Document:

THIS WARRANT HAS NOT BEEN REGISTERED
                        UNDER THE SECURITIES ACT OF 1933
                             AND IS NOT TRANSFERABLE
                            EXCEPT AS PROVIDED HEREIN

                               Vaughan Foods, Inc.

                                PURCHASE WARRANT

                                   Issued to:

                        PAULSON INVESTMENT COMPANY, INC.

                             Exercisable to Purchase

                                  200,000 Units

                                       of

                               VAUGHAN FOODS, INC.

                            Void after ________, 2012

<PAGE>

     This is to certify that, for value received and subject to the terms and
conditions set forth below, the Warrantholder (hereinafter defined) is entitled
to purchase, and the Company promises and agrees to sell and issue to the
Warrantholder, at any time on or after ________, 2007 and on or before ________,
2012, up to 200,000 Units (hereinafter defined) at the Exercise Price
(hereinafter defined).

     This Warrant Certificate is issued subject to the following terms and
conditions:

     1. DEFINITIONS OF CERTAIN TERMS. Except as may be otherwise clearly
required by the context, the following terms have the following meanings:

          (a) "Act" means the Securities Act of 1933, as amended.

          (b) "Cashless Exercise" means an exercise of Warrants in which, in
lieu of payment of the Exercise Price, the Holder elects to receive a lesser
number of Securities such that the value of the Securities that such Holder
would otherwise have been entitled to receive but has agreed not to receive, as
determined by the closing price of such Securities on the date of exercise or,
if such date is not a trading day, on the next prior trading day, is equal to
the Exercise Price with respect to such exercise. A Holder may only elect a
Cashless Exercise if Securities issuable by the Company on such exercise are
publicly traded securities.

          (c) "Class A Warrant" means a warrant defined as a Class A Warrant in
the Warrant Agreement.

          (d) "Class B Warrant" means a warrant defined as a Class B Warrant in
the Warrant Agreement.

          (e) "Closing Date" means the date on which the Offering is closed.

          (f) "Commission" means the Securities and Exchange Commission.

          (g) "Common Stock" means the common stock, par value $0.001, of the
Company.

          (h) "Company" means Vaughan Foods, Inc., an Oklahoma corporation.

          (i) "Company's Expenses" means any and all expenses payable by the
Company or the Warrantholder in connection with an offering described in Section
6 hereof, except Warrantholder's Expenses.

          (j) "Corporate Financing Rule" means Rule 2710 of the rules of the
National Association of Securities Dealers, Inc.

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<PAGE>

          (k) "Effective Date" means the date on which the Registration
Statement is declared effective by the Commission.

          (l) "Exercise Price" means the price at which the Warrantholder may
purchase one Unit upon exercise of Warrants as determined from time to time
pursuant to the provisions hereof. The initial Exercise Price is $_____ per
Unit.

          (m) "Offering" means the public offering of Units made pursuant to the
Registration Statement.

          (n) "Participating Underwriter" means any underwriter participating in
the sale of the Securities pursuant to a registration under Section 6 of this
Warrant Certificate.

          (o) "Registration Statement" means the Company's registration
statement (File No. 333 -______) as amended on the Closing Date.

     (p) "Rules and Regulations" means the rules and regulations of the
Commission adopted under the Act.

          (q) "Securities" means the securities obtained or obtainable upon
exercise of the Warrant or securities obtained or obtainable upon exercise,
exchange, or conversion of such securities.

          (r) "Unit" means one share of Common Stock, one redeemable Class A
Warrant and one redeemable Class B Warrants.

          (s) "Unit Warrant" means either a Class A Warrant or a Class B
Warrant.

          (t) "Warrant Agreement" means that certain Warrant Agreement, dated as
of _______, 2006, by and between the Company and ___________________ relating to
the issuance of Unit Warrants.

          (u) "Warrant Certificate" means a certificate evidencing the Warrant.

          (v) "Warrantholder" means a record holder of the Warrant or
Securities. The initial Warrantholder is Paulson Investment Company, Inc.

          (w) "Warrantholder's Expenses" means the sum of (i) the aggregate
amount of cash payments made to an underwriter, underwriting syndicate, or agent
in connection with an offering described in Section 6 hereof multiplied by a
fraction the numerator of which is the aggregate sales price of the Securities
sold by such underwriter, underwriting syndicate, or agent in such offering and
the denominator of which is the aggregate sales price of all of the securities
sold by such underwriter, underwriting syndicate, or agent in such offering and
(ii) all out-of-pocket expenses of the Warrantholder, except for the fees and
disbursements of one firm retained as legal counsel for the Warrantholder that
will be paid by the Company.

          (x) "Warrant" means the warrant evidenced by this certificate, any
similar certificate issued in connection with the Offering, or any certificate
obtained upon transfer or partial exercise of the Warrant evidenced by any such
certificate.

     2. EXERCISE OF WARRANT. All or any part of the Warrant represented by this
Warrant Certificate may be exercised commencing one year after the Effective
Date and

                                       3
<PAGE>

ending at 5 p.m. Pacific Time on the fifth anniversary of the Effective Date
(the "Expiration Date") by surrendering this Warrant Certificate, together with
appropriate instructions, duly executed by the Warrantholder or by its duly
authorized attorney, at the office of the Company, 216 N.E. 12th Street, Moore,
Oklahoma 73160, Attention: Chief Executive Officer; or at such other office or
agency as the Company may designate. The date on which such instructions are
received by the Company shall be the date of exercise. If the Holder has elected
a Cashless Exercise, such instructions shall so state. Subject to the provisions
below, upon receipt of notice of exercise, the Company shall immediately
instruct its transfer agent to prepare certificates for the Securities to be
received by the Warrantholder upon completion of the Warrant exercise. When such
certificates are prepared, the Company shall notify the Warrantholder and
deliver such certificates to the Warrantholder or as per the Warrantholder's
instructions immediately upon payment in full by the Warrantholder, in lawful
money of the United States, of the Exercise Price payable with respect to the
Securities being purchased, if any. If the Warrantholder shall represent and
warrant that all applicable registration and prospectus delivery requirements
for their sale have been complied with upon sale of the Securities received upon
exercise of the Warrant, such certificates shall not bear a legend with respect
to the Act.

     If fewer than all the Securities purchasable under the Warrant are
purchased, the Company will, upon such partial exercise, execute and deliver to
the Warrantholder a new Warrant Certificate (dated the date hereof), in form and
tenor similar to this Warrant Certificate, evidencing that portion of the
Warrant not exercised. The Securities to be obtained on exercise of the Warrant
will be deemed to have been issued, and any person exercising the Warrant will
be deemed to have become a holder of record of those Securities, as of the date
of the payment of the Exercise Price.

     3. ADJUSTMENTS IN CERTAIN EVENTS. The number, class, and price of
Securities for which this Warrant Certificate may be exercised are subject to
adjustment from time to time upon the happening of certain events as follows:

          (a) If the outstanding shares of the Company's Common Stock are
divided into a greater number of shares or a dividend in stock is paid on the
Common Stock, the number of shares of Common Stock for which the Warrant is then
exercisable will be proportionately increased and the Exercise Price will be
proportionately reduced; and, conversely, if the outstanding shares of Common
Stock are combined into a smaller number of shares of Common Stock, the number
of shares of Common Stock for which the Warrant is then exercisable will be
proportionately reduced and the Exercise Price will be proportionately
increased. The increases and reductions provided for in this Section 3(a) will
be made with the intent and, as nearly as

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<PAGE>

practicable, the effect that neither the percentage of the total equity of the
Company obtainable on exercise of the Warrants nor the price payable for such
percentage upon such exercise will be affected by any event described in this
Section 3(a).

          (b) In case of any change in the Common Stock through merger,
consolidation, reclassification, reorganization, partial or complete
liquidation, purchase of substantially all the assets of the Company, or other
change in the capital structure of the Company, other than changes in par value,
then, as a condition of such change, lawful and adequate provision will be made
so that the holder of this Warrant Certificate will have the right thereafter to
receive upon the exercise of the Warrant the kind and amount of shares of stock
or other securities or property to which he would have been entitled if,
immediately prior to such event, he had held the number of shares of Common
Stock obtainable upon the exercise of the Warrant. In any such case, appropriate
adjustment will be made in the application of the provisions set forth herein
with respect to the rights and interest thereafter of the Warrantholder, to the
end that the provisions set forth herein will thereafter be applicable, as
nearly as reasonably may be, in relation to any shares of stock or other
property thereafter deliverable upon the exercise of the Warrant. The Company
will not permit any change in its capital structure to occur unless the issuer
of the shares of stock or other securities to be received by the holder of this
Warrant Certificate, if not the Company, agrees to be bound by and comply with
the provisions of this Warrant Certificate.

          (c) When any adjustment is required to be made in the number of shares
of Common Stock, other securities, or the property purchasable upon exercise of
the Warrant, the Company will promptly determine the new number of such shares
or other securities or property purchasable upon exercise of the Warrant and (i)
prepare and retain on file a statement describing in reasonable detail the
method used in arriving at the new number of such shares or other securities or
property purchasable upon exercise of the Warrant and (ii) cause a copy of such
statement to be mailed to the Warrantholder within thirty (30) days after the
date of the event giving rise to the adjustment.

          (d) No fractional shares of Common Stock or other securities will be
issued in connection with the exercise of the Warrant, but the Company will pay,
in lieu of fractional shares, a cash payment therefor on the basis of the mean
between the bid and asked prices of the Common Stock in the over-the-counter
market or the last sale price of the Common Stock on the principal exchange or
other trading facility on which the Common Stock is traded on the day
immediately prior to exercise.

          (e) If securities of the Company or securities of any subsidiary of
the Company are distributed pro rata to holders of Common Stock, such number of
securities will be distributed to the Warrantholder or its assignee upon
exercise of its rights hereunder as such Warrantholder or assignee would have
been entitled to if this Warrant Certificate had been exercised prior to the
record date for such distribution. The provisions with respect to adjustment of
the Common Stock provided in this Section 3 will also apply to the securities to
which the Warrantholder or its assignee is entitled under this Section 3(e).

          (f) Notwithstanding anything herein to the contrary, there will be no
adjustment made hereunder on account of the sale by the Company of the Common
Stock or other Securities purchasable upon exercise of the Warrant.

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<PAGE>

          (g) If, immediately prior to any exercise of Warrants, there shall be
outstanding no securities of a class or series that, but for the provisions of
this Section 3, would be issuable upon such exercise (the "FORMERLY ISSUABLE
SECURITIES"), then, upon such exercise, and in lieu of the Formerly Issuable
Securities, the Company shall issue that number and kind of other securities or
property for which the Formerly Issuable Securities were most recently
exercisable or into which the Formerly Issuable Securities were most recently
convertible, as the case may be.

     4. RESERVATION OF SECURITIES. The Company agrees that the number of shares
of Common Stock or other Securities sufficient to provide for the exercise of
the Warrant upon the basis set forth above will at all times during the term of
the Warrant be reserved for exercise.

     5. VALIDITY OF SECURITIES. All Securities delivered upon the exercise of
the Warrant will be duly and validly issued in accordance with their terms, and
the Company will pay all documentary and transfer taxes, if any, in respect of
the original issuance thereof upon exercise of the Warrant.

     6. REGISTRATION OF SECURITIES ISSUABLE ON EXERCISE OF WARRANT CERTIFICATE.

          (a) The Company will register the Securities with the Commission
pursuant to the Act so as to allow the unrestricted sale of the Securities to
the public from time to time commencing on the first anniversary of the
Effective Date and ending at 5:00 p.m. Pacific Time on the fifth anniversary of
the Effective Date (the "REGISTRATION PERIOD"). The Company will also file such
applications and other documents necessary to permit the sale of the Securities
to the public during the Registration Period in those states in which the Units
were qualified for sale in the Offering or such other states as to which the
Company and the Warrantholder agree. In order to comply with the provisions of
this Section 6(a), the Company is not required to file more than one
registration statement. No registration right of any kind, "piggyback" or
otherwise, will last longer than five years from the Effective Date.

          (b) The Company will pay all of the Company's Expenses and each
Warrantholder will pay its pro rata share of the Warrantholder's Expenses
relating to the registration, offer, and sale of the Securities.

          (c) Except as specifically provided herein, the manner and conduct of
the registration, including the contents of the registration statement, will be
entirely in the control and at the discretion of the Company. The Company will
file such post-effective amendments and supplements as may be necessary to
maintain the currency of the registration statement during the period of its
use. In addition, if the Warrantholder participating in the registration is
advised by counsel that the registration statement, in their opinion, is
deficient in any material respect, the Company will use its best efforts to
cause the registration statement to be amended to eliminate the concerns raised.

          (d) The Company will furnish to the Warrantholder the number of copies
of a prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as it may reasonably request
in order to facilitate the disposition of Securities owned by it.

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<PAGE>

          (e) The Company will, at the request of Warrantholders holding at
least 50 percent of the then outstanding Warrants, (i) furnish an opinion of the
counsel representing the Company for the purposes of the registration pursuant
to this Section 6, addressed to the Warrantholders and any Participating
Underwriter, (ii) furnish an appropriate letter from the independent public
accountants of the Company, addressed to the Warrantholders and any
Participating Underwriter, and (iii) make such representations and warranties to
the Warrantholders and any Participating Underwriter as are customarily given to
underwriters of public offerings of equity securities in connection with such
offerings. A request pursuant to this subsection (e) may be made on three
occasions. The documents required to be delivered pursuant to this subsection
(e) will be dated within ten days of the request and will be, in form and
substance, equivalent to similar documents furnished to the underwriters in
connection with the Offering, with such changes as may be appropriate in light
of changed circumstances.

     7. INDEMNIFICATION IN CONNECTION WITH REGISTRATION.

          (a) If any of the Securities are registered, the Company will
indemnify and hold harmless each selling Warrantholder, any person who controls
any selling Warrantholder within the meaning of the Act, and any Participating
Underwriter against any losses, claims, damages, or liabilities, joint or
several, to which any Warrantholder, controlling person, or Participating
Underwriter may be subject under the Act or otherwise; and it will reimburse
each Warrantholder, each controlling person, and each Participating Underwriter
for any legal or other expenses reasonably incurred by the Warrantholder,
controlling person, or Participating Underwriter in connection with
investigating or defending any such loss, claim, damage, liability, or action,
insofar as such losses, claims, damages, or liabilities, joint or several (or
actions in respect thereof), arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained, on the effective
date thereof, in any such registration statement or any preliminary prospectus
or final prospectus, or any amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading; provided, however, that the Company will not be liable in any case
to the extent that any loss, claim, damage, or liability arises out of or is
based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in any registration statement, preliminary prospectus,
final prospectus, or any amendment or supplement thereto, in reliance upon and
in conformity with written information furnished by a Warrantholder for use in
the preparation thereof. The indemnity agreement contained in this subparagraph
(a) will not apply to amounts paid to any claimant in settlement of any suit or
claim unless such payment is first approved by the Company, such approval not to
be unreasonably withheld.

          (b) Each selling Warrantholder, as a condition of the Company's
registration obligation, will indemnify and hold harmless the Company, each of
its directors, each of its officers who have signed any registration statement
or other filing or any amendment or supplement thereto, and any person who
controls the Company within the meaning of the Act, against any losses, claims,
damages, or liabilities to which the Company or any such director, officer, or
controlling person may become subject under the Act or otherwise, and will
reimburse any legal or other expenses reasonably incurred by the Company or any
such director, officer, or controlling person in connection with investigating
or defending any such loss, claim, damage, liability, or action, insofar as such
losses, claims, damages, or liabilities (or actions in respect

                                       7
<PAGE>

thereof) arise out of or are based upon any untrue or alleged untrue statement
of any material fact contained in said registration statement, any preliminary
or final prospectus, or other filing, or any amendment or supplement thereto, or
arise out of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, but only to the extent that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in said registration statement, preliminary or final prospectus, or other
filing, or amendment or supplement, in reliance upon and in conformity with
written information furnished by such Warrantholder for use in the preparation
thereof; provided, however, that the indemnity agreement contained in this
subparagraph (b) will not apply to amounts paid to any claimant in settlement of
any suit or claim unless such payment is first approved by the Warrantholder,
such approval not to be unreasonably withheld.

          (c) Promptly after receipt by an indemnified party under subparagraphs
(a) or (b) above of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against an indemnifying
party, notify the indemnifying party of the commencement thereof; but the
omission to notify the indemnifying party will not relieve it from any liability
that it may have to any indemnified party otherwise than under subparagraphs (a)
and (b).

          (d) If any such action is brought against any indemnified party and it
notifies an indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate in, and, to the extent that it may wish,
jointly with any other indemnifying party similarly notified, to assume the
defense thereof, with counsel satisfactory to such indemnified party; and after
notice from the indemnifying party to such indemnified party of its election to
assume the defense thereof, the indemnifying party will not be liable to such
indemnified party for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation.

     8. RESTRICTIONS ON TRANSFER. This Warrant Certificate and the Warrant may
not be sold, transferred, assigned, pledged, or hypothecated, or be the subject
of any hedging, short sale, derivative, put, or call transaction that would
result in the effective economic disposition of the securities by any person for
a period of 180 days immediately following the Effective Date, except as
permitted in subparagraph (g)(2) of the Corporate Financing Rule. The Warrant
may be divided or combined, upon request to the Company by the Warrantholder,
into a certificate or certificates evidencing the same aggregate number of
Warrants.

     9. NO RIGHTS AS A SHAREHOLDER. Except as otherwise provided herein, the
Warrantholder will not, by virtue of ownership of the Warrant, be entitled to
any rights of a shareholder of the Company but will, upon written request to the
Company, be entitled to receive such quarterly or annual reports as the Company
distributes to its shareholders.

     10. NOTICE. Any notices required or permitted to be given hereunder will be
in writing and may be served personally or by mail; and if served will be
addressed as follows:

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<PAGE>

         If to the Company:

                  Vaughan Foods, Inc.
                  216 N.E. 12th Street
                  Moore, Oklahoma 73160
                  Attention:  Chief Executive Officer

         If to the Warrantholder:

                  at the address furnished
                  by the Warrantholder to the
                  Company for the purpose of
                  notice.

     Any notice so given by mail will be deemed effectively given 48 hours after
mailing when deposited in the United States mail, registered or certified mail,
return receipt requested, postage prepaid and addressed as specified above. Any
party may by written notice to the other specify a different address for notice
purposes.

     11. APPLICABLE LAW. This Warrant Certificate will be governed by and
construed in accordance with the laws of the State of Oregon, without reference
to conflict of laws principles thereunder. All disputes relating to this Warrant
Certificate shall be tried before the courts of Oregon located in Multnomah
County, Oregon to the exclusion of all other courts that might have
jurisdiction.

         Dated as of _______, 2006

                                            VAUGHAN FOODS, INC.

                                            By: ________________________________
                                                Name: Mark E. Vaughan
                                                Title:   Chief Executive Officer

         Agreed and Accepted as of _______, 2006

                                            PAULSON INVESTMENT COMPANY, INC.

                                            By: ________________________________
                                                Name:
                                                Title:

                                        9[EXHIBIT 10.1]
                            LEASE

THIS AGREEMENT, made this 21st day of December 2005 between
Taub Investments herinafter called OWNER, with an address at
----------------
41 D Germay Drive, Wilmington, DE 19804
---------------------------------------

                             AND

PSI-TEC CORPORATION hereinafter called TENANT with an
-------------------
address at Beacon Hill Development Center, 2320  Lighthouse
           ------------------------------------------------
Lane, Wilmington, DE 19810.
--------------------------

PREMISES

     WITNESSETH, That Owner has leased to Tenant as Tenant
has leased from owner, all those certain premises in the
state of Delaware, New Castle County, described as follows:
41 A Germay Drive, Wilmington, DE 19804 consisting of
-----------------------------------------------------
approximately +/- 1,400 square feet of warehouse/office
-------------------------------------------------------
space as shown on Exhibit A upon the following terms and
---------------------------
conditions:

TERMS/RENT

  1.   The term of this lease is Three(3) years beginning on
                                 --------------
     the first day of January 2006, and ending on the 31st day of
     December, 2008 at the rent of

Year                         Monthly rent
-----------------------------------------
1/1/06 to 12/31/06            $675.00

1/1/07 to 12/31/07            $695.00

1/1/08 to 12/31/08            $716.11

Each beginning on the 1st day of January, 2006, and
continuing on the 1st day of each month thereafter, at the
office of 41 D Germay Drive, Wilmington, DE, 19804 during
business hours, or at such other place as owner may in
writing from time to time direct, and Tenant does for
itself, it's successors and assigns, covenant the promise to
pay said rent without further notice.  Rents are due
promptly on the first day of each month; and in the event
the Tenant becomes delinquent for more than 5 days after the
due date, Tenant authorizes Landlord to impose a 95%0 per
month late charge; and in the event the Tenant becomes
delinquent for more than (30) days after the due date,
Tenant authorizes the Landlord to enter premises and take
possession.  The owner shall have the right to change locks,
discontinue utilities in the Tenant's name and to take any
legal action necessary to recover delinquent rents.  A late
fee in the amount of 5% of the monthly rent shall be charged
if rent is not paid in full by the 5th day after the due
date.

USE OF PREMISES

                                                                1
<PAGE>

  2. Tenant may use and occupy said premise for the
     following purpose:  Warehouse, laboratory and general office
                         ----------------------------------------
     and for no other purpose, except with the prior written
     consent of the Owner.

  Tenant shall comply with all applicable City, County and
  State Laws, ordinances, and regulations, and with the
  rules and regulations of the Local Board of Underwriters
  with respect to use and occupancy of the said premises.
  Tenant shall not permit the conduct of any business,
  trade or occupation on said premises, or anything to be
  done thereon, which may void or make voidable any policy
  of insurance held by Owner thereon.  Tenant shall keep
  the demise and all improvements and fixtures in good
  condition, order and repair, throughout the term of the lease.

POSSESSION

  3. Tenant agrees that in the event of the liability of
     Owner to deliver possession of the premises at the
     commencement of the lease term, Owner shall not be liable
     for any damage caused thereby, nor shall this lease be void
     or voidable, but Tenant shall not be liable for any rent
     until such time as Owner can and does offer to deliver
     possession of the premises to Tenant and the total rent
     payable by Tennant and the commencement date of the lease
     term shall both be adjusted accordingly.

SERVICES

  4. The parties agree that each shall, subject to further
     provisions hereof, furnish and pay for the services and
     items assigned to them below, in addition to the other
     considerations recited herein:

     A.  Heat as required                                     Tenant
     B.  Air Conditioning as required                         Tenant
     C.  Electricity for ordinary lighting and for office
         machines                                             Tenant
     D.  Maintenance of plumming, heating air conditioning    Tenant
         and electric equipment
     E.  Water and Sewer rent(pro rata share)                 Tenant
     F.  Clearing of ice and snow from sidewalks; sanding     Tenant
         And or salting
     G.   Replacement of broken window glass                  Tenant
     H.   Janiter and cleaning service                        Tenant
     I.   Window washing                                      Tenant
     J.   Ordinary repairs                                    Tenant
     K.   Ordinary repairs and maintenance                    Tenant
     L.   Structural repairs                                  Tenant
     M.   Parking lot maintenance, including plowing, etc     Tenant
          When necessary ( pro rata share CAM)

                                                                2
<PAGE>

     N.   Roof repairs and maintenance                        Tenant
     O.   Rubbish removal                                     Tenant
     P.   Security                                            Tenant
     Q.   Light bulb replacement                              Tenant
     R.   Overhead door and opener repair & maintenance       Tenant
     S.   Real estate taxes & hazards insurance               Tenant

     Owner shall not be liable for any failure to furnish
     the services  and items assigned to it above if such
     failure is due to a shortage of materials, supplies,
     labor, services and other cause beyond it's control.

SIGN

  5. No  sign,  advertisement, notice shall be inscribed,
     painted or affixed on any part of the outside or inside of
     said building without the written consent of the Owner,
     which consent Owner agrees not to withhold reasonability.

SUBLETTING

  6. Tenant  shall not sublet, transfer or in any  manner
     dispose of the said premises or any part thereof, for all or
     any part, of the term hereby granted, without the prior
     written consent of the owner, such consent shall not be
     unreasonably  withheld.  If the Tenant merges  into  or
     consolidates  with, or liquidates  or  sells  al  or  a
     substantial part of it's assets to any person, corporation
     or organization of any kind, such action shall constitute an
     assignment or transfer of the premises within the meaning of
     the lease.

PEACEABLE SURRENDER OF PREMISES

  7. On  the  last day of the lease term as  presently written,
     or  on  the last day of any renewal  or  extension thereof,
     or  upon  sooner  termination  by  mutual  written agreement,
     Tenant shall peaceably surrender the premises in as good a
     condition  as reasonable and  proper  use will permit.  Any
     personal property left upon the premises  shall be  deemed
     abandoned by the Tenant.  Tenant shall leave  the premises
     broom clean.

ALTERATIONS

  8. Tenant shall not make any alterations, additions or
     improvements  to the said premises without the prior written
     consent of the owner.  In no event shall any structural
     change or any other change or modification be made to
     structure, heating, electrical or pluming services be
     undertaken by Tenant or employee or agent of Tenant.  Any
     approved additions, alterations or improvements shall be
     done in accordance wit the applicable State and County Laws
     and Ordinances and building and zoning rules and
     regulations.  Tenant hereby expressly assumes full
     responsibility for all damages and for injuries which may
     result, to any person or property by reason of or resulting
     from said alterations, additions or improvements and shall
     hold owner harmless with respect thereto.

                                                           3
<PAGE>

  Any alterations, additions, or improvements made in, to
  or on the premises shall, unless otherwise provided by
  written agreement, be the property of Owner, and shall
  remain upon and be surrendered with the premises, except
  for the Tenants Trade fixtures.  Tenant shall pay, when
  due, any and all sums of money that may be due for any
  and all labor, services, materials, supplies or equipment
  alleged to have been furnished or to be furnished to or
  for Tenant in, on or about the premises, and which may be
  secured by any mechanic's materialmen's or other lien
  against the premises or of Owner's interest therein, and
  Tenant shall cause each such lien to be fully discharged
  and released at the time and performance of any
  obligation secured by and such lien matures or becomes
  due.

LIABILITY

  9. Owner in no event shall be liable for any damage or
     injury to Tenant or any agent or employee of Tenant, or to
     any person or persons coming upon the said premises in
     connection with the occupancy by Tenant or otherwise , or to
     any goods, chattels, or other property of Tenant, or any
     other person or persons which may, during the term of this
     lease, be located in said premises, caused and contributed
     by water, rain, snow, breakage of pipes, leakage, or by any
     other cause except the willful negligence of the Owner, it's
     agents or employees.

OWNER'S INSPECTON

  10. Owner and persons designated by it to have the
      right to enter the said premises at reasonable hours to
      examine the same and to do such work as Owner is
      obligated to do under the terms hereof, or to do such
      work as Owner shall deem necessary for the safety or
      preservation of the said premises; provided however, that
      the same shall not interfere reasonably with the conduct
      of the Tenant's business.

FIRE

  11. If fire or casualty to the rental unit occurs without
      fault of the part of Tenant, or other person on premises
      with Tenant's consent, thereby rendering the premises or
      appurtenances necessary to the use thereof partially or
      wholly unusable, the Tenant may:

  a) if the premises is totally destroyed by fire or other
     casualty; immediately quit the premises and notify Owner in
     writing of Tenant's election to quit within (1) week after
     vacating, in which case the rental agreement shall terminate
     as of the date of such notice.  If Tenant fails to notify
     Owner of Tenant's election to quit Tenant shall be liable
     for rent accruing to the date of Owner's actual knowledge of
     Tenant's vacation, or impossibility of further occupancy ;
     or,

  b) if continued occupancy is otherwise lawful, Tenant may
     vacate any part of the premises rendered unusable by the
     fire or casualty, in which case the Tenant's liability for

                                                           4
<PAGE>

     rent shall be no more than the market value of that part of
     the premises which Tenant continues to use and occupy.

INDEMNITY

 12. Tenant for itself, it's successors and assigns,
     covenants and agrees to indemnify and hold harmless Owner,
     it's successors and assigns, of and from any and all damages
     and for liability from anything whatsoever for arising from
     or out of, or in connection with the occupancy of the said
     premises by Tenant, it's agents or servants, and for itself,
     it's successors and assigns, does hereby release Owner, it's
     successors and assigns from any change or damage of
     liability arising from anything in connection with the
     occupancy of the Tenant of the said premises, unless the
     same shall be caused by the negligence of the Landlord, it's
     agents, or employees.

 13. In the event Tenant's occupancy causes any increase in
     premium for the fire, boiler and/or casualty rates on the
     leased premises or the building of which they are a part
     above the rate for the least hazardous type of occupancy
     legally permitted in the leased premises, the Tenant shall
     pay the additional premium on the fire boiler and/or
     casualty insurance policies by reason thereof.  The Tenant
     shall also pay in such event, any additional premium on the
     rent insurance policy that may be carried by the Owner for
     it's protection against rent loss through fire..  Bills for
     such additional premium shall be rendered by Owner to Tenant
     at such times as Owner may elect, and shall be due from, and
     payable by Tenant when rendered, and the amount thereof
     shall be deemed to be, and paid as additional rent.

BREACH OR DEFAULT BY TENANT

  14. Any breach by Tenant of any conditions of this lease,
      not including payment of rent, may be cured by Owner for the
      account of and at the expense of Tenant, and any sums so
      advanced shall be paid to Owner on the first day of the
      following month.

  Should Tenant be in default of any of the terms or conditions of
  this lease, while such default continues, neither the whole or
  any part of the furniture, equipment or supplies located in the
  premises shall be removed there from, except with the written
  consent of Owner, first obtained.

REAL ESTATE TAXES AND BUILDING INSURANCE

 15. Tenant will pay it's pro rata share all real property
     taxes which have been, or may be assessed by any lawful
     authority against the land and improvements.  Should such
     aforesaid taxes exceed, in any subsequent lease year, the

                                                           5
<PAGE>

     amount paid for the first full year of taxes assessed
     against the land and improvements, the Tenant shall pay as
     additional rent Tenant's proportionate share of the total
     increase, based upon the percentage of increase over the
     taxes in the first lease year.  Tenant shall also pay for
     it's pro rata share of Owner's cost of fire, hazard and
     liability insurance maintained by owner for the building and
     common areas which the premises is a part.  Invoices for the
     above items shall be payable by Tenant within 15 days of
     receiving invoice from owner.

INSURANCE

  16. Tenant shall maintain in full force and effect, at it's
      sole cost and expense, during the term of this lease or any
      renewal or extension thereof, (i) public liability insurance
      including contractual liability, with respect to the leased
      premises in companies and in form acceptable to Owner,
      providing on an occurrence basis, a minimum combined single
      limit of One Million Dollars ($1,000,000) per occurrence and
      Two Million Dollars ($2,000,000) in the aggregate, and (ii)
      fire and extended coverage insurance on Tenant's personal
      property, including inventory, trade fixtures, floor
      coverings, furniture and other property, and Tenant's
      leasehold improvements.  Such a policy shall name Owner and
      Tenant as insured's as their interest shall appear, and
      shall be affected by valid and enforceable policies issued
      by insurers of recognized responsibility satisfactory to
      Owner.  Policy shall also contain a provision that said
      policy shall not be cancelled except after Ten (10) days
      written notice  to Owner.  The policy shall expressively
      waive and bar any claim of subrogation against Owner.
      Appropriate certificates shall be furnished to Owner by
      Tenant to prove issuance of such policies and their coverage.

PERSONAL PROPERTY TAXES

  17. Tenant shall be liable for the payment of all taxes
      levied against any personal property or trade fixtures
      placed in, on, or about the premises, including shelves,
      counters, vaults, vault doors, wall safes, partitions,
      machinery, electrical or electronic equipment.  If Owner is
      required to pay any of such taxes, Tenant, upon demand,
      agrees to reimburse Owner therefore.

BANKRUPTCY

  18. In the event Tenant shall file voluntary petition in
      bankruptcy, make an assignment for the benefit of creditors,
      or be adjudged a bankrupt, or if a receiver, trustee, or
      custodian is appointed for Tenant by any court, or if Tenant
      files any petition for relief under any section of the
      bankruptcy laws of the United States now in force or
      hereafter enacted, or if Tenant takes advantage of any
      insolvency act of ant state or the United States now in

                                                           6
<PAGE>

      force or hereafter enacted, or if the interest of the Tenant
      shall be sold under any execution or other legal process,
      issued out of any court, or if Tenant shall abandon or
      vacate the said premises during the said term, or if Tenant
      shall break any promise or covenant on it's part to be
      performed, then in any such even it shall be lawful for
      owner, at any time thereafter, at it's option, while the
      same continues, if it shall continue for a period of Ten(10)
      days, upon ten(10) days written notice Tenant to enter said
      premises and again have possession thereof and occupy the
      same as id the lease had not been made, and thereupon this
      lease and everything contained herein upon the part of the
      owner to be done and performed  , shall cease and become
      null and void, without prejudice to the right of Owner to
      recover from Tenant by distraint  , attachment or other
      legal process, all rents or additional rents due and owing
      according to the terms of this lease, or any damages
      resulting from the violation of this lease or the terms
      hereof.

SECURITY DEPOSIT

  19. Tenant has deposited with Owner $1,575.00, receipt
      whereof is hereby acknowledged, a security for the full and
      faithful performance of each and every term, provision,
      covenant and condition of this lease.  In the event Tenant
      defaults in respect of any of the terms, provisions,
      covenants or conditions of this lease, including but not
      limited to the payment of rent, Owner may use, apply, or
      retain the whole or any part of such security for the
      payment of any rent in default or for any other sum which
      owner may spend or be required to spend, by reason of
      Tenant's default.  Should tenant faithfully and fully comply
      with all the terms, provisions, covenants, and conditions of
      this lease, the security deposit or any balance thereof
      shall be returned to Tenant at the expiration of the term
      hereof.  Tenant shall not be entitled to any interest on
      said security deposit.

  20. The failure of owner to insist upon a strict
      performance of any of the terms, conditions and covenants
      herein, shall not be deemed a waiver of any rights or
      remedies that owner may have and shall not be deemed a
      waiver of any subsequent breach or default in the terms,
      conditions and covenants herein contained.

EMINANT DOMAIN

  21. If the whole or any part of the premises leased to
      Tenant shall be taken by any public authority under the
      power of eminent domain, then the term of this lease shall
      cease on the part so taken on the date possession of the
      part is surrendered and any unearned rent paid or credited
      in advance shall be refunded, and from that day, Tenant
      shall have the right either to cancel this lease and to
      declare the same null and void, or to continue in possession
      of the remainder of the premises under the terms herein

                                                           7
<PAGE>

      provided, except that the rent shall be reduced in
      proportion to the portion of the premises taken.  Tenant
      shall notify owner within thirty (30) days after
      notification by the owner and/or such public authority of
      the intention to take a portion of the premises leased to
      tenant of it's intention to cancel the lease; otherwise, the
      lease shall continue on the terms and conditions
      hereinbefore stated as to the portion not taken for the
      remainder of the term.  Tenant shall not be entitled to
      receive any part of any award or awards that may be made to
      or received by owner.  Tenant at it's own expense may take
      independent proceedings against the public authority
      exercising the power of eminent domain to prove and
      establish any damage Tenant may have sustained.

ABSENCE FROM PREMISES

  22. At any time during the term of this lease or any
      renewal or extension thereof, Tenant agrees to inform owner
      in writing, if and when premises are due to be unoccupied
      for an extended period of time (10 working days or more);
      such notice will be given no later than the first day of
      such absence.

  23. Time is of the essence of this lease.

SUBORDINATION

  24. Tenant agrees that this lease shall be subordinate
to any mortgages or trust deeds which may now be in effect
or hereafter be placed upon the real property of which the
demised premises form a part, and to any and all advances
made or to be made thereunder.

NOTICES

  25. Any notice provided for herein shall be given by
      registered mail , postage prepaid, addressed, if to Owner at
      Taub Investments at 41 Germay Drive, Wilmington, DE 19804
      and if to Tenant at PSI-TEC Corporation; Beacon Hill
      Development Center, 2320 Lighthouse Lane, Wilmington, DE
      19810 Atten: Andrew Ashton

TERMINATION

  26. Subject to the options to renew provided in the Rider,
      it is agreed that this lease shall be terminate without
      notice by either party, upon the expiration of the period
      specified in Paragraph 1 hereof.

HOLDOVER

                                                           8
<PAGE>

  27. Any holding over after the expiration of the term
      hereof, without the written consent of owner, shall be
      construed to be a tenancy from month to month at one and one
      half (1and 1/2) hereinbefore specified .  If owner's written
      consent is granted, the rent shall be at the amount being
      paid at expiration date of this lease.

RIDER

  28. A Rider consisting of One(1) pages , with sections
      numbered consecutively N/A through N/A is attached hereto
      and made part hereof.

NO OPTION

  29. The submission of this lease for examination does not
      constitute a reservation of or option for the leased
      premises and this becomes effective as a lease only upon
      execution thereof by Owner and Tenant.  If this lease is not
      executed by both parties and fully executed copies delivered
      to both parties by then, this lease shall be null and void.

COMMISSION

  30. In consideration of it's services in negotiating this
      lease, Owner, it's successors or assigns, agrees to pay
      Stoltz Realty Co. it's successors or assigns, a commission
      equal to four percent (4%) upfront for the term of this
      lease and for any extension or renewal.  In the event said
      commission is not paid within thirty(30) days of the due
      date, Stoltz Realty Co. shall have the right to accelerate
      payment of the balance of future commissions base upon the
      Tenant exercising all options to renew and extend this lease
      and all such future commissions shall become due and payable
      at once upon demand.

  If the tenant or any assigns of tenant or any form of ownership in
  which tenant is connected with, purchase the real estate which the
  premises are a part, during the term of this lease or any extension
  thereof, and for 180 days after this lease, or any extension thereof,
  expires, Owner, it's successors or assigns, agrees to have Stoltz
  Realty Co., it' successors or assigns, represent the owner in the
  transaction and pay a commission equal to 6 percent of the sales
  price (gross consideration),

       The owner agrees that these commission
  covenants shall survive any sale, conveyance, lease
  or other transfer of the building and any breach
  hereof shall constitute a lien against the building
  that shall run with the building.

HAZARDOUS SUBSTANCES

  31. During the term of this lease or any extension, renewal
      or expansion thereof the tenet agrees not to generate,
      manufacture, store, treat, dispose, release or threaten

                                                           9
<PAGE>

      release of any hazardous waste or substance by tenant or by
      agent, employee or invitee of tenant on or about any of the
      property. Tenant also agrees that all the activity of the
      tenant shall be conducted in compliance with all applicable
      federal, state and local laws, regulations and ordinances.
      Tenant authorizes landlord and it's agents to enter the
      properties and premises to make sure such inspections and
      tests, as landlord may deem appropriate to determine
      compliance of the property with this section of the lease.
      If tenant does generate, manufacture, store, treat, dispose,
      release or threaten to release any hazardous waste on the
      property, tenant shall become liable for cleanup and the
      cost to cleanup the property.  Tenant also agrees to
      indemnify, hold harmless the landlord against any and all
      claims, losses, liabilities, damages, penalties and expenses
      which landlord may directly or incur or suffer as a result
      from a breach of this section of the lease.  Tenant also
      agrees not to store any junk cars or parts anywhere outside
      of the premises during the term or extension of this lease.

OUTSIDE STORAGE & LOITERING

Tenant agrees not to store or place any junk, damaged cars,
automobile parts or material outside the premises.  Tenant
understands that no loitering, drag racing, or any excessive
noise or music is permitted on or around the premises.
Tenant further understands that no pets are allowed on the
premises.  The existence of any of these violations shall be
determined by the sole discretion of the Owner.

     As used herein, the neuter gender shall be construed as
feminine or masculine gender, as the case may be.

     This agreement shall bind and benefit the parties
hereto and their respective Executors, Administrators,
Heirs, Successors and Assigns.

                   SIGNITURE PAGE TO FOLLOW:

                                                           10
<PAGE>

       IN WITNESS WHEREOF, the parties have caused this
       lease to be executed on the date first above
       written.

       SEALED AND DELIVERED
       IN THE PRESENCE OF:

                                     OWNER: Taub
       Investments

       _________________________     _______________________
       Witness                       Sylvan Taub

                                     Tenant:PSI-TEC
       Corporation

       __________________________    ________________________(seal)
       Witness                       By:
                                     Tenant:PSI-TEC
       Corporation

       ________________________      ________________________(seal)
       Witness                       By:

                                                           11
<PAGE>

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