THIS NOTE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR ANY STATE SECURITIES LAW (COLLECTIVELY, THE "SECURITIES LAWS"),
AND HAS BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION
WITH, THE SALE OR DISTRIBUTION THEREOF. THIS NOTE MAY NOT BE SOLD, OFFERED FOR
SALE OR OTHERWISE TRANSFERRED UNLESS IT (I) IS REGISTERED OR QUALIFIED UNDER ALL
APPLICABLE SECURITIES LAWS OR (II) IS EXEMPT FROM REGISTRATION OR QUALIFICATION
UNDER SUCH LAWS AND THE ISSUER IS PROVIDED WITH AN OPINION OF COUNSEL
SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION OR QUALIFICATION IS NOT
FOR VALUE RECEIVED , Vaughan Foods, Inc., an Oklahoma corporation (“Debtor”), promises to pay to Herb Grimes
(“Lender”), at the offices of the Debtor, on June 30, 2008 (the “Maturity Date”) the principal sum of EIGHT HUNDRED
SEVENTY-FIVE THOUSAND DOLLARS and 00/100 (US$875,000.00) with interest thereon at the rate of ten percent (10%) per
Interest as aforesaid shall be calculated on the basis of actual number of days elapsed over a year of 360 days.
Notwithstanding anything to the contrary that may be contained herein, if at any time after the date hereof and prior
to the Maturity Date, Debtor shall have sold any equity securities in a transaction wherein the gross proceeds received by the
Debtor equal or exceed four million dollars ($4,000,000.00) (a “Qualified Sale,”) then upon the closing of such Qualified Sale, the
entire outstanding principal and accrued and unpaid interest on this Note shall be due and payable.
If this Note, or any payment hereunder, falls due on a Saturday, Sunday or a day that is a public holiday in the State
of Oklahoma, this Note, or such payment hereunder, shall be made on the next succeeding business day and such additional
time shall be included in the computation of any interest payable hereunder.
Debtor may at its option prepay all or any part of the unpaid princi