8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

_________________

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 31, 2006

JACLYN, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware	1-5863	22-1432053
(State or Other Jurisdiction	(Commission	(IRS Employer
of Incorporation)	File No.)	Identification No.)

635 59TH Street
West New York, New Jersey	07093
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code:  (201) 868-9400

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

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:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01. Entry into a Material Definitive Agreement.

        Jaclyn, Inc. (the “Company”) previously announced it had entered into an Agreement of Lease dated as of September 1, 2006 with 195 Spring Valley Associates, LLC (“Spring Valley”), under which the Company has leased an office building (including the underlying land and other improvements) located in Maywood, New Jersey (the “Leased Premises”), to which the Company intends to relocate its executive offices later this year.

        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.

Item 9.01. Financial Statements and Exhibits.

       (a)        Financial Statements of Businesses Acquired. Not Applicable.

       (b)        Pro Forma Financial Information. Not Applicable.

       (c)        Exhibits.

Exhibit No.	Description
10.01	Mortgage dated as of August 31, 2006 of Landlord in favor of the Company.
10.02	Promissory Note dated as of August 31, 2006 of Landlord in favor of the Company.

SIGNATURES

        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.

Date: September 1, 2006	JACLYN, INC.
	By: /s/ Robert Chestnov             Robert Chestnov, President

EXHIBIT INDEX

Exhibit No.	Description
10.01	Mortgage dated as of August 31, 2006 of Landlord in favor of the Company.
10.02	Promissory Note dated as of August 31, 2006 of Landlord in favor of the Company.

EX-10

Exhibit 10.01

MORTGAGE

This Mortgage is made on August 31, 2006

BETWEEN the Borrower(s) 195 SPRING VALLEY ASSOCIATES, LLC, a New Jersey limited liability company with an address at 155 North Dean Street, Englewood, New Jersey,

AND the Lender(s) JACLYN, INC. with an address at 5801 Jefferson Street, West New York, New Jersey.

        WHEREAS, the Borrower is the owner of 195-197 West Spring Valley Avenue, Maywood, New Jersey (hereinafter the “Property”) described in this Mortgage; and

        WHEREAS, 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 “Note”), which evidences a loan (the “Loan”) made by Lender to the Borrower, on the Maturity Date; and

        WHEREAS, the Borrower has agreed to grant security to the Lender for all of Borrower’s obligations under the Note; and

        WHEREAS, 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’s obligations;

        NOW THEREFORE, 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 Schedule A 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.

        Rights Given to the Lender. 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’s rights under this Mortgage will end. The Lender will then cancel this Mortgage at the Lender’s expense.

        Promises.        The Borrower makes the following promises to the Lender:

1.   Note and Mortgage. To comply with all of the terms of the Note and this Mortgage.

2.  Payments. To make all payments required by the Note and this Mortgage.

3.  Ownership. 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.

4.  Liens and Taxes. 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.

5.  Insurance. 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’s behalf if the Borrower fails to do so. All payments from the insurance company must be payable to the Lender under a “standard mortgage clause” 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.

6.  Repairs. 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.

7.  Statement of Amount Due. 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.

8.   Rent. The Borrower will not accept rent for more than one month in advance.

9.   Lawful Use. The Borrower will use the Property in compliance with all laws, ordinances and other requirements of any governmental authority.

        Eminent Domain. 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

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.

        Payments Made for Borrower(s). 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.

        Events of Default. Each of the following shall constitute an event of default under this Mortgage (each, an “Event of Default”):

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;

A. 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;

B. 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;

C. 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;

D. 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;

E. 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;

F. 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;

G. 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

H. If Borrower dissolves or ceases operations.

        Payment Due Upon Default.     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’s costs of collection and reasonable attorney’s fees.

        Lender’s Rights Upon Default.     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:

1. take possession of and manage the Property, including collection of rents and profits;

2. have a court appoint a receiver to accept rent for the Property;

3. start a court action, known as foreclosure, which will result in a sale of the Property to reduce the Borrower’s obligations under the Note and this Mortgage; and

4. sue the Borrower for any money owed to the Lender.

        Notices.    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.

        No Waiver by Lender.     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’s behalf.

        Each Person Liable.     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.

        Environmental Matters.     The Borrower represents and warrants to the Lender that on and as of the date hereof:

        1.       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 “Damages,” as such term is defined in N.J.S.A. 58:10-23.11g and/or “Cleanup and Removal Costs,” as such term is defined in N.J.S.A. 58:10-23.11b(d), arising from an intentional or unintentional

action or omission of the Borrower or operator of said real property resulting in the releasing, spilling, pumping, pouring, emitting, emptying or dumping of “Hazardous Substances,” 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.

        2.        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 “Major Facility,” 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 “Major Facility.”

        3.        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 (“NJDEPE”) concerning any intentional or unintentional action or omission on the Borrower’s part resulting in the releasing, spilling, leaking, pumping, pouring, emitting, emptying or dumping of “Hazardous Substances,” 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.

        4.        The Borrower shall not use the Property for the purpose of generating, manufacturing, refining, producing, storing, treating, handling, transferring, processing, disposing or transporting “Hazardous Substances” as such term is defined in N.J.S.A. 58:10-23.11b(k) and N.J.A.C. 7:1-3.3.

        B.        The Borrower covenants and agrees that so long as any the Loan is outstanding, the Borrower will comply with the following covenants:

        1.        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 “Major Facility” as defined in N.J.S.A. 58:10-23.11b, its amendments or supplements thereto.

        2.        If the Borrower is presently an owner or operator of a “Major Facility” 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.

        3.        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 “Hazardous Substance,” 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.

        4.        So long as the Borrower shall own or operate any real property located in the State of New Jersey, which is used as a “Major Facility,” 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.

        5.        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 “Damages,” as such term is defined in N.J.S.A. 58:10-23.11g, and/or “Cleanup and Removal Costs,” 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 “Hazardous Substances,” 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’s agreement that the commitment of the title insurance company to affirmatively insure over or omit such claim shall constitute such satisfactory security).

        6.        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 “Hazardous Substances,” 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,

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.

        No Oral Changes.   This Mortgage can only be changed by an agreement in writing signed by both the Borrower and the Lender.

        Copy Received.   The Borrower acknowledges receipt of a true copy of this Mortgage without charge.

        Signatures.  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.

WITNESS:	195 SPRING VALLEY ASSOCIATES, LLC
	A New Jersey limited liability company
/s/ Matthew Cohen        Matthew Cohen	By: /s/ Howard Kent        HOWARD KENT, Managing Member
/s/ Matthew Cohen        Matthew Cohen	By: /s/ Gregory Van Cleef        GREGORY VAN CLEEF, Managing Member

EX-10

Exhibit 10.02

PROMISSORY NOTE

$2,200,000.00 August 31, 2006
Englewood, N.J. 07631

                 FOR VALUE RECEIVED, the undersigned, 195 SPRING VALLEY ASSOCIATES, LLC, a New Jersey limited liability company, (the “Borrower”) promises to pay to the order of JACLYN, INC., having an office located at 5801 Jefferson Street, West New York, New Jersey (the “Lender”) or at such other place as may be designated in writing by the Lender, on or before August 31, 2016 (the “Maturity Date”) the principal sum of TWO MILLION TWO HUNDRED THOUSAND ($2,200,000.00) DOLLARS together with interest on the unpaid principal balance hereof computed at the rate stated below. THIS IS A BALLOON NOTE.

                 1.       Interest Rate. 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.

                2.       Security. 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 “Mortgaged Premises,”, 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.

                 3.    Prepayment. The Note may be repaid in full or in part at any time without penalty.

                 4.       Late Fee. 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 “late charge” 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 “late charge,” if not previously paid, shall be added to and become a part of the next succeeding monthly payment to be made hereunder.

                 5.       Additional Payments. 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.

                 6.       Default Interest Rate. 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.

                 7.       Events of Default. Each of the following shall constitute an event of default under this Note (each, an “Event of Default”):

 A. 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;

 B. 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;

 C. 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;

 D. 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;

 E. 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;

 F. 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;

 G. 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;

 H. 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

 I. If the Borrower dissolves or ceases operations.

                 8.       Remedies. In case one or more Events of Default shall have occurred, the Lender shall have the following rights and remedies:

                  A.        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.

                 B.        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.

                  C.        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’ 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.

                 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.

                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

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.

                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.

                 9.        Miscellaneous.

                A.       Notices. 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.

                B.       Invalid Provisions to Affect No Others. 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.

                C.       Successors and Assigns; Gender; Number. 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.

                D.       Captions. 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.

                E.       Governing Law. This Note shall be governed by and construed according to the laws of the State of New Jersey.

                 F.       Usury. 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.

                 G.       Construction. 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.

                 H.       Waiver of Jury Trial. 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.

                 I.         Legal Fees. 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.

                 J.         Modifications. 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.

                 K.         Validity of Loan. 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 ipsofacto 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.

WITNESS:	195 SPRING VALLEY ASSOCIATES, LLC
	A New Jersey limited liability company
/s/ Matthew Cohen         Matthew Cohen	By: /s/ Howard Kent        HOWARD KENT, Managing Member
/s/ Matthew Cohen         Matthew Cohen	By: /s/ Gregory Van Cleef        GREGORY VAN CLEEF, Managing Member