Document:

EXHIBIT 10.10

                                LOCK-UP AGREEMENT

                                                                _________, 200__

PAULSON INVESTMENT COMPANY, INC.
As Representative of the several
Underwriters named in Schedule I to
the Underwriting Agreement referred to below
811 SW Front Avenue
Portland, Oregon 97204

      Re:   VAUGHAN FOODS, INC. - PUBLIC OFFERING

            The undersigned understands that you, as Representative of the
several Underwriters, propose to enter into an Underwriting Agreement (the
"UNDERWRITING AGREEMENT") with Vaughan Foods, Inc., an Oklahoma corporation,
(the "COMPANY"), providing for the public offering (the "PUBLIC OFFERING") by
the several Underwriters named in Schedule I to the Underwriting Agreement (the
"UNDERWRITERS"), of Units ("UNITS"), each Unit consisting of one share of Common
Stock, par value $0.001, of the Company ("COMMON STOCK"), one Class A Warrant
and one Class B Warrant, all as more fully described in the Prospectus (defined
below.)

            In consideration of the Underwriters' agreement to purchase and make
the Public Offering of the Units, and for other good and valuable consideration
receipt of which is hereby acknowledged, the undersigned hereby agrees that,
without the prior written consent of Paulson Investment Company, Inc. on behalf
of the Underwriters, the undersigned will not, at any time earlier than one year
after the date of the prospectus relating to the Public Offering (the
"PROSPECTUS"), (1) offer, pledge, announce the intention to sell, sell, contract
to sell, sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant to purchase, or otherwise
transfer or dispose of, directly or indirectly, any shares of Common Stock, or
any securities of the Company that are substantially similar to the Common
Stock, or any securities convertible into or exercisable or exchangeable for
Common Stock (including, but not limited to, Common Stock which may be deemed to
be beneficially owned by the undersigned in accordance with the rules and
regulations of the Securities and Exchange Commission and securities which may
be issued upon exercise of a stock option or warrant) or (2) enter into any
swap, option, future, forward or other agreement that transfers, in whole or in
part, any of the economic consequences of ownership of the Common Stock or any
securities of the Company which are substantially similar to the Common Stock,
including, but not limited to, any security convertible into or exercisable or
exchangeable for Common Stock, whether any such transaction described in clause
(1) or (2) above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise. In addition, the undersigned agrees that,
without the prior written consent of Paulson Investment Company, Inc. on behalf
of the Underwriters, it will not, during the period ending one year after the
date of the Prospectus, make any demand for or exercise any

<PAGE>

right with respect to, the registration of any shares of Common Stock or any
substantially similar securities of the Company, including but not limited to,
any security convertible into or exercisable or exchangeable for Common Stock.

            The undersigned represents and warrants that it is not a party to
any agreement or understanding that would cause a breach of this Lock-Up
Agreement if it were entered into during the period in which the restrictions
set forth herein are effective.

            In furtherance of the foregoing, the Company and any duly appointed
transfer agent for the registration or transfer of the securities described
herein are hereby authorized to decline to make any transfer of securities if
such transfer would constitute a violation or breach of this Lock-Up Agreement.

            The undersigned hereby represents and warrants that the undersigned
has full power and authority to enter into this Lock-up Agreement. All authority
herein conferred or agreed to be conferred and any obligations of the
undersigned shall be binding upon the successors, assigns, heirs or personal
representatives of the undersigned.

            The undersigned understands that, if the Underwriting Agreement does
not become effective, on or prior to March 31, 2007, or if the Underwriting
Agreement (other than the provisions thereof which survive termination) shall
terminate or be terminated prior to payment for and delivery of the Common Stock
to be sold thereunder, the undersigned shall be released from all obligations
under this Lock-Up Agreement.

            The undersigned understands that the Underwriters are entering into
the Underwriting Agreement and proceeding with the Public Offering in reliance
upon this Lock-Up Agreement.

<PAGE>

            THIS LOCK-UP AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAWS PRINCIPLES THEREOF.

                                     Very truly yours,

                                     -------------------------------------------

                                     By:                                     (1)
                                         ---------------------------------------
                                           Name:
                                           Title:

Accepted as of the date
first set forth above:

PAULSON INVESTMENT COMPANY, INC.

    Acting severally on behalf of themselves and
    the several Underwriters to be named in
    Schedule I to the Underwriting Agreement

By:
     ----------------------------------------------
     Name:
     Title:

----------------
(1) To be completed by an entity other than an individual.Exhibit 10.1 Compensation for Named Executive Officers for 2007

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EXHIBIT 10.1

Compensation for the Named Executive Officers

 

			
2007
	
			
Target Bonus
	
			
As a 
	
		
2007
	
Perentage of
	
2006

		
Base Salary
	
Base Salary
	
Bonus Amount

	

	
Daniel D. Rosenthal
	
$
	
650,000
		
120
	
%
	
$
	
940,896
	
	
President and Chief Executive Officer
								
									
	
Thomas E. Prince
	
$
	
520,000
		
100
	
%
	
$
	
588,060
	
	
Chief Operating Officer
								
									
	
Cliff J. Piscitelli
	
$
	
413,000
		
100
	
%
	
$
	
407,385
	
	
Executive Vice President, Director of Secondary Marketing
								
									
	
Edward A. Luther
	
$
	
235,000
		
70
	
%
	
$
	
187,110
	
	
Senior Vice President, Director of Major Loans
								
									
	

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	Navigation LinksExhibit 10.2 2007 Annual Incentive Plan for Executive Management

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EXHIBIT 10.2
ANNUAL INCENTIVE PLAN

DOWNEY FINANCIAL CORP.

2007 Annual Incentive Plan
Executive Management

 

OBJECTIVE

The Downey Financial Corp. Annual Incentive Plan, (the “Plan”), is designed to motivate and reward eligible executive management of
Downey Financial Corp., Downey Savings and Loan Association, F.A., and DSL Service Company (the “Company”) for performance that
results in achievement of key organizational and individual executive goals.  Objectives are established to align executives’
interest and performance with interests of Downey Financial Corp.

 

ELIGIBILITY

Those eligible to participate in this plan include executives with broad responsibility and decision-making authority who have a
major impact on the results of their own functional areas and on the overall performance of the Company.  Plan participation and
participation level (expressed as a percentage of base salary) is subject to the approval of the Compensation Committee and the Board
of Directors and may be revised by the Board, based on the performance of the Company.  For those individuals who become eligible to
participate mid-year, the incentive award will be prorated for the percentage of the year the employee was eligible to participate.
If an eligible employee receives a base salary adjustment during the plan year, the annual base salary will be prorated for the
percentage of the year each salary was in effect and the incentive payment will be calculated on the adjusted base salary.

 

PERFORMANCE MEASURES

The Plan consists of two separate measurement factors which are combined to establish the total incentive opportunity.  A
participant’s ability to earn any portion of the incentive is based on the successful attainment of the Company’s Business Performance
as measured by net income and the achievement of established Individual Performance/Goals.

 

BUSINESS PERFORMANCE

In determining any potential award, the business performance component will be based on a Net Income target of [redacted].  In order
for any award to be paid, the Business Performance Percentage must be 80% or greater.  The table below summarizes the required net
income levels.  The Business Performance Percentage is adjusted as illustrated in the table below to determine the Adjusted Business
Performance Percentage (or bonus potential) before individual performance assessment.  The Adjusted Business Performance Percentage
is increased in 2%

 

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increments for every percentage the Business Performance Percentage is above 80% and at or below 100%, and is
increased in 1% increments for every percentage the Business Performance Percentage is above 100%, up to a maximum business
percentage of 120%.

	

	

		
Adjusted Business
	
	
Actual
	
Business Performance
		
Performance Percentage
	
	
Net Income
	
Percentage
		
(i.e., Bonus Potential)
	
	
[Redacted]
	
120%
		
120%
	
	
[Redacted]
	
100%
		
100%
	
	
[Redacted]
	
80%
		
60%
	
		
Below 80%
		
0%
	

INDIVIDUAL PERFORMANCE

Individual performance will be evaluated and a performance rating established by the Chief Executive Officer, and reviewed by the
Compensation Committee and the Board of Directors of Downey. In making this evaluation, appropriate weight is given to the degree of
achievement of pre-determined division/department objectives as well as evaluation of job responsibilities and performance factors.

The table below summarizes the Individual Performance ratings and corresponding percentage adjustments.

		
Individual Performance

	
Individual Performance
	
Percentage Factor

		
5 – Outstanding Performance
		
110% - 120
	
%

		
4 – Exceeds Expectations
		
100% - 110
	
%

		
3 – Meets Expectations
		
80% - 100
	
%

		
2 – Needs Improvement
		
0%  - 80
	
%

		
1 – Not Performing Job
		
0
	
%

CALCULATION OF AWARD

The actual award received, if any, is based on the following Formula (see attached example):

	
Base
		
Individual Target
		
Adjusted Business
		
Individual
		
	
Salary
	
x
	
Bonus %
	
x
	
Performance
	
x
	
Factor
	
=
	
Bonus

 

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PAYMENT

Overall performance will be assessed within 60 days after the end of the Plan Year.  The participant must be actively employed on the
date of the payout in order to receive an incentive payment, unless termination is due to death, incapacitation or retirement.
Payment will be prorated in this situation. Awards will be paid in February following the Plan year or as soon as administratively
possible.  Checks are subject to appropriate tax withholdings as well as any 401(k) and or deferred compensation deductions.

 

TERMINATION AND MODIFICATION

This incentive plan will be reviewed periodically to evaluate its effectiveness.  The Board of Directors has the authority to modify
or terminate any part of this plan at their discretion, at any time.

 

EFFECTIVE DATE

The Plan operates on a fiscal year basis and this Plan summary is effective January 1, 2007 and amends all prior Annual Incentive
Plans for Executive Management previously approved by Downey Savings and Loan Association Board of Directors, including the plan
approved on April 28, 1993.

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