Promissory Note between Enclaves of Grand Oaks LLC and Sovereign Bank dated December 31, 2006

 Exhibit 10.3 PROMISSORY NOTE FOR VALUE RECEIVED, on December 31, 2006 (the "Maturity Date"), ENCLAVES OF GRAND OAKS LLC, a South Carolina limited liability company having a mailing address at c/o Enclaves Group, Inc., 45 Knollwood Road, Elmsford, NY 10523 (hereinafter called "Borrower") promises to pay to the order of SOVEREIGN BANK, (hereinafter called "Lender") at its offices at 1010 Farmington Avenue, West Hartford, Connecticut 06107 or at such other place as the holder of this note may from time to time designate in writing, the principal sum of FOUR MILLION SIX HUNDRED FIFTEEN THOUSAND DOLLARS ($4,615,000.00), in lawful money of the United States with interest at the rate or rates set forth below, until fully paid. Borrower further agrees to pay all taxes levied or assessed upon said principal sum against any holder of this Note and all costs, including reasonable attorneys' fees incurred in the collection, defense, preservation, enforcement or protection of this Note or any guaranty hereof in the foreclosure of any mortgage or security interest now or hereafter securing the same or in any proceedings to otherwise enforce or protect this Note or any guaranty hereof or any security therefor. Interest on this Note shall be computed on the basis of a year of three hundred sixty (360) days and actual days elapsed. (1) INTEREST RATE/PAYMENTS. (a) INTEREST RATES, PAYMENT OF INTEREST. So long as no Event of Default (hereafter defined) has occurred and subject to the terms hereof, principal outstanding hereunder shall bear interest at a rate per annum equal to the LIBOR Rate (as hereinafter defined) plus two hundred twenty-five (225) basis points for Interest Periods of thirty (30) days (herein the "LIBOR Based Rate"). Interest on all amounts outstanding at the LIBOR Based Rate shall be payable, in arrears, on the first Banking Day following the expiration of the applicable Interest Period, commencing January 9, 2006 through the Maturity Date, as the same may be extended as provided herein. (b) So long as no Event of Default (hereafter defined) has occurred, Borrower shall have the option of extending the loan for an additional period of twelve (12) months from the Maturity Date. If Borrower exercises such option, Borrower agrees to pay a fee of one-half percent (0.50%) of the amount of the Loan then outstanding. If Borrower elects to exercise such extension option, it shall give Lender written notice via certified mail, return receipt requested at the address set forth above, to the attention of the Lender's Commercial Mortgage Group not later than December 1, 2006 of such election, time being of the essence with respect to such notice, such notice to be accompanied by payment of said fee. If said fee is not paid by said date, then the extension notice shall not be deemed effective. (2) INTEREST PERIODS. Each Interest Period shall commence on the Banking Day designated by Borrower on the terms hereof and shall end on the last day of the Interest Period; PROVIDED HOWEVER: (i) any Interest Period that would otherwise end on a day which is not a Banking Day shall be extended to the next Banking Day unless such extension would carry such Interest Period into the next month, in which event such Interest shall end on the preceding Banking Day; (ii)  any Interest Period that begins on the last Banking Day of a calendar month (or on a date for which there is no numerically corresponding day in the calendar month during which such Interest Period is to end), shall (subject to clause (i) above) end on the last Banking Day of such calendar month; and (iii) any Interest Period that would otherwise extend beyond the Maturity Date shall end on the Maturity Date. (3) END OF INTEREST PERIOD. At the end of each Interest Period the Lender will extend the applicable Interest Period for an additional 30-day Interest Period. (4) AUTOMATIC PAYMENT. Borrower hereby authorizes Lender to automatically deduct from Borrower's deposit account with the Lender the amount of any loan payment ("Automatic Payments"). If the funds in the account are insufficient to cover any payment, Lender shall not be obligated to advance funds to cover the payment. At any time and for any reason, Borrower or Lender may voluntarily terminate Automatic Payments. The Lender shall record on the books and records of the Lender an appropriate notation evidencing each repayment on account of the principal hereof and the amount of interest paid; and the Borrower authorizes the Lender to maintain such records or make such notations and agrees that the amount shown on the books and records as outstanding from time to time shall constitute the amount owing to the Lender pursuant to this Note, absent manifest error. (5) SWAP AGREEMENT. Borrower may enter into a SWAP agreement or other similar agreement or arrangement with Lender or its affiliates with respect to amounts bearing interest at the LIBOR Based Rate (any such agreement or arrangement shall be in form and substance reasonably satisfactory to Lender) in order to hedge or minimize risk with respect to the fluctuation of interest rates. The SWAP Agreement shall be for the remaining term of this Note and shall, at all times, be in a notional amount sufficient to cover all principal amounts outstanding from time to time under the loan evidenced by this Note. If the SWAP Agreement shall expire prior to the Maturity Date and leave any principal of the loan evidenced by this Note uncovered thereby, or if for any other reason any principal portion of the loan evidenced by this Note shall be uncovered by the SWAP Agreement, such uncovered amount shall be immediately due and payable. (6) DEFAULT RATE. To the extent allowed by applicable law, after the occurrence of any Event of Default, after maturity or after judgement has been rendered on this Note, Borrower's right to select pricing options shall cease (if applicable) and all outstanding principal and unpaid interest shall bear, until paid, interest at a rate per annum equal to five (5%) percentage points greater than that which would otherwise be applicable (the "Default Rate"). Where Borrower would, but for the application of the preceding sentence, have had the right to elect among interest rate options, the "Default Rate" shall mean the Variable Rate PLUS five (5%) percentage points. (7) LATE CHARGE. If a regularly scheduled payment is fifteen (15) days or more late, Borrower will be charged 5.000% of the unpaid portion of the regularly scheduled payment or $10.00, whichever is greater. If Lender demands payment of this Loan, and Borrower does not pay the Loan within fifteen (15) days after Lender's demand, Borrower will be charged either 5.000% of the unpaid principal plus accrued unpaid interest or $10.00, whichever is greater. -2-  (8) EXPENSES. Borrower further promises to pay to the Lender, as incurred, and as an additional part of the unpaid principal balance, all costs, expenses and reasonable attorneys' fees incurred (i) in the protection, modification, collection, defense or enforcement of all or part of this Note or any guaranty hereof, or (ii) in the foreclosure or enforcement of any mortgage or security interest which may now or hereafter secure either the debt hereunder or any guaranty thereof, or (iii) with respect to any action taken to protect, defend, modify or sustain the lien of any such mortgage or security agreement, or (iv) with respect to any litigation or controversy arising from or connected with this Note or any mortgage or security agreement or collateral which may now or hereafter secure this Note, or (v) with respect to any act to protect defend, modify, enforce or release any of its rights or remedies with regard to, or otherwise effect collection of, any collateral which may now or in the future secure this Note or with regard to or against Borrower or any endorser, guarantor or surety of this Note. (9) BASIS FOR DETERMINING INTEREST RATE INADEQUATE OR UNFAIR. In the event that the Lender shall have determined that by reason of circumstances affecting the interbank Eurodollar market, adequate and reasonable means do not exist for determining the LIBOR Rate, or Eurodollar deposits in the relevant amount and for the relevant maturity are not available to the Lender in the interbank Eurodollar market, the Lender shall give the Borrower prompt notice of such determination. If such notice is given, then any amount outstanding at the LIBOR Based Rate shall be converted to the Prime Rate on the last Banking Day of the then current Interest Period for such amount. Until such notice has been withdrawn, the Lender shall have no obligation to maintain amounts outstanding at the LIBOR Based Rate and the Borrower shall not have the right to convert any amounts to the LIBOR Based Rate. Thereafter, interest at the Prime Rate shall be payable in arrears, on the first day of each month. (10) ILLEGALITY OF LIBOR RATE. Notwithstanding any other provision of this Note, if, after the date of this Note, any applicable law, treaty, regulation or directive, or any change therein or in the interpretation or application thereof, shall make it unlawful for the Lender to maintain any amount at the LIBOR Based Rate, the obligation of the Lender hereunder to maintain such rate shall forthwith be suspended for the duration of such illegality and the Borrower shall, if any such amount is outstanding at the LIBOR Based Rate promptly, upon request from the Lender, prepay such advance or convert such amount to the Prime Rate. If any such payment is made on a day that is not the last Banking Day of the then current Interest Period applicable to such amount, the Borrower shall pay the Lender, upon the Lender's request, any amount required under Section 12 of this Note. (11) DEFINITIONS. (a) "Banking Day" shall mean with respect to LIBOR Based Rate, any day on which commercial lenders are open for international business (including dealings in U.S. Dollar ($) deposits in London, England and the Governing State (a "London Banking Day") and; with respect to Variable Rate, any day other than a day on which commercial lenders in the Governing State are required or permitted by law to close. (b) "Governing State" shall mean the state where Lender's offices are located as set forth in the first paragraph of this Note. -3-  (c) "Interest Period" with respect to any amount at the LIBOR Based Rate shall mean a thirty (30) day period. (d) "LIBOR Based Rate" shall have the meaning set forth in paragraph 1(b) hereof. (e) "LIBOR Rate" shall mean as applicable to any Interest Period applicable thereto, (i) a rate per annum (rounded upward if necessary, to the nearest 1/32 of one percent) equal to the composite London Interbank Offered Rate which appears on the Telerate page 3750 as of 11:00 a.m. London time on the day that is two (2) London Banking Days preceding the first day of such Interest Period (or if not reported thereon, then as determined by Lender from another recognized source or interbank quotation) DIVIDED BY (ii) a fraction (A) the numerator of which is one and (B) the denominator of which is the average of the daily rates (expressed as a decimal) of maximum reserve requirements which are, at any time, rates (expressed as a decimal) of maximum reserve requirements which are, at any time, applicable during such Interest Period (including, without limitation, basic, supplemental, special, marginal and emergency reserves) under any regulation of the Board of Governors of the Federal Reserve System or other banking authority, domestic or foreign, as now or hereafter in effect, prescribed for eurocurrency funding (currently referred to as Eurocurrency Liabilities in Regulation D of such Board) to which the Lender (including any branch, affiliate or other fronting office, making or holding a loan that accrues interest at a rate which refers to LIBOR) is subject, as now or hereinafter in effect. (f) "Loan Documents" shall mean any and all agreements, instruments, documents, security agreements, mortgages, financing statements, and supplements thereto and relating to the Loan, or entered into between the Borrower or any guarantor in favor of, or with, the Lender, at any time, for any purpose. (g) "Maturity Date" shall have the meaning set forth in the first paragraph of this Note, as the same may be extended under Paragraph 1(a)(ii) hereof. (h) "Obligations" shall mean all loans, advances, debts, liabilities, obligations, covenants and duties owing by the Borrower to the Lender of every kind and description (whether or not evidenced by any note or other instrument and whether or not for the payment of money), direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, whether or not such obligations are related to the transaction described in this Note, by class, or kind, or whether or not contemplated by the parties at the time of the granting of this security interest, including without limitation, all interest, fees, charges, expenses and attorneys' fees chargeable to the Borrower or incurred by the Lender in connection with the Borrower's account whether provided for herein or in any Loan Document. (i) The term "Prime Rate" means the variable per annum rate of interest so designated from time to time by the Lender as its prime rate. The Prime Rate is a reference rate and does not necessarily represent the lowest or best rate being charged to any customer. The rate of interest hereunder shall change simultaneously and automatically, without further notice, upon the Lender's determination and designation from time to time of the Prime Rate. The -4-  Lender's determination and designation from time to time of the Prime Rate shall not in any way preclude the Lender from making loans to other borrowers at rates that are higher or lower than or different from the referenced rate. (12) OPTIONAL PREPAYMENT. (a) The Borrower has the right to pay before due any part of the unpaid balance bearing interest at the Prime Rate without penalty or premium. (b) At its option and upon written notice to Lender, the Borrower may prepay any amount bearing interest at the LIBOR Based Rate in whole or in part from time to time without premium or penalty but with accrued interest on the principal being prepaid to the date of such repayment provided that such amount may only be prepaid on the last Banking Day of the then current Interest Period with respect thereto. (c) In the event that any prepayment of an amount bearing interest at the LIBOR Based Rate is required or permitted on a date other than the last Banking Day of the then current Interest Period with respect thereto, Borrower shall have the right at any time and from time to time to prepay such amount in whole (but not in part) if no Event of Default exists and Borrower shall pay to Lender a Yield Maintenance Fee in an amount computed as follows: The current rate for United States Treasury securities (bills on a discounted basis shall be converted to a bond equivalent) with a maturity date closest to the maturity date of the term chosen pursuant to the Interest Period as to which the prepayment is made, shall be subtracted from the LIBOR Rate in effect at the time of prepayment. If the result is zero or a negative number, there shall be no Yield Maintenance Fee. If the result is a positive number, then the resulting percentage shall be multiplied by the amount of the principal balance being prepaid. The resulting amount shall be divided by 360 and multiplied by the number of days remaining in the term chosen pursuant to the Interest Period as to which the prepayment is made. Said amount shall be reduced to present value calculated by using the number of days remaining in the designated term and using the above-referenced United States Treasury security rate and the number of days remaining in the designated term chosen pursuant to the Interest Period as to which the prepayment is made. The resulting amount shall be the Yield Maintenance Fee due to Lender upon prepayment of the principal bearing interest at a LIBOR Based Rate. If by reason of any Event of Default Lender elects to declare the Loan to be immediately due and payable, then any Yield Maintenance Fee with respect to the Loan shall become due and payable in the same manner as though Borrower had exercised such right of prepayment. Borrower recognizes that Lender will incur substantial additional costs and expenses including loss of yield and anticipated profitability in the event of a prepayment of the Loan and that the Yield Maintenance Fee compensates Lender for such costs and expenses. Borrower acknowledges that the Yield Maintenance Fee is bargained for consideration and not a penalty. (d) All such prepayment amounts shall be applied first to fees and expenses then due hereunder, then to interest on the unpaid principal balance accrued to the date of prepayment and last to the principal balance then due hereunder. -5-  (13) DEFAULT. The happening of any of the following events or conditions shall constitute an "Event of Default" under this Note: 1. Failure to make any payment of principal or interest or any sum due under this Note when the same shall be due and payable; or 2. Default by the Borrower in the payment or performance of any obligation on its part to be paid or performed, or breached by the Borrower of any representation, warranty, term, covenant or condition of or under any agreements between the Lender and the Borrower including, without limitation, any default or Event of Default under that certain Loan Agreement dated of even date herewith, as the same may be amended, modified, extended or restated or in any Loan Document. Upon and after an Event of Default, the whole of said indebtedness, both principal and interest, and including any other sums which may become due under this Note, shall, at the option of the holder of this Note, immediately become due and payable without presentment, demand, protest, notice of protest, or other notice of dishonor of any kind, all of which are hereby expressly waived by the Borrower. (14) WAIVERS, CONSENT TO JURISDICTION. The Borrower agrees that no delay or failure on the part of the holder in exercising any power, privilege, remedy, option or right hereunder shall operate as a waiver thereof or of any other power, privilege, remedy or right; nor shall any single or partial exercise of any power, privilege, remedy, option or right hereunder preclude any other or future exercise thereof or the exercise of any other power, privilege, remedy, option or right. The rights and remedies expressed herein are cumulative, and may be enforced successively, alternately, or concurrently and are not exclusive of any rights or remedies which holder may or would otherwise have under the provisions of all applicable laws, and under the provisions of all agreements between the Borrower and the Lender. The Borrower hereby waives presentment, demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note. The Borrower hereby assents to any extension or postponement of the time of payment or any other indulgence, to the addition or release of any party or person primarily or secondarily liable, and to the addition, release and/or substitution of all or any portion of any collateral now or hereafter securing this Note. Borrower shall not be obligated to pay and Lender shall not collect interest at a rate higher than the maximum permitted by law or the maximum that will not subject Lender to any civil or criminal penalties. If, because of the acceleration of maturity the payment of interest in advance or any other reason, Borrower is required, under the provisions of any Loan Document or otherwise, to pay interest at a rate in excess of such maximum rate, the rate of interest under such provisions shall immediately and automatically be reduced to such maximum rate and any payment made in excess of such maximum rate shall be applied to principal outstanding hereunder or, if required by applicable law, shall be returned to Borrower. -6-  Lender shall have the unrestricted right at any time or from time to time, and without Borrower's consent, to sell, assign, endorse, or transfer all or any portion of its rights and obligations hereunder to one or more Lenders or other entities (each an "Assignee"), and Borrower agrees that it shall execute, or cause to be executed such documents including without limitation, amendments to this Agreement and to any other documents, instruments and agreements executed in connection herewith as Lender shall deem necessary to effect the foregoing. In addition, at the request of Lender and any such Assignee, Borrower shall issue one or more new promissory notes, as applicable, to any such Assignee and, if Lender has retained any of its rights and obligations hereunder following such assignment, to Lender, which new promissory notes shall be issued in replacement of, but not in discharge of, the liability evidenced by the note held by Lender prior to such assignment and shall reflect the amount of the respective commitments and loans held by such Assignee and Lender after giving effect to such assignment. Upon the execution and delivery of appropriate assignment documentation, amendments and any other documentation required by Lender in connection with such assignment, and the payment by Assignee of the purchase price agreed to by Lender and such Assignee, such Assignee shall be a party to this Agreement and shall have all of the rights and obligations of Lender hereunder (and under any and all other guaranties, documents, instruments and agreements executed in connection herewith) to the extent that such rights and obligations have been assigned by Lender pursuant to the assignment documentation between Lender and Assignee, and Lender shall be released from its obligation hereunder and thereunder to a corresponding extent. Lender shall have the unrestricted right at any time and from time to time, and without the consent of or notice to Borrower to grant to one or more institutions or other persons (each a "Participant") participating interests in Lender's obligations to lend hereunder and/or any or all of the loans held by Lender hereunder. In the event of any such grant by Lender of a participating interest to a Participant, whether or not upon notice to Borrower, Lender shall remain responsible for the performance of its obligations hereunder and Borrower shall continue to deal solely and directly with Lender in connection with Lender's rights and obligations hereunder. Lender shall furnish any information concerning Borrower in its possession from time to time to any prospective assignees and Participants, provided that Lender shall require any such prospective assignee or Participant to maintain the confidentiality of such information. Upon receipt of an affidavit of an officer of Lender as to the loss, theft, destruction or mutilation of the Note or any other security document(s) which is not of public record and, in the case of any such loss, theft, destruction or mutilation, upon surrender and cancellation of such Note or other document(s), the Borrower will issue, in lieu thereof, a replacement Note or other document(s) in the same principal amount thereof and otherwise of like tenor. Lender may at any time pledge, endorse, assign, or transfer all or any portion of its rights under the Loan Documents including any portion of this Note to any of the twelve (12) Federal Reserve Banks organized under Section 4 of the Federal Reserve Act 12 U.S.C. Section 341. No such pledge or enforcement thereof shall release Lender from its obligations under any of the Loan Documents. -7-  Borrower hereby grants to Lender a lien, security interest and a right of setoff as security for all of the Obligations, upon and against all deposits, credits, collateral and property, now or hereafter in the possession, custody, safekeeping or control of Lender or any entity under the control of Lender, or in transit to any of them. At any time, without demand or notice, Lender may set off the same or any part thereof and apply the same to any liability or obligation of Borrower even though unmatured and regardless of the adequacy of any other collateral securing the Obligations. ANY AND ALL RIGHTS TO REQUIRE LENDER TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF THE BORROWER, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED. Lender shall not be required to marshal any present or future security for, or guarantees of, the Obligations or to resort to any such security or guarantee in any particular order and the Borrower waives to the fullest extent that it lawfully can, (a) any right it might have to require the Lender to pursue any particular remedy before proceeding against the Lender and (b) any right to the benefit of, or to direct the application of the proceeds of any collateral until the Obligations are paid in full. Borrower hereby waives such rights as it may have to notice and/or hearing under any applicable federal or state laws pertaining to the exercise by Lender of such rights as the Lender may have regarding the right to seek prejudgment remedies and/or deprive Borrower or any Guarantor of or affect the use of or possession or enjoyment of Borrower's property prior to the rendition of a final judgment against the Borrower. The Borrower further waives any right it may have to require Lender to provide a bond or other security as a precondition to or in connection with any prejudgment remedy sought by Lender, and waives any objection to the issuance of such prejudgment remedy based on any offsets, claims, defenses or counterclaims to any action brought by the Lender. BORROWER AND LENDER MUTUALLY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE, THE LOAN AGREEMENT OR ANY OTHER LOAN DOCUMENTS EXECUTED IN CONNECTION HEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR LENDER TO MAKE THE LOAN AND ACCEPT THIS AGREEMENT. Borrower hereby agrees that the following courts: State Court - Any state or local court of the Governing State Federal Court - United States District Court for the District of the Governing State or at the option of Lender, any court in which Lender shall initiate legal or equitable proceedings and which has subject matter jurisdiction over the matter in controversy, shall have exclusive jurisdiction to hear and determine any -8-  claims or disputes between Borrower and Lender pertaining directly or indirectly to this Agreement or to any matter arising in connection with this Agreement. Borrower expressly submits and consents in advance to such jurisdiction in any action or proceeding commenced in such courts, hereby waiving personal service of the summons and complaint, or other process or papers issued therein, and agreeing that service of such summons and complaint, or other process or papers, may be made by registered or certified mail addressed to Borrower at the address set forth herein. Should Borrower fail to appear or answer any summons, complaint, process or papers so served within thirty (30) days after the mailing thereof, it shall be deemed in default and an order and/or judgment may be entered against it as demanded or prayed for in such summons, complaint, process or papers. The exclusive choice of forum set forth herein shall not be deemed to preclude the enforcement of any judgment obtained in such forum or the taking of any action under this Agreement to enforce the same in any appropriate jurisdiction. This Note shall be governed by and construed in accordance with the laws of the Governing State. Dated: December 9, 2005. ENCLAVES OF GRAND OAKS LLC By: Enclaves Group, Inc. Its Managing Member By: /s/ Daniel G. Hayes ---------------------------- Daniel G. Hayes Its President and CEO -9-