<SUBMISSION>
<ACCESSION-NUMBER>0000910680-06-000952
<TYPE>8-K
<PUBLIC-DOCUMENT-COUNT>4
<PERIOD>20060922
<ITEMS>1.01
<ITEMS>9.01
<FILING-DATE>20060926
<DATE-OF-FILING-DATE-CHANGE>20060926
<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>061108887
</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>f8k092206.htm
<DESCRIPTION>CURRENT REPORT
<TEXT>
<HTML>
<HEAD>
<TITLE></TITLE>
</HEAD>
<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>

<!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Date of Report (Date of
earliest event reported): September 22, 2006 </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"><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>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" WIDTH="100%">
<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>
<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" WIDTH="100%">
<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></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>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" WIDTH="100%">
<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>

<!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->
<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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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<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>
</TABLE>

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<TR VALIGN=TOP>
<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>
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)  </FONT></TD>
</TR>
</TABLE>

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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> <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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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<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>

<DIV STYLE="page-break-after:always"></DIV>

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<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Default" -->
<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;On
September 22, 2006, Jaclyn, Inc. (the &#147;<U>Company</U>&#148;) entered into a Third
Amendment to Revolving Loan Agreement, Promissory Note and Other Loan Documents (the
&#147;<U>Amendment</U>&#148;) with TD Banknorth, N.A., successor by merger to Hudson
United Bank (the &#147;<U>Lender</U>&#148;). The Amendment modified the Revolving Loan
Agreement (as amended to date, the &#147;<U>Loan Agreement</U>&#148;) between the Company
and the Lender and certain other loan documents to, among other things: (a) extend the
maturity date of the Loan Agreement until December 31, 2008, (b) increase  from $40,000,000 to $50,000,000
the maximum aggregate amount of revolving loans that may be made to, and letters of credit
that may be issued for the benefit of, the Company by the Lender under the Loan Agreement,
(c) increase from $25,000,000 to $30,000,000 the maximum amount of revolving loans that may be made to the
Company by the Lender under the Loan Agreement, and (d) increase the maximum seasonal
overadvance line under the Loan Agreement from $8,000,000 to $12,000,000.</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;The
foregoing summary of the Amendment is qualified in its entirety by reference to the full
text of the Amendment and to the Second Restated Secured Revolving Note of the Company,
copies of which is attached to this Report on Form 8-K as Exhibits 10.01 and 10.02,
respectively, and which are incorporated herein by reference.</FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Default" -->
<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>


<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" WIDTH="100%">
<TR VALIGN="TOP">
<TD WIDTH="6%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="15%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U>Exhibit No.</U> </FONT></TD>
     <TD WIDTH="79%" ALIGN="LEFT"><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 ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><A HREF="ex10_1-f8k092206.htm">10.01</A></FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> <A HREF="ex10_1-f8k092206.htm">Third  Amendment  to  Revolving
 Loan  Agreement,  Promissory  Note and                                             Other
Loan Documents  dated  September 22, 2006 between the Company and
                                            the Lender and</A>  </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 ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><A HREF="ex10_2-f8k092206.htm">10.02</A></FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> <A HREF="ex10_2-f8k092206.htm">Second Restated  Secured  Revolving
Note of the Company dated September                                             22, 2006.</A> </FONT></TD></TR>
</TABLE>

<DIV STYLE="page-break-after:always"></DIV>

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<HR SIZE=5 COLOR=GRAY NOSHADE>


<!-- MARKER FORMAT-SHEET="Head Major Center Bold" FSL="Default" -->
<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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<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT" WIDTH="50%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Date: September 26, 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/ Anthony Christon</U><BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Anthony Christon, Chief Financial Officer</FONT></TD></TR>
</TABLE>

<DIV STYLE="page-break-after:always"></DIV>

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<HR SIZE=5 COLOR=GRAY NOSHADE>



<!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2">EXHIBIT INDEX </FONT> </P>



<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" WIDTH="100%">
<TR VALIGN="TOP">
<TD WIDTH="6%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="15%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U>Exhibit No.</U> </FONT></TD>
     <TD WIDTH="79%" ALIGN="LEFT"><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 ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><A HREF="ex10_1-f8k092206.htm">10.01</A></FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><A HREF="ex10_1-f8k092206.htm">Third  Amendment  to  Revolving
 Loan  Agreement,  Promissory  Note and                                             Other
Loan Documents  dated  September 22, 2006 between the Company and
                                            the Lender and</A>  </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 ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><A HREF="ex10_2-f8k092206.htm">10.02</A></FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><A HREF="ex10_2-f8k092206.htm">Second Restated  Secured  Revolving
Note of the Company dated September                                             22, 2006.</A> </FONT></TD></TR>
</TABLE>


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<TYPE>GRAPHIC
<SEQUENCE>2
<FILENAME>ballot.jpg
<DESCRIPTION>GRAPHIC
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<TYPE>EX-10
<SEQUENCE>3
<FILENAME>ex10_1-f8k092206.htm
<DESCRIPTION>EX-10.1; 3RD AMNDMNT TO REVOLVING LOAN AGMNT
<TEXT>
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<!-- MARKER FORMAT-SHEET="Head Right" FSL="Default" -->
<P ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><A NAME="ex10.01-f8k092206"><U>Exhibit 10.01</U></A></B> </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold" FSL="Default" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=4>THIRD AMENDMENT TO
REVOLVING LOAN AGREEMENT,<BR>PROMISSORY NOTE AND
OTHER LOAN DOCUMENTS </FONT></H1>

<!-- 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>AGREEMENT,
</B>made this 22nd day of September 2006 (this &#147;Agreement&#148;) between <B>JACLYN,
INC.</B> (&#147;Borrower&#148;), a corporation organized and existing pursuant to the laws
of the State of Delaware, having an address at 635 59th Street, West New York, New Jersey
07093 (hereinafter referred to as, &#147;Borrower&#148;) and <B>TD BANKNORTH, N.A.</B>,
successor by merger to HUDSON UNITED BANK<B> </B>(hereinafter referred to as,
&#147;Lender&#148;) located at 1000 MacArthur Boulevard, Mahwah, New Jersey 07430. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold" FSL="Default" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=4>W I T N E S S E T H: </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Sub 2 Left" FSL="Default" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS:</B> </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;A.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          Borrower entered into a revolving loan agreement with Hudson United Bank
          (Hudson) on December 23, 2002 and pursuant to such revolving loan agreement,
          Borrower executed and delivered to Hudson its promissory note in the original
          principal amount of <B>THIRTY-TWO MILLION AND 00/100 (32,000,000.00) DOLLARS
          </B>dated December 23, 2002 (the &#147;Revolving Note&#148;); </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;B.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          Borrower
subsequently requested that Hudson increase the amount of funds           available under
the Revolving Loan from &#147;<B>THIRTY-TWO MILLION AND 00/100           (32,000,000.00)
DOLLARS&#148;</B>to<B> &#147;FORTY MILLION AND 00/100           (40,000,000.00) DOLLARS,</B>&#148; extend
the maturity date of the Revolving           Loan and Revolving Note from <B>&#147;December
1, 2004&#148;</B>to <B>&#147;December 1, 2005,&#148;</B> increase the amount of the
direct debt           sub-limit under the Revolving Loan from <B>&#147;$22,000,000.00&#148;</B> to
<B>&#147;$25,000,000.00,&#148;</B> increase the over-advance limit from           &#147;<B>$5,000,000.00&#148;</B> to
&#147;<B>$8,000,000.00&#148;</B> for the           period July 31st through November 30th
and make certain other modifications and           changes to the terms and conditions of
the aforementioned revolving loan           agreement;  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;C.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          Hudson
agreed to increase the amount of funds available under the Revolving Loan           from
&#147;<B>THIRTY-TWO MILLION AND 00/100 (32,000,000.00) DOLLARS&#148;</B>to<B> &#147;FORTY
MILLION AND 00/100 (40,000,000.00) DOLLARS,</B>&#148; to           extend the maturity
date of the Revolving Loan and Revolving Note from <B>&#147;December 1, 2004&#148;</B> to
<B>&#147;December 1, 2005,&#148;</B> to           increase the amount of the direct debt
sub-limit under the Revolving Loan from           &#147;<B>$22,000,000.00&#148;</B> to
&#147;<B>$25,000,000.00,&#148;</B> to           increase the over-advance limit from
&#147;<B>$5,000,000.00&#148;</B> to           &#147;<B>$8,000,000.00&#148;</B> for the
period July 31st through November 30th           and to make certain other modifications
and changes to the terms and conditions           of the aforementioned revolving loan
agreement strictly in accordance with the           terms and conditions of a first
amendment to revolving loan agreement,           promissory note and other loan documents
dated October 23, 2003 (the revolving           loan agreement dated December 23, 2002 as
amended by the first amendment to           revolving loan agreement, promissory note and
other loan documents dated October           23, 2003 are hereinafter collectively
referred to as, the &#147;Loan           Agreement&#148;);  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;D.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          In
connection with the first amendment, Borrower executed and delivered to           Hudson
its promissory note dated October 23, 2003 in the original principal           amount of
$40,000,000.00 (the &#147;Restated Secured Revolving Note&#148;);  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;E.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          Borrower
again requested that Hudson continue to provide financing under the           Revolving
Loan, extend the maturity date of the Revolving Loan and Restated           Secured
Revolving Note from <B>&#147;December 1, 2005&#148;</B> to <B>&#147;December 1, 2007,&#148;</B>modify
the interest rate on Advances and           otherwise modify the terms and conditions of
the aforementioned revolving loan           agreement;  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;F.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          Hudson
agreed to continue to provide financing under the Revolving Loan, to           extend the
maturity date of the Revolving Loan and Restated Secured Revolving           Note from <B>&#147;December
1, 2005&#148;</B> to <B>&#147;December 1,           2007,&#148;</B>to modify the interest
rate on Advances and to otherwise modify           the terms and conditions of the
aforementioned revolving loan agreement in           accordance with the terms and
conditions of a second amendment to revolving loan           agreement, promissory note
and other loan documents dated May 5, 2005 (the           revolving loan agreement dated
December 23, 2002 as amended by the first           amendment to revolving loan
agreement, promissory note and other loan documents           dated October 23, 2003 and
the second amendment to revolving loan agreement,           promissory note and other
loan documents dated May 5, 2005 are hereinafter           collectively referred to as,
the &#147;Loan Agreement&#148;);  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;G.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          Borrower
has now requested that Lender increase the amount of funds available           under the
Revolving Loan from &#147;<B>FORTY MILLION AND 00/100 (40,000,000.00)           DOLLARS&#148;</B>to<B> &#147;FIFTY
MILLION AND 00/100 (50,000,000.00)           DOLLARS,</B>&#148; extend the maturity date
of the Revolving Loan and Restated           Revolving Note from <B>&#147;December 1, 2007&#148;</B> to
<B>&#147;December 1,           2008,&#148;</B> increase the amount of the direct debt
sub-limit under the           Revolving Loan from &#147;<B>$25,000,000.00&#148;</B> to <B>&#147;$30,000,000.00,&#148;</B> increase
the over-advance limit from           &#147;<B>$8,000,000.00&#148;</B> to &#147;<B>$12,000,000.00&#148;</B> for
the           period June 30th through October 31<SUP>st</SUP>, release Investments (JLN)
Ltd.           and Josell Global Sourcing Ltd. (which are no longer in existence) from
their           respective guaranties of the obligations of Borrower to Lender and to
make           certain other modifications and changes to the terms and conditions of the
Loan           Agreement; and  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;H.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          Lender
has agreed to increase the amount of funds available under the Revolving           Loan
from &#147;<B>FORTY MILLION AND 00/100 (40,000,000.00) DOLLARS&#148;</B>to<B> &#147;FIFTY
MILLION AND 00/100 (50,000,000.00) DOLLARS,</B>&#148; to           extend the maturity
date of the Revolving Loan and Restated Revolving Note from <B>&#147;December 1, 2007&#148;</B> to
<B>&#147;December 1, 2008,&#148;</B> to           increase the amount of the direct debt
sub-limit under the Revolving Loan from           &#147;<B>$25,000,000.00&#148;</B> to
&#147;<B>$30,000,000.00,&#148;</B> to           increase the over-advance limit from
&#147;<B>$8,000,000.00&#148;</B> to           &#147;<B>$12,000,000.00&#148;</B> for the
period June 30th through October           31<SUP>st</SUP>, to release Investments (JLN)
Ltd. and Josell Global Sourcing           Ltd. from their respective guaranties of the
obligations of Borrower to Lender           and to make certain other modifications and
changes to the terms and conditions           of the Loan Agreement strictly as set forth
in this Agreement.  </FONT></P>

<DIV STYLE="page-break-after:always"></DIV>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>NOW
THEREFORE</B>, in consideration of the foregoing, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
undersigned hereto agree as follows: </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          In
connection with Lender&#146;s agreement to increase the amount of funds
          available under the Revolving Loan, Borrower has this date executed and
          delivered to Lender its promissory note in the original principal amount of <B>FIFTY
MILLION AND 00/100</B><B>(50,000,000.00) DOLLARS</B> in the form           attached
hereto as <B>Schedule A </B>(hereinafter, the &#147;Second Restated           Secured
Revolving Note&#148;) which note shall replace and supersede, but shall           not be
considered a repayment of, the Restated Secured Revolving Note. Any and           all
interest due and owing under the Restated Secured Revolving Note and any
          further amounts evidenced by the Restated Secured Revolving Note shall
hereafter           be evidenced by the Second Restated Secured Revolving Note and any
unpaid           interest under the under the Restated Secured Revolving Note shall be
payable on           the first payment date on the Second Restated Secured Revolving
Note.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Section
1.24 </B>of the Loan Agreement is amended to read as follows:  </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=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;1.24.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><U>&#147;Guarantor&#148;</U></B><U></U> shall
mean JLN, INC., Bonnie           International (Hong Kong) Ltd., The Bag Factory Inc.,
Max N. Nitzberg, Inc.,           Topsville, Inc., and any other Person who shall, at any
time, agree to be a           guarantor or surety for Borrower.  </FONT>
</TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Section
1.30 of </B>the Loan Agreement is amended to read as follows:  </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=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;1.30.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><U>&#147;Loan
Interest Rate&#148;</U></B><U></U> shall mean the Prime Rate           until January 31,
2006 and thereafter the &#147;Base Rate&#148; (as hereinafter           defined) of
Lender. The &#147;Base Rate&#148; shall mean the fluctuating rate of           interest
announced from time to time by Lender as its &#147;Base Rate.&#148; Any
          interest that has the Base Rate as a factor will change immediately upon
          Lender&#146;s announcement of its new rate. The Base Rate is not necessarily
the           lowest rate charged by Lender on its loans and is set by Lender in its sole
          discretion. If the Base Rate index becomes unavailable during the term of the
          Loan, Lender may designate a substitute index. Interest shall be computed by
the           Bank on the basis of actual days elapsed, divided by a 360-day year.  </FONT>
</TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Section
1.39 </B>of the Loan Agreement is amended to read as follows:  </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=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;1.39.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><U>&#147;Prime
Rate&#148;</U></B><U></U> means the fluctuating rate of           interest, which is
determined periodically, announced from time to time by           Hudson United Bank as
its &#147;Prime Rate.&#148; </FONT>
</TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Section
1.47 </B>of the Loan Agreement is amended to read as follows:  </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><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;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;1.47.
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B><U>&#147;Termination Date&#148;</U><B>shall
mean the earlier of December                     1, 2008, or the date on which Lender
terminates </B><B>this Agreement pursuant                     to </B>Section 12.1<B> of
this Agreement.&#148;</B> </FONT>
</TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Section
2.1</B> of the Loan Agreement is amended to read as follows:  </FONT></P>

<DIV STYLE="page-break-after:always"></DIV>

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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=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;2.1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Advances</U>.
Subject to the terms and conditions of this Agreement           including, without
limitation, the Maximum Facility and relying upon the           representations and
warranties set forth in this Agreement, for so long as no           Default or Event of
Default shall have occurred and shall be continuing, Lender           shall make Advances
to Borrower on its request, from time to time during the           term of this Agreement
in an amount (&#147;Borrowing Capacity&#148;) not to           exceed at any one time
outstanding the lesser of:  </FONT>
</TD>
</TR>
</TABLE>
<BR>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          THIRTY MILLION and 00/100 (30,000,000.00) DOLLARS, or </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          the sum of (i) eighty-five (85) percent of the face amount of Borrower&#146;s
          Eligible Receivables, (ii) fifty (50) percent of the Value of Borrower&#146;s
          Eligible Inventory, and (iii) fifty (50) percent of the outstanding face amount
          of Letters of Credit issued under this Agreement, </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>plus in each case, for the period
from June 30th through October 31st only $12,000,000.00, provided an officer of Borrower
submits to Lender an Authenticated Record within twenty (20) days of the end of June,
July, August, September and October certifying that sixty-five (65) percent of the Value
of all Eligible Inventory is subject to confirmed bona fide purchase orders with unrelated
third parties. Value shall mean the lower of cost or the fair market value of such
Inventory, as reflected on the books and records of 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;For
the purpose of calculating the Borrowing Capacity under <B>Subsection 2.1(b)</B>, the face
amount of all Letters of Credit shall be deducted from such sum. Within the limits of the
Borrowing Capacity, and subject to the limitations set forth in this Agreement, Borrower
may borrow, repay and re-borrow Advances.&#148; </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;7.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Article
2.A</B> of the Loan Agreement is amended to read as follows:  </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=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;2.A
<U>Letters of Credit.</U> At the request of Borrower or a Guarantor, and upon execution
of Lender&#146;s customary Letter of Credit documentation, Lender shall issue Letter(s)
of Credit on behalf of Borrower or a Guarantor. The Letters of Credit shall be on terms
mutually acceptable to Lender and Borrower or the Guarantor, as the case may be, and no
Letter of Credit shall have an expiration date later than ninety (90) days after the
Termination Date and shall not contain an evergreen clause or any other automatic renewal
provision. Any drawing under the Letter of Credit shall be deemed an Advance made to
Borrower, without request therefore, immediately upon payment on any such draft or
drawing. In connection with the issuance of a Letter of Credit, Borrower shall pay to
Lender issuance, wire, discrepancy and other fees as agreed to by Borrower and Lender. If
there is any dispute between the beneficiary and Borrower or the Guarantor regarding the
terms and conditions of any Letter of Credit or the issuance or the payment of any
drawing(s) under any such Letter of Credit, any such dispute shall be solely between the
beneficiary and Borrower and/or the Guarantor and Borrower shall be obligated to pay to
Lender any and all amounts paid by Lender, in the absence of Lender&#146;s gross
negligence or willful misconduct, to the beneficiary of the Letter of Credit without any
defense, counterclaim or set-off, all of which are expressly waived.  </FONT>
</TD>
</TR>
</TABLE>
<BR>

<DIV STYLE="page-break-after:always"></DIV>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject
to the terms and conditions of this Agreement, for so long as no Event of Default shall
exist and be continuing, Lender shall issue Letters of Credit in its discretion at the
request of Borrower or a Guarantor having an aggregate outstanding face amount equal to
the lesser of (a) the Maximum Facility or (b) the amount calculated in accordance with
<B>Subsection 2.1(b)</B>. The sum calculated in accordance with clause (b) of the
immediately preceding sentence shall be reduced by the outstanding principal balance of
all Revolving Loans as they may vary from time to time. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Lender
has previously issued Letters of Credit for the account of Borrower and/or Guarantors.
These Letters of Credit shall be considered issued under and in accordance with the terms
and conditions of this Agreement and shall be subject to all of the benefits of and
secured by the Collateral described in the General Security Agreement and the various
Guaranty and Security Agreements.&#148; </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;8.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Section
3.1</B> of the Loan Agreement is amended to read as follows:  </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=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;3.1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Interest
on Advances</U>. Except as provided below, Borrower shall pay           interest monthly,
in arrears, on the first day of each month, commencing January           1, 2003 on the
average daily unpaid principal amount of the Revolving Loan at a           fluctuating
rate which is equal to the Loan Interest Rate or, as provided below,           the LIBOR
rate. Notwithstanding the foregoing, on and after the occurrence and           during the
continuance of an Event of Default, Borrower shall pay interest on           the
Revolving Loan at a rate which is three (3) percent per annum above the Loan
          Interest Rate; provided, however, in no event shall any interest to be paid
          under this Agreement or under any Loan Document exceed the maximum rate
          permitted by law.  </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=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notwithstanding
 the  foregoing,  Borrower,  at any time shall be  permitted  to fix the  interest rate
payable on all or any portion of the Revolving Loan for a period of one, two or three
months based on the corresponding LIBOR rate for such time period plus two hundred fifty
(250) basis points for the period from December 23, 2002 until October 22, 2003, plus two
hundred twenty-five (225) basis points for the period from October 23, 2003 until May 5,
2005 and thereafter plus two hundred (200) basis points. The interest on any such fixed
rate Advance shall be due and payable on the maturity date of such Advance.&#148; </FONT>
</TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;9.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Section
6.3 </B>of the Loan Agreement is amended to read as follows:  </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=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          &#147;6.3
<B><U>Annual Financial Statements</U></B><U></U>. Within ninety (90)           days after
the close of each Fiscal Year of Borrower unless an extension is           granted or
permitted by the Securities and Exchange Commission, but in any event           within
one hundred fifty (150) days of each Fiscal Year of Borrower, a complete           copy
of Borrower&#146;s annual report on Form 10-K filed with the United Stated
          Securities and Exchange Commission containing an unqualified audit report on
the           financial statements of Borrower contained therein prepared by an
independent           certified public accountant, consisting of a balance sheet,
statements of           operations, statements of stockholders&#146; equity and
statements of cash flow  </FONT>
</TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;10.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Section
9.6</B> of the Loan Agreement is amended to read as follows:  </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=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;</B>9.6.<B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Distributions</U>.</B> Make
any capital distribution in Property or return of           capital, or purchase or
redeem any of its stock or other securities, or retire           any of its stock, or
take any action which would have an effect equivalent to           any of the foregoing;
provided, however, that so long as no Event of Default           shall have occurred and
be continuing or would result from Borrower taking the           following action, and
further provided that Borrower&#146;s Board of Directors           shall approve same
either prior to or subsequent to such action, Borrower may           purchase or redeem
its stock or other securities or retire its stock in           accordance with the laws
of its state of organization up to an aggregate amount           of 125,000 shares during
each Fiscal Year of Borrower and, in each case, may           transfer to treasury all
shares of stock so purchased or redeemed.  </FONT>
</TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;11.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Section
9.19</B> of the Loan Agreement is amended to read as follows:  </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=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B)&nbsp;&nbsp;&nbsp;&nbsp;          &#147;9.19<B>.
<U>Effective Tangible Net Worth</U></B><U></U>. Permit           Borrower&#146;s
Effective Tangible Net Worth to be less than the amounts set           forth below,
tested annually, during the periods set forth below:  </FONT>
</TD>
</TR>
</TABLE>
<BR>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" WIDTH="40%">
<TR VALIGN=Bottom>
     <TH COLSPAN=2><FONT FACE="Times New Roman, Times, Serif" SIZE=1><U>Amount</U></FONT></TH>
     <TH COLSPAN=2><FONT FACE="Times New Roman, Times, Serif" SIZE=1><U>Time Period</U></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH="35%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2><BR>10,500,000.00</FONT></TD>
        <TD WIDTH="8%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2><BR>&nbsp;</FONT></TD>
     <TD WIDTH="55%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2><BR>Fiscal Year ending June 30, 2005</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2><BR>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2><BR>9,000,000.00</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><BR>*</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2><BR>Fiscal Year ending June 30, 2006</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
</TABLE>
<BR>




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<P>_________________ </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*For
the Fiscal Year ending June 30, 2007 and each Fiscal Year thereafter, the minimum
Effective Tangible Net Worth (ETNW) for such Fiscal Year shall be the minimum ETNW for the
for the immediately preceding Fiscal Year increased by fifty (50) percent of the net
profits of the Fiscal Year being tested, determined in accordance with the financial
statements to be submitted to Lender pursuant to <B>Article 6, </B>and reduced as
permitted by the next two paragraphs. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;12.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Article
9</B> of the Loan Agreement is amended by adding a new <B>Section           9.20</B> to
read as follows:  </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=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"9.20
Debt to  Effective  Tangible  Net Worth.  On and after June 30,  2005,  permit the  ratio
of Borrower&#146;s Debt to ETNW to be no greater than 2.25 to 1.0, which ratio shall
change to be no greater than 2.50 to 1.0 on and after June 30, 2006 and thereafter,
tested annually.&#148; </FONT>
</TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;13.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          Upon
execution of this Agreement by Borrower, Lender hereby releases Investments
          (JLN) Ltd. and Josell Global Sourcing Ltd. from their guarantees of the
          obligations of Borrower to Lender and releases any liens or security interests
          granted in favor of Lender by either such entity. Upon execution of this
          Agreement by Borrower, Lender undertakes to discharge all  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>UCC-1 financing statements and any
other lien recordations that have been filed against the assets of either such entity by
Lender. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;14.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          Borrower
and Guarantors acknowledge and agree that the term           &#147;Obligation&#148; or
&#147;Obligations,&#148; as defined in the Loan           Agreement, shall include the
Second Restated Secured Revolving Note referred to           in this Agreement.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;15.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          Borrower
acknowledges that in the event Lender and Borrower mutually agree to           renew the
Revolving Loan beyond the Termination Date of the Revolving Loan,           Lender
reserves the right to impose revised new and/or additional financial           covenants
relating to the Revolving Loan.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;16.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          In
order to induce Lender to increase the amount of funds available under the
          Revolving Loan and extend the revolving credit facility, Borrower represents
and           warrants to Lender that, except as disclosed in Borrower&#146;s Annual
Report on           Form 10-K for the Fiscal Year ended June 30, 2005, Borrower&#146;s
Quarterly           Reports on Form 10-Q for the quarterly periods ended September 30,
2005,           December 31, 2005, and March 31, 2005, press releases, and except as
disclosed           to Lender, since June 30, 2005, there has been (1) no material
adverse change in           the financial condition, assets, liabilities, business or
operation (financial           or otherwise) of Borrower and the Guarantor, taken as a
whole, and (2) no           damage, destruction or loss of any of Borrower&#146;s or any
Guarantor&#146;s           property, whether or not covered by insurance, materially and
adversely           affecting Borrower&#146;s and the Guarantor&#146;s business or
property, taken           as a whole.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;17.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          Any
reference in any document executed and/or delivered in connection with the           Loan
Agreement to the &#147;Agreement&#148; or the &#147;Loan Agreement&#148;          shall
mean the revolving loan agreement dated December 23, 2002 as amended by           the
first amendment dated October 23, 2003, the second amendment dated May 5,           2005
and this Agreement. All of the provisions of the Restated Secured Revolving
          Note, the Loan Agreement or any other document executed or delivered in
          connection with the Loan Agreement (collectively, the &#147;Loan
          Documents&#148;) are amended so that such terms shall be consistent with the
          provisions of this Agreement. Notwithstanding the foregoing and to the extent
          that there is any inconsistency between the provisions of those agreements and
          this Agreement, the provisions of this Agreement shall govern.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;18.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          Lender&#146;s
agreement to increase the amount of funds available under the           Revolving Loan
from &#147;<B>FORTY MILLION AND 00/100 (40,000,000.00)           DOLLARS&#148;</B>to<B> &#147;FIFTY
MILLION AND 00/100 (50,000,000.00)           DOLLARS,</B>&#148; to extend the maturity
date of the Revolving Loan and           Restated Revolving Note from <B>&#147;December
1, 2007&#148;</B> to <B>&#147;December 1, 2008,&#148;</B> to increase the amount of the
direct debt           sub-limit under the Revolving Loan from &#147;<B>$25,000,000.00&#148;</B> to
<B>&#147;$30,000,000.00,&#148;</B> to increase the over-advance limit from
          &#147;<B>$8,000,000.00&#148;</B> to &#147;<B>$12,000,000.00&#148;</B> for the
          period June 30th through October 31<SUP>st</SUP>, to release Investments (JLN)
          Ltd. and Josell Global Sourcing Ltd. from their respective guaranties of the
          obligations of Borrower to Lender and to otherwise modify the Loan Agreement
and           the other Loan Documents is not and shall not be construed as a waiver of
any           current or future default under the Second Restated Secured Revolving Note,
the           Restated Secured Revolving Note, the Loan Agreement or any other Loan
Document           nor shall it preclude Lender from proceeding against Borrower on any
such           default. This Agreement is also not a relinquishment of any rights or
remedies           Lender may have in  </FONT></P>

<DIV STYLE="page-break-after:always"></DIV>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>connection  with the  Second
 Restated Revolving Note, the Restated Secured Revolving Note, the Loan Agreement or any
other Loan Document. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;19.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>As
a material condition to the entering into of this Agreement, Borrower and           each
Guarantor by executing this Agreement voluntarily and expressly waive any           and
all rights to assert a claim, counterclaim or defense which now exists of           which
they have actual knowledge against Lender arising out of or in any way
          connected with the Restated Secured Revolving Note, the Loan Agreement or any
          other Loan Document. The foregoing waiver shall apply to any action instituted
          by any of the undersigned and to any action or proceeding brought against any
of           the undersigned by Lender. The term &#147;actual knowledge&#148; means the
          conscious awareness of those officers of Borrower and the Guarantors who have
          given substantive attention to this Agreement, of facts or information relating
          to such a claim, counterclaim or defense, without undertaking any investigation
          to determine the existence or absence of any such facts or information, either
          within Borrower or any of the Guarantors or otherwise.</B> </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;20.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          Borrower
and each Guarantor by executing this Agreement acknowledge that there           is due
and owing on the Second Restated Secured Revolving Note as <B>August 16,           2006</B> the
principal sum of <B>$32,717,423.13 </B>of which <B>$16,125,000.00</B> is direct debt and
<B>$16,592,423.13</B> consist of           outstanding Letters of Credit.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;21.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          Borrower
and each Guarantor by executing this Agreement confirm that all of the
          representations and warranties set forth in the Loan Agreement are true and
          correct in all material respects, and that no default in the performance by
          Borrower of the covenants therein has occurred and is continuing on the date
          hereof. As of the date hereof, to Borrower&#146;s actual knowledge (as such
term           is defined in paragraph 12 of this Agreement), there have been no changes
to the           information set forth in <B>Schedules 5.2, 5.3, 5.8, 5.9, 5.13, 5.14,
5.15,           5.16, 5.17, 5.18 and 5.23 </B>of the Loan Agreement, except as set forth
in the           copies of such schedules annexed hereto.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;22.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          BORROWER
AND EACH GUARANTOR BY EXECUTING THIS AGREEMENT ACKNOWLEDGE THAT IT HAS           HAD A
FULL AND FAIR OPPORTUNITY TO REVIEW THIS AGREEMENT AND THE DOCUMENTS           REFERRED
TO HEREIN WITH COUNSEL OF ITS CHOICE AND THAT IT HAS BEEN ADVISED AS TO           THEIR
TERMS AND CONDITIONS, WHICH ARE ACCEPTABLE TO IT. FURTHER, EACH CONFIRMS           THAT
IN DELIVERING THIS AGREEMENT TO LENDER, IT IS NOT RELYING ON ANY PROMISE,
          COMMITMENT, REPRESENTATION OR UNDERSTANDING, EITHER EXPRESS OR IMPLIED, MADE BY
          OR ON BEHALF OF LENDER THAT IS NOT EXPRESSLY SET FORTH HEREIN, OR IN THE LOAN
          AGREEMENT, THE SECOND RESTATED SECURED REVOLVING NOTE, THE RESTATED SECURED
          REVOLVING NOTE OR ANY OTHER LOAN DOCUMENT. BORROWER AND EACH GUARANTOR BY
          EXECUTING THIS AGREEMENT AND THE SECOND RESTATED SECURED REVOLVING NOTE
          ACKNOWLEDGE AND UNDERSTAND THAT ALL OBLIGATIONS UNDER THE <B>RESTATED SECURED
          REVOLVING NOTE</B> ARE DUE AND PAYABLE IN ACCORDANCE WITH THE LOAN AGREEMENT AS
          AMENDED BY THIS AGREEMENT,<B></B>UNLESS LENDER <U>IN ITS SOLE</U> </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>AND ABSOLUTE DISCRETION</U>
EXTENDS THE MATURITY DATE OF SUCH OBLIGATION AND THAT LENDER HAS NOT MADE ANY
REPRESENTATION THAT IT WILL EXTEND THE MATURITY DATE OF SUCH OBLIGATION. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;23.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          Borrower
acknowledges that discussions may take place between itself and Lender
          concerning additional modifications of the Second Restated Revolving Note and
          the Loan Agreement after the date hereof. Lender <U>in its sole and absolute
          discretion</U> may terminate any such discussions at any time and for any
reason           or no reason and Lender shall have no liability for failing to engage in
or           terminating any such discussions. While the parties hereto may reach
preliminary           agreement as to the modification of one or more provisions of the
Loan Agreement           and/or the Second Restated Revolving Note, none of the
undersigned shall be           bound by any agreement on any individual point until
agreement is reached on           every issue and the agreement on all such issues has
been reduced to a written           agreement signed by Lender and Borrower. Further, the
Loan Agreement may only be           amended by a written agreement executed by Borrower
and Lender and no           negotiations or other actions undertaken by Lender shall
constitute a waiver of           Lender&#146;s rights under this Agreement and/or the
Second Restated Revolving           Note except to the extent specifically set forth in a
written agreement           complying with the provisions of this paragraph.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;24.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          This
document may be executed in one or more counterparts and all such documents
          taken together shall be considered one original document. Capitalized terms
used           but not defined herein shall have the meanings assigned to those terms in
the           Loan Agreement (as such term is defined in recital paragraph C above).  </FONT></P>


<DIV STYLE="page-break-after:always"></DIV>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>IN
WITNESS WHEREOF</B>, the parties hereto have caused this Agreement to be executed by their
officers thereunto duly authorized on the day and year first above written </FONT></P>


<TABLE WIDTH="70%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="50%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>WITNESS:</B><BR>
<BR>
<BR>
<U>/s/ David Yanagisawa</U><BR>
<BR>
<BR>
<BR>
<BR>
<B>WITNESS:</B><BR>
<BR>
<BR>
<U>/s/ Larissa Tarbox</U><BR>
<BR>
</FONT></TD>
     <TD WIDTH="50%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>JACLYN, INC.</B><BR>
<BR>
<BR>
by <U>/s/ Anthony C. Christon</U><BR>
Name: Anthony C. Christon<BR>
Title: Chief Financial Officer<BR>
<BR>
<BR>
<B>TD BANKNORTH, N.A.</B><BR>
<BR>
<BR>
by <U>/s/ David Yanagisawa</U><BR>
David S. Yanagisawa<BR>
Senior Vice President</FONT></TD></TR>
</TABLE>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
valuable consideration, the receipt and sufficiency of which is hereby acknowledged, each
Guarantor of the performance and payment of Borrower, does hereby approve all of the terms
and conditions of this Agreement, does hereby approve the execution and delivery of this
Agreement by Jaclyn, Inc., does hereby acknowledge and confirm its continuing liability
and responsibility to TD Banknorth, N.A., successor by merger to Hudson United Bank with
respect to the debts referred to in this Agreement and the Loan Agreement including,
without limitation, the Second Restated Secured Revolving Note. </FONT></P>

<TABLE WIDTH="70%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="50%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>WITNESS:</B><BR>
<BR>
<BR>
<BR>
<U>/s/ David Yanagisawa</U><BR>
<BR>
<BR>
<BR>
<B>WITNESS:</B><BR>
<BR>
<BR>
<U>/s/ David Yanagisawa</U><BR>
<BR>
<BR>
<BR>
<BR>
<B>WITNESS:</B><BR>
<BR>
<BR>
<U>/s/ David Yanagisawa</U><BR>
<BR>
<BR>
<BR>
<BR>
<B>WITNESS:</B><BR>
<BR>
<U>/s/ David Yanagisawa</U><BR>
<BR>
<BR>
<BR>
<B>WITNESS:</B><BR>
<BR>
<BR>
<U>/s/ David Yanagisawa</U><BR>
<BR>
<BR>
</FONT></TD>
     <TD WIDTH="50%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Bonnie International<BR>
<B>(Hong Kong) Limited</B><BR>
<BR>
<BR>
by <U>/s/ Anthony C. Christon</U><BR>
Name: Anthony C. Christon<BR>
Title: Chief Financial Officer<BR>
<BR>
<B>Max N. Nitzberg, Inc.</B><BR>
<BR>
<BR>
by <U>/s/ Anthony C. Christon</U><BR>
Name: Anthony C. Christon<BR>
Title: Chief Financial Officer<BR>
<BR>
<BR>
<B>Topsville, Inc.</B><BR>
<BR>
<BR>
by <U>/s/ Anthony C. Christon</U><BR>
Name: Anthony C. Christon<BR>
Title: Chief Financial Officer<BR>
<BR>
<BR>
<B>The Bag Factory Inc.</B><BR>
<BR>
by <U>/s/ Anthony C. Christon</U><BR>
Name: Anthony C. Christon<BR>
Title: Chief Financial Officer<BR>
<BR>
<B>JLN, Inc.</B><BR>
<BR>
<BR>
by <U>/s/ Anthony C. Christon</U><BR>
Name: Anthony C. Christon<BR>
Title: Chief Financial Officer<BR>
</FONT></TD></TR>
</TABLE>

<DIV STYLE="page-break-after:always"></DIV>

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<TABLE WIDTH="30%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">STATE OF NEW JERSEY<BR>
&nbsp;<BR>
COUNTY OF HUDSON</FONT></TH>
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">}<BR>
}ss.:<BR>
}</FONT></TH></TR>
</TABLE>



<!-- MARKER FORMAT-SHEET="Para Indent" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;I
CERTIFY that on September 22, 2006, appeared before me, <B>Anthony C. Christon</B>, to me
known, who, being by me duly sworn, did depose and say that he is the <B>Chief Financial
Officer &amp; Treasurer</B> of <B>JACLYN, INC.,</B> the corporation described in and which
executed the foregoing instrument; that he knows the seal of the corporation; that the
seal affixed to the instrument is such corporate seal; that it was so affixed by order of
the board of directors of the corporation, and that he signed his name thereto by like
order. </FONT></P>


<TABLE WIDTH="100%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="50%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="50%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">/s/&nbsp;Larissa Tarbox</FONT><HR WIDTH=50% SIZE=1 COLOR=BLACK NOSHADE></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><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;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notary</FONT></TD></TR>
</TABLE>



<TABLE WIDTH="30%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">STATE OF NEW JERSEY<BR>
&nbsp;<BR>
COUNTY OF PASSAIC</FONT></TH>
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">}<BR>
}ss.:<BR>
}</FONT></TH></TR>
</TABLE>



<!-- MARKER FORMAT-SHEET="Para Indent" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;I
CERTIFY that on September 22, 2006, appeared before me, <B>David S. Yanagisawa</B>, to me
known, who, being by me duly sworn, did depose and say that he is a <B>Senior Vice
President</B> of <B>TD BANKNORTH, N.A., successor by merger to HUDSON UNITED BANK</B>, the
corporation described in and which executed the foregoing instrument; that he knows the
seal of the corporation; that the seal affixed to the instrument is such corporate seal;
that it was so affixed by order of the board of directors of the corporation, and that he
signed his name thereto by like order. </FONT></P>

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     <TD WIDTH="50%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="50%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">/s/&nbsp;Larissa Tarbox</FONT><HR WIDTH=50% SIZE=1 COLOR=BLACK NOSHADE></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><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;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notary</FONT></TD></TR>
</TABLE>


<TABLE WIDTH="30%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">STATE OF NEW JERSEY<BR>
&nbsp;<BR>
COUNTY OF HUDSON</FONT></TH>
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">}<BR>
}ss.:<BR>
}</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;I
CERTIFY that on September 22, 2006, appeared before me <B>Anthony Christon</B>, to me
known, who, being by me duly sworn, did depose and say that he is the <B>Chief Financial
Officer</B> of <B>Bonnie International (Hong Kong) </B>Limited, the corporation described
in and which executed the foregoing instrument; that he knows the seal of the corporation;
that the seal affixed to the instrument is such corporate seal; that it was so affixed by
order of the board of directors of the corporation and that he signed his name thereto by
like order </FONT></P>

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     <TD WIDTH="50%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="50%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">/s/&nbsp;Larissa Tarbox</FONT><HR WIDTH=50% SIZE=1 COLOR=BLACK NOSHADE></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><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;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notary</FONT></TD></TR>
</TABLE>


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<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">STATE OF NEW JERSEY<BR>
&nbsp;<BR>
COUNTY OF HUDSON</FONT></TH>
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">}<BR>
}ss.:<BR>
}</FONT></TH></TR>
</TABLE>

<!-- 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;I
CERTIFY that on September 22, 2006, appeared before me <B>Anthony Christon</B>, to me
known, who, being by me duly sworn, did depose and say that he is the <B>Chief Financial
Officer</B> of <B>JLN, Inc.,</B> the corporation described in and which executed the
foregoing instrument; that he knows the seal of the corporation; that the seal affixed to
the instrument is such corporate seal; that it was so affixed by order of the board of
directors of the corporation and that he signed his name thereto by like order </FONT></P>

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<TR VALIGN="TOP">
     <TD WIDTH="50%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="50%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">/s/&nbsp;Larissa Tarbox</FONT><HR WIDTH=50% SIZE=1 COLOR=BLACK NOSHADE></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><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;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notary</FONT></TD></TR>
</TABLE>
<BR>

<TABLE WIDTH="30%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">STATE OF NEW JERSEY<BR>
&nbsp;<BR>
COUNTY OF HUDSON</FONT></TH>
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">}<BR>
}ss.:<BR>
}</FONT></TH></TR>
</TABLE>

<!-- 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;I
CERTIFY that on September 22, 2006, appeared before me <B>Anthony Christon</B>, to me
known, who, being by me duly sworn, did depose and say that he is the <B>Chief Financial
Officer</B> of <B>Max N. Nitzberg, Inc.,</B> the corporation described in and which
executed the foregoing instrument; that he knows the seal of the corporation; that the
seal affixed to the instrument is such corporate seal; that it was so affixed by order of
the board of directors of the corporation and that he signed his name thereto by like
order </FONT></P>

<TABLE WIDTH="100%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="50%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="50%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">/s/&nbsp;Larissa Tarbox</FONT><HR WIDTH=50% SIZE=1 COLOR=BLACK NOSHADE></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><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;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notary</FONT></TD></TR>
</TABLE>

<DIV STYLE="page-break-after:always"></DIV>

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<TABLE WIDTH="30%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">STATE OF NEW JERSEY<BR>
&nbsp;<BR>
COUNTY OF HUDSON</FONT></TH>
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">}<BR>
}ss.:<BR>
}</FONT></TH></TR>
</TABLE>



<!-- 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;I
CERTIFY that on September 22, 2006, appeared before me <B>Anthony Christon</B>, to me
known, who, being by me duly sworn, did depose and say that he is the <B>Chief Financial
Officer</B> of <B>Topsville, Inc.,</B> the corporation described in and which executed the
foregoing instrument; that he knows the seal of the corporation; that the seal affixed to
the instrument is such corporate seal; that it was so affixed by order of the board of
directors of the corporation and that he signed his name thereto by like order </FONT></P>

<TABLE WIDTH="100%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="50%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="50%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">/s/&nbsp;Larissa Tarbox</FONT><HR WIDTH=50% SIZE=1 COLOR=BLACK NOSHADE></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><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;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notary</FONT></TD></TR>
</TABLE>



<TABLE WIDTH="30%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">STATE OF NEW JERSEY<BR>
&nbsp;<BR>
COUNTY OF HUDSON</FONT></TH>
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">}<BR>
}ss.:<BR>
}</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;I
CERTIFY that on September 22, 2006, appeared before me <B>Anthony Christon</B>, to me
known, who, being by me duly sworn, did depose and say that he is the <B>Chief Financial
Officer</B> of <B>The Bag Factory Inc.,</B> the corporation described in and which
executed the foregoing instrument; that he knows the seal of the corporation; that the
seal affixed to the instrument is such corporate seal; that it was so affixed by order of
the board of directors of the corporation and that he signed his name thereto by like
order </FONT></P>

<TABLE WIDTH="100%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="50%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="50%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">/s/&nbsp;Larissa Tarbox</FONT><HR WIDTH=50% SIZE=1 COLOR=BLACK NOSHADE></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><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;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notary</FONT></TD></TR>
</TABLE>




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<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>4
<FILENAME>ex10_2-f8k092206.htm
<DESCRIPTION>EX-10.2; 2ND RSTD SECURED RVLVNG NOTE
<TEXT>
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<P ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U><B><A NAME="ex10_02-f8k092206">Exhibit 10.02</A></B></U></FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold" FSL="Default" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=4><U>SECOND RESTATED
SECURED REVOLVING NOTE</U> </FONT></H1>

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     <TD WIDTH="50%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$50,000,000.00<BR>
&nbsp;</FONT></TD>
     <TD WIDTH="50%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Mahwah, New Jersey<BR>
September 22, 2006</FONT></TD></TR>
</TABLE>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;FOR
VALUE RECEIVED, <B>JACLYN, INC.,</B> a corporation having an address at 635 59th Street,
West New York, New Jersey 07093 (&#147;Borrower&#148;), promises to pay to the order of
<B>TD BANKNORTH, N.A., successor by merger to</B> <B>HUDSON UNITED BANK</B>
(&#147;Lender&#148;), at 1000 MacArthur Boulevard, Mahwah, New Jersey 07430 or at such
other place as Lender may from time to time in writing designate, the principal sum of
each Advance made by Lender to Borrower under that certain revolving loan agreement dated
December 23, 2002 between Borrower and Lender as it has been or may be subsequently
amended and/or modified (collectively, the &#147;Loan Agreement&#148;) (the Loan Agreement
together with all of the other documents, instruments or agreements executed in connection
therewith, as the same may be modified, amended, restated or replaced from time to time
are hereinafter collectively referred to as, the &#147;Loan Documents&#148;). The
aggregate unpaid principal balance hereof shall not exceed at any time the sum of <B>FIFTY
MILLION and 00/100 (50,000,000.00) DOLLARS.</B> Capitalized terms used herein and not
otherwise defined shall have the meaning given such terms in the Loan Documents. The
entire unpaid principal balance hereof, together with the accrued interest thereon and
accrued late charges, if any, and all other sums due hereunder and under the Loan
Documents shall be due and payable on the Termination Date. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Borrower
also promises to pay interest to Lender monthly, in arrears, on the first day of each
month commencing on January 1, 2003 on the average daily unpaid principal balance of this
Note at the rate set forth in <B>Section 3.1 </B>of the Loan 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;This
is the &#147;Revolving Note&#148; referred to in the Loan Agreement and is entitled to the
benefit of all of the terms and conditions and the security of all of the security
interests and liens granted by Borrower or any other person to Lender pursuant to the Loan
Agreement or any other Loan Document. Upon the occurrence and during the continuance of
any Event of Default, the entire unpaid principal amount owed Lender hereunder shall, at
the option of Lender, become immediately due and payable without further notice or demand,
all as provided in the Loan 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;This
Note replaces and supersedes (but shall not be considered a repayment of) a note of
Borrower dated December 23, 2002 in the original principal amount of $32,000,000.00 and a
note of Borrower dated October 23, 2003 in the original principal amount of $40,000,000.00
(collectively, the &#147;Prior Note&#148;). Any and all amounts evidenced by the Prior
Note shall hereafter be evidenced by this Note and any accrued but unpaid interest due and
owing under the Prior Note shall be payable on the first interest payment date 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;Whenever
any payment to be made under this Note shall be stated to be due on a day other than a
Banking Day, such payment shall be made on the next succeeding Banking Day and </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>such extension of time shall be
included in the computation of any interest then due and payable 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;The
undersigned and all other parties who, at any time, may be liable hereon in any capacity
waive presentment, demand for payment, protest and notice of dishonor of this Note. This
Note and any provision hereof may not be waived, modified, amended or discharged orally,
but only by an agreement in writing which is signed by the holder and the party or parties
against whom enforcement of any waiver, change, modification, amendment 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;This
Note shall be governed by and construed under the internal laws of the State of New
Jersey, as the same may from time to time be in effect, without regard to principles of
conflicts of laws thereof. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN
WITNESS WHEREOF, the undersigned has executed this Note the day and year first above
written. </FONT></P>


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     <TD WIDTH="50%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>WITNESS:</B><BR>
<BR>
<BR>
<U>/s/ David Yanagisawa</U><BR>
<BR>
<BR>
<BR>
<BR>
</FONT></TD>
     <TD WIDTH="50%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>JACLYN, INC.</B><BR>
<BR>
<BR>
by: <U>/s/ Anthony C. Christon</U><BR>
Name: Anthony C. Christon<BR>
Title: Chief Financial Officer &amp; <BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Treasurer<BR>
<BR>
</FONT></TD></TR>
</TABLE>









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