Exhibit
10.21

MANAGEMENT
AGREEMENT

This
Management Agreement (this Agreement) is effective April 8, 2009 (the
Effective Date) by and between Vaughan Foods, Inc. (the Company) and Herbert B. Grimes
(the Executive) with
respect to the following:.

WHEREAS,
the Executive currently serves as a senior executive officer of the Company;
and

WHEREAS,
the Company desires to provide stability to the Employer/Employee relationship
of the Executive by entering into this Agreement with the Executive; and

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.

NOW,
THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

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|1. | Term of Agreement; Defined Terms.

(a)
Term of Agreement. This Agreement shall not have any specific duration
and shall continue in full force and effect unless and until (i) the
Executive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s
employment with the Company and if such employment terminates.

(b)
Defined Terms. Capitalized terms used throughout this Agreement have the
meaning ascribed to such terms in Exhibit A attached hereto.

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|2. | Terms, Conditions, and Benefits of
 Employment.

(a)
Position and Duties. The
Executive shall serve as Chairman of the Board and Chief Executive 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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) serve on corporate, civic, charitable, or industry boards
or committees, (ii) deliver lectures, fulfill speaking engagements, or
teach at educational institutions, or (iii) manage personal investments,
so long as such activities do not significantly interfere with the Executives
obligations under this Agreement; provided, however, that the Executive
shall not serve on the board of any business, hold any other position with any

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business, or otherwise engage in any 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.

(b)
Annual Base Salary. The Executive shall receive an Annual Base Salary,
which may be increased from time to time in the Company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.

(c)
Annual Bonus. 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.

(d)
Incentive Awards. In the Compensation Committee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.

(e)
Disability. 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.

(f)
Expenses. 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.

(g)
Other Employee Benefits. 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

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provide the Executive (and the Executives dependents,
if applicable) with the same level of health (including dental), disability,
and life (including accidental death/dismemberment) insurance benefits as were
provided to the Executive (and the Executive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.

(h)
Fringe Benefits. 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.

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|3. | Termination of Employment;
 Suspensions; Change in Control.

(a)
Termination Upon Death. The Executives employment with the Company
shall terminate immediately upon the Executives death.

(b)
Reassignment of Duties and
Termination Due to the Executive Becoming Disabled.

(i)
Reassignment. 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).

(ii)
Termination. 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.

(c)
Termination by the Company; Cause.
The Company may terminate the Executives employment with the Company at any
time whether with or without Cause. If the Company terminates the Executive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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s employment.

(d)
Termination by the Executive; Good
Reason. 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 Good Reason Notice).
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

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delivers a Notice of Termination to the Company and
subsequently resigns within thirty (30) days after the Companys deadline in
Section 3(d)(i) expires. Notwithstanding the previous sentence and at the
Company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.

(e)
Paid Suspensions. 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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.

(f)
Effect of a Change in Control on
Timing of Termination Date. If the Company terminates the
Executive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.

(g)
Notice of Termination.
Any termination of the Executive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 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).

(h)
Effect of Termination and Duties
Upon Termination. 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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; provided, however, that prior to the Termination Date, the
Executive shall continue to be treated as a Company employee for other purposes
and the Executive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,

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notebooks, notes, and other documents and things
(including any copies thereof) containing any Confidential Information.

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|4. | Obligations of the
 Company Upon Termination.

(a)
Accrued Obligations. Upon any termination of the Executive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 (21⁄2) 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 Accrued Obligations).

(b)
Good Reason; Other Than for Cause,
Death, or Becoming Disabled. If (x) the Company terminates the Executives
employment other than for Cause, the Executive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:

(i)
the Company shall pay the Executive within thirty (30) days after the
Termination Date

(A)
a lump sum in cash equal to 1 times the sum of:

(1)
the greater of (x) the Executives then-current Annual Base Salary, and (y) the
Executives Annual Base Salary at any time during the two (2) years before the
Termination Date; and

(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); provided, however, if the Executive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

(B)
any applicable Prorated Annual Bonus; and

(ii)
the Company shall provide the Executive

(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

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the Change in Control, if applicable); provided,
however, 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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s new employer shall be responsible for such medical and dental
benefits that are available under the new employers plans before any medical
and dental benefits are provided pursuant to this subparagraph (A);

(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); provided, however, 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.

(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s taxable year in which the income taxes were incurred; and

(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s title and position with the
Company and other executives similarly situated in other companies within the
Companys peer industry group. Any reimbursement of such expenses shall be made
by December 31 of the Executives taxable year following the year the expenses
were incurred.

(c)
Death or Disabled. If
the Executive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.

(d)
Cause; Other than for Good Reason.
If the Executive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.

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(e)
Application of Section 409A of the
Code. Notwithstanding
the above paragraphs of this Section 4, if the Company determines that (i) the
Executive is a specified employee within the meaning of Section 409A of the
Code (Section 409A) as
of the date of his separation from service as defined by Section 409A (Separation
from Service), 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s Separation from
Service (or, if earlier, upon his death).

(f)
General Release. The
Company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 Exhibit B 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.

5.          Non-Exclusivity
of Rights. Except as specifically provided in Sections
4(b)(ii)(A) and 4(b)(v), nothing in this Agreement shall prevent or limit the
Executive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; provided, however, 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.

6.          Full
Settlement. The Company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.

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|7. | Certain Additional Payments by the
 Company.

(a)
Gross-Up Payment. 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 7) (each, a Payment)
is determined to be subject to excise tax imposed by the Code, including
Section 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 Excise Tax), then the Executive shall be entitled to
receive an additional payment (a Gross-Up
Payment) in an

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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.

(b)
Determinations and Tax Notice. 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 Accounting Firm), 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s Gross-Up Payment (the Tax Notice). 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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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 (Underpayment), 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.

(c)
Contests. 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). 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:

(i)
provide any information reasonably requested by the Company relating to such
claim;

(ii)
contest such claim as the Company shall reasonably request in writing,
including, without limitation, accepting legal representation reasonably
selected by the Company;

(iii)
cooperate with the Company in good faith to effectively contest such claim; and

(iv)
permit the Company to participate in any proceedings relating to such claim.

The Company (x) shall pay all costs and expenses
(including additional interest and penalties)

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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; provided, however, that the Company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.

(d)
Refunds. If, after receiving an advance from the Company pursuant to
Section 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 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.

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|8. | Confidential Information and
 Non-Solicitation.

(a)
Confidential Information. 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s
success. Accordingly, the Executive shall use Confidential Information only to
the Company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s own benefit,
for the benefit of others, or to the Companys detriment.

(b)
Legally Required Disclosure. If any court or agency requests the
Executive to disclose Confidential Information, then the Executive shall
promptly notify the Company and

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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.

(c)
Exceptions. Confidential Information shall not include knowledge that
was acquired during the course of the Executives employment under this
Agreement that is generally known to persons of the Executives experience in
other companies in the same industry.

(d)
Legal Proceedings. This Section 8 shall not unreasonably restrict the
Executive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.

(e)
Other Obligations. This Agreement supplements, rather than supplants,
the Executive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.

(f)
Non-Solicitation. 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.

(g)
Remedies. 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 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 8, raise the
defense that the Company has an adequate remedy at law.

(h)
Survival. The Executives obligations under this Section 8 shall survive
any termination of the Executives employment or of this Agreement.

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|9. | Assignment; Successors.

(a)
Assignment. The Companys rights and obligations under this Agreement
may not be assigned to any entity other than an Affiliate without the
Executives consent. The Executive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

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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s legal representatives.

(b)
Successors and Assigns. This Agreement shall inure to the benefit of and
be binding upon the Company and its successors and assigns.

(c)
Assumption. 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.

|    |                                               
|--- | ----------------------------------------------
|10. | Dispute Resolution and Guarantees
 of Payment.

(a)
Mandatory Arbitration.
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; provided, however, that the
AAA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.

(b)
Injunctions and Enforcement of
Arbitration Awards. 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.

(c)
Waiver of Jury Trial. To
the extent permitted by law, the parties waive any and all rights to a jury
trial with respect to any Employment Matter.

(d)
Attorney Fees.

(i)
If (A) a claim for arbitration or a lawsuit in connection with an Employment
Matter (an Employment Matter Claim) 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

11

---



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 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.

(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 fees, costs and expenses on a monthly basis during the pendency of
such Employment Matter Claim. Within sixty (60) days following the Companys
receipt of each such monthly request and appropriate documentation supporting
such request for reimbursement of attorneys fees, costs and expenses, the
Company shall reimburse the Executive (or pay directly to the Executives
attorney) the Executives attorneys 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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.

(e)
Secondary Liability for Payment. 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 Guarantors) 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; provided, however, 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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).

11.      Non-Disparagement.
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.

12

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|    |                               
|--- | ------------------------------
|12. | Indemnification and Insurance.

(a)
Indemnity. The Company
shall, to the maximum extent permitted by law, defend, indemnify, and hold
harmless the Executive and the Executive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s employment by the Company (and any predecessor of
the Company), or the Executive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.

(b)
Insurance. 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; provided, however, 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.

(c)
Gross-Up. 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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.

13.      Executive
to Provide Assistance with Claims. 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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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 Company shall include the Company and its Affiliates.

14.      Entire Agreement. 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; provided, however, that
this Agreement shall not adversely affect the

13

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Executives rights under the terms of any option on
stock of the Company or any other award based on the stock of the Company.

|    |               
|--- | --------------
|15. | Miscellaneous.

(a)
Governing Law. 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.

(b)
Captions. The captions of this Agreement are not part of this Agreement
and shall have no force or effect.

(c)
Amendment. This Agreement may not be amended or modified except by a
written agreement executed by the parties or their respective successors and
legal representatives.

(d)
Notices. 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:

| |                                         
| | ----------------------------------------
| | If to the Executive:                    
| |                                         
| | Herbert B. Grimes                       
| | Vaughan Foods, Inc.                     
| | 216 NE 12th Street                      
| | Moore, Oklahoma 73160                   
| |                                         
| | If to the Company:                      
| |                                         
| | Vaughan Foods, Inc.                     
| | 216 NE 12th Street                      
| | Moore, Oklahoma 73160                   
| |                                         
| | With copies to:                         
| |                                         
| | J. Dudley Hyde, Esq.                    
| | McAfee & Taft A Professional Corporation
| | 10th Floor, Two Leadership Square       
| | 211 N. Robinson                         
| | Oklahoma City, Oklahoma 73102           

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; provided, however, that in no event shall any such
notices be deemed to be given later than the date they are actually received.

(e)
Severability. 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

14

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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.

(f)
Withholdings. 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.

(g)
Waiver. 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.

(h)
Representations and Warranties. 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.

[SIGNATURES
APPEAR ON FOLLOWING PAGE]

15

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IN
WITNESS WHEREOF, the Company and the Executive have executed this Amended and
Restated Severance Agreement as of the Effective Date.

| |                                                     
| | ----------------------------------------------------
| | /s/ Herbert B. Grimes                               
| |                                                     
| | Herbert B. Grimes                                   
| |                                                     
| | Vaughan Foods, Inc.                                 
| |                                                     
| | /s/ Gene P. Jones                                   
| |                                                     
| | By: Gene P. Jones                                   
| | Its: Secretary, Treasurer & Chief Financial
 Officer

16

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Exhibit A

Definitions

Definitions. The following terms, when used throughout this Agreement, shall have the
following meanings:

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1.  | AAA means the American Arbitration
 Association.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|2.  | Accounting
 Firm has the meaning ascribed to such term in Section 7(b).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|3.  | Act means the Securities Exchange of Act of
 1934, as amended from time to time.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|4.  | Accrued Obligations has the meaning
 ascribed to such term in Section 4(a).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|5.  | Affiliate 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; provided, however, that a natural person shall not be
 considered an Affiliate.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|6.  | Agreement has the meaning set forth in the
 preamble.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|7.  | Annual Base Salary 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 $320,400 per year, plus an
 automobile allowance of $12,000, for a total of $332,400. 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s then current Annual Base Salary shall
 be increased by $32,040. 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 Annual
 Base Salary 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s general payroll practices and shall be subject to FICA and
 income tax withholding.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|8.  | Annual Bonus 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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.                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|9.  | Board means, at any given time, the
 Companys Board of Directors at that time.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|10. | Cause means any of the following:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

- 1 -

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | the willful failure by the Executive to
 substantially perform the Executive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;                    
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                
| | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 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                                                                                                                                                   
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                
| | (c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 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;
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                
| | provided, however, that (x) an act
 or omission by the Executive shall be considered willful only if it was not
 in good faith and was without reasonable belief that it was in the Company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s best
 interests.

|    |                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 
|--- | ----------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|11. | CEO means, at any given time, the Chief Executive
 Officer of the Company at that time.
|    |                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 
|12. | Change in Control means the occurrence of
 any one of the following events:            
|    |                                                                                          
|    | (a)                                                                                       | The Incumbent Directors cease for any reason to
 constitute at least a majority of the Board;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | (b)                                                                                       | any person is or becomes a beneficial owner (as defined
 in Rule 13d-3 under the Act), directly or indirectly, of Company
 securities representing 30% or more of either (x) the Companys outstanding
 shares of common stock or (y) the combined voting power of the Companys then
 outstanding securities eligible to vote in the election of directors (each, Company Securities); provided,
 however, 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;
|    |                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | (c)                                                                                       | 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s stockholders, whether for such transaction or the issuance of
 securities in the transaction (a Reorganization),
 or the sale or other disposition of all or substantially all of the Companys
 assets to an entity that is not an Affiliate (a Sale), unless:                                                                                                                                                                                                                                                                                                                                                                                                     

- 2 -

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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | (i)                                                                                                                                                               | the holders of the Company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 Surviving Corporation), 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 Parent Corporation),
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | (ii)                                                                                                                                                              | 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                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | (iii)                                                                                                                                                             | 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s approval of the
 execution of the initial agreement providing for such Reorganization or Sale;                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | (any Reorganization or Sale that satisfies all of
 the criteria specified in (i), (ii) and (iii) above shall be deemed to be a Non-Qualifying Transaction);
 or
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                  
|    | (d)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | the Companys stockholders approve a plan of
 complete liquidation or dissolution of the Company.                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                  
|    | 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s
 acquisition of Company Securities that reduces the number of Company
 Securities outstanding; provided, however, 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).
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|13. | CIC Period means the two-year period
 following a Change in Control.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|14. | COBRA means the Consolidated Omnibus Budget
 Reconciliation Act of 1986, as amended from time to time.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                               | 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|15. | Code means Internal Revenue Code of 1986,
 as amended from time to time.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|16. | Company 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|17. | Compensation Committee means, at any given
 time, the Compensation Committee of the Board at that time.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|18. | Confidential
 Information 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|19. | Disabled means, with respect to the
 Executive, that (a) he has received disability payments under the Company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.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|20. | Effective Date has the meaning set forth in
 the preamble to this Agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|21. | Employment
 Matter means any dispute, controversy, or claim between the
 parties arising out of, relating to, or concerning this Agreement, the Executives
 employment with the Company, or the termination of that employment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|22. | Employment Matter Claim has the meaning
 ascribed to such term in Section 10(d)(i).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|23. | Excise Tax has the meaning ascribed to such
 term in Section 7(a).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|24. | Executive has the meaning set forth in the
 preamble to this Agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|25. | Good Reason means any of the following
 events, unless the Executive has consented in writing to such events:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | the assignment of any duties materially inconsistent
 with the Executive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;
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                              
|    | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | any material failure by the Company to comply with
 any provision of this Agreement, other than an isolated, insubstantial, or
 inadvertent failure not occurring                                                                                                                                                                                                                            

- 4 -

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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                               | 
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | in bad faith and which and which the Company
 remedies promptly after receipt of notice from the Executive;                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                              
|    | (c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | any failure by the Company to comply with and
 satisfy Section 9(c); or                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                              
|    | (d)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | any relocation of the Executives principal office
 to a location more than fifty (50) miles from the Executives principal
 office prior to such relocation.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                              
|26. | Good Reason Notice has the meaning ascribed
 to such term in Section 3(d).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|27. | Gross-Up
 Payment has the meaning ascribed to such term in Section 7(a).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|28. | Guarantors has the meaning ascribed to such
 term in Section 10(e).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|29. | Incumbent
 Directors means the members of the Board on the Effective Date; provided,
 however, 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.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|30. | Notice
 of Termination 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; provided, however, 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.                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|31. | Payment
 has the meaning ascribed to such term in Section 7(a).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|32. | A person 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
 person for purposes of this Agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|33. | Prorated Annual Bonus means a prorated
 amount of an Annual Bonus payable under Sections 4(b)(i)(B) or 4(c). If the
 Executives employment began in a calendar year before                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

- 5 -

---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  | 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | 
|    | the calendar year in which the Termination Date
 occurs, the Prorated Annual Bonus shall be calculated based on the prior
 year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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.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|34. | Representatives
 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.                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|35. | Section 409A has
 the meaning ascribed to such term in Section 4(e).                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|36. | Separation from Service has the meaning
 ascribed to such term in Section 4(e).                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|37. | Short-Term Disability Payments means
 disability payments under the Companys short-term disability policy or plan
 that are less than 100% of the then-current Annual Base Salary.                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|38. | Supervisor means, with respect to the
 Executive, the person to whom the Executive reports, as determined by the CEO
 or the CEOs designee from time to time or the Board with respect to the CEO.                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|39. | Tax Notice has the meaning ascribed to such
 term in Section 7(b).                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|40. | Termination Date means the Executive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).                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|41. | Underpayment
 has the meaning ascribed to such term in Section 7(b).                                                                                                                                                                                                                                                                                                                                                                                                                    

- 6 -

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EXHIBIT B

GENERAL
RELEASE

NOTICE

Vaughan Foods, Inc. (the Company)
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.

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 Employment
Agreement). 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 Severance
Benefits) 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.

BEFORE SIGNING THIS GENERAL RELEASE
YOU SHOULD REVIEW IT CAREFULLY. YOU ALSO HAVE THE RIGHT TO CONSULT WITH AN
ATTORNEY OF YOUR CHOICE.

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.

GENERAL
RELEASE

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 current and former employees, officers, directors, and agents
(together, the Released Parties) 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

---



any and all rights I may
have with respect to and promise not to file a lawsuit to assert any such
claims.

This General Release
includes, but is not limited to, claims arising under the Age Discrimination in
Employment Act (ADEA) 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 compensation,
any legally protected activity, or alleged whistleblower status, or on any
other basis whatsoever.

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s qualified benefit plans or arrangements as of or after my last
day of employment with the Company or on any of the Companys obligations under
the Employment Agreement.

MISCELLANEOUS

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.

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.

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.

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

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.

This General Release and the
Company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 Code). 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.

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.

Dated this ___ day of
___________, 20__.

| |                  
| | -----------------
| |                  
| | Herbert B. Grimes

3

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