Vaughan Foods, Inc.
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>4
<FILENAME>c57062_ex10-23.htm
<TEXT>
<HTML>

<HEAD><TITLE></TITLE></HEAD>
<BODY>

<P ALIGN=RIGHT><FONT SIZE=2><B>Exhibit 10.23</B></FONT></P>

<P ALIGN=CENTER><FONT SIZE=2><B>MANAGEMENT AGREEMENT</B></FONT></P>

<P><FONT
SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
Management Agreement (this &#147;<U>Agreement</U>&#148;) is effective April 8, 2009 (the
&#147;<U>Effective Date</U>&#148;) by and between Vaughan Foods, Inc. (the &#147;<U>Company</U>&#148;) and Gene P. Jones (the
&#147;<U>Executive</U>&#148;) with
respect to the following:.</FONT></P>

<P><FONT
SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS,
the Executive currently serves as a senior executive officer of the Company;
and</FONT></P>

<P><FONT
SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS,
the Company desires to provide stability to the Employer/Employee relationship
of the Executive by entering into this Agreement with the Executive; and</FONT></P>

<P><FONT
SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS,
the Board of Directors of the Company believes it in the best interest of the
Company to provide continuity of its senior management by entering into
employment agreements with certain members of its senior management team. </FONT></P>

<P><FONT
SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NOW,
THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:</FONT></P>

<TABLE ALIGN=CENTER BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR style="font-size:1px">
<TD WIDTH="4%" VALIGN=TOP>
<P>&nbsp;</P>
</TD>
<TD WIDTH="96%" VALIGN=TOP>
<P>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=2><B>31.</B></FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2><B><U>Term of Agreement; Defined Terms</U></B>.</FONT></P>
</TD>
</TR>
</TABLE>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U>Term
of Agreement</U>. This Agreement shall not have any specific duration and shall
continue in full force and effect unless and until (i) the Executive&#146;s
employment is terminated by either party in accordance with Section 3, and (ii)
all obligations and liabilities of the parties arising in connection with such
termination or otherwise accruing under this Agreement have been fully
satisfied. Notwithstanding any contrary provision in this Agreement, nothing in
this Agreement constitutes a guarantee of continued employment but instead
provides for certain rights and benefits during the Executive&#146;s employment with
the Company and if such employment terminates. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U>Defined
Terms</U>. Capitalized terms used throughout this Agreement have the meaning
ascribed to such terms in <U>Exhibit &#147;A&#148;</U> attached hereto. </FONT></P>

<TABLE ALIGN=CENTER BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR style="font-size:1px">
<TD WIDTH="4%" VALIGN=TOP>
<P>&nbsp;</P>
</TD>
<TD WIDTH="96%" VALIGN=TOP>
<P>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=2><B>32.</B></FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2><B><U>Terms, Conditions, and Benefits of Employment</U></B>.</FONT></P>
</TD>
</TR>
</TABLE>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U>Position and Duties</U>. The
Executive shall serve as Chief Financial Officer of the Company or in such
other substantially equivalent position(s) requested by the Board with the
appropriate authority, duties, and responsibilities attendant to such
position(s). The Executive shall devote his full working time, best efforts,
abilities, knowledge, and experience to the Company&#146;s business and affairs as
necessary to faithfully perform his duties, responsibilities, and authorities under
this Agreement. The Executive may, without violating this Agreement,
(i)&nbsp;serve on corporate, civic, charitable, or industry boards or
committees, (ii)&nbsp;deliver lectures, fulfill speaking engagements, or teach
at educational institutions, or (iii)&nbsp;manage personal investments, so long
as such activities do not significantly interfere with the Executive&#146;s
obligations under this Agreement; <U>provided, however</U>, that the Executive
shall not serve on the board of any business, hold any other position with any
business, or otherwise engage in any</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4><P ALIGN=LEFT STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<P><FONT SIZE=2>business activity, without the prior written consent of his Supervisor.
If the Executive conducted any such activities as of the Effective Date, then
the continuation of such activities (or similar activities for the same
organization) after the Effective Date shall be permitted.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U>Annual
Base Salary</U>. The Executive shall receive an Annual Base Salary, which may
be increased from time to time in the Company&#146;s discretion but shall not be
reduced unless the Company reduces the salaries of similarly situated
executives, in which case the Annual Base Salary may be reduced by the same
percentage and shall be restored to its prior level when, and to the same
extent as, the Company restores the salaries of such similarly situated
executives. Any increase in Annual Base Salary shall not limit or reduce any
other obligation owed to the Executive under this Agreement. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <U>Annual
Bonus</U>. The Executive shall be eligible to participate in a program in which
he may receive an Annual Bonus. If the Compensation Committee establishes a
target for the Annual Bonus as a percentage of the Annual Base Salary, then
such target shall not be less than the targets for similarly situated
executives of the Company. Unless otherwise payable under Sections 4(b)(i)(B)
or 4(c), the Executive must be actively employed for the entire year upon which
the Annual Bonus is based to be eligible to receive such Annual Bonus.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <U>Incentive
Awards</U>. In the Compensation Committee&#146;s discretion, the Company may provide
the Executive with annual equity grants, or cash awards in lieu of such grants,
which shall be comparable to the grants or awards made to similarly situated
executives of the Company.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <U>Disability</U>.
The Company shall provide the same disability insurance coverage benefits to
the Executive as provided to similarly situated executives of the Company. If,
during his employment with the Company, the Executive receives Short-Term
Disability Payments, then the Company shall pay the Executive the difference
between the Short-Term Disability Payments and the portion of his then-current
Annual Base Salary the Company would have paid him while receiving Short-Term
Disability Payments. If the Executive is Disabled during his employment with
the Company and otherwise entitled to receive salary and bonus payments under
this Agreement, then any such salary and bonus payments (or such payments in
lieu of salary and bonus payments) shall be reduced by the amount of any
Short-Term Disability Payments received by the Executive for the period of
short-term disability and any benefits paid for the same period under the
Company-provided disability insurance coverage.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <U>Expenses</U>.
The Company shall reimburse the Executive for all reasonable business-related
expenses incurred and accounted for in accordance with its standard policies
and procedures for expense reimbursements and deductibles under Section 162 of
the Code.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) <U>Other
Employee Benefits</U>. During the term of this Agreement, the Executive shall
be entitled to participate in all employee benefit, welfare, and other plans,
practices, policies, and programs applicable to similarly situated executives
of the Company, subject to the terms of such plans, practices, policies, and
programs as they may be amended from time to time. Specifically, the Executive
shall be entitled to four (4) weeks of paid vacation a year, which if not taken
may not be carried over to another year. During any CIC Period, the Company
shall continue to provide the Executive (and the Executive&#146;s dependents, if
applicable) with the same level of</FONT></P>

<P ALIGN=CENTER><FONT SIZE=2>2</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4><P ALIGN=LEFT STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<P><FONT SIZE=2>health (including dental), disability, and life (including accidental
death/dismemberment) insurance benefits as were provided to the Executive (and
the Executive&#146;s dependents, if applicable) immediately before the Change in
Control upon terms and conditions that are not materially less favorable to the
Executive than as in effect immediately before the Change in Control with
respect to each of such health, disability, and life insurance coverages.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) <U>Fringe
Benefits</U>. To the extent not otherwise covered under this Agreement, the
Company shall provide the Executive with fringe benefits and perquisites to the
same extent and on the same terms as those benefits are provided by the Company
from time to time to similarly situated executives of the Company.</FONT></P>

<TABLE ALIGN=CENTER BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR style="font-size:1px">
<TD WIDTH="4%" VALIGN=TOP>
<P>&nbsp;</P>
</TD>
<TD WIDTH="96%" VALIGN=TOP>
<P>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=2><B>33.</B></FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2><B><U>Termination of Employment; Suspensions; Change in Control</U></B>.</FONT></P>
</TD>
</TR>
</TABLE>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U>Termination
Upon Death</U>. The Executive&#146;s employment with the Company shall terminate
immediately upon the Executive&#146;s death. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U>Reassignment of Duties and
Termination Due
to the Executive Becoming Disabled</U>. </FONT></P>

<P><FONT
SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)
<U>Reassignment</U>. Whether or not the Executive is Disabled, the Company may
reassign his duties during any time he has become physically or mentally
incapable of performing his essential job functions with or without reasonable
accommodation or job protection as required by law and no such reassignment
shall be deemed Good Reason for the Executive to terminate his employment under
Section 3(d).</FONT></P>

<P><FONT
SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)
<U>Termination</U>. If the Executive becomes Disabled, then the Company may
give the Executive written notice of its intent to terminate his employment, in
which case such employment shall terminate effective on the thirtieth (30th)
day after receipt of such notice as long as the Executive has not been
medically released and returned to full-time duty before such thirtieth (30th)
day. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <U>Termination by the Company;
Cause</U>.
The Company may terminate the Executive&#146;s employment with the Company at any
time whether with or without Cause. If the Company terminates the Executive&#146;s
employment for Cause, then such termination shall not be effective unless and
until the Board (i) provides reasonable notice and an opportunity to the
Executive and his counsel (if applicable) to be heard at a meeting called to
discuss the Executive&#146;s employment and (ii) subsequently provides the Executive
with a copy of a resolution duly adopted by at least a three-fifths (3/5)
majority of the Board specifying that the Board has determined in good faith
that Cause exists for terminating the Executive&#146;s employment. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <U>Termination by the Executive; Good
Reason</U>.
The Executive may terminate his employment with the Company at any time whether
with or without Good Reason. If
the Executive believes Good Reason exists for terminating his employment, then
he shall give the Company written notice of the acts or omissions constituting
Good Reason within thirty (30) days after learning of such acts or omissions
constituting Good Reason (the &#147;<U>Good Reason Notice</U>&#148;). No termination of
employment for Good Reason shall be effective unless (i) within thirty (30)
days after receiving the Good Reason Notice, the Company fails to either cure
such acts or omissions or notify the Executive of the intended method of cure,
and (ii) the Executive delivers a Notice of Termination to the Company and
subsequently resigns within thirty (30)</FONT></P>

<P ALIGN=CENTER><FONT SIZE=2>3</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4><P ALIGN=LEFT STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<P><FONT SIZE=2>days after the Company&#146;s deadline in Section 3(d)(i) expires.
Notwithstanding the previous sentence and at the Company&#146;s request, the
Executive shall provide services consistent with his then-current authority,
duties, and responsibilities for up to ninety (90) days after having provided
the Good Reason Notice to the Company.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <U>Paid
Suspensions</U>. Notwithstanding any contrary provision in this Agreement, the
Company may suspend the Executive with pay for up to thirty (30) days pending
an investigation authorized by the Company or the Board, or pursued by, or at
the request of, a governmental authority, to determine whether the Executive
has engaged in acts or omissions constituting Cause. Any such paid suspension
shall not constitute Good Reason for the Executive to terminate his employment
under Section 3(d). The Executive shall cooperate with the Company in
connection with any such investigation. If the Executive&#146;s employment is
subsequently terminated for Cause in connection with such investigation, then
the Executive shall repay any amounts paid by the Company to the Executive
during such paid suspension.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <U>Effect of a Change in Control on
Timing of
Termination Date</U>. If the Company terminates the Executive&#146;s
employment other than for Cause or the Executive becoming Disabled and a Change
in Control occurs following the Termination Date, then such Change in Control
shall be deemed to have occurred immediately prior to the Termination Date if
either (i) the Termination Date occurs following the execution of an agreement
that provides for a transaction or transactions that, if consummated,
constitutes such Change in Control, or (ii) the Executive reasonably
demonstrates that such termination was either (A) requested by a third party
who had indicated an intention or taken steps reasonably calculated to effect
the Change in Control or who effectuates such Change in Control, or (B) was
otherwise in connection with, or in anticipation of, such Change in Control. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) <U>Notice of Termination</U>. Any
termination of the Executive&#146;s employment by the Company or by the Executive
shall be effective only when communicated by a Notice of Termination given to
the other party in accordance with Section&nbsp;15(d). In the event of a
termination by the Executive for Good Reason, a Notice of Termination shall be
effective only if given within the time limit established by Section 3(d). </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) <U>Effect of Termination and Duties Upon
Termination</U><I>.</I> If, on
the Termination Date, the Executive is a member of the board of directors (or
any similar governing body) or an officer of the Company or any Affiliate, or
holds any other position with the Company or an Affiliate, then the Executive
shall resign and be deemed to have resigned from all such positions as of the
Termination Date. Between the date a Notice of Termination is delivered and the
Termination Date, the Executive shall continue to perform his duties under this
Agreement and such services for the Company as are necessary and appropriate
for a smooth transition to the Executive&#146;s replacement, if any. Notwithstanding
the foregoing sentence, the Company may relieve the Executive from further
duties under this Agreement after receiving a Notice of Termination; <U>provided,
however</U>, that prior to the Termination Date, the Executive shall continue
to be treated as a Company employee for other purposes and the Executive&#146;s
rights to compensation or benefits shall not be reduced by reason of the
relief. Upon the Termination Date, the Executive shall return to the Company
any keys, credit cards, passes, confidential documents or material, or other
property belonging to the Company, and all writings, files, records,
correspondence,</FONT></P>

<P ALIGN=CENTER><FONT SIZE=2>4</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4><P ALIGN=LEFT STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<P><FONT SIZE=2>notebooks, notes, and other documents and things (including any copies
thereof) containing any Confidential Information.</FONT></P>

<TABLE ALIGN=CENTER BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR style="font-size:1px">
<TD WIDTH="4%" VALIGN=TOP>
<P>&nbsp;</P>
</TD>
<TD WIDTH="96%" VALIGN=TOP>
<P>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=2><B>34.</B></FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2><B><U>Obligations of the Company Upon Termination</U></B>.</FONT></P>
</TD>
</TR>
</TABLE>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U>Accrued
Obligations</U>. Upon any termination of the Executive&#146;s employment for any
reason, the Company shall pay the Executive (i) his accrued Annual Base Salary
and accrued, unused vacation through the Termination Date in a lump sum in cash
within thirty (30) days after the Termination Date, and (ii) if the Executive
is actively employed during the entire year upon which such Annual Bonus is
based under Section 2(c) before the Termination Date, the Annual Bonus at the
same time as such bonuses are paid to similarly situated executives of the
Company but in no event later than two and one-half (2&#189;) months after the end
of the taxable year in which any substantial risk of forfeiture with respect to
such bonus lapses (the payments in (i) and (ii) shall be referred to as the &#147;<U>Accrued
Obligations</U>&#148;).</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U>Good Reason; Other Than for Cause,
Death, or
Becoming Disabled</U>. If (x) the Company terminates the Executive&#146;s
employment other than for Cause, the Executive&#146;s death, or the Executive
becoming Disabled, or (y) the Executive terminates his employment for Good
Reason, then the Company shall, in addition to the payment of the Accrued
Obligations, have the following obligations to the Executive: </FONT></P>

<P><FONT
SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)
the Company shall pay the Executive within thirty (30) days after the
Termination Date </FONT></P>

<P><FONT
SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A)
a lump sum in cash equal to 1 times the sum of: </FONT></P>

<P><FONT
SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)
the greater of (x) the Executive&#146;s then-current Annual Base Salary, and (y) the
Executive&#146;s Annual Base Salary at any time during the two (2) years before the
Termination Date; and</FONT></P>

<P><FONT
SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(2) the average of the Annual Bonuses received by the Executive within three
(3) years before the Termination Date (or, if termination occurs during the CIC
Period, the greater of (x) the average Annual Bonus received by the Executive
within three (3) years before the Termination Date, and (y) the average Annual
Bonus received by the Executive within three (3) years before the Change in
Control); <U>provided, however</U>, if the Executive&#146;s employment began in the
same calendar year as the termination of such employment, then the Annual Bonus
amount used for calculating the lump sum payment due shall be determined by the
Compensation Committee in its discretion; and </FONT></P>

<P><FONT
SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B)
any applicable Prorated Annual Bonus; and </FONT></P>

<P><FONT
SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)
the Company shall provide the Executive </FONT></P>

<P><FONT
SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A)
for the period allowed under Section 4980B of the Code, with the same level of
health and dental insurance benefits for the Executive (and his dependents, if
applicable) upon substantially similar terms and conditions (including
contributions required by the Executive for such benefits) as existed
immediately before the Termination Date (or, if more favorable to the
Executive, as such benefits and terms and conditions existed immediately before</FONT></P>

<P ALIGN=CENTER><FONT SIZE=2>5</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4><P ALIGN=LEFT STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<P><FONT SIZE=2>the Change in Control, if applicable); <U>provided, however</U>, if the
Executive is not eligible to continue participating in the Company plans
providing such benefits, then the Company shall otherwise provide such benefits
on the same after-tax basis as if continued participation had been permitted.
The Company&#146;s obligations under this subparagraph (A) shall apply against its
coverage obligations under COBRA. Notwithstanding the foregoing, if the
Executive becomes eligible to receive health and dental insurance benefits
through subsequent employment, then the Executive shall ensure that a
coordination of benefits occurs so that the medical and dental plan of the
Executive&#146;s new employer shall be responsible for such medical and dental
benefits that are available under the new employer&#146;s plans before any medical
and dental benefits are provided pursuant to this subparagraph (A);</FONT></P>

<P><FONT
SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B)
for three (3) years following the Termination Date, with the same level of life
insurance benefits upon substantially similar terms and conditions (including
contributions required by the Executive for such benefits) as existed
immediately before the Termination Date (or, if more favorable to the
Executive, as such benefits and terms and conditions existed immediately before
the Change in Control); <U>provided, however</U>, if the Executive is not
eligible to continue participating in the Company plans providing such life
insurance benefits, then the Company shall otherwise provide such benefits on
the same after-tax death benefit basis as if continued participation had been
permitted.</FONT></P>

<P><FONT
SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)
if the value of any benefits or payment provided under subparagraphs (A) and
(B) above is subject to income taxes, and would not have been subject to income
taxes if the Executive had continued employment with the Company, then the
Company shall pay the Executive a Gross-Up Payment (as described in Section
7(a)) in an amount equal to the aggregate amount of the additional federal,
state, and local income taxes payable by the Executive as a result of the
receipt of such benefit or payment by December 31 of the year next following
the Executive&#146;s taxable year in which the income taxes were incurred; and</FONT></P>

<P><FONT
SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)
the Company shall pay, or reimburse the Executive, for a reasonable amount of
outplacement services from a mutually agreeable service provider for twelve
(12) months following the Termination Date. The amount of such outplacement
services shall be commensurate with the Executive&#146;s title and position with the
Company and other executives similarly situated in other companies within the
Company&#146;s peer industry group. Any reimbursement of such expenses shall be made
by December 31 of the Executive&#146;s taxable year following the year the expenses
were incurred.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <U>Death or Disabled</U>. If the
Executive&#146;s employment terminates due to death or because he is Disabled, then
this Agreement shall terminate without further obligations to the Executive or
his legal representatives, as applicable, under this Agreement, other than the
obligation to pay, within thirty (30) days after the Termination Date, (i) the
Accrued Obligations, and (ii) any applicable Prorated Annual Bonus. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <U>Cause; Other than for Good
Reason</U>.
If the Executive&#146;s employment is terminated for Cause or the Executive
terminates his employment without Good Reason, then this Agreement shall
terminate without further obligations to the Executive under this Agreement
other than for payment of the Accrued Obligations. </FONT></P>

<P ALIGN=CENTER><FONT SIZE=2>6</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4><P ALIGN=LEFT STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <U>Application of Section 409A of the
Code</U>. Notwithstanding the above
paragraphs of this Section 4, if the Company determines that (i) the Executive
is a &#147;specified employee&#148; within the meaning of Section 409A of the Code (&#147;<U>Section 409A</U>&#148;) as of the
date of his &#147;separation from service&#148; as defined by Section 409A (&#147;<U>Separation
from Service</U>&#148;), and (ii) any amount of any payment to be made under this
Section 4 is subject to Section 409A, then such amount shall not be paid to the
Executive until six (6) months after the date of his Separation from Service
(or, if earlier, the date of his death). In such case, the portion of the
payment so delayed shall be paid in a single lump sum in cash on the first
(1st) day of the seventh (7th) month following the Executive&#146;s Separation from Service
(or, if earlier, upon his death). </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <U>General Release</U>. The
Company&#146;s
obligation to make the payments described under Section 4(b) shall be
conditioned on the Executive signing and not revoking the general form of
release attached as <U>Exhibit &#147;B&#148;</U> or such other form acceptable to the
Company within the time periods provided in such release. The Company shall not
be required to make any payment under Section 4(b) until the period for the
Executive to revoke the release has expired.</FONT></P>

<P><FONT SIZE=2><B>35.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Non-Exclusivity of Rights</U></B>.
Except as specifically provided in Sections 4(b)(ii)(A) and 4(b)(v), nothing in
this Agreement shall prevent or limit the Executive&#146;s right to participate in
any plan, program, policy, or practice provided by the Company or any Affiliate
and for which the Executive may qualify, nor shall anything in this Agreement
limit or otherwise affect such rights as the Executive may have under any other
contract or agreement with the Company or any Affiliate. Amounts that are
vested benefits or that the Executive is otherwise entitled to receive under
any plan, policy, practice, or program of, or any contract or agreement with,
the Company or any Affiliate at or after the Termination Date shall be payable
in accordance with such plan, policy, practice, program, contract, or
agreement, except as explicitly modified by this Agreement; <U>provided,
however</U>, that the Executive shall not be eligible for severance benefits
under any other severance program, policy, practice, or plan of the Company or
any Affiliate providing benefits upon involuntary termination of employment.</FONT></P>

<P><FONT SIZE=2><B>36.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Full Settlement</U></B>.
The Company&#146;s payment and other obligations under this Agreement shall not be
affected by any set-off, counterclaim, recoupment, defense, or other claim,
right, or action against the Executive or others. The Executive shall have no
obligation to seek employment or otherwise mitigate his damages under this
Agreement and amounts payable to the Executive under this Agreement shall not
be reduced whether or not the Executive obtains other employment, except as
provided in Section 4(b)(ii) of this Agreement.</FONT></P>

<TABLE ALIGN=CENTER BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR style="font-size:1px">
<TD WIDTH="4%" VALIGN=TOP>
<P>&nbsp;</P>
</TD>
<TD WIDTH="96%" VALIGN=TOP>
<P>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=2><B>37.</B></FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2><B><U>Certain Additional Payments by the Company</U></B>.</FONT></P>
</TD>
</TR>
</TABLE>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U>Gross-Up
Payment</U>. Notwithstanding any contrary provision of this Agreement and
except as provided below, if any payment, benefit, or distribution by the
Company, any Affiliate, or trusts established by the Company or any Affiliate
for the benefit of its employees, to or for the benefit of the Executive
(whether pursuant to this Agreement or otherwise but determined without regard
to any additional payments required under this Section&nbsp;7) (each, a &#147;<U>Payment</U>&#148;) is determined to be
subject to excise tax imposed by the Code, including Section&nbsp;4999 of the
Code, or any interest or penalties are incurred by the Executive with respect
to such an excise tax (such excise tax and any such interest and penalties
shall referred to as the &#147;<U>Excise
Tax</U>&#148;), then the Executive shall be entitled to receive an additional
payment (a &#147;<U>Gross-Up Payment</U>&#148;)
in an</FONT></P>

<P ALIGN=CENTER><FONT SIZE=2>7</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4><P ALIGN=LEFT STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<P><FONT SIZE=2>amount such that, after payment by the Executive of all taxes
(including any applicable interest or penalties) and Excise Tax imposed upon or
related to the Gross-Up Payment, the Executive retains a Gross-Up Payment
amount equal to the Excise Tax imposed upon the Payments.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U>Determinations
and Tax Notice</U>. Subject to Section 7(c), all determinations required under
this Section 7, including whether and when a Gross-Up Payment is required and
its amount, shall be made by a nationally recognized certified public accounting
firm designated and paid by the Company (the &#147;<U>Accounting Firm</U>&#148;), which
shall provide its analysis and detailed supporting calculations to both the
Company and the Executive within fifteen (15) business days after the Executive
delivers to the Company any written notice of any claim by the Internal Revenue
Service that may require the Company&#146;s Gross-Up Payment (the &#147;<U>Tax Notice</U>&#148;).
The Company shall pay any Gross-Up Payment due under this Section 7 to the
Executive within five (5) days after receiving the Accounting Firm&#146;s
determination but in no event later than December 31 of the year next following
the taxable year in which the Executive received the Payment. If the Accounting
Firm determines that no Excise Tax is payable by the Executive, then it shall
furnish the Executive with an opinion supporting the determination not to
report an Excise Tax on the Executive&#146;s federal income tax return. Any
determination by the Accounting Firm shall be binding upon the parties. Due to
the uncertainty of the application of Section 4999 of the Code when the initial
determination is made by the Accounting Firm, it is possible that Gross-Up
Payments that will not have been made by the Company should have been made (&#147;<U>Underpayment</U>&#148;),
consistent with the calculations required under this Section 7. If the Company
exhausts its remedies pursuant to Section 7(c) and the Executive thereafter is
required to pay any Excise Tax, then the Accounting Firm shall determine the
amount of the Underpayment that has occurred, and any such Underpayment shall
be promptly paid by the Company to or for the benefit of the Executive but in
no event later than the December 31 of the year next following the taxable year
in which the Executive received the Payment.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <FONT COLOR=BLACK><U>Contests</U><FONT
COLOR=BLACK>. The Tax Notice shall be given as
soon as practicable but no later than ten (10) business days after the
Executive receives written notice of such claim describing the nature of such
claim and indicating the due date for such claim. The Executive shall not pay
such claim until thirty (30) days after delivering the Tax Notice to the
Company (or such shorter period imposed by the Internal Revenue Service). </FONT>If
the Company notifies the Executive in writing before the expiration of such
period that it desires to contest such claim, then the Executive shall: </FONT></FONT></P>

<P><FONT
SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)
provide any information reasonably requested by the Company relating to such
claim;</FONT></P>

<P><FONT
SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)
contest such claim as the Company shall reasonably request in writing,
including, without limitation, accepting legal representation reasonably
selected by the Company;</FONT></P>

<P><FONT
SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)
cooperate with the Company in good faith to effectively contest such claim; and</FONT></P>

<P><FONT
SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)
permit the Company to participate in any proceedings relating to such claim.</FONT></P>

<P><FONT SIZE=2>The Company (x) shall pay all costs and expenses (including additional
interest and penalties)</FONT></P>

<P ALIGN=CENTER><FONT SIZE=2>8</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4><P ALIGN=LEFT STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<P><FONT SIZE=2>related to such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax (including
interest and penalties) imposed as a result of such representation and payment
of costs and expenses, (y) shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forgo any and all administrative
appeals, proceedings, hearings, and conferences with the taxing authority in
respect of such claim, and (z) may, at its sole option, either direct the
Executive to pay the tax claimed and sue for a refund or contest the claim in
any permissible manner, in which case, the Executive shall administratively and
judicially prosecute such contest to a determination as the Company shall
determine; <U>provided, however</U>, that the Company&#146;s control of the contest
shall be limited to issues with respect to which a Gross-Up Payment would be
payable under this Agreement and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority. If the Company directs the Executive to
pay such claim and sue for a refund, then the Company shall, to the extent
permitted by law, advance the amount of such payment to the Executive, on an
interest-free basis, and shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income tax (including interest or
penalties) imposed with respect to such advance or with respect to any imputed
income with respect to such advance. The Company shall make any payment in
reimbursement of costs and expenses, Excise Tax, income tax, or other amounts
due the Executive under this Section 7(c) no later than December 31 of the year
following the year in which (x) the taxes that are the subject of the audit are
remitted to the taxing authority, or (y) there is a final and non-appealable
settlement or other resolution of the litigation. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <U>Refunds</U>.
If, after receiving an advance from the Company pursuant to Section&nbsp;7(c),
the Executive becomes entitled to receive any refund with respect to such
claim, the Executive shall promptly pay the Company the amount of such refund
(together with any interest paid or credited after applicable taxes). If, after
receiving an advance from the Company pursuant to Section&nbsp;7(c), a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund before the expiration of
thirty (30) days after such determination, then such advance shall be forgiven
and shall not be required to be repaid and the amount of such advance shall
offset the amount of the Gross-Up Payment required to be paid.</FONT></P>

<TABLE ALIGN=CENTER BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR style="font-size:1px">
<TD WIDTH="4%" VALIGN=TOP>
<P>&nbsp;</P>
</TD>
<TD WIDTH="96%" VALIGN=TOP>
<P>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=2><B>38.</B></FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2><B><U>Confidential Information and Non-Solicitation</U></B>.</FONT></P>
</TD>
</TR>
</TABLE>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U>Confidential
Information</U>. Given his position and employment with the Company, the
Executive acknowledges that he will be using, acquiring, and adding to
Confidential Information of a special and unique nature and value to the
Company and its strategic plan and financial operations. The Executive further
acknowledges that all Confidential Information belongs exclusively to the
Company, is material and proprietary, and is critical to the Company&#146;s success.
Accordingly, the Executive shall use Confidential Information only to the
Company&#146;s benefit and shall not at any time during or after his employment with
the Company directly or indirectly disclose any Confidential Information to any
person or use any Confidential Information for the Executive&#146;s own benefit, for
the benefit of others, or to the Company&#146;s detriment.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U>Legally
Required Disclosure</U>. If any court or agency requests the Executive to
disclose Confidential Information, then the Executive shall promptly notify the
Company and</FONT></P>

<P ALIGN=CENTER><FONT SIZE=2>9</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4><P ALIGN=LEFT STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<P><FONT SIZE=2>take reasonable steps to prevent such disclosure until the Company
receives such notice and has an opportunity to respond to such court or agency.
If the Executive obtains information that may be subject to the attorney-client
privilege of the Company or any Affiliate, then the Executive shall take reasonable
steps to maintain the confidentiality of such information and to preserve such
privilege.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <U>Exceptions</U>.
Confidential Information shall not include knowledge that was acquired during
the course of the Executive&#146;s employment under this Agreement that is generally
known to persons of the Executive&#146;s experience in other companies in the same
industry.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <U>Legal
Proceedings</U>. This Section 8 shall not unreasonably restrict the Executive&#146;s
ability to disclose Confidential Information in any legal proceeding involving
any claim for breach or enforcement of this Agreement. If the parties dispute
whether information may be disclosed in accordance with this Section 8(d), then
the matter shall be considered an Employment Matter and decided in accordance
with Section 10.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <U>Other
Obligations</U>. This Agreement supplements, rather than supplants, the
Executive&#146;s obligations under any Company policy relating to confidential
information and any agreement of the Executive relating to confidentiality,
inventions, copyrightable material, business and/or technical information,
trade secrets, solicitation of employees, interference with business
relationships, competition, and other similar matters that protect the business
and operations of the Company or its Affiliates.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <U>Non-Solicitation</U>.
During his employment with the Company and for eighteen (18) months following
the date such employment terminates, regardless of the reason for such
termination, the Executive shall not directly or indirectly hire, employ,
solicit for employment, attempt to solicit for employment, or communicate with
about changing employment, any person who was an employee of the Company or its
Affiliate within six (6) months of such hiring, employing, soliciting, or
communicating. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) <U>Remedies</U>.
The Executive acknowledges and agrees that the Company will have no adequate
remedy at law and could be irreparably harmed if the Executive breaches or
threatens to breach his obligations under this Section&nbsp;8. The Company
shall be entitled to equitable and/or injunctive relief to prevent any such
breach or threatened breach and to specific performance in addition to any
other available legal or equitable remedies. The Executive shall not, in any
equity proceeding relating to the enforcement of this Section&nbsp;8, raise the
defense that the Company has an adequate remedy at law.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) <U>Survival</U>.
The Executive&#146;s obligations under this Section 8 shall survive any termination
of the Executive&#146;s employment or of this Agreement.</FONT></P>

<TABLE ALIGN=CENTER BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR style="font-size:1px">
<TD WIDTH="4%" VALIGN=TOP>
<P>&nbsp;</P>
</TD>
<TD WIDTH="96%" VALIGN=TOP>
<P>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=2><B>39.</B></FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2><B><U>Assignment; Successors</U></B>.</FONT></P>
</TD>
</TR>
</TABLE>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U>Assignment</U>.
The Company&#146;s rights and obligations under this Agreement may not be assigned
to any entity other than an Affiliate without the Executive&#146;s consent. The
Executive&#146;s duties, responsibilities, authorities, compensation, and benefits
are personal to the Executive and may not be assigned to any person or entity
without written consent from the</FONT></P>

<P ALIGN=CENTER><FONT SIZE=2>10</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4><P ALIGN=LEFT STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>


<P><FONT SIZE=2>Company other
than by will or the laws of descent and distribution. This Agreement shall
inure to the benefit of and be enforceable by the Executive&#146;s legal
representatives. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)
<U>Successors and Assigns</U>. This Agreement shall inure to the benefit
of and be binding upon the Company and its successors and assigns. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)
<U>Assumption</U>. The Company shall require any successor or assignee
(whether direct or indirect, by purchase, merger, consolidation, or otherwise)
to all or substantially all of the business and/or assets of the Company to
assume expressly and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform if no such
succession or assignment had taken place. </FONT></P>

<P><FONT SIZE=2><B>40.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Dispute Resolution and Guarantees of Payment</U></B>.
</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)
<U>Mandatory Arbitration</U>. Subject to Section 10(b), any Employment
Matter shall be finally settled by arbitration in Oklahoma City, Oklahoma
administered by the AAA under its Employment Arbitration Rules then in effect; <U>provided,
however</U>, that the AAA&#146;s Employment Arbitration Rules shall be modified as
follows: (i) each arbitrator shall agree to treat as confidential evidence and
other information presented, and (ii) there shall be no authority to award
punitive damages or liquidated or indirect damages unless such damages could be
awarded by a court of competent jurisdiction. The decision of the arbitrator(s)
shall be enforceable in any court of competent jurisdiction. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)
<U>Injunctions and Enforcement of Arbitration Awards</U>. Either party
may bring an action or special proceeding in a state or federal court of
competent jurisdiction in Oklahoma City, Oklahoma to enforce any arbitration
award under Section 10(a). The Company also may bring such an action or
proceeding, in addition to its rights under Section 10(a) and whether or not an
arbitration proceeding has been or is ever initiated, to temporarily,
preliminarily, or permanently enforce Sections 8 or 11. The Executive agrees
that (i) violating Sections 8 or 11 would damage the Company in ways that
cannot be measured or repaired, (ii) the Company shall be entitled to an
injunction, restraining order, or other equitable relief restraining any actual
or threatened violation of Sections 8 or 11, (iii) the Company shall not be
required to post a bond or prove actual damages when seeking such an
injunction, restraining order, or other equitable relief, and (iv) remedies at
law for such violations would be inadequate. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)
<U>Waiver of Jury Trial</U>. To the extent permitted by law, the parties
waive any and all rights to a jury trial with respect to any Employment Matter.
</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)
<U>Attorney Fees</U>. </FONT></P>

<P><FONT
SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)
If (A) a claim for arbitration or a lawsuit in connection with an
Employment Matter (an &#147;<U>Employment Matter Claim</U>&#148;) is filed by either of
the parties, and (B) the Executive is ultimately successful in respect of one
or more material claims or defenses brought, raised or pursued in connection
with such Employment Matter Claim, then the Company shall reimburse the
Executive for all legal fees and expenses reasonably incurred in connection
with such Employment Matter Claim, provided that such legal fees are reasonable
and are calculated on an hourly rather than a contingency fee basis, as well as
all costs and expenses reasonably incurred in connection with pursuing or
defending any such Employment Matter Claim. Except as </FONT></P>

<P ALIGN=CENTER><FONT SIZE=2>11</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4><P ALIGN=LEFT STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<P><FONT SIZE=2>provided in
Section 10(d)(ii) below, the Company shall make such reimbursement to the
Executive as soon as practicable following final resolution of the Employment
Matter Claim, but no later than December 31 of the year immediately following
the year of such resolution, provided that the Company receives appropriate
documentation of such attorneys&#146; fees, costs, and expenses, which shall be
provided by the Executive no later than the later of (x) December 31 of the
year in which resolution occurs, or (y) sixty (60) days following the
resolution of the Employment Matter Claim. </FONT></P>

<P><FONT
SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)
If an Employment Matter Claim is filed by either of the parties during
the CIC Period, or (B) an Employment Matter Claim has been filed prior to a
Change in Control but has not been resolved as of the effective date of a
Change in Control, then the Executive may submit his request for reimbursement
of attorneys&#146; fees, costs and expenses on a monthly basis during the pendency
of such Employment Matter Claim. Within sixty (60) days following the Company&#146;s
receipt of each such monthly request and appropriate documentation supporting
such request for reimbursement of attorneys&#146; fees, costs and expenses, the
Company shall reimburse the Executive (or pay directly to the Executive&#146;s
attorney) the Executive&#146;s attorneys&#146; fees, costs and expenses that the Company
is obligated, pursuant to Section 10(d)(i) above, to reimburse with respect to
such Employment Matter Claim. In the event the Executive ultimately fails to be
successful with respect to at least one of the Executive&#146;s material claims or
defenses brought, raised or pursued in connection with such contest or dispute,
the Executive shall repay the Company the amount of any such reimbursement
received in connection with such dispute in accordance with this Section 10(d)
(without interest) as soon as practicable following the final resolution of
such matter. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)
<U>Secondary Liability for Payment</U>. If any Affiliate is not
otherwise obligated to provide benefits to the Executive by this Agreement,
then the Company shall take, and cause each such Affiliate (the &#147;<U>Guarantors</U>&#148;)
to take, such actions as are necessary to cause the Guarantors to jointly and
severally guarantee the payment of benefits otherwise due to the Executive
under this Agreement if the Company fails to pay such benefit within thirty
(30) days of the due date for such payment; <U>provided, however</U>, that no
entity organized under the laws of any jurisdiction outside the United States
shall have an obligation to enter into such guarantee. Each of the Guarantors
shall be subrogated to the Executive&#146;s rights under this Agreement to the
extent of any payments by each such Guarantor to or on account of the Executive
under this Section 10(e). </FONT></P>

<P><FONT SIZE=2><B>41.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Non-Disparagement</U></B>. The Executive
shall not make any negative or disparaging comments regarding the Company or
its Representatives or its or their respective performance, operations, or
business practices, or otherwise take any action that could reasonably be
expected to adversely affect the Company or such Representatives or their
personal or professional reputations. The Executive may truthfully respond to
inquiries by government agencies or to inquiries by any person through a
subpoena or other valid judicial process without violating this Section 11,
provided that the Executive delivers written notice of such required disclosure
to the Company promptly before making such disclosure, unless such notice to
the Company is prohibited by applicable law, court order, subpoena, process, or
governmental decree. </FONT></P>

<P ALIGN=CENTER><FONT SIZE=2>12</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4><P ALIGN=LEFT STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<P><FONT SIZE=2><B>42.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Indemnification and Insurance</U></B>. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)
<U>Indemnity</U>. The Company shall, to the maximum extent permitted by
law, defend, indemnify, and hold harmless the Executive and the Executive&#146;s
heirs, estate, executors, and administrators against any costs, losses, claims,
suits, proceedings, damages, or liabilities to which they may become subject to
arising from, based on, or relating to the Executive&#146;s employment by the
Company (and any predecessor of the Company), or the Executive&#146;s service as an
officer or member of the board of directors (or any similar governing body) of
the Company (or any predecessor of the Company) or any Affiliate, including
without limitation reimbursement for any legal or other expenses reasonably
incurred by the Executive in connection with investigation and defending
against any such costs, losses, claims, suits, proceedings, damages, or
liabilities. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)
<U>Insurance</U>. The Company shall maintain directors and officers
liability insurance in commercially reasonable amounts (as reasonably
determined by the Board), and the Executive shall be covered under such
insurance to the same extent as other similarly situated executives of the
Company; <U>provided, however</U>, that the Company shall not be required to
maintain such insurance coverage if the Board determines that it is unavailable
at reasonable cost, provided that the Executive is given written notice of any
such determination promptly after it is made. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)
<U>Gross-Up</U>. If the value of any benefits or payment provided under
Section 12(a) is subject to income taxes, then the Company shall make a Gross-up
Payment (as described in Section 7(a)) to the Executive, by December 31 of the
year next following the Executive&#146;s taxable year in which the income taxes were
incurred, such that, after payment of all taxes imposed on or related to such
Gross-up Payment, the Executive retains an amount equal to 75% of the federal,
state, and local income taxes imposed upon such benefits or payment. </FONT></P>

<P><FONT SIZE=2><B>43.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Executive to Provide Assistance with Claims</U></B>.
During his employment with the Company and following the termination of such
employment, regardless of the reason for such termination, the Executive shall
assist the Company in defending any claims that may be made against the
Company, and shall assist the Company in prosecuting any claims that may be
made by the Company, to the extent that such claims may relate to the
Executive&#146;s services for the Company. The Executive shall promptly inform the
Company if he learns of any lawsuits involving such claims that may be filed
against the Company. The Company shall reimburse the Executive for all
reasonable out-of-pocket expenses associated with such assistance, including
travel expenses, incurred and accounted for in accordance with its standard
policies and procedures for expense reimbursements and deductibles under
Section 162 of the Code. For periods after the Termination Date, the Company
shall provide reasonable compensation to the Executive for such assistance at a
rate to be determined by the Company in its discretion. The Executive shall
promptly inform the Company if asked to assist in any investigation of the
Company that may relate to the Executive&#146;s services for the Company, regardless
of whether a lawsuit has then been filed against the Company with respect to
such investigation. For purposes of this Section 13, the term &#147;Company&#148; shall
include the Company and its Affiliates. </FONT></P>

<P><FONT SIZE=2><B>44.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Entire Agreement</U></B>. Except as
provided in Section 8(e), this Agreement constitutes the entire agreement among
the parties with respect to its subject matters and supersedes any and all
prior or contemporaneous oral and written agreements and understandings with
respect to such subject matters, including without limit all prior agreements
relating to employment, severance, or change in control; <U>provided, however</U>,
that this Agreement shall not adversely affect the </FONT></P>

<P ALIGN=CENTER><FONT SIZE=2>13</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4><P ALIGN=LEFT STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<P><FONT SIZE=2>Executive&#146;s
rights under the terms of any option on stock of the Company or any other award
based on the stock of the Company. </FONT></P>

<P><FONT SIZE=2><B>45.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Miscellaneous</U></B>. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)
<U>Governing Law</U>. This Agreement shall be governed by and construed
in accordance with the laws of the State of Oklahoma, without reference to its
conflict-of-laws principles. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)
<U>Captions</U>. The captions of this Agreement are not part of this
Agreement and shall have no force or effect. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)
<U>Amendment</U>. This Agreement may not be amended or modified except
by a written agreement executed by the parties or their respective successors
and legal representatives. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)
<U>Notices</U>. All notices and other communications under this
Agreement shall be in writing and sent to the other party by either hand
delivery, pre-paid overnight carrier, or registered or certified U.S. mail
(return receipt requested) postage prepaid, addressed as follows: </FONT></P>

<TABLE ALIGN=CENTER BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR style="font-size:1px">
<TD WIDTH="20%" VALIGN=TOP>
<P>&nbsp;</P>
</TD>
<TD WIDTH="80%" VALIGN=TOP>
<P>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2><U>If to the
 Executive</U>: </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>Gene P.
 Jones </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>Vaughan
 Foods, Inc. </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>216 NE 12<SUP>th</SUP>
 Street </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>Moore,
 Oklahoma 73160 </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2><U>If to the
 Company</U>: </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>Vaughan
 Foods, Inc. </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>216 NE 12<SUP>th</SUP>
 Street </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>Moore,
 Oklahoma 73160 </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>With copies
 to: </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>J. Dudley
 Hyde, Esq. </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>McAfee &amp;
 Taft A Professional Corporation </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>10<SUP>th</SUP>
 Floor, Two Leadership Square </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>211 N.
 Robinson </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>Oklahoma
 City, Oklahoma 73102 </FONT></P>
</TD>
</TR>
</TABLE>

<P><FONT SIZE=2>or to such
other address as either party shall have furnished to the other in writing.
Such notice shall be deemed given (i) in the case of hand delivery, the day of
delivery; (ii) in the case of overnight delivery, the next business day or the
day designated for delivery; and (iii) in the case of certified or registered
U.S. mail, five (5) days after deposit in the U.S. mail; <U>provided, however</U>,
that in no event shall any such notices be deemed to be given later than the
date they are actually received. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)
<U>Severability</U>. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, and this </FONT></P>

<P ALIGN=CENTER><FONT SIZE=2>14</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4><P ALIGN=LEFT STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<P><FONT SIZE=2>Agreement
shall be construed as if such invalid or unenforceable provisions were omitted
(but only to the extent such provision cannot be appropriately reformed or
modified). If any such provision may be made enforceable by limitation, then
such provision shall be deemed to be so limited and shall be enforceable to the
maximum extent permitted by applicable law. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)
<U>Withholdings</U>. The Company may withhold from any amounts payable
under this Agreement all amounts authorized by the Executive or required to be
withheld under any applicable federal, state, local, or foreign law or
regulation. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)
<U>Waiver</U>. The waiver by either party of a breach of any term or
provision of this Agreement shall not operate or be construed as a waiver of a
subsequent breach of the same term or provision by either party or of the
breach of any other term or provision of this Agreement. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)
<U>Representations and Warranties</U>. The Executive represents and
warrants that (i) he is not, and shall not become, a party to any agreement,
contract, arrangement, or understanding, whether of employment or otherwise,
that would in any way restrict or prohibit him from undertaking or performing
the duties required by this Agreement or that would in any way restrict or
prohibit his ability to be employed by the Company in accordance with this
Agreement; (ii) his employment by the Company does not and shall not violate
the terms of any policy of, or any agreement with, any prior employer regarding
confidentiality or competition; and (iii) his position with the Company shall
not require him to improperly use any trade secrets or confidential information
of any prior employer or any other person or entity for whom he has performed
services. </FONT></P>

<P ALIGN=CENTER><FONT SIZE=2><B>[SIGNATURES APPEAR ON FOLLOWING PAGE]</B></FONT></P>

<P ALIGN=CENTER><FONT SIZE=2>15</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4><P ALIGN=LEFT STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN
WITNESS WHEREOF, the Company and the Executive have executed this Amended and
Restated Severance Agreement as of the Effective Date. </FONT></P>

<TABLE ALIGN=CENTER BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR style="font-size:1px">
<TD WIDTH="50%" VALIGN=TOP>
<P>&nbsp;</P>
</TD>
<TD WIDTH="50%" VALIGN=TOP>
<P>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>/s/ Gene P.
 Jones</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<HR SIZE=1 WIDTH="100%" NOSHADE COLOR=GRAY ALIGN=CENTER>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>Gene P.
 Jones</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2><B>Vaughan Foods, Inc. </B></FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>/s/ Herbert
 B. Grimes </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<HR SIZE=1 WIDTH="100%" NOSHADE COLOR=GRAY ALIGN=CENTER>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>By: Herbert
 B. Grimes </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>Its:
 Chairman of the Board and Chief Executive Officer</FONT></P>
</TD>
</TR>
</TABLE>

<P ALIGN=CENTER><FONT SIZE=2>16</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4><P ALIGN=LEFT STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<P ALIGN=CENTER><FONT SIZE=2><B><U>Exhibit A</U></B></FONT></P>

<P ALIGN=CENTER><FONT SIZE=2><B><U>Definitions</U></B></FONT></P>

<P><FONT SIZE=2><B><U>Definitions</U></B>. The
following terms, when used throughout this Agreement, shall have the following
meanings: </FONT></P>

<TABLE ALIGN=CENTER BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR style="font-size:1px">
<TD WIDTH="5%" VALIGN=TOP>
<P>&nbsp;</P>
</TD>
<TD WIDTH="95%" VALIGN=TOP>
<P>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=2>83.</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>&#147;<U>AAA</U>&#148;
 means the American Arbitration Association. </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=2>84.</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>&#147;<U>Accounting
 Firm</U>&#148; has the meaning ascribed to such term in Section 7(b). </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=2>85.</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>&#147;<U>Act</U>&#148;
 means the Securities Exchange of Act of 1934, as amended from time to time. </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=2>86.</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>&#147;<U>Accrued
 Obligations</U>&#148; has the meaning ascribed to such term in Section 4(a). </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=2>87.</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>&#147;<U>Affiliate</U>&#148;
 means, with respect to the Company, any person that directly, or indirectly
 through one or more intermediaries, controls, is controlled by, or is under
 common control with, the Company; <U>provided, however</U>, that a natural
 person shall not be considered an Affiliate. </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=2>88.</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>&#147;<U>Agreement</U>&#148;
 has the meaning set forth in the preamble. </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=2>89.</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>&#147;<U>Annual
 Base Salary</U>&#148; means the annual base salary of the Executive as in effect
 from time to time. During the term of this Agreement, the Annual Base Salary
 shall be $267,000 per year, plus an automobile allowance of $12,000, for a
 total of $279,000. The Annual Base Salary is reviewed annually. When the
 Company and its subsidiaries collectively achieve annualized revenue of at
 least $125,000,000 (based on 6-month trailing average), Executive&#146;s then
 current Annual Base Salary shall be increased by $26,700. Any increase in
 Annual Base Salary shall not service to limit or reduce any obligations of
 Executive in this Agreement. The Annual Base Salary shall not be reduced
 after any increase, and the term &#147;Annual Base Salary&#148; shall refer to the
 Annual Base Salary as so increased. The Annual Base Salary shall be payable
 in regular installments in accordance with the Company&#146;s general payroll
 practices and shall be subject to FICA and income tax withholding. </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=2>90.</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>&#147;<U>Annual
 Bonus</U>&#148; means, with respect to any given year, the annual bonus payable to
 the Executive with respect to that year, as determined by the Compensation
 Committee in its discretion. The Annual Bonus target shall be up to 50% of
 Annual Base Salary in accordance with the Company&#146;s Bonus Performance Plan
 proposed by the senior management of the Company and approved by the Board.
 Executive shall only be eligible to receive a Annual Bonus at the end of such
 fiscal year if Executive remains employed by the Company or an Affiliate at
 such, time or under the terms of a separate severance arrangement if not then
 employed by the Company. See Section 4(b)(i) if the Executive is terminated
 for Good Reason. </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=2>91.</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>&#147;<U>Board</U>&#148;
 means, at any given time, the Company&#146;s Board of Directors at that time. </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=2>92.</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>&#147;<U>Cause</U>&#148;
 means any of the following: </FONT></P>
</TD>
</TR>
</TABLE>

<P ALIGN=CENTER><FONT SIZE=2>- 1 -</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4><P ALIGN=LEFT STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<TABLE ALIGN=CENTER BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR style="font-size:1px">
<TD WIDTH="5%" VALIGN=TOP>
<P>&nbsp;</P>
</TD>
<TD WIDTH="5%" VALIGN=TOP>
<P>&nbsp;</P>
</TD>
<TD WIDTH="90%" VALIGN=TOP>
<P>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>(a)</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>the willful
 failure by the Executive to substantially perform the Executive&#146;s duties for
 the Company or an Affiliate (other than due to physical or mental incapacity)
 within thirty (30) days after receiving a written demand for substantial
 performance from the Supervisor, the CEO, or the Board; </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>(b)</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>the willful
 engaging by the Executive in illegal or dishonest conduct or gross misconduct
 that is materially and demonstrably injurious to the Company or an Affiliate;
 or </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>(c)</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>the
 conviction of the Executive of a felony or any crime of moral turpitude, a
 guilty or nolo contendere plea by the Executive with respect to a felony or
 any crime of moral turpitude, or the deferred adjudication or unadjudicated
 probation of the Executive with respect to a felony or any crime of moral
 turpitude; </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=TOP>
<P><FONT SIZE=2><U>provided,
 however</U>, that (x) an act or omission by the
 Executive shall be considered &#147;willful&#148; only if it was not in good faith and
 was without reasonable belief that it was in the Company&#146;s best interests,
 and (y) any act or omission by the Executive based upon authority granted by
 resolution duly adopted by the Board, the instructions of the Supervisor, or
 the advice of counsel for the Company shall be conclusively presumed to be in
 good faith and in the Company&#146;s best interests. </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=2>93.</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=TOP>
<P><FONT SIZE=2>&#147;<U>CEO</U>&#148;
 means, at any given time, the Chief Executive Officer of the Company at that
 time. </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=2>94.</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=TOP>
<P><FONT SIZE=2>&#147;<U>Change
 in Control</U>&#148; means the occurrence of any one of the following events: </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>(a)</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>The
 Incumbent Directors cease for any reason to constitute at least a majority of
 the Board; </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>(b)</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>any person
 is or becomes a &#147;<U>beneficial owner</U>&#148; (as defined in Rule 13d-3 under the
 Act), directly or indirectly, of Company securities representing 30% or more
 of either (x) the Company&#146;s outstanding shares of common stock or (y) the
 combined voting power of the Company&#146;s then outstanding securities eligible
 to vote in the election of directors (each, &#147;<U>Company Securities</U>&#148;); <U>provided,
 however</U>, that the event described in this paragraph (b) shall not be
 deemed to be a Change in Control by virtue of any of the following acquisitions
 or transactions: (A) by the Company or any subsidiary, (B) by any employee
 benefit plan (or related trust) sponsored or maintained by the Company or any
 subsidiary, (C) by an underwriter temporarily holding securities pursuant to
 an offering of such securities, or (D) pursuant to a Non-Qualifying
 Transaction; </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>(c)</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>the
 consummation of a merger, consolidation, statutory share exchange, or similar
 form of corporate transaction involving the Company or any of its
 subsidiaries that requires the approval of the Company&#146;s stockholders,
 whether for such transaction or the issuance of securities in the transaction
 (a &#147;<U>Reorganization</U>&#148;), or the sale or other disposition of all or
 substantially all of the Company&#146;s assets to an entity that is not an Affiliate
 (a &#147;<U>Sale</U>&#148;), unless: </FONT></P>
</TD>
</TR>
</TABLE>

<P ALIGN=CENTER><FONT SIZE=2>- 2 -</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4><P ALIGN=LEFT STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<TABLE ALIGN=CENTER BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR style="font-size:1px">
<TD WIDTH="5%" VALIGN=TOP>
<P>&nbsp;</P>
</TD>
<TD WIDTH="5%" VALIGN=TOP>
<P>&nbsp;</P>
</TD>
<TD WIDTH="5%" VALIGN=TOP>
<P>&nbsp;</P>
</TD>
<TD WIDTH="85%" VALIGN=TOP>
<P>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>(i)</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>the holders
 of the Company&#146;s shares of common stock either receive in such Reorganization
 or Sale, or hold immediately following the consummation of the Reorganization
 or Sale, more than 50% of each of the outstanding common stock and the total
 voting power of securities eligible to vote in the election of directors of
 (x) the corporation resulting from such Reorganization or the corporation
 that has acquired all or substantially all of the assets of the Company in
 connection with a Sale (in either case, the &#147;<U>Surviving Corporation</U>&#148;),
 or (y) if applicable, the ultimate parent corporation that directly or
 indirectly has beneficial ownership of 100% of the voting securities eligible
 to elect directors of the Surviving Corporation (the &#147;<U>Parent Corporation</U>&#148;),
 </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>(ii)</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>no person
 (other than any employee benefit plan (or related trust) sponsored or
 maintained by the Surviving Corporation or the Parent Corporation) is or
 becomes, as a result of the Reorganization or Sale, the beneficial owner,
 directly or indirectly, of 30% or more of the outstanding shares of common
 stock or the total voting power of the outstanding voting securities eligible
 to vote in the election of directors of the Parent Corporation (or, if there
 is no Parent Corporation, the Surviving Corporation), and </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>(iii)</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>at least a
 majority of the members of the board of directors of the Parent Corporation
 (or, if there is no Parent Corporation, the Surviving Corporation) following
 the consummation of the Reorganization or Sale were Incumbent Directors at
 the time of the Board&#146;s approval of the execution of the initial agreement
 providing for such Reorganization or Sale; </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=TOP>
<P><FONT SIZE=2>(any
 Reorganization or Sale that satisfies all of the criteria specified in (i),
 (ii) and (iii) above shall be deemed to be a &#147;<U>Non-Qualifying Transaction</U>&#148;);
 or</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>(d)</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=TOP>
<P><FONT SIZE=2>the
 Company&#146;s stockholders approve a plan of complete liquidation or dissolution
 of the Company. </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="3" VALIGN=TOP>
<P><FONT SIZE=2>Notwithstanding
 the foregoing, a Change in Control shall not be deemed to occur solely
 because any person acquires beneficial ownership of more than 30% of Company
 Securities due to the Company&#146;s acquisition of Company Securities that
 reduces the number of Company Securities outstanding; <U>provided, however</U>,
 if, following such acquisition by the Company, such person becomes the
 beneficial owner of additional Company Securities that increases the
 percentage of outstanding Company Securities beneficially owned by such
 person, a Change in Control shall then occur. In addition, if a Change in
 Control occurs pursuant to paragraph 12(b) above, then no additional Change
 in Control shall be deemed to occur pursuant to paragraph 12(b) by reason of
 subsequent changes in holdings by such person (except if the holdings by such
 person are reduced below 30% and thereafter increase to 30% or above). </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="3" VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=2>95.</FONT></P>
</TD>
<TD COLSPAN="3" VALIGN=TOP>
<P><FONT SIZE=2>&#147;<U>CIC
 Period</U>&#148; means the two-year period following a Change in Control. </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=2>96.</FONT></P>
</TD>
<TD COLSPAN="3" VALIGN=TOP>
<P><FONT SIZE=2>&#147;<U>COBRA</U>&#148;
 means the Consolidated Omnibus Budget Reconciliation Act of 1986, as amended
 from time to time. </FONT></P>
</TD>
</TR>
</TABLE>

<P ALIGN=CENTER><FONT SIZE=2>- 3 -</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4><P ALIGN=LEFT STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<TABLE ALIGN=CENTER BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR style="font-size:1px">
<TD WIDTH="5%" VALIGN=TOP>
<P>&nbsp;</P>
</TD>
<TD WIDTH="5%" VALIGN=TOP>
<P>&nbsp;</P>
</TD>
<TD WIDTH="90%" VALIGN=TOP>
<P>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=2>97.</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=TOP>
<P><FONT SIZE=2>&#147;<U>Code</U>&#148;
 means Internal Revenue Code of 1986, as amended from time to time. </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=2>98.</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=TOP>
<P><FONT SIZE=2>&#147;<U>Company</U>&#148;
 means Vaughan Foods, Inc., as set forth in the preamble to this Agreement,
 and any successor to or assignee of its business and/or assets that assumes
 and agrees to perform this Agreement by operation of law or otherwise. </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=2>99.</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=TOP>
<P><FONT SIZE=2>&#147;<U>Compensation
 Committee</U>&#148; means, at any given time, the Compensation Committee of the
 Board at that time. </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=2>100.</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=TOP>
<P><FONT SIZE=2>&#147;<U>Confidential
 Information</U>&#148; means non-public information (including, without limitation,
 information regarding litigation and pending litigation) concerning the
 Company and its Affiliates that was acquired by or disclosed to the Executive
 during his employment with the Company and following the Termination Date. </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=2>101.</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=TOP>
<P><FONT SIZE=2>&#147;<U>Disabled</U>&#148;
 means, with respect to the Executive, that (a) he has received disability
 payments under the Company&#146;s long-term disability plan for a period of three
 (3) months or more, or (b) based upon the written report (prepared after a
 complete physical examination of the Executive) of a mutually agreeable
 qualified physician designated by the Company and the Executive or his
 representative, the Compensation Committee determines, in accordance with
 Section 409A of the Code, that the Executive has become physically or
 mentally incapable of performing his essential job functions with or without
 reasonable accommodation or job protection as required by law for a
 continuous period expected to last for a continuous period of not less than
 twelve (12) months. </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=2>102.</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=TOP>
<P><FONT SIZE=2>&#147;<U>Effective
 Date</U>&#148; has the meaning set forth in the preamble to this Agreement. </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=2>103.</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=TOP>
<P><FONT SIZE=2>&#147;<U>Employment
 Matter</U>&#148; means any dispute, controversy, or claim between the parties
 arising out of, relating to, or concerning this Agreement, the Executive&#146;s
 employment with the Company, or the termination of that employment. </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=2>104.</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=TOP>
<P><FONT SIZE=2>&#147;<U>Employment
 Matter Claim</U>&#148; has the meaning ascribed to such term in Section 10(d)(i).</FONT></P>
</TD>
</TR>

<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=2>105.</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=TOP>
<P><FONT SIZE="2">&#147;<U>Excise Tax</U>&#148; has the meaning
ascribed to such term in Section 7(a).</FONT> </P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>

<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=2>106.</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=TOP>
<P><FONT SIZE="2">&#147;<U>Executive</U>&#148; has the meaning set forth in the preamble to this
Agreement. </FONT> </P>
</TD>
</TR>


<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=2>107.</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=TOP>
<P><FONT SIZE=2>&#147;<U>Good
 Reason</U>&#148; means any of the following events, unless the Executive has
 consented in writing to such events: </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>(a)</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>the
 assignment of any duties materially inconsistent with the Executive&#146;s
 position (including status, offices, titles, and reporting requirements),
 authority, duties, or responsibilities under this Agreement, other than an
 isolated, insubstantial, or inadvertent action not taken in bad faith and
 which the Company remedies promptly after receipt of notice from the
 Executive; </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>(b)</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>any material
 failure by the Company to comply with any provision of this Agreement, other
 than an isolated, insubstantial, or inadvertent failure not occurring </FONT></P>
</TD>
</TR>
</TABLE>

<P ALIGN=CENTER><FONT SIZE=2>- 4 -</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4><P ALIGN=LEFT STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<TABLE ALIGN=CENTER BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR style="font-size:1px">
<TD WIDTH="5%" VALIGN=TOP>
<P>&nbsp;</P>
</TD>
<TD WIDTH="5%" VALIGN=TOP>
<P>&nbsp;</P>
</TD>
<TD WIDTH="90%" VALIGN=TOP>
<P>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>in bad faith
 and which and which the Company remedies promptly after receipt of notice
 from the Executive;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>(c)</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>any failure
 by the Company to comply with and satisfy Section 9(c); or </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>(d)</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>any
 relocation of the Executive&#146;s principal office to a location more than fifty
 (50) miles from the Executive&#146;s principal office prior to such relocation. </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=2>108.</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=TOP>
<P><FONT SIZE=2>&#147;<U>Good
 Reason Notice</U>&#148; has the meaning ascribed to such term in Section 3(d).</FONT></P>
</TD>
</TR>

<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>



<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=2>109.</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=TOP>
<P><FONT SIZE="2">&#147;<U>Gross-Up Payment</U>&#148; has the
meaning ascribed to such term in Section 7(a).</FONT> </P>
</TD>
</TR>


<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>

<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=2>110.</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=TOP>
<P><FONT SIZE="2">&#147;<U>Guarantors</U>&#148; has the meaning ascribed to such term in
Section 10(e).</FONT> </P>
</TD>
</TR>

<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=2>111.</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=TOP>
<P><FONT SIZE=2>&#147;<U>Incumbent
 Directors</U>&#148; means the members of the Board on the Effective Date; <U>provided,
 however</U>, that (x) any person becoming a director and whose election or
 nomination for election was approved by a vote of at least a majority of the
 Incumbent Directors then on the Board (either by a specific vote or by
 approval of the proxy statement of the Company in which such person is named
 as a nominee for director, without written objection to such nomination)
 shall be deemed an Incumbent Director, and (y) no individual initially
 elected or nominated as a director of the Company as a result of an actual or
 threatened election contest (as described in Rule 14a-11 under the Act) or
 other actual or threatened solicitation of proxies or consents by or on
 behalf of any person (as such term is used in Sections 13(d)(3) and 14(d)(2)
 of the Act) other than the Board, including by reason of any agreement
 intended to avoid or settle any such election contest or solicitation of
 proxies or consents, shall be deemed an Incumbent Director. </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=2>112.</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=TOP>
<P><FONT SIZE=2>&#147;<U>Notice
 of Termination</U>&#148; means a written notice that (i) indicates the specific
 termination provision of Section 3 that is being relied upon, (ii) to the
 extent applicable, reasonably describes the facts and circumstances claimed
 to provide a basis for termination under the provision so indicated, and
 (iii) specifies the Termination Date; <U>provided, however</U>, that the
 failure to describe in the Notice of Termination any fact or circumstance
 constituting Good Reason or Cause shall not waive any right of either party
 under this Agreement or preclude either party from asserting such fact or
 circumstance in enforcing rights under this Agreement. </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=2>113.</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=TOP>
<P><FONT SIZE=2>&#147;<U>Payment</U>&#148;
 has the meaning ascribed to such term in Section 7(a). </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=2>114.</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=TOP>
<P><FONT SIZE="2">A &#147;<U>person</U>&#148;
shall have the meaning ascribed by Section 3(a)(9) of the Act and shall also
mean a natural person, company, government (and any political subdivision,
agency, or instrumentality of a government), corporation, partnership,
limited liability company, trust, unincorporated organization, or other
entity. When two or more persons act as a partnership, limited partnership,
syndicate, or other group for the purposes of acquiring, holding, or
disposing Company Securities, such partnership, limited partnership,
syndicate, or other group shall be deemed a &#147;<U>person</U>&#148; for purposes of this
Agreement. </FONT> </P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=2>115.</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=TOP>
<P><FONT SIZE=2>&#147;<U>Prorated
 Annual Bonus</U>&#148; means a prorated amount of an Annual Bonus payable under
 Sections 4(b)(i)(B) or 4(c). If the Executive&#146;s employment began in a
 calendar year before </FONT></P>
</TD>
</TR>
</TABLE>

<P ALIGN=CENTER><FONT SIZE=2>- 5 -</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4><P ALIGN=LEFT STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<TABLE ALIGN=CENTER BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR style="font-size:1px">
<TD WIDTH="5%" VALIGN=TOP>
<P>&nbsp;</P>
</TD>
<TD WIDTH="95%" VALIGN=TOP>
<P>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>the calendar
 year in which the Termination Date occurs, the Prorated Annual Bonus shall be
 calculated based on the prior year&#146;s Annual Bonus (if any) times the number
 of days worked in the year in which the Termination Date occurs divided by
 three hundred sixty five (365). If the Executive&#146;s employment began in the
 calendar year in which the Termination Date occurs, then the Prorated Annual
 Bonus shall be determined by the Compensation Committee in its discretion. </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=2>116.</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>&#147;<U>Representatives</U>&#148;
 means, with respect to the Company, its Affiliates and any of their
 respective past or present officers, directors, stockholders, partners, members,
 managers, agents, and employees. </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=2>117.</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>&#147;<U>Section
 409A</U>&#148; has the meaning ascribed to such term in Section 4(e). </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=2>118.</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>&#147;<U>Separation
 from Service</U>&#148; has the meaning ascribed to such term in Section 4(e). </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=2>119.</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>&#147;<U>Short-Term
 Disability Payments</U>&#148; means disability payments under the Company&#146;s
 short-term disability policy or plan that are less than 100% of the
 then-current Annual Base Salary. </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=2>120.</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>&#147;<U>Supervisor</U>&#148;
 means, with respect to the Executive, the person to whom the Executive
 reports, as determined by the CEO or the CEO&#146;s designee from time to time or
 the Board with respect to the CEO. </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=2>121.</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>&#147;<U>Tax
 Notice</U>&#148; has the meaning ascribed to such term in Section 7(b). </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=2>122.</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>&#147;<U>Termination
 Date</U>&#148; means the Executive&#146;s last day of employment by the Company or an
 Affiliate (including any successor to the Company or such Affiliate as
 determined in accordance with Section 9). </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=2>123.</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>&#147;<U>Underpayment</U>&#148;
 has the meaning ascribed to such term in Section 7(b). </FONT></P>
</TD>
</TR>
</TABLE>

<P ALIGN=CENTER><FONT SIZE=2>- 6 -</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4><P ALIGN=LEFT STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<P ALIGN=CENTER><FONT SIZE=2><B><U>EXHIBIT B</U></B></FONT></P>

<P ALIGN=CENTER><FONT SIZE=2><B><U>GENERAL RELEASE</U></B></FONT></P>

<P ALIGN=CENTER><FONT SIZE=2><B><U>NOTICE</U></B></FONT></P>

<P><FONT SIZE=2><B>Vaughan Foods, Inc. (the &#147;<U>Company</U>&#148;) is
an equal opportunity employer. Various laws prohibit employment discrimination
based on sex, race, color, national origin, religion, age, disability,
eligibility for covered employee benefits, veteran status, and other legally
protected characteristics. You may also have rights under other federal, state,
and/or municipal statutes, orders, or regulations pertaining to labor,
employment, and/or employee benefits. These laws are enforced through the
United States Department of Labor (DOL), the Equal Employment Opportunity
Commission (EEOC), and various other federal, state, and municipal labor
departments, fair employment boards, human rights commissions, similar
agencies, and courts. </B></FONT></P>

<P><FONT SIZE=2><B>This General Release is being provided to you
in connection with the Amended and Restated Employment Agreement previously
entered between you and the Company (the &#147;<U>Employment Agreement</U>&#148;). You
have at least twenty-one (21) days from the date you receive this General
Release, if you want it, to consider whether you wish to sign this General
Release and receive the payments and benefits (the &#147;<U>Severance Benefits</U>&#148;)
available under the Employment Agreement for doing so. You have at least until
the close of business twenty-one (21) days from the date you receive this
General Release to make your decision. You may not, however, sign this General
Release until, at the earliest, your last effective date of employment. </B></FONT></P>

<P><FONT SIZE=2><B>BEFORE SIGNING THIS GENERAL RELEASE YOU
SHOULD REVIEW IT CAREFULLY. YOU ALSO HAVE THE RIGHT TO CONSULT WITH AN ATTORNEY
OF YOUR CHOICE. </B></FONT></P>

<P><FONT SIZE=2><B>You may revoke this General Release within
seven (7) days after you sign it and it shall not become effective or
enforceable until that revocation period has expired. If you do not timely sign
and return this General Release, or if you exercise your right to revoke the
General Release after signing it, then you will not be eligible to receive the
Severance Benefits. Any revocation must be in writing and must be received by
the Company within the seven-day period following your execution of this
General Release. </B></FONT></P>

<P ALIGN=CENTER><FONT SIZE=2><B><U>GENERAL RELEASE</U></B></FONT></P>

<P><FONT SIZE=2>In
consideration of the Severance Benefits offered to me by the Company under the
Employment Agreement, I hereby (i) release and discharge the Company and its
predecessors, successors, affiliates, parent, subsidiaries, and partners and
each of those entities&#146; current and former employees, officers, directors, and
agents (together, the &#147;<U>Released Parties</U>&#148;) from all claims, liabilities,
demands, and causes of action, known or unknown, fixed or contingent, that I
may have or claim to have against them, including without limit any claims that
result from or arise out of my past employment with the Company, the severance
of that relationship and/or otherwise, or any contract or agreement with or relating
to the Released Parties, and (ii) waive </FONT></P>

<P ALIGN=CENTER><FONT SIZE=2>- 1 -</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4><P ALIGN=LEFT STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<P><FONT SIZE=2>any and all
rights I may have with respect to and promise not to file a lawsuit to assert
any such claims. </FONT></P>

<P><FONT SIZE=2>This General
Release includes, but is not limited to, claims arising under the Age Discrimination
in Employment Act (&#147;<U>ADEA</U>&#148;) and any other federal, state, and/or
municipal statutes, orders, or regulations pertaining to labor, employment,
and/or employee benefits. This General Release also applies without limitation
to any claims or rights I may have growing out of any legal or equitable
restrictions on the rights of the Released Parties not to continue an
employment relationship with their employees, including any express or implied
employment or other contracts, and to any claims I may have against the
Released Parties for fraudulent inducement or misrepresentation, defamation,
wrongful termination, or other torts or retaliation claims in connection with
workers&#146; compensation, any legally protected activity, or alleged whistleblower
status, or on any other basis whatsoever. </FONT></P>

<P><FONT SIZE=2>It is
specifically agreed, however, that this General Release does not have any
effect on any rights or claims under the ADEA I may have against the Company
that arise after the date I execute this General Release or on any vested
rights I may have under any of the Company&#146;s qualified benefit plans or
arrangements as of or after my last day of employment with the Company or on
any of the Company&#146;s obligations under the Employment Agreement. </FONT></P>

<P ALIGN=CENTER><FONT SIZE=2><B><U>MISCELLANEOUS</U></B></FONT></P>

<P><FONT SIZE=2>By signing
this General Release, I shall, and hereby do, resign from any corporate, board,
and other offices and positions I may hold with the Company and its affiliates
as of the date my employment with the Company terminated. </FONT></P>

<P><FONT SIZE=2>I agree that
(i) none of the Released Parties shall have any obligation to employ or to hire
or rehire me, to consider me for hire, or to deal with me in any respect with
regard to potential future employment; (ii) I shall not ever apply for or
otherwise seek employment with any of the Released Parties for eighteen (18)
months after the Termination Date; and (iii) my forbearance to seek future
employment as just stated shall be construed as being purely contractual and in
no way involuntary, discriminatory, or retaliatory. </FONT></P>

<P><FONT SIZE=2>I have
carefully reviewed and fully understand all the provisions of the Employment
Agreement and General Release, including the foregoing Notice. I have not
relied on any representation or statement, oral or written, relating to the
Employment Agreement or this General Release by the Released Parties that are
not set forth in those documents. </FONT></P>

<P><FONT SIZE=2>The Employment
Agreement and this General Release, including the foregoing Notice, set forth
the entire agreement between me and the Company with respect to payments and
benefits payable to me due to the termination of my employment with the
Company, and supersede all prior agreements and understandings, written and
oral, between the parties with respect to such subject matters. I understand
that my receipt and retention of the Severance Benefits are contingent not only
on my execution and non-revocation of this General Release, but also on my
continued compliance with my other obligations under the Employment Agreement.
I acknowledge that the Company has given me at least twenty-one (21) days to consider
whether I wish to accept or reject the Severance Benefits I am otherwise
eligible to receive under the </FONT></P>

<P ALIGN=CENTER><FONT SIZE=2>- 2 -</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4><P ALIGN=LEFT STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<P><FONT SIZE=2>Employment
Agreement in exchange for signing and not revoking this General Release. I
hereby represent and state that I fully understand the effects and consequences
of the Employment Agreement and General Release prior to signing those
documents. </FONT></P>

<P><FONT SIZE="2">This General
Release and the Company&#146;s obligation to provide the Severance Benefits under
the Employment Agreement shall be interpreted and construed to comply with
Section 409A of the Internal Revenue Code (the &#147;<U>Code</U>&#148;). The parties agree to
cooperate and work together in good faith to take all actions reasonably
necessary to effectuate the intent of this paragraph. Notwithstanding the
preceding sentence, I understand and acknowledge that I shall be solely
responsible for any risk that the tax treatment of all or part of the Severance
Benefits may be affected by Section 409A of the Code and impose significant
adverse tax consequences on me, including accelerated taxation, a 20%
additional tax, and interest. Because of the potential tax consequences, I
understand that I have the right, and am encouraged by this paragraph, to
consult with a tax advisor of my choice before signing this General Release. </FONT> </P>

<P><FONT SIZE=2>This General
Release shall be governed by the laws of the State of Oklahoma, without regard
to any conflict-of-laws principles, and shall not be modified unless in a
writing signed by both of the parties. </FONT></P>

<P><FONT SIZE=2>Dated this ___
day of ___________, 20__. </FONT></P>

<TABLE ALIGN=CENTER BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR style="font-size:1px">
<TD WIDTH="50%" VALIGN=TOP>
<P>&nbsp;</P>
</TD>
<TD WIDTH="50%" VALIGN=TOP>
<P>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<HR SIZE=1 WIDTH="80%" NOSHADE COLOR=GRAY ALIGN=LEFT>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P><FONT SIZE=2>Gene P.
 Jones </FONT></P>
</TD>
</TR>
</TABLE>

<P ALIGN=CENTER><FONT SIZE=2>-
3 -</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4>

</BODY>

</HTML>

</TEXT>
</DOCUMENT>
