Promissory Note between Enclaves of Eagle Nest LLC and K&B Equity Group, Inc. d/b/a Magellan Mortgage Group, dated December 9, 2005

 Exhibit 10.1 PROMISSORY NOTE $1,250,000.00 DECEMBER 9, 2005 1. BORROWER'S PROMISE TO PAY 1.1 FOR VALUE RECEIVED, the undersigned, ENCLAVES OF EAGLE NEST LLC., a Florida limited liability company, whose address is 45 Knollwood Road, Fifth Floor Elmsford, New York 10523 (hereinafter referred to as "BORROWER") promises to pay to the order of K&B EQUITY GROUP, INC. D/B/A MAGELLAN MORTGAGE GROUP, its successors and/or assigns (hereafter referred to as the "LENDER") at its office at 314 Clematis Street, Suite 201, West Palm Beach, FL 33401, or such other place as the holder of this NOTE may designate the principal sum of ONE MILLION TWO HUNDRED FIFTY THOUSAND AND 00/100 DOLLARS ($1,250,000.00), together with interest from the date of disbursement on the outstanding balance thereof, at the rate of ten and one-half (10.5%) percent per annum from the date hereof and on the terms set forth herein, to be paid in the lawful funds of the United States of America. 1.2 Commencing January 9, 2006 and on the same day of each succeeding calendar month thereafter through and until the Maturity Date (hereinafter defined), BORROWER shall pay without offset, deduction or demand equal monthly payments of interest only in arrears, in the amount of TEN THOUSAND NINE HUNDRED THIRTY-SEVEN AND 50/100 DOLLARS ($10,937.50). This NOTE becomes due and payable in one lump sum balloon payment on December 9, 2006 (the "Maturity Date") at which time all unpaid principal, and all accrued interest and all other sums due hereunder shall become due and payable without offset, deduction or demand. 1.3 Interest shall be calculated on the outstanding principal balance due pursuant to this PROMISSORY NOTE based upon an actual three hundred sixty (360) day year. 1.4 BORROWER shall pay all ad valorem real property taxes and assessments against all common areas and all insurance premiums when due. Any failure to make all such payments shall be a default herein. 1.5 All payments of interest, principal and other amounts due herein shall be made without offset, deductions, claim, counterclaim or defense. 2. PLACE OF PAYMENT All payments of principal and/or interest are payable at the office of LENDER, 314 Clematis Street, Suite 201, West Palm Beach, FL 33401 , or at such other place as the holder hereof may from time to time ----------- INITIAL HERE  designate in writing, in lawful money of the United States of America, which shall be legal tender for public and private debts at the time of payments, without deduction for or on account of any present or future taxes, duties or other charges levied or imposed on this NOTE or the proceeds hereof, or upon the BORROWER or LENDER by any government, or any instrumentality, authority or political subdivision thereof. BORROWER agrees, upon the request of the LENDER, to pay all such taxes, duties and other charges in addition to principal and interest on this NOTE, exclusive of United States income taxes and Florida income taxes. Failure to do so shall constitute a default under the terms of this NOTE. 3. PREPAYMENT BORROWER shall not have the right to prepay this NOTE unless BORROWER prepays this NOTE in whole and pays to LENDER (or shall have paid in aggregate with such payment and the interest payments due under section 1.2 above) the sum equal to six (6) months interest hereunder, with any amount in excess of accrued and paid interest constituting a prepayment charge for such privilege and which charge shall not be applied on the amount owing on this NOTE. Notwithstanding the foregoing, subsequent to June 9, 2006, BORROWER may prepay principal owing on this NOTE in whole at any time without any premium or charge whatsoever. All prepayments shall be applied first to accrued interest and then to principal in inverse order of maturity. ALL prepayments in whole of principal of this NOTE shall include interest through the date of prepayment on the principal amount being prepaid. 4. SECURITY AGEEMENTS BORROWER and LENDER agree that this NOTE is secured by a Mortgage and Security Agreement, Assignment of Leases, Rents, and Profits, UCC-1 Financing Statements, and other loan documents entered into by BORROWER in favor of LENDER, of even date herewith, some of which shall be recorded in the Public Records of Okeechobee County, Florida (hereinafter collectively the "SECURITY AGREEMENTS"). Some of the SECURITY AGREEMENTS secure as collateral for the LENDER'S extending the loan of ONE MILLION TWO HUNDRED FIFTY THOUSAND AND 00/100 DOLLARS ($1,250,000.00), as evidenced by this NOTE, the property more particularly described in the Mortgage and Security Agreement located in Lee County, Florida. Any default by BORROWER in any of the terms and conditions of any of the SECURITY AGREEMENTS shall be a default in this NOTE and the SECURITY AGREEMENTS, and all indebtedness or amounts due herein or due in the SECURITY AGREEMENTS by BORROWER to LENDER shall immediately become due and payable with all interest and other amounts due hereunder, and accrued thereon, without demand. Further, any default by Borrower, any affiliate of Borrower, or any guarantor of Borrower in any other loan with LENDER, or any affiliate of LENDER, shall be a default herein and in any other such loan with LENDER or any affiliate of LENDER. 2 ----------- INITIAL HERE  5. LOAN CHARGES Notwithstanding any provision in this NOTE, or the SECURITY AGREEMENTS, or in any instrument now or hereafter relating to or securing the indebtedness, the total liability for payments of interest and payments in the nature of interest, including all charges, fees, exactions or other sums which may at any time be deemed to be interest, shall not exceed the limit imposed by the usury laws of the State of Florida or the applicable laws of the United States of America, whichever shall be higher (the "MAXIMUM RATE"). In the event the total liability for payments of interest and payments in the nature of interest, including, without limitation, all charges, fees, exactions or other sums which may at any time be deemed to be interest, which for any month or other interest payment period exceeds the MAXIMUM RATE, all sums in excess of those lawfully collectible as interest for the period in question (and without further agreement or notice by, between, or to any party hereto) shall be applied to the reduction of the principal balance immediately upon receipt of such sums by the LENDER, with the same force and effect as though the undersigned had specifically designated such excess sums to be so applied to the reduction of the principal balance and the LENDER has agreed to accept certain sums as a premium-free payment of principal, provided, however, that the LENDER may, at any time and from time to time, elect, by notice in writing to the undersigned, to waive, reduce, or limit the collection of any sums in excess of those lawfully collectible as interest rather than accept such sums as a prepayment of the principal balance. It is the intention of the parties that the undersigned does not intend or expect to pay nor does the LENDER intend or expect to charge, accept or collect any interest under this NOTE in excess of the MAXIMUM RATE. 6. BORROWER'S DEFAULT, REMEDIES 6.1 Time is of the essence hereof. If any payment of principal or of interest of this NOTE or any other sum due hereunder is not paid within five (5) days after the same becomes due, the amount thereof shall thereafter bear interest at the MAXIMUM RATE, provided that the interest rate subsequent to such default ("DEFAULT RATE") shall not exceed sixteen and one-half (16.5%) percent per annum. If any default shall occur hereunder or under any of the SECURITY AGREEMENTS, and such default shall continue beyond any applicable grace period provided herein or Borrower shall dissolve or become liquidated, then the LENDER, at its option and without notice, demand or presentment for payment to the undersigned or others, may declare immediately due and payable the outstanding principal balance of this NOTE together with all accrued and unpaid interest thereon to the date of default and together with interest thereafter at the MAXIMUM RATE, provided that the DEFAULT RATE shall not exceed sixteen and one-half (16.5%) percent per annum, together with all costs and fees, including reasonable attorneys' fees and paralegals' fees, including any sales or service tax due and payable upon the attorneys fees and paralegals' fees and court costs (through and including any and all collection, trial, appellate and administrative procedures) incurred by the LENDER in collecting or enforcing payment thereof, and all 3 ----------- INITIAL HERE  other sums due hereunder or under the SECURITY AGREEMENTS, anything herein or in the SECURITY AGREEMENTS to the contrary notwithstanding, all without any relief whatever from any valuation or appraisement laws (to the full extent permitted by law), and payment thereof may be enforced and recovered in whole or in part at any time by any one or more of the remedies provided to the LENDER in this NOTE. 6.2 In order to cover the extra expense in handling delinquent payments, the BORROWER shall pay a late charge of five (5%) percent of any payment, or portion thereof, not received by the LENDER by the fifth (5th) day after the date the payment is due. The LENDER may assess a late charge of any such late payment, including, without limitation, any installment or other periodic payment, final payment, balloon payment, escrow payment and any other payment required by the SECURITY AGREEMENTS to be made to the LENDER. This late charge shall be in addition to DEFAULT RATE of interest required to be paid in Article 6.1 herein. 6.3 To the extent necessary to enable LENDER to exercise its rights and remedies hereunder demand, presentment, notice of dishonor, protest and extension of time of payment are hereby waived by all makers, sureties, guarantors and endorsers hereof, and each of such parties hereby agrees to all modifications, renewals, any number of extensions of time for payment of this NOTE, release of other persons or entities obligated under this NOTE and release of any security for this NOTE, all without further notice, and agree that any such activities shall not release any of such parties not expressly released in writing. This NOTE shall be the joint and several obligation of each of the parties named as BORROWER herein, and all sureties, guarantors and endorsers of this NOTE, and shall be binding upon them and their heirs, legal representatives, successors and assigns. 6.4 To the extent necessary to enable LENDER to exercise its rights and remedies hereunder, the remedies of the LENDER as provided herein and in the SECURITY AGREEMENTS shall be cumulative and concurrent and may be pursued singly, successively or together, at the sole discretion of the LENDER, and may be exercised as often as occasion therefor shall occur; and the failure to exercise any such right or remedy shall in no event be construed as a waiver or release thereof. The LENDER shall not be deemed, by any act of omission or commission, to have waived any of its rights or remedies hereunder unless such waiver is in writing and signed by the LENDER, and then only to the extent specifically set forth in the writing. 6.5 To the extent necessary to enable LENDER to exercise its rights and remedies hereunder the BORROWER and all others who are, or may become liable for the payment hereof, expressly agree that the LENDER shall not be required first to institute any suit or to exhaust its remedies against the BORROWER or 4 ----------- INITIAL HERE  any other person or party to become liable hereunder or against the collateral under the SECURITY AGREEMENTS, in order to enforce the payment of this NOTE; and expressly agree that, notwithstanding the occurrence of any of the foregoing (except the express written release by the LENDER of any such person), the BORROWER shall be and remain, directly and primarily liable for all sums due under this NOTE and under the SECURITY AGREEMENTS. 6.6 BORROWER shall be responsible for providing financial statements, including, but not limited to, balance sheet, income statements, statements of changes in financial position, statement of financial position, financial statements, and such other documents and statements as may be reasonably be required by LENDER within thirty (30) days after the end of each calendar year quarter of every year during the term hereof. In the event LENDER does not receive all documents required herein within thirty (30) days of their due date, the BORROWER shall be deemed in default of this NOTE. 6.7 BORROWER hereby agrees that, in consideration of the recitals and mutual covenants contained herein, and for other good and valuable consideration, BORROWER hereby acknowledges that in the event that it shall (i) file in any bankruptcy court of competent jurisdiction a petition in bankruptcy or be the subject of any voluntary or involuntary petition under Title 11 of the U.S. Code as amended ("Bankruptcy Code"); (ii) be the subject of any order of relief issued under the Bankruptcy Code; (iii) file or be the subject of any petition seeking any reorganization, or arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future federal or state act or law relating to bankruptcy, insolvency, or other relief for debtors; (iv) have sought or consented to or acquiesced in the appointment of any trustee or receiver, conservator, or liquidator; or (v) be the subject or any order, judgment, or decree entered by any court of competent jurisdiction approving a petition filed against BORROWER, for any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any present or future federal or state act or law relating to bankruptcy, insolvency, or other relief for debtors under any present or future federal or state law relating to bankruptcy, insolvency or relief for debtors, then, subject only to obtaining prior court approval, and without the need for any further showing of cause, LENDER shall thereupon be entitled to, and BORROWER hereby irrevocably consents to the granting of relief from any automatic stay imposed by Section 362 of the Bankruptcy Code, or otherwise, and waives any rights under Section 11 U.S.C. Section 365, on or against the exercise of the rights and remedies otherwise available to BORROWER as provided by law, any legal action under the NOTE, MORTGAGE, and other LOAN DOCUMENTS (including, without limitation, the right of LENDER to begin or complete the foreclosure suit and sale of the collateral) and otherwise provided by law, and BORROWER irrevocably waives its respective right to object to such relief. BORROWER specifically agrees not to directly or indirectly oppose, interfere with, impede or otherwise defend 5 ----------- INITIAL HERE  against LENDER'S efforts to gain relief from the automatic stay or to otherwise enforce its rights hereunder. The remedies described in this paragraph are not exclusive and shall not limit LENDER'S rights. To the extent the terms and conditions of this Article 6.7 are unenforceable, illegal or unconscionable, the same shall be deemed severed and deleted from this NOTE, and all other terms and conditions shall remain in full force and effect. 6.8 Any person or entity who is a guarantor, co-maker, surety or endorser of this NOTE is fully and personally obligated to keep all of the promises BORROWER has made in this NOTE, including the promise to pay the full amount owed. Any person or entity who assumes these obligations, including the obligations of a guarantor, co-maker, surety or endorser of this NOTE, is also obligated to keep all of the promises BORROWER has made in this NOTE, and LENDER may enforce its rights under this NOTE against each such person or entity, individually or against all of them together. 7. GIVING OF NOTICES Any notice that must be given BORROWER under this NOTE will be given by mailing same to each person constituting the BORROWER by first class mail, postage prepaid. All notices will be addressed to BORROWER at the addresses set forth below the BORROWERS' signatures unless LENDER is given written notice of a different address given as herein provided. Any notice that must be given to the LENDER under this NOTE will be given by mailing it by first class mail, postage prepaid, to the LENDER at the address stated in this NOTE, or at such other address as LENDER may designate to the BORROWER as herein provided. 8. MISCELLANEOUS THE LENDER IS UNDER NO OBLIGATION TO REFNANCE THIS LOAN UPON MATURITY This instrument shall be governed by and construed and enforced according to the laws of the State of Florida, except where specifically preempted by federal law. Venue with respect to any litigation on this NOTE shall be Palm Beach County, Florida. The provisions of this NOTE may be changed only by a written agreement executed by the LENDER and the BORROWER. Whenever used, the singular shall include the plural, the plural shall include the singular, the use of any gender shall be applicable to all genders, and the words "BORROWER" and "LENDER" shall be deemed to include the respective heirs, legal representatives, successors and assigns of the BORROWER and the LENDER. 6 ----------- INITIAL HERE  No waiver of any default hereunder shall extend to or shall affect any subsequent or any other existing default or shall impair any rights, powers or remedies consequent thereon. If this NOTE is executed by more than one person, firm or entity, then the term BORROWER as used in this NOTE shall refer to all such persons, firms or entities and all promises, agreements, covenants, consents, waivers, representations and warranties and other provisions of this NOTE are made by and shall be binding upon each and every undersigned person, firm and entity, jointly and severally. Wherever provision is made for payment of attorneys' fees or counsels' fees or expenses incurred by the LENDER, said provision shall include but not be limited to reasonable attorneys' or counsel's fees or expenses incurred in any and all judicial, bankruptcy, reorganization, administrative, or other proceeding including appellate proceedings, whether such proceedings arise before or after entry on the final judgment. It is expressly understood and agreed that the LENDER shall never be construed for any purpose as a partner, joint venturer, co-principal or associate of the BORROWER or of any person or party claiming by, through or under the BORROWER in the conduct of their respective businesses. Proper documentary stamps have been paid on and affixed to the SECURITY AGREEMENTS securing this NOTE and payment of intangible tax, if due, in the proper amount is reflected on the MORTGAGE. Time is of the essence with respect to all obligations, payments and all other actions required of BORROWER herein. 7 ----------- INITIAL HERE  9. WAIVER OF JURY TRIAL BORROWER AND LENDER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY AND ALL RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION (INCLUDING, BUT NOT LIMITED TO, ANY CLAIMS, CROSSCLAIMS OR THIRD PARTY CLAIMS) ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE, THE OTHER SECURITY AGREEMENTS OR THE TRANSACTIONS CONTEMPLATED HEREIN. BORROWER HEREBY CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF THE LENDER OR THE LENDER'S COUNSEL HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE LENDER WOULD NOT, IN THE EVENT OF SUCH LITIGATION, SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION. BORROWER ACKNOWLEDGES THAT THE LENDER HAS BEEN INDUCED TO ENTER INTO THIS LOAN, INCLUDING THIS NOTE, BY INTER ALIA, THE PROVISIONS OF THIS PARAGRAPH. 10. BORROWER hereby grants to LENDER a contractual possessory security interest in, and hereby assigns, conveys, delivers, pledges and transfers to LENDER all of BORROWER'S right, title and interest in and to BORROWER'S accounts with LENDER (whether checking, savings, or some other account) including, without limitation, all accounts held jointly with someone else and all accounts BORROWER may open in the future, excluding, however, all IRA, Keogh, and trust accounts. BORROWER authorizes LENDER, to the extent permitted by applicable law, to charge or set off all sums owing on this NOTE against any and all such accounts. IN WITNESS WHEREOF, BORROWER has executed this NOTE on the date written above. BORROWER: ENCLAVES OF EAGLE NEST LLC By: ENCLAVES GROUP, INC., its Managing Member By: /s/ Daniel G. Hayes (L.S.) ------------------------------ Name: Daniel G. Hayes Title: President and CEO (Corporate Seal) 8 ----------- INITIAL HERE  STATE OF NEW YORK ) ) ss: COUNTY OF WESTCHESTER ) I HEREBY CERTIFY that on this day, before me, an officer duly authorized in the State aforesaid and in the County aforesaid, to take acknowledgements, personally appeared Daniel G. Hayes, President and CEO of Enclaves Group, Inc., a Delaware corporation, the Managing Member of ENCLAVES OF EAGLE NEST LLC, a Florida limited liability company, who [X] is personally known to me, or [_] has produced ______________________ as identification and who, being duly sworn, executed the foregoing instrument and acknowledged before me that he executed the same. WITNESS my hand and official seal in the County and State last aforesaid this 8 day of DECEMBER. /s/ David Jay Parker --------------------------------------- (Signature) --------------------------------------- (Printed Name) My Commission Expires: My Commission No. is: David Jay Parker Notray Public, State of New York No. 02PA6105869 Qualified in Westchester County Commission Expires Feb. 23, 2008 9 ----------- INITIAL HERE