<SUBMISSION>
<ACCESSION-NUMBER>0000910680-06-000904
<TYPE>8-K
<PUBLIC-DOCUMENT-COUNT>4
<PERIOD>20060831
<ITEMS>1.01
<ITEMS>9.01
<FILING-DATE>20060901
<DATE-OF-FILING-DATE-CHANGE>20060901
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>JACLYN INC
<CIK>0000052969
<ASSIGNED-SIC>3100
<IRS-NUMBER>221432053
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>0630
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>8-K
<ACT>34
<FILE-NUMBER>001-05863
<FILM-NUMBER>061071377
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>635 59TH STREET
<CITY>WEST NEW YORK
<STATE>NJ
<ZIP>07093
<PHONE>2018689400
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>5801 JEFFERSON STREET
<CITY>WEST NEW YORK
<STATE>NJ
<ZIP>07093
</MAIL-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>f8k08312006.htm
<DESCRIPTION>FORM 8-K
<TEXT>
<HTML>
<HEAD>
<TITLE></TITLE>
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<BODY>


<!-- MARKER FORMAT-SHEET="Head Major Center Bold" FSL="Default" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>UNITED STATES <BR>SECURITIES AND
EXCHANGE COMMISSION <BR>Washington, D.C. 20549 </FONT></H1>

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     <P ALIGN=CENTER>_________________ </P>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold" FSL="Default" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>FORM 8-K </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold" FSL="Default" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>CURRENT REPORT <BR>Pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934 </FONT></H1>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Date of Report (Date of
earliest event reported): August 31, 2006 </FONT></P>



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     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="3"></FONT></TH></TR>
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 <TD ALIGN="CENTER" WIDTH="100%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>JACLYN, INC. </B></FONT> <HR SIZE="1" WIDTH="100%" COLOR="Black"></TD></TR>
<TR VALIGN="TOP">
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(Exact Name of Registrant as Specified in its Charter) </FONT></TD></TR>
</TABLE>
<BR>

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<TR VALIGN=Bottom>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH="33%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>Delaware</U></FONT></TD>
     <TD WIDTH="33%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>1-5863</U></FONT></TD>
     <TD WIDTH="34%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>22-1432053</U></FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(State or Other Jurisdiction</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Commission</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(IRS Employer</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>of Incorporation)</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>File No.)</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Identification No.)</FONT></TD></TR>
</TABLE>
<BR>
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     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH="25%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">635 59<SUP>TH </SUP>Street </FONT></TD>
     <TD WIDTH="65%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH="10%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>West New York, New Jersey</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>07093</FONT></TD></TR>
<TR>
     <TD ALIGN="CENTER"><HR NOSHADE COLOR=#000000 SIZE=1></TD>
     <TD ALIGN="CENTER"><HR NOSHADE COLOR=#000000 SIZE=1></TD>
     <TD ALIGN="CENTER"><HR NOSHADE COLOR=#000000 SIZE=1></TD></TR>
<TR VALIGN=top>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Address of Principal Executive Offices)</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Zip Code)</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD></TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Registrant&#146;s
telephone number, including area code:&nbsp;&nbsp;(201) 868-9400  </FONT></P>

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<TR VALIGN="BOTTOM">
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="3"></FONT></TH></TR>
<TR VALIGN="TOP">
 <TD ALIGN="CENTER" WIDTH="100%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Not Applicable</FONT> <HR SIZE="1" WIDTH="100%" COLOR="Black"></TD></TR>
<TR VALIGN="TOP">
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(Former Name or Former Address, if Changed Since Last Report) </FONT></TD></TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Check the appropriate box below if
the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the
registrant under any of the following provisions: </FONT></P>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> <IMG SRC="ballot.jpg" HEIGHT="15" WIDTH="15">  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)  </FONT></TD>
</TR>
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<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)  </FONT></TD>
</TR>
</TABLE>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> <IMG SRC="ballot.jpg" HEIGHT="15" WIDTH="15"> </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))  </FONT></TD>
</TR>
</TABLE>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><IMG SRC="ballot.jpg" HEIGHT="15" WIDTH="15"></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))  </FONT></TD>
</TR>
</TABLE>
<BR>


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<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Item 1.01. Entry into a
Material Definitive Agreement.</B> </FONT> </H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Jaclyn,
Inc. (the &#147;<U>Company</U>&#148;) previously announced it had entered into an
Agreement of Lease dated as of September 1, 2006 with 195 Spring Valley Associates, LLC
(&#147;<U>Spring Valley</U>&#148;), under which the Company has leased an office building
(including the underlying land and other improvements) located in Maywood, New Jersey (the
<U>&#147;Leased Premises</U>&#148;), to which the Company intends to relocate its
executive offices later this year. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
August 31, 2006, Spring Valley purchased the Leased Premises. At the closing of the
purchase, the Company provided Spring Valley with $2,200,000 in mortgage financing, which
is secured by a first priority mortgage in favor of the Company on the land, office
building, and other customary rights of the mortgagor. A copy of the mortgage note of
Spring Valley and the mortgage granted by Spring Valley in favor of the Company are
attached to this Current Report on Form 8-K as Exhibits 10.01 and 10.02, respectively. </FONT></P>

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<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Item 9.01. Financial
Statements and Exhibits.</B> </FONT> </H1>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Financial Statements of Businesses Acquired</U>. Not Applicable. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Pro Forma Financial Information</U>. Not Applicable. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Exhibits</U>. </FONT></P>



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<TR VALIGN="TOP">
<TD WIDTH="6%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U>Exhibit No.</U> </FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U>Description</U> </FONT></TD></TR>
<TR VALIGN="TOP">
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><BR></FONT></TD></TR>
<TR VALIGN="TOP">
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.01</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Mortgage dated as of August 31, 2006 of Landlord in favor of the<BR>
Company.</FONT></TD></TR>
<TR VALIGN="TOP">
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><BR></FONT></TD></TR>
<TR VALIGN="TOP">
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.02</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Promissory Note dated as of August 31, 2006 of Landlord in favor of<BR>
the Company.<BR>
</FONT></TD></TR>
<TR VALIGN="TOP">
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
</TABLE>


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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2">SIGNATURES </FONT> </H1>

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<FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant
to the requirements of Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned hereunto duly authorized. </FONT> </P>



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     <TD ALIGN="LEFT" WIDTH="50%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Date: September 1, 2006</FONT></TD>
     <TD ALIGN="LEFT" WIDTH="50%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">JACLYN, INC.</FONT></TD></TR>
<TR VALIGN="TOP">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><BR><BR>By: <U>/s/ Robert Chestnov</U><BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Robert Chestnov, President </FONT></TD></TR>
</TABLE>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2">EXHIBIT INDEX </FONT> </P>



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<TR VALIGN="TOP">
<TD WIDTH="6%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U>Exhibit No.</U> </FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U>Description</U> </FONT></TD></TR>
<TR VALIGN="TOP">
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><BR></FONT></TD></TR>
<TR VALIGN="TOP">
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.01</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Mortgage dated as of August 31, 2006 of Landlord in favor of the<BR>
Company.</FONT></TD></TR>
<TR VALIGN="TOP">
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><BR></FONT></TD></TR>
<TR VALIGN="TOP">
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.02</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Promissory Note dated as of August 31, 2006 of Landlord in favor of<BR>
the Company.<BR>
</FONT></TD></TR>
<TR VALIGN="TOP">
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
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<FILENAME>ballot.jpg
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<FILENAME>ex10_01-f8k08312006.htm
<DESCRIPTION>EXHIBIT 10.01
<TEXT>
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<!-- MARKER FORMAT-SHEET="Head Right" FSL="Default" -->
<P ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>Exhibit 10.01</B></U> </FONT> </P>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold" FSL="Default" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>MORTGAGE </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Left" FSL="Default" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>This Mortgage is made on
August 31, 2006 </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>BETWEEN the Borrower(s) <B>195 SPRING
VALLEY ASSOCIATES, LLC,</B> a New Jersey limited liability company with an address at 155
North Dean Street, Englewood, New Jersey, </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>AND the Lender(s) <B>JACLYN, INC</B>.
with an address at 5801 Jefferson Street, West New York, New Jersey. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>WHEREAS,
</B>the Borrower is the owner of 195-197 West Spring Valley Avenue, Maywood, New Jersey
(hereinafter the &#147;Property&#148;) described in this Mortgage; and  </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>WHEREAS</B>,
the Borrower has entered into a Promissory Note of even date herewith, in the principal
amount of Two Million Two Hundred Thousand Dollars ($2,200,000) (the &#147;Note&#148;),
which evidences a loan (the &#147;Loan&#148;) made by Lender to the Borrower, on the
Maturity Date; and  </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>WHEREAS</B>,
the Borrower has agreed to grant security to the Lender for all of Borrower&#146;s
obligations under the Note; and  </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>WHEREAS</B>,
in order to induce the Lender to accept the Note from the Borrower, the Borrower has
agreed to execute and deliver this Mortgage as additional collateral security for the
payment of Borrower&#146;s obligations;  </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>NOW
THEREFORE</B>, for the securing of the payment by Borrower of all amounts owing under the
Note, and all interest accrued thereon, the Borrower has mortgaged and does mortgage to
the Lender ALL that certain property located in the Borough of Maywood, County of Bergen
and State of New Jersey commonly known as 195-197 West Spring Valley Avenue and more
fully described on <B>Schedule A </B>attached hereto. The Property includes: (a) the
land; (b) all buildings that are now, or will be, located on the land; (c) all fixtures
that are now, or will be, attached to the land or building(s); (d) all condemnation
awards and insurance proceeds relating to the land and building(s); and (e) all other
rights that the Borrower has or will have as the owner of the Property.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Rights
Given to the Lender</B>. The Borrower mortgages the Property to the Lender. This means
that the Borrower gives the Lender those rights stated in this Mortgage and also those
rights the law gives to lenders who hold mortgages on real property. When the Borrower
pays all amounts due to the Lender under the Note and this Mortgage, the Lender&#146;s
rights under this Mortgage will end. The Lender will then cancel this Mortgage at the
Lender&#146;s expense.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Promises</B>.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          The
Borrower makes the following promises to the Lender:  </FONT></P>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1.  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;<U>Note
and Mortgage</U>. To comply with all of the terms of the Note and this
                    Mortgage.  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2.  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;<U>Payments</U>.
To make all payments required by the Note and this Mortgage.  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3.  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;<U>Ownership</U>.
The Borrower warrants title to the Property (N.J.S.A. 46:9-2).                     This
means the Borrower owns the Property and will defend its ownership against
                    all claims.  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4.  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;<U>Liens
and Taxes</U>. The Borrower will pay all liens, taxes, assessments, and
                    other government charges made against the Property when due. The
Borrower will                     not claim any deduction from the taxable value of the
Property because of this                     Mortgage. The Borrower will not claim any
credit against the principal and                     interest payable under the Note and
this Mortgage for any taxes paid on the                     Property.  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>5.  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;<U>Insurance</U>.
The Borrower must maintain extended coverage insurance on the
                    Property. The insurance companies, policies, amounts and types of
coverage must                     be acceptable to the Lender. The Borrower will notify
the Lender in the event of                     any substantial loss or damage. The Lender
may then settle the claim on the                     Borrower&#146;s behalf if the
Borrower fails to do so. All payments from the                     insurance company must
be payable to the Lender under a &#147;standard mortgage                     clause&#148; in
the insurance policy. The Lender may use any proceeds to repair                     and
restore the Property or to reduce the amount due under the Note and this
                    Mortgage. This will not delay the due date for any payment under the
Note and                     this Mortgage.  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>6.  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;<U>Repairs</U>.
The Borrower will keep the Property in good repair, neither                     damaging
nor abandoning it. The Borrower will allow the Lender to inspect the
                    Property upon reasonable notice.  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>7.  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;<U>Statement
of Amount Due</U>. Upon request of the Lender, the Borrower will
                    certify to the Lender in writing: (a) the amount due on the Note and
this                     Mortgage, and (b) whether or not the Borrower has any defense to
the obligations                     under the Note and this Mortgage.  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>8.  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;<U>Rent</U>.
The Borrower will not accept rent for more than one month in                     advance.  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>9.  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;<U>Lawful
Use</U>. The Borrower will use the Property in compliance with all
                    laws, ordinances and other requirements of any governmental
authority.  </FONT></TD>
</TR>
</TABLE>
<BR>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Eminent
Domain</B>. All or part of the Property may be taken by a government entity for public
use. If this occurs, the Borrower agree that any compensation be given to the Lender. The
Lender may use this to repair and restore the Property or to reduce the amount owed on
the  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Note and this  Mortgage.  This will
not delay the due date for any further payment due the Note and this Mortgage.  Any
remaining balance will be paid to the Borrower.  </FONT></P>




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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Payments
Made for Borrower(s)</B>. If the Borrower does not make all of the repairs or payments as
agreed in this Mortgage, the Lender may do so for it. The cost of these repairs and
payments will be added to the principal, will bear interest at the same rate provided in
the Note and will be repaid to the Lender upon demand.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Events
of Default</B>. Each of the following shall constitute an event of default under this
Mortgage (each, an &#147;<B>Event of Default</B>&#148;):  </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=9%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=91%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
If
any representation or warrant made by any Borrower in connection with the Loan or herewith
shall prove to have been false, incorrect or misleading in any substantial and/or material
respect on the date of which same were made; </FONT></TD>
</TR>
</TABLE>
<BR>

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               <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
                    <TR VALIGN=TOP>
                    <TD ALIGN=RIGHT WIDTH=6%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>A. </FONT></TD>
                    <TD ALIGN=LEFT WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
                    <TD WIDTH=91%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                    Borrower shall have failed to make any payment of any installment of principal
                    or interest on the Mortgage Note on its due date, after the applicable grace
                    period; </FONT></P></TD>
                    </TR>
                    </TABLE>
                    <BR>

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               <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
                    <TR VALIGN=TOP>
                    <TD ALIGN=RIGHT WIDTH=6%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>B. </FONT></TD>
                    <TD ALIGN=LEFT WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
                    <TD WIDTH=91%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                    Borrower shall have failed to duly observe or perform any covenant, condition or
                    agreement on the part of the Borrower pursuant to the terms of the Mortgage and
                    Note; </FONT></P></TD>
                    </TR>
                    </TABLE>
                    <BR>

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                    <TR VALIGN=TOP>
                    <TD ALIGN=RIGHT WIDTH=6%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>C. </FONT></TD>
                    <TD ALIGN=LEFT WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
                    <TD WIDTH=91%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                    Borrower shall have transferred or caused to have been transferred, title to or
                    possession of any interest in the Property, or any part thereof, to any party
                    without the express prior written consent of the Lender; </FONT></P></TD>
                    </TR>
                    </TABLE>
                    <BR>

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                    <TR VALIGN=TOP>
                    <TD ALIGN=RIGHT WIDTH=6%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>D. </FONT></TD>
                    <TD ALIGN=LEFT WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
                    <TD WIDTH=91%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                    Borrower shall have entered into a secondary financing not previously approved
                    by the Lender or shall have consented to the placing of any lien on the
                    property; </FONT></P></TD>
                    </TR>
                    </TABLE>
                    <BR>

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                    <TR VALIGN=TOP>
                    <TD ALIGN=RIGHT WIDTH=6%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>E. </FONT></TD>
                    <TD ALIGN=LEFT WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
                    <TD WIDTH=91%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                    Borrower becomes insolvent or admits in writing its inability to pay its debts
                    as they mature; or applies for, consents to, or acquiesces in the appointment of
                    a trustee or receiver for any of its property; or in the absence of an
                    application, consent, or acquiescence a trustee or receiver is appointed for it
                    or a substantial part of its property and is not discharged within thirty (30)
                    days; or it otherwise commits an act of bankruptcy; or any bankruptcy,
                    reorganization, debt arrangement, or other proceeding under any bankruptcy or
                    insolvency law, or any dissolution or liquidation proceeding, is instituted by
                    or against it and if instituted is consented to or acquiesced in by it or
                    remains for undismissed for a period of thirty (30) days; </FONT></P></TD>
                    </TR>
                    </TABLE>
                    <BR>

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               <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
                    <TR VALIGN=TOP>
                    <TD ALIGN=RIGHT WIDTH=6%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>F. </FONT></TD>
                    <TD ALIGN=LEFT WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
                    <TD WIDTH=91%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                    Any government, board, agency, department, or commission takes possession or
                    control of a substantial part of the property of the Borrower and such
                    possession or control continues for thirty (30) days, unless Borrower is
                    diligently pursuing a directive which will result in its obtaining possession
                    and control of the property; </FONT></P></TD>
                    </TR>
                    </TABLE>
                    <BR>

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                    <TR VALIGN=TOP>
                    <TD ALIGN=RIGHT WIDTH=6%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>G. </FONT></TD>
                    <TD ALIGN=LEFT WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
                    <TD WIDTH=91%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                    A final judgment against any Borrower in excess of $10,000.00 which is not being
                    contested in good faith and remains undischarged for thirty (30) days; or </FONT></P></TD>
                    </TR>
                    </TABLE>
                    <BR>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD ALIGN=RIGHT WIDTH=6%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>H. </FONT></TD>
<TD ALIGN=LEFT WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=91%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>If
Borrower dissolves or ceases operations.  </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Payment
Due Upon Default</B>. &nbsp;&nbsp;&nbsp;&nbsp;If the Lender declares that the Borrower is
in default, the Borrower must immediately pay the full amount of all unpaid principal,
interest, other amounts due on the Note and this Mortgage and the Lender&#146;s costs of
collection and reasonable attorney&#146;s fees.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Lender&#146;s
Rights Upon Default</B>. &nbsp;&nbsp;&nbsp;&nbsp;If the Lender declares that the Note and
this Mortgage are in default, the Lender will have all rights given by law or set forth
in this Mortgage. This includes the right to do any one or more of the following:  </FONT></P>

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                    <TR VALIGN=TOP>
                    <TD ALIGN=RIGHT WIDTH=6%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1. </FONT></TD>
                    <TD ALIGN=LEFT WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
                    <TD WIDTH=91%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                    take possession of and manage the Property, including collection of rents and
                    profits; </FONT></P></TD>
                    </TR>
                    </TABLE>
                    <BR>

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                    <TR VALIGN=TOP>
                    <TD ALIGN=RIGHT WIDTH=6%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2. </FONT></TD>
                    <TD ALIGN=LEFT WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
                    <TD WIDTH=91%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                    have a court appoint a receiver to accept rent for the Property; </FONT></P></TD>
                    </TR>
                    </TABLE>
                    <BR>

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                    <TR VALIGN=TOP>
                    <TD ALIGN=RIGHT WIDTH=6%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3. </FONT></TD>
                    <TD ALIGN=LEFT WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
                    <TD WIDTH=91%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                    start a court action, known as foreclosure, which will result in a sale of the
                    Property to reduce the Borrower&#146;s obligations under the Note and this
                    Mortgage; and </FONT></P></TD>
                    </TR>
                    </TABLE>
                    <BR>

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                    <TR VALIGN=TOP>
                    <TD ALIGN=RIGHT WIDTH=6%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4. </FONT></TD>
                    <TD ALIGN=LEFT WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
                    <TD WIDTH=91%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                    sue the Borrower for any money owed to the Lender. </FONT></P></TD>
                    </TR>
                    </TABLE>
                    <BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Notices</B>.&nbsp;&nbsp;&nbsp;&nbsp;All
notices must be in writing and personally delivered or sent by certified           mail,
return receipt requested, to the addresses given in this Mortgage. Address
          changes may be made upon notice to the other party.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>No
Waiver by Lender</B>. &nbsp;&nbsp;&nbsp;&nbsp;The Lender may exercise any right under
this Mortgage or under any law, even if Lender has delayed in exercising that right or
has agreed in an earlier instances not to exercise that right. The Lender does not waive
its right to declare that the Borrower is in default by making payments or incurring
expenses on the Borrower&#146;s behalf.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Each
Person Liable</B>. &nbsp;&nbsp;&nbsp;&nbsp;This Mortgage is legally binding upon each
Borrower and all who succeed to their responsibilities (such as heirs and executors). The
Lender may enforce any of the provisions of the Note and this Mortgage against any one or
more of the Borrowers who sign this Mortgage.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Environmental
Matters</B>. &nbsp;&nbsp;&nbsp;&nbsp;The Borrower represents and warrants to the Lender
that on and as of the date hereof:  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To
the best of the its knowledge, after due inquiry and investigation, no lien           has
been attached to any revenues or any real or personal property owned by the
          Borrower and located in the State of New Jersey, including, but not limited to,
          the Property, as a result of the chief executive of the New Jersey Spill
          Compensation Fund expending monies from said fund to pay for           &#147;Damages,&#148; as
such term is defined in N.J.S.A. 58:10-23.11g and/or           &#147;Cleanup and Removal
Costs,&#148; as such term is defined in N.J.S.A.           58:10-23.11b(d), arising from
an intentional or unintentional  </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>action or  omission of the  Borrower
 or  operator  of said real  property resulting in the releasing, spilling, pumping,
pouring, emitting, emptying or dumping of &#147;Hazardous Substances,&#148; as such term
is defined in N.J.S.A. 58:10-23.11b(k), into the waters of the State of New Jersey or
onto lands from which it might flow or drain into said waters or into waters outside the
jurisdiction of the State of New Jersey where damage may have resulted to the lands,
waters, fish, shellfish, wildlife, biota, air and other resources owned, managed, held in
trust or otherwise controlled by the State of New Jersey.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          None
of the real property owned and/or occupied by the Borrower and located in           the
State of New Jersey, including the Property, has been or is now being used           as a
&#147;Major Facility,&#148; as such term is defined in N.J.S.A.
          58:10-23.11b(l). The aforesaid real property, including but not limited to the
          Property, will not be used as a &#147;Major Facility.&#148; </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          The
Borrower has not received a summons, citation, directive, letter or other
          communication, written or oral, from the New Jersey Department of Environmental
          Protection and Energy (&#147;NJDEPE&#148;) concerning any intentional or
          unintentional action or omission on the Borrower&#146;s part resulting in the
          releasing, spilling, leaking, pumping, pouring, emitting, emptying or dumping
of           &#147;Hazardous Substances,&#148; as such term is defined in N.J.S.A.
          58:10-23.11b(k), into the waters of the State of New Jersey or onto lands from
          which it might flow or drain into said waters or into the waters outside the
          jurisdiction of the State of New Jersey resulting in damage to the lands,
          waters, fish, shellfish, wildlife, biota, air and other resources owned,
          managed, held in trust or otherwise controlled by the State of New Jersey.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          The
Borrower shall not use the Property for the purpose of generating,
          manufacturing, refining, producing, storing, treating, handling, transferring,
          processing, disposing or transporting &#147;Hazardous Substances&#148; as such
          term is defined in N.J.S.A. 58:10-23.11b(k) and N.J.A.C. 7:1-3.3.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          The
Borrower covenants and agrees that so long as any the Loan is outstanding,           the
Borrower will comply with the following covenants:  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          The
Borrower agrees to immediately notify the Lender, in writing, of (i) the
          discovery, discharge or release of any Hazardous Substance for which the
          Borrower is in any way responsible under the Spill Compensation and Control Act
          or any similar federal or state statute, and (ii) the use or proposed use of
the           Premises for a business having a Standard Industrial Classification Number
          within 22-39 inclusive, 46-49 inclusive, 51 or 76 as designated in the Standard
          Industrial Classification Manual prepared by the Office of Management and
Budget           in the Executive Office of the President of the United States or as a
          &#147;Major Facility&#148; as defined in N.J.S.A. 58:10-23.11b, its amendments
          or supplements thereto.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          If
the Borrower is presently an owner or operator of a &#147;Major           Facility&#148; in
the State of New Jersey, as such term is defined in N.J.S.A.           58:10-23.b(l), or
if the Borrower ever become such an owner or operator, then           the Borrower shall
furnish NJDEPE with all the information required by N.J.S.A.           58:10-23.11d.  </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          The
Borrower shall not cause or permit to exist, as a result of an intentional           or
unintentional action or omission on its part, a releasing, spilling, leaking,
          pumping, emitting, pouring, emptying or dumping of a &#147;Hazardous
          Substance,&#148; as such term is defined in N.J.S.A. 58:10-23.11b(k), into
          waters of the State of New Jersey or onto lands from which it might flow or
          drain into said waters or into waters outside the jurisdiction of the State of
          New Jersey where damage may result to the lands, waters, fish, shellfish,
          wildlife, biota, air and other resources owned, managed, held in trust or
          otherwise controlled by the State of New Jersey, unless said release, spill,
          leak, etc. is pursuant to and in compliance with the conditions of a permit
          issued by the appropriate federal or state governmental authorities.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          So
long as the Borrower shall own or operate any real property located in the
          State of New Jersey, which is used as a &#147;Major Facility,&#148; as such
term           is defined in N.J.S.A. 58:10-23.11b(l), the Borrower shall duly file or
cause to           be duly filed with the Director of the Division of Taxation in the New
Jersey           Department of the Treasury, a tax report or return and shall pay or make
          provision for the payment of all taxes due therewith, all in accordance with
and           pursuant to N.J.S.A. 58:10-23.11h.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          In
the event that there shall be filed a lien against the Premises by NJDEPE,
          pursuant to and in accordance with the provisions of N.J.S.A. 58:10-23.11f(f),
          as a result of the chief executive of the New Jersey Spill Compensation Fund
          having expended monies from said fund to pay for &#147;Damages,&#148; as such
          term is defined in N.J.S.A. 58:10-23.11g, and/or &#147;Cleanup and Removal
          Costs,&#148; as such term is defined in N.J.S.A. 58:10-23.b(d), arising from an
          intentional or unintentional action or omission of the mine, resulting in the
          releasing, spilling, pumping, pouring, emitting, emptying or dumping of
          &#147;Hazardous Substances,&#148; as such term is defined in N.J.S.A.
          58:10-23.11b(k) into the waters of the State of New Jersey or onto lands from
          which it might flow or drain into said waters or into waters outside the
          jurisdiction of the State of New Jersey where damage may result to the lands,
          waters, fish, shellfish, wildlife, biota, air and other resources owned,
          managed, held in trust or otherwise controlled by the State of New Jersey, then
          the Borrower shall, within thirty (30) days from the date that the Borrower is
          given notice that the lien has been placed against the Premises or within such
          shorter period of time in the event that the State of New Jersey has commenced
          steps to cause the Premises to be sold pursuant to the lien, either (a) pay the
          claim and remove the lien from the Premises, or (b) furnish (i) a bond
          reasonably satisfactory to the title insurance company and the Lender in the
          amount of the claim out of which the lien arises, (ii) a cash deposit in the
          amount of the claim out of which the lien arises, or (iii) other security
          satisfactory to the Lender in an amount sufficient to discharge the claim out
of           which the lien arises (subject to the Lender&#146;s agreement that the
          commitment of the title insurance company to affirmatively insure over or omit
          such claim shall constitute such satisfactory security).  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          Should
the Borrower cause or permit any intentional or unintentional action or
          omission resulting in the releasing, spilling, leaking, pumping, pouring,
          emitting, emptying or dumping of &#147;Hazardous Substances,&#148; as such term
          is defined in N.J.S.A. 58:10-23.11b(k), into the waters of the State of New
          Jersey or onto lands from which it might flow or drain into said waters or into
          the waters outside the jurisdiction of the State of New Jersey resulting in
          damage to the lands, waters, fish, shellfish, wildlife, biota, air or other
          resources owned, managed or held in trust or otherwise controlled by the State
          of New Jersey, without having obtained a permit issued by the appropriate
          governmental authorities, the Borrower shall promptly notify the Lender of such
          spill,  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>leak,  etc.  and shall clean up such
spill,  leak,  etc. in  accordance  with the provisions of the New Jersey Spill
Compensation and Control Act and any other applicable environmental statutes or
regulations, federal or state.  </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>No
Oral Changes</B>.&nbsp;&nbsp; This Mortgage can only be changed by an agreement in
writing signed by both the Borrower and the Lender.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Copy
Received</B>.&nbsp;&nbsp; The Borrower acknowledges receipt of a true copy of this
Mortgage without charge.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Signatures</B>.&nbsp;&nbsp;The
Borrower agrees to the terms of this Mortgage. If the Borrower is a
          corporation, its proper corporate officers sign and its corporate seal is
          affixed.  </FONT></P>


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     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2">WITNESS:</FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2">195 SPRING VALLEY ASSOCIATES, LLC</FONT></TH></TR>
<TR VALIGN="TOP">
     <TD WIDTH="50%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD WIDTH="50%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">A New Jersey limited liability company</FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><BR><BR></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>/s/ Matthew Cohen</U><BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Matthew Cohen</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><BR>By: <U>/s/ Howard Kent</U><BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;HOWARD KENT, Managing Member<BR><BR></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>/s/ Matthew Cohen</U><BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Matthew Cohen</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><BR>By: <U>/s/ Gregory Van Cleef</U><BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;GREGORY VAN CLEEF, Managing Member</FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
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     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
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     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
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     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
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<SEQUENCE>4
<FILENAME>ex10_02-f8k08312006.htm
<DESCRIPTION>EXHIBIT 10.02
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<P ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><U>Exhibit 10.02</U> </B></FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PROMISSORY NOTE </FONT></H1>



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     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$2,200,000.00</FONT></TH>
     <TH WIDTH="50%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">August 31, 2006<BR>
Englewood, N.J. 07631</FONT></TH></TR>
</TABLE>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;FOR
VALUE RECEIVED,<B> </B>the undersigned, <B>195 SPRING VALLEY ASSOCIATES, LLC</B>, a New
Jersey limited liability company, (the <B>&#147;Borrower&#148;</B>) promises to pay to the
order of <B>JACLYN, INC.</B>, having an office located at 5801 Jefferson Street, West New
York, New Jersey (the &#147;<B>Lender&#148;</B>) or at such other place as may be
designated in writing by the Lender, on or before August 31, 2016 (the &#147;<B>Maturity
Date</B>&#148;) the principal sum of <B>TWO MILLION TWO HUNDRED THOUSAND ($2,200,000.00)
DOLLARS</B> together with interest on the unpaid principal balance hereof computed at the
rate stated below. <B>THIS IS A BALLOON NOTE.</B> </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Interest
Rate</U>. The loan evidenced by this Note shall bear interest at a           fixed equal
to seven (7%) percent per annum. The loan shall bear interest from           the date of
closing until payment in full of the principal amount, said interest           to be
calculated on the basis of a 365-day year for the actual number of days
          involved. Interest only will be due and payable monthly for the first Thirty
Six           (36) months of the term. Principal and interest shall be amortized over
three           hundred (300) months and shall be payable in equal monthly installments
during           the final eighty-four (84) months of the term. All outstanding principal
and           interest shall be paid due in full on the Maturity Date, or upon sale of
the           Mortgaged Premises, whichever occurs first.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Security</U>.
This Note is subject to a Mortgage and Security Agreement made           by Borrower to
Lender of even date herewith in relation to the property known as           195-197 West
Spring Valley Avenue, Maywood, New Jersey as more particularly           described in
said Mortgage and sometimes referred to as the &#147;Mortgaged           Premises,&#148;,
and Borrower does hereby covenant and promise well and truly to           abide by and
comply with each and every covenant and condition set forth herein           and in said
Mortgage and Security Agreement.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;&nbsp;&nbsp;&nbsp;<U>Prepayment</U>.
The Note may be repaid in full or in part at any time without           penalty.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Late
Fee</U>. Without prejudice to any other provision herein, it is agreed           that in
the event any payment is not paid within fifteen (15) days of its due           date, a
&#147;late charge&#148; equal to five (5%) percent of the overdue           payment may
be charged by the Lender for the purpose of defraying the expenses           incident to
handling such delinquent payments. Such &#147;late charge,&#148; if           not
previously paid, shall be added to and become a part of the next succeeding
          monthly payment to be made hereunder.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Additional
Payments</U>. In addition to the payments provided for in           Paragraph 1 above,
Borrower promises to pay, on demand, any additional monies           required to be paid
or advanced by Borrower or paid or advanced on behalf of           Borrower by Lender
pursuant to the terms of the Mortgage and Security Agreement.  </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Default
Interest Rate</U>. From and after the maturity of this Note, either           according
to its terms or as a result of the declaration of maturity made by the           Lender,
whether by acceleration or otherwise, or from and after default in           payment
and/or default in the performance of any covenants or agreements           irrespective
of any declaration of maturity, the entire principal remaining           unpaid
hereunder, as well as all amounts owing pursuant to Paragraph 5 above           shall
bear interest at the default rate of seventeen (17%) percent per annum on           the
principal of this Note or the highest applicable lawful rate, whichever is           the
lesser, provided that there shall be no automatic reduction to the highest
          lawful rate as to any Borrower hereof barred by law from availing itself in any
          action or proceeding of the defense of usury or any Borrower barred or exempted
          from the operation of any law limiting the amount of interest that may be paid
          for the loan or use of money, or in the event this transaction, because of its
          amount or purpose for any other reason, is exempt from the operation of any
such           law.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Events
of Default</U>. Each of the following shall constitute an event of           default
under this Note (each, an &#147;<B>Event of Default</B>&#148;):  </FONT></P>

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               <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
                    <TR VALIGN=TOP>
                    <TD ALIGN=RIGHT WIDTH=6%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;A. </FONT></TD>
                    <TD ALIGN=LEFT WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
                    <TD WIDTH=91%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                    Any representation or warrant made by any Borrower herein or in the Mortgage and
                    Security Agreement shall prove to have been false, incorrect or misleading in
                    any substantial and/or material respect on the date of which same were made; </FONT></P></TD>
                    </TR>
                    </TABLE>
                    <BR>

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                    <TD ALIGN=RIGHT WIDTH=6%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;B. </FONT></TD>
                    <TD ALIGN=LEFT WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
                    <TD WIDTH=91%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                    Borrower shall have failed to make any payment of any installment of principal
                    or interest on the Note on its due date, after the applicable grace period; </FONT></P></TD>
                    </TR>
                    </TABLE>
                    <BR>

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                    <TD ALIGN=RIGHT WIDTH=6%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;C. </FONT></TD>
                    <TD ALIGN=LEFT WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
                    <TD WIDTH=91%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                    Borrower shall have failed to duly observe or perform any covenant, condition or
                    agreement on the part of the Borrower under the terms of the Mortgage and
                    Security Agreement; </FONT></P></TD>
                    </TR>
                    </TABLE>
                    <BR>

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                    <TD ALIGN=RIGHT WIDTH=6%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;D. </FONT></TD>
                    <TD ALIGN=LEFT WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
                    <TD WIDTH=91%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                    Borrower shall have transferred or caused to have been transferred, title to or
                    possession of any interest in the Mortgaged Premises, or any part thereof, to
                    any party without the express prior written consent of the Lender; </FONT></P></TD>
                    </TR>
                    </TABLE>
                    <BR>

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                    <TD ALIGN=RIGHT WIDTH=6%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;E. </FONT></TD>
                    <TD ALIGN=LEFT WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
                    <TD WIDTH=91%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                    Borrower shall have entered into a secondary financing not previously approved
                    by the Lender or shall have consented to the placing of any lien on the
                    Mortgaged Premises; </FONT></P></TD>
                    </TR>
                    </TABLE>
                    <BR>

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<TD ALIGN=RIGHT WIDTH=6%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;F.  </FONT></TD>
<TD ALIGN=LEFT WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=91%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Borrower
becomes insolvent or admits in writing its inability to pay its debts
                    as they mature; or applies for, consents to, or acquiesces in the
appointment of                     a trustee or receiver for any of its property; or in
the absence of an                     application, consent, or acquiescence a trustee or
receiver is appointed for it                     or a substantial part of its property
and is not discharged within thirty (30)                     days; or it otherwise
commits an act of bankruptcy; or any bankruptcy,                     reorganization, debt
&nbsp;arrangement, or other proceeding under any bankruptcy or insolvency law, or any
dissolution or liquidation proceeding, is instituted by or against it and if instituted
is consented to or acquiesced in by it or remains for undismissed for a period of thirty
(30) days;  </FONT></P></TD>
</TR>
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                    <TD ALIGN=RIGHT WIDTH=6%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;G. </FONT></TD>
                    <TD ALIGN=LEFT WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
                    <TD WIDTH=91%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                    Any government, board, agency, department, or commission takes possession or
                    control of a substantial part of the property of the Borrower and such
                    possession or control continues for thirty (30) days, unless Borrower is
                    diligently pursuing a directive which will result in its obtaining possession
                    and control of the Mortgaged Premises; </FONT></P></TD>
                    </TR>
                    </TABLE>
                    <BR>

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                    <TD ALIGN=RIGHT WIDTH=6%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;H. </FONT></TD>
                    <TD ALIGN=LEFT WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
                    <TD WIDTH=91%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                    A final judgment against any Borrower in excess of $10,000.00 which is not being
                    contested in good faith and remains undischarged for thirty (30) days; or </FONT></P></TD>
                    </TR>
                    </TABLE>
                    <BR>

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                    <TD ALIGN=RIGHT WIDTH=6%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;I. </FONT></TD>
                    <TD ALIGN=LEFT WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
                    <TD WIDTH=91%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                    If the Borrower dissolves or ceases operations. </FONT></P></TD>
                    </TR>
                    </TABLE>
                    <BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Remedies</U>.
In case one or more Events of Default shall have occurred, the           Lender shall
have the following rights and remedies:  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          The
Lender may, by written notice to the Borrower, declare all amounts           outstanding
(with accrued interest thereon) with interest at the Default Rate           from the date
of the Event of Default to be immediately due and payable,           whereupon the same
shall become due and payable forthwith without presentment,           demand, protest or
other notice of any kind, all of which are hereby expressly           waived by the
Borrower.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
B.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          To
take any action at law or in equity to collect the payments or to enforce the
          performance and observance of the obligations, agreements and covenants of the
          Borrower contained in this Note or the Mortgage and Security Agreement.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
C.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          To
institute an action of mortgage foreclosure, or take other action as the law
          may allow, at law or in equity, for the enforcement of this Note, and proceed
          therein to final judgment and execution for the entire unpaid balance of
          principal plus interest, plus costs of suit, interest and reasonable
          attorneys&#146; fees. In case of any sale of the Mortgaged Premises by virtue
of           judicial proceedings, the Mortgaged Premises may be sold in one parcel and
as an           entirety or in such parcels, manner or order as the Lender in its
reasonable           discretion may elect. The Lender shall be required to make any all
all tenants           parties defendant to a foreclosure proceeding.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
proceeds received from the sale or other disposition of the whole or any part of the
Mortgaged Premises shall be applied as follows: (i) first, to the payment of all fees,
costs and expenses incurred by the Lender in connection with such sale or disposition;
(ii) second, to the payment in full of the loan; and (iii) third, the balance, if any, of
such proceeds remaining after payment in full of the foregoing, to the Borrower or as a
court of competent jurisdiction may otherwise direct.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Without
limiting the foregoing, in exercising its remedies upon the occurrence of an Event of
Default, the Lender (i) shall not be responsible or liable for any shortage, discrepancy,
damage, loss or destruction of any part of the Mortgaged Premises regardless of the cause
thereof unless the same shall happen through its gross negligence or willful misconduct;
(ii) shall be entitled to the appointment (without notice and without proof of diminution
in value of the Mortgaged  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Premises) of
a receiver to take possession of all or any portion of the Mortgaged Premises
          and to exercise such powers as the court shall confer upon the receiver; and
          (iii) generally may perform all acts necessary or proper to carry out the
          intention of this Note, as fully and completely as though the Lender were the
          absolute owner of the Mortgaged Premises for all purposes, and the Borrower
          hereby ratifies and confirms all that the Lender shall do by virtue of this
          grant of power.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
rights and remedies of the Lender hereunder shall be in addition to every other right and
remedy now and hereafter provided by law; the rights and remedies of the Lender shall be
cumulative and not exclusive one of the other; the Lender may exercise the same at such
times, in such order, to such extent and as often as Lender deems advisable, and without
regard to whether the exercise of one precedes, concurs with, or succeeds the exercise of
another; no delay or omission by the Lender in exercising a right or remedy shall exhaust
or impair the same, or constitute a waiver of, or acquiescence in, the Event of Default;
and no waiver of an Event of Default by the Lender shall extend to or affect any other
Event of Default or impair any right or remedy with respect thereto. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Miscellaneous</U>. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Notices</U>.
All notices to the Borrower shall be directed to the address set           forth on the
first page hereof, or at such other address as the Borrower shall           designate to
the Lender, and all notices to the Lender shall be directed to the           address set
forth on the first page hereof, or at such other address as the           Lender shall
designate to the Borrower, and all notices shall be in writing and           shall be
mailed by certified mail, return receipt requested, telexed,           telecopied,
telegraphed, hand delivered or sent by Federal Express or other           similar
reputable overnight delivery service providing for receipt of delivery,           and
shall be deemed given when received.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Invalid
Provisions to Affect No Others</U>. In case any one or more of the           covenants,
agreements, terms or provisions contained in this Note shall be           invalid,
illegal or unenforceable in any respect, the validity of the remaining
          covenants, agreements, terms or provisions contained herein shall be in no way
          affected, prejudiced or disturbed thereby.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Successors
and Assigns; Gender; Number</U>. All of the grants, covenants,           terms,
provisions and conditions of this Note shall run with the land and bind           the
Borrower, its successors and permitted assigns, and shall inure to the           benefit
of the Lender, the successors and assigns of the Lender and all           subsequent
holders of this Note. As used herein the singular shall include the           plural and
vice versa and the masculine shall include the feminine, the feminine           the
masculine and the neuter the feminine and/or the masculine and vice versa,           as
the context requires.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Captions</U>.
The captions herein are inserted only for convenience of           reference and in no
way define, limit or describe the scope or intent of this           Note or any
particular paragraph or section hereof, nor the proper construction           hereof.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;E.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Governing
Law</U>. This Note shall be governed by and construed according to           the laws of
the State of New Jersey.  </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
F.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Usury</U>.
Anything herein to the contrary notwithstanding, the obligation of           the Borrower
under this Note shall be subject to the limitation that payments of           interest
shall not be required to the extent that receipt of any such payment by           the
Lender would be contrary to provisions of law applicable to the Lender           limiting
the maximum rate of interest which may be charged or collected by the           Lender.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
G.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Construction</U>.
The Borrower and the Lender hereby acknowledge that each           party and its counsel
have reviewed and revised this Note and that the normal           rule of construction to
the effect that any ambiguities are to be resolved           against the drafting party
shall not be employed in the interpretation of this           Note or any amendments,
exhibits or schedules hereto.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
H.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Waiver
of Jury Trial</U>. The undersigned Borrower hereby agrees to waive all           rights
to trial by jury of any issues raised under this Note or any other           agreement or
instrument signed by and between the undersigned and the Lender.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
I.<B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B><U>Legal
Fees</U>. The prevailing party in any legal action including in           relation to
collection under this Note or to protect or foreclose the security           given for
this Note, shall be entitled reasonable attorneys fees and expenses           for the
services of such counsel, whether or not suit be brought.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
J.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Modifications</U>.
This Note may not be changed orally, but only by an           agreement in writing and
signed by the party against whom enforcement of any           waiver, change,
modification or discharge is sought.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
K.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Validity
of Loan</U>. Anything herein to the contrary notwithstanding, if           from any
circumstances whatever fulfillment of any provision of this Note at the           time
performance of said provision shall be due shall involve transcending the           limit
of validity prescribed by the usury statutes of the State of New Jersey or           any
other law of the State of New Jersey, then <U>ipso</U><U>facto</U> the
          obligation to be fulfilled shall be reduced to the limit of such validity so
          that in no event shall exaction be possible under this Note in excess of the
          limit of such validity.  </FONT></P>


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     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2">WITNESS:</FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2">195 SPRING VALLEY ASSOCIATES, LLC</FONT></TH></TR>
<TR VALIGN="TOP">
     <TD WIDTH="50%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD WIDTH="50%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">A New Jersey limited liability company</FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><BR></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>/s/ Matthew Cohen</U><BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Matthew Cohen</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><BR>By: <U>/s/ Howard Kent</U><BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;HOWARD KENT,&nbsp;Managing Member<BR><BR></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>/s/ Matthew Cohen</U><BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Matthew Cohen</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><BR>By: <U>/s/ Gregory Van Cleef</U><BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;GREGORY VAN CLEEF,&nbsp;Managing Member</FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
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