ex10_5.htm


    
      

    

    Exhibit
      10.5

    
      


      


      MANUFACTURING
        AND SUPPLY AGREEMENT

      


      This
        Manufacturing and Supply Agreement (this “Agreement”) is effective as of
        the 30th day of March, 2007 (the “Effective Date”), by and between
        Baywood International, Inc., a Nevada corporation (“Customer”), and NHK
        Laboratories, Inc., a California corporation (“Supplier”).  In
        consideration of the mutual covenants contained herein and for other good
        and
        valuable consideration, the receipt and sufficiency of which are hereby
        acknowledged, the parties agree as follows:

      


      
        	
                1.

              	
                MANUFACTURE
                  OF PRODUCTS; ORDERS;
                  SHIPMENT

              


      

       

      1.1    Manufacture
        of Products.  Supplier agrees to manufacture for, and to
        sell and deliver to, Customer, such number of the products described on Appendix
        A, as the same may be amended from time to time by mutual agreement (the
        “Products”), and having the product specifications for such Products set
        forth on Appendix B, as the same may be amended from time to time by mutual
        agreement (the “Product Specifications”), as Customer may order pursuant
        to this Agreement.  Customer shall have no obligation to order any
        Products.  Supplier shall manufacture, handle, package, label and ship
        the Products in strict conformity with (a) all applicable Product
        Specifications and (b) all applicable laws and
        regulations.  Subject to the terms and conditions of this Agreement,
        Supplier shall be Customer’s exclusive supplier of the Products.

       

      1.2    Purchase
        Orders.  Customer shall order the Products by written
        purchase orders of Customer that shall specify (i) the quantity of the
        Products, (ii) the addresses to which the Products are to be delivered; and
        (iii) the shipment date for the Products.  Supplier shall accept
        all purchase orders that comply with the terms and conditions of this Agreement,
        and use commercially reasonable efforts to accept all other purchase
        orders.  All purchase orders and invoices for Products are subject to
        the terms and conditions of this Agreement, which terms and conditions shall
        supersede any and all conflicting terms and conditions on Customer’s order form
        in effect from time to time.  All orders by Customer shall be subject
        to Supplier's approval and acceptance, and no order shall be binding on Supplier
        until accepted in writing by a duly authorized officer or employee of
        Supplier.

       

      1.3    Shipment.  All
        Products delivered by Supplier shall be suitably packed and labeled for
        shipment. All shipments shall be F.C.A (as defined in Incoterms 2000) Supplier’s
        facilities.  Customer may change the delivery address for the Products
        ordered, at any time prior to shipment of such Products at no additional
        charge,
        provided that Customer shall reimburse Supplier for any additional storage
        or
        freight costs incurred as a result of any such change.  No early
        shipment of Products is permitted without Customer’s consent. Supplier shall
        promptly notify Customer in writing describing any delay in Product
        delivery.  Once approved and accepted, orders may be cancelled in
        whole or in part or deliveries deferred by Customer only with the prior written
        consent of Supplier and only upon such terms as will reimburse Supplier for
        any
        loss in connection therewith.  Customer shall pay a reasonable charge
        for such cancellation or delay which shall cover the expense of any direct
        and
        indirect commitments Supplier has made to any third party, including any
        of its
        suppliers, and further providing a reasonable allowance for overhead and
        profit.


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	
                2.

              	
                PRICE
                  AND PAYMENT; RIGHT TO
                  MANUFACTURE

              


      

       

      2.1    Price
        and Payment.  The unit prices for the Products shall be
        as set forth in the applicable purchase order, and shall be in U.S. dollars,
        inclusive of all costs associated with Supplier’s manufacture, packaging and
        shipment of the Products.  Supplier shall issue invoices to Customer
        no sooner than the shipment date for such Products, and Customer shall pay
        all
        such invoices within forty-five (45) days of receipt of the invoice or the
        applicable Products, whichever is later.  In the event that Supplier’s
        invoices to Customer are not paid when due, Customer agrees to pay an amount
        equal to 1.5% of the invoice(s) total for each month past the due date on
        which
        payment was due.  Customer further agree to pay reasonable attorney’s
        fees and costs incurred in connection with any legal action to collect any
        invoice(s) not paid when due in which Supplier is the successful
        party.

       

      2.2    Right
        of Manufacture.  Subject to the terms of this Section
        2.2, Customer agrees to purchase the Products exclusively from Supplier as
        long
        as Supplier is not in default under this Agreement.  If Customer
        receives an offer from a Qualifying Third-Party (as defined below) to provide
        any of the Products at a per-item cost lower than that currently offered
        by
        Supplier (a “Third Party Offer”), Supplier shall have the right to match
        the terms of such Third Party Offer for a period of ten (10) days from
        Supplier’s receipt of the terms of such Third Party Offer from
        Customer.  In the event Supplier agrees to match the Third Party
        Offer, Customer and Supplier shall enter into an amendment to this Agreement
        to
        conform to the terms of the Third Party Offer, except for such terms which
        are
        less favorable to Customer.  If Supplier does not agree to match the
        Third Party Offer, Customer shall be free to enter into an agreement with
        such
        Qualifying Third Party to purchase the Product or Products in quantities
        and at
        the prices contained in the Third Party Offer and on payment terms no less
        favorable than those in the Third Party Offer, and this Agreement shall remain
        in full force and effect as to any other Products and purchases.  For
        purposes of this Agreement, “Qualifying Third Party” shall mean a contract
        manufacturer registered with the U.S. Food and Drug Administration and holding
        GMP certification.

       

      
        	
                3.

              	
                WARRANTY,
                  SERVICE AND TECHNICAL
                  SUPPORT

              


      

       

      3.1    Products
        Warranty.  Supplier hereby warrants and covenants that
        all Products, and all materials and components incorporated therein which
        are
        sourced or provided by Supplier, and supplied by Supplier under this Agreement
        shall:  (i) conform with all applicable Product Specifications and all
        applicable laws and regulations; (ii) be of good and merchantable quality,
        free
        from defects in materials and workmanship; (iii) be fit for their intended
        purposes; (iv) not be adulterated or misbranded in any way.  All
        Products covered by terms and conditions stated herein shall be subject to
        the
        standard manufacturing and commercial variations and practices of
        Supplier.  Products manufactured by Supplier may have permissible
        variations and deviations as stated in the USP24 and NF19 <1161> which
        states “...each unit shall be not less than 90% and not more than 110% of the
        theoretically calculated weight for each unit.”  Said permissible
        variations and/or deviations shall apply to net and gross weights of goods
        or
        products, and shall also apply to active ingredient
        potencies.  Supplier reserves the right to ship overages and underages
        of weight, length, size, and/or quantity in accordance with Suppliers’s standard
        practices, but not to exceed 10% of Customer’s original amount ordered under
        purchase order.  EXCEPT AS STATED IN THIS AGREEMENT, SUPPLIER IS
        PROVIDING NO OTHER WARRANTIES, WHETHER EXPRESS OR IMPLIED, AND WHETHER STATUTORY
        OR OTHERWISE, WITH RESPECT TO THE PRODUCTS INCLUDING, BUT NOT LIMITED TO,
        ANY
        WARRANTIES ARISING FROM A COURSE OF DEALING OR USAGE OF TRADE.  THIS
        SECTION 3 STATES THE ENTIRE LIABILITY OF SUPPLIER WITH RESPECT TO THE WARRANTY
        GIVEN HEREIN.


      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      3.2           Inspection
        Period.  Within thirty (30) days from the date of receipt
        by Customer of any Products (the “Inspection Period”), Customer may
        reject and return to Supplier any Products which fail to meet the applicable
        Product Specifications (“Defective Products”), or all of a given lot of
        Products if the lot contains a statistically
        significant sample of Defective Products as determined by
        the application of the square root of lot size plus one sampling
        rule.  Unless otherwise agreed to in writing by Supplier, the Products
        covered hereunder may be inspected or tested by Customer only at the place
        of
        manufacture or at any qualified third party testing facility or at such other
        place or done in accordance with any reasonable conditions and rules specified
        by Supplier.  Customer further must notify Supplier of any claimed
        rejection of Products so tested by any reseller of Customer within ten (10)
        calendar days after their receipt of such reseller’s claim by
        Customer.  All analytical and/or physical test protocols must adhere
        to standards established by the United States Pharmacoepia 24 (hereinafter
        referred to as “USP24”) or higher, National Formulary 19 (hereinafter referred
        to as “NF19”) or higher and/or another standard which is agreed to in writing by
        Supplier.  Thereafter, Customer shall be deemed to have waived and
        further to be prohibited from asserting any rejection or seeking the return
        of
        any such goods or products.

      


      3.3           Replacement
        of Defective Products by Supplier.  In the case of such
        rejection during the Inspection Period, Supplier shall, at Customer’s option:
        (i) replace the Defective Products with new Products and ship the
        replacement Products to Customer, at Supplier’s expense, as soon as reasonably
        practicable following Supplier’s receipt of the Defective Products; or
        (ii) provide a full refund to Customer for such Defective
        Products.  All replacement Products furnished by Supplier pursuant to
        this Section 3.3 shall be at no charge to Customer, and Supplier shall bear,
        or
        promptly credit or reimburse Customer for, all shipping costs in connection
        therewith.  In addition to the foregoing, Supplier shall, at its sole
        expense, perform and complete a Root Cause Analysis within thirty (30) days
        after such Defective Products are identified.  Upon completion of each
        Root Cause Analysis, Supplier shall promptly implement a corrective action
        plan
        to prevent further Defective Products and shall communicate to Customer,
        in
        writing, the results of the Root Cause Analysis and the corresponding corrective
        action plan.

      


      3.4    Warranty
        Claim Disputes.  If Supplier determines that a Product
        returned, pursuant to Section 3.2 hereof is not a Defective Product, Supplier
        may notify Customer in writing of such determination (a “Warranty Claim
        Dispute”); provided, however, that a Warranty Claim Dispute
        must be received by Customer no later than thirty (30) days after the earlier
        of
        Supplier’s receipt of the returned Product or warranty claim
        report.  Each Warranty Claim Dispute shall contain all information
        necessary for Customer to evaluate its validity.  Warranty Claim
        Disputes containing insufficient information may be rejected by
        Customer.  Within thirty (30) days of receipt of a Warranty Claim
        Dispute, Customer shall evaluate the validity of the Warranty Claim Dispute,
        and
        shall accept or reject the Warranty Claim Dispute by written notice to
        Supplier.  If Customer accepts a Warranty Claim Dispute, Customer
        shall promptly reimburse Supplier for the costs (if any) of the replacements
        and
        related shipping costs incurred by Supplier in connection with the Product
        subject to the Warranty Claims Dispute.  If Customer rejects a
        Warranty Claim Dispute, Customer shall have the right to refer the Warranty
        Claim Dispute to an independent party for testing.  The decision of
        the independent party shall be final and binding.  The cost of testing
        will be borne by the party whose contention is not upheld by the independent
        party.  A Warranty Claim Dispute shall not relieve Supplier of its
        obligations under Sections 3.1 and 3.3 hereof.  The procedures for
        Warranty Claim Disputes shall also apply in the event of a recall by
        Customer.


      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      3.5           RMA
        Procedure.  All Defective Products returned to Supplier
        by Customer in accordance with this Agreement shall  include a Return
        Merchandise Authorization Number (a “RMA Number”) on the outside
        packaging of such returned Defective Product.  Supplier shall issue
        RMA Numbers upon request from Customer.  Supplier shall provide
        Customer with a designated telephone number for the purpose of providing
        RMA
        Numbers.

       

      
        	
                4.

              	
                TERM
                  AND TERMINATION This Agreement shall
                  commence on the Effective Date and continue for an initial term
                  of three
                  (3) years.  This Agreement shall automatically renew for two (2)
                  additional one (1) year terms, unless a party provides the other
                  party
                  notice of its intent to terminate this Agreement at least three
                  (3) months
                  prior to the end of the then current term.  Either party may, at
                  its option, terminate this Agreement, if the other party has breached
                  any
                  provision of this Agreement and has failed to cure such breach
                  within
                  thirty (30) days of delivery of written notice describing the
                  breach.  Notwithstanding the foregoing, either party may
                  terminate this Agreement, without opportunity to cure, if the other
                  party
                  files for bankruptcy or similar action or is in breach of its
                  confidentiality obligations hereunder.  Termination of this
                  Agreement, for whatever reason, shall not affect the obligations
                  of either
                  party that exist as of the date of expiration or
                  termination.  Upon termination of this Agreement for any reason
                  other than the default of Supplier, unless Customer purchases all
                  of the
                  Products on order, either finished or in progress, all costs incurred
                  by
                  Supplier with respect to such orders in process which Supplier
                  cannot
                  resell to its other customers (including without limitation shipping
                  and
                  delivery costs, packaging, label design, and cost of raw, work-in-process
                  and finished product with respect to the Product) shall be borne
                  by
                  Customer.

              


      

       

      
        	
                5.

              	
                REPRESENTATIONS
                  AND
                  WARRANTIES  Each
                  party represents and warrants to the other party that (i) it is
                  duly
                  organized and validly existing under the laws of its jurisdiction
                  of
                  incorporation or formation, and has full corporate power and authority
                  to
                  enter into this Agreement and to carry out the provisions hereof
                  and (ii)
                  this Agreement is legally binding upon it, enforceable in accordance
                  with
                  its terms.

              


      

       

      
        	
                6.

              	
                CONFIDENTIALITY

              


      

       

      
        	
                 

              	
                a.

              	
                Confidential
                  Information.  For purposes of this Agreement,
                  “Confidential Information” means any information disclosed by
                  either party to the other party, either directly or indirectly,
                  in
                  writing, orally or by inspection of tangible objects, which is
                  confidential, trade secret or proprietary to the disclosing party
                  or any
                  third party that has furnished it to the disclosing party.  The
                  parties agree during the term of this Agreement and all times thereafter
                  to use the Confidential Information of the disclosing party only
                  for its
                  performance under this Agreement, and to not to use the Confidential
                  Information for any other purpose.  Each party shall take at
                  least the same degree of care that it uses to protect its own most
                  highly
                  confidential and proprietary information of similar nature and
                  importance
                  (but in no event less than reasonable care) to protect the confidentiality
                  of the Confidential Information of the disclosing
                  party.

              


      

       

      
        	
                 

              	
                b.

              	
                Exclusions.  The
                  foregoing obligations in Section 5.1 shall not apply to any
                  Confidential Information to the extent the party receiving such
                  Confidential Information can prove such Confidential
                  Information:  (i) was publicly known prior to the time of
                  disclosure by the disclosing party; (ii) becomes publicly known
                  through no act or omission of the receiving party; (iii) was
                  rightfully known by the receiving party, without restriction, prior
                  to the
                  time of first disclosure by the disclosing party; (iv) was
                  independently developed by the receiving party without the use
                  of the
                  Confidential Information; or (v) was rightfully obtained by receiving
                  party, without restriction, from a third party who has the right
                  to make
                  such disclosure and without breach of any duty of confidentiality
                  to the
                  disclosing party.  In addition, a party receiving Confidential
                  Information may disclose such Confidential Information to the extent
                  such
                  party is required by law to disclose such Confidential
                  Information.

              


      


      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      
        	
                7.

              	
                INDEMNIFICATION.
                  Supplier shall indemnify, hold harmless and defend Customer, its
                  successors and assigns, and their respective officers, directors,
                  employees and agents, from any and all claims, losses, liabilities,
                  damages, judgments, penalties, settlements, expenses and costs,
                  including
                  without limitation reasonable attorneys fees, professional fees
                  and court
                  costs brought by third parties arising out of or related to (i)
                  Supplier’s
                  negligence, willful misconduct or omission or breach of this Agreement,
                  and the warranties contained herein,
                  and (ii) the infringement or alleged infringement by any
                  of the
                  Products of the intellectual property rights of a third
                  party.  Customer shall promptly notify Supplier of any
                  claims.  Supplier shall not settle any claims without the prior
                  written approval of Customer, which approval shall not be unreasonably
                  withheld or delayed.  Customer shall have the right, but not the
                  obligation, to participate in the defense of any claim at its sole
                  expense
                  through counsel of its choosing without forfeiting, reducing or
                  otherwise
                  affecting Customer’s right to indemnification
                  hereunder.  Without limiting the generality of the foregoing
                  indemnity, in the event any Product is held to have infringed the
                  intellectual property rights of any third party, or Supplier is
                  prevented
                  from delivering such Product to Customer as a result of a claim
                  of such
                  infringement, then Supplier, as promptly as possible, will either
                  (a) take
                  such action as is necessary to make the Product non-infringing,
                  or (b)
                  substitute a comparable, non-infringing Product acceptable to Customer,
                  failing which Customer shall no longer have any obligation under
                  this
                  Agreement to purchase the infringing Product from
                  Supplier.

              


      

       

      
        	
                8.

              	
                LIMITATION
                  OF LIABILITY.  NEITHER PARTY WILL BE LIABLE
                  FOR SPECIAL, INDIRECT, PUNITIVE, EXEMPLARY, INCIDENTAL OR CONSEQUENTIAL
                  DAMAGES ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT HOWEVER
                  ARISING, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY
                  OF SUCH
                  DAMAGES.  Except for liability arising from Supplier’s breach of
                  its obligations under Section 7(ii), neither party’s liability arising out
                  of or relating to this Agreement shall exceed the aggregate amounts
                  payable to Supplier by Customer under this
                  Agreement.

              


      

       

      
        	
                9.

              	
                TITLE
                  AND OWNERSHIP OF PRODUCTS.  Supplier owns
                  and shall continue to at all times own title to: (i) all formulas,
                  recipes, other proprietary information and specifications, and
                  all
                  intellectual property rights, relating to the Products, (ii) the
                  brand
                  name of the Products (except for those of which are Customer trademarks),
                  and (iii) the label design and all associated intellectual property
                  rights
                  (other than any Customer trademarks).  Supplier may, at any
                  time, sell products with formulas, recipes and specifications similar
                  to
                  or exactly like the Products to other Supplier customers.
                  

              


      

       

      
        	
                10.

              	
                GENERAL
                  PROVISIONS

              


      

       

      
        	
                 

              	
                a.

              	
                Integration
                  / Modification.  This Agreement and the appendices
                  hereto are both a final expression of the parties’ Agreement and a
                  complete and exclusive statement with respect to all of its
                  terms.  This Agreement supersedes all prior and contemporaneous
                  agreements and communications, whether oral, written or otherwise,
                  concerning any and all matters contained herein.  This Agreement
                  may be modified or supplemented only in a writing signed by all
                  parties
                  hereto.

              


      


      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      
        	
                 

              	
                b.

              	
                Relationship
                  Between the Parties.  The relationship of the
                  parties shall be that of independent contractors.  Nothing
                  contained in this Agreement shall be construed to create a partnership,
                  joint venture or agency relationship between Customer and
                  Supplier.

              


      

       

      
        	
                 

              	
                c.

              	
                Insurance.  Supplier
                  shall obtain and keep in force a commercial general liability policy
                  with
                  coverage amounts not less than $2,000,000.  Supplier shall name
                  Customer as an additional insured on such policy or policies of
                  insurance.  Supplier shall, prior to the Effective Date of this
                  Agreement, deliver to Customer and thereafter keep current valid
                  certificates of insurance or copies of insurance binder evidencing
                  the
                  existence and amounts of the required
                  insurance.

              


      

       

      
        	
                 

              	
                d.

              	
                Non-Waiver.  The
                  failure of a party to insist upon strict performance of any provision
                  of
                  this Agreement or to exercise any right arising out of this Agreement
                  shall neither impair that provision or right nor constitute a waiver
                  of
                  that provision or right, in whole or in part, in that instance
                  or in any
                  other instance.

              


      

       

      
        	
                 

              	
                e.

              	
                Remedies.  Except
                  as otherwise expressly provided herein, no remedy in this Agreement
                  is
                  intended to be exclusive, but each shall be cumulative and in addition
                  to
                  any other remedy referred to herein or otherwise available at law,
                  equity
                  or otherwise.

              


      

       

      
        	
                 

              	
                f.

              	
                Assignment.  Customer
                  shall have the right to assign this Agreement without the consent
                  of
                  Supplier.  Supplier may not assign this Agreement without
                  Customer’s consent.  Any assignment, delegation or transfer, or
                  attempt at the same, in violation of the foregoing shall be void
                  and
                  without effect.

              


      

       

      
        	
                 

              	
                g.

              	
                No
                  Third Party Beneficiaries.  This Agreement is
                  neither expressly nor impliedly made for the benefit of any party
                  other
                  than those executing it.

              


      

       

      
        	
                 

              	
                h.

              	
                Severability.  If,
                  for any reason, any part of this Agreement is adjudicated invalid,
                  unenforceable or illegal by a court of competent jurisdiction,
                  such
                  adjudication shall not affect or impair, in whole or in part, the
                  validity, enforceability or legality of any remaining portions
                  of this
                  Agreement.  All remaining portions shall remain in full force
                  and effect as if the original Agreement had been executed without
                  the
                  invalidated, unenforceable or illegal
                  part.

              


      

       

      
        	
                 

              	
                i.

              	
                Notices.  Any
                  notice to be given under this Agreement shall be in writing and
                  shall be
                  presumptively deemed given (i) when personally delivered;
                  (ii) when sent by facsimile, with confirmation of receipt;
                  (iii) one (1) day after having been sent by commercial overnight
                  courier with written verification of receipt; or (iv) five (5) days
                  after having been sent by registered or certified mail, return
                  receipt
                  requested, proper postage prepaid.  All such notices shall be
                  addressed to the receiving party at the address or addresses set
                  forth
                  below or at such other addresses as either party may specify from
                  time to
                  time by written notice in accordance
                  herewith.

              


      


      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      
        
          
            
              	
                      If
                        to Supplier, notices must be addressed to:

                    	
                      With
                        a copy to:

                    
	 	 
	
                      NHK
                        Laboratories, Inc.

                    	
                      Olsen
                        Kim & Braker LLP

                    
	
                      12230
                        E. Florence Ave.

                    	
                      12424
                        Wilshire Blvd., Suite 1120

                    
	
                      Santa
                        Fe Springs, CA  90670-3806

                    	
                      Los
                        Angeles, CA 90025

                    
	
                      Attention:
                        Shafiel Ahmed

                    	
                      Attention:  Jeffrey
                        L. Braker, Esq.

                    
	
                      Fax:
                        (562) 204-0683

                    	
                      Fax:  (310)
                        826-8411

                    
	 	 
	
                      If
                        to Customer, notices must be addressed to:

                    	
                      With
                        a copy to:

                    
	 	 
	
                      Baywood
                        International, Inc.

                    	
                      Meltzer,
                        Lippe, Goldstein & Breitstone, LLP

                    
	
                      14950
                        North 83rd
                        Place, Suite
                        1

                    	
                      190
                        Willis Avenue

                    
	
                      Scottsdale,
                        AZ  85260

                    	
                      Mineola,
                        NY  11501

                    
	
                      Attention:
                        Neil Reithinger, President & C.E.O.

                    	
                      Attention:  David
                        I. Schaffer, Esq.

                    
	
                      Fax:
                        (480) 483-2168

                    	
                      Fax:  (516)
                        747-0653

                    


            

          

        

      

      


      
        	
                 

              	
                j.

              	
                Force
                  Majeure.  Neither party shall be liable for the
                  failure or delay in performance of any obligation under this Agreement
                  by
                  reason of any event beyond such party’s reasonable control, including
                  without limitation Acts of God, fire, flood, earthquake or other
                  natural
                  forces, war, civil unrest, actions or decrees of governmental bodies,
                  accident, casualty, freight
                  embargoes.

              


      

       

      
        	
                 

              	
                k.

              	
                Choice
                  of Law, Forum and Jurisdiction.  THIS AGREEMENT IS
                  MADE WITHIN THE STATE OF CALIFORNIA AND SHALL BE GOVERNED BY AND
                  CONSTRUED
                  IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT
                  REGARD TO
                  ITS CONFLICT OF LAWS PRINCIPLES.  THE PARTIES AGREE THAT THE
                  UNITED NATIONS CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE
                  OF GOODS
                  SHALL NOT APPLY TO THIS AGREEMENT.  THE PARTIES HERETO HEREBY
                  IRREVOCABLY AND UNCONDITIONALLY:  (i) AGREE THAT ANY AND
                  ALL ACTIONS, SUITS OR OTHER LEGAL PROCEEDINGS, WHETHER OR NOT ARISING
                  UNDER THIS AGREEMENT AND REGARDLESS OF THE LEGAL THEORY UPON WHICH
                  THE
                  CLAIMS ARE BASED, MAY BE BROUGHT AGAINST THE OTHER PARTY ONLY IN
                  THE
                  COURTS OF THE STATE CALIFORNIA FOR THE COUNTY OF ORANGE OR THE
                  SOUTHERN
                  DIVISION OF THE UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT
                  OF
                  CALIFORNIA, AND CONSENT TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS
                  IN
                  ANY SUCH LEGAL PROCEEDING; (ii) AGREE THAT SERVICE OF PROCESS IN ANY
                  SUCH LEGAL PROCEEDING SHALL BE EFFECTED IN ACCORDANCE WITH THE
                  STATUTES OF
                  CALIFORNIA AND THE UNITED STATES, AS APPROPRIATE; AND (iii) WAIVE ANY
                  OBJECTION EITHER PARTY MAY NOW OR HEREAFTER HAVE TO THE VENUE OF
                  ANY SUCH
                  LEGAL PROCEEDING IN SUCH
                  COURTS.

              


      


      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      
        	
                 

              	
                l.

              	
                Jury
                  Waiver.  TO THE EXTENT PERMITTED BY LAW, THE
                  PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY
                  IN ANY
                  ACTION, SUIT OR OTHER LEGAL PROCEEDING BETWEEN THEM, WHETHER OR
                  NOT
                  ARISING UNDER THIS AGREEMENT, AND REGARDLESS OF THE LEGAL THEORY
                  UPON
                  WHICH THE CLAIMS ARE BASED.

              


      

       

      
        	
                 

              	
                m.

              	
                Attorney
                  Fees.  In the event any litigation or other
                  proceeding is brought by either party arising out of or relating
                  to this
                  Agreement, the prevailing party in such litigation or other proceeding
                  shall be entitled to recover from the other party all reasonable
                  costs,
                  attorney fees, professional fees and other expenses incurred by
                  such
                  prevailing party in such litigation or
                  proceeding.

              


      

       

      
        	
                 

              	
                n.

              	
                Ambiguities.  Ambiguities
                  and uncertainties in this Agreement, if any, shall not be interpreted
                  against either party, regardless of which party may be deemed to
                  have
                  caused the ambiguity or uncertainty to
                  exist.

              


      

       

      
        	
                 

              	
                o.

              	
                Counterparts.  This
                  Agreement may be executed in one or more counterparts, each of
                  which shall
                  be deemed an original document and all of which together shall
                  be deemed
                  one instrument.

              


      

       

      
        	
                 

              	
                p.

              	
                Further
                  Assurances.  Each party to this Agreement shall, at
                  its own expense, furnish, execute, and deliver all documents and
                  take all
                  actions as may reasonably be required to effect the terms and purposes
                  of
                  this Agreement.

              


      

       

      
        	
                 

              	
                q.

              	
                Survival.  In
                  addition to any term which expressly provides for survival beyond
                  the term
                  hereof, Sections 2.1 (to the extent applicable), 3, 5, 6, 7, 8,
                  10(k) and
                  10(l) shall survive expiration or termination of this
                  Agreement.

              


      


      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      IN
        WITNESS WHEREOF, the Parties, intending to be bound hereby, have executed
        this
        Agreement as of the date first set forth above.

      


      
        
          
            
              	
                      Baywood
                        International, Inc.

                    	 	
                      NHK
                        Laboratories, Inc.

                    
	 	 	 	 	 
	 	 	 	 	 
	
                      By:

                    	
                      /s/
                        Neil Reithinger

                    	 	
                      By:

                    	
                      /s/
                        M. Amirul Karim

                    
	 	 	 	 	 
	
                      Name:

                    	
                      Neil
                        Reithinger

                    	 	
                      Name:

                    	
                      M.
                        Amirul Karim

                    
	 	 	 	 	 
	
                      Title:

                    	
                      President
                        & C.E.O.

                    	 	
                      Title:

                    	
                      President

                    


            

          

        

      

      

        
          
            
            

          

          
            9

            
              

            

          

          
            
            

          

        

      

       

      APPENDIX A

      PRODUCTS


      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      APPENDIX B

      PRODUCT
        SPECIFICATIONS

    

     

     

    11