"Inventory," "Documents," "Instruments," "Chattel
Paper," "Accounts," and "General Intangibles" (as such
terms are defined in the California Uniform Commercial
Code) relating to, generated from, arising out of or
incidental to the ownership, development, use or
operation of the Property or the Improvements (whether
or not subsequently removed from the Property or the
Improvements), including, without limitation, all

          (i) machinery and tools; (ii) rugs, carpets
     and other floor coverings; (iii) draperies and
     drapery rods and brackets, awnings, window shades,
     venetian blinds and curtains; (iv) lamps,
     chandeliers and other lighting fixtures; (v)
     office maintenance and other supplies; (vi)
     apparatus, appliances, furniture and furnishings,
     building service equipment, and building
     materials, supplies and equipment; (vii) rights,
     royalties, rents, security deposits, advance
     rentals, revenues, profits and benefits;
     (viii) leases, lease guarantees, contracts,
     contract rights, licenses, permits and
     certificates; (ix) deposits, funds, money and
     deposit accounts; (x) tenements, hereditaments and
     appurtenances; (xi) approvals and parcel maps
     (whether tentative or final), building permits and
     certificates of occupancy; (xii) names under or by
     which the Property or any of the Improvements may
     at any time be operated or known and rights to
     carry on business under any such names or any
     variant thereof; (xiii) trademarks and good will;
     (xiv) management agreements, service contracts,
     supply contracts or other contracts or agreements;
     (xv) warranties; (xvi) water stock; (xvii) shares
     of stock or other evidence of ownership of any
     part of the Property or Improvements that is owned
     by Trustor in common with others, and all
     documents of membership in any owners' or members'
     association or similar group having responsibility
     for managing, maintaining or operating any part of
     the Property or Improvements; (xviii) plans and
     specifications prepared for construction of
     improvements on the Property, or any part thereof,
     and studies, data and drawings related thereto,
     including, without limitation, studies, data or
     reports relating to toxic or hazardous wastes or
     materials located on the Property and/or
     Improvements, and contracts and agreements of
     Trustor relating to the aforesaid plans and
     specifications or to the aforesaid studies, data,
     reports and drawings or to the construction of
     improvements on the Property; (xix) sales
     agreements, deposit receipts, escrow agreements
     and other ancillary documents and agreements
     entered into respecting the sale to any purchasers
     of any part of the Property, and/or Improvements,
     together with all deposits and other proceeds of
     the sale thereof; (xx) damages, royalties and
     revenue of every kind, nature and description
     whatsoever that Trustor may be entitled to receive
     from any person or entity owning or having or
     hereafter acquiring a right to the oil, gas or
     mineral rights and reservations of the Property;
     (xxi) deposits made with or other security given
     to utility companies by Trustor with respect to
     the Property and/or Improvements; (xxii) advance
     payments of insurance premiums made by Trustor
     with respect to, and all claims or demands with
     respect to, insurance; (xxiii) negotiable
     certificates of deposit of Trustor in
     Beneficiary's possession and all accounts of
     Trustor maintained with Beneficiary and each
     deposit account of Trustor assigned to Beneficiary
     pursuant to any agreement; (xxiv) insurance
     proceeds; (xxv) condemnation awards; (xxvi) causes
     of action, claims, compensation, awards and
     recoveries for any damage or injury to the
     Property and/or Improvements or for any loss or
     diminution in value of the Property and/or
     Improvements; (xxvii) books and records,
     including, without limitation, all computer
     records, computer tapes and electronic and
     electromagnetic representations and reproductions
     thereof; (xxviii) guaranties of and security for
     any of the foregoing; (xxix) all substitutions,
     renewals, improvements, attachments, accessions,
     additions and replacements to any of the
     foregoing; and

     H.   All "Proceeds" (as such term is defined in
the California Uniform Commercial Code), collections,
insurance proceeds and products of any of the property
listed in the preceding paragraph G, including without
limitation, proceeds of any voluntary or involuntary
disposition or claim respecting any part thereof
(pursuant to judgment, condemnation award or otherwise)
and all documents, instruments, general intangibles,
goods, equipment, inventory, chattel paper, monies,
accounts, deposit accounts and other personal property
that may arise from the sale or disposition of any of
the foregoing, all guaranties of and security for any
of the foregoing, and all books and records, including,
without limitation, all computer records, computer
tapes and electronic and electromagnetic
representations and reproductions thereof, relating to
any of the foregoing.

Anything above or elsewhere in this Deed of Trust to
the contrary notwithstanding, the lien of this Deed of
Trust shall not encumber or attach to any items of
equipment or machinery located in or attached to the
Property and used solely in connection with Trustor's
manufacturing operations (including, without
limitation, the items of equipment attached to the
Property as of the date hereof known as the In-Line
Flat Glass Coating Sputtering Machine and the
Computerized Scribe-and-Break Glass Fabrication
Machine), even if such equipment or machinery is or may
be deemed a fixture or realty under California law, but
the lien of this Deed of Trust shall encumber and
attach to any items of equipment or machinery located
in or attached to the Property that are used for the
operation or maintenance of any Improvements.  Upon
Trustor's written request, Beneficiary shall execute
and deliver a written certificate or instrument (in
recordable form requested by Trustor and reasonably
satisfactory to Beneficiary) confirming that any
equipment or machinery specifically identified in such
certificate or instrument is not subject to the lien or
encumbrance of this Deed of Trust, but Trustor shall
promptly reimburse Beneficiary for any out-of-pocket
costs incurred by Beneficiary relating to the review
and execution of such certificate or instrument
(including, without limitation, attorneys' fees and
costs).  Trustor shall also have the right at any time
and from time to time to remove any or all equipment or
machinery located in or attached to the Property not
encumbered by the lien of the Deed of Trust, provided
that Trustor shall be responsible for repairing any and
all damage to the Property caused by such removal and
the failure to repair any and all such damage shall be
deemed to constitute bad-faith waste and provided
further that prior to removal of any such equipment or
machinery attached to the Property that Trustor
furnishes Beneficiary with whatever assurances and/or
further security that Beneficiary requires in good
faith that any such damage shall be repaired.  In
addition, Beneficiary agrees to release its lien
against any equipment or machinery attached to the
Property and used solely in connection with the
operation of Trustor's manufacturing operations and not
used for the operation or maintenance of any
Improvements, that may be deemed a fixture or realty,
provided that Trustor removes such equipment or
machinery from the Property and Trustor immediately, to
Beneficiary's satisfaction, repairs any damage to the
Trust Property caused by such removal.


The property listed above in paragraphs (G) and (H)
above may be referred to herein as the "Personal
Property."

The Property together with the additional property
listed above in paragraphs A through H shall be
referred to herein as the "Trust Property."

     This Deed of Trust secures:

          One: Payment by Trustor of an indebtedness in
     the principal sum of Two Million Six Hundred
     Thousand Dollars ($2,600,000), with interest
     thereon, according to the terms of the Note
     (which, by reference, is hereby made a part
     hereof), and the performance, observance and
     discharge of each and every obligation,
     representation, warranty, covenant and agreement
     of Trustor contained in the Note [(including,
     without limitation, provisions providing for the
     adjustment of the interest rate)].

          Two: Payment by Trustor of such additional
     sums with interest thereon as may hereafter be
     loaned by Beneficiary to Trustor when evidenced by
     a promissory note or notes of Trustor and stated
     by the terms thereof to be secured hereby.

          Three:  The performance, observance and
     discharge of each and every obligation,
     representation, warranty, covenant and agreement
     of Trustor contained herein.

          Four:  Payment by Trustor of all other sums
     with interest thereon becoming due or payable
     under the provisions hereof to either Trustee or
     Beneficiary.

          Five:  Payment by Trustor of all real estate
     and personal property taxes and assessments levied
     against the Trust Property.

          Six:  Payment of any and all sums advanced by
     Beneficiary to protect the Trust Property, with
     interest thereon at an annual rate of interest
     equal to thirteen percent (13%).

          Seven:  Performance, observance and discharge
     of each and every obligation, representation,
     warranty, covenant and agreement of Trustor
     contained in the Assignment of Rents and Leases
     (the "Assignment"), executed by Trustor, in favor
     of Beneficiary, and in any and all pledges,
     agreements, security agreements, supplemental
     agreements or other instruments of security
     executed by Trustor as of even date herewith or at
     any time subsequent to the date hereof for the
     purpose of further securing any indebtedness
     hereby secured, or any part thereof, or any
     further advancements or further or additional
     loans of any sums hereafter made by Beneficiary to
     Trustor during the continuance of these trusts and
     secured hereby, or for the purpose of
     supplementing or amending this Deed of Trust or
     any instrument secured hereby.

          Eight:  The performance, observance and
     discharge of each and every obligation,
     representation, warranty, covenant and agreement
     of Trustor contained in the Borrower's Affidavit
     and Solvency Certificate (the "Certificate"),
     executed by Borrower, in favor of Beneficiary, and
     under all other present and future agreements
     executed by Trustor in favor of Beneficiary
     relative to, evidencing, or securing the Loan or
     the indebtedness evidenced by the Note (excluding
     the obligations, representations, warranties,
     covenants and agreements contained in that certain
     Environmental Indemnity Agreement of even date
     herewith executed by Borrower as indemnitor in
     favor of Beneficiary, as indemnitee, which
     obligations, representations, warranties,
     covenants and agreements are not secured by this
     Deed of Trust or the other Security Documents (as
     defined hereinafter) nor are they related in any
     manner to any amounts owed to Beneficiary pursuant
     to the Note).

     This Deed of Trust, the Note, the Certificate, the
     Assignment and any other deeds of trust,
     mortgages, agreements or other instruments given
     to evidence or further secure the payment and
     performance of any obligation secured hereby (and
     any and all replacements, rearrangements,
     modifications, substitutions, extensions, renewals
     modifications or amendments thereto) are sometimes
     referred to collectively herein as the "Security
     Documents."

                          ARTICLE 1

     COVENANTS, WARRANTIES AND REPRESENTATIONS OF TRUSTOR

To protect the security of this Deed of Trust, Trustor
hereby covenants, warrants, represents and agrees as
follows:

     1.1  Ownership.  Trustor is the lawful owner in
fee of the Trust Property.  The Trust Property is free
from any adverse lien, security interest, encumbrance
or adverse claim thereon (except for the lien created
by this Deed of Trust and those claims that are of
record and have been previously disclosed to
Beneficiary in writing).  Trustor has good right, full
power and lawful authority to convey the Trust Property
pursuant to and in accordance with this Deed of Trust.
Trustor shall warrant and forever defend said Trust
Property and the quiet and peaceful possession thereof
against the claims of all persons whomsoever.

     1.2  Secured Obligations.  Trustor shall pay when
due all indebtedness and perform all obligations that
are secured by this Deed of Trust in accordance with
their respective terms, pay when due any future
advances and perform all future obligations secured by
this Deed of Trust.

     1.3  Insurance Policies.

          1.3.1  Trustor shall maintain in full force
and effect, at Trustor's sole cost and expense, (i)
comprehensive public liability insurance insuring
Trustor and Beneficiary against loss, damage, or
liability for injury to, or death of, persons and loss
or damage to property occurring from any cause
whatsoever in, upon, or about the Property and the
Improvements, (ii) fire, hazard and extended coverage
insurance on the Trust Property, (iii) loss of rental
value, (iv) if required by Beneficiary, boiler and
machinery insurance covering pressure vessels, air
tanks, machinery, pressure piping, heating, air
conditioning and elevator and escalator equipment,
provided the Improvements contain equipment of such
nature, and insurance against loss of occupancy, use or
rents arising from any such breakdown, in such amounts
as are satisfactory to Beneficiary, and (v) any other
insurance required by law.  The insurance policies must
be approved by Beneficiary in its reasonable discretion
as to amount, form, deductibles and insurer, and must
cover all risks Beneficiary requires and must be with
A+, A or A- rated companies that have a financial size
of X or better as shown in a current Best's Key Rating
Guide (or comparable guide book acceptable to
Beneficiary if Best's should become unavailable);
provided, however, that the above-referenced policy or
policies of comprehensive public liability insurance
shall be maintained in amounts not less than Two
Million and No/100 Dollars ($2,000,000) combined single
limit; and provided further that the hazard, fire and
extended coverage insurance policies must contain a
New York standard mortgagee or lender clause
endorsement making all losses payable to Beneficiary,
must contain cancellation provisions requiring not less
than thirty (30) days' written notice to Beneficiary as
a condition precedent to any cancellation thereof, must
be for the full replacement value of the Improvements,
and must contain a "Replacement Cost Endorsement"; and
provided further that Loss of "business interruption"
insurance shall be in the amount of at least Three
Hundred Ninety-Five Thousand Dollars ($395,000) for
each twelve (12) month period (and pro rata for any
portion thereof).  The hazard, fire and extended
coverage insurance policies and a copy of all other
insurance policies, together with receipts for the
payment of premiums, are to be delivered to and held by
the Beneficiary.  All renewal and replacement policies
(or certificates or binders evidencing same) must be
delivered to the Beneficiary at least fifteen (15) days
before expiration of the old policies.  Approval of any
insurance by Beneficiary will not be a representation
of the solvency of any insurer or the sufficiency of
any amount of insurance.  Anything above to the
contrary notwithstanding, in no event shall Trustor be
required to insure against loss by earthquake, earth
movement or flood unless such coverage unless such
insurance is available at commercially reasonable
rates.  The deductible for fire, hazard and extended
coverage insurance may be One Hundred Thousand Dollars
($100,000).

          1.3.2  All policies of insurance required to
be maintained by Trustor hereunder shall contain a
waiver of subrogation against the Trustee and
Beneficiary, and an endorsement or agreement by the
insurer that any loss shall be payable in accordance
with the terms of such policy notwithstanding any act
or negligence of Trustor that might otherwise result in
forfeiture of said insurance and the further agreement
of the insurer waiving all rights of set-off,
counterclaim or deductions against Trustor.

          1.3.3  Notwithstanding anything to the
contrary herein, in the event Trustor fails to provide,
maintain, keep in full force and effect or deliver and
furnish to Beneficiary the policies of insurance
required hereunder, in addition to all other remedies
available under this Deed of Trust or any of the
Security Documents, Beneficiary, in its sole and
absolute discretion and without obligation with respect
thereto, may procure such insurance or single-interest
insurance for such risks covering Beneficiary's
interest, and Trustor will pay all premiums thereon
(and interest thereon at the rate of thirteen percent
(13%) per annum from the date of expenditure by
Beneficiary until the date of payment by Trustor)
promptly upon demand by Beneficiary, and until such
payment is made by Trustor the amount of all such
premiums together with interest thereon shall be
secured by this Deed of Trust.

          1.3.4  Notwithstanding anything to the
contrary herein, in the event of foreclosure of this
Deed of Trust or other transfer of title or assignment
of the Trust Property in extinguishment, in whole or in
part, of the debt secured hereby, all right, title and
interest of Trustor in and to all policies of insurance
required herein or the proceeds thereof shall inure to
the benefit of and pass to the successor-in-interest to
Trustor or the purchaser or grantee of the Trust
Property.

     1.4  Damage and Insurance Proceeds.

          1.4.1  Trustor shall give prompt written
notice to Beneficiary of any damage or injury to the
Trust Property costing in excess of $25,000 to repair
and Trustor shall give whatever notice to insurers of
any such damage, injury, loss or diminution of value as
may be required.  All insurance proceeds on the Trust
Property and all causes of action, claims,
compensation, awards and recoveries for any such damage
or injury to the Trust Property are hereby absolutely
assigned to and shall be paid to Beneficiary, and
Trustor agrees to execute such further evidence of such
absolute assignment of such insurance proceeds, causes
of action, claims, compensation, awards and recoveries
as Beneficiary or Trustee may require.  Beneficiary may
(but shall not be obligated to) participate in any
suits or proceedings relating to any such proceeds,
causes of action, claims, compensation, awards or
recoveries and may join with Trustor in adjusting any
loss covered by insurance.  Subject to the terms and
conditions of Section 1.4.4 below, Beneficiary will
apply any sums received by it under this paragraph
first to the payment of all of its costs and expenses
(including but not limited to legal fees and
disbursements) incurred in obtaining those sums, and
then, in its sole and absolute discretion and without
regard to the adequacy of its security, to the payment
of the indebtedness and obligations secured by this
Deed of Trust or to Trustor for restoration or repair
of the Trust Property under Beneficiary's prescribed
disbursement control procedures as hereinafter
described.

          1.4.2  In the event Beneficiary elects,
subject to the terms and conditions of Section 1.4.4
below, to apply any sums received under Section 1.4.1
above in whole or in part to the payment of the
indebtedness and obligations secured by this Deed of
Trust, no prepayment privilege fee shall apply
(notwithstanding anything to the contrary in the Note).
Any sums applied to the payment of the indebtedness
secured by this Deed of Trust shall be applied first
against disbursements by Beneficiary (and any interest
thereon at the rate of thirteen percent (13%) per annum
from the date of expenditure by Beneficiary until the
date of payment by Trustor) chargeable to Trustor
pursuant to the terms of this Deed of Trust, then
against accrued interest then due and owing under the
Note, and thereafter against the principal due under
the Note in the inverse order of principal payments as
they mature.

          1.4.3  Notwithstanding the foregoing, in the
event of loss, Beneficiary is hereby authorized either
(a) to settle, adjust or compromise any claim under the
above insurance policies without consent of Trustor,
which consent is hereby expressly waived; or (b) to
allow Trustor to agree with the insurance company or
companies on the amount to be paid upon the loss.  In
either case, Beneficiary is authorized to collect and
receive any such insurance money.  Notwithstanding
anything to the contrary contained herein, Trustor may,
without the consent of Beneficiary, so long as Trustor
is not in default hereunder, settle, adjust or
compromise any claim in an original amount less than
Twenty Five Thousand and No/100 Dollars ($25,000.00).

          1.4.4  Notwithstanding anything to the
contrary herein contained, if (i) the insurers do not
deny liability as to the insured; (ii) no Event of
Default (as hereinafter defined) exists and no event
exists that, with the passage of time or the giving of
notice or both, would constitute such an Event of
Default; (iii) Beneficiary has received evidence,
satisfactory to Beneficiary in its good faith
discretion, that there are sufficient funds available
and/or committed, including such insurance proceeds, to
effectuate such restoration and to cover the expenses
of operating and maintaining the Trust Property and
servicing the debt secured hereby and any other debt
secured by the Trust Property until the Trust Property
is generating sufficient revenues to cover such
expenses and debt service; (iv) in Beneficiary's
judgment, Beneficiary's security will not be materially
impaired by the application of the insurance proceeds
to the restoration of the Improvements; (v) Trustor has
delivered to Beneficiary financial plans and
projections, including, without limitation, the status
of all tenancies or uses of the Trust Property, from
which Beneficiary, in its sole judgment, determines
that after the completion of such restoration the Trust
Property will be economically viable; (vi) Beneficiary
has approved the plans and specifications to be used in
connection with such restoration; and (vii) the
restoration will return the Improvements to
substantially the same condition, character and utility
and to at least the value that existed immediately
prior to such casualty; then such insurance proceeds,
after deducting therefrom all expenses incurred by
Beneficiary in the collection and administration
thereof, shall be used to pay Trustor for the cost of
rebuilding, replacing, restoring or repairing the Trust
Property so insured in accordance with the disbursement
procedures herein contained.  In all other cases, such
insurance proceeds may at Beneficiary's discretion,
either be applied in payment or reduction of the
indebtedness secured hereby (whether then due or not)
in accordance with Section 1.4.2 above, or be held by
Beneficiary and used to reimburse Trustor or any other
party for the cost of the rebuilding, replacing,
restoring or repairing the Trust Property so insured.

          1.4.5  In the event Trustor is entitled
(whether pursuant to the terms hereof or pursuant to
Beneficiary's election or otherwise) to payment out of
insurance proceeds for any repair, rebuilding,
restoration or replacement, such proceeds shall be made
available, from time to time, upon Beneficiary being
furnished with satisfactory evidence of progress in
such repair, rebuilding, restoration or replacement,
together with satisfactory evidence of the estimated
cost of completion thereof and together with any such
architect's certificates, waivers of lien, contractors'
sworn statements and other evidence of cost and
payments as Beneficiary may reasonably require and
approve.  If the estimated cost of the work exceeds ten
percent (10%) of the original principal amount of the
indebtedness secured hereby, Beneficiary shall also be
furnished with all plans and specifications for such
rebuilding, replacement, restoration or repair as
Beneficiary may reasonably require and approve.  The
aggregate amount of all payments made prior to the
final completion of the work shall never exceed ninety
percent (90%) of the value of the work performed, from
time to time, and at all times the undisbursed balance
of said proceeds remaining in the hands of Beneficiary
shall be at least sufficient to pay for the cost of
completion of the work free and clear of liens.  If the
amount of such insurance proceeds is insufficient to
cover the cost of repair, rebuilding, replacement or
restoration, Trustor shall pay such cost in excess of
the insurance proceeds before being entitled to any
payment out of said insurance proceeds.  Any surplus
that may remain out of said insurance proceeds after
payment of such cost of repair, rebuilding, restoration
or replacement shall, at the option of Beneficiary, be
applied on account of the indebtedness (whether then
due or not) secured hereby in accordance with the terms
of Section 1.4.2 above or be paid to any other party
entitled thereto.

          1.4.6  Nothing herein contained shall be
deemed to excuse Trustor from repairing or maintaining
the Trust Property as provided in Section 1.9 hereof or
from restoring all damage or destruction to the Trust
Property, regardless of whether there are insurance
proceeds available or whether any such proceeds are
sufficient in amount.  The application or release by
Beneficiary of any insurance proceeds shall not cure or
waive any default or notice of default under this Deed
of Trust or invalidate any act done pursuant to such
notice.

     1.5  Waiver of Claims.  Trustor waives any and all
right to claim or to recover against Beneficiary, its
officers, employees, agents, attorneys and
representatives, for loss of or damage to Trustor, the
Trust Property, Trustor's other property or the
property of others under Trustor's control from any
cause insured against or required to be insured against
by the provisions of this Deed of Trust.

     1.6  Taxes and Assessments.

          1.6.1  Trustor agrees to pay prior to
delinquency all taxes and assessments that are or may
become a lien on the Trust Property or that are
assessed against the Trust Property or its rents,
royalties, profits and income.  Trustor shall furnish
to Beneficiary satisfactory evidence respecting the
payment of any and all taxes and assessments.  Trustor
also agrees to pay when due all lawful claims and
demands of mechanics, materialmen, laborers and others
for any work performed or materials delivered for the
Trust Property.  Trustor also agrees to pay when due
all utility charges that are incurred by Trustor for
the benefit of the Trust Property or that may become a
charge or lien against the Trust Property for gas,
electricity, water, telephone or sewer services
furnished to the Trust Property and all other charges
or assessments of a similar nature, whether public or
private, affecting the Trust Property or any portion
thereof, whether or not such taxes, assessments or
charges are liens thereon.  Notwithstanding anything to
the contrary herein, in the event Trustor fails to pay
any of the foregoing when due or prior to delinquency
as required herein, in addition to all other remedies
available under this Deed of Trust or any other
Security Documents, Beneficiary, in its sole and
absolute discretion and without obligation with respect
thereto, may pay any or all such amounts, and Trustor
will pay such amounts advanced (and interest thereon at
the rate of thirteen percent (13%) per annum from the
date incurred by Beneficiary until the date of payment
by Trustor) promptly upon demand by Beneficiary, and
until such payment is made by Trustor, the amount of
all such advances together with interest thereon shall
be secured by this Deed of Trust.  Notwithstanding the
forgoing provisions of this Section 1.6.1, Trustor
shall have the right to contest in good faith any
taxes, assessments, claims or demands at any time
affecting the Trust Property, provided that such
contest is diligently prosecuted and provided further
that during the course of such contest Trustor
furnishes Beneficiary with whatever assurances and/or
further security that Beneficiary reasonably requires
that its security will not be impaired by virtue of the
contest.

          1.6.2  Unless waived in writing upon such
terms and conditions as Beneficiary in its sole
discretion may determine, Trustor shall deposit with
such party and at such place as Beneficiary may from
time to time in writing appoint, commencing on the
"Adjustment Date" (as defined in the Note), and on the
day monthly installments of principal and interest are
payable under the Note until the indebtedness secured
by this Deed of Trust is fully paid, a sum equal to one-
twelfth of the estimated total annual real property
taxes and assessments on the Trust Property and of the
estimated total annual premiums on insurance policies
required to be maintained with respect to the Trust
Property pursuant to the Deed of Trust, such estimate
to be made from time to time in Beneficiary's
reasonable discretion, with notice of any change in
such estimate to be given in writing by Beneficiary to
Trustor at least thirty (30) days in advance, and such
deposit to be held without any allowance of interest
and to be used for the payment of taxes, assessments
and insurance renewal premiums relating to the Trust
Property prior to delinquency.  If the funds so
deposited are insufficient to pay any such tax,
assessment and insurance renewal premium prior to
delinquency, Trustor shall, within five (5) days after
receipt of demand therefor, deposit such additional
funds as may be necessary to pay such taxes,
assessments and insurance renewal premiums in full.
Upon the occurrence and during the continuance of an
Event of Default, Beneficiary may at its own option,
without being required to do so, apply any monies at
the time on deposit pursuant hereto on any of Trustor's
obligations contained in the Note and/or secured by
this Deed of Trust, in such order and manner as
Beneficiary in its sole and absolute discretion may
elect.  Such deposits shall be held to be irrevocably
applied by Beneficiary or by any depository appointed
pursuant hereto for the purposes for which the deposits
are made hereunder and shall not be subject to the
direction and control of Trustor; provided, however,
that neither Beneficiary nor any such depository
appointed pursuant hereto, shall be liable for any
failure to apply to the payment of taxes, assessments
and insurance renewal premiums any amount so deposited
unless Trustor, while not in default under the Note or
this Deed of Trust, shall have requested Beneficiary or
said depository in writing, sent by certified mail
return receipt requested, to make application of such
funds to the payment of particular taxes, assessments
and/or insurance renewal premiums accompanied by the
bills or invoices for such taxes, assessments and/or
insurance renewal premiums, at least thirty (30) days
prior to the date when any such payment is delinquent.
Trustor hereby grants to Beneficiary a security
interest in any such deposits to secure Trustor's
obligation under this Deed of Trust and agrees to
execute such financing statements and take such other
actions as are required by Beneficiary to create and
perfect its security interest in such deposits.

     1.7  Assignment of Rents.

          1.7.1  Trustor hereby presently and
absolutely conveys, transfers and assigns to
Beneficiary, its successors and assigns, all the
rights, interest and privileges that Trustor as lessor
has and may have in any leases now existing or
hereafter made and affecting the Trust Property or any
part thereof, with all of the existing and future
rents, additional rents, revenues, issues, earnings,
products, royalties, income and profits of the Trust
Property that arise from any lease or occupancy
agreement pertaining to the Trust Property.  Anything
to the contrary herein notwithstanding, Trustor also
hereby assigns to Beneficiary any award made hereafter
to Trustor in any court proceeding involving any of the
lessees (specifically including, without limitation, in
any bankruptcy, insolvency or reorganization proceeding
in any state or federal court) and any and all payments
made by or on behalf of any lessee in lieu of rent.
Trustor hereby appoints Beneficiary as its irrevocable
attorney-in-fact to appear in any action and/or to
collect any such award or payment.

          1.7.2  Anything to the contrary herein
notwithstanding, unless and until there occurs an Event
of Default under this Deed of Trust or any other
Security Documents, Trustor will have a license to
collect and receive those rents, additional rents,
royalties, income and profits as they become due.  Upon
the occurrence of an Event of Default under this Deed
of Trust or any other Security Documents, Beneficiary
may terminate Trustor's license in Beneficiary's sole
and absolute discretion at any time, and may thereafter
collect the rents, additional rents, royalties, income
and profits itself or by an agent or receiver.
Notwithstanding the foregoing, no action taken by
Beneficiary to collect any rents, additional rents,
royalties, income or profits will make Beneficiary a
mortgagee-in-possession of the Trust Property, unless
Beneficiary personally or by authorized agent enters
into actual possession of the Trust Property.
Possession by a court appointed receiver will not be
considered possession by Beneficiary.

          1.7.3  Trustor hereby agrees to indemnify
Beneficiary against, and to hold Beneficiary harmless
from, any and all liability, claim, demand, damage,
loss, cost or expense (including actual attorneys' fees
and expenses) arising from any of said leases or from
this assignment, and this assignment shall not place
responsibility for the control, care, management or
repair of said premises upon Beneficiary, or make
Beneficiary responsible or liable for any negligence in
the management, operation, upkeep, repair or control of
the Trust Property resulting in loss or injury or death
to any tenant, licensee, employee or stranger.  Any
expenditures made by Beneficiary to cure any default by
Trustor under any term of any lease (and interest
thereon at the rate of thirteen percent (13%) per annum
from the date incurred by Beneficiary until the date of
payment by Trustor) will be paid by Trustor promptly
upon demand by Beneficiary and will be additional
indebtedness secured by this Deed of Trust.

          1.7.4  The receipt by Beneficiary of any
rents, additional rents, issues, royalties, income or
profits pursuant hereto after the institution of
foreclosure proceedings hereunder shall not cure such
default nor affect such proceedings or any sale
pursuant hereto.  All rents, additional rents, issues,
royalties, income and profits collected by Beneficiary
or a receiver will be applied first to pay all expenses
of collection, and then to the payment of all costs of
operation and management of the Trust Property, and
then to the payment of the indebtedness and obligations
secured by this Deed of Trust in whatever order
Beneficiary directs in its sole and absolute discretion
and without regard to the adequacy of its security.

          1.7.5  Concurrently with the recordation of
this Deed of Trust, the Assignment shall also be
recorded.  To the extent of any inconsistency between
this Article 1, Section 1.7 of this Deed of Trust and
the Assignment, the terms and provisions of the
Assignment shall be controlling.

     1.8   Transfer of Trust Property.

          1.8.1  Without the prior written consent of
Beneficiary, which consent or the denial thereof shall
be in Beneficiary's sole and  absolute discretion,
Trustor shall not hypothecate, pledge, grant a security
interest in or otherwise encumber (whether voluntarily
or by operation of law) all or any portion of the Trust
Property (a "Prohibited Encumbrance").

          1.8.2  Without the prior written consent of
Beneficiary, which consent or the denial thereof shall
be in Beneficiary's sole and absolute discretion, (i)
Trustor (or any subsequent holder of an interest in the
Trust Property following a transfer to which
Beneficiary consents or that is otherwise permitted
hereby (a "Subsequent Owner")) shall not sell, assign,
convey, contract to sell, lease (other than pursuant to
any existing leases of the Trust Property that have
been approved by Beneficiary) or otherwise transfer all
or any portion of the Trust Property or any interest or
estate therein (whether possessory or nonpossessory),
whether voluntarily or by operation of law; or (ii)
there shall occur a transfer in the aggregate of more
than fifty percent (50%) of the shares in Trustor to
one person or entity and any affiliates of any such
person or entity (the occurrence of an event described
above in (i) or (ii) that occurs without Beneficiary's
consent being referred to herein as a "Prohibited
Transfer").  Notwithstanding the preceding provisions
of this Section 1.8.2, Trustor may, in good faith and
by appropriate proceedings, contest any lien or
encumbrance without cost or expense to Trustee or
Beneficiary, but only upon posting, and concurrently
supplying to Beneficiary a certified copy of, a
statutory bond or other security sufficient under
applicable law or causing the issuance of title
insurance satisfactory to Beneficiary, fully to protect
any and all of the Trust Property encumbered by such
claim of lien and otherwise sufficient in Beneficiary's
sole judgment to protect Trustee and Beneficiary
against any judgment in favor of lien claimant.  If the
conditions of the preceding sentence are satisfied
within twenty (20) days after Trustor receives notice
of such lien or encumbrance, such lien or encumbrance
shall not be deemed to be a Prohibited Encumbrance or a
Prohibited Transfer.

          1.8.3  Notwithstanding anything to the
contrary contained in this Section 1.8, Beneficiary
shall consent to a one-time transfer of the Trust
Property, provided, however, that it is established to
the satisfaction of Beneficiary in its good faith
discretion that all of the following requirements have
been satisfied:

               (i)  not less than thirty (30) days
prior to the proposed transfer, Trustor shall have
delivered to Beneficiary (A) a written request for
approval of the proposed transfer; (B) if the proposed
transferee is a limited partnership, a true and
complete copy of the such limited partnership's
Agreement of Limited Partnership and Certificate of
Limited Partnership (Form LP-1), and a good standing
certificate for such limited partnership; (C) if the
proposed transferee is a general partnership, a true
and complete copy of the Agreement of Partnership and
the Statement of Partnership of such partnership; (D)
if the proposed transferee is a corporation, a true and
complete copy of such corporation's Articles of
Incorporation and Bylaws and a good standing
certificate for such corporation; and (E) true and
complete copies of all agreements and documentation
relating to the transfer;

               (ii) the proposed purchaser must be an
experienced owner of commercial real estate for
properties similar to the Trust Property and must have
internal property management personnel with
demonstrated capability in the management of such
properties such that the managerial and operational
skills of the proposed purchaser are as good as
Trustor's as of the date hereof and as of the date of
the proposed transfer;


               (iii)     as of the date of the proposed
transfer, the proposed purchaser must be at least as
creditworthy as Trustor as of the date hereof and as of
the date of the proposed transfer;

               (iv) all documentation relating to the
transfer must be good faith satisfactory to
Beneficiary;

               (v)  no Event of Default and no event,
that with the passage of time and/or the giving of
notice would constitute such an Event of Default,
exists and no other event or condition exists that
could cause the Loan to be in jeopardy of default at
the time Trustor requests approval of the proposed
transfer and at the time of the transfer;

               (vi) at the time of the request for
approval of the proposed transfer, Trustor shall have
paid to Beneficiary a nonrefundable transfer privilege
fee equal to one percent (1%) of the then outstanding
principal balance under the Note;

               (vii)     Trustor shall have obtained an
endorsement to Beneficiary's policy of title insurance,
if required by Beneficiary, insuring the continued
priority, without additional exceptions other than
current real property taxes and other matters approved
by Beneficiary, of the lien of this Deed of Trust;

               (viii)    Trustor and the transferee
shall have satisfied all other good faith requirements
of Beneficiary for providing its consent to such
transfers, including, without limitation, the execution
and delivery of an assumption agreement, a security
agreement and financing statement;

               (ix) the use of the Trust Property shall
remain the same (that is, for general office and
industrial purposes) after the transfer; and

               (x)  Trustor shall pay all actual fees
and expenses incurred by Beneficiary or its counsel in
connection with the proposed transfer, including,
without limitation, all legal, recording and title
insurance fees and expenses.  Trustor acknowledges and
agrees that Trustor shall be liable to Beneficiary for
such fees and expenses regardless of whether the
proposed transfer actually occurs, and such liability
shall be secured by the Deed of Trust and shall bear
interest at the rate of thirteen percent (13%) per
annum from the date incurred by Beneficiary until paid.

The right described in this Section 1.8. shall be
available only with respect to a single transfer by the
original Trustor and not with respect to subsequent
transfers.  (A transfer in accordance with such one-
time right is hereinafter referred to as a "One-Time
Third Party Transfer.")  For the purposes of this
provision, a transfer shall not be deemed to have
occurred if, following notice or request for consent to
Beneficiary, such transfer is not completed for any
reason whatsoever.  The right to make a One-Time Third
Party Transfer by the original Trustor may be exercised
only with Beneficiary's prior approval of the matters
that require its approval, or as to which it is
required to be satisfied, as provided above.

          1.8.4  In the event of a Prohibited Transfer,
then, at Beneficiary's election in its sole and
absolute discretion, upon notice to Trustor,
Beneficiary may declare the whole of the principal
balance of the Note and all accrued but unpaid interest
thereon immediately due and payable, together with a
transfer privilege fee of (i) four percent (4%) of said
principal balance if such Prohibited Transfer occurs
during the first four (4) Loan Years (as defined in the
Note) or (ii) the greater of (A) one half (1/2) of the
amount that would be the Prepayment Privilege Fee (as
provided in the Note) and (B) one percent (1%) of said
principal balance, if such Prohibited Transfer occurs
at any time during the fifth (5th) Loan Year through
the sixth (6th) month of the fifteenth (15th) Loan
Year.  Commencing with the seventh (7th) month of the
fifteenth (15th) Loan Year, there will be no transfer
privilege fee.

          1.8.5  Notwithstanding anything to the
contrary contained in this Section 1.8, the occurrence
of (a) a Prohibited Encumbrance, or (b) a Prohibited
Transfer where (i) Trustor or any Related Party retains
any interest in the property so transferred, (ii)
Trustor or any Related Party has any agreement or
understanding with the transferee of such property with
respect to the retransfer of such property to Trustor
or to any Related Party, or (iii) Trustor or any
Related Party has any interest in the transferee of
such property, shall be deemed an Event of Default, and
Beneficiary shall have all of its rights and remedies
in such event, including, without limitation, the right
to declare the entire unpaid principal balance of the
Note and all accrued but unpaid interest thereon
immediately due and payable, together with the
prepayment privilege fee due pursuant to the terms of
the Note upon the occurrence of an Event of Default
followed by acceleration of the maturity of the Note,
and to charge interest at the rate of thirteen percent
(13%) per annum on such sum from the date of such
Prohibited Transfer or Prohibited Encumbrance until
such sum is paid in full.

     1.9  Maintenance, Repair, Alteration.

          1.9.1  Trustor will not commit any waste on
the Trust Property or take any actions that would
invalidate or give cause for the  cancellation of any
insurance carried on the Trust Property.  Trustor will
maintain the Trust Property in good condition and
repair.  Trustor will keep the Trust Property free from
mechanics' liens or other liens or claims for liens not
expressly subordinated to the lien hereof.
Notwithstanding the preceding sentence, Trustor may, in
good faith and by appropriate proceedings, contest any
lien or encumbrance without cost or expense to Trustee
or Beneficiary, but only upon posting, and concurrently
supplying to Beneficiary a certified copy of, a
statutory bond or other security sufficient under
applicable law or causing the issuance of title
insurance satisfactory to Beneficiary, fully to protect
any and all of the Property encumbered by such claim of
lien and otherwise sufficient in Beneficiary's sole
judgment to protect Trustee and Beneficiary against any
judgment in favor of the lien claimant.  If the
conditions of the preceding sentence are satisfied
within twenty (20) days after Trustor receives notice
of such lien or claim, such lien or claim shall not be
deemed to be an Event of Default hereunder.  Trustor
will pay when due any indebtedness that may be secured
by a lien or charge on the Trust Property or any part
thereof (other than liens for taxes and assessments,
which shall be paid prior to delinquency) and will,
upon request, exhibit satisfactory evidence of the
discharge of any such liens to Beneficiary.  No
Improvements located on the Trust Property may be
removed, demolished or materially altered without the
prior written consent of Beneficiary.  No personal
property in which Beneficiary has a security interest
hereunder may be removed from the Trust Property unless
it is immediately replaced by similar property of at
least equivalent value on which Beneficiary will
immediately have a valid and perfected first lien and
security interest, ranking senior in priority to any
and all other liens, security interests, encumbrances,
or charges thereon.  Trustor shall complete promptly
and in good and workmanlike manner any building or
buildings or any improvements now or at any time in the
process of erection upon the Property and to restore
promptly in like manner any Improvement that may be
damaged or destroyed thereon.  Without Beneficiary's
prior written consent, Trustor will make no material
alterations to the Trust Property except as required by
law or municipal ordinance.  Trustor will suffer or
permit no change in the general nature of the occupancy
or use of the Trust Property without Beneficiary's
prior written consent.

          1.9.2  Without the prior written consent of
Beneficiary, Trustor will not seek, make or consent to
any change in the zoning or conditions of use of the
Trust Property.  Trustor will comply with and make all
payments required under the provisions of any and all
laws, ordinances, regulations, resolutions, covenants,
conditions, and restrictions now or hereafter affecting
the Trust Property or any part thereof or the business
or the activity conducted thereon.  Trustor will comply
with all existing and future requirements of all
governmental authorities having jurisdiction over the
Trust Property or the use thereof and will not commit,
suffer, permit, or allow any act to be done in and upon
the Trust Property in violation of any existing or
future law, ordinance, resolution or regulation.
Trustor will comply with all restrictions of record
with respect to the Trust Property or use thereof.
Notwithstanding the forgoing provisions of this Section
1.9.2, Trustor shall have the right to contest in good
faith any laws, ordinances, regulations, resolutions,
covenants, conditions, and restrictions any time
affecting the Trust Property, provided that such
contest is diligently prosecuted and provided further
that during the course of such contest Trustor
furnishes Beneficiary with whatever assurances and/or
further security that Beneficiary requires in good
faith that its security will not be impaired by virtue
of the contest.


          1.9.3  Beneficiary, at any time, is
authorized to engage an independent inspector to survey
the adequacy of the maintenance of the Trust Property
and/or to conduct an environmental audit of the Trust
Property to determine whether the Trust Property is in
compliance with and/or whether any conditions exist
that may cause the Trust Property to be in violation of
any "Environmental Laws" (as defined hereinafter).  The
scope and type of a survey or environmental audit shall
be in Beneficiary's sole and absolute discretion, and
Trustor acknowledges that an environmental audit may
include, without limitation, air, soil and ground water
sampling.  Provided that an Event of Default has
occurred and is continuing when the work on any such
survey or audit commenced or Beneficiary has a good
faith belief that the Property may be in violation of
Environmental Laws, Trustor shall pay the cost incurred
by Beneficiary for any such survey or environmental
audit (and interest thereon at the rate of thirteen
percent (13%) per annum from the date incurred by
Beneficiary until repayment by Trustor), and all such
costs with interest thereon shall be secured by this
Deed of Trust.  If the Trust Property is found to be in
violation of any Environmental Laws or any conditions
exist that may make the Trust Property be in violation
of any Environmental Laws or if the maintenance of the
Trust Property is found to be in violation of this Deed
of Trust, such inspector shall make recommendations to,
and determine the estimated cost to, bring the Trust
Property into compliance with such laws, correct such
conditions or make such repairs and replacements
necessary to comply with this Deed of Trust.  In such
event Trustor shall commence implementation of such
recommendations at its own cost and expense within
thirty (30) days, and shall thereafter with diligence,
complete such recommendations and Trustor shall provide
Beneficiary with bonds or other assurances required by
Beneficiary in its sole and absolute discretion that
said recommendations will be satisfactorily completed.
Trustor acknowledges that any survey or environmental
audit shall be conducted solely for the benefit of
Beneficiary and that in no manner should the completion
of such a survey or environmental audit be deemed to be
a representation by Beneficiary as to the Property's
compliance with any Environmental Laws or as to the
adequacy of the maintenance of the Trust Property.

     1.10  Books and Records.

          1.10.1  Trustor will keep adequate books and
records of account of the Trust Property and of
Trustor's own financial affairs sufficient to permit
the preparation of financial statements therefrom in
accordance with generally accepted accounting
principles.  Beneficiary and its agents will have the
right to examine, copy and audit the records and books
of account of the Trust Property at all reasonable
times.  If Trustor shall be in default under this Deed
of Trust or under any other Security Documents, Trustor
shall deliver to Beneficiary, upon demand, audited
financial statements and profit-and-loss statements for
the Trust Property prepared by an independent certified
public accountant in accordance with generally accepted
accounting principles consistently applied.  In
addition to the foregoing, Trustor shall, within one
hundred twenty (120) days of the first day of each
calendar year, furnish to Beneficiary financial
statements of Trustor statements of income and expenses
of the Trust Property for the preceding calendar year,
a balance sheet of the Trust Property as of the first
day of the calendar year, and a current rent roll (if
any part of the Trust Property is then subject to
lease), each shall be certified as to truth and
accuracy by Trustor and shall be satisfactory in form
and substance to Beneficiary in its good faith and
absolute discretion and disclose a solvent condition.

          1.10.2  Beneficiary, or its agents,
representatives or workmen, are authorized to enter at
any reasonable time (and upon reasonable advance notice
to Trustor) upon or in any part of the Trust Property
for the purpose of inspecting the Trust Property and
for the purpose of performing any of the acts it is
authorized to perform under the terms of this Deed of
Trust or any other Security Documents or any other
agreement between the parties.

          1.10.3  Trustor will promptly furnish, upon
Beneficiary's request, a duly acknowledged written
statement setting forth all amounts due on the
indebtedness secured by this Deed of Trust and stating
that no offsets or defenses exist, and containing such
other matters as Beneficiary may reasonably require.

          1.10.4  Trustor hereby represents, warrants
and certifies that all financial statements,
information and certificates previously or
contemporaneously delivered to Beneficiary concerning
Trustor, and/or the Trust Property are true, complete
and correct in all material respects.

     1.11  Management of the Trust Property.  Trustor
will provide for competent management of the Trust
Property.  Any third party manager of the Trust
Property and their management contracts (including any
modification, extension or renewal thereof) shall be
approved by Beneficiary in its sole and absolute
discretion.  All rights of any person or entity to
compensation or fees pursuant to any such management
contract shall be subordinate to Beneficiary's rights
under this Deed of Trust and any other Security
Documents.  Any such management contracts shall be
terminable upon the occurrence of an Event of Default,
at the option of Beneficiary in Beneficiary's sole and
absolute discretion, upon thirty (30) days' written
notice to the manager thereunder.

     1.12  Actions Affecting Trust Property.

          1.12.1  Trustor will, at its own expense,
appear in and defend any action or proceeding that
would affect Beneficiary's security or the rights or
powers of Beneficiary or Trustee or that purports to
affect any of the Trust Property.  If Trustor fails to
perform any of its covenants or agreements contained in
this Deed of Trust or in any of the Security Documents,
or if any action or proceeding of any kind (including,
but not limited to any condemnation proceeding or any
bankruptcy, insolvency, arrangement, reorganization or
other debtor relief proceeding) is commenced or if
there occurs any other event that might affect
Beneficiary's, Trustor's or Trustee's interest in the
Trust Property or Beneficiary's right to enforce its
security, then Beneficiary and/or Trustee may, without
notice, any right to such prior notice which is hereby
expressly waived, at their option and without
obligation to do so, make any appearances, disburse any
sums and take any actions as may be necessary or
desirable to protect the Trust Property, to protect or
enforce the security of this Deed of Trust or to remedy
the failure of Trustor to perform its covenants and
agreements (without, however, waiving any default of
Trustor).  Trustor agrees to pay all out-of-pocket
expenses of Beneficiary and Trustee thus incurred
(including, without limitation, all actual attorneys'
fees and costs).  Any sums so disbursed by Beneficiary
or Trustee (and interest thereon) will be additional
indebtedness of Trustor secured by this Deed of Trust,
will bear interest from the date incurred by
Beneficiary or Trustee until paid by Trustor at the
rate of thirteen percent (13%) per annum, and will be
payable by Trustor upon demand.  This paragraph will
not be construed to require Beneficiary or Trustee to
incur any expenses, make any appearances, or take any
actions.

          1.12.2  If Beneficiary is made or becomes a
party to any litigation concerning this Deed of Trust,
the other Security Documents or the Trust Property or
any part thereof or interest therein, or the occupancy
thereof by Trustor, then Trustor shall indemnify,
defend and hold Beneficiary harmless from all
liability, claims, demands, obligations, losses, costs
and expenses, incurred by reason of said litigation,
including, without limitation, all actual attorneys'
fees and expenses incurred by Beneficiary in such
litigation, whether or not any such litigation is
prosecuted to judgment.  If Beneficiary commences an
action against Trustor or appears in any bankruptcy,
insolvency, reorganization or other proceeding for
debtor relief to enforce any of the terms hereof or
because of the breach by Trustor of any of the terms
hereof, or for the recovery of any sum secured hereby,
Trustor shall pay to Beneficiary, upon demand, all
actual attorneys' fees and expenses, and the right to
such attorneys' fees and expenses shall be deemed to
have accrued on the commencement of such action, shall
be enforceable whether or not such action is prosecuted
to judgment, will be additional indebtedness of Trustor
secured by this Deed of Trust and will bear interest at
the rate of thirteen percent (13%) per annum from the
date incurred until paid in full.

          1.12.3  In the event Trustor requests (i) any
changes to this Deed of Trust or any other documents
relating to the Loan, (ii) releases of any part of the
Trust Property or any additional property upon which a
security interest has been granted to secure the
indebtedness secured hereby, or (iii) any waivers by
Beneficiary, then Trustor shall reimburse Beneficiary
for all resulting actual attorneys' fees and expenses
incurred by Beneficiary.  The need for legal review and
preparation of any documentation shall be in the sole
discretion of Beneficiary.

     1.13  Security Agreement and Fixture Filing.

          1.13.1  Trustor hereby grants to Beneficiary
a security interest in the Personal Property to secure
all of Trustor's obligations to Beneficiary contained
in this Deed of Trust and any other Security Documents.
This Deed of Trust constitutes a Security Agreement
with respect to all personal property in which
Beneficiary is granted a security interest hereunder,
and Beneficiary shall have all of the rights and
remedies of a secured party under the Uniform
Commercial Code as enacted in California (the "Uniform
Commercial Code") as well as all other rights and
remedies available at law or in equity.

          1.13.2  Trustor will execute, acknowledge,
deliver and cause to be recorded or filed, in the
manner and place required by any present or future law,
any instrument that may be requested by Beneficiary to
publish notice or protect, perfect, preserve, continue,
extend, or maintain the security interest and lien, and
the priority thereof, of this Deed of Trust or the
interest of Beneficiary in the Trust Property,
including, without limitation by reason of
specification, deeds of trust, security agreements,
financing statements, continuation statements, and
instruments of similar character, and Trustor shall pay
or cause to be paid (i) all filing and recording taxes
and fees incident to each such filing or recording,
(ii) all expenses, including without limitation, actual
attorneys' fees and costs, incurred by Beneficiary in
connection with the preparation, execution, and
acknowledgement of all such instruments, and (iii) all
federal, state, county and municipal stamp taxes and
other taxes, duties, imposts, assessments, and charges
arising out of or in connection with the execution and
delivery of such instruments.  Trustor hereby
irrevocably constitutes and appoints Beneficiary the
attorney-in-fact of Trustor, to execute, deliver and,
if appropriate, to file with the appropriate filing
officer or office any such instruments if Trustor
should fail to do so.

          1.13.3  Upon the occurrence and during the
continuance of any Event of Default, Beneficiary shall
have the right to cause any of the Trust Property that
is Personal Property and subject to the security
interest of Beneficiary hereunder to be sold at any one
or more public or private sales as permitted by
applicable law, and Beneficiary shall further have all
other rights and remedies, whether at law, in equity,
or by statute, as are available to secured creditors
under applicable law, specifically including, without
limitation, the right to proceed as to both the real
property and the personal property contained within the
Trust Property as permitted by Uniform Commercial Code
Section 9501(4).  Any such disposition may be conducted
by an employee or agent of Beneficiary or Trustee.  Any
person, including both Trustee and Beneficiary, shall
be eligible to purchase any part or all of such
property at any such disposition.

          1.13.4  Expenses of retaking, holding,
preparing for sale, selling or the like shall be borne
by Trustor and shall include, without limitation,
Beneficiary's and Trustee's actual attorneys' fees and
legal expenses.  Trustor, upon demand of Beneficiary,
shall assemble such personal property and make it
available to Beneficiary at such place as shall be
required by Beneficiary in its sole discretion.
Beneficiary shall give Trustor at least five (5) days'
prior written notice of the time and place of any
public sale or other disposition of such personal
property or of the time of or after which any private
sale or any other intended disposition is to be made,
and if such notice is sent to Trustor, at the same
address as is provided for the mailing of notices
herein, it is hereby deemed that such notice shall be
and is reasonable notice to Trustor.

          1.13.5  Trustor maintains a place of business
in the State of California, as set forth as the address
of Trustor provided herein under "Requests for Notices"
below, and Trustor will immediately notify Beneficiary
in writing of any change in its place of business.

          1.13.6  Portions of the Trust Property are
goods that are or are to become fixtures relating to
the Property, and Trustor covenants and agrees that the
filing of this Deed of Trust in the real estate records
of the county where the Trust Property is located shall
also operate from the time of filing as a fixture
filing in accordance with Sections 9313 and 9402(6) of
the Uniform Commercial Code.

     1.14  Payments.  All sums payable by Trustor
hereunder or secured hereby shall be paid without
notice, demand, counterclaim, setoff, deduction or
defense and without abatement, suspension, deferment,
diminution or reduction, and the obligations and
liabilities of Trustor hereunder shall in no way be
released, discharged or otherwise affected (except as
expressly provided herein or in the Note) by reason of:
(i) any damage to or destruction of or any condemnation
or similar taking of the Trust Property or any part
thereof; (ii) any restriction or prevention of or
interference with any use of the Trust Property or any
part thereof; (iii) any defect in title to or
encumbrance on the Property or the Improvements or any
part thereof or any eviction from the Property or any
part thereof by title paramount or otherwise; (iv) any
bankruptcy, insolvency, reorganization, composition,
adjustment, dissolution, liquidation or other like
proceeding relating to Beneficiary, or any action taken
with respect to this Deed of Trust by any trustee or
receiver of Beneficiary, or by any court, in any such
proceeding; (v) any claim that Trustor has or might
have against Beneficiary; (vi) any default or failure
on the part of Beneficiary to perform or comply with
any of the terms hereof or of any other agreement with
Trustor; or (vii) any other occurrence whatsoever,
whether similar or dissimilar to the foregoing, and
whether or not Trustor shall have notice or knowledge
of any of the foregoing.  Trustor waives all rights now
or hereafter conferred by statute or otherwise to any
abatement, suspension, deferment, diminution or
reduction of any sum secured hereby and payable by
Trustor.

     1.15  Condemnation.

          1.15.1  Should the Trust Property, or any
part thereof or interest therein, be taken or damaged
by reason of any public  improvement or condemnation
proceeding, or in any other manner or should Trustor
receive any notice or other information regarding such
proceeding, Trustor shall give prompt written notice
thereof to Beneficiary.

          1.15.2  Beneficiary shall be entitled to all
compensation, awards and other payments or relief
therefor, and shall be entitled at its option to
commence, appear in and prosecute in its own name any
action or proceedings.  Beneficiary shall also be
entitled to make any compromise or settlement in
connection with such taking or damage.  All such
compensation, awards, damages, rights of action and
proceeds awarded to Trustor (the "Proceeds") are hereby
assigned to and shall be paid to Beneficiary, and
Trustor agrees to execute such further assignments of
the Proceeds as Beneficiary or Trustee may require.

          1.15.3  Subject to the terms and conditions
of Section 1.15.4 below, in the event any portion of
the Trust Property is so taken or damaged, Beneficiary
shall have the option, in its sole and absolute
discretion, to apply all such Proceeds, after deducting
therefrom all costs and expenses (whether incurred with
or without suit), including actual attorneys' fees and
costs, incurred by it in connection with such Proceeds,
to any indebtedness (whether due or not) secured hereby
and in such order as Beneficiary may determine, or to
require Trustor to restore and rebuild and to apply all
such Proceeds, after such deductions, to the
restoration of the Trust Property.  Such application or
release shall not cure or waive any default or notice
of default hereunder or invalidate any act done
pursuant to such notice.  Notwithstanding the
foregoing, if (i) no Event of Default exists and no
event exists that, with the passage of time or the
giving of notice or both, would constitute such an
Event of Default; (ii) Beneficiary has received
evidence, satisfactory to Beneficiary in its good faith
judgment, that there are sufficient funds available
and/or committed, including such condemnation proceeds,
to effectuate such restoration and to cover the
expenses of operating and maintaining the Trust
Property and servicing the debt secured hereby and any
other debt secured by the Trust Property until the
Trust Property is generating sufficient revenues to
cover such expenses and debt service; (iii) in
Beneficiary's judgment, Beneficiary's security will not
be materially impaired by the application of the
condemnation proceeds to the restoration of the
Improvements; (iv) Trustor has delivered to Beneficiary
financial plans and projections from which Beneficiary,
in its good faith judgment, determines that after the
completion of such restoration the Trust Property will
be economically viable; (v) Beneficiary has approved
the plans and specifications to be used in connection
with such restoration; and (vi) the restoration will
return the Improvements to substantially the same
condition, character and utility that existed
immediately prior to such taking; then the Proceeds,
after the deductions provided for above, shall be used
to pay Trustor for the cost of the rebuilding or
restoring of the buildings or improvements.

          1.15.4  In the event Trustor is required by
Beneficiary's option or otherwise entitled to rebuild
or restore as aforesaid, the Proceeds, after said
deductions, shall be paid out in the same manner as
provided in Section 1.4.5 hereof for the payment of
insurance proceeds toward the cost of rebuilding or
restoration.  If the amount of such Proceeds is
insufficient to cover the cost of rebuilding or
restoration, Trustor shall pay such cost in excess of
the Proceeds before being entitled to any payment out
of said Proceeds.

          1.15.5  Any surplus that may remain out of
said Proceeds after payment of such cost of rebuilding
or restoration shall, at the option of Beneficiary, be
applied on account of the indebtedness (whether then
due or not) secured hereby in such order as Beneficiary
may determine or be paid to any other party entitled
thereto.  In applying any Proceeds on account of the
indebtedness secured hereby, a prepayment privilege fee
shall be assessed based on the Privilege Rate as
defined in the Note.  To the extent that any applicable
prepayment fee results from the application of the
award to the prepayment of the indebtedness secured
hereby, such amount shall be paid by the condemning
authority as part of the award and not by Trustor as an
amount in addition to the award, and if no such award
for prepayment fees is granted, Trustor shall have no
liability for any such fees (anything to the Note to
the contrary notwithstanding).

     1.16  Additional Security.  In the event
Beneficiary at any time holds additional security for
any of the obligations secured hereby, it may enforce
the sale thereof or otherwise realize upon the same, at
its option, either before or concurrently herewith or
after a sale is made hereunder.

     1.17  Trustee Actions.  At any time, or from time
to time, without liability therefor and without notice
to Trustor, upon written request of Beneficiary and
presentation of this Deed of Trust and the Note secured
hereby for endorsement, and without affecting the
personal liability of any person for payment of the
indebtedness secured hereby or the effect of this Deed
of Trust upon the remainder of said Trust Property,
Trustee may (i) reconvey all or any part of said Trust
Property, (ii) consent in writing to the making of any
map or plan thereof, (iii) join in granting any
easement thereon, or (iv) join in any extension
agreement or any agreement subordinating the lien or
charge hereof or other agreement affecting this Deed of
Trust.

     1.18  Release or Discharge.  Without affecting the
liability of any other person liable for the payment of
any obligation herein mentioned, and without affecting
the lien or charge of this Deed of Trust upon any
portion of the Trust Property not then or theretofore
released as security for the full amount of all unpaid
obligations, Beneficiary may, from time to time and
without notice (i) release any person so liable, (ii)
extend the maturity or alter any of the terms of any
such obligation, (iii) grant other indulgences, (iv)
release or reconvey, or cause to be released or
reconveyed at any time at Beneficiary's option any
parcel, portion or all of the Trust Property, (v) take
or release any  other or additional security for any
obligation herein mentioned, or (vi) make compositions
or other arrangements with debtors in relation thereto.

     1.19  Taxes. If, by the laws of the United States
of America, or of any state having jurisdiction over
Trustor, any tax is due or becomes due in respect of
the issuance of this Deed of Trust or any other
Security Documents, or the recording of all or any of
the foregoing or of any security interest created
thereby, Trustor will pay such tax in the manner
required by such law.  Trustor shall also hold harmless
and indemnify Trustee or Beneficiary against any
liability incurred by reason of the imposition of any
tax on the issuance of this Deed of Trust or any other
Security Documents, or on the recording of this Deed of
Trust or any other Security Documents or of any
security interest created hereby or thereby.

     1.20  Regulated Substances.

          1.20.1  As used herein, "Regulated Substance"
means any substance, material, or matter including,
without limitation, medical waste that may give rise to
liability under any Environmental Laws (as defined
herein).  As used herein, "Environmental Laws" means
(a) any local, state or federal laws, rules, ordinances
or regulations, either in existence as of the date
hereof, or enacted or promulgated after the date of
this Deed of Trust, that concern the existence,
management, control, discharge, treatment, containment,
and/or removal of substances or materials that are or
may become a threat to public health or the
environment; or (b) any common law theory based on
nuisance, trespass, negligence, strict liability,
aiding and abetting or other tortious conduct.

          1.20.2  Trustor represents and warrants that
(i) there has been no deposit, storage, seepage or
filtration of any Regulated Substances (including,
without limitation, asbestos, oil, petroleum or
chemical liquids or solids, liquids or gaseous
products) at, upon, under or within the Trust Property
or any contiguous real estate in violation of any
Environmental Laws, and (ii) Trustor has not caused or
permitted to occur, and shall not permit to exist, any
condition that may cause a discharge of any Regulated
Substances at, upon, under or within the Property or on
any contiguous real estate.

          1.20.3  Trustor further represents and
warrants that (i) neither Trustor nor any other party
has been, is or will be involved in operations at or
near the Trust Property, which operations could lead to
(A) the imposition of liability under the Environmental
Laws on Trustor, or on any subsequent or former owner
of the Trust Property, or (B) the creation of a lien on
the Trust Property under the Environmental Laws or
under any similar laws or regulations; and (ii) Trustor
has not permitted, and Trustor will not permit, any
tenant or occupant of the Property to engage in any
activity that could impose liability under the
Environmental Laws on such tenant or occupant, on
Trustor or on any other owner of any of the Trust
Property.

          1.20.4  Trustor and the Trust Property shall
comply strictly and in all respects with the
requirements of the Environmental Laws and related
regulations and with all similar laws and regulations
and shall notify Beneficiary immediately in the event
of any discharge or discovery of any Regulated
Substance at, upon, under or within the Trust Property
of which Trustor has notice.  Trustor shall promptly
forward to Beneficiary copies of all orders, notices,
permits, applications or other communications and
reports of which Trustor has notice in connection with
any discharge or the presence of any Regulated
Substance or any other matters relating to the
Environmental Laws or any similar laws or regulations,
as they may affect the Trust Property.

     1.21  Forfeiture.  Trustor hereby represents and
warrants to Beneficiary that there has not been
committed by Trustor or any other person involved with
the Trust Property any act or omission affording the
federal government or any state or local government the
right of forfeiture as against the Trust Property or
any part thereof or any monies paid in performance of
Trustor's obligations under this Deed of Trust and the
other Security Documents, and each agreement and/or
obligation of Trustor incorporated by reference therein
or herein, and any modifications or amendments thereof.
Trustor hereby covenants and agrees not to commit,
permit or suffer to exist any act or omission affording
such right of forfeiture.  In furtherance thereof,
Trustor hereby indemnifies Beneficiary and agrees to
defend and hold Beneficiary harmless from and against
any loss, damage or injury by reason of the breach of
the covenants and agreements or the warranties and
representations set forth in this Section 1.21.
Without limiting the generality of the foregoing, the
filing of formal charges or the commencement of
proceedings against Trustor, Beneficiary or  all or any
part of the Trust Property under any federal or state
law for which a potential result is forfeiture of (a)
the Trust Property or any part thereof or (b) any
monies paid in performance of Trustor's obligations
under this Deed of Trust or the other Security
Documents shall, at the election of Beneficiary,
constitute an Event of Default hereunder without notice
or opportunity to cure.

     1.22  Continuing Obligations.  Trustor agrees to
fully and faithfully satisfy and perform the
obligations of Trustor contained in this Deed of Trust
and the other Security Documents, and each agreement
and/or obligation of  Trustor incorporated by reference
therein or herein, and any modifications or amendments
thereof.  All representations, agreements, obligations,
covenants and warranties of Trustor contained in any of
the Security Documents incorporated by reference
therein, or contained herein or in any other Security
Documents, or otherwise made by Trustor to or with
Beneficiary at any time whether or not contained in any
of the foregoing documents, shall survive the funding
of the Loan and shall remain continuing obligations,
agreements, covenants, warranties and representations
of Trustor during any time when any portion of the
obligations secured by this Deed of Trust remain
outstanding (it being understood, however, that
statements in any representation or warranty are
represented or warranted to be true and correct only as
of the date made except for representations or
warranties pertaining to future conduct, which such
representations and warranties pertaining to the future
shall be deemed to be covenants for purposes of Section
2.1 hereof).

     1.23  Americans With Disabilities Act.  Trustor
hereby represents to Beneficiary that the Trust
Property is in full compliance with the Americans With
Disabilities Act (the "ADA") to the extent that the ADA
applies to the Trust Property.  Trustor hereby
covenants and agrees not to permit, commit or suffer to
exist any condition which might result in a violation
of the ADA, and if any such condition should occur to
immediately remedy any such condition.  Trustor hereby
indemnifies and agrees to defend and hold Beneficiary
harmless from and against any loss, damage, injury,
claim, liability, cost or expense (including actual
attorneys' fees and expenses) by reason of the breach
of the covenants, agreements and indemnities set forth
in this Section 1.23.

                          ARTICLE 2

                           DEFAULT

      2.1  Events of Default.  Trustor will be in
default under this Deed of Trust if any of the
following events should occur, any one or all of which
events shall be an event of default ("Event of
Default") hereunder:

          (a)  Trustor fails to make any payment of
principal and/or interest under the Note within ten
(10) days after the date when due;

          (b)  There occurs either a Prohibited
Encumbrance or a Prohibited Transfer;

          (c)  Trustor fails to perform any other
covenant or obligation or breaches any other agreements
or warranties contained in this Deed of Trust or
incorporated into any other Security Document and such
failure or breach (and the consequences that the delay
in such performance may have caused) are not cured
and/or remedied within fifteen (15) days after notice
of such failure or breach is given to Trustor from
Beneficiary; provided, however, if such failure or
breach cannot, in the sole and absolute discretion of
Beneficiary exercised in good faith, reasonably be
cured and/or remediated within said fifteen (15) day
period, Trustor shall have an additional sixty (60)
days to cure such failure or breach so long as Trustor
is diligently pursuing such cure and/or remediation;
provided, further, that in no event shall any cure
and/or remediation period exceed forty five (45) days.
Notwithstanding the foregoing, any such failure or
breach shall be deemed an Event of Default upon the
occurrence thereof (for which no notice shall be
required and no cure period shall be available to
Trustor) if (a) such failure or breach is the third
(3rd) default to occur within any period of twelve (12)
consecutive months and notice of the first two (2)
defaults has been sent to Trustor, regardless of
whether the same or different defaults are involved and
notwithstanding that Trustor may have cured within any
applicable cure period any previous defaults occurring
within such twelve (12) month period or (b) in the
reasonable discretion of Beneficiary, such failure or
breach constitutes or creates a clear and present
emergency or threat to the Trust Property;

          (d)  Any representation by Trustor or
disclosure or certification made to the Beneficiary by
or on behalf of Trustor proves to be false or
misleading in any material respect on the date as of
which made, whether or not that representation,
disclosure or certification appears in this Deed of
Trust or in any other Security Documents;

          (e)  The filing of any claim or lien or
notice to withhold against the Trust Property or any
part thereof or of any interest or right made
appurtenant thereto and the continued maintenance of
said claim or lien or notice to withhold for a period
of thirty (30) days after discovery thereof without
discharge or satisfaction thereof or provision therefor
satisfactory to Beneficiary in its good faith
discretion;

          (f)  Any failure or breach of any covenant or
condition on Trustor's part to be performed under any
other loan agreement, note, deed of trust or assignment
applicable to the Trust Property and such failure or
breach continues for twenty (20) days after notice from
Beneficiary;

          (g)  Any of the following:

               (1)  A general assignment by Trustor or,
if Trustor is a partnership, by any of the general
partners of Trustor, or if Trustor is a corporation, by
any of the shareholders that control Trustor, for the
benefit of creditors;

               (2)  The filing of a voluntary petition
by Trustor or, if Trustor is a partnership, by any of
the general partners of Trustor, or if Trustor is a
corporation, by any of the shareholders that control
Trustor, in bankruptcy or any other petition under any
section or chapter of the Bankruptcy Code or any
similar law, whether state, federal, foreign,
provincial or otherwise, for the relief of debtors;

               (3)  The filing of an involuntary
petition or any other petition under any section or
chapter of the Bankruptcy Code or any similar law,
whether state, federal, foreign, provincial or
otherwise, for the relief of debtors against Trustor or
any of the general partners of Trustor if Trustor is a
partnership, or any of the shareholders that control
Trustor if Trustor is a corporation, by the creditors
of any of the aforementioned, said petition remaining
undischarged or the party subject thereof failing to
obtain vacation thereof for a period of sixty (60)
days;

               (4)  The appointment by any court of a
receiver to take possession of the Trust Property (or
any portion thereof) or of any asset or assets of
Trustor or any of the general partners of Trustor if
Trustor is a partnership or any of the shareholders
that control Trustor if Trustor is a corporation, such
asset or assets having a value in excess of One Hundred
Thousand Dollars ($100,000) and said receivership
remaining undischarged for a period of sixty (60) days;

               (5)  Attachment, execution or judicial
seizure of the Trust Property (or any portion thereof)
or of all or any part of the assets of Trustor or any
of the general partners of Trustor if Trustor is a
partnership, or any of the shareholders that control
Trustor if Trustor is a corporation, such attachment,
execution or other seizure remaining undismissed or
undischarged for a period of sixty (60) days after the
levy thereof;

          (h)  Trustor fails to pay, with respect to
the Trust Property, any installment of special
assessments, or any installment of general real estate
taxes, or any installment of personal property taxes,
or any insurance renewal premiums, prior to
delinquency, unless the same is being contested in good
faith pursuant to the last sentence of section 1.6.1
hereto; or

          (i)  Any default by Trustor under any leases
of the Trust Property or any termination, modification,
surrender, merger or other change of any leases of the
Trust Property (or any portion thereof), without the
prior written consent of Beneficiary.

                          ARTICLE 3

                           REMEDIES

     3.1  Remedies Upon Default.  If Trustor is in
default, Beneficiary may, at its sole option, without
notice to Trustor, which notice is  hereby expressly
waived, do any one or more of the following:

          (a)  Declare any or all indebtedness secured
by this Deed of Trust to be due and payable immediately
(in which event, all such indebtedness shall thereafter
bear interest at the rate of thirteen percent (13%) per
annum until paid);

          (b)  Enter into the Trust Property, in
person, by agent or by court- appointed receiver; take
any and all steps that may be desirable in
Beneficiary's judgment to preserve and enhance the
value, marketability or rentability of the Trust
Property; complete any unfinished development; manage
and operate the Trust Property; and apply any rents,
additional rents, royalties, income or profits
collected against the indebtedness secured by this Deed
of Trust without in any way curing or waiving any
default of Trustor;

          (c)  Bring a court action to foreclose this
Deed of Trust or to enforce its provisions or any of
the indebtedness or obligations secured by this Deed of
Trust;

          (d)  Cause any or all of the Trust Property
to be sold under the power of sale granted hereby
(pursuant to California Civil Code Section 2924 et seq.
and/or any other provision of applicable law) in any
manner permitted by applicable law; and

          (e)  Exercise any other right or remedy
available under law or in equity, specifically
including, without limitation, any or all of the
remedies available to a secured party under the Uniform
Commercial Code as enacted in California as respects
personal property subject to any security interest
granted hereunder.

          Nothing herein contained shall be construed
as constituting Beneficiary a "mortgagee-in-possession"
in the absence of the taking of actual possession of
the Property by Beneficiary pursuant to the terms
hereof.  In the exercise of the powers herein granted
Beneficiary, no liability shall be asserted or enforced
against Beneficiary, all such liability being expressly
waived and released by Trustor.

     3.2  Foreclosure by Power of Sale.  For any sale
under the power of sale granted by this Deed of Trust,
Trustee shall record and give all notices required by
law and then, upon the expiration of such time as is
required by law, may sell the Trust Property upon any
terms and conditions specified by Beneficiary and
permitted by applicable law.  Trustee may postpone any
sale by public announcement at the time and place
noticed for the sale.  If the Trust Property consists
of several lots or parcels, Beneficiary in its sole and
absolute discretion may designate their order of sale
or may elect to sell all of them as an entirety,
whether or not Trustor objects.  Any person, including
Trustee and Beneficiary, may purchase at any sale.
Upon any sale, Trustee will execute and deliver to the
purchaser or purchasers a deed or deeds conveying the
property sold, but without any covenant or warranty,
express or implied, and the recitals in the deed or
deeds of any facts affecting the regularity or validity
of the sale will be conclusive against all persons.

     3.3  Proceeds of Foreclosure Sale.  The proceeds
of any sale under this Deed of Trust will be applied in
the following manner:

          FIRST:  Payment of the costs and expenses of
the sale, including but not limited to Trustee's actual
fees, actual attorneys' fees and costs for
disbursements, title charges, transfer taxes, the cost
of surveys, engineering reports, appraisals, and
environmental audits of the Trust Property, all
expenses, liabilities and advances of Trustee, as well
as all allowances, costs and fees provided by law,
together with interest thereon at the maximum rate of
interest permitted by applicable law on all advances
made by Trustee;

          SECOND:  Payment of all sums expended by
Beneficiary under the terms of this Deed of Trust and
not yet repaid, together with interest thereon at the
rate of thirteen percent (13%) per annum from the date
incurred until paid;

          THIRD:  Payment of the indebtedness and
obligations of Trustor secured by this Deed of Trust in
any order that Beneficiary may choose in its sole and
absolute discretion; and

          FOURTH:  The remainder, if any, to the person
or persons legally entitled to it.

     3.4  Marshalling.  Trustor waives all rights to
direct the order in which any of the Trust Property
will be sold in the event of any sale under this Deed
of Trust, and also any right to have any of the Trust
Property marshalled upon any sale.

     3.5  Remedies are Cumulative.  All remedies
contained in this Deed of Trust are cumulative, and
Beneficiary shall also have all other remedies provided
by law or in any other agreement between Trustor and
Beneficiary.  No delay or failure by Beneficiary to
exercise any right or remedy under this Deed of Trust
will be construed to be a waiver of that right or
remedy or of any default by Trustor.  Beneficiary may
exercise any one or more of its rights and remedies at
its option without regard to the adequacy of its
security.

     3.6  Fair Market Value.  In consideration of the
limitation on personal liability as provided in the
Note, Trustor agrees that to the extent Trustor is
entitled to present competent evidence of the fair
market value of the Trust Property as of the date of
foreclosure or sale under this Deed of Trust or in
connection with a bankruptcy proceeding affecting
Trustor and/or the Trust Property, the following shall
be considered competent evidence for the fact finder's
determination of the fair market value of the Trust
Property as of the date of the sale:

     (i)  the Trust Property shall be valued in an "as
     is" condition as of the date of the sale, without
     any assumption or expectation that the Trust
     Property will be repaired or improved in any
     manner before a resale of the Trust Property after
     sale;

     (ii) the valuation shall be based upon an
     assumption that the purchaser desires a prompt
     resale of the Trust Property for cash promptly
     (but no later than twelve (12) months) following
     the sale;

     (iii)     all expenses to be incurred when the
     purchaser at the sale resells the Trust Property,
     including reasonable closing costs customarily
     borne by the seller in a commercial real estate
     transaction, should be taken into account in such
     valuation, including, without limitation,
     brokerage commissions, title insurance, a survey
     of the Trust Property, tax prorations, attorneys'
     fees, and marketing costs;

     (iv) the gross fair market value of the Trust
     Property shall be further discounted to account
     for any estimated holding costs associated with
     maintaining the Trust Property pending sale,
     including, without limitation, utilities expenses,
     property management fees, taxes and assessments
     [to the extent not accounted for in (iii) above],
     and other maintenance expenses; and

     (v)  any expert opinion testimony given or
     considered in connection with a determination of
     the fair market value of the Trust Property must
     be given by persons having at least five (5) years
     experience in appraising similarly improved
     property in the vicinity where the Trust Property
     is located and being actively engaged therein at
     the time of such testimony.


                          ARTICLE 4

                        MISCELLANEOUS

     4.1  Severability.  The invalidity or
unenforceability of any one or more provisions of this
Deed of Trust will in no way affect any other
provision.

     4.2  Beneficiary Statements.  Trustor agrees to
pay Beneficiary a reasonable charge, not to exceed the
maximum allowed by law, for giving any statement of the
status of the obligations secured by this Deed of
Trust.

     4.3  Notices.   All notices given under this Deed
of Trust must be in writing and will be effectively
served upon personal delivery or, if mailed, no later
than three (3) business days mailing by United States
certified mail, postage prepaid, return receipt
requested, sent to the following addresses:

     "Beneficiary":      Aid Association for Lutherans
                         4321 North Ballard Road
                         Appleton, Wisconsin  54919
                         Attn:  Director of Investments

                    With copies to:

                         Aid Association for Lutherans
                         4321 North Ballard Road
                         Appleton, Wisconsin  54919
                         Attn:  Law Department

                    and:

                         Pircher, Nichols & Meeks
                         1999 Avenue of the Stars,
Suite 2600
                         Los Angeles, California  90067
                         Attention:  Real Estate
Notices (DLP)

     and sent to Trustor at its address appearing on
     the signature page hereof.

Such addresses may be changed by written notice.
However, the service of any notice of default or notice
of sale under this Deed of Trust as required by law
will be effective on the date of recordation, and will
be effective if served upon Trustor at its address
appearing below.

     4.4  Reconveyance.  Upon the payment and
performance in full of all sums and obligations secured
by this Deed of Trust, Beneficiary agrees to request
Trustee to reconvey the Trust Property, and upon
payment of its fees and all other sums owing to it
under this Deed of Trust, Trustee will reconvey the
Trust Property without warranty to the person or
persons legally entitled to it.  Such person or persons
must pay all costs and expenses in connection
therewith, including all costs of recordation.  The
recitals in the reconveyance of any facts will be
conclusive on all persons.  The grantee in the
reconveyance may be described as "the person or persons
legally entitled thereto."

     4.5  Statutes of Limitations.  Trustor waives all
present and future statutes of limitations as a defense
to any action to enforce the provisions of this Deed of
Trust or to collect any indebtedness secured by this
Deed of Trust to the fullest extent permitted by law.

     4.6  Trustor/Beneficiary Defined.  The term
"Trustor" includes both the original Trustor and any
subsequent owner or owners of any of the Trust
Property, and the term "Beneficiary" includes the
original Beneficiary and also any future owner or
holder, including pledgees and participants, of the
Note or any interest therein.

     4.7  Construction.  This Deed of Trust and the
other Security Documents shall be construed without
regard to any presumption or rule requiring
construction against the party causing such instruments
to be drafted.  All terms and words used in this Deed
of Trust, whether singular or plural and regardless of
the gender thereof, shall be deemed to include any
other number and any other gender as the context may
require.

     4.8  Captions.  The captions and headings of the
articles and sections of this Deed of Trust are for
convenience only and are not to be used in construing
this Deed of Trust.

     4.9  Amendment.  Neither this Deed of Trust nor
any term, covenant, or condition contained herein may
be amended, modified, or terminated, except by an
agreement in writing, signed by the party charged
therewith.

     4.10  Successors and Assigns.  The terms of this
Deed of Trust will bind the legal representatives,
successors, heirs, legatees, devisees, assigns,
conservators, guardians, beneficiaries, or
administrators of Trustor and Beneficiary and the
successors in trust of Trustee.  This provision shall
not limit or restrict the effect of the transfer
restrictions contained herein.

     4.11 Substitution of Trustee.  Beneficiary may
remove Trustee or any successor Trustee at any time or
times and appoint a successor Trustee by recording a
written substitution in the county where the real
property covered by this Deed of Trust is located, or
in any other manner permitted by law.  Upon that
appointment, all of the powers, rights and authority of
Trustee will immediately become vested in its
successor.

     4.12 Waivers.

          4.12.1  To the fullest extent permitted by
law, Trustor waives the benefit of all laws now
existing or that hereafter may be enacted providing for
(i) any appraisement before sale of any portion of the
Trust Property and (ii) the benefit of all laws now
existing or that may be hereafter enacted in any way
extending the time for the enforcement or the
collection of the Note or the debt evidenced thereby or
creating or extending a period of redemption from any
sale made in collecting said debt.  To the fullest
extent Trustor may do so, Trustor agrees that Trustor
will not at any time insist upon, plead, claim or take
the benefit or advantage of any law now or hereafter in
force providing for any appraisement, valuation, stay,
extension or redemption, and Trustor, for Trustor,
Trustor's representatives, successors, heirs, legatees,
devisees, assigns, beneficiaries, conservators,
administrators or guardians, and for any and all
persons ever claiming any interest in the Trust
Property, to the fullest extent permitted by law hereby
waives and releases all rights of redemption,
valuation, appraisement, stay of execution, notice of
election to mature or declare due the whole of the
secured indebtedness and marshalling in the event of
foreclosure of the liens hereby created.  If any law
referred to in this paragraph and now in force, of
which Trustor, Trustor's representatives, successors,
heirs, legatees, devisees, assigns, beneficiaries,
conservators, administrators, guardians, or other
person might take advantage despite this paragraph,
shall hereafter be repealed or cease to be in force,
such law shall not thereafter be deemed to preclude the
application of this paragraph.  Trustor expressly
waives and relinquishes any and all rights and remedies
that Trustor may have or be able to assert by reason of
the laws of the State of California pertaining to the
rights and remedies of sureties.

          4.12.2  TRUSTOR EXPRESSLY WAIVES ALL RIGHTS
TO A TRIAL BY JURY IN ANY ACTION, COUNTERCLAIM OR
PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT
MATTER OF THIS DEED OF TRUST.  THIS WAIVER APPLIES TO
ALL CLAIMS AGAINST ALL PARTIES TO SUCH ACTIONS AND
PROCEEDINGS, INCLUDING PARTIES WHO ARE NOT PARTIES TO
THIS DEED OF TRUST.  THIS WAIVER IS KNOWINGLY,
INTENTIONALLY AND VOLUNTARILY MADE BY TRUSTOR, AND
TRUSTOR EXPRESSLY ACKNOWLEDGES THAT NEITHER
BENEFICIARY, NOR ANY PERSON ACTING ON BEHALF OF
BENEFICIARY HAS MADE ANY REPRESENTATIONS OF FACT TO
INCLUDE THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO
MODIFY OR NULLIFY ITS EFFECT.  TRUSTOR FURTHER
ACKNOWLEDGES THAT TRUSTOR HAS BEEN REPRESENTED (OR HAS
HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING
OF THIS DEED OF TRUST AND IN THE MAKING OF THIS WAIVER
BY INDEPENDENT LEGAL COUNSEL, SELECTED OF TRUSTOR'S OWN
FREE WILL, AND THAT TRUSTOR HAS HAD THE OPPORTUNITY TO
DISCUSS THIS WAIVER WITH COUNSEL.  TRUSTOR FURTHER
ACKNOWLEDGES THAT TRUSTOR HAS READ AND UNDERSTANDS THE
MEANING AND RAMIFICATIONS OF THIS DEED OF TRUST AND,
SPECIFICALLY, THIS WAIVER PROVISION.

     4.13  Taxation of Liens.  In the event of the
enactment after the date hereof of any law deducting
from the value of all or any portion of the Trust
Property for the purpose of taxation any lien thereon,
or imposing upon Beneficiary the payment of the whole
or any part of the taxes or assessments or charges or
liens herein required to be paid by Trustor, or
changing in any way the law relating to the taxation of
deeds of trust or debts secured by deeds of trust or a
beneficiary's interest in the property, or the manner
of collection of taxes, so as to affect Beneficiary,
this Deed of Trust or the debt secured hereby, then,
and in any such event, Trustor, upon demand by
Beneficiary, shall pay such taxes or assessments, or
reimburse Beneficiary therefor; provided, however, that
if in the opinion of counsel for Beneficiary (a) it
might be unlawful to require Trustor to make such
payment or (b) the making of such payment might result
in the imposition of interest beyond the maximum amount
permitted by law, then and in such event, Beneficiary
may elect, in its sole and absolute discretion, by
notice in writing given to Trustor, to declare all of
the indebtedness secured hereby to be and become due
and payable thirty (30) days from the giving of such
notice.  In the event of a prepayment of the Note
pursuant to the provisions of this paragraph, no
prepayment privilege fee shall apply (notwithstanding
anything to the contrary in the Note).

     4.14  Consents and Approvals.  No waiver of any
default or breach by Trustor hereunder shall be implied
from any omission by Beneficiary to take action on
account of such default even if such default persists
or is repeated, and no express waiver shall affect any
default other than the default specified in the waiver
and any such waiver shall be operative only for the
time and to the extent therein stated.  Inaction of
Beneficiary shall never be considered as a waiver of
any right accruing to it on account of any default on
the part of Trustor.  Waivers of any covenant, term or
condition contained herein shall not be construed as a
waiver of any subsequent breach of the same covenant,
term or condition.  Beneficiary's consent to any act or
omission by Trustor will not be a consent to any other
or subsequent act or omission or a waiver of the need
for such consent in any future or other instance and
the consent or approval by Beneficiary to or of any act
by Trustor shall not be deemed to waive or render
unnecessary the consent or approval of Beneficiary to
or of any subsequent or similar act.  The acceptance by
Beneficiary of any payment on the indebtedness secured
hereby shall not be deemed or construed as a waiver by
Beneficiary of any breach of any covenant, term or
condition hereof except any relating to the payment
accepted.

     4.15  Costs of Nonperformance.  If either Trustor
or Beneficiary fails to perform any of their respective
covenants or agreements contained in this Deed of Trust
or any of the Security Documents, then the
nonperforming party shall pay all out-of-pocket
expenses of the other party (including but not limited
to actual fees and disbursements of counsel) incurred
by reason of or in response to such nonperformance,
together with interest thereon at the rate of thirteen
percent (13%) per annum from the date such expenses are
incurred until paid.

     4.16 Inconsistencies with Other Documents.  In the
event of any inconsistency between the provisions of
this Deed of Trust or any of the  Security Documents,
the provisions of the Note shall control over those of
the Deed of Trust.

     4.17 Governing Law.  This Deed of Trust shall be
governed by and construed in accordance with the laws
of the State of California.



                     REQUESTS FOR NOTICES

     Trustor requests that a copy of any notice of
default and notice of  sale required by law be mailed
to it at its address below:

     Trustor:            Optical Coating Laboratory,
Inc.
     Address:            2789 North Point Parkway
                         Santa Rosa, California  95407-
7397
                         Attention:  CFO

     Executed in the State of California as of the day
and year first above written.
   
                            OPTICAL COATING
                            LABORATORY, INC.,
                            a Delaware corporation
                            
                            
                            By:
                            __________________________
                            _
                                 Name:
                            _____________________
                                 Title:
                            ____________________
                            



State of ____________  )
                       )  ss.
County of ___________  )



     On ________________, 1995, before me,
, a notary public in and for said state, personally
appeared ______________________, personally known to me
(or proved to me on the basis of satisfactory evidence)
to be the person(s) whose name(s) is/are subscribed to
the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted,
executed the instrument.

     WITNESS my hand and official seal.

Signature
(Seal)

UCC-1 Financing Statement
Item No. 6 cont.


         All properties now owned and hereafter
acquired by Debtor and used in the operation or
maintenance of the buildings and real property located
in the County of Sonoma, State of California and more
particularly described on Exhibit B attached hereto and
hereby incorporated herein by this reference (the
"PROPERTY"); including but not limited to:

            A.  All proceeds, causes of action and
         claims, both in law and in equity, arising on
         account of any damage to or taking of the
         Property, including but not limited to
         insurance proceeds and condemnation proceeds,
         and all claims arising on account of any
         damage to or taking of the Property, and all
         proceeds, causes of action and claims for any
         loss or diminution in value of the Property;

            B.  All "EQUIPMENT," "FARM PRODUCTS,"
         "INVENTORY," "DOCUMENTS," "INSTRUMENTS,"
         "CHATTEL PAPER," "ACCOUNTS," and "GENERAL
         INTANGIBLES" (as such terms are defined in
         the California Uniform Commercial Code)
         relating to, generated from, arising out of
         or incidental to the ownership, development,
         use or operation of the Property (whether or
         not subsequently removed from the Property
         and whether or not located on the Property),
         including, without limitation, all (i)
         machinery and tools; (ii) rugs, carpets and
         other floor coverings; (iii) draperies and
         drapery rods and brackets, awnings, window
         shades, venetian blinds and curtains; (iv)
         lamps, chandeliers and other lighting
         fixtures; (v) office maintenance and other
         supplies; (vi) apparatus, appliances,
         furniture and furnishings, building service
         equipment, and building materials, supplies
         and equipment; (vii) rights, royalties,
         rents, security deposits, advance rentals,
         revenues, profits and benefits;
         (viii) leases, lease guarantees, contracts,
         contract rights, licenses, permits and
         certificates; (ix) deposits, funds, money and
         deposit accounts; (x) tenements,
         hereditaments and appurtenances; (xi)
         approvals and parcel maps (whether tentative
         or final), building permits and certificates
         of occupancy; (xii) names under or by which
         the Property may at any time be operated or
         known and rights to carry on business under
         any such names or any variant thereof;
         (xiii) trademarks and good will;
         (xiv) management agreements, service
         contracts, supply contracts or other
         contracts or agreements; (xv) warranties;
         (xvi) water stock; (xvii) shares of stock or
         other evidence of ownership of any part of
         the Property that is owned by Debtor in
         common with others, and all documents of
         membership in any owners' or members'
         association or similar group having
         responsibility for managing, maintaining or
         operating any part of the Property;
         (xviii) plans and specifications prepared for
         construction of improvements on the Property,
         or any part thereof, and studies, data and
         drawings related thereto, including, without
         limitation, studies, data or reports relating
         to toxic or hazardous wastes or materials
         located on the Property and contracts and
         agreements of Trustor relating to the
         aforesaid plans and specifications or to the
         aforesaid studies, data, reports and drawings
         or to the construction of improvements on the
         Property; (xix) sales agreements, deposit
         receipts, escrow agreements and other
         ancillary documents and agreements entered
         into respecting the sale to any purchasers of
         any part of the Property, together with all
         deposits and other proceeds of the sale
         thereof; (xx) damages, royalties and revenue
         of every kind, nature and description
         whatsoever that Debtor may be entitled to
         receive from any person or entity owning or
         having or hereafter acquiring a right to the
         oil, gas or mineral rights and reservations
         of the Property; (xxi) deposits made with or
         other security given to utility companies by
         Debtor with respect to the Property and/or
         Improvements; (xxii) advance payments of
         insurance premiums made by Debtor with
         respect to, and all claims or demands with
         respect to, insurance; (xxiii) negotiable
         certificates of deposit of Debtor in Secured
         Party's possession and all accounts of Debtor
         maintained with Beneficiary and each deposit
         account of Trustor assigned to Secured Party
         pursuant to any agreement; (xxiv) insurance
         proceeds; (xxv) condemnation awards;
         (xxvi) causes of action, claims,
         compensation, awards and recoveries for any
         damage or injury to the Property or for any
         loss or diminution in value of the Property;
         (xxvii) books and records, including, without
         limitation, all computer records, computer
         tapes and electronic and electromagnetic
         representations and reproductions thereof;
         (xxviii) guaranties of and security for any
         of the foregoing; (xxix) all substitutions,
         renewals, improvements, attachments,
         accessions, additions and replacements to any
         of the foregoing; and

            C.  All "PROCEEDS" (as such term is
         defined in the California Uniform Commercial
         Code), collections, insurance proceeds and
         products of any of the property listed in the
         preceding paragraph, including without
         limitation, proceeds of any voluntary or
         involuntary disposition or claim respecting
         any part thereof (pursuant to judgment,
         condemnation award or otherwise) and all
         documents, instruments, general intangibles,
         goods, equipment, inventory, chattel paper,
         monies, accounts, deposit accounts and other
         personal property that may arise from the
         sale or disposition of any of the foregoing,
         all guaranties of and security for any of the
         foregoing, and all books and records,
         including, without limitation, all computer
         records, computer tapes and electronic and
         electromagnetic representations and
         reproductions thereof, relating to any of the
         foregoing.

UCC-1 Financing Statement
Item No. 6 cont.


UCC-1 Financing Statement
Item No. 9 cont.



9.  Signatures of Debtor

"DEBTOR"
OPTICAL COATING
LABORATORY, INC.,
a Delaware
corporation

By: _____________________________

Name:_______________________

Title:_______________________


When recorded mail to:

Pircher, Nichols & Meeks
1999 Avenue of the Stars
Suite 2600
Los Angeles, California 90067
Attn:  David L. Packer, Esq.


                ASSIGNMENT OF RENTS AND LEASES


     This ASSIGNMENT OF RENTS AND LEASES (the
"ASSIGNMENT") is made as of November 8, 1995 by OPTICAL
COATING LABORATORY, INC., a Delaware corporation
(hereinafter called "ASSIGNOR"), to AID ASSOCIATION FOR
LUTHERANS, a Wisconsin corporation (hereinafter called
"ASSIGNEE").


                           RECITALS


     A.   As of the date hereof, Assignor has delivered
to Assignee that certain Secured Promissory Note (which
note, and any and all replacements, rearrangements,
modifications, substitutions, extensions and renewals
thereof are hereinafter collectively called the "NOTE")
of even date herewith in the original principal amount
of Two Million Six Hundred Thousand Dollars
($2,600,000.00) evidencing a loan made by Assignee to
Assignor in said amount (the "LOAN").  The Note is
secured by that certain Deed of Trust, Financing
Statement, Fixture Filing and Security Agreement (With
Assignment of Rents) (the "DEED OF TRUST") of even date
herewith constituting a lien on that certain real
property located in the City of
Santa Rosa, County of Sonoma, State of California, as
more particularly described on Exhibit A attached
hereto and by this reference incorporated herein (the
"PROPERTY").

     B.   As a condition to the making of the Loan to
Assignor, Assignee has required Assignor to assign to
Assignee all the rights, interests and privileges that
Assignor, as landlord, has and may hereafter have in
any and all leases, subleases, licenses, franchises or
other occupancy agreements , whether now existing or
hereafter made, demising all or any portion of the
Property (the "LEASES").

     NOW, THEREFORE, in consideration of the making of
the Loan to Assignor, and for other good and valuable
consideration, the receipt and sufficiency of which are
hereby acknowledged, Assignor hereby absolutely and
presently conveys, transfers and assigns unto Assignee
all of the Leases, together with all rights and
privileges incident thereto, and together with all
rents, additional rents, income, profits and payments
due or to become due therefrom and together with all
security deposits, guaranties and other security now or
hereafter held by Assignor as security for the
performance of the obligations of the tenants
thereunder.

     In connection therewith, Assignor hereby covenants
and declares as follows:

     1.   This Assignment is intended by Assignor and
Assignee to create and shall be construed to create an
absolute assignment to Assignee of all of Assignor's
right, title and interest in the Leases and in rents,
additional rents, income, payments and profits
therefrom and shall not be deemed to create a security
interest herein for the payment of any indebtedness or
the performance of any obligations of Assignor under
the Loan Documents (as hereinafter defined).

     2.   So long as there shall not have occurred a
default by Assignor with respect to any of its
obligations, financial or otherwise (the
"OBLIGATIONS"), under the terms of the Note, the Deed
of Trust, this Assignment or any other documents and
agreements now or hereafter executed and delivered in
connection with the Loan (the Note, the Deed of Trust,
this Assignment and any other documents and agreements
now or hereafter executed and delivered in connection
with the Loan being sometimes collectively referred to
as the "LOAN DOCUMENTS"), Assignor will have a
revocable license to collect all rents, additional
rents, income, profits and payments from the Leases and
to retain, use and enjoy the same.  Upon the occurrence
of any such default under the Loan Documents by
Assignor, Assignee may terminate Assignor's license in
its sole and absolute discretion at any time by written
notice to Assignor and may thereafter collect such
rents, additional rents, income, profits and payments
itself or by an agent or a receiver.

     3.   Assignor will not, without Assignee's prior
written consent, which may be granted or denied in
Assignee's sole and absolute discretion, (a) terminate,
consent to the cancellation or surrender of, or alter,
modify or amend, any of the Leases; (b) accept
prepayments of any installment of rent or additional
rent to become due under any of the Leases in excess of
one (1) month's rent, except prepayments in the nature
of security for the performance of the lessee's
obligations thereunder; (c) relocate any tenant to any
location other than the Property; or (d) in any manner
impair the value of the Property or the security of
Assignee for the payment of the indebtedness secured
hereby.  Any or all future Leases must provide, in a
manner satisfactory to Assignee in its sole and
absolute discretion, that the lessee will recognize as
its lessor any person succeeding to the interest of
Assignor upon any foreclosure of the Deed of Trust.

     4.   As an incident to this Assignment and
notwithstanding anything to the contrary contained in
Paragraph 2 hereof, Assignor hereby presently and
absolutely assigns to Assignee any award made hereafter
to Assignor in any court proceeding involving any of
the lessees under the Leases (including, without
limitation, in any bankruptcy, insolvency or
reorganization proceedings in any state or federal
court), and any and all payments made by such lessees
in lieu of rent and additional rent.  Assignor hereby
irrevocably appoints Assignee as its attorney-in-fact
to appear in any such action and/or to collect any such
award or payment.

     5.   Upon or at any time after default in the
payment of the Loan or in the performance of any of the
Obligations, Assignee, without in any way waiving such
default, may at its option and without regard to the
adequacy of the security for the Loan, either by a
representative or by agent, with or without bringing
any action or proceeding, or by a receiver appointed by
a court, take possession of the Property and have,
hold, manage, lease and operate the same on such terms
and for such period of time as Assignee may deem
proper, including, without limitation, the right to
effect new Leases, to cancel, surrender, alter or amend
the terms of, and/or renew then-existing Leases, and/or
to make concessions to tenants; and, either with or
without taking possession of the Property in its own
name, demand, sue for or otherwise collect and receive
all rents, additional rents, income, payments and
profits of the Property, including those past due and
unpaid, with full power to make from time to time all
alterations, renovations, repairs or replacements
thereto or thereof as may seem proper to Assignee and
to apply such rents, additional rents, income and
profits to the payment of:  (a) all expenses of
managing the Property, including, without being limited
thereto, the salaries, fees and wages of a managing
agent and such other employees as Assignee may deem
necessary or desirable and all expenses of operating
and maintaining the Property, including, without being
limited thereto, all taxes, charges, claims,
assessments, water rents, sewer rents and any other
liens, and premiums for all insurance that Assignee may
deem necessary or desirable and the cost of all
alterations, renovations, repairs or replacements, and
all expenses incident to taking and retaining
possession of the Property; (b) the indebtedness
evidenced by the Note or otherwise due and owing under
the Loan Documents, including all costs and attorneys'
fees, in such order of priority as to any of the items
mentioned in this paragraph as Assignee in its sole
discretion may determine, any statute, law, custom or
use to the contrary notwithstanding; and (c) the
remainder, if any, to the person or persons legally
entitled thereto.  Assignor further agrees that it will
use diligent efforts to facilitate Assignee's
collection of said rents, additional rents, income,
payments and profits and will, upon request by
Assignee, execute a written notice to each tenant
directing the tenant to pay rents and other amounts due
and payable under the applicable Lease to said
Assignee.  The exercise by Assignee of the option
granted it in this paragraph and the collection of the
rents, additional rents, income, payments and profits
and the application thereof as herein provided shall
not be considered a waiver of any default by Assignor
under the Note, Deed of Trust or under any of the other
Loan Documents.  Notwithstanding the foregoing, no
action taken by Assignee to collect any rents,
additional rents, income, payments or profits will make
Assignee a "mortgagee-in-possession" of the Property
unless Assignee personally or by authorized agent
enters into actual possession of the Property.
Possession by a court-appointed receiver shall not be
considered possession by Assignee.

     6.   The receipt by Assignee of any rents,
additional rents, income, payments or profits pursuant
to this Assignment after the institution of foreclosure
proceedings either by court action or by the private
power of sale contained in the Deed of Trust shall not
cure any such default (unless sums so collected fully
reimburse Assignee for all sums then due) nor affect
such proceedings or any sale pursuant thereto, nor
shall the receipt of this Assignment or any rents,
additional rents, income, payments, or profits pursuant
hereto be deemed to limit any rights or remedies of
Assignee under the Deed of Trust.

     7.   Assignee shall not be obligated to perform or
discharge any obligation or duty to be performed or
discharged by Assignor under any of the Leases, and
Assignor hereby agrees to indemnify, defend and hold
Assignee harmless from and against any and all
liabilities, claims, losses, demands, damages, costs
and expenses (including, without limitation, actual
attorneys' fees and costs) arising from any of the
Leases or from this Assignment.  This Assignment shall
not place responsibility upon Assignee for the control,
care, management or repair of the Property resulting in
loss or injury or death to any tenant, licensee,
employee or stranger or any other person or entity.
Assignee shall not be responsible for any loss
sustained by Assignor resulting from the failure of
Assignee to let the Property after default or from any
other act or omission of Assignee in managing the
Property after a default, other than any resulting from
Assignee's wilful misconduct.  Assignee shall not be
liable for failure to collect rents, additional rents,
payments, income and profits.

     8.   Assignor covenants and represents that (a)
Assignor has full right and title to assign the Leases
and the rents, additional rents, income, payments and
profits due or to become due thereunder; (b) no other
assignment of any interest therein has been made; (c)
there are no existing defaults or events which, with
notice or the passage of time or both, shall constitute
a default under the provisions of any of the Leases;
and (d) there are no offsets, credits or defenses to
the payment of any obligations under any of the Leases.
Assignor further covenants and agrees that upon a
default in any of its Obligations, Assignor shall hold
in trust in a trust account for the benefit of
Assignee, all rents, additional rents, income,
revenues, issues, profits, condemnation awards,
administrative rents, use and occupancy payments,
damages, moneys, and security payable or receivable
under or with respect to the Leases, or pursuant to any
of the provisions thereof, whether as rent or
otherwise, that are not applied towards necessary
operating expenses of the Property or not immediately
paid to Assignee.

     9.   Assignor hereby authorizes Assignee to give
notice in writing of this Assignment at any time to any
lessee under any of the Leases.  At the sole option of
Assignee, any such notice to a lessee may be
accompanied by a copy of this Assignment.

     10.  Violation of any of the covenants,
representations and provisions contained herein by
Assignor shall be deemed a default under the terms of
the Note and the Deed of Trust and shall give Assignee
the right to exercise any or all rights or remedies
provided hereunder and under the Note and the Deed of
Trust.

     11.  Payment in full of the Note and satisfaction
of all Obligations secured by the Deed of Trust and
recordation of a release of all property encumbered
thereby shall automatically terminate this Assignment.
Upon any partial release and reconveyance of any
portion of the property encumbered by the Deed of
Trust, this Assignment shall automatically terminate as
to such portion subject to such partial release and
reconveyance.

     12.  This Assignment applies to and binds the
original Assignor and its heirs, administrators,
executors, successors and assigns, as well as any
subsequent owner of the Property.

     13.  As used herein, the term "ASSIGNEE" includes
the original Assignee and also any future owner or
holder of the Note or any interest therein.

     14.  This Assignment is intended to cover all of
the Leases now or hereafter created that affect the
Property or any portion thereof.  Nevertheless,
Assignor agrees that it will, at any time and from time
to time, on demand by Assignee, execute specific
assignments of any of the future Leases affecting the
Property or any portion thereof.  Assignor covenants
and agrees to deliver copies of all future Leases
affecting the Property promptly to Assignee.

     15.  This Assignment has been executed and
delivered for value at Sonoma County, California on the
date first above written.  This Assignment shall be
governed by and construed in accordance with the laws
of the State of California.

     16.  All notices, requests, demands and other
communications hereunder shall be in writing and shall
be deemed to have been duly given when personally
delivered, or, if mailed, on the date three (3)
business days after mailing by United States certified
mail, prepaid, return receipt requested, to the parties
at the following addresses (until such addresses are
changed by notice pursuant to these notice provisions):

          Assignor:

               Optical Coating Laboratory, Inc.
               2789 North Point Parkway
               Santa Rosa, California  95407-7397
               Attention:  Mr. Jeff Ryan, Assistant
Treasurer


          Assignee:

               Aid Association for Lutherans
               4321 North Ballard Road
               Appleton, Wisconsin  54919
               Attn:  Director of Investments

          With copies to:

               Aid Association for Lutherans
               4321 North Ballard Road
               Appleton, Wisconsin  54919
               Attn:  Law Department

     IN WITNESS WHEREOF, Assignor has executed this
Assignment as of the date first above written.

OPTICAL COATING
LABORATORY, INC.,
a Delaware corporation

By: ___________________________

Name: _____________________

Title: ____________________


                          EXHIBIT A

                      Legal Description



              [Attach Notarial Acknowledgements]
              ENVIRONMENTAL INDEMNITY AGREEMENT


     This ENVIRONMENTAL INDEMNITY AGREEMENT (the
"AGREEMENT") is entered into as of November 8, 1995 by
and between AID ASSOCIATION FOR LUTHERANS, a Wisconsin
corporation ("AAL"), and OPTICAL COATING LABORATORY,
INC., a Delaware corporation (individually and
collectively, "INDEMNITOR").  The parties hereto enter
into this contract with reference to the following
facts:

     A.   AAL has agreed to make a loan to Indemnitor
in the amount of Two Million Six Hundred Thousand
Dollars ($2,600,000.00) (the "LOAN") (AAL Loan No.
74750).  The Loan is to be evidenced by a Mortgage Note
(the "NOTE"), and the Note is to be secured by a Real
Estate Mortgage and Security Agreement, Assignment of
Rents and Leases and Financing Statements (the "LOAN
DOCUMENTS") creating a lien on certain real property,
and all improvements thereon, located in the City of
Santa Rosa, County of Sonoma, State of California (the
"PROPERTY"), as more particularly described in
Exhibit A attached hereto.  (The Note, the Deed of
Trust and any other documents relating to the Loan
other than this Agreement may be referred to herein
collectively as the "LOAN DOCUMENTS").  The making of
the Loan is subject to a condition precedent that
Indemnitor make and deliver this Agreement to AAL.

     B.   Indemnitor acknowledges that AAL would not
make the Loan in the absence of this Agreement.

     C.   Indemnitor acknowledges that AAL may sustain
"LOSSES" (as defined herein) should AAL become an owner
of the Property, whether by foreclosure of the Deed of
Trust, judicial or nonjudicial, by the acceptance of a
deed in lieu of foreclosure, or otherwise, or after the
reconveyance of the Deed of Trust in amounts that have
no relationship to the amounts owed to AAL pursuant to
the Note or any of the other Loan Documents.

     D.   Indemnitor acknowledges and agrees that any
amounts owed to AAL by Indemnitor pursuant to the
provisions of this Agreement are not secured by the
Loan Documents nor are they related in any manner to
any amounts owed to AAL pursuant to the Note and that
said liabilities shall survive and continue to be of
full force and effect notwithstanding satisfaction of
the Loan Documents, a foreclosure conducted pursuant to
the Loan Documents, the making of a deed in lieu of
foreclosure in favor of AAL or a transfer of any other
interest in the Property, whether by Indemnitor or AAL
or by any successor or assignee of Indemnitor or AAL.

     NOW, THEREFORE, in consideration of the foregoing
recitals, which recitals are hereby incorporated herein
by this reference, and for other good and valuable
consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows:

     1.   REGULATED SUBSTANCES.  As used herein,
"REGULATED SUBSTANCE" means any substance, material or
matter that may give rise to liability under any
Environmental Laws.  "ENVIRONMENTAL LAWS" shall mean
any local, state or federal laws, rules, ordinances or
regulations either in existence as of the date hereof,
or enacted or promulgated after the date of this
Agreement, that concern the existence, management,
control, discharge, treatment, containment and/or
removal of substances or materials that are or may
become a threat to public health or the environment; or
any common law theory based on nuisance, trespass,
negligence, strict liability, aiding and abetting or
other tortious conduct.

     2.   COVENANTS.  Promptly upon the written and
good faith request of AAL from time to time, Indemnitor
shall provide AAL, at Indemnitor's expense, with an
environmental site assessment or environmental audit
report prepared by an environmental engineering firm
acceptable to AAL, to assess with a reasonable degree
of certainty the presence or absence of any Regulated
Substances and the potential costs in connection with
abatement, cleanup or removal of any Regulated
Substances in violation of Environmental Laws found at,
upon, under or within the Property; provided, however,
that Indemnitor shall not be responsible for the costs
of such an assessment or audit unless an "EVENT OF
DEFAULT" (as defined in the Deed of Trust) has occurred
and is continuing when the work on an environmental
site assessment or environmental audit report is
commenced or AAL has a good faith belief that the
Property may be in violation of Environmental Laws.

     3.   INDEMNITY.

          3.1  Scope of Indemnity.  Indemnitor hereby
agrees to indemnify, save, defend (at Indemnitor's cost
and sole expense) and hold harmless AAL  and the
officers, directors, agents and employees of AAL, and
the successors and assigns of each of the foregoing
(all of such persons or entities being collectively
referred to herein as "INDEMNIFIED PERSONS" and each
such reference shall refer jointly and severally to
each such person), from and against the full amount of
any and all Losses, regardless of the negligence of
Indemnified Persons except as hereinafter specifically
excepted.  "LOSSES" shall mean any and all liabilities,
obligations, losses, damages, injuries, penalties,
claims, actions, suits, costs, expenses and
disbursements (including, but not limited to, all
actual attorneys' fees and expenses (including, without
limitation, the allocated costs for services of in-
house counsel)) and all other professional or
consultants' expenses incurred in investigating,
preparing for, serving as a witness in or defending
against any action or proceeding, whether actually
commenced or threatened, which may be asserted against
any Indemnified Person, arising from, in respect of, as
a consequence of, or in connection with any of the
following:  (a) the removal of any Regulated Substance
on, within or released from the Property, whether such
removal is done or completed by Indemnitor, AAL, or any
other person or entity and regardless of whether or not
such removal is rendered pursuant to a court order or
the order of an administrative agency; (b) claims
asserted by any person or entity (including, without
limitation, any governmental agency or quasi-
governmental authority, board, bureau, commission,
department, instrumentality or public body, court, or
administrative tribunal (a "GOVERNMENTAL AGENCY")), in
connection with or in any way arising out of the
presence, storage, use, disposal, generation,
transportation or treatment of any Regulated Substance
at, upon, under or within the Property, either prior to
or after the date of this Agreement and either prior to
or after the time that Indemnitor became owner of the
Property; (c) the violation or claimed violation of any
Environmental Laws in regard to the Property, whether
such violation or claimed violation occurred prior to
or after the date of this Agreement and regardless of
whether such violation occurred prior to or after the
time that Indemnitor became owner of the Property; or
(d) the preparation of an environmental audit on the
Property, whether conducted or authorized by
Indemnitor, AAL or a third party or the implementation
of any environmental audit's recommendations.  AAL may
employ the attorneys and/or consultants of its choice.
Notwithstanding the foregoing provisions of this
Section 3.1, (a) Indemnitor shall not be required to
indemnify any Indemnified Person to the extent that any
Losses result from Regulated Substances being brought
onto the Property by such Indemnified Persons, and (b)
if the Property is transferred to AAL or any of its
successors or assigns, then Indemnitor shall not be
liable for any Losses that a final decree of a court of
competent jurisdiction holds arise solely due to
conditions that did not exist on the Property prior to
the transfer of the Property to AAL or its successors
or assigns.

          3.2  Claim Settlement.  So long as AAL is
beneficiary under the Loan Documents or if AAL at any
time shall have become a mortgagee in possession or a
successor in interest to Indemnitor by foreclosure or
deed in lieu of foreclosure with respect to all or part
of the Property, Indemnitor shall not settle any claim
under or on account of the Environmental Laws without
AAL's prior written consent, which consent may be
withheld in AAL's sole and absolute discretion;
provided, however, that if the proposed settlement
involves (i) no admission of guilt or liability on the
part of AAL, (ii) no adverse financial impact on AAL,
and (iii) no adverse impact on the value of the
Property, then such consent shall not be unreasonably
withheld or delayed.

     4.   PAYMENTS. Payments under this Agreement in
respect of all Losses shall be due and payable as such
Losses are incurred.  Within a reasonable time after
any such Losses are incurred, the Indemnified Person
shall give notice to Indemnitor; provided, however,
that failure by an Indemnified Person to give such
notice shall not relieve Indemnitor from any liability,
duty or obligation hereunder.  Indemnitor will pay
interest on any amount not paid from the time such
Losses are incurred regardless of date of notice, at
the interest rate equal to the One-Year Treasury Rate
then in effect plus five percent (5%), but in no event
to exceed the maximum interest rate allowed by law.

     5.   OBLIGATION TO DEFEND.

          5.1  Assumption of Defense.  Upon request of
any Indemnified Person, Indemnitor shall defend any and
all actions or proceedings  that may be brought against
such Indemnified Person in connection with or arising
out of the matters covered by this Agreement.  In the
event that Indemnitor is defending an Indemnified
Person, Indemnitor may settle the claim only with the
Indemnified Person's prior written consent, said
consent or the denial thereof to be in the Indemnified
Person's sole and absolute discretion.

          5.2  Delivery of Acknowledgement.  Within
thirty (30) days from the date of receipt by Indemnitor
from Indemnified Person of a request to defend,
Indemnitor must acknowledge in a writing, satisfactory
to the Indemnified Person in its good faith discretion,
its duty to defend and that such claim is covered in
its entirety by this Agreement (the "ACKNOWLEDGEMENT");
provided, however, that until the Indemnified Person
receives the Acknowledgement, the Indemnified Person
shall be entitled to defend such claim and Indemnitor
shall be bound in the manner set forth in subparagraph
5.4 hereof.

          5.3 Conduct of Defense; Participation by 
Indemnified Person.  If Indemnitor defends an Indemnified 
Person, the defense must be conducted by reputable attorneys
satisfactory to Indemnified Person, retained and paid
solely by Indemnitor.  Indemnified Person may
participate in the proceedings and retain a separate
counsel at its own expense.  But if the Indemnified
Person concludes in its sole discretion exercised in
good faith that there is a conflict of interest -
consistent with applicable standards of professional
responsibility - between itself and Indemnitor, then
Indemnitor will be conclusively liable for the results,
including the amount of any judgment, compromise, or
good faith, out-of-court settlement.

          5.4  Indemnitor's Failure to Defend.  If
Indemnitor fails to deliver the Acknowledgment or fails
to choose counsel satisfactory to the Indemnified
Person, Indemnitor shall not thereafter be entitled to
elect to defend, and Indemnitor shall be bound by and
shall be conclusively liable for the results obtained
by the Indemnified Person, including without
limitation, the amount of any judgment or good faith
out-of-court settlement or compromise and all costs and
actual fees of counsel incurred by the Indemnified
Person in connection therewith.

     6.   NOTIFICATION BY INDEMNITOR.  Indemnitor
agrees promptly to notify AAL of the commencement of
any litigation or proceedings pending, threatened or
commenced (whether or not served) against Indemnitor or
any other party in connection with Regulated Substances
and the Property and of the receipt of any notice from
any Governmental Agency in regard to Regulated
Substances and the Property.  Indemnitor shall promptly
upon receipt provide the Indemnified Person with true,
complete and correct copies of all such notices and
other documentation related to said notices, litigation
or proceedings.

     7.   INVALIDITY.  If any terms of this Agreement
shall be held invalid, illegal or unenforceable, such
provisions shall be severable from the rest of this
Agreement and the validity, legality, or enforceability
of the remaining provisions shall not in any way be
affected or impaired thereby.

      8.  ATTORNEYS' FEES.  In any action to enforce or
interpret this Agreement, the prevailing party shall be
entitled to receive from the losing party its
reasonable attorneys' fees and costs incurred in
connection therewith.

      9.  NO TIME LIMIT.  There is no time limitation
on Indemnitor's obligations hereunder, and Indemnitor
waives all present and future statutes of limitations
as a defense to any action to enforce the provisions of
this Agreement.

     10.  NOTICE.  Any notice that Indemnitor or AAL
may be required or entitled to give to the other party
hereunder shall be in writing and shall be deemed given
three (3) days after being sent by certified mail,
return receipt requested, postage prepaid, at the
addresses specified below:

                    "AAL" or "Indemnified Persons"

                    Aid Association for Lutherans
                    4321 North Ballard Road
                    Appleton, Wisconsin  54919
                    Attn:  Law Department

                    With a copy to:
                    Pircher, Nichols & Meeks
                    1999 Avenue of the Stars
                    Suite 2600
                    Los Angeles, California 90067
                    Attn:  Real Estate Notices (DLP)

                    "Indemnitor"

                    Optical Coating Laboratory, Inc.
                    2789 North Point Parkway
                    Santa Rosa, California  95407-7397
                    Attention:  Mr. Jeff Ryan, Assistant Treasurer

     The addresses set forth above may be changed as to
any party by such party delivering to the other parties
written notice as to such change of address.

     11.  CAPTIONS, GENDER, AND NUMBER.  Any section or
paragraph, title or caption contained in this Agreement
is for convenience only and shall not be deemed a part
of this Agreement.  As used in this Agreement, the
masculine, feminine or neuter gender, and the singular
or plural number, shall each be deemed to include the
others whenever the context so indicates.

     12.  INDEMNIFIED PERSONS' RIGHTS.  The parties
hereto expressly acknowledge that this Agreement is
made expressly for the benefit of the Indemnified
Persons.

     13.  SUCCESSORS AND ASSIGNS.  This Agreement shall
be binding upon, and inure to the benefit of, the
parties named herein and their respective successors
and assigns.  Indemnitor's obligations hereunder shall
survive and continue to be of full force and effect
notwithstanding a foreclosure conducted pursuant to the
Loan Documents, the making of a deed in lieu of
foreclosure by Indemnitor in favor of AAL or a transfer
of any other interest in the Property, whether by
Indemnitor, Indemnitor or AAL or by any successor or
assignee of Indemnitor, Indemnitor or AAL.

      14. WAIVERS, FAILURE OR INDULGENCES NOT WAIVER.
INDEMNITOR WAIVES TRIAL BY JURY IN ANY ACTION BROUGHT
ON, UNDER OR BY VIRTUE OF THIS AGREEMENT AND WAIVES ANY
RIGHT TO REQUIRE AAL AT ANY TIME TO PURSUE ANY REMEDY
IN AAL'S POWER WHATSOEVER.  No failure or delay on the
part of an Indemnified Person in the exercise of any
power, right or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial
exercise of any power, right or privilege preclude any
other or further exercise of any such power, right or
privilege.  All powers, rights and privileges hereunder
are cumulative to, and not exclusive of, any powers,
rights or privileges otherwise available.

     15.  JOINT AND SEVERAL LIABILITY.  The obligations
and liabilities of the persons constituting Indemnitor
are joint and several.

     16.  COMPLETE AGREEMENT.  This Agreement
supersedes any prior negotiations, discussions or
communications between AAL and Indemnitor and
constitutes the entire agreement between AAL and
Indemnitor with respect to this Agreement.

     17.  NO AMENDMENT OR WAIVER EXCEPT IN WRITING.
This Agreement may be amended or modified only by a
writing duly executed by Indemnitor and AAL, which
expressly refers to this Agreement and the intent of
the parties so to amend this Agreement.

     18.  GOVERNING LAW.  This Agreement shall be
governed by and construed in accordance with the laws
of the State of Wisconsin (without regard to conflicts
of law).

     IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date and year first written above.

                              "Indemnitor"

                              OPTICAL COATING LABORATORY, INC.,
                              a Delaware corporation


                              By: ___________________________
                              
                              Name: _____________________
                              
                              Title: ____________________

                              "AAL"

                              Aid Association for Lutherans,
                              a Wisconsin corporation


                              By:  __________________________
                                   Wayne C. Streck
                                   Vice President -
                                   Mortgages and Real Estate


                              By: __________________________
                                  Kenneth E. Podell
                                  Assistant Secretary


                         Exhibit A


                     LEGAL DESCRIPTION
        BORROWER'S AFFIDAVIT AND SOLVENCY CERTIFICATE


     On November 8, 1995, OPTICAL COATING LABORATORY,
INC., a Delaware corporation ("BORROWER"), being duly
sworn, deposes and says as follows:

     1.   The principal place of business of Borrower
is 2789 North Point Parkway, Santa Rosa, California  95407-
7397.

     2.   This Borrower's Affidavit and Solvency
Certificate ("AFFIDAVIT") is given to Aid Association
for Lutherans ("LENDER") to induce Lender to make a
loan to Borrower in the amount of Two Million Six
Hundred Thousand Dollars ($2,600,000.00) (the "LOAN")
as evidenced by a certain Secured Promissory Note (the
"NOTE") dated as of even date herewith, in the original
principal amount of Two Million Six Hundred Thousand
Dollars ($2,600,000.00) executed by Borrower and
payable to the order of Lender, said Note being secured
by, among other things, a Deed of Trust, Financing
Statement, Fixture Filing and Security Agreement (With
Assignment of Rents) (the "DEED OF TRUST") dated as of
even date herewith, from Borrower for the benefit of
Lender and an Assignment of Rents and Leases (the
"ASSIGNMENT") dated as of even date herewith.  Borrower
intends that Lender and its transferees, successors and
assigns may rely on the representations set forth in
this Affidavit in connection with the consummation of
the Loan, all of which representations and statements
shall be deemed made and effective as of the date
hereof and as of each date the Loan or any amount
thereof is funded.  (The Note, Deed of Trust,
Assignment, and all other documents executed by
Borrower and delivered to Lender in connection with the
Loan are hereinafter collectively referred to as the
"LOAN DOCUMENTS.")

     3.   Borrower is the fee simple owner of the tract
of land described in Exhibit A and the improvements
thereon (the "MORTGAGED PROPERTY"), free and clear of
any liens, easements, or other encumbrances except
those listed in that certain Preliminary Title Report
No. 62204760 (the "TITLE REPORT") from North American
Title Company (the "TITLE COMPANY").

     4.   To the best of Borrower's knowledge, there
are not any structural defects in any of the said
improvements or personalty, and the heating,
electrical, plumbing and drainage at or servicing the
Mortgaged Property are in good condition and working
order and adequate in quantity and quality for the
normal operation of the Mortgaged Property, except as
otherwise disclosed to Lender.  To the best of
Borrower's knowledge after diligent inquiry, there is
no asbestos present in the Mortgaged Property and there
are no underground tanks on the Mortgaged Property.  No
part of the Mortgaged Property has been destroyed or
damaged by fire or other casualty.

     5.   Borrower has delivered to Lender a true,
correct and complete copy of its By-Laws, Articles of
Incorporation and corporate resolutions authorizing the
execution by Borrower of the Loan Documents.  Such
documents have not been modified, amended or otherwise
changed since the date thereof and all documents
required to be filed in connection with the conduct of
Borrower's business have been filed in the appropriate
offices.

     6.   Except for rights of tenants under the Leases
described in Exhibit B, Borrower is now in possession
of the Mortgaged Property and its possession of the
Mortgaged Property is peaceable and undisturbed.
Borrower's fee simple title to the Mortgaged Property
cannot in good faith be disrupted or questioned, and
Borrower does not know any facts by reason of which any
claim to the Mortgaged Property, or any part thereof,
might arise or be set up adverse to Borrower, except
for liens and encumbrances disclosed by the Title
Report.  The Mortgaged Property is free and clear of
(a) any lien for taxes and any governmental charge or
assessment (except taxes not yet due and payable), and
(b) any easements, rights-of-way, restrictive
covenants, liens by contract, judgment, statute or
proceeding in any court or any encumbrances of any
nature whatsoever, except those set forth in the Title
Commitment.

     7.   All utilities required for the operation of
the Mortgaged Property (including, without limitation,
electric, gas, water and sewer) are available to and
enter the Mortgaged Property through adjoining public
streets or through adjoining private land in accordance
with valid public or private easements that will inure
to the benefit of Lender pursuant to the provisions of
the Deed of Trust.

     8.   All statements, representations and
warranties contained in the Loan Documents or in any
writing previously delivered by Borrower to Lender in
connection with the Loan are true and correct in all
material respects, and all obligations of Borrower to
be performed prior to making the Loan and all
conditions to the making of the Loan have been
performed and satisfied.

     9.   There have been no material adverse changes,
financial or otherwise, in the condition of Borrower or
in the actual or pro forma operating statements for the
Mortgaged Property from that disclosed to Lender in the
loan application submitted to Lender by Borrower, or in
any supporting data submitted therewith, and all of the
information contained therein is true and correct.

     10.  There is no material claim, investigation,
litigation or condemnation proceeding pending or
threatened against the Mortgaged Property or Borrower,
except as heretofore disclosed in writing to Lender.

     11.  There is no judgment, decree or order of any
court or governmental or administrative agency or
instrumentality which has been issued against Borrower
and which has or may have any material adverse effect
on the Mortgaged Property or on the business of
Borrower, except as have been heretofore disclosed to
Lender in writing.

     12.  The books and records of Borrower have been
maintained in the regular course of business and in
accordance with generally accepted accounting
principles consistently applied.  Borrower is solvent
as reflected by the entries in said books and records
and as reflected by the actual facts, and Borrowers
know of no fact or pending or threatened claim or
litigation that might result in the insolvency or
bankruptcy of Borrower.

     13.  The Note and all other Loan Documents have
been duly authorized, executed and delivered and
constitute valid and binding obligations of Borrower
enforceable in accordance with their respective terms.
No approval, consent, order or authorization of any
governmental authority and no designation,
registration, declaration or filing with any
governmental entity is required in connection with the
execution and delivery of the Note or any other Loan
Document executed and delivered by Borrower to Lender
in connection with the Loan.

     14.  The execution and delivery of the Note and
all other Loan Documents will not violate or contravene
any agreement, indenture or instrument to which
Borrower is a party or by which it or the Mortgaged
Property may be bound, or be in conflict with, result
in a breach of, or constitute a default under any such
agreement, indenture or other instrument, or result in
the creation or imposition of any lien, charge or
encumbrance of any nature whatsoever upon any of the
property or assets of Borrower except as contemplated
by the provisions of the Loan Documents, and no action
or approval with respect thereto by any third person is
required.

     15.  Borrower has not entered into any contracts
or agreements (verbal or written) for the furnishing of
labor and materials (including fabricated materials)
for use in connection with the construction and/or
rehabilitation of improvements on the Mortgaged
Property except as heretofore disclosed in writing to
Lender and the Title Company.

     16.  To the best of Borrower's knowledge after
diligent inquiry,

          (a)  the Schedule of Leases attached hereto
as Exhibit B (the "Schedule of Leases") is true,
accurate and complete as of the date hereof;

          (b)  all obligations required to be
undertaken by the lessor to the date hereof under any
leases have been performed, including, but not limited
to, all required tenant improvements, alterations,
installations and construction, for which payment in
full has been made in all cases;

          (c)  no tenant has any offsets, defenses or
claims available against rent payable by it or other
performance or obligations otherwise due from it under
any lease;

          (d)  no tenant is in default under, or is in
arrears in the payment of any sums or in the
performance of any obligation required of it under, its
lease;

          (e)  no item payable by any tenant under any
lease has been heretofore prepaid, except for rent
currently due or as prorated, prepaid escalations and
security deposits;

          (f)  there are no brokers' commissions,
finders' fees or other charges payable or to become
payable by or to any third party as a result of or in
connection with any lease or any transaction related
thereto;

          (g)  no tenant or any other party has
asserted any claim (other than for customary refunds at
the expiration of a lease) to all or any part of any
security deposit; and

          (h)  no tenant or any other party has any
option to purchase the Mortgaged Property or any part
thereof or right of first refusal or first offer with
respect thereto.

     17.  Complete copies of any leases listed in the
Schedule of Leases, including all amendments and
modifications thereto, have been delivered to Lender.

     18.  Borrower is the absolute owner of the
personal property listed in Exhibit C attached hereto.
Said personal property is free and clear of all liens,
charges and encumbrances.

     19.  All labor and material, including all
appliances, heating and air conditioning equipment, and
other fixtures, that have been or are to be performed
or furnished to the Mortgaged Property have been paid
for in full to the date hereof.  To Borrower's
knowledge, there are no mechanics' or materialmen's
liens, lienable bills, or other claims constituting or
that may constitute a lien on the Mortgaged Property
and the improvements, fixtures and equipment to be
constructed or installed thereon, or any part thereof,
that are or will become prior or superior to the lien
and security interest evidenced by the Deed of Trust or
any of the Loan Documents, of which Borrower has not
advised Lender and the Title Company in writing.

     20.  The improvements, fixtures and equipment now
or to be constructed and installed upon the Mortgaged
Property do or will comply in all material respects
with all applicable zoning ordinances, building codes
and other laws, rules and regulations, and any
restrictive covenants affecting the Mortgaged Property,
and the use which Borrower intends to make of such
improvements will comply in all material respects with
such zoning ordinances, building codes and other laws,
rules and regulations and restrictive covenants.

     Borrower solemnly affirms under penalties of
perjury and upon personal knowledge that the contents
of the foregoing are true.  Borrower makes this
Affidavit for the purpose of inducing Lender to make
the Loan.

                            BORROWER:
                            
                            OPTICAL COATING
                            LABORATORY, INC.,
                            a Delaware corporation
                            
                            
                            By: __________________________
                            
                            Name: _____________________
                            Title: ____________________


STATE OF            )
                    ) ss.
COUNTY OF           )

          On this ___ day of _________, 19__, before
me, the undersigned, a Notary Public in and for said
State, personally appeared _____________, personally
known to me (or proved to me on the basis of
satisfactory evidence) to be the person that executed
the within instrument, and acknowledged to me that __
executed the same.

     WITNESS my hand and official seal.


_____________________________

Notary Public


                          Exhibit A


                      LEGAL DESCRIPTION


                          Exhibit B


                          RENT ROLL

                        Leases:  None


                          Exhibit C


                [To be provided by Borrower.]

      AUTHORIZATION AGREEMENT FOR PREAUTHORIZED PAYMENTS


COMPANY NAME: OPITCAL COATING LABORATORY, INC. AAL
NUMBER: LOAN NO. 74750

     THIS Agreement made November 8, 1995 by and
between OPTICAL COATING LABORATORY, INC., a Delaware
corporation (hereinafter "COMPANY"), and AID
ASSOCIATION FOR LUTHERANS, a Wisconsin corporation
(hereinafter "AAL").

     WHEREAS, COMPANY agrees to have AAL originate
preauthorized payment entries ("DEBIT ENTRIES") on the
15th day of each month to COMPANY'S account ("ACCOUNT")
specified in Schedule A, attached hereto, in payment of
mortgage loan dated as of the date hereof
("OBLIGATION") owed by COMPANY to AAL pursuant to the
terms of this Agreement and the Rules relating to ACH
preauthorized payments and deposits ("RULES") of the
National Automated Clearing House Association and the
Wisconsin Automated Clearing House Association; and

     WHEREAS, AAL is willing to initiate Debit Entries
on the terms set forth below;

     NOW, THEREFORE, in consideration of the mutual
promises contained herein, AAL and COMPANY agree as
follows:

1.   Authorization.  Subject to the terms set forth
below, COMPANY authorizes AAL to initiate Debit Entries
to the Account in accordance with the agreement for
payments owing from time to time by COMPANY to AAL
resulting from Obligation.

2.   Authorization Limitations: Procedures.  No Debit
Entry shall be initiated under this Agreement except in
conformity with the authorization provided above.  No
single Debit Entry initiated under this Agreement shall
be in excess of the Maximum Entry Amount defined in
Schedule A, attached to and made a part of this
Agreement.  Such maximum amount may be changed by AAL
from time to time on 10 days prior written notice to
COMPANY.  Credit Entries may be initiated only to
reverse a prior Debit Entry if done in error.

3.   Originator's Failure to Originate.  COMPANY shall
not be deemed to default on any obligation or suffer
any loss of discount or other penalty by reason of the
failure of AAL to initiate any Debit Entry in
accordance with the terms of this Agreement, or by
reason of any delay in receipt by COMPANY'S financial
institution, or the nonreceipt by such institution of
any Debit Entry initiated by AAL.

4.   Compliance with Rules.  COMPANY and AAL shall
comply with and be bound by the Rules as in effect from
time to time.

5.   Acceptance and Return of Entries.  COMPANY agrees
to accept any Debit Entry initiated in accordance with
this Agreement, and to maintain sufficient balances in
the Account to honor such Debit Entries.  Any Debit
Entry initiated under this Agreement may be returned in
accordance with the Rules.  COMPANY shall not be deemed
to have accepted any Debit Entry that is returned in
accordance with the Rules.  Failure to accept any such
Debit Entry does not relieve the COMPANY of its
obligations under Obligation.

6.   Debit Entry Information.  Each Debit Entry
initiated under this Agreement shall be accompanied by
information required under the Rules.  It shall be the
responsibility of the COMPANY'S financial institution
to provide notification of all Debit Entries to the
COMPANY.

7.   COMPANY'S Account.  The Account specifics are
provided in Schedule A, attached to and made a part of
this Agreement.  The COMPANY Account may be changed by
COMPANY from time to time on 30 days prior written
notice to AAL.  If COMPANY is a natural person, COMPANY
represents to AAL that the Account is, and during the
term of this agreement, will be, maintained primarily
for business, and not for personal, family, or
household purposes.

8.   Bank Service Charges.  COMPANY shall be
responsible for any charges assessed by its financial
institution for these Debit Entries.

9.   Questions and Errors.  In the event of any
question or error relating to Debit Entries initiated
pursuant to this Agreement, COMPANY should contact
Investment Accounting at AAL, (414/734-5721) and AAL
SHOULD CONTACT

(Contact person's name and phone number)

10.  Liability of Parties.  Neither AAL nor COMPANY
shall be liable for the act or omission of any
Automated Clearing House, financial institution, or
other person.  However, the failure of an Automated
Clearing House, financial institution or other person
to accept a Debit Entry initiated by AAL because of
insufficient balances in the Account shall be deemed a
default of COMPANY under the Obligation unless COMPANY
causes AAL to receive payment in full in immediately
available funds of the amount of such Debit Entry on or
before the expiration of the grace period for the
payment of such amount (as such grace period is
specified in the note evidencing the Obligation).

11.  Notices.  Any written notice or other written
communication required or permitted to be given under
this Agreement shall be delivered, or sent by United
States registered mail, postage prepaid, and, if to
AAL, addressed to:

          Assistant Treasurer
          Aid Association for Lutherans
          4321 North Ballard Road
          Appleton, WI  54919

     and, if to COMPANY, addressed to:

           COMPANY Name       OPTICAL COATING
                              LABORATORY, INC.

           COMPANY Address    2789 North Point Parkway
                              Santa Rosa, California
                              95407-7397
                              Attention:  Mr. Jeff Ryan, 
                              Assistant Treasurer

unless another address is substituted by notice
delivered or sent as provided herein.  Any such notice
shall be deemed given when so delivered or sent.

12.  Termination.  This Agreement may be terminated by
COMPANY or AAL at any time by giving 30 days prior
written notice thereof to the other party.
Notwithstanding such termination, this Agreement shall
remain in force and effect as to all transactions which
shall have occurred prior to the date of termination.
This Agreement shall terminate upon the satisfaction of
the Obligation.  Termination of this Agreement does not
release AAL or COMPANY from the terms and liabilities
of the Obligation.

13.  Law Governing.  This Agreement shall be construed
in accordance with and governed by the laws of the
State of Wisconsin.

14.  Entire Agreement, Etc.  This Agreement embodies
the entire Agreement of the parties with respect to the
subject matter hereof, and supersedes all previous
negotiation, representations, and agreements with
respect thereto, and shall be binding upon the parties
hereto, and their respective successors and assigns.
This Agreement may be amended only by a writing signed
by both parties.

Signed:

"COMPANY"
OPTICAL COATING LABORATORY, INC.,
a Delaware corporation

By:  ___________________________
Name: _____________________
Title: ____________________

"AAL"

Aid Association for Lutherans, a
Wisconsin corporation

By:  ________________________
     Wayne C. Streck
     Vice President -
     Mortgages and Real Estate


By:  ________________________
     Kenneth E. Podell
     Assistant Secretary


                                   SCHEDULE A


COMPANY Name:  Optical Coating Laboratory, Inc.
AAL Number:  LOAN NO. 74750

COMPANY Taxpayer Identification Number:

Maximum Entry Amount:  $24,847

COMPANY Account:  The Account is the following deposit
Account maintained by the COMPANY:

     Financial Institution:

     Street Address:

     City, State, Zip Code:

     ABA Number:

     Bank's Telephone Number:

     COMPANY Account Number:

     Date of this Schedule:

ATTACH VOIDED CHECK HERE

        BORROWER'S AFFIDAVIT AND SOLVENCY CERTIFICATE


     On November 8, 1995, OPTICAL COATING LABORATORY,
INC., a Delaware corporation ("BORROWER"), being duly
sworn, deposes and says as follows:

     1.   The principal place of business of Borrower
is:

     2.   This Borrower's Affidavit and Solvency
Certificate ("AFFIDAVIT") is given to Aid Association
for Lutherans ("LENDER") to induce Lender to make a
loan to Borrower in the amount of Two Million Six
Hundred Thousand Dollars ($2,600,000.00) (the "LOAN")
as evidenced by a certain Secured Promissory Note (the
"NOTE") dated as of even date herewith, in the original
principal amount of Two Million Six Hundred Thousand
Dollars ($2,600,000.00) executed by Borrower and
payable to the order of Lender, said Note being secured
by, among other things, a Deed of Trust, Financing
Statement, Fixture Filing and Security Agreement (With
Assignment of Rents) (the "DEED OF TRUST") dated as of
even date herewith, from Borrower for the benefit of
Lender and an Assignment of Rents and Leases (the
"ASSIGNMENT") dated as of even date herewith.  Borrower
intends that Lender and its transferees, successors and
assigns may rely on the representations set forth in
this Affidavit in connection with the consummation of
the Loan, all of which representations and statements
shall be deemed made and effective as of the date
hereof and as of each date the Loan or any amount
thereof is funded.  (The Note, Deed of Trust,
Assignment, and all other documents executed by
Borrower and delivered to Lender in connection with the
Loan are hereinafter collectively referred to as the
"LOAN DOCUMENTS.")

     3.   Borrower is the fee simple owner of the tract
of land described in Exhibit A and the improvements
thereon (the "MORTGAGED PROPERTY"), free and clear of
any liens, easements, or other encumbrances except
those listed in that certain Preliminary Title Report
No. __________ (the "TITLE REPORT") from ____________
(the "TITLE COMPANY").

     4.   To the best of Borrower's knowledge, there
are not any structural defects in any of the said
improvements or personalty, and the heating,
electrical, plumbing and drainage at or servicing the
Mortgaged Property are in good condition and working
order and adequate in quantity and quality for the
normal operation of the Mortgaged Property, except as
otherwise disclosed to Lender.  To the best of
Borrower's knowledge after diligent inquiry, there is
no asbestos present in the Mortgaged Property and there
are no underground tanks on the Mortgaged Property.  No
part of the Mortgaged Property has been destroyed or
damaged by fire or other casualty.

     5.   Borrower has delivered to Lender a true,
correct and complete copy of its By-Laws, Articles of
Incorporation and corporate resolutions authorizing the
execution by Borrower of the Loan Documents.  Such
documents have not been modified, amended or otherwise
changed since the date thereof and all documents
required to be filed in connection with the conduct of
Borrower's business have been filed in the appropriate
offices.

     6.   Except for rights of tenants under the Leases
described in Exhibit B, Borrower is now in possession
of the Mortgaged Property and its possession of the
Mortgaged Property is peaceable and undisturbed.
Borrower's fee simple title to the Mortgaged Property
cannot in good faith be disrupted or questioned, and
Borrower does not know any facts by reason of which any
claim to the Mortgaged Property, or any part thereof,
might arise or be set up adverse to Borrower, except
for liens and encumbrances disclosed by the Title
Report.  The Mortgaged Property is free and clear of
(a) any lien for taxes and any governmental charge or
assessment (except taxes not yet due and payable), and
(b) any easements, rights-of-way, restrictive
covenants, liens by contract, judgment, statute or
proceeding in any court or any encumbrances of any
nature whatsoever, except those set forth in the Title
Commitment.

     7.   All utilities required for the operation of
the Mortgaged Property (including, without limitation,
electric, gas, water and sewer) are available to and
enter the Mortgaged Property through adjoining public
streets or through adjoining private land in accordance
with valid public or private easements that will inure
to the benefit of Lender pursuant to the provisions of
the Deed of Trust.

     8.   All statements, representations and
warranties contained in the Loan Documents or in any
writing previously delivered by Borrower to Lender in
connection with the Loan are true and correct in all
material respects, and all obligations of Borrower to
be performed prior to making the Loan and all
conditions to the making of the Loan have been
performed and satisfied.

     9.   There have been no material adverse changes,
financial or otherwise, in the condition of Borrower or
in the actual or pro forma operating statements for the
Mortgaged Property from that disclosed to Lender in the
loan application submitted to Lender by Borrower, or in
any supporting data submitted therewith, and all of the
information contained therein is true and correct.

     10.  There is no material claim, investigation,
litigation or condemnation proceeding pending or
threatened against the Mortgaged Property or Borrower,
except as heretofore disclosed in writing to Lender.

     11.  There is no judgment, decree or order of any
court or governmental or administrative agency or
instrumentality which has been issued against Borrower
and which has or may have any material adverse effect
on the Mortgaged Property or on the business of
Borrower, except as have been heretofore disclosed to
Lender in writing.

     12.  The books and records of Borrower have been
maintained in the regular course of business and in
accordance with generally accepted accounting
principles consistently applied.  Borrower is solvent
as reflected by the entries in said books and records
and as reflected by the actual facts, and Borrowers
know of no fact or pending or threatened claim or
litigation that might result in the insolvency or
bankruptcy of Borrower.

     13.  The Note and all other Loan Documents have
been duly authorized, executed and delivered and
constitute valid and binding obligations of Borrower
enforceable in accordance with their respective terms.
No approval, consent, order or authorization of any
governmental authority and no designation,
registration, declaration or filing with any
governmental entity is required in connection with the
execution and delivery of the Note or any other Loan
Document executed and delivered by Borrower to Lender
in connection with the Loan.

     14.  The execution and delivery of the Note and
all other Loan Documents will not violate or contravene
any agreement, indenture or instrument to which
Borrower is a party or by which it or the Mortgaged
Property may be bound, or be in conflict with, result
in a breach of, or constitute a default under any such
agreement, indenture or other instrument, or result in
the creation or imposition of any lien, charge or
encumbrance of any nature whatsoever upon any of the
property or assets of Borrower except as contemplated
by the provisions of the Loan Documents, and no action
or approval with respect thereto by any third person is
required.

     15.  Borrower has not entered into any contracts
or agreements (verbal or written) for the furnishing of
labor and materials (including fabricated materials)
for use in connection with the construction and/or
rehabilitation of improvements on the Mortgaged
Property except as heretofore disclosed in writing to
Lender and the Title Company.

     16.  To the best of Borrower's knowledge after
diligent inquiry,

          (a)  the Schedule of Leases attached hereto
as Exhibit B (the "Schedule of Leases") is true,
accurate and complete as of the date hereof;

          (b)  all obligations required to be
undertaken by the lessor to the date hereof under any
leases have been performed, including, but not limited
to, all required tenant improvements, alterations,
installations and construction, for which payment in
full has been made in all cases;

          (c)  no tenant has any offsets, defenses or
claims available against rent payable by it or other
performance or obligations otherwise due from it under
any lease;

          (d)  no tenant is in default under, or is in
arrears in the payment of any sums or in the
performance of any obligation required of it under, its
lease;

          (e)  no item payable by any tenant under any
lease has been heretofore prepaid, except for rent
currently due or as prorated, prepaid escalations and
security deposits;

          (f)  there are no brokers' commissions,
finders' fees or other charges payable or to become
payable by or to any third party as a result of or in
connection with any lease or any transaction related
thereto;

          (g)  no tenant or any other party has
asserted any claim (other than for customary refunds at
the expiration of a lease) to all or any part of any
security deposit; and

          (h)  no tenant or any other party has any
option to purchase the Mortgaged Property or any part
thereof or right of first refusal or first offer with
respect thereto.

     17.  Complete copies of any leases listed in the
Schedule of Leases, including all amendments and
modifications thereto, have been delivered to Lender.

     18.  Borrower is the absolute owner of the
personal property listed in Exhibit C attached hereto.
Said personal property is free and clear of all liens,
charges and encumbrances.

     19.  All labor and material, including all
appliances, heating and air conditioning equipment, and
other fixtures, that have been or are to be performed
or furnished to the Mortgaged Property have been paid
for in full to the date hereof.  To Borrower's
knowledge, there are no mechanics' or materialmen's
liens, lienable bills, or other claims constituting or
that may constitute a lien on the Mortgaged Property
and the improvements, fixtures and equipment to be
constructed or installed thereon, or any part thereof,
that are or will become prior or superior to the lien
and security interest evidenced by the Deed of Trust or
any of the Loan Documents, of which Borrower has not
advised Lender and the Title Company in writing.

     20.  The improvements, fixtures and equipment now
or to be constructed and installed upon the Mortgaged
Property do or will comply in all material respects
with all applicable zoning ordinances, building codes
and other laws, rules and regulations, and any
restrictive covenants affecting the Mortgaged Property,
and the use which Borrower intends to make of such
improvements will comply in all material respects with
such zoning ordinances, building codes and other laws,
rules and regulations and restrictive covenants.

     Borrower solemnly affirms under penalties of
perjury and upon personal knowledge that the contents
of the foregoing are true.  Borrower makes this
Affidavit for the purpose of inducing Lender to make
the Loan.

                            BORROWER:
                            
                            OPTICAL COATING
                            LABORATORY, INC.,
                            a Delaware corporation
                            
                            
                            By:
                            __________________________
                           
                            Name:
                            _____________________
                                 
                            Title:
                            ____________________


STATE OF            )
                    ) ss.
COUNTY OF           )

          On this ___ day of _________, 19__, before
me, the undersigned, a Notary Public in and for said
State, personally appeared _____________, personally
known to me (or proved to me on the basis of
satisfactory evidence) to be the person that executed
the within instrument, and acknowledged to me that __
executed the same.

     WITNESS my hand and official seal.


_____________________________

Notary Public


                          Exhibit A


                      LEGAL DESCRIPTION



November 8, 1995



Aid Association For Lutherans
4321 North Ballard Road
Appleton, Wisconsin  54919

                              Re:
                              Loan of $2,600,000 from
                              AID ASSOCIATION FOR
                              LUTHERANS, a Wisconsin
                              corporation ("LENDER") to
                              OPTICAL COATING
                              LABORATORY, INC., a
                              Delaware corporation
                              ("BORROWER"); Waiver of
                              California Civil Code
                              Section
                              2954.10

Ladies and Gentlemen:

     This letter is written to you in connection with
the funding by Lender of a loan to Borrower in the
principal amount of Two Million Six Hundred Thousand
Dollars ($2,600,000), which Loan is evidenced by a
Secured Promissory Note in the face amount of Two
Million Six Hundred Thousand Dollars ($2,600,000) of
even date herewith made by Borrower and payable to the
order of Lender ("NOTE"), which Note is secured, inter
alia, by a Deed of Trust, Financing Statement, Fixture
Filing and Security Agreement (With Assignment of
Rents) of even date herewith made by Borrower as
Trustor for the benefit of Lender as Beneficiary (the
"DEED OF TRUST").

     The undersigned, having received the benefit of
advice of legal counsel of its own selection, hereby:

     (1)  acknowledges that the Note and Deed of Trust
contain provisions allowing Lender to charge prepayment
fees upon the acceleration of the maturity date of the
principal and accrued interest under the Note upon
certain direct or indirect conveyances of rights, title
or interests, including, without limitation,
"Prohibited Transfers" (as defined in the Deed of
Trust) and "Prohibited Encumbrances" (as defined in the
Deed of Trust) in the property (the "PROPERTY") subject
to the Deed of Trust;

     (2)  expressly waives the provisions of California
Civil Code Section 2954.10 (and any similar provision
of applicable law in any manner conditioning the
enforceability of any prepayment fees as set forth in
the Note and Deed of Trust) and expressly agrees to the
payment of any prepayment fees as set forth in the Note
and/or the Deed of Trust, including, without
limitation, prepayment fees charged upon the
acceleration of the maturity date of the principal and
accrued interest under the Note as a result of any
Prohibited Transfers or Prohibited Encumbrances;

     (3)  expressly acknowledges that (a) in
establishing the annual interest rate of 8%, Lender has
assumed and taken into account the fact that the loan
evidenced by the Note will not be prepaid and that
there will be no Prohibited Transfers or Prohibited
Encumbrances or any other event that would cause Lender
to accelerate the maturity date of the Note, and (b)
the provisions in the Note and/or Deed of Trust
relating to Borrower's payment of a premium in the
event of an acceleration are intended to compensate
Lender in the event that this assumption proves to be
incorrect;

     (4)  expressly acknowledges that Lender's
agreement to make the loan evidenced by the Note was
expressly conditioned on the waiver and agreement
contained herein and that Borrower bargained for and
received specific exceptions from Lender's normal and
usual terms and provisions (for example, (a) Borrower
bargained for and received a provision wherein Lender,
in reliance on Borrower's management of the Property
subject to the Deed of Trust, agreed that the Note
should be non-recourse; and (b) Borrower bargained for
and received specific exceptions from Lender's normal
and usual due on sale provisions (e.g., one-time
assumption upon satisfaction of certain conditions)],
and that the foregoing constitutes "evidence of a
course of conduct by the obligee of individual weight
to the consideration in that transaction for the waiver
or agreement," all within the meaning of California
Civil Code Section 2954.10.

Sincerely,

OPTICAL COATING LABORATORY, INC.,
a Delaware corporation


By:  ___________________________
Name: _____________________
Title: ____________________



      AUTHORIZATION AGREEMENT FOR PREAUTHORIZED PAYMENTS


COMPANY NAME: OPTICAL COATING LABORATORY, INC. AAL
NUMBER: LOAN NO. 74750

     THIS Agreement made November 8, 1995 by and
between OPTICAL COATING LABORATORY, INC., a Delaware
corporation (hereinafter "COMPANY"), and AID
ASSOCIATION FOR LUTHERANS, a Wisconsin corporation
(hereinafter "AAL").

     WHEREAS, COMPANY agrees to have AAL originate
preauthorized payment entries ("DEBIT ENTRIES") on the
15th day of each month to COMPANY'S account ("ACCOUNT")
specified in Schedule A, attached hereto, in payment of
mortgage loan dated as of the date hereof
("OBLIGATION") owed by COMPANY to AAL pursuant to the
terms of this Agreement and the Rules relating to ACH
preauthorized payments and deposits ("RULES") of the
National Automated Clearing House Association and the
Wisconsin Automated Clearing House Association; and

     WHEREAS, AAL is willing to initiate Debit Entries
on the terms set forth below;

     NOW, THEREFORE, in consideration of the mutual
promises contained herein, AAL and COMPANY agree as
follows:

1.   Authorization.  Subject to the terms set forth
below, COMPANY authorizes AAL to initiate Debit Entries
to the Account in accordance with the agreement for
payments owing from time to time by COMPANY to AAL
resulting from Obligation.  AAL shall initiate Debit
Entries not earlier than the date payment is due under
the Note by Company in favor of AAL.

2.   Authorization Limitations: Procedures.  No Debit
Entry shall be initiated under this Agreement except in
conformity with the authorization provided above.  No
single Debit Entry initiated under this Agreement shall
be in excess of the Maximum Entry Amount defined in
Schedule A, attached to and made a part of this
Agreement.  Such maximum amount may be changed by AAL
from time to time on 10 days prior written notice to
COMPANY.  Credit Entries may be initiated only to
reverse a prior Debit Entry if done in error.

3.   Originator's Failure to Originate.  COMPANY shall
not be deemed in breach or default on any obligation or
suffer any loss of discount or other penalty by reason
of the failure of AAL to initiate any Debit Entry in
accordance with (or as authorized by) the terms of this
Agreement, or by reason of any delay in receipt by
COMPANY'S financial institution, or the nonreceipt by
such institution of any Debit Entry initiated by AAL.

4.   Compliance with Rules.  COMPANY and AAL shall
comply with and be bound by the Rules as in effect from
time to time.

5.   Acceptance and Return of Entries.  COMPANY agrees
to accept any Debit Entry initiated in accordance with
this Agreement, and to maintain sufficient balances in
the Account to honor such Debit Entries.  Any Debit
Entry initiated under this Agreement may be returned in
accordance with the Rules.  COMPANY shall not be deemed
to have accepted any Debit Entry that is returned in
accordance with the Rules.  Failure to accept any such
Debit Entry does not relieve the COMPANY of its
obligations under Obligation.

6.   Debit Entry Information.  Each Debit Entry
initiated under this Agreement shall be accompanied by
information required under the Rules.  It shall be the
responsibility of the COMPANY'S financial institution
to provide notification of all Debit Entries to the
COMPANY.

7.   COMPANY'S Account.  The Account specifics are
provided in Schedule A, attached to and made a part of
this Agreement.  The COMPANY Account may be changed by
COMPANY from time to time on 30 days prior written
notice to AAL.  If COMPANY is a natural person, COMPANY
represents to AAL that the Account is, and during the
term of this agreement, will be, maintained primarily
for business, and not for personal, family, or
household purposes.

8.   Bank Service Charges.  COMPANY shall be
responsible for any charges assessed by its financial
institution for these Debit Entries.

9.   Questions and Errors.  In the event of any
question or error relating to Debit Entries initiated
pursuant to this Agreement, COMPANY should contact
Investment Accounting at AAL, (414/734-5721) and AAL
SHOULD CONTACT

________________________________________________________.
     (Contact person's name and phone number)

10.  Liability of Parties.  Neither AAL nor COMPANY
shall be liable for the act or omission of any
Automated Clearing House, financial institution, or
other person.  However, the failure of an Automated
Clearing House, financial institution or other person
to accept a Debit Entry initiated by AAL because of
insufficient balances in the Account shall be deemed a
default of COMPANY under the Obligation unless COMPANY
causes AAL to receive payment in full in immediately
available funds of the amount of such Debit Entry on or
before the expiration of the grace period for the
payment of such amount (as such grace period is
specified in the note evidencing the Obligation).

11.  Notices.  Any written notice or other written
communication required or permitted to be given under
this Agreement shall be delivered, or sent by United
States registered mail, postage prepaid, and, if to
AAL, addressed to:

          Assistant Treasurer
          Aid Association for Lutherans
          4321 North Ballard Road
          Appleton, WI  54919

     and, if to COMPANY, addressed to:

           COMPANY Name       
           OPTICAL COATING LABORATORY, INC.

           COMPANY Address         
           2789 North Point Parkway
           Santa Rosa, California 95407-7397
           Attention:  Mr. Jeff Ryan, Assistant Treasurer

unless another address is substituted by notice
delivered or sent as provided herein.  Any such notice
shall be deemed given when so delivered or sent.

12.  Termination.  This Agreement may be terminated by
COMPANY or AAL at any time by giving 30 days prior
written notice thereof to the other party; provided,
that AAL shall not terminate this Agreement so long as
it requires COMPANY to make installment payments by
means of preauthorized automated clearinghouse
transactions.  Notwithstanding such termination, this
Agreement shall remain in force and effect as to all
transactions which shall have occurred prior to the
date of termination.  This Agreement shall terminate
upon the satisfaction of the Obligation.  Termination
of this Agreement does not release AAL or COMPANY from
the terms and liabilities of the Obligation.

13.  Law Governing.  This Agreement shall be construed
in accordance with and governed by the laws of the
State of Wisconsin.

14.  Entire Agreement, Etc.  This Agreement embodies
the entire Agreement of the parties with respect to the
subject matter hereof, and supersedes all previous
negotiation, representations, and agreements with
respect thereto, and shall be binding upon the parties
hereto, and their respective successors and assigns.
This Agreement may be amended only by a writing signed
by both parties.

Signed:

          "COMPANY"

OPTICAL COATING LABORATORY, INC.,
a Delaware corporation


By:  ___________________________
Name: _____________________
Title: ____________________

          "AAL"

Aid Association for Lutherans, a
  Wisconsin corporation

By:  ________________________
     Wayne C. Streck
     Vice President -
     Mortgages and Real Estate


By:  ________________________
     Kenneth E. Podell
     Assistant Secretary


                                   SCHEDULE A


COMPANY Name:  Optical Coating Laboratory, Inc.
AAL Number:  LOAN NO. 74750

COMPANY Taxpayer Identification Number:


Maximum Entry Amount:  $24,847

COMPANY Account:  The Account is the following deposit
Account maintained by the COMPANY:

     Financial Institution:


     Street Address:


     City, State, Zip Code:


     ABA Number:


     Bank's Telephone Number:


     COMPANY Account Number:


     Date of this Schedule:


ATTACH VOIDED CHECK HERE



                        November 8, 1995




North American Title Company
2755 Mendocino Avenue
Santa Rosa, California  95403
Attention:  Ms. Leslie Hudson

               Re:  Loan by Aid Association for
               Lutherans, a Wisconsin corporation
               ("LENDER"), to Optical Coating
               Laboratory, Inc., a California
               corporation ("BORROWER"); 1405
               Thunderbolt Way, Santa Rosa, California
               (the "PROPERTY"); AAL Loan No. 74750;
               Title Order No. 62204760

Ladies and Gentlemen:

          This letter authorizes North American Title
Company, Inc. (the "TITLE COMPANY") to act as escrow
holder in reference to the above transaction in
accordance with the instructions contained herein.

     I.   CLOSING DOCUMENTS.  The following monies,
items or documents have been or will be delivered to
you for the purpose of closing the above-referenced
transaction:

          1.   Deed of Trust, Security  Agreement  and
Fixture Filing (with Assignment of Rents) (the "DEED OF
TRUST") dated as of November 8, 1995, by and among
Borrower as trustor,  Title Company as trustee, and
Lender as beneficiary, properly executed by Borrower
and acknowledged by a licensed notary public;

          2.   Assignment of Rents and Leases (the
"ASSIGNMENT") dated as of November 8, 1995, made by
Borrower as assignor in favor of Lender as assignee,
properly executed by Borrower and acknowledged by a
licensed notary public;

          3.   Letter from David L. Packer, Esq., of
Pircher, Nichols & Meeks, on behalf of Lender to you
certifying that all preconditions to the funding of the
loan have been satisfied (the "AAL LETTER");

          4.   Statement of Mason-McDuffie Financial
Corp. ("BROKER") for services rendered;

          5.   Statements of Pircher, Nichols & Meeks
for (i) legal services rendered and (ii) for costs
incurred with respect to this transaction;

          6.   Funds from AAL in the amount of Two
Million Six Hundred Thousand Dollars ($2,600,000) (the
"LOAN PROCEEDS").

     B.   CONDITIONS OF CLOSING.  You may close the
above-referenced transaction upon the fulfillment of
the conditions set forth below:

          1.   You hold the monies, documents and items
referred to in paragraphs A.1 through A.6 above, duly
executed and acknowledged where required.

          2.   Commonwealth Land Title Insurance
Company is prepared and unconditionally committed and
obligated to issue a 1970 Form ALTA Lender's Extended
Coverage Policy of Title Insurance (the "Title
Policy"), which shall (a) include C.L.T.A.
[Endorsements No. 100 (without deletions or
exceptions), No. 103.3 (as to items 7 and 8 of the
"PTR" (as defined below)), No. 103.7 (providing "That
said land has unencumbered pedestrian and vehicular
access to publicly dedicated streets known as
Thunderbolt Way and Northpoint Parkway" rather than
"That said land abuts upon physically open streets
known as Thunderbolt Way and Northpoint Parkway"), No.
104.6 (covering the Assignment), No. 116 (confirming
that there is located on said land a
warehouse/manufacturing plant known as 1405 Thunderbolt
Way, Santa Rosa, California), No. 116.1 (confirming
that the Property is the same as that delineated on a
survey prepared by Carlile Associates, designated as
Job No. 2342.3 AND WHICH SURVEY MUST  BE  ATTACHED TO
THE POLICY OF TITLE INSURANCE), and No. 116.4; and (b)
insure Lender that the Borrower is the fee owner of the
Property and insuring Lender in the amount of $2,600,00
as the holder of a valid and existing first deed of
trust lien with respect to the Deed of Trust
encumbering the Property, subject only to:

                   i.    Taxes that are lien but are
     not due and payable (taxes due but not delinquent,
     delinquent taxes, penalties, and any interest to
     have been paid); and

                  ii.    Those exceptions disclosed as
     items 7, 8, 9, 11, 12, 13, 14, and 16 on the
     Preliminary Title Report of Title Company (the
     "PTR"), Order No. 62204760 dated as of September
     11, 1995 at 7:30 a.m. which Borrower represents
     and warrants to Title Company and Lender are the
     only leases of the Property and that such tenants
     have no options to purchase, or rights of first
     refusal in, the Property or any portion thereof.

          3.   You have executed and returned three (3)
copies  of this letter to the undersigned.

          4.   You have telephoned and received oral
advice from David L. Packer, Esq. (310) 201-8973, or
any other attorney from the law firm of Pircher,
Nichols & Meeks, that all other conditions of closing
required by Lender to be fulfilled outside of the above-
referenced escrow have been fulfilled to the
satisfaction of Lender.

     C.   CLOSING PROCEDURES.  In closing escrow, you
will strictly adhere to the procedures in the order set
forth below.  All the requirements with respect to the
closing shall be considered as having taken place
simultaneously, and no delivery or payment shall be
considered as having been made until all deliveries,
payments and closing transactions have been
accomplished.

          1.   Record the Deed of Trust in the official
records of Sonoma County, California.

          2.   Record the Assignment in the official
records of Sonoma County, California.

          3.   WITHIN THREE (3) BUSINESS DAYS OF THE
RECORDING OF THE DEED OF TRUST, deliver to Lender in
care of David L. Packer, Esq. at Pircher, Nichols &
Meeks, 1999 Avenue of the Stars, Suite 2600, Los
Angeles, California 90067, the following items:

               a.   A conformed copy of the Deed of
     Trust with recordation stamps thereon;

               b.   A conformed copy of the Assignment
     with recordation stamps thereon; and

               c.   The original Title Policy and a
     copy thereof.

          4.   Deliver to Lender a check made payable
jointly to First American Real Estate Tax Services,
Inc. and AAL in the amount of $276 for a type H Realty
Tax Service Contract (the "Tax Contract") for a period
of fifteen (15) years.

          5.   Disburse the loan funds as follows:

               a.   Pay the following fees and charges:

                        i.    the demands of holders
     thereof for release or reconveyance of all
     encumbrances and/or mechanics liens of record
     necessary to place title in the conditions called
     for in paragraph B.2 above;

                       ii.    your escrow fees and disbursements;

                      iii.    the cost of the Title Policy;

                       iv.    the cost of the Tax Contract;

                        v.    the statement of Broker;

                       vi.    the statements of Pircher, Nichols & 
                       Meeks; and

                      vii.    any and all other costs, fees, charges 
                              and taxes with respect to closing
                              this transaction.      
     
               b.   After payment of the above, disburse the 
                    remaining funds to Borrower in accordance
                    with its instructions.

     D.   GENERAL INSTRUCTIONS.

          1.   All costs and expenses for the Title
Policy, endorsements, escrow fees, photocopying,
recording fees, mortgage taxes, Title Company's
services, and all other fees, charges and taxes with
respect to the closing of this transaction shall be
paid by Borrower, and Lender shall have no
responsibility or liability for any such costs or
expenses.

          2.   All supplemental instructions and/or
amendments hereto must be in a writing signed by both
Lender (or David L. Packer, Esq. as Lender's
representative) and Borrower.


          3.   At any time prior to the close of this
transaction, you shall, upon Lender's request,
immediately disburse to Lender the Loan Proceeds.  If
this escrow shall fail to close by two (2) business
days after receipt by you of the Loan Proceeds, you
shall upon request of either party anytime thereafter
terminate this escrow and return to each party all
documents delivered by such party and held by you and
disburse to Lender the Loan Proceeds.  In the absence
of such termination, this escrow shall continue and
shall be closed as soon as you are in a position to do
so.

          4.   Borrower shall be liable to Lender for
interest on the Loan Proceeds of eight percent (8%) per
annum for the period on and after the day upon which
Lender disburses the Loan Proceeds to the Title
Company, and if this escrow should fail to close for
any reason, then Borrower shall nonetheless be liable
for such interest from and including such date to and
including the day upon which the Lender receives back
from escrow all sums placed by Lender in the escrow.

          5.   Except as otherwise specifically
provided herein, all communications and documents shall
be furnished to Borrower and Lender at the following
addresses:

               Lender:

                    Pircher, Nichols & Meeks
                    1999 Avenue of the Stars
                    Suite 2600
                    Los Angeles, California 90067
                    Attention: David L. Packer, Esq.

               Borrower:

                    Optical Coating Laboratory
                    2789 North Point Parkway
                    Santa Rosa, California 95407-7397
                    Attention:  Mr. Jeffrey M. Ryan

          6.   This letter of instructions may be
executed in two or more counterparts, each of which
shall be an original, but all of which shall constitute
one and the same letter of instructions.

     PLEASE IMMEDIATELY RETURN THREE EXECUTED COPIES OF
THESE INSTRUCTIONS TO LENDER IN CARE OF DAVID PACKER.

                              Very truly yours,

                              "Lender"


                              By:
                              David L. Packer
                              for Pircher, Nichols & Meeks
                              attorneys for Aid Association for Lutherans



                              "Borrower"
                              OPTICAL COATING LABORATORY, INC.,
                              A Delaware corporation



                              By:
                              Name:______________________________
                              Title:______________________________


The undersigned acknowledges receipt of
the within Escrow Instructions and agrees
to proceed in strict accordance therewith.

"Title Company"

NORTH AMERICAN TITLE COMPANY



By:

     Name:
     Title: