PROMISSORY NOTE, LOAN AND SECURITY AGREEMENT BRIDGE FUNDING

Exhibit 10.1

THE SECURITY REPRESENTED HEREBY, AND THE SECURITIES ISSUABLE UPON CONVERSION OR REDEMPTION HEREOF, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, ENCUMBERED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS WHICH, IN THE OPINION OF COUNSEL FOR THE HOLDER, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO COUNSEL FOR THIS COMPANY, IS AVAILABLE.

VEMICS, INC.

PROMISSORY NOTE,

LOAN AND SECURITY AGREEMENT

BRIDGE FUNDING

US$1,200,000

FOR VALUE RECEIVED, Vemics, Inc., a corporation duly organized and validly existing under the laws of the state of Nevada (the “ Company ”), promises to pay to Sonoran Pacific Resources, LLP , an Arizona limited liability partnership , the registered holder of this secured convertible promissory note (“ Note ”) and its successors and assigns (the “ Holder ”), the principal sum of One Million Two Hundred Thousand Dollars ($1,200,000) (“ Loan Proceeds ”) in accordance with the terms hereof, and interest on the principal sum outstanding in accordance with the terms hereof.  Accrual of interest on the outstanding principal amount shall commence on the date hereof and shall continue until payment in full of the outstanding principal amount has been made or duly provided for, or until the entire outstanding principal amount of the Note has been converted.

This Note has been issued in the aggregate principal amount of $1,200,000 (collectively, the “ Loan Proceeds ”).  The Loan Proceeds shall be paid to the Company as follows: (i) $200,000 previously paid by wire transfer on March 5, 2008, (ii) $20,000 as interest accrued on said initial principal advance from the date of advance through the date hereof and added to the outstanding principal on the date hereof, (iii) $75,000 by wire transfer on the date hereof, (iv) $300,000 by wire transfer on or before April 25, 2009, and (v) the balance in monthly draw requests by the Company on or before the 2 ^nd   of each month as a supplement to the Company’s cash receipts subject to the reasonable approval of Holder.

The following is a statement of the rights of the Holder of this Note and the terms and conditions to which this Note is subject, and to which the Holder, by acceptance of this Note, agrees:

1.      Closing Fee .  Immediately upon the execution hereof, the Company shall issue to Holder 4,000,000 shares of its common stock, par value $0.001 per share (“Common Stock”).

2.      Principal Repayment and conversion options .  The outstanding principal amount of this Note and any and all accrued but unpaid interest thereon shall be payable on or before December 31, 2009 (the “ Maturity Date ”), unless this Note has been converted or redeemed at the Holder’s written consent.  The Company may prepay all or any portion of this Note at any time provided the prepayment includes an additional 50% redemption fee with respect to the amount prepaid. ( example; principal, interest due plus 50% redemption fee).

3.                Interest .  The Holder shall receive interest on the outstanding principal amount of this Note at the rate of Fifteen Percent (15.0%) per annum.  Interest shall be due and payable on the last day of each month hereafter and on the Maturity Date.  Accrued interest may be drawn from the undisbursed Loan Proceeds and shall be so drawn if not otherwise timely paid by the Company.  Interest payments drawn from the Loan Proceeds shall be added to the principal balance outstanding immediately upon being so drawn. In the event the Loan Proceeds have been fully drawn and the Company fails to pay interest timely before the Maturity Date, then all of the provisions of Section 5(c)(iii) shall become immediately effective so that the interest rate becomes 25% per annum, the additional Common Stock and warrants are immediately issued by the Company, and the New Balance is repaid according to the terms therein stated.

4.               Security. The Holder shall receive a security interest in as described in Exhibit “A” attached hereto in all of the Collateral as defined therein, with such rights and remedies as described therein.

5.                Conversion.  The primary intent of the Company and the Holder is that this Note is to be repaid in cash plus interest. The options listed below are for the Holder’s benefit only.

(a)            Optional Conversion .  From and after the date hereof, Holder may elect, at its option, to convert all or any portion of the outstanding Loan Proceeds into shares of Preferred Stock of the Company (“Preferred Stock”), at the Conversion Price. The Conversion Price shall be $67,500 per share of Preferred Stock of the Company, which amount is determined by dividing the sum of  the full potential Loan Proceeds ($1,200,000) plus the full 50% redemption fee ($600,000), as hereafter described, by 28 shares of Preferred Stock. Each share of Preferred Stock issued shall be immediately automatically converted into Common Stock or at such time determined by the Holder, equal to 1% of the equity ownership in the Company. Equity ownership shall include all issued Common Stock including all shares of Common Stock to be issued to the Holder upon conversion of the portion of the Note to be converted,  and all outstanding warrants and options that have exercise prices up to double the average trading day price for the previous 20 days prior to conversion into Common Stock. The option to convert the outstanding Loan Proceeds into equity will expire 24 hours prior to a capital raise by the Company of a minimum of $10,000,000 (Ten Million Dollars), provided the Company has given the Holder at least ten days prior written notice of such expiration and the details of such capital raise.

(b)            Mechanics of Conversion .  Upon any conversion of the outstanding principal amount of this Note, (i) such principal amount converted shall be converted and such converted portion of this Note shall become fully paid and satisfied, (ii) the Holder shall surrender and deliver the original Note, together with its written election of exercise of the conversion rights including a statement as to the portion of the Note being converted, to the Company’s office or such other address which the Company shall designate against delivery of the certificates representing Common Stock of the Company; (iii) the Company shall promptly deliver a new duly executed Note to the Holder in the principal amount, if any, that remains outstanding after any such conversion; and (iv) in exchange for all or any portion of the surrendered Note described in clause (ii) of this Section 5(b), the Company shall provide the Holder with irrevocable instructions addressed to the Company’s transfer and exchange agent, as applicable, to issue the appropriate number of shares of Common Stock.

(c)           Repayment Option. The Holder shall have the option at the Maturity Date to redeem this Note for cash as follows:

(d)                     Issue Taxes .  The Company shall pay any and all issue and other taxes that may be payable with respect to any issue or delivery of shares of Common Stock on conversion of this Note pursuant hereto; provided , however , that the Company shall not be obligated to pay any transfer taxes resulting from any transfer requested by Holder in connection with any such conversion.

(e)                     Elimination of Fractional Interests .  No fractional shares of Common Stock shall be issued upon conversion of this Note, nor shall the Company be required to pay cash in lieu of fractional interests, it being the intent of the parties that all fractional interests shall be eliminated and that all issuances of the Common Stock shall be rounded up to the nearest whole share.

(f)                     Warrants .  Upon the date hereof the Company shall issue 480,000 warrants (in the form attached hereto as Exhibit “B”) convertible into of Common Stock at a price of $.05 per share, with five years to convert.

6.            Early Repayment by May 31, 2009 . If the Company repays the entire Note on or before May 31, 2009, such early repayments shall be the sum of the following:

7.            Rights upon Liquidation, Dissolution or Winding Up.   In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, the Holder shall be entitled to receive, prior and in preference to any distribution of any of the assets of the Company or to the holders of any equity security of the Company, an amount equal to the unpaid and unconverted principal face amount of the Note and any accrued and unpaid interest thereon.

8.            Affirmative Covenants of the Company .  The Company hereby agrees that, so long as the Note remains outstanding and unpaid, or any other amount is owing to the Holder hereunder, the Company will:

(a)            Corporate Existence and Qualification .  Take the necessary steps to preserve its corporate existence and its right to conduct business in all states in which the nature of its business requires qualification to do business.

(b)            Books of Account .  Keep its books of account in accordance with good accounting practices.

(c)            Insurance .  Maintain insurance with responsible and reputable insurance companies or associations, as determined by the Company in its sole but reasonable discretion, in such amounts and covering such risks as is usually carried by companies engaged in similar businesses and owning similar properties in the same general areas in which the Company operates.

(d)            Preservation of Properties; Compliance with Law .  Maintain and preserve all of its properties that are used or that are useful in the conduct of its business in good working order and condition, ordinary wear and tear excepted and comply with the charter and bylaws or other organizational or governing documents of the Company, and any law, treaty, rule or regulation, or determination of an arbitrator or a court or other governmental authority, in each case applicable to or binding upon the Company or any of its property or to which each the Company or any of its property is subject.

                (e)            Taxes .  Duly pay and discharge all taxes or other claims, which might become a lien upon any of its property except to the extent that any thereof are being in good faith appropriately contested with adequate reserves provided therefor.

(f)            Reservation of Shares .  The Company shall at all times have authorized, and reserved for the purpose of issuance, a sufficient number of shares of Common Stock issuable upon conversion of this Note and exercise of the Warrants to provide for the issuance of all of such shares.  Prior to complete conversion of this Note and exercise of the Warrants, the Company shall not reduce the number of shares of Common Stock reserved for issuance hereunder without the written consent of the Holder except for a reduction proportionate to a reverse stock split effected for a business purpose other than affecting the requirements of this Section, which reverse stock split affects all shares of Common Stock equally.

(g)            Use of Proceeds .  The proceeds of the Note will be used for working capital purposes.

                                (h)            Financial Information .  The company shall maintain its filings with the Securities and Exchange Commission pursuant to Section 13 or Section 15 of the Exchange Act.

9.            Negative Covenants of the Company .  The Company hereby agrees that, so long as all or any portion of this Note remains outstanding and unpaid it will not, nor will it permit any of its subsidiaries, if any, without the consent of the  Holder (as defined in Section 16 hereof), to:

(a)            Indebtedness for Borrowed Money .  Without the prior written consent of the Holder, incur, or permit to exist, any new Indebtedness (as defined below) for borrowed money in excess of $50,000 during each fiscal year of the Company,  except in the ordinary course of the Company’s business.  For purposes of this Note, “ Indebtedness ” shall mean (a) all obligations of the Company for borrowed money or with respect to deposits or advances of any kind, (b) all obligations of the Company evidenced by bonds, debentures, notes or other similar instruments, (c) all obligations of the Company for the deferred purchase price of property or services, except current accounts payable arising in the ordinary course of business and not overdue beyond such period as is commercially reasonable for the Company’s business, (d) all obligations of the Company under conditional sale or other title retention agreements relating to property purchased by the Company, (e) all payment obligations of the Company with respect to interest rate or currency protection agreements, (f) all obligations of the Company as an account party under any letter of credit or in respect of bankers’ acceptances, (g) all obligations of any third party secured by property or assets of such Person (regardless of whether or not the Company is liable for repayment of such obligations), except for obligations to secure Indebtedness incurred within the limitations of this Section 9(a); (h) all guarantees of the Company and (i) the redemption price of all redeemable preferred stock of the Company, but only to the extent that such stock is redeemable at the option of the holder or requires sinking fund or similar payments at any time prior to the Maturity Date.

(b)            Mergers, Acquisitions and Sales of Assets .   Enter into any merger or consolidation or liquidate, windup or dissolve itself or sell, transfer or lease or otherwise dispose of all or any substantial part of its assets or technologies (other than sales of inventory and obsolescent equipment in the ordinary course of business); except: (i) if the Company is the surviving corporation and a change in control has not occurred, (ii) that any subsidiary of the Company may merge into or consolidate with any other subsidiary which is wholly-owned by the Company, and (iii) any subsidiary which is wholly-owned by the Company may merge with or consolidate into the Company provided that the Company is the surviving corporation.

(c)            Loans.   Lend or advance money, credit or property to (by capital contribution, loan, purchase or otherwise) any firm, corporation, or other Person except (i) investments in United States Government obligations, certificates of deposit of any banking institution with combined capital and surplus of at least $200,000,000; (iii) accounts receivable arising out of sales in the ordinary course of business; and (iv) loans to subsidiaries, if any.

(d)            Dividends and Distributions .  Pay dividends or make any other distribution on shares of the capital stock of the Company.

(e)            Liens .  Create, assume or permit to exist, any lien on any of its property or assets now owned or hereafter acquired except (i) liens in favor of the Holder; (ii) liens granted to secure Indebtedness incurred within the limitations of Section 9(a) hereof; (iii) liens incidental to the conduct of its business or the ownership of its property and assets which were not incurred in connection with the borrowing of money or the obtaining of advances or credit and which do not materially impair the use thereof in the operation of its business; (iv) liens for taxes or other governmental charges which are not delinquent or which are being contested in good faith and for which a reserve shall have been established in accordance with generally accepted accounting principles; and (v) purchase money liens granted to secure the unpaid purchase price of any fixed assets purchased within the limitations of Section 9(h) hereof.

(f)            Contingent Liabilities .  Assume, endorse, be or become liable for or guarantee the obligations of any Person, contingently or otherwise, excluding however, the endorsement of negotiable instruments for deposit or collection in the ordinary course of business or guarantees of the Company made within the limitations of Section 9(a) hereof.

(g)            Sales of Receivables; Sale - Leasebacks .  Sell, discount or otherwise dispose of notes, accounts receivable or other obligations owing to the Company, with or without recourse, except for the purpose of collection in the ordinary course of business; or sell any asset pursuant to an arrangement to thereafter lease such asset from the purchaser thereof.

(h)            Capital Expenditures; Capitalized Leases .  Expend in the aggregate for the Company and all its subsidiaries in excess of $100,000 in any fiscal year for Capital Expenditures (as defined below), including payments made on account of Capitalized Leases (as defined below).  “ Capital Expenditures ” shall mean for any period, the aggregate amount of all payments made by any Person directly or indirectly for the purpose of acquiring, constructing or maintaining fixed assets, real property or equipment which, in accordance with generally accepted accounting principles, would be added as a debit to the fixed asset account of such Person, including, without limitation, all amounts paid or payable with respect to Capitalized Lease Obligations and interest which are required to be capitalized in accordance with generally accepted accounting principles.  “ Capitalized Lease ” shall mean any lease the obligations to pay rent or other amounts under which constitute Capitalized Lease Obligations.  “ Capitalized Lease Obligations ” shall mean as to any Person, the obligations of such Person to pay rent or other amounts under a lease of (or other agreement conveying the right to use) real and/or personal property which obligations are required to be classified and accounted for as a capital lease on a balance sheet of such Person under generally accepted accounting principles and, for purposes of this Note, the amount of such obligations shall be the capitalized amount thereof, determined in accordance with generally accepted accounting principles.

(i)            Nature of Business .  Materially alter the nature of the Company’s business or otherwise engage in any business other than the business engaged in or proposed to be engaged in on the date of this Note.

(j)            Stock of Subsidiaries .  Sell or otherwise dispose of any subsidiary, if any, or permit a subsidiary, if any, to issue any additional shares of its capital stock except pro rata to its stockholders.

(k)            ERISA .  (i) Terminate any plan ( “Plan” ) of a type described in Section 402l(a) of the Employee Retirement Income Security Act of l974, as amended from time to time ( “ERISA” ) in respect of which the Company is an “employer” as defined in Section 3(5) of ERISA so as to result in any material liability to the Pension Benefit Guaranty Corporation (the “ PBGC ”) established pursuant to Subtitle A of Title IV of ERISA, (ii) engage in or permit any person to engage in any “prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of the Internal Revenue Code of 1954, as amended) involving any Plan which would subject the Company to any material tax, penalty or other liability, (iii) incur or suffer to exist any material “accumulated funding deficiency” (as defined in Section 302 of ERISA), whether or not waived, involving any Plan, or (iv) allow or suffer to exist any event or condition, which presents a material risk of incurring a material liability to the PBGC by reason of termination of any Plan.

(l)            Accounting Changes .  Make, or permit any subsidiary to make any change in their accounting treatment or financial reporting practices except as required or permitted by generally accepted accounting principles in effect from time to time.

(m)            Transactions with Affiliates .  Directly or indirectly, purchase, acquire or lease any property from, or sell, transfer or lease any property to, or enter into any other transaction, with any Affiliate (as defined below) except in the ordinary course of business and at prices and on terms not less favorable to it than those which would have been obtained in an arm’s-length transaction with a non-affiliated third party.   “Affiliate” as applied to any Person, shall mean any other Person directly or indirectly through one or more intermediaries controlling, controlled by, or under common control with, that Person.  For the purposes of this definition, “control” (including with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting securities or by contract or otherwise.

10.            Events of Default .  The Note shall become immediately due and payable at the option of the Holder, without notice or demand, upon any one or more of the following events or occurrences (“ Events of Default ”):

(a)           if any portion of the Note is not paid when due;

(b)           if any representation or warranty of the Company made in this Note, or in any certificate, report or other financial statement or other instrument or document delivered pursuant hereto, or any notice, certificate, demand or request delivered to the Holder pursuant to this Note or any other document proves to be false or misleading in any material respect as of the time when the same is made;

(c)           if the Company consummates a transaction which would cause this Note or any exercise of any Holder’s rights under this Notes and the Warrants (i) to constitute a non-exempt prohibited transaction under ERISA, (ii) to violate a state statute regulating governmental plans or (iii) otherwise to subject the Company to liability for violation of ERISA or such state statute;

(d)           if any final judgment for the payment of money is rendered against the Company and the Company does not discharge the same or cause it to be discharged or vacated within one hundred twenty (120) days from the entry thereof, or does not appeal therefrom or from the order, decree or process upon which or pursuant to which said judgment was granted, based or entered, and does not secure a stay of execution pending such appeal within one hundred twenty (120) days after the entry thereof;

(e)           subject to the provisions of Section 9(e) hereof, if any taxes are not paid before delinquency;

(f)           if the Company makes an assignment for the benefit of creditors or if the Company generally does not pay its debts as they become due;

(g)           if a receiver, liquidator or trustee of the Company is appointed or if the Company is adjudicated a bankrupt or insolvent, or if any petition for bankruptcy, reorganization or arrangement pursuant to federal bankruptcy law, or any similar federal or state law, is filed by or against, consented to, or acquiesced in, by the Company or if any proceeding for the di