EXHIBIT 10.9
                                                                    ------------

RECORDING REQUESTED BY
Chicago Title Company
212645-MW

WHEN RECORDED MAIL TO Owens Financial Group, Inc.
P.0. Box 2400 Walnut Creek CA 94595

Loan #50759

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                        DEED OF TRUST, SECURITY AGREEMENT
                       AND ASSIGNMENT OF LEASES AND RENTS


Dated December 20, 2001

Made and entered into by and between
INNOVATIVE MICRO TECHNOLOGY, INC., a Delaware corporation
having a mailing address at:
c/o Pete Altavilla
75 Robin Hill Rd., Goleta, CA 93117
hereinafter referred to as "Trustor",

INVESTORS YIELD, INC., a California corporation
whose address is:
c/o Owens Financial Group, 2221 Olympic Blvd., Walnut Creek, CA 94595
hereinafter referred to as "Trustee" and

OWENS FINANCIAL GROUP, INC., a California Corporation,
whose address is: 2221 Olympic Blvd., Walnut Creek, CA. 94595
hereinafter referred to as "Beneficiary",

WITNESSETH:  That Trustor IRREVOCABLY GRANTS, BARGAINS, SELLS, CONVEYS,
TRANSFERS and ASSIGNS to TRUSTEE, IN TRUST, WITH POWER OF SALE, the
following property in the:
County of Santa Barbara, State of California described to wit:

SEE EXHIBIT 'A' ATTACHED FOR LEGAL DESCRIPTION

APN: 73-050-20-00-2

         TOGETHER  WITH all of the  following  which  with the  above  described
property (sometimes hereinafter referred to as the "Premises") are (except where
the  context  otherwise  requires)  hereinafter  collectively  called the "Trust
Property":


                                      -1-
<PAGE>




         (a) All tenements,  hereditaments, and appurtenances and all estate and
rights of Trustor  in and to the  premises  and the  reversion  and  reversions,
remainder and remainders thereof and thereto;

         (b) All right,  title and  interest  of Trustor in and to all  streets,
roads and public  places,  opened or proposed,  and all  easements and rights of
way, public or private, now or hereafter used in connection with the premises;

         (c) All water and water  rights  (whether  riparian,  appropriative  or
otherwise, and whether or not appurtenant) in or hereinafter relating to or used
in connection with the premises;

         (d)  All  buildings,  improvements,   fixtures,  equipment,  furniture,
furnishings,  construction materials and all other articles of personal property
in which  Trustor now has, or at any time  hereafter  acquires,  an interest and
which now are, or at any time hereafter  are,  attached to or situated in, on or
about  the  premises  or used in  connection  with or in the  operation  of  the
premises, and all renewals, replacements and substitutions thereof and additions
thereto  and  proceeds  thereof  including,  but not  limited  to, all  heating,
cooling, air conditioning,  filtration   and plumbing equipment, light fixtures,
elevators and elevator equipment, all hot water heaters and water softeners, all
floor coverings, all stoves, ovens,  refrigerators,  freezers, all wells, pumps,
pipes,   motors,   engines   and  pumping   apparatus   and   equipment,   which
specifically-described  property  Trustor  represents  are and  shall be and are
intended to be a part of the real property;

         (e) All of Trustor's accounts,  accounts  receivable,  contract rights,
inventory,  chattel paper and general intangibles  relating to the construction,
use,  operation  or  occupancy  of the  premises  and which are now owned or are
hereafter  owned or acquired by Trustor  and/or in which  Trustor now has, or at
any time hereafter acquires, an interest in, and all renewals,  replacements and
substitutions thereof and additions thereto and all proceeds thereof;

         (f) All of the Trustor's  interest in all leases and rental  agreements
now or hereafter  existing on or  pertaining to all or any part of the Premises,
and all of the rents, issues and profits of the property or arising from the use
of enjoyment of all or any portion  thereof,  and all security  deposits arising
from the use or enjoyment of all or any portion of the Premises, and all utility
deposits  made to procure and maintain  utility  services to the Premises or any
portion thereof;

         (g) Any and all awards,  payments or other amounts  including  interest
thereon,  which may be made with  respect to the Trust  Property  as a result of
injury to or decrease  in the value of the Trust  Property or as a result of the
exercise or threat of exercise of the power of eminent domain;

         (h) Any licenses,  contracts,  permits and  agreements now or hereafter
required or used in connection with the ownership,  operation and maintenance of
the Premises, and the right to use any trade name, trademark or service mark now
or hereafter  associated with the operation of any business of Trustor conducted
on the Premises and any grazing or range rights  related to or pertaining to the
Premises;

         (i) All of the rents,  issues  (including but not limited to crops) and
profits thereof; and


                                      -2-
<PAGE>



         (j) Any  proceeds  derived  from  the  sale,  transfer,  hypothecation,
disposition,  assignment, lease, or loss of any of the foregoing, to have and to
hold unto Trustee, its successors and assigns forever.

FOR THE  PURPOSE  OF  SECURING:  (1)  payment of the sum of  $5,400,000.00  Five
Million  Four  Hundred  Thousand  and 00/1 00  Dollars  with  interest  thereon,
together with costs and attorney's fees,  according to the terms of a promissory
note, or notes (hereinafter referred to in the singular as "Note"), of even date
herewith  made  by  Trustor,  payable  to the  order  of  Beneficiary,  and  all
extensions or renewals  thereof;  (2) performance of each covenant,  promise and
agreement of Trustor  contained  herein or in any  construction  loan  agreement
executed by Beneficiary as lender and Trustor as borrower, of even date herewith
(the "Loan Agreement"), if any, or incorporated herein by reference; (3) payment
of all sums required to be made by Trustor pursuant to the terms hereof; and (4)
payment of such additional sums as may be hereafter advanced by Beneficiary, its
successors  and assigns,  to Trustor,  or any  successor in interest of Trustor,
with interest thereon.

TO PROTECT THE PROPERTY AND SECURITY GRANTED BY THIS TRUST DEED, IT IS AGREED:

         1. Title.  Trustor  warrants that it is seized of good and merchantable
fee simple  title to the Trust  Property,  subject only to  reservations  in the
patent,  water right application,  obligations  arising in favor of water use or
irrigation  associations  or  companies  (none of the  assessments  of which are
delinquent),  easements  and  restrictions  of record,  and none  other,  unless
specifically set forth as follows: See attached Exhibit "B"

         2. Payment and Performance.  Trustor agrees to pay the Note referred to
above, including principal,  interest,  costs and attorney's fees, in accordance
with the terms of said Note, and to promptly and diligently comply with, observe
and perform all other obligations contained in the Note, this Deed of Trust, the
Loan Agreement and all other  agreements and instruments  executed in connection
therewith.

                  The  promissory  note secured by this Deed of Trust contains a
provision which provides that upon Trustor's failure to make any of the payments
required to be paid under the terms of the promissory note and/or Deed of Trust,
or in the  event  Beneficiary,  or his  agent,  advances  sums on  behalf of the
Trustor to protect the security of this Deed of Trust,  then said amounts  shall
accrue additional  interest at the rate of FIVE PERCENTAGE  (5.00%) points above
the  interest  rate in  effect  under  the  promissory  note at the time of such
delinquency or default.

                  The undersigned  Trustor requests that a copy of any notice of
default  and of any notice of sale  hereunder  be mailed to him at this  mailing
address opposite his signature hereto.

         3.  Taxes and Other  Charges.  Trustor  agrees to pay,  before the same
becomes  delinquent,  all  future  taxes,  assessments,  water,  sewer and other
charges levied or assessed upon or against the Trust  Property,  and in addition
all charges for gas, electricity and other items furnished to or charged against
the Trust Property.


                                      -3-
<PAGE>



                  Trustor  agrees  to pay,  prior  to  delinquency,  any and all
ground rents and amounts payable under any lease, trust deed,  mortgage or other
instrument  which may be an  encumbrance  on the Trust  Property.  Trustor shall
exhibit to  Beneficiary;  upon  request,  receipt  from the proper  officers  or
persons evidencing all such payments.

         4. Insurance.  Trustor agrees to keep the improvements now or hereafter
located on the Trust Property insured against loss by fire and other hazards and
casualties  in such amounts and for such periods as may be required from time to
time by Beneficiary.  Trustor agrees to pay the premiums on such insurance, when
due and prior to delinquency,  and furnish proof of such payment to Beneficiary.
All insurance shall be carried in responsible  insurance  companies  approved by
Beneficiary.  The policies shall be held by  Beneficiary  and shall have, at all
times,  loss  payable  clauses  attached  thereto  in  favor of  Beneficiary  as
mortgagee  and  approved  by  Beneficiary  and  shall  have a  provision  giving
Beneficiary  thirty (30) days prior written notice of  cancellation  or material
change.

                  In the  event  of any  loss  or  damage  to the  improvements,
Trustor will give immediate  notice by mail to Beneficiary and make proper proof
of loss (and if not made by Trustor, Beneficiary may make the same). Beneficiary
may require that the payment for such loss be paid directly to Beneficiary  only
and not  jointly to Trustor  and  Beneficiary.  Beneficiary  may, at its option,
apply the payment to the  reduction of the  indebtedness  secured  hereby or may
apply the same to the  restoration  or repair of the property  damaged.  Trustor
hereby  assigns to  Beneficiary  all such  policies  and the payments to be made
thereunder.

                  In the event of foreclosure of this trust deed, or exercise of
the power of sale given to Trustee,  or acquisition of the title to the property
by Beneficiary or its assigns, all right title and interest of Trustor in and to
the policies and proceeds  thereof and sums payable  thereunder  shall forthwith
pass automatically to the purchaser of said property.

         5. Condition of Improvements.  Trustor agrees to keep the buildings and
other improvements on the property and other Trust Property at all times in good
condition and repair.  All apparatus and machinery shall be kept in good working
order and properly  serviced and repaired.  If any of the Trust  Property  which
constitutes  personalty becomes worn out or obsolete, it shall, unless otherwise
approved  by  Beneficiary,  be replaced by  comparable  personalty  which is new
and/or better  suited to the proper  operation of the premises and is reasonably
necessary to preserve and protect the value of such  premises.  Trustor will not
allow nor commit any waste,  and will not  demolish nor  structurally  alter any
buildings on the property,  and will do no act to injure or depreciate the value
of  such  property.  The  property  and  buildings  thereon  shall  be kept in a
reasonably clean, safe and sanitary condition and shall not be allowed to become
dilapidated or rundown.

                  Trustor  agrees that it will not remove or allow to be removed
any  fixture or  fixtures  from the Trust  Property  without  the prior  written
consent of  Beneficiary.  Trustor further agrees that in adding any new fixtures
or in substituting fixtures on the Trust Property, prior proof will be furnished
to Beneficiary that no security interest exists therein.

                  Trustor  agrees to complete,  restore and  reconstruct in good
and  workmanlike  manner,  to the  condition  required  hereby,  any building or
improvement which constitutes a part of the premises which may be damaged


                                      -4-
<PAGE>


or destroyed;  not to permit any lien of mechanics or  materialsmen to attach to
the Trust Property or any portion thereof; to comply with all laws,  ordinances,
regulations and  governmental  orders  affecting the Trust Property or regarding
any alterations or improvements thereto; not to commit, suffer or permit any act
with  respect  to the  Trust  Property  in  violation  of law or any  covenants,
conditions  or  restrictions  pertaining  thereto.  Any  alteration,   addition,
construction,  reconstruction,  improvement  or major repair to be made upon the
premises shall be commenced and prosecuted with due diligence  pursuant to plans
and  specifications  which have been approved by  Beneficiary  and in accordance
with all building codes and other regulations applicable thereto all pursuant to
the terms and conditions of the Loan Agreement.

         6.  Beneficiary's or Trustee's  Actions.  In the event Trustor fails to
make any payment  required to be made by it hereunder or fails to perform any of
its other  obligations  hereunder  or under  any Loan  Agreement  or other  loan
instruments,  Beneficiary  may,  but shall not be  obligated  to,  make any such
payment or perform  any such  obligation  on behalf of Trustor  (Trustor  hereby
granting  Beneficiary the right to go upon the premises for such purpose without
thereby  becoming liable to Trustor or any person in possession  thereof holding
by, through or under Trustor).  All  expenditures  made by Beneficiary  shall be
prima facie evidence of the necessity therefor and reasonableness  thereof. Such
expenditures,  together  with all  incidental  costs of  Beneficiary,  including
reasonable attorney's fees if incurred,  shall be immediately due and payable by
Trustor to Beneficiary, shall bear interest at a rate contracted for in the Note
(or if more than one note is secured  hereby,  then at the highest rate provided
in any note  selected  by  Beneficiary)  until paid and shall be secured by this
Trust Deed. Trustor hereby irrevocably constitutes and appoints Beneficiary, and
each of its officers,  Trustor's attorney-in-fact,  coupled with an interest for
the purpose of performing all acts on Trustor's  behalf  necessary to effectuate
the intent of this section, and authorizes and empowers Beneficiary, and each of
its authorized  representatives and designees,  to enter upon the Trust Property
or any part  thereof  for the  purposes of  inspection  and of  complying  with,
observing and  performing any rights of cure granted to Beneficiary in this Deed
of Trust.  The aforesaid power of attorney shall survive the death or disability
of the principal, and Trustor hereby ratifies any and all acts which Beneficiary
(or any of its  agents or  officers)  shall  lawfully  do or cause to be done by
virtue thereof.  Nothing contained in this or any other Section hereof, however,
shall be construed as requiring  Beneficiary to advance or expend monies,  incur
any cost or expense or do any act for any purpose  mentioned in such Sections or
for any other purposes whatsoever.

         7. Right of Entry and  Inspection.  Trustee and  Beneficiary  and their
officers, employees, and agents may enter upon and inspect the Trust Property at
any reasonable time or times.  Beneficiary  shall have no obligation to inspect,
or  liability  to Trustor  or  third-parties  for  failing to inspect or for the
manner in which it inspects.

         8. Actions  Affecting Trust  Property.  Trustor agrees to appear in and
contest any action or proceeding purporting to affect the security hereof or the
rights or powers of Beneficiary  or Trustee;  and to pay all costs and expenses,
including costs of evidence of title and attorney's  fees, in any such action or
proceeding in which Beneficiary or Trustee may appear.

         9. Condemnation.  The proceeds of any judgment,  award or settlement in
any condemnation or eminent domain proceeding shall be paid to Beneficiary,  who
may, at its option, either apply the proceeds to reduce the indebtedness secured


                                      -5-
<PAGE>



hereby (whether  matured or to mature in the future) or release such proceeds to
Trustor.  Trustor hereby  assigns and transfers to Beneficiary  all such amounts
and proceeds and all rights to make claim for, and to adjust, settle, compromise
and collect any such awards or proceeds and agrees that  Beneficiary may receive
the same on behalf of Trustor. All costs and expenses incurred by Beneficiary in
connection  with the  recovery of any such awards or proceeds  shall be deducted
from such award or proceeds.

         10. Security Agreement.  This Deed of Trust shall constitute a security
agreement  within the meaning of the Uniform  Commercial  Code as adopted in the
State  of  California  ("UCC")  as to any  of the  Trust  Property  covered  and
encumbered by this Deed of Trust as to which the  provisions  may apply,  and is
intended to create a security interest in such property in favor of Beneficiary.
This Deed of Trust shall be  self-operative  with respect to such property,  but
Trustor  agrees to execute  and  deliver  on demand  such  security  agreements,
financing  statements and other  instruments as Beneficiary may request in order
to  impose  or  perfect  the  lien  hereof  more  specifically  upon any of such
property.  Trustor also hereby irrevocably  constitutes and appoints Beneficiary
(and any  officer or agent  thereof)  as its true and  lawful  attorney-in-fact,
coupled  with an  interest,  to execute  and file on behalf of  Trustor  (and at
Trustor's  expense)  any  and  all  financing  statements  (including,   without
limitation,   any  original   counterpart  or  carbon,   photographic  or  other
reproduction  of this Deed of Trust,  any of which,  Trustor hereby agrees,  may
serve as a financing statement), and re-filings,  continuations and terminations
thereof, which Beneficiary,  in its sole determination,  shall deem necessary or
prudent,  in each case without the signature of Trustor  thereon.  The aforesaid
power of attorney  shall survive the death or disability of the  principal,  and
Trustor hereby ratifies any and all acts which Beneficiary (or any of its agents
or officers)  shall  lawfully do or cause to be done by virtue  thereof.  If the
lien of this  Deed of Trust on any  property  is now,  or  shall  hereafter  be,
subject to a prior  security  interest  covering such  property,  by reason of a
purchase money security interest or otherwise,  then in the event of any default
hereunder,  all the right,  title and  interest of Trustor in and to any and all
deposits therein is hereby assigned to Beneficiary, together with the benefit of
any payments now or hereunder  made thereon.  The previous  sentence  shall not,
however,  operate to authorize any such prior  security  interest.  In the event
Trustor owns or acquired only a lessee's interest in any such property, then, in
addition to the  foregoing  requirements,  before any of said property is placed
in, on or about the premises or  improvements at any time situate  thereon:  (i)
the  written  approval of  Beneficiary  to the  leasing  agreements  under which
Trustor owns or acquires such lessee's  interest shall have first been obtained;
and (ii) the  consent  of the  lessor  of any such  leasing  agreements  to such
security  interest of Beneficiary,  and all agreements of the lessor in favor of
Beneficiary  deemed necessary by Beneficiary,  shall first have been obtained to
the satisfaction of Beneficiary.

                  Trustor   agrees  that  all   property  of  every  nature  and
description,  whether real or personal,  covered by this Deed of Trust, together
with all property in which  Beneficiary  has a security  interest by reason of a
separate  agreement or instrument,  are encumbered as one unit.  Upon default by
Trustor  under or with respect to any of the  indebtedness  secured  hereby,  or
under any other  instrument  executed  in favor of  Beneficiary  to secure  such
indebtedness, the security interest of Beneficiary may, at Beneficiary's option,
be foreclosed or sold in the same proceeding by Beneficiary or Trustee,  and all
of the property (both realty and personalty)  may, at Beneficiary's  option,  be
sold as such in one unit as a going  business,  or Beneficiary may elect to sell


                                      -6-
<PAGE>



or cause the Trustee to sell the property which is realty (or which  Beneficiary
elects to treat as realty) in one  proceeding as above provided and the property
which consists of personal  property in one or more separate  proceedings and in
any manner now or  hereafter  permitted  by the UCC. The giving of ten (10) days
prior written  notice to Trustor by Trustee or Beneficiary of the time and place
for the  sale or  other  disposition  of any  Trust  Property  which is not real
property,  shall  constitute  reasonable  notice to  Trustor.  Upon  request  of
Beneficiary,  Trustor shall  assemble and make the Trust  Property  available to
Beneficiary at the premises herein described. Failure to produce any item of the
Trust Property for five (5) days after demand to inspect the same has been given
to Trustor by Beneficiary  and/or Trustee shall constitute a default  hereunder.
No Trust Property shall be removed from the premises above described without the
prior written consent of Beneficiary.  Trustor hereby expressly waives any right
which it may have to direct the order in which any of the Trust  Property  shall
be sold.  The filing or recording  of any  financing  statement  relating to any
property or rights or interests generally or specifically described herein shall
not be  construed  to  diminish  or alter  any of the  Beneficiary's  rights  or
priorities hereunder.

         11.  Assignment and Collection of Rents.  Trustor hereby absolutely and
presently assigns and transfers to Beneficiary all of Trustor's right, title and
interest  in and to all  leases,  rents,  issues and  profits or income from the
Trust  Property  (collectively,  the "rents")  and each and every part  thereof,
including all present and future leases or rental  agreements.  This  assignment
may be enforced by  Beneficiary  without  regard to the adequacy of the security
hereof or the solvency of Trustor by any one or more of the  following  methods:
(1) appointment of a receiver;  (2) Beneficiary  taking  possession of the Trust
Property;  (3) Beneficiary  collecting any moneys payable under leases or rental
agreements directly from the parties obligated for payment;  (4) injunction;  or
(5) any other method permitted by law.

                  Unless and until Beneficiary shall elect to collect said rents
Trustor shall have a revocable  license,  subject to the provisions  hereof,  to
collect and  receive  the rents.  Upon the  occurrence  of a default  hereunder,
however, Beneficiary may, at its option, elect to terminate such license without
regard  to the  adequacy  of the  security  hereunder,  the  value of the  Trust
Property,  the solvency of Trustor or any showing of fraud or  mismanagement  on
Trustor's part, and without further notice to or demand upon Trustor, and either
in person, by agent or by a receiver, and in its own or in Trustor's name, enter
upon  and take  possession  of all or any part of the  Trust  Property,  exclude
Trustor and its agents therefrom,  hold, store, use, operate, manage and control
the Trust Property and protect its security as it sees fit, make, enforce,  and,
if the same be subject to modification or cancellation,  modify or cancel leases
upon such terms or conditions  as  Beneficiary  deems  proper,  obtain and evict
tenants, fix or modify rents, contract for and make repairs and alterations, sue
for or otherwise collect and receive the rents (including,  without  limitation,
those past due and unpaid) therefrom,  and apply the same, after first deducting
therefrom the costs and expenses of operation and collection (including, without
limitation, attorney's fees and disbursements), against the indebtedness in such
priority and  proportions as  Beneficiary,  in its sole  discretion,  shall deem
proper. Trustor hereby irrevocably authorizes and directs all tenants to pay the
rents  directly to Beneficiary  upon receipt of written notice from  Beneficiary
asserting the existence of a default hereunder,  and Trustor hereby relieves all
`tenants  from any liability to Trustor by reason of the payment of the rents to
Beneficiary.


                                      -7-
<PAGE>


                  Any rents received by Beneficiary shall be applied to the cost
of  collection,  second to  any  expenses  Beneficiary  may expend in making the
property ready for or  satisfactory  to any lessee or tenant,  and the remainder
shall  be  applied  on the  indebtedness  secured  hereby  (whether  matured  or
unmatured)  as  Beneficiary  may elect.  Rents  received by  Beneficiary  may be
applied by Beneficiary in any manner and in any priority it deems  advisable and
such receipt shall not  constitute a waiver of any right or claim of Beneficiary
nor cure any default hereunder.

                  Trustor shall not receive or collect more than one (1) months'
rents  in  advance,  and  Trustor  agrees  not  to  default  in  performing  its
obligations under any leases on the property.  Without the prior written consent
of  Beneficiary,  Trustor  shall  neither do nor omit to do anything,  nor allow
anything  to be done or to be  omitted  to be done,  which  might  impair any of
Beneficiary's  rights or  interests  with  respect  to   the  rents and  leases,
including,  without limitation,  granting any concessions or abatements of rent,
canceling  or  accepting  a  surrender  of any lease,  allowing  any lease to be
assigned or the space demised thereunder  sublet,  further assigning or pledging
or granting a security interest in any rents or leases,  suffering any waiver or
release of the landlord's rights or committing any landlord's default.

                  Neither Trustee nor Beneficiary  shall be obligated to perform
or discharge any obligation,  duty or liability  under any of the leases,  or by
reason of the foregoing  assignment,  and Trustor shall and does hereby agree to
indemnify and hold Trustee and Beneficiary harmless from any liability,  loss or
damage  which  they may  incur  under  any  lease or under or by  reason  of the
foregoing  assignment  and from any claims  and  demands  which may be  asserted
against  them  or  either  of  them  by  reason  of any  alleged  obligation  or
undertaking  on Trustee's or  Beneficiary's  part to perform or discharge any of
the terms, covenants or agreements contained in the leases.

                  Trustor  specifically  understands and agrees that neither the
assignment  to  Beneficiary  of the  rents  and  leases,  nor  the  exercise  by
Beneficiary of any of its rights or remedies under this section, shall be deemed
to make  Beneficiary a  "mortgagee-in-possession"  or otherwise  responsible  or
liable in any manner with respect to the Trust Property,  or the use, occupancy,
enjoyment  or  operation  of  all or  any  portion  thereof,  unless  and  until
Beneficiary, in person or by agent, assumes actual possession thereof. Nor shall
any appointment of a receiver for the Trust Property by any Court, either at the
request of  Beneficiary  or by agreement  with  Trustor,  or the  entering  into
possession of the Trust Property or any part thereof by such receiver, be deemed
to make  Beneficiary a  "mortgagee-in-possession"  or otherwise  responsible  or
liable in any manner with respect to the Trust  Property or the use,  occupancy,
enjoyment or operation of all or any portion thereof.

         12.  Hazardous  Materials.  For  the  purposes  of this  Deed of Trust,
Trustor,  Beneficiary  and  Trustee  agree that,  unless the  context  otherwise
specifies  or  requires,  the  following  terms shall have the  meanings  herein
specified:

                   (A)  "Environmental   Law"  shall  mean  any  Law  concerning
environmental quality,  health or safety and/or the protection of, or regulation
of the discharge of Hazardous Materials into, the air, ground or water.


                                      -8-
<PAGE>




                   (B)   "Hazardous    Materials"   shall   mean   radon,   urea
formaldehyde,  asbestos, polychorinated biphenyls, petroleum and petroleum-based
products  underground  storage tanks and all other pollutants  and/or explosive,
flammable,  radioactive,  dangerous,  hazardous or toxic  chemicals,  materials,
waste or  substances  defined as such in any  Environmental  Law or which by any
Environmental  Law require special  handling or notification to any Governmental
Authority  in  connection  with their  manufacture,  use,  collection,  storage,
treatment or. disposal.

                   (C)  "Hazardous  Materials   Contamination"  shall  mean  the
dumping,  placement,  storage,  discharge,  release, seepage, emission, leakage,
use,  manufacture,  generation or existence of Hazardous  Materials into,  from,
under, above, around, at, in or onto the Trust Property; or the contamination of
the Trust  Property,  any other  property or any  buildings,  facilities,  soil,
groundwater,  air or other elements under, above, around, at, in or on the Trust
Property or any other  property as a result of  Hazardous  Materials at any time
(whether before or after the date of this Deed of Trust) emanating from or under
the Trust Property.

         (a)  Trustor's   Representations   and   Warranties.   Trustor   hereby
represents  and  warrants  that it shall not cause or permit and, to the best of
its knowledge (after due inquiry), except as disclosed by Trustor to Beneficiary
in  the  Environmental  Disclosure  form  relating  to  the  premises  or in any
environmental or soil reports, no other person has caused, suffered or permitted
any Hazardous  Materials to be dumped,  placed,  stored,  held,  located,  used,
manufactured,  generated,   leaked,  discharged,  released,  seeped,  emitted or
disposed of into, from, on, under, above, around, in or at the Trust Property or
any part thereof, and that no part of the Trust Property will be or, to the best
of its knowledge (after due inquiry),  has been used for the disposal,  storage,
treatment, processing, manufacturing,  generation or other handling of Hazardous
Materials.

         (b)  Trustor's  Covenants.  Trustor  agrees  to:  (i)  give  notice  to
Beneficiary  immediately upon Trustor's acquiring knowledge of the use, presence
or storage or alleged use,  presence or storage of any  Hazardous  Materials at,
under, above,  around, in or on the Trust Property or of any Hazardous Materials
Contamination,  with a full  description  thereof  and  copies of all  materials
relating  to the  manner in which it  acquired  such  knowledge;  (ii)  promptly
comply. with all Environmental Laws requiring the removal, treatment or disposal
of such Hazardous  Materials or Hazardous  Materials  Contamination  and provide
Beneficiary with satisfactory evidence of such compliance;  and (iii) deliver to
Beneficiary, within thirty (30) days after demand by Beneficiary, a bond, letter
of  credit  or  similar   financial   assurance   evidencing  to   Beneficiary's
satisfaction  that  sufficient  funds are available to pay the cost of removing,
treating and  disposing  of such  Hazardous  Materials  or  Hazardous  Materials
Contamination  and discharging  any assessments  which may be established on the
Trust Property as a result thereof.

         (c) Superfund  Lien.  Trustor shall not cause or suffer any liens to be
recorded against the Property as a consequence of, or in any way related to, the
presence,  remediation  or  disposal  of  Hazardous  Material  in or  about  the
Property,  including  any state,  federal or local  so-called  "Superfund"  lien
relating to such matters.

         (d) Trustor's Liabilities/Indemnity.  Trustor shall at all times assume
any and all liabilities arising from the presence, handling, treatment, storage,
transportation,  removal or  disposal of  Hazardous  Material on or in the Trust
Property.  Regardless of whether any event of default shall have occurred and be



                                      -9-
<PAGE>



continuing  or any remedies in respect of the Trust  Property  are  exercised by
Beneficiary,  Trustor shall defend,  indemnify and hold harmless Beneficiary and
Trustee from and against any and all liabilities  (including strict  liability),
suits,  actions,  claims,  demands,  penalties,   damages  (including,   without
limitation, lost profits,  consequential damages, interest, penalties, fines and
monetary sanctions),  losses, costs or expenses (including,  without limitation,
consultants' fees, investigation and laboratory fees, reasonable attorneys' fees
and remedial costs) (the foregoing are hereinafter  collectively  referred to as
"Liabilities")  which  may now or in the  future  (whether  before  or after the
culmination of the transactions  contemplated by the Loan Agreement) be incurred
or  suffered  by  Beneficiary  or  Trustee  by reason  of,  resulting  from,  in
connection  with, or arising in any manner  whatsoever  out of the breach of any
warranty  or  covenant  or the  inaccuracy  of  any  representation  of  Trustor
contained  or referred to in this  section of this Deed of Trust or which may be
asserted as a direct or indirect  result of the presence on or under, or escape,
seepage, leakage, spillage,  discharge, emission or release from the Property of
any Hazardous Materials or any Hazardous Materials Contamination or arise out of
or  result  from  the  environmental  condition  of the  Trust  Property  or the
applicability of any Governmental  requirements relating to Hazardous Materials,
whether or not occasioned wholly or in part by any condition,  accident or event
caused by any act or omission of Trustor or Beneficiary.

                  Such Liabilities shall include, without limitation: (i) injury
or death to any person; (ii) damage to or loss of the use of any property; (iii)
the  cost of any  demolition  and  rebuilding  of the  improvements,  repair  or
remediation  and the  preparation of any activity  required by any  Governmental
authority;  (iv) any lawsuit or  proceeding  brought or  threatened,  good faith
settlement  reached,  or governmental order relating to the presence,  disposal,
release or threatened  release of any  Hazardous  Material on, from or under the
Trust Property; and (v) the imposition of any lien on the Trust Property arising
from the  activity  of Borrower or  Borrower's  predecessors  in interest on the
premises or from the  existence  of Hazardous  Materials or Hazardous  Materials
Contamination upon the Trust Property.

         (e) Reassignment or Reconveyance. Beneficiary shall have the right, but
without any obligation,  to reassign or reconvey the Premises to Trustor, in the
event that Beneficiary  shall, at any time,  determine that Hazardous  Materials
are  located in, on or under the Trust  Property  or any part  thereof or in the
event that the Trust  Property  or any part  thereof is  affected  by  Hazardous
Materials  Contamination  or  subject  to the  lien  or  claim  of  lien  of any
governmental or  quasi-governmental  unit, body or agency or any third party for
clean-up  costs or  other  costs  pursuant  to the  Comprehensive  Environmental
Response,  Compensation  and Liability Act of 1980,  as amended,  or  any  other
similar   statute,   law,   rule   or   regulation   of  any   governmental   or
quasi-governmental   unit,   body  or  agency.   This  provision  shall  survive
Beneficiary's  acquisition  of the Trust  Property  pursuant to a Trustee's sale
hereunder,  foreclosure hereunder or otherwise. This subparagraph (e) is for the
sole benefit of  Beneficiary  or an assignee of  Beneficiary's  entire  interest
under this Deed of Trust or  participating  lenders in the loan evidenced by the
Note which this Deed of Trust  secures  and shall not be for the  benefit of any
other person or entity.

         (f) Survival.  The covenants and  agreements  contained in this section
shall survive the consummation of the transactions  contemplated by this Deed of
Trust and payment and reconveyance or foreclosure of this Deed of Trust.


                                      -10-
<PAGE>




         13. Time of Essence. Time is of the essence of this Trust Deed and each
and every provision  thereof.  No failure on the part of Beneficiary to exercise
any of its rights  hereunder  shall be  construed as a waiver of or prejudice to
its rights in the event of any other subsequent  default or breach.  No delay on
the part of Beneficiary in exercising any of its rights hereunder shall preclude
it from the  exercise  thereof at any time  during the  continuance  of any such
default.  The  acceptance of late  payments  shall not waive the "time is of the
essence"  provision and shall not waive  Beneficiary's  right to declare default
for failure to pay. All rights and remedies of  Beneficiary  are  cumulative and
concurrent,   and  may  be  exercised  singly,   severally  or  concurrently  as
Beneficiary may elect.

         14.  Default.  In the event of any default by Trustor in the payment of
the  indebtedness  secured  hereby  which  remains  uncured  for ten  (10)  days
following  written notice thereof;  or in the event of any default of Trustor in
performing  any of its  obligations  hereunder or any  non-monetary  obligations
under the Loan  Agreement  or other  document  executed  by Trustor  and held by
Beneficiary which (subject to Section 24 hereof) remains uncured for twenty (20)
days following written notice thereof; or in the event Trustor, or any guarantor
or surety (and, if this Trust Deed secures a construction  loan,  then Trustor's
contractor) shall be adjudicated  insolvent or bankrupt,  or any proceedings are
filed  by or  against  them  or any of  them  in the  nature  of  bankruptcy  or
reorganization  or  arrangement  with creditors  which are not dismissed  within
thirty (30) days of  commencement;  or in the event any  proceeding  is filed to
foreclosure or any Notice of Trustee's Sale is recorded on any other lien on the
Trust Property  (whether  junior or senior to this Trust Deed);  or in the event
any Writ of  Attachment  or Execution or any similar  process  shall be filed or
levied against the Trust  Property  which is not  discharged  within thirty (30)
days; or if Trustor shall permit or suffer another party or governmental  entity
to  acquire  possession  of, any  interest  in or any lien upon any of the Trust
Property  which is  inconsistent  with  Beneficiary's  rights  hereunder  or the
provisions  hereof,  except by eminent domain;  or in the event Trustor abandons
the Trust Property or leaves the same unattended or unprotected; or in the event
Beneficiary shall deem the security provided by this Trust Deed inadequate or in
danger of being impaired or diminished  from any cause  whatsoever  (any of such
events  being an  event  of  default  hereunder);  then  and in any  such  event
Beneficiary  may  declare  the entire  debt and all  indebtedness  of Trustor to
Beneficiary  to be  immediately  due and  payable  without  notice  to  Trustor.
Beneficiary  may thereupon,  at is option,  and without prior notice and without
affecting  the lien of this  Trust  Deed,  do any one or more of the  following:
enter upon the premises and inspect, repair, improve and maintain the same, rent
or lease the  premises or portions  thereof as  Beneficiary  shall see fit,  and
perform such other acts thereon as Beneficiary  may deem necessary or advisable;
sue for all or  part of the  indebtedness  owing  from  Trustor  to  Beneficiary
without  affecting or without losing the security of this Trust Deed;  foreclose
this Trust Deed as a mortgage in the manner  provided by law; cause the exercise
of the power of sale granted  herein;  bring an action for damages;  or exercise
such other remedies or combination of remedies  Beneficiary  may have under this
Deed of Trust,  the Loan Agreement or any other  agreement or instrument,  or at
law or in equity.

         15.  Release.  Upon  payment  in full of all sums  secured  hereby  and
performance of all obligations of Trustor hereunder, the lien of this Trust Deed
upon the Trust Property shall be released by a Deed of Reconveyance,  which said
reconveyance  shall be without warranty and shall operate to reconvey the estate
vested in trustee hereby.  If reconveyance by Deed of Reconveyance is to be made
by Trustee, Beneficiary shall  deliver  the  original of this Trust Deed and the


                                      -11-
<PAGE>




Note  secured  hereby to  Trustee  with a request  for  reconveyance  by Deed of
Release.  If Trustee shall perform any such acts or execute  complete or partial
reconveyances,  it shall be paid a fee in accordance with its  established  fees
and charges therefor.

                  The Grantee in any Deed of Release  executed  pursuant to this
Trust Deed may be described as "the person or persons legally entitled thereto,"
and the recitals  therein of any matters or facts shall be  conclusive  proof of
the truthfulness thereof.

         16. Beneficiary's Powers. Beneficiary may, at any time, without notice,
release  any person  liable  for  payment of any  indebtedness  secured  hereby,
release portions of the Trust Property from this Trust Deed, or extend or modify
the time for payment or other terms of the indebtedness  secured hereby or grant
other  indulgences,  and any  such  release,  extension,  modification  or other
actions shall not affect the personal liability of any person for the payment of
said  indebtedness or the lien of this Trust Deed upon the remaining  portion of
said property.

                  At any time,  without  liability  therefor and without notice,
and without affecting the personal  liability of trustor or any other person for
payment of the  indebtedness  secured  hereby,  Trustee may, with the consent of
Beneficiary:  (1) release and reconvey by Deed of  Reconveyance  any part of the
Trust Property from the lien hereof;  (2) consent to the making and recording of
any maps or plats of the Trust  Property;  (3) join in granting  any easement on
the Trust  Property;  or (4) join in any  extension  agreement or any  agreement
subordinating or modifying the lien of charge hereof.  If Trustee  shall perform
any such acts or execute  complete or partial  reconveyances  it shall be paid a
fee in accordance with its established fees and charges therefor.

         17. Foreclosure. In the event of default hereunder,  Beneficiary, if it
desires Trustee to exercise the power of sale granted hereby,  shall execute and
deliver to  Trustee a written  declaration  of  default  and demand for sale and
shall  surrender  to Trustee this Trust Deed,  the Note  secured  hereby and all
documents  evidencing  any  expenditures  hereunder,  together  with such  other
documents as trustee may require.  Beneficiary shall also execute and deliver to
Trustee all notices to Trustor that must be signed by Beneficiary.  Upon receipt
thereof,  Trustee  shall give notice and sell the Trust  Property as provided by
law.  Trustee may postpone the sale as provided by law.  After sale of the Trust
Property, Trustee shall deliver its deed to the purchaser conveying the property
so sold but without any covenant or warranty, express or implied. The recital in
any such deed of any matters or facts,  stated either specifically or in general
terms,  or as  conclusions  of law or facts,  shall be  conclusive  proof of the
truthfulness thereof.

                  If the Beneficiary  shall be the purchaser at the sale, all or
any  portion  of the  amounts  due to  Beneficiary  hereunder  or under the Note
secured  hereby may be, applied in payment of all or any portion of the purchase
price.

                  In the event of  default  hereunder,  at any time  before  the
Trust  Property  has been  legally  sold  pursuant to the power of sale  granted
hereby,  this Trust Deed may be foreclosed in the manner provided by law for the
foreclosure of mortgages on real property.


                                      -12-
<PAGE>




         18.  Cancellation/Reinstatement.  Beneficiary may, at any time, request
cancellation of Trustee's  Notice of Sale,  whereupon  Trustee shall execute and
record,  or cause to be recorded,  a Cancellation  of Notice of Sale in the same
county in which the Notice of Sale was recorded.  The exercise by Beneficiary of
this  right  shall not  constitute  a waiver of any  default  then  existing  or
subsequently occurring.

                  In  the  event  this  Trust  Deed  and  the  indebtedness  and
obligations  secured  hereby  are  reinstated  in the  manner  provided  by law,
Beneficiary shall forthwith notify Trustee thereof as provided by law. Upon such
notification,  Trustee shall record, or cause to be recorded,  a Cancellation of
Notice  of Sale in the same  county in which  the  Notice  of Sale was  recorded
within the period then required by law.

         19. Receiver.  In the event of default hereunder,  Beneficiary shall be
entitled  to the  appointment  of a  Receiver  to take  charge of the  property,
collect the rents,  issues and profits therefrom,  care for and repair the same,
improve the same when  necessary  or  desirable,  lease and rent the property or
portions thereof  (including  leases existing beyond the term of  receivership),
and otherwise use and utilize the property, and to have such other duties as may
be fixed by the court.

                  Trustor specifically agrees that the Receiver may be appointed
without any notice to Trustor  whatsoever,  and the court may appoint a Receiver
without reference to the adequacy or inadequacy of the security, or the solvency
or insolvency of Trustor,  and without reference to other matters normally taken
into account by courts in the discretionary  appointment of Receivers,  it being
the intention of Trustor to hereby  authorize the appointment of a Receiver when
Trustor is in  default  and  Beneficiary  has  requested  the  appointment  of a
Receiver.  Trustor  hereby  agrees  and  consents  to  the  appointment  of  the
particular  person or firm  (including  an officer or employee  of  Beneficiary)
designated by Beneficiary as Receiver and hereby waives its rights to suggest or
nominate  any person or firm as Receiver in  opposition  to that  designated  by
Beneficiary.

         20. Substitute  Trustee.  Beneficiary may substitute another Trustee in
the place of the Trustee herein named to exercise the rights,  powers and duties
granted by law and  contained  herein.  Upon such  appointment,  and without the
necessity of a conveyance to the successor  Trustee,  the latter shall be vested
with all the title, powers and duties conferred upon the Trustee herein named.

         21.  Leases.  Beneficiary  or any purchaser at Trustee's sale or at any
foreclosure  sale may, if it so elects,  be subrogated to and succeed to all the
rights of Trustor  under any or all leases on the  property or portions  thereof
Beneficiary may, if it so elects,  subordinate its rights hereunder to any lease
on the property,  or a portion thereof, and keep the lease in effect through and
after any foreclosure action or Trustee's sale.

         22.   Subrogation.   Beneficiary  shall  be  subrogated  to  the  lien,
notwithstanding  its  release of record,  of any prior  mortgage,  trust deed or
other  encumbrance  paid or  discharged  from the  proceeds of the Note  secured
hereby, or from any advance made by Beneficiary.


                                      -13-
<PAGE>




         23.  Changes in Tax Laws. In the event of the passage after the date of
this  Trust  Deed of any law  levying  any tax upon this  Trust Deed or the debt
secured hereby,  which Beneficiary is obliged to pay, then Trustor agrees to pay
said tax or reimburse  Beneficiary  for the payment of the same,  provided  that
Trustor  shall not be obligated to pay any amount which would be  considered  as
interest at a rate higher than that allowed by law, and provided further that in
the event of the enactment of any such law Beneficiary  shall have the right, at
its option, to declare the indebtedness secured hereby to be immediately due and
payable.

         24. Due on Sale or Encumbrance.  Trustor shall not,  without  obtaining
Beneficiary's  prior written  consent (which consent may be given or withheld in
Beneficiary's sole and absolute  discretion (and, if given, under such terms and
conditions  as  Beneficiary,  in its  sole  and  absolute  discretion,  may deem
appropriate  under  the  circumstances  then  existing),  grant,  convey,  sell,
exchange,  assign,  lease,  encumber,  option,  grant a right of first  refusal,
contribute to a partnership, joint venture, corporation or other legal entity or
otherwise  transfer or dispose of (whether  directly or  indirectly  and whether
voluntarily,  involuntarily  or by operation  of law) the Trust  Property or any
part thereof or any interest  therein,  or enter into any  agreement or make any
arrangement  to do  any  of  the  foregoing  (individually  or  collectively,  a
"Transfer"). Any Transfer attempted or undertaken in violation of the provisions
of this section shall, at Beneficiary's option, be null and void and of no force
and effect  whatsoever,  and the same also shall constitute a default  hereunder
(without  any   requirement  of  notice  or   opportunity  to  cure)   entitling
Beneficiary,  at its option,  to avail itself of any and all rights,  powers and
remedies provided therefor in this Deed of Trust, or under the Note or under any
other  instrument  relating  thereto,  or at Law or in  equity.  Consent  to any
particular  Transfer  shall not be deemed to be consent to any  further or other
Transfer. Whether or not Beneficiary has consented to any Transfer,  Beneficiary
may deal with  Trustor's  successor-in-interest  (with  respect  to this Deed of
Trust  and the  indebtedness  secured  hereby)  in the same  manner  as with the
Trustor  herein  named  without in any way  vitiating or  discharging  Trustor's
liability  hereunder or for the  indebtedness.  Beneficiary  may  condition  its
consent to any Transfer upon receipt of fees and/or  modifications  to the terms
of the  indebtedness  (including,  without  limitation,  changes  to the rate of
interest,  maturity  date and size  and  manner  of  repayment),  to the  extent
permitted by law. All Transfers  consented to hereunder  shall be evidenced by a
written  instrument,  duly and properly executed and acknowledged by each of the
parties  thereto  and,  if  requested  by  Beneficiary,  in  form  suitable  for
recording. No Transfer,  whether or not undertaken in violation of this section,
shall release  Trustor from any of its  obligations  under this Deed of Trust or
the Note,  the Loan  Agreement,  or any  other  security  document  or reduce or
diminish the same in any way.

         25. Legal  Actions.  Trustee may, but shall be under no  obligation  or
duty to, appear in or defend any action or  proceeding  purporting to affect the
security  hereof or the rights or powers of Beneficiary  or Trustee.  If Trustee
shall take such action at the request of Beneficiary,  it shall be paid therefor
in accordance with its established  fees and charges and shall be reimbursed for
its costs and expenses actually incurred, including attorney's fees.

         26. Miscellaneous.  The Trust created hereby is irrevocable by Trustor.
Trustee accepts this Trust when this Trust Deed, duly executed and acknowledged,
is made a public record as provided by law, but  acceptance is not required as a
condition  to the  validity  hereof,  and  this  Trust  Deed is  effective  upon
delivery.  Trustee shall not  be obligated to notify any party hereto of pending
sale  under any other  Trust  Deed,  or of any  action  or  proceeding  in which

                                      -14-
<PAGE>



Trustor, Beneficiary or Trustee shall be a party, except as required by law, and
Trustor waives any  requirements of presentment,  demand for payment,  notice of
nonpayment or late payment,  protest,  notice of protest, notice of dishonor and
all other similar  formalities.  Trustor  further waives all right Trustor might
otherwise  have to require  Trustee  and/or  Beneficiary  to proceed  against or
exhaust  the  assets  encumbered  hereby  or by any  other  security  instrument
securing any of the indebtedness due Beneficiary,  or to pursue any other remedy
available to Beneficiary in any particular  manner or order,  and Trustor agrees
that Trustee and/or  Beneficiary may proceed against any security in such manner
and order as Beneficiary in its sole discretion may determine.  No remedy herein
conferred upon or reserved to Trustee or Beneficiary is intended to be exclusive
of any other remedy  herein or by law provided or  permitted,  but each shall be
cumulative and shall be in addition to every other remedy given hereunder or now
or hereafter  existing at law or in equity or by statute.  Every power or remedy
given hereunder and by any of the loan  instruments to Trustee or Beneficiary or
to  which  either  of  them  may  be  otherwise  entitled,   may  be  exercised,
concurrently or  independently,  from time to time and as often as may be deemed
expedient by Trustee or Beneficiary  and either of them may pursue  inconsistent
remedies.

         27.  No Merger  or  Extinguishment.  It is the  express  intention  and
agreement  of the  parties  that,  if  Beneficiary  shall at any time  hereafter
acquire  title to or any  interest in all or any portion of the Trust  Property,
including  but not Limited to any  interest  pursuant to an option  agreement or
purchase contract, then, until all of the indebtedness secured hereby shall have
been paid in full,  (a) the interests of  Beneficiary  hereunder and the lien of
this Deed of Trust  shall not be  extinguished  or merge or become  merged in or
with the estate or interests of  Beneficiary  as holder and owner of title to or
any interest in all or any portion of the Trust Property, regardless of how such
title was acquired  (including,  but not limited to, by foreclosure or trustee's
sale of a lien or  encumbrance  prior or subordinate to the lien of this Deed of
Trust),  (b) if Beneficiary is also the owner at that time of a leasehold estate
in the Trust Property, the leasehold estate of Beneficiary in the Trust Property
shall not be  extinguished  or merge or become  merged in or with the  estate or
interests of  Beneficiary as holder and owner of fee title to the Trust Property
and (c) until payment in full of all of the  indebtedness  secured  hereby,  the
various estates and interests of Beneficiary in the Trust Property,  the lien of
this Deed of Trust and the interests of Beneficiary  hereunder shall continue in
full  force and effect to the same  extent as if  Beneficiary  had not  acquired
title to or such other  interest  in the Trust  Property,  and the  indebtedness
secured hereby shall not be deemed extinguished, satisfied or discharged.

         28. Terminology. The word "Trustor" and the language of this instrument
shall,  where  there is more than one  Trustor,  be  construed  as plural and be
binding equally on Trustors. The obligations of Trustors hereunder and under the
Note secured  hereby shall be joint and several.  This Trust Deed applies to, is
binding  upon,  and inures to the benefit of all parties  hereto,  their  heirs,
executors, administrators,  successors and assigns. The term "Beneficiary" shall
include not only the original Beneficiary  hereunder,  but also any future owner
and holder of the note secured hereby.

         29. Severability.  If any provision hereof should be held unenforceable
or invalid,  in whole or in part, then such  unenforceable  or void provision or
part shall be deemed severable from the remaining provisions hereof and shall in
no way affect the validity of this Trust Deed.


                                      -15-
<PAGE>




         30.  Relationship of Parties.  Nothing  contained in this Deed of Trust
shall be construed as creating a partnership, joint venture,  principal-agent or
other type of relationship  between Trustor and Beneficiary  (other than that of
borrower-lender) or cause Beneficiary to be responsible in any way for the debts
or obligations of Trustor.

         31. Interest Rate.  Notwithstanding  any provisions  herein,  or in the
Note  secured  hereby,   or  in  any  related   agreement  between  Trustor  and
Beneficiary,  the total  liability  of  Trustor  for  payments  in the nature of
interest  shall not exceed  the  limits now  imposed by the laws of the State of
California.  Trustor agrees that all costs,  fees,  taxes,   expenses,  charges,
goods, compensating balance requirements,  things in action or any other sums of
money or  things  of  value  (collectively  the  "Additional  Sums")  paid by or
contracted  to be paid by  Trustor  to or for the  benefit  of  Beneficiary,  or
received directly or indirectly by Beneficiary,  whether pursuant to the Note or
the Deed of Trust or otherwise with respect to this  transaction or indebtedness
evidenced by the Note, or with respect to the security  therefor,  which,  under
the law of the State of California  may be deemed to be interest with respect to
such indebtedness, shall, for the purpose of any laws of the State of California
which may limit the maximum  rate of interest to be charged with respect to such
indebtedness,  be payable by Trustor  as, and shall be deemed to be,  additional
interest,  and for such purposes the agreed upon and contracted rate of interest
described  in the Note  secured  hereby  shall be deemed to be  increased by the
Additional Sums.

         32.  Notices.  Trustor  requests  that a copy  of any  Notice  of  Sale
hereunder be mailed to him at his mailing  address set forth below.  Any notices
required to be given to Trustor by mailing  shall be effective and complete when
mailed  and shall be mailed to the  address  set forth  below.  Lack of  receipt
thereof shall in no way invalidate the notice or any sale by Trustee  hereunder.
If Trustor desires to change the address to which notices shall be mailed,  such
change shall be accomplished by a request as provided by law.

         33.  Trustee's  Fees and  Charges.  Trustee  shall be paid for all acts
performed by it  hereunder  or in  connection  herewith in  accordance  with its
established  fees and  charges.  All  such  fees  and  charges  shall be paid by
Trustor,  and if  Beneficiary  shall  advance any such fees or charges,  Trustor
shall reimburse  Beneficiary  for same on demand,  Payment thereof is secured by
this Trust Deed.

         34. Defects in Documents.  Trustor will,  upon request of  Beneficiary,
promptly  correct any defect,  error or omission  which may be discovered in the
contents of this Trust Deed or in the execution or  acknowledgment  hereof,  and
will  execute,  acknowledge   and deliver such further  instruments  and do such
further  acts  as  may  be  necessary  or as  may  be  reasonably  requested  by
Beneficiary;  to carry out more  effectively the purposes of this Trust Deed; to
subject  to the lien and  security  interest  hereby  created  any of  Trustor's
properties, rights or interest covered or intended to be covered hereby; and, to
perfect and maintain such lien and security interest.

         35. Separate  Taxation of Trust  Property.  For the purpose of securing
separate  taxation and  assessment  of the premises  herein  described,  Trustor
shall, if not already accomplished and if obtainable, obtain a separation of the
Trust Property which is realty from all other adjacent lands.


                                      -16-
<PAGE>




         36. Change in Address.  Trustor shall keep  Beneficiary  advised at all
times of the address or addresses of Trustor's residence, place of business, and
if  more  than  one,   Trustor's  chief  executive  office,  and  Trustor  shall
immediately advise Beneficiary of any change in any such address.

         37.  Extension.  The Note  secured  by this  Deed of Trust  contains  a
provision for the extension of the maturity date.

INNOVATIVE MICRO TECHNOLOGY, INC., a Delaware corporation


/s/ John S. Foster
_________________________________
John S. Foster, Chief Executive Officer, President and Chairman of the Board


/s/ Peter T. Altavilla
_________________________________
Peter T. Altavilla, Chief Financial Officer, Controller and Secretary
































                                      -17-
<PAGE>


                            FORM OF REQUEST TO CONVEY


THE PROMISSORY  NOTE OR NOTES,  AND ANY EVIDENCES OF FURTHER  AND/OR  ADDITIONAL
ADVANCES MUST BE PRESENTED WITH THIS REQUEST:

Walnut Creek, California,

Date______________________

To INVESTORS YIELD, INC., a California Corporation Trustee:

You are hereby authorized and requested to execute a reconveyance  hereunder and
deliver the same to:

------------------------------------------------------------------------------
Trustee

------------------------------------------------------------------------------
Address

____________________________________________Regarding Order #___________________
Attention

The undersigned hereby certifies that they are `the owner and holder of the debt
mentioned in said deed of trust by recorded assignment.

Beneficiary:

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

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







                                      -18-
<PAGE>



                                   EXHIBIT "A"

That portion of Ranchos Los Dos Pueblos,  in the County of Santa Barbara,  State
of California, described as follows:

Beginning at the Southeasterly corner of the tract of land described in the deed
to Raytheon Manufacturing Company,  recorded February 28, 1957 as Instrument No.
4219 in Book 1432, Page 370 of Official Records, records of said County, being a
point on the  Northerly  line of Hollister  Avenue,  as shown on a map of survey
filed in Book 24 at Page 52 of Record of  Survey,  in the  Office of the  County
Recorder of said County;  thence leaving said Northerly line of Hollister Avenue
and  following  along the Easterly line of said  Raytheon  Tract of land,  North
3(0)22' 25" West,  507.70 feet to a point from which the  Northeasterly  corner.
thereof bears North 3(degree) 22' 25" West,  306.84 feet;  thence,  leaving said
Easterly line of said Raytheon Tract of land parallel with the Northerly line of
said Hollister  Avenue and distant 500.00 feet Northerly  therefrom  measured at
right angles thereto, North 76(degree) 38' East, 70.29 feet; thence,  continuing
parallel with the  Northerly  line of Hollister  Avenue and distant  500.00 feet
Northerly therefrom measured at right angles thereto,  North 74(degree) 19' East
at 532.75 feet the  Southwesterly  corner of the tract of land  described in the
deed to Fulton-Ventura Corporation, a Nevada Corporation, recorded July 21, 1958
as Instrument No. 17238 in Book 1541 at Page 61 of Official Records,  records of
said  County,  932.75 feet to the  Southeasterly  corner of said last  mentioned
tract  of land on the  Westerly  line of La  Patera  Road 60 feet in  width,  as
described  in the deed to County of Santa  Barbara,  recorded in Book 39 at Page
385 of Deeds, records of said County; thence along said Westerly line of said La
Patera Road, South 10(degree) 51' 30" East, 501.78 feet to the Northerly line of
Hollister  Avenue;  thence along said Northerly line, South 74(degree) 19' West,
900.65 feet to an angle point therein;  thence South 76(degree) 38' West, 162.50
feet to the point of beginning.

EXCEPTING  therefrom that portion thereof described in the deed to the County of
Santa Barbara, recorded December 7, 1962 as Instrument No. 51965 in Book 1966 at
Page 463 of Official Records.

Also excepting  therefrom one-half of any and all oil, gas and other hydrocarbon
substances  within  and under the above  described  property  more than 500 feet
beneath  the  surface  thereof  and/or  producible  therefrom  or  therethrough,
without,  however,  any surface  rights or right of surface  entry with  respect
thereto, as reserved in deed from James Williams,  Jr., as. Executor of the Will
of James G. Williams, deceased, recorded January 27, 1961 as Instrument No. 2800
in Book 1820, Page 50 of Official Records.

APN#73-050-20




                                      -19-
<PAGE>



                                   EXHIBIT "B"


A Deed of Trust to secured an indebtedness in the original amount shown below:

Amount:           $7,625,000.00
Dated:            November 18, 1999
Trustor:          Applied Magnetics Corporation, a Delaware corporation
Trustee:          Bar K, Inc., a California corporation
Beneficiary:      Gold Mountain Financial Institution, Inc.,
                         a California corporation
Recorded:         November 24, 1999, as Instrument No. 99-0093081
Original Loan #:  Not shown
Affects:          The herein described land and other land

A junior Deed of Trust in favor of the Professional  Persons as described in and
pursuant to the Order and/or Debtor's Third Amended Plan of Reorganization under
Chapter 11 of the  Bankruptcy  Code dated as of September 24, 2001, as modified.
Said  Deed of Trust  shall be  recorded  subsequent  to,  and shall at all times
remain junior to, Owens Financial Group's Deed of Trust.















                                      -20-
<PAGE>
STATE OF CALIFORNIA

COUNTY OF SANTA BARBARA

On this 21 day of  December in the year of 2001  before me, the  undersigned,  a
Notary Public in and for said State, personally appeared

John S. Foster and Peter T. Altavilla

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         MARGO L WAGNER
         NOTARY PUBLIC



STATE OF __________________

COUNTY OF________________

On this _____ day of___________ in the year of _, 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(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 __________________________
         NOTARY PUBLIC

THIS  CERTIFICATE  IS  ATTACHED  TO THE  DOCUMENT  IDENTIFIED  AS DEED OF TRUST,
SECURITY AGREEMENT & ASSIGNMENT OF LEASES & RENTS Dated December 20, 2001