Form of Promissory Note

EXHIBIT 10.1

Form of Promissory Note

PROMISSORY NOTE

             FOR VALUE RECEIVED, Vegalab, Inc. ("Borrower") promises to pay to the order of ______________. or its successors and assigns ("Holder") at _________________, or such other address as it may designate from time to time, the principal sum of FIVE HUNDRED THOUSAND DOLLARS ($500,000) (the “Loan Amount”), together with interest thereon as set forth herein, on the following terms and conditions:

8.1       Borrower is under no legal disability to execute, deliver and perform the Note;

8.2       the execution, delivery and performance by Borrower of the agreements within this Note will not violate any Jaw, rule, regulation or court order or result in the breach of or constitute a default under any indenture or loan, credit or other agreement or instrument to which Borrower is a party or by which its properties may be bound or affected or result in the creation or imposition of any lien, charge or encumbrance of any nature upon any of its properties or assets contrary to the terms of any such instrument or agreement;

8.3       the Note constitutes the legal, valid and binding obligation of Borrower enforceable in accordance with its respective terms (except, as to enforceability, to the extent limited by bankruptcy, insolvency and other similar laws affecting creditors’ rights generally);

8.4       there is no suit, action or proceeding pending or, to the knowledge of Borrower, threatened against or affecting Borrower or Guarantor before any court, arbitrator, administrative agency or other governmental authority which, if adversely determined, would materially and adversely affect its business, properties, operations, assets or condition (financial or otherwise) or the validity of any of the transactions contemplated by the Note, or the ability of Borrower or Guarantor to perform its or his obligations hereunder or thereunder or as contemplated hereby or thereby;

8.5       Neither Borrower nor Guarantor is in default of a material provision under any material agreement, instrument, decree or order to which it or he is a party or to which its or his property is bound or affected;

8.6       All financial information of the Borrower and the Guarantor provided to the Holder is true, accurate and complete as of the date of such information. There has been no material adverse change in the Borrower’s or Guarantor’s financial condition from the date of such information. All financial statements of the Borrower and the Guarantor fully and fairly present the financial condition of the Borrower or the Guarantor, as the case may be, on the dates thereof and the results of its operations for the periods covered thereby. The Borrower and the Guarantor have filed all required state, federal and local tax returns and have paid, or made arrangements for the payment of, all taxes due and owing,

8.7       Borrower has not entered into any loan agreements, executed any notes, or further encumbered the Collateral, except as disclosed to Holder and outlined on Exhibit A attached hereto.

10.1       As used herein, the term “Event of Default” shall mean and include each or all of the following events:

10.1.1       Borrower shall fail to pay, within ten (10) days after the due date thereof, any amounts required to be paid by Borrower under the Note or any other indebtedness of Borrower to Holder, whether any such indebtedness is now existing or hereafter arises and whether direct or indirect, due or to become due, absolute or contingent, primary or secondary or joint or joint and several;

10.1.2       Borrower or Guarantor shall fail to observe or perform any of the covenants, conditions or agreements to be observed or performed by it or he under the Note or Guaranty or any credit or similar agreement between Borrower and Holder for a period of twenty (20) days after written notice, specifying such default and requesting that it be remedied, given to Borrower by Holder;

10,1.3       Borrower or Guarantor shall file a petition in bankruptcy under any present or future state or federal bankruptcy act or under any similar federal or state law, or shall be adjudicated a bankrupt or insolvent, or shall make a general assignment for the benefit of his creditors, or shall be unable to pay its debts generally as they become due; or if a petition or answer proposing the adjudication of Borrower or Guarantor as a bankrupt under any present or future state or federal bankruptcy act or any similar federal or state law shall be filed in any court and such petition or answer shall not be discharged or denied within sixty (60) days after the filing thereof;

10.1.4       final judgment(s) for the payment of money shall be rendered against Borrower or Guarantor and shall remain undischarged for a period of thirty (30) days during which execution shall not be effectively stayed;

10.1.5       Borrower or Guarantor shall be or become insolvent (whether in the equity or bankruptcy sense);

10.1.6       any representation or warranty made by Borrower in the Note or Guarantor in the Guaranty shall prove to be untrue or misleading in any material respect, or any statement, certificate or report furnished hereunder or under any of the foregoing documents by or on behalf of Borrower or Guarantor to Holder shall prove to be untrue or misleading in any material respect on the date when the facts set forth and recited therein are stated or certified;

10.1.7       Guarantor shall die or take any action to revoke or terminate the Guaranty, provided however, the same shall not constitute an Event of Default unless Borrower is unable to provide a substitute guarantor that is reasonably satisfactory to Holder within ninety (90) days following the death of the Guarantor.

10.2       Rights and Remedies. Upon the occurrence of an Event of Default or at any time during its continuance, Holder may, at its option, exercise any and all of the following rights and remedies (and any other rights and remedies available to it):

10.2.1       Holder may, without notice, declare immediately due and payable all unpaid sums due to it under this Note, and to demand immediate payment of the Note;

10.2.2       Holder shall have the right, in addition to any other rights provided by law, to enforce its rights and remedies under the Note.

IN WITNESS WHEREOF, this Note has been executed as of the date set forth above.