ex10_4.htm


    
      

    

    Exhibit
      10.4

    
      


      EMPLOYMENT
        AGREEMENT

      


      This
        EMPLOYMENT AGREEMENT (“Agreement”) is made as of March 30, 2007, by and between
        Baywood International, Inc., a Nevada corporation (the “Company”), and Thomas
        Pinkowski, an individual residing at 3703 Calle Fino Clarete San Clemente,
        California 92673 (“Employee”).

      


      W
        I T N E S S E T H:

      


      WHEREAS,
        Baywood Acquisition, Inc., a Nevada corporation and a wholly-owned subsidiary
        of
        the Company (“Buyer”), intends to purchase certain assets of Nutritional
        Specialties, Inc. d/b/a LifeTime® or LifeTime Vitamins®, a California
        corporation (“LifeTime”), pursuant to an Asset Purchase Agreement, of even date
        herewith, by and among the Company, Buyer, LifeTime and the LifeTime
        Representatives defined therein, including Employee (the “Asset Purchase
        Agreement”);

      


      WHEREAS,
        immediately prior to the closing of the transactions contemplated in the
        Asset
        Purchase Agreement (the “Closing”), Employee is employed as President of
        LifeTime;

      


      WHEREAS,
        this Agreement is to be effective upon the Closing;

      


      WHEREAS,
        the Company wishes to ensure that it will continue to have the benefits of
        Employee’s services after the Closing on the terms and conditions hereinafter
        set forth; and

      


      WHEREAS,
        Employee desires to work for the Company on the terms and conditions hereinafter
        set forth.

      


      NOW,
        THEREFORE, in consideration of the mutual covenants and agreements hereinafter
        set forth, the parties hereto hereby agree as follows:

      


      1.        
            Employment; Term.  The Company hereby
        employs Employee, and Employee hereby accepts employment with the Company,
        in
        accordance with and subject to the terms and conditions set forth
        herein.  The term of employment shall commence upon the Closing and
        shall continue for a period of five (5) years (the “Term”), unless earlier
        terminated in accordance with Section 5 hereof.

      


      2.         
           Employment.

      


      (a)           The
        Company hereby agrees to employ Employee as a Vice President and as President
        of
        Buyer for the Term.  Employee agrees to serve in such capacity and
        shall have primary responsibility for the operation of the business formerly
        conducted by LifeTime and such other duties, responsibilities and authority,
        commensurate with such position as shall be assigned to him by the Board
        of
        Directors (the “Board”) or the Chief Executive Officer of the
        Company.


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (b)           Employee
        shall devote Employee’s full business time and attention to Employee’s duties on
        the Company’s behalf.

      


      3.        
            Compensation.

      


      (a)           The
        Company shall pay Employee a base salary of Two Hundred Thousand Dollars
        ($200,000) per annum (the “Base Salary”), payable bi-weekly, in accordance with
        the Company’s then existing payroll practices and subject to all legally
        required or customary withholdings and other applicable
        taxes.  Executive shall be entitled to an increase in Base Salary of
        five percent (5%) per annum upon meeting performance standards reasonably
        established by the Board or otherwise based on performance as reasonably
        determined by the Board.

      


      (b)           Employee
        shall be entitled to receive an annual bonus award (“Annual Bonus”) based on the
        achievement of established financial goals as set forth
        below.  Employee’s Annual Bonus shall equal four percent (4%) of the
        net operating income of the Company for each fiscal year upon meeting
        performance standards reasonably established by the Board or otherwise based
        on
        performance as reasonably determined by the Board, commencing fiscal year
        2007.
        Notwithstanding the foregoing, the minimum Annual Bonus for fiscal year 2007
        shall be One Hundred Thousand Dollars ($100,000).  Subject to the
        terms of this Section 3(b), the Company shall have the right to offset against
        Employee’s Annual Bonus Twenty Thousand Dollars ($20,000) per annum for each
        year of the Term for a total amount of One Hundred Thousand Dollars ($100,000)
        in order for the Company to reimburse LifeTime the total principal amount
        payable under Employee’s Unsecured Promissory Note, dated December 10, 2004,
        payable to LifeTime in the principal amount of $100,000 (the
“Note”).  In the event this Agreement is terminated for any reason
        prior to the end of the Term, Employee shall promptly pay the Company the
        remaining principal balance of the Note.  Employee’s Annual Bonus
        shall be subject to review and approval each year by the Board.

      


      (c)           Upon
        the Closing, the Company shall grant to Employee, pursuant to the Company’s 2004
        Stock Option Plan (the “Plan”), options (the “Options”) to purchase five million
        (5,000,000) shares of Common Stock, par value $0.001 per share, of the Company
        (the “Common Stock”) at an exercise price equal to the Current Market Price (as
        hereinafter defined) on the date of grant.  The Options will vest as
        to 20% on the date of grant and as to an additional 20% on each anniversary
        date
        of the date of grant.  The Options will expire as to each vested
        portion if not exercised within five (5) years after the date of
        vesting.  Subject to the foregoing, the terms and provision of the
        Options shall be consistent with the Plan and all exhibits thereto.

      


      For
        purposes of this Agreement, “Current Market Price” on any day of determination
        means the closing price of a share of Common Stock on the over-the-counter
        bulletin board as reported by the National Quotation Bureau Incorporated,
        or a
        similar generally accepted reporting service, or if not so available, in
        such
        manner as furnished by any Nasdaq member firm of the National Association
        of
        Securities Dealers, Inc. selected from time to time by the Board for that
        purpose, or if not so available, a price determined in good faith by the
        Board
        as being equal to the fair market value thereof, as the case may
        be.


      
        
          
          

        

        
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      (d)           In
        consideration of Employee’s agreements hereunder, the Company will issue and
        deliver to Employee promptly after the execution hereof, pursuant to the
        Plan, a
        restricted stock grant of two million (2,000,000) shares of Common Stock
        (the
“Restricted Shares”), on the following terms:

      


      (i)           The
        restrictions on Employee’s ownership of the Restricted Shares shall lapse
        on the following dates, provided Employee is an employee in good standing
        on
        each such date:

      


      
        
          	
                  400,000
                    shares

                	
                  December
                    31, 2007

                
	
                  400,000
                    shares

                	
                  December
                    31, 2008

                
	
                  400,000
                    shares

                	
                  December
                    31, 2009

                
	
                  400,000
                    shares

                	
                  December
                    31, 2010

                
	
                  400,000
                    shares

                	
                   December
                    31, 2011;

                


        

      

      


      (ii)           From
        and after the date of issuance,   but subject to the terms and
        conditions set forth in the agreement relating to the grant of the Restricted
        Shares, Employee shall have rights as a stockholder of the Company, including,
        but not limited to, voting rights, the right to receive dividends and the
        right
        to participate in any capital adjustment applicable to all holders of Common
        Stock (but not the right of an owner to sell or otherwise receive the value
        of
        the Restricted Shares); provided, however, that a distribution with
        respect to shares of Common Stock, other than a distribution in cash, shall
        be
        deposited with the Company and shall be subject to the same restrictions
        as the
        shares of Common Stock with respect to which such distribution was made;
        and

      


      (iii)           In
        all other respects the Restricted Shares shall be subject to the restrictions,
        terms and conditions of the Plan and the agreement relating to the grant
        of the
        Restricted Shares.

      


      4.      
              Benefits.

      


      (a)           The
        Company agrees to reimburse Employee for all reasonable out-of-pocket business
        expenses incurred by Employee in the normal course of business in connection
        with the performance of Employee’s duties under this Agreement in accordance
        with the Company’s policy as it may be amended from time to time.  The
        Company shall make such reimbursements within a reasonable amount of time
        after
        submission by Employee of vouchers, receipts, credit card bills or other
        documentation in accordance with the Company’s then applicable policies and
        procedures.  In addition, the Company shall pay Employee’s monthly
        business-related cellular telephone bill and business-related home high-speed
        Internet access bill.

      


      (b)           Employee
        shall be entitled to participate in any and all medical insurance, group
        health
        care programs, disability insurance, pension and other benefit plans which
        are
        made generally available by the Company to other similarly situated senior
        level
        employees of the Company performing similar functions as
        Employee.  The Company, in its sole discretion, may at any time amend
        or terminate its benefit plans or programs.


      
        
          
          

        

        
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      (c)           Employee
        shall receive an automobile allowance of Nine Hundred Dollars ($900) per
        month.

      


      (d)           The
        Company shall maintain, at its expense, key man life insurance (the “Policy”) on
        the life of Employee for the benefit of the Company with a benefit of Five
        Million Dollars ($5,000,000).  Employee’s signature to this Agreement
        constitutes Employee’s written consent to being insured under the Policy and
        that the Company may continue such life insurance coverage after Employee’s
        employment with the Company terminates, regardless of the cause of such
        termination.  Employee shall make all necessary applications, submit
        to physical examinations and otherwise cooperate with the Company with respect
        to the purchase of the Policy.

      


      (e)           The
        Company shall match Employee’s contributions, if any, made to the Company’s
        401(k) plan, dollar for dollar, up to Ten Thousand Dollars ($10,000) per
        annum.

      


      (f)           Employee
        shall be entitled to three (3) weeks paid vacation per annum, at a time or
        times
        to be determined in consultation with the Chief Executive Officer of the
        Company.  Vacation not taken or used shall be deferred or paid in cash
        to the extent, if at all, consistent with the Company’s employment polices in
        effect from time to time.

      


      (g)           Employee
        shall be entitled to such other benefits as are generally available to other
        similarly situated senior level employees of the Company performing similar
        functions as Employee.

      


      5.     
              Termination.  Employee’s
        employment hereunder may be terminated under the following
        circumstances:

      


      (a)           Death.  Employee’s
        employment hereunder shall terminate immediately upon Employee’s
        death.

      


      (b)           Disability.  The
        Company may terminate Employee’s employment hereunder at any time after Employee
        becomes “Disabled.”  For purposes of this Agreement, Employee shall be
“Disabled” upon the earlier of (i) the date Employee becomes entitled to receive
        disability benefits under the Company’s long-term disability plan or (ii)
        Employee’s inability to perform the essential functions of the duties and
        responsibilities contemplated under this Agreement for a period of more than
        ninety (90) consecutive days or for more than one hundred twenty (120) days
        in
        any 270-day period due to physical or mental incapacity or impairment, as
        determined in the reasonable judgment of a physician licensed in the State
        of
        California, selected by the Company.  Such termination shall become
        effective five (5) business days after the Company gives written notice of
        such
        termination to Employee or to his legal representative, in accordance with
        Section 9 hereof.


      
        
          
          

        

        
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      (c)           Termination
        by the Company without Cause.  The Company may terminate
        Employee’s employment hereunder without Cause (as hereinafter defined) at any
        time after providing written notice to Employee.

      


      (d)           Termination
        by the Company for Cause.  The Company may terminate Employee’s
        employment hereunder for Cause at any time after providing written notice
        to
        Employee, which notice shall provide in reasonable detail the reason(s) for
        such
        termination.  For purposes of this Agreement, “Cause” shall mean any
        of the following: (i) Employee’s willful or intentional failure or refusal to
        perform or observe any of Employee’s significant duties, responsibilities or
        obligations set forth in, or as contemplated under, this Agreement where
        such
        failure or refusal shall not have ceased or been remedied within thirty (30)
        days following written warning from the Company, provided that such obligation
        to provide written warning and the related right to cure shall not apply
        to (x)
        such matters as are not curable, or (y) repeated violations of this clause
        (i);
        (ii) acts or omissions by Employee involving Employee’s gross negligence related
        to the discharge of Employee’s duties; (iii) any act or failure to act by
        Employee constituting fraud or involving a knowing, willful or intentional
        misrepresentation, theft, embezzlement, dishonesty or moral turpitude
        (collectively, “Fraud”); (iv) conviction of (or a plea of
nolocontendere to) an offense which is a felony in the
        jurisdiction involved or which is a misdemeanor in the jurisdiction involved
        but
        which involves Fraud; (v) any willful or intentional act or omission by Employee
        which is intended to or which materially injures the reputation, business
        or
        business relationships of the Company, or Employee’s reputation or business
        relationships; (vi) alcoholism, drug abuse or other substance abuse having
        a
        material adverse effect on the performance of Employee’s duties hereunder; or
        (vii) Employee’s willful or intentional failure or refusal to comply with any
        reasonable and lawful request or direction of the Company not contrary to
        the
        provisions of this Agreement, where such failure or refusal shall not have
        ceased or been remedied within thirty (30) days following written warning
        from
        the Company, provided that such obligation to provide written warning and
        the
        related right to cure shall not apply to (x) such matters as are not curable,
        or
        (y) repeated violations of this clause (vii).

      


      (e)           Termination
        by Employee for Good Reason.  Employee may terminate Employee’s
        employment hereunder at any time for either of the following reasons (a
        termination for “Good Reason”):  (i) the Company’s breach of any
        material provision of this Agreement, which shall continue unremedied for
        thirty
        (30) days after written notice by Employee to the Company, or (ii)  if
        Employee is relieved by the Company of primary responsibility for the operations
        of the  business formerly conducted by LifeTime, except (x) for Cause,
        or (y) if Employee is given other duties of substantially the same
        responsibility and importance to the Company.

      


      (f)           Other
        Termination by Employee.  Employee may terminate Employee’s
        employment hereunder at any time, other than for Good Reason, after providing
        thirty (30) days-prior written notice to the Company.


      
        
          
          

        

        
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      6.      
              Compensation Following Termination Prior
        to the End of the Term.  In the event that Employee’s employment
        hereunder is terminated prior to the end of the Term, Employee shall be entitled
        only to the following compensation and benefits upon such
        termination:

      


      (a)           Termination
        by Reason of Death or Disability.  In the event that Employee’s
        employment is terminated by reason of Employee’s death or Disability,
        respectively, the Company shall pay the following amounts to Employee (or
        Employee’s spouse or estate, as applicable):

      


      (i)           Any
        accrued but unpaid Base Salary (as determined pursuant to Section 3(a) hereof)
        for services rendered to the date of termination.

      


      (ii)           Any
        accrued but unpaid expenses required to be reimbursed pursuant to Section
        4(a)
        hereof.

      


      (iii)           A
        pro rata share, based on the portion of the fiscal year in which Employee
        was
        employed at the time of his death or Disability, of the Annual Bonus to which
        Employee would have been entitled had Employee remained employed by the Company
        through the end of the then current fiscal year (as determined pursuant to
        Section 3(b) hereof).  Such amount shall be paid as soon as reasonably
        practicable following the calculation thereof at the end of such fiscal
        year.

      


      Except
        as
        otherwise specifically provided herein, in the event Employee’s employment is
        terminated pursuant to this Section 6(a), the benefits to which Employee
        may be
        entitled upon such termination pursuant to the plans, programs and arrangements
        referred to in Section 4(b) hereof shall be determined and paid in accordance
        with the terms of such plans, programs and arrangements.

      


      (b)           Termination
        by the Company for Cause or by Employee without Good Reason.  In
        the event that Employee’s employment hereunder is terminated by the Company for
        Cause or by Employee without Good Reason, the Company shall pay the following
        amounts to Employee:

      


      (i)           Any
        accrued but unpaid Base Salary (as determined pursuant to Section 3(a) hereof)
        for services rendered to the date of termination.

      


      (ii)           Any
        accrued but unpaid expenses required to be reimbursed pursuant to Section
        4(a)
        hereof.

      


      (c)           Termination
        by the Company Without Cause or by Employee for Good Reason.  (A)
        In the event that Employee’s employment hereunder is terminated by the Company
        without Cause or by Employee for Good Reason, the Company shall pay the
        following amounts to Employee:


      
        
          
          

        

        
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      (i)           Any
        accrued but unpaid Base Salary (as determined pursuant to Section 3(a) hereof)
        for services rendered to the date of termination.

      


      (ii)           Any
        accrued but unpaid expenses required to be reimbursed pursuant to Section
        4(a)
        hereof.

      


      (iii)           Base
        Salary for a period of twelve (12) months from the date of
        termination.

      


      (iv)           A
        pro rata share, based on such period of the fiscal year in which Employee
        was
        employed, of the Annual Bonus to which Employee would have been entitled
        had
        Employee remained employed by the Company through the end of the then current
        fiscal year (as determined pursuant to Section 3(b) hereof); provided,
        however, that Employee shall be entitled to the entire Annual Bonus to which
        Employee would have been entitled had Employee remained employed by the Company
        through the end of the then current fiscal year if, at the time of termination
        of Employee’s employment pursuant to this Section 6(c), Employee was employed by
        the Company for at least the first six (6) months of such fiscal
        year.   Such amount shall be paid as soon as reasonably
        practicable following the calculation thereof at the end of such fiscal
        year.

      


      (B)           Notwithstanding
        the foregoing, the Company shall have no obligation to make any further payments
        pursuant to Section 6(c)(A)(iii) or 6(c)(A)(iv) hereof in the event that
        Employee breaches any of his obligations set forth in Section 7
        hereof.

      


      (C)           Except
        as otherwise specifically provided herein, in the event Employee’s employment is
        terminated pursuant to this Section 6(c), the benefits to which Employee
        may be
        entitled upon such termination pursuant to the plans, programs and arrangements
        referred to in Section 4(b) hereof shall be determined and paid in accordance
        with the terms of such plans, programs and arrangements.

      


      
        	
                 

              	
                (d)

              	
                General.

              


      

      


      In
        the
        event that Employee’s employment is terminated for any reason, Employee shall
        cease to be an employee of the Company for all purposes, and, except as may
        be
        provided under this Agreement or under the terms of any incentive compensation,
        employee benefit or fringe benefit plan applicable to Employee at the time
        of
        Employee’s termination prior to the end of the Term, shall have no right to
        receive any other compensation, employee benefits or perquisites, or to
        participate in any other plan, arrangement or benefit, with respect to any
        future period after such termination.  In the event that Employee’s
        employment is terminated for any reason, the Company’s payment of salary and
        other amounts specifically provided for in the applicable previous paragraph
        of
        this Section 6 shall constitute complete satisfaction of all payment obligations
        of the Company to Employee pursuant to this Agreement, and Employee’s rights set
        out in this Section 6 shall constitute Employee’s sole and exclusive rights and
        remedies as a result of any actual or constructive termination of his employment
        hereunder.


      
        
          
          

        

        
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      7.       
             Non-Competition and Non-Solicitation;
        Non-Disclosure of Proprietary Information; Surrender of Records; Company
        Property.

      


      (a)           General.
        Employee acknowledges that the Company would not consummate the transactions
        contemplated by the Asset Purchase Agreement without the assurance that Employee
        will not engage in any of the activities prohibited by this Section 7 for
        the
        periods set forth below.  Employee agrees to restrict Employee’s
        actions as provided for in this Section 7.  Employee understands that
        the provisions of this Section 7 may limit Employee’s ability to earn a
        livelihood in a business similar to the business of the Company but nevertheless
        agrees and hereby acknowledges that the consideration provided under the
        Asset
        Purchase Agreement and this Agreement, including any amounts provided under
        Section 3 hereof, are sufficient to justify the restrictions contained in
        such
        provisions.  In consideration thereof, and in light of Employee’s
        education, skills and abilities, Employee agrees that Employee will not assert
        in any forum that the provisions of this Section 7 prevent Employee from
        earning
        a living or otherwise are void or unenforceable or should be held void or
        unenforceable.

      


      (b)           Non-Competition  Employee
        acknowledges and recognizes the highly competitive nature of the Company’s
        business and that Employee’s position with the Company and access to the
        Company’s confidential records and proprietary information renders Employee
        special and unique.  In consideration of payments made and to be made
        by the Company to Employee pursuant to this Agreement and the Asset Purchase
        Agreement (including, without limitation, pursuant to Section 3 hereof),
        Employee agrees that (A) during the Term  or (B) in the event
        Employee’s employment is terminated prior to the end of the Term, until the
        later of (x) three (3) years from the Closing Date (as defined below) or
        (y) one
        (1) year from the termination of this Agreement, Employee will not, directly
        or
        indirectly, in the United States or any other place in which the Company
        then
        does business, engage in, or be affiliated in any manner with any individual,
        partnership, venture, unincorporated association, organization, syndicate,
        corporation, limited liability company, or other entity, trust and trustee,
        executor, administrator or other legal or personal representative, or any
        government or agency or political subdivision thereof (any of the foregoing,
        a
“Person”) engaged in, the business of manufacturing, marketing, distributing
        and/or selling (A) neutraceutical products, including but not limited to
        dietary
        supplements and pharmaceuticals; (B) any other product categories the Company
        is
        actively manufacturing, marketing, distributing and/or selling as of the
        date of
        termination or expiration of this Agreement; or (C) any other product categories
        manufactured, marketed, distributed and/or sold by the Company during the
        Term.  As used in this Agreement, “Closing Date” means the date on
        which the Closing actually occurs.

      


      (c)           Non-Solicitation.  In
        further consideration of the payments made and to be made by the Company
        to
        Employee pursuant to this Agreement and the Asset Purchase Agreement (including,
        without limitation, pursuant to Section 3 hereof), Employee agrees that (A)
        during the Term  or (B) in the event Employee’s employment is
        terminated prior to the end of the Term, until the later of (x) three (3)
        years
        from the Closing Date or (y) one (1) year from the termination of this
        Agreement, Employee shall not, directly or indirectly, on his own behalf
        or on
        behalf of any Person, (A) advise or encourage any employee, agent, consultant,
        representative, customer, licensor, vendor or supplier of the Company to
        terminate his, her or its relationship with the Company, or (B) solicit or
        attempt to solicit or participate in the solicitation of or employ or otherwise
        engage any employee, agent, consultant or representative of the Company,
        or
        otherwise encourage any such person to become an employee, agent, representative
        or consultant of or to any other Person.


      
        
          
          

        

        
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      (d)           Extension
        of Restrictions.  Notwithstanding the foregoing, the Company shall
        have the right, but not the obligation, to require Employee to remain subject
        to
        the restrictions set forth in Sections 7(b) and 7(c) hereof for a period
        of one
        year following the expiration of the Term, in which case the Company shall
        pay
        Employee an amount equal to one-half of Employee’s Base Salary during the last
        year of his employment, payable in accordance with Section 3
        hereof.

      


      (e)           Proprietary
        Information.  Employee acknowledges that during the course of
        Employee’s employment with the Company Employee will necessarily have access to
        and make use of proprietary information and confidential records of the
        Company.  Employee covenants that Employee shall not, during the Term
        or any time thereafter (irrespective of the circumstances under which Employee’s
        employment with the Company terminates), directly or indirectly, use for
        Employee’s own purpose or for the benefit of any person or entity other than the
        Company, nor otherwise disclose, any proprietary information of which Employee
        has knowledge to any person or entity, unless such disclosure has been
        authorized in writing by the Company or is otherwise required by
        law.  Employee acknowledges and understands that the term “proprietary
        information” includes, but is not limited to, patents, copyrights and trade
        secrets, including, without limitation: (i) the proprietary software products,
        programs, applications and processes utilized by or on behalf of the Company
        to
        the extent such information is unique to the Company or is not known to others
        outside the Company; (ii) the name and/or address of any customer, licensor
        or
        vendor of the Company, to the extent confidential, or any proprietary
        information concerning the transactions or relations of any customer of the
        Company with the Company or any of its principals, directors, employees or
        agents; (iii) any proprietary information concerning any product, technology
        or
        procedure employed by or on behalf of the Company but not generally known
        to its
        customers or competitors, or under development by or being tested by or on
        behalf of the Company but not at the time offered generally to customers;
        (iv)
        any information which is generally regarded and treated as confidential or
        proprietary in any line of business engaged in by or on behalf of the Company;
        (v) information belonging to customers or affiliates of the Company or any
        other
        individual or entity which the Company has agreed to hold in confidence
        (provided that Employee has knowledge of the Company’s duty to hold such
        third-party information in confidence); and (vi) all written, graphic or
        other
        material relating to or containing any of the foregoing.  The term
“proprietary information” shall not include information generally available to
        or known by the public or in the industry, or information that is or becomes
        available to Employee on a non-confidential basis from a source other than
        the
        Company or the Company’s stockholders, principals, directors, officers,
        employees or agents (other than as a breach of any obligation of
        confidentiality).


      
        
          
          

        

        
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      (f)           Confidentiality
        and Surrender of Records.  Employee shall not, during the Term or
        any time thereafter (irrespective of the circumstances under which Employee’s
        employment with the Company terminates), except as required by law or as
        is
        necessary for the performance of Employee’s duties hereunder, directly or
        indirectly, publish, make known or in any fashion disclose any confidential
        records to, or permit any inspection or copying of confidential records by,
        any
        Person, and Employee shall not retain, and shall deliver promptly to the
        Company, any of the same following termination of Employee’s employment for any
        reason or upon request by the Company.  The term “confidential
        records” means all correspondence, memoranda, files, manuals, books, designs,
        sketches, lists, financial, operating or marketing records, magnetic tape,
        or
        electronic or other media or equipment for records of any kind which may
        be in
        Employee’s possession or under Employee’s control or accessible to Employee
        which may contain any proprietary information.  All confidential
        records shall be and remain the sole property of the Company during the Term
        and
        thereafter.

      


      (g)           Disclosure
        Required by Law.  In the event Employee is required by law or
        court order to disclose any proprietary information or confidential records
        of
        the Company, Employee shall provide the Company with prompt written notice
        so
        that the Company may seek a protective order or other appropriate remedy,
        and if
        such protective order or other remedy is not obtained, Employee shall furnish
        only that portion of the proprietary information that is legally required
        as
        determined by counsel to the Company.

      


      (h)           No
        Other Obligations.  Employee represents and warrants to the
        Company that Employee is not precluded or limited in Employee’s ability to
        undertake or perform the duties described herein by any contract, agreement,
        or
        restrictive covenant.  Employee covenants that Employee shall not
        employ the trade secrets or proprietary information of any other Person in
        connection with Employee’s employment by the Company.

      


      (i)           Confidentiality
        of this Agreement.  Employee agrees to keep confidential the terms
        of this Agreement, to the extent public disclosure is not made by the Company
        as
        provided below.  This provision does not prohibit Employee from
        providing this information as required by law or to his attorneys, accountants
        or business advisors for purposes of obtaining legal, tax or business advice;
        provided, however, that Employee shall be responsible for breaches of the
        confidentiality restrictions contained herein by such persons as if Employee
        had
        breached such restrictions.  The Company shall not disclose the terms
        of this Agreement except as necessary in the ordinary course of its business,
        as
        required by law or as required by any governmental or quasi-governmental
        entity
        or any self regulatory organization.

      


      (j)           Company
        Property.  All rights (if any) in reports, materials, inventions,
        processes, discoveries, improvements, modifications, know-how or trade secrets
        conceived, developed or otherwise made by Employee during the Term, alone
        or
        with others, and in any way relating to the present or future products or
        business of the Company (collectively, the “Developments”), shall be the sole
        property of the Company.  Employee agrees to, and hereby does, assign
        to the Company for no consideration all of Employee’s right, title and interest
        in and to all Developments.  Employee agrees that all such
        Developments that are copyrightable shall constitute works made for hire
        under
        the copyright laws of the United States and Employee hereby assigns to the
        Company all copyrights and other proprietary rights Employee may have in
        any
        such Developments to the extent that they might not be considered works made
        for
        hire.  Employee shall make and maintain adequate and current written
        records of all Developments, and shall disclose all Developments fully and
        in
        writing to the Company promptly after development of the same, and at any
        time
        upon request.


      
        
          
          

        

        
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      (k)           Enforcement.  Employee
        acknowledges and agrees that, by virtue of Employee’s position, Employee’s
        services, and access to and use of proprietary information and confidential
        records, any violation by Employee of any of the undertakings contained in
        this
        Section 7 would cause the Company immediate, substantial and irreparable
        injury
        for which it has no adequate remedy at law.  Accordingly, Employee
        agrees that in the event of a breach by Employee of any said undertakings,
        the
        Company will be entitled to seek temporary and permanent injunctive relief
        in
        any court of competent jurisdiction (without the need to post any bond and
        without proving that damages would be inadequate).  Rights and
        remedies provided for in this Section 7 are cumulative and shall be in addition
        to rights and remedies otherwise available to the parties hereunder or under
        applicable law.

      


      8.     
              No Third Party Rights.  The
        parties do not intend the benefits of this Agreement to inure to any person
        or
        entity not a party to this Agreement (other than to the spouse or estate
        of
        Employee in the case of death or Disability of Employee, in which case such
        spouse or estate shall be entitled to only those rights set forth in Section
        6(a) hereof).  Notwithstanding anything contained in this Agreement,
        this Agreement shall not be construed as creating any right, claim or cause
        of
        action against any party by any person or entity not a party to this Agreement
        (other than the spouse or estate of Employee in the case of the death or
        Disability of Employee, in which case such spouse or estate shall be entitled
        to
        only those rights set forth in Section 6(a) hereof).

      


      9.     
              Notices.  Unless otherwise
        provided herein, any notice required or permitted under this Agreement shall
        be
        given in writing and shall be deemed to have been duly given upon personal
        delivery to the party to be notified or three (3) days after being mailed
        by
        United States certified or registered mail, postage prepaid, return receipt
        requested or one (1) day after being sent by Federal Express or other recognized
        overnight delivery to the following respective addresses, or at such other
        address as each may specify by notice to the other:

      


      Notice
        to
        the Company:

      


      Baywood
        International, Inc.

      14950
        North 83rd
        Place, Suite 1

      Scottsdale,
        Arizona 85260

      Attention:
        Neil Reithinger, President & CEO

      Facsimile:
        (480) 483-2168

      


      With
        a
        copy to:

      


      Meltzer,
        Lippe, Goldstein & Breitstone, LLP

      190
        Willis Avenue

      Mineola,
        New York  11501

      Attention:
        David I. Schaffer, Esq.

      Facsimile:
        (516) 747-0653


      
        
          
          

        

        
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      Notice
        to
        Employee:

      


      Thomas
        Pinkowski

      3703
        Calle Fino Clarete

      San
        Clemente, California 92673

      Facsimile:
        (949) 218-2524

      


      With
        a
        copy to:

      


      Stradling
        Yocca Carlson & Ruth

      660
        Newport Center Drive, Suite 1600

      Newport
        Beach, California 92660

      Attention:  Mark
        L. Skaist, Esq.

      Facsimile:
        (949) 823-5117

      


      10.           Assignability;
        Binding Effect.  This Agreement is a personal contract calling for
        the provision of unique services by Employee, and Employee’s obligations
        hereunder may not be sold, transferred, assigned, pledged or
        hypothecated.  In the event of any attempted assignment or transfer of
        obligations hereunder by Employee contrary to the provisions hereof, the
        Company
        will have no further liability for payments hereunder.  The rights and
        obligations of the Company hereunder will be binding upon and inure to the
        benefit of the successors and assigns of the Company.

      


      11.           Entire
        Agreement; Amendment; Waiver.  This Agreement constitutes the
        entire agreement between the parties hereto with respect to the subject matter
        hereof and supersedes all other prior agreements and understandings, both
        written and oral, between the parties with respect to the subject matter
        hereof.  This Agreement shall not be modified or amended except by a
        written instrument duly executed by each of the parties hereto.  Any
        waiver of any term or provision of this Agreement shall be in writing signed
        by
        the party charged with giving such waiver.  Waiver by either party
        hereto of any breach hereunder by the other party shall not operate as a
        waiver
        of any other breach, whether similar to or different from the breach
        waived.  No delay on the part of the Company or Employee in the
        exercise of any of their respective rights or remedies shall operate as a
        waiver
        thereof, and no single or partial exercise by the Company or Employee of
        any
        such right or remedy shall preclude other or further exercise
        thereof.

      


      12.           Severability.  If
        any term or provision of this Agreement shall be held to be invalid or
        unenforceable for any reason, such term or provision shall be ineffective
        to the
        extent of such invalidity or unenforceability without invalidating the remaining
        terms and provisions hereof, and this Agreement shall be construed as if
        such
        invalid or unenforceable term or provision had not been contained
        herein.


      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

      13.           Survivability.  The
        provisions of this Agreement, which by their terms call for performance
        subsequent to termination of Employee’s employment hereunder, or of this
        Agreement, shall survive such termination.

      


      14.           Counterparts
        and Headings.  This Agreement may be executed in any number of
        counterparts, each of which shall be deemed an original and all which together
        shall constitute one and the same instrument.  Facsimile signatures
        shall be given the same legal effect as original signatures.  All
        headings are inserted for convenience of reference only and shall not affect
        the
        meaning or interpretation of this Agreement.

      


      15.           Governing
        Law. This Agreement shall be construed in accordance with the internal laws
        of the State of Arizona, without regard to principles of conflicts of
        laws.

      


      16.           Waiver
        of Jury Trial.  Each party hereto irrevocably waives, to the
        fullest extent permitted by law, all rights to trial by jury in any action,
        proceeding or counterclaim (whether based upon contract, tort or otherwise)
        arising out of or relating to this Agreement or any of the transactions
        contemplated hereby.

      


       

      [Signature
        Page Follows]


      
        
          
          

        

        
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      IN
        WITNESS WHEREOF, the parties hereto have caused this Agreement to be
        duly executed and delivered as of the day and year first above
        written.

      


      


      
        
          	 	 	
                  BAYWOOD
                    INTERNATIONAL, INC.

                
	 	 	 
	 	 	 
	 	
                  By:

                	
                  /s/
                    Neil Reithinger

                
	 	 	
                  Name:
                    Neil Reithinger

                
	 	 	
                  Title:
                    President & C.E.O.

                
	 	 	 
	 	 	 
	 	 	
                  EMPLOYEE

                
	 	 	 
	 	 	 
	 	 	
                  /s/
                    Thomas Pinkowski

                
	 	 	
                  THOMAS
                    PINKOWSKI

                


        

      

       

    

     

    14