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                                                                   Exhibit 10.38


                                                        Loan No.:001-0003346-001

                                PROMISSORY NOTE

             (50 South MacQuesten Parkway, Mount Vernon, New York)


$937,500.00                                                    February 10,1999



         FOR VALUE RECEIVED, MICHAEL ANTHONY JEWELERS, INC., a Delaware
corporation ("BORROWER"), promises to pay to the order of GENERAL ELECTRIC
CAPITAL BUSINESS ASSET FUNDING CORPORATION ("Payee"; Payee and any subsequent
holder of this Note being referred to herein as "Holder") at Payee's office at
10900 Northeast Fourth Street, Suite 500, Bellevue, Washington 98004, attention:
Real Estate Department, or at such other address as Holder may from time to time
designate in writing, the principal sum of Nine Hundred Thirty-Seven Thousand
Five Hundred and no hundredths Dollars ($937,500.00) together with interest from
the date the proceeds of the loan (the "Loan") evidenced by this Promissory Note
(this "Note") are initially disbursed until maturity on the principal balance
from time to time remaining unpaid hereon at the rate of seven and five
hundredths percent (7.05%) per annum (computed on the basis of a 360-day year of
twelve (12) consecutive thirty (30)-day months) in installments as follows: (i)
interest only in advance at the rate of $183.59 per day shall be due and payable
on the date the proceeds of the Loan are initially disbursed to or for the
benefit of BORROWER (including, without limitation, disbursement into an escrow
for the benefit of BORROWER) for the period beginning on the date of such
disbursement and ending on the last day of the month during which such
disbursement occurs, and (ii) one hundred seventy-nine (179) installments of
principal and interest in the amount of $8,452.74 each shall be payable
commencing on the first day of the second month following the month in which
funds are advanced and continuing on the first day of each and every succeeding
month until the first day of the one hundred eightieth (180th) month thereafter,
at which time all then unpaid principal and interest hereon shall be due and
payable.

         If any payment shall not be received by Holder within ten (10) days
after its due date, BORROWER shall pay an additional charge equal to five
percent (5.00%) of the delinquent payment or the highest additional charge
permitted by law, whichever is less.

         Except as is expressly provided for herein, this Note may not be
prepaid in whole or in part without the prior written consent of Holder. Upon
not less than thirty (30) days' advance written notice to Holder at any time
after the fifth (5th) anniversary of the due date of the first monthly principal
and interest payment due under this Note, and upon payment of a prepayment
premium as set forth below (the "Prepayment Premium"), BORROWER shall have the
right to prepay all, but not less than all, of the outstanding balance of this
Note on any regularly scheduled principal and interest payment date. The
Prepayment Premium shall be determined by (i) calculating the decrease
(expressed in basis points) in the current weekly average yield of ten (10)-year
U.S. Treasury Constant Maturities (as published in FEDERAL RESERVE STATISTICAL
RELEASE H.15 [519]) (the "Index") from Friday, October 2, 1998, to the Friday
immediately preceding the week in which the prepayment is made, (ii) dividing
the decrease by 100, (iii) multiplying the result by the following described
applicable premium factor (the "Premium Factor"), and (iv) multiplying the
product by the principal balance to be prepaid. If the Index is unchanged or has
increased from
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Friday, October 2, 1998, to the Friday immediately preceding the prepayment
date, no Prepayment Premium shall be due. The Premium Factor shall be the amount
shown on the following chart for the month in which prepayment occurs:

<TABLE>
<CAPTION>

       No. Mos.                                      Premium 
      Remaining             (Years)                   Factor
      ---------             -------                   ------


      <S>                     <C>                       <C>  
       180-169                (15)                      .073 
       168-157                (14)                      .069 
       156-145                (13)                      .064 
       144-133                (12)                      .059 
       132-121                (11)                      .054 
       120-109                (10)                      .049
       108- 97                ( 9)                      .044 
        96- 85                ( 8)                      .039 
        84- 73                ( 7)                      .035 
        72- 61                ( 6)                      .030 
        60- 49                ( 5)                      .025 
        48- 37                ( 4)                      .020 
        36- 25                ( 3)                      .015 
        24- 13                ( 2)                      .010 
        12-  1                ( 1)                      .005
</TABLE>


If the Federal Reserve Board ceases to publish Statistical Release H.15 [519],
then the decrease in the weekly average yield of ten (10)-year U.S. Treasury
Constant Maturities will be determined from another source designated by
Holder. Prepayment prior to the fifth (5th) anniversary of the due date of the  
first monthly principal and interest payment due under this Note will not be 
permitted.

         If Holder at any time accelerates this Note after an Event of Default
(defined below), then BORROWER shall be obligated to pay the Prepayment Premium
in accordance with the foregoing schedule. The Prepayment Premium shall not be
payable with respect to condemnation awards or insurance proceeds from fire or
other casualty which Holder applies to prepayment, nor with respect to
BORROWER's prepayment of the Note in full during the last three (3) months of
the term of this Note unless an Event of Default has occurred. BORROWER
expressly acknowledges that such Prepayment Premium is not a penalty but is
intended solely to compensate Holder for the loss of its bargain and the
reimbursement of internal expenses and administrative fees and expenses incurred
by Holder.

         Subject to the exceptions described below, Holder shall not seek any
deficiency judgment against BORROWER, it being understood and agreed that
BORROWER shall not have any personal liability for the payment of the
indebtedness evidenced by the loan documents executed or delivered in connection
with this Note (the "Loan Documents"), and such indebtedness shall be considered
limited recourse to the BORROWER.

         The foregoing notwithstanding, Holder shall have full recourse against
BORROWER for the full payment of (i) any Prepayment Premium due under this Note;
(ii) taxes, insurance premiums, and other amounts advanced by Holder to protect
the collateral described in the Mortgage, Security Agreement, and Assignment of
Leases and Rents ("Mortgage") securing this

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Note; and (iii) all attorney's fees or other costs of collection incurred by
Holder pursuant to any of the Loan Documents. In addition, Holder shall have
full recourse against BORROWER for the full payment of all indebtedness
evidenced by the Loan Documents in the event that any of the following occur:
(i) BORROWER has committed fraud in any of the documents executed in connection
with the indebtedness evidenced by the Loan Documents or in any materials
submitted to Holder or any other party in connection therewith; (ii) BORROWER
has intentionally misrepresented material facts with respect to BORROWER or with
respect to the nature, status or history of the property (the "Property")
covered by the Mortgage.

         In addition, Holder shall have full recourse against BORROWER for any
losses, damages, costs and expenses arising out of or in connection with the
occurrence of any of the following: (i) BORROWER misapplies or fails to remit to
Holder any insurance proceeds or any condemnation proceeds involving the
Property; (ii) BORROWER fails to remit to Holder after an Event of Default (as
hereinafter defined) an amount equal to rents, issues, profits, revenues, income
or proceeds of the Property which either are in BORROWER's possession or control
as of the date of an Event of Default or are thereafter received by BORROWER or
by any third party on behalf of BORROWER; (iii) BORROWER collects advance rents
in violation of any provision of the Loan Documents; (iv) BORROWER misapplies
any security deposit; (v) BORROWER breaches its obligations under any lease of
the Property (or any part thereof).

         In addition, nothing contained herein shall: (i) be deemed to be a
release or impairment of any part of the indebtedness evidenced by this Note or
of the lien created by the Mortgage; (ii) limit or otherwise prejudice in any
way the rights of Holder to enforce any of its rights and remedies under this
Note or under the Mortgage, including, if necessary, naming BORROWER as a
defendant in any suit, action or proceeding; (iii) limit the right of Holder to
proceed against BORROWER for the Prepayment Premium; (iv) limit the right of
Holder to proceed and recover a personal judgment against any person or entity
receiving funds from BORROWER in connection with acts specified in the preceding
paragraph of this Note; (v) limit the liability of BORROWER (or any other party)
under the Certificate and Indemnity Agreement Regarding Hazardous Substances
executed in favor of Holder; or (vi) limit the liability of any guarantor of the
BORROWER's obligations owing to Holder.

         Each of the following shall constitute an Event of Default ("Event of
Default") hereunder and under the Mortgage:

         (a) Failure of Holder to receive any payment of principal, interest, or
Prepayment Premium upon this Note when due, and such failure shall continue for
ten (10) days after written notice is given by Holder to BORROWER of the same;
or

         (b) Failure of BORROWER within the time required by the Mortgage to pay
any sum secured thereby other than the Note or to make any payment for taxes,
insurance or for reserves for such payments, or any other payment necessary to
prevent filing of or discharge of any lien, and such failure shall continue for
a period of ten (10) days after written notice is given to BORROWER by Holder
specifying such failure; or

         (c) Failure by BORROWER to observe or perform any obligations of
BORROWER to Holder on or with respect to any transactions, debts, undertakings
or agreements other than the transaction evidenced by this Note prior to the
expiration of any applicable cure period set forth therein; or



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         (d) Failure of BORROWER to make any payment or perform any obligation
under any superior liens or encumbrances on the Property, within the time
required thereunder, or commencement of any suit or other action to foreclose
any superior liens or encumbrances; or

         (e) Failure by BORROWER to observe or perform any of its obligations
under any of the lease agreements covering the Property prior to the expiration
of any applicable cure period set forth therein; or

         (f) The Property is transferred or any agreement to transfer any part
or interest in the Property in any manner whatsoever is made or entered into
without the prior written consent of Holder, except as specifically allowed
under the Mortgage, including without limitation creating or allowing any liens
on the Property or leasing any portion of the Property; or

         (g) Filing by BORROWER of a voluntary petition in bankruptcy or filing
by BORROWER of any petition or answer seeking or acquiescing in any
reorganization, arrangement, composition, readjustment, liquidation, or similar
relief for itself under any present or future federal, state or other statute,
law or regulation relating to bankruptcy, insolvency or other relief for
debtors, or the seeking, consenting to, or acquiescing by BORROWER in the
appointment of any trustee, receiver, custodian, conservator or liquidator for
BORROWER, any part of the Property, or any of the income or rents of the
Property, or the making by BORROWER of any general assignment for the benefit of
creditors, or the inability of or failure by BORROWER to pay its debts generally
as they become due, or the insolvency on a balance sheet basis or business
failure of BORROWER, or the making or suffering of a preference within the
meaning of federal bankruptcy law or the making of a fraudulent transfer under
applicable federal or state law, or concealment by BORROWER of any of its
property in fraud of creditors, or the imposition of a lien upon any of the
property of BORROWER which is not discharged in the manner permitted by the
Mortgage, or the giving of notice by BORROWER to any governmental body of
insolvency or suspension of operations; or

         (h) Filing of a petition against BORROWER seeking any reorganization,
arrangement, composition, readjustment, liquidation, or similar relief under any
present or future federal, state or other law or regulation relating to
bankruptcy, insolvency or other relief for debts, or the appointment of any
trustee, receiver, custodian, conservator or liquidator of BORROWER, of any part
of the Property or of any of the income or rents of the Property, unless such
petition shall be dismissed within sixty (60) days after such filing, but in any
event prior to the entry of an order, judgment or decree approving such
petition; or

         (i) The institution of any proceeding for the dissolution or
termination of BORROWER voluntarily, involuntarily, or by operation of law; or

         (j) A material adverse change occurs in the assets, liabilities or net
worth of BORROWER from the assets, liabilities or net worth of BORROWER
previously disclosed to Holder; or

         (k) Any warranty, representation or statement furnished to Holder by or
on behalf of BORROWER under this Note, the Mortgage, or any of the Loan
Documents shall prove to have been false or misleading in any material respect;
or

         (l) Failure of BORROWER to observe or perform any other covenant or
condition contained in the Mortgage and such default shall continue for thirty
(30) days after notice



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<PAGE>   5

is given to BORROWER specifying the nature of the failure, or if the default
cannot be cured within such cure period, BORROWER fails within such time to
commence and pursue curative action with reasonable diligence or fails at any
time after expiration of such cure period to continue with reasonable diligence
all necessary curative actions. No notice of default and no opportunity to cure
shall be required with respect to defaults under Section 17 of the Mortgage or
if during the prior twelve (12) months Holder has already sent a notice to
BORROWER concerning default in performance of the same obligation; or

         (m) Failure of BORROWER to observe or perform any other obligation
under any Loan Document (other than this Note or the Mortgage) when such
observance or performance is due, and such failure shall continue beyond the
applicable cure period set forth in such Loan Document, or if the default cannot
be cured within such applicable cure period, BORROWER fails within such time to
commence and pursue curative action with reasonable diligence or fails at any
time after expiration of such applicable cure period to continue with reasonable
diligence all necessary curative actions. No notice of default and no
opportunity to cure shall be required if during the prior twelve (12) months
Holder has already sent a notice to BORROWER concerning default in performance
of the same obligation; or

         (n) BORROWER's abandonment of the Property; or

         (o) Any of the foregoing events occur with respect to or any tenant of
the Property or any guarantor of such tenant's obligations under its lease; or

         (p) The occurrence of any "Event of Default" under any of the documents
evidencing or securing BORROWER's line of credit with Chase
Manhattan Bank.

         Upon the occurrence of any of the foregoing Events of Default, Holder
shall have the option to declare the entire amount of principal and interest due
under this Note immediately due and payable without notice or demand, and Holder
may exercise any of its rights under this Note and any document executed or
delivered herewith. After acceleration or maturity, BORROWER shall pay interest
on the outstanding principal balance of this Note at the rate of five percent
(5.00%) per annum above Chase Manhattan Bank's prime interest rate in effect
from time to time, or fifteen percent (15.00%) per annum, whichever is higher,
provided that such interest rate shall not exceed the maximum interest rate
permitted by law.

         All payments of the principal and interest on this Note shall be made
in coin or currency of the United States of America which at the time shall be
the legal tender for the payment of public and private debts.

         If this Note is placed in the hands of an attorney for collection,
BORROWER agrees to pay reasonable attorneys' fees and costs incurred by Holder
in connection therewith, and in the event suit or action is instituted to
enforce or interpret this Note (including without limitation efforts to modify
or vacate any automatic stay or injunction), the prevailing party shall be
entitled to recover all expenses reasonably incurred at, before or after trial
and on appeal, whether or not taxable as costs, or in any bankruptcy proceeding,
or in connection with post-judgment collection efforts, including, without
limitation, attorneys' fees, witness fees (expert and otherwise), deposition
costs, copying charges and other expenses.

         This Note shall be governed and construed in accordance with the laws
of the State of New York applicable to contracts made and to be performed
therein (excluding choice-of-law



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<PAGE>   6

principles). BORROWER hereby irrevocably submits to the jurisdiction of any
state or federal court sitting in New York in any action or proceeding brought
to enforce or otherwise arising out of or relating to this Note, and hereby
waives any objection to venue in any such court and any claim that such forum is
an inconvenient forum.

         This Note is given in a commercial transaction for business purposes.

         This Note may be declared due prior to its expressed maturity date, all
in the events, on the terms, and in the manner provided for in the Mortgage.

         BORROWER and any sureties, endorsers, guarantors and other parties now
or hereafter liable for the payment of this Note, in whole or in part, hereby
severally (i) waive demand, notice of demand, presentment for payment, notice of
nonpayment, notice of default, protest, notice of protest, notice of intent to
accelerate, notice of acceleration and all other notices except those for which
the Loan Documents expressly provide, and further waive diligence in collecting
this Note or in enforcing any of the security for this Note; (ii) agree to any
substitution, subordination, exchange or release of any security for this Note
or the release of any party primarily or secondarily liable for the payment of
this Note; (iii) agree that Holder shall not be required to first institute suit
or exhaust its remedies hereon against BORROWER or others liable or to become
liable for the payment of this Note or to enforce its rights against any
security for the payment of this Note; and (iv) consent to any extension of time
for the payment of this Note, or any installment hereof, made by agreement by
Holder with any person now or hereafter liable for the payment of this Note,
even if BORROWER is not a party to such agreement.

         All agreements between BORROWER and Holder, whether now existing or
hereafter arising and whether written or oral, are hereby limited so that in no
contingency, whether by reason of demand or acceleration of the final maturity
of this Note or otherwise, shall the interest contracted for, charged, received,
paid or agreed to be paid to Holder exceed the maximum amount permissible under
the applicable law. If, from any circumstance whatsoever, interest would
otherwise be payable to Holder in excess of the maximum amount permissible under
applicable law, the interest payable to Holder shall be reduced to the maximum
amount permissible under applicable law; and if from any circumstance Holder
shall ever receive anything of value deemed interest by applicable law in excess
of the maximum amount permissible under applicable law, an amount equal to the
excessive interest shall be applied to the outstanding principal balance hereof,
or if such excessive amount of interest exceeds the unpaid balance of principal
hereof, such excess shall be refunded to BORROWER. All interest paid or agreed
to be paid to Holder shall, to the extent permitted by applicable law, be
amortized, prorated, allocated, and spread throughout the full period (including
any renewal or extension) until payment in full of the principal so that the
interest hereon for such full period shall not exceed the maximum amount
permissible under applicable law. Holder expressly disavows any intent to
contract for, charge or receive interest in an amount which exceeds the maximum
amount permissible under applicable law. This paragraph shall control all
agreements between BORROWER and Holder.

                  IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS
                  AGREEMENT SHOULD BE READ CAREFULLY BECAUSE ONLY
                  THOSE TERMS IN WRITING ARE ENFORCEABLE. NO OTHER
                  TERMS OR ORAL PROMISES NOT CONTAINED IN THIS WRITTEN
                  CONTRACT MAY BE LEGALLY ENFORCED. YOU



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<PAGE>   7


                  MAY CHANGE THE TERMS OF THIS AGREEMENT ONLY BY ANOTHER 
                  WRITTEN AGREEMENT.


                  TIME IS OF THE ESSENCE HEREOF.

         IN WITNESS WHEREOF, BORROWER has caused this Note to be executed by its
duly authorized officers under seal as of the year and day first written above.


                                        BORROWER:


                                        MICHAEL ANTHONY JEWELERS, INC.,
                                        a Delaware corporation


                                        By: /s/ Michael A. Paolercio
                                           ------------------------------------
                                           Michael A. Paolercio, Treasurer


                                                   [SEAL]


                                          Duplicate Original


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