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The screen snapshots below show examples of how to set the necessary attributes with AttributeSet nodes.

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Once you have created your instances, you can then override the material if you so desire using the standard Katana mechanisms for applying a material to a Scene Graph location.  Note that any material assigned at the instance source location will be ignored.  This is to allow for overrides on the instance locations.  However, you will only be able to override the materials at the root of the instance source location.  Overrides to the materials on child locations of an instance source will need to be done with user attributes. 

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