CERTIFICATE OF DESIGNATION
                                       OF
               SERIES I 8% CUMULATIVE CONVERTIBLE PREFERRED STOCK
                                       OF
                           BAYWOOD INTERNATIONAL, INC.

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                       Pursuant to Section 78.1955 of the
                             Nevada Revised Statutes
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     Baywood International, Inc., a corporation organized and existing under the
laws of the State of Nevada (the "Company"), hereby certifies that the following
resolutions  were  adopted by the Board of Directors of the Company on March 27,
2007  pursuant  to authority of the Board of Directors as required by the Nevada
Revised  Statutes:

     RESOLVED, that pursuant to the authority granted to and vested in the Board
of  Directors  of  the  Company  (the  "Board  of  Directors" or the "Board") in
accordance with the provisions of its Certificate of Incorporation, the Board of
Directors  hereby  authorizes  a  series  of the Company's previously authorized
Preferred  Stock, par value $0.001 per share (the "Preferred Stock"), and hereby
states  the  designation  and  number  of shares, and fixes the relative rights,
preferences,  privileges,  powers  and  restrictions  thereof  as  follows:

     Series  I  8%  Cumulative  Convertible  Preferred  Stock:

                                    ARTICLE 1
                                   DEFINITIONS

     The  terms  defined  in this Article 1 whenever used in this Certificate of
Designation  have  the  following  respective  meanings:

     "Affiliate"  has  the meaning ascribed to such term in Rule 12b-2 under the
Exchange  Act.

     "Board"  or  "Board  of  Directors"  means  the  Board  of Directors of the
Company.

     "Business  Day" means a day other than Saturday, Sunday or any day on which
banks  located  in  the  State of New York are authorized or obligated to close.

     "Capital  Shares"  or "Capital Stock" means the Common Shares and any other
shares  of  any other class or series of capital stock, whether now or hereafter
authorized  and  however  designated, which have the right to participate in the
distribution  of  earnings  and  assets  (upon  dissolution,  liquidation  or
winding-up)  of  the  Company.


<PAGE>
     "Common Shares" or "Common Stock" means shares of common stock, par value $
0.001  per  share,  of  the  Company.

      "Conversion  Date" means any day on which (i) all or any portion of shares
of  the  Series  I  Preferred  Stock  are  converted and (ii) accrued and unpaid
dividends  are  converted  in lieu of cash in accordance with Section 6.1(a), in
accordance  with  the  provisions  hereof.

     "Conversion  Notice"  means a written notice of conversion substantially in
the  form  annexed  hereto  as  Annex  I.

     "Conversion  Price"  has  the  meaning  set  forth  in  Section  6.3.

     "Conversion  Price  Floor"  has the meaning set forth in Section 6.4(a)(i).

     "Conversion  Share"  means  a  share  of Common Stock issuable upon (i) the
conversion  of  any  Series I Preferred Stock and (ii) the conversion of accrued
and  unpaid  dividends  in  lieu  of  cash.

     "Company"  means Baywood International, Inc., a Nevada corporation, and any
successor  or  resulting  corporation  by  way of merger, consolidation, sale or
exchange  of  all  or  substantially  all of the Company's assets, or otherwise.

     "Current  Market Price" means on any date of determination the closing sale
price  (or  if no closing sale price is reported, the average of the closing bid
and closing ask prices or, if there is more than one in either case, the average
of  the  average  closing  bid  and closing ask prices) as reported in composite
transactions  for  the  principal United States securities exchange on which the
Common  Stock  is traded at such time or, if the Common Stock is not listed on a
United  States  national  or  regional  securities  exchange, as reported on the
Over-The-Counter  Bulletin  Board,  or, if not so reported, as determined by the
Board  in  its  good  faith  discretion.

     "Dividend  Period"  means  the period commencing on and including the Issue
Date  or,  if a dividend has previously been paid, the day after the immediately
preceding Dividend Payment Due Date, and ending on and including the immediately
subsequent  Dividend  Payment  Due  Date.

     "Dividend  Payment  Due  Date"  means  March  31, June 30, September 30 and
December  31  of  each  year.

     "Dividend  Rate"  means eight percent (8%) per annum, subject to adjustment
as  set  forth  in  Section  6.4(a)(i), computed on the basis of a 365-day year.

     "Exchange  Act"  means  the  Securities  Exchange  Act of 1934, as amended.

     "Issue  Date"  means, as to any share of Series I Preferred Stock, the date
of  issuance  of  such  share.


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<PAGE>
     "Liquidation  Event"  has  the  meaning  set  forth  in  Section  5.1.

     "Liquidation  Preference"  means,  with  respect to a share of the Series I
Preferred  Stock,  cash,  property or securities valued as to (i) securities, at
the  Current  Market  Price,  (ii)  property,  as  determined  in the good faith
discretion  of  the Board, and (ii) cash at the face value thereof, in an amount
equal  to the sum of (x) the Stated Value for such outstanding share of Series I
Preferred  Stock  (as  adjusted  for  any stock dividends, stock combinations or
stock  splits  with respect to such share) plus (y) the aggregate of all accrued
                                           ----
and  unpaid dividends on such share of Series I Preferred Stock through the date
of  the  payment  of  the  Liquidation  Preference.

     "Mandatory  Conversion  Date"  has the meaning set forth in Section 6.2(c).

     "Outstanding",  when used with reference to Common Shares or Capital Shares
(collectively,  "Shares"),  means,  on any date of determination, all issued and
outstanding  Shares,  and  includes  all  such  Shares  issuable  in  respect of
outstanding  scrip or any certificates representing fractional interests in such
Shares;  provided, however, that any such Shares directly or indirectly owned or
held by or for the account of the Company or any Subsidiary of the Company shall
not  be  deemed  "Outstanding"  for  purposes  hereof.

     "Person" means an individual, a corporation, a partnership, an association,
a limited liability company, an unincorporated business organization, a trust or
other entity or organization, and any government or political subdivision or any
agency  or  instrumentality  thereof.

     "Qualified  IPO"  means  a  firm  commitment  underwritten  public offering
pursuant  to  an  effective  registration  statement  under  the Securities Act,
covering  the  offer  and  sale  by the Company of Common Stock which results in
aggregate  gross  proceeds  to  the Company of not less than Ten Million Dollars
($10,000,000)  at a per share valuation at least equal to 250% of the Conversion
Price  in  effect  at  the  time  of  conversion.

     "SEC"  means  the  United  States  Securities  and  Exchange  Commission.

     "Securities  Act"  means  the  Securities  Act  of  1933,  as  amended.

     "Series  I Preferred Shares" or "Series I Preferred Stock" means the shares
of  Series  I  8%  Cumulative Convertible Preferred Stock of the Company or such
other  convertible  preferred stock of the Company as may be exchanged therefor.

     "Stated  Value"  has  the  meaning  set  forth  in  Article  2.

     "Subsidiary"  means  any  entity  of  which  securities  or other ownership
interests  having  ordinary  voting  power  to  elect a majority of the board of
directors  or  other  persons performing similar functions are owned directly or
indirectly  by  the  Company.

     "Warrants"  means  the Warrants for the Purchase of Shares of Common Stock,
issued  or  to  be issued by the Company to holders of Series I Preferred Stock,
and  any


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<PAGE>
warrants  issued as a consequence of the exercise or transfer of any warrants in
whole  or  in  part.

     All  references  to "cash" or "$" herein mean currency of the United States
of  America.

                                    ARTICLE 2
                             DESIGNATION AND AMOUNT

     The  designation  of this series, which consists of one million (1,000,000)
shares of Preferred Stock, shall be Series I 8% Cumulative Convertible Preferred
Stock  and  the  stated  value shall be Ten Dollars ($10) per share (the "Stated
Value").

                                    ARTICLE 3
                                      RANK

     The  Series  I Preferred Stock shall rank senior to any other Capital Stock
of  the  Company  and  shall  rank junior to all outstanding indebtedness of the
Company.

                                    ARTICLE 4
                                    DIVIDENDS

     4.1     Each  holder  of  the Series I Preferred Stock shall be entitled to
receive,  out of funds legally available for the payment of dividends, dividends
payable in cash at the Dividend Rate on the Stated Value of each share of Series
I  Preferred  Stock  on and as of each Dividend Payment Due Date with respect to
each  Dividend  Period.  Dividends  on  the  Series  I  Preferred Stock shall be
cumulative  from  the  date  of  issue,  whether or not declared for any reason,
including  if  such declaration is prohibited under any outstanding indebtedness
or  borrowings  of  the  Company  or  any  of  its  Subsidiaries,  or  any other
contractual  provision  binding  on  the Company or any of its Subsidiaries, and
whether  or  not there shall be funds legally available for the payment thereof.

     4.2     Each  dividend  shall be payable on each Dividend Payment Due Date,
commencing  June 30, 2007 or the Dividend Payment Due Date immediately following
the  Issue Date, as applicable, to the holders of record of shares of the Series
I  Preferred  Stock,  as  they appear on the stock records of the Company at the
close  of  business  on such record date, not more than thirty (30) days or less
than ten (10) days preceding the payment dates thereof, as shall be fixed by the
Board  of  Directors.  Accrued and unpaid dividends for any past Dividend Period
shall  be  paid  to holders of record upon the occurrence of a Liquidation Event
and  upon  conversion  of shares of Series I Preferred Stock, unless a holder of
record  chooses  to convert such accrued and unpaid dividends in lieu of cash in
accordance  with  Section  6.1(a).

                                    ARTICLE 5
                             LIQUIDATION PREFERENCE

     5.1     Upon the occurrence of any Liquidation Event, no distribution shall
be  made  to  the  holders  of any shares of Capital Stock of the Company unless
prior  thereto,


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<PAGE>
the  holders  of  shares of Series I Preferred Stock, subject to this Article 5,
shall  have  received  the  Liquidation  Preference  with respect to each share.

For  purposes  hereof,  the term "Liquidation Event" means (i)(a) an acquisition
after  the date hereof by an individual or legal entity or "group" (as described
in  Rule  13d-5(b)(1)  promulgated  under the Exchange Act) of effective control
(whether  through legal or beneficial ownership of Capital Stock of the Company,
by  contract  or  otherwise)  of  in excess of fifty percent (50%) of the voting
securities of the Company, (b) the merger or consolidation of the Company or any
Subsidiary  in  one  or  a  series  of related transactions with or into another
entity as a result of which the Company  ceases to exist or as a result of which
the  Common  Stock  ceases  to  be  a  class  of securities registered under the
Exchange  Act,  other  than  (i) a merger solely for the purpose of changing the
jurisdiction  of  incorporation  of  the  Company  and  resulting  in  a
reclassification,  conversion  or exchange of outstanding shares of Common Stock
solely  into shares of common stock of the surviving entity, or (ii) a merger or
consolidation  pursuant  to  which  holders  of the Capital Stock of the Company
immediately  prior  to  such transaction have the right to exercise, directly or
indirectly,  fifty percent (50%) or more of the total voting power of all shares
of the Capital Stock entitled to vote generally in elections of directors of the
continuing or surviving person immediately after giving effect to such issuance,
(c)  the  sale,  lease, license or other disposition of all or substantially all
the assets or any substantial asset of the Company in one or a series of related
transactions,  or  (d) the execution by the Company of an agreement to which the
Company  is a party or by which it is bound, providing for any of the events set
forth  above  in  (a),  (b)  or  (c),  or (iii) any liquidation, dissolution, or
winding  up  of  the  Company,  whether  voluntary  or  involuntary.

     5.2     If,  upon  any Liquidation Event, the remaining assets and funds of
the  Company  legally  available  for  payments  of  the aggregate amount of all
Liquidation  Preferences  payable  in  respect of outstanding shares of Series I
Preferred  Stock  (after  payment  of  requisite  liquidation  distributions  or
payments  to  holders  of  shares of any class or series of Capital Stock of the
Company  with  a  liquidation preference senior to the Series I Preferred Stock)
shall  be  insufficient  to  make payment in full of all Liquidation Preferences
payable  with  respect  to  outstanding  shares  of Series I Preferred Stock and
shares  of  any  class  or  series  of  Capital Stock of the Company at the time
outstanding  with a liquidation preference on parity with the Series I Preferred
Stock  then all such remaining assets and funds of the Company legally available
for  distribution  shall  be distributed among the holders of Series I Preferred
Stock  at  the time outstanding and the holders of shares of any class or series
of  Capital  Stock  of  the  Company at the time outstanding, with a liquidation
preference  on  parity with the Series I Preferred Stock, pro rata in proportion
                                                          --- ----
to  the  full  amounts  to  which they would otherwise be respectively entitled.

     5.3     If,  upon  any Liquidation Event, the remaining assets and funds of
the  Company  legally  available  for  payments  of  the aggregate amount of all
Liquidation Preferences payable in respect of shares of Series I Preferred Stock
outstanding and shares of any class or series of Capital Stock of the Company on
parity with the Series I Preferred Stock outstanding (after payment of requisite
liquidation  distributions  or  payments  to  holders  of shares of any class or
series  of  Capital  Stock  of  the  Company  with


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<PAGE>
a  liquidation  preference  senior  to the Series I Preferred Stock) shall be in
excess  of  the  amounts  necessary  to  make payment in full of all Liquidation
Preferences  available  with respect to outstanding shares of Series I Preferred
Stock  and  outstanding  shares  of  any class or series of Capital Stock of the
Company on parity with the Series I Preferred Stock, then all such excess assets
and  funds remaining and legally available for distribution shall be distributed
among  the holders of shares of Series I Preferred Stock at the time outstanding
and  the  holders  of  the Common Stock, pro rata in proportion to the number of
                                         --- ----
shares  of  Common  Stock  then owned or into which shares of Series I Preferred
Stock  would  then  be  convertible.

                                    ARTICLE 6
                 CONVERSION OF PREFERRED STOCK; CONVERSION PRICE

     6.1     Voluntary  Conversion.
             ---------------------

          (a)     Each  share  of  Series I Preferred Stock may be converted, at
the  option  of  the holder thereof, at any time and from time to time into such
number  of  Common  Shares  as  shall be determined by dividing the Stated Value
plus,  if such holder chooses in his, her or its sole and absolute discretion to
convert  accrued  and  unpaid  dividends,  such  amount  of  accrued  and unpaid
dividends,  by  the  Conversion  Price (as hereinafter defined) in effect at the
time  of  conversion, and initially each share may be converted into two hundred
(200) Common Shares.  In the event a holder of record does not choose to convert
accrued  and  unpaid  dividends, such holder shall receive cash in the amount of
accrued  and  unpaid  dividends  in  accordance  with  Section  6.1(b).

          (b)     In  order  for a holder of Series I Preferred Stock to convert
such  shares  into  shares  of  Common  Stock,  such  holder shall surrender the
certificate or certificates representing such shares of Series I Preferred Stock
to  be converted, at the office of the transfer agent for the Series I Preferred
Stock  together  with  a  Conversion  Notice.  If  required  by  the  Company,
certificates  surrendered  for  conversion shall be endorsed or accompanied by a
written  instrument  or  instruments  of  transfer,  in form satisfactory to the
Company,  duly executed by the registered holder or its attorney duly authorized
in  writing.  As promptly as practicable after receipt of the Conversion Notice,
the  Company  shall  (i)  issue  the  Common  Stock  issued  upon  conversion in
accordance  with  the  provisions of this Article 6, and (ii) cause to be mailed
for  delivery  by  overnight  courier  to  such  holder  (x)  a  certificate  or
certificate(s)  representing  the number of Common Shares to which the Holder is
entitled  by virtue of such conversion, (y) cash, as provided in Section 6.6, in
respect  of any fraction of a Common Share issuable upon such conversion and (z)
if  such holder does not convert accrued and unpaid dividends in accordance with
Section  6.1(a),  cash  in  the amount of accrued and unpaid dividends as of the
Conversion  Date.  Such  conversion shall be deemed to have been effected at the
time at which the Conversion Notice indicates and at such time the rights of the
holder  of  the  Preferred  Stock with regard to the Series I Preferred Stock so
converted, as such, shall cease and the Person or Persons in whose name or names
the  Common  Stock  issued  upon conversion shall be issuable shall be deemed to
have  become  the  holder  or holders of record of the Common Shares represented
thereby and all voting and other rights associated with the beneficial ownership
of  such  Common Shares shall at such time vest with such Person or Persons. The
Conversion  Notice  shall  constitute  a  contract  between


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<PAGE>
the  holder and the Company, whereby the holder shall be deemed to subscribe for
the  number  of  Common  Shares  which  it will be entitled to receive upon such
conversion  and,  in  payment and satisfaction of such subscription (and for any
cash  adjustment  to which it is entitled pursuant to Section 6.6), to surrender
the  Series  I  Preferred  Stock  and  to release the Company from all liability
thereon.  No  cash  payment  aggregating less than $1.00 shall be required to be
given  unless  specifically  requested  by  the  holder.

     6.2     Mandatory Conversion.
             --------------------

          (a)     Each  share of Series I Preferred Stock then outstanding shall
automatically  be  converted  into  such  number  of  Common  Shares as shall be
determined by dividing the Stated Value by the Conversion Price in effect at the
time  of  conversion,  upon  the  closing  of  a  Qualified  IPO.

          (b)     At  any  time  after  January  1,  2008, in the event that the
Current  Market  Price  shall  have  exceeded five hundred percent (500%) of the
Conversion Price in effect in any consecutive 30-day trading period, the Company
may  (but  is  not  required  to) cause the mandatory conversion of the Series I
Preferred  Stock  into shares of Common Stock as shall be determined by dividing
the  Stated  Value  of  each share of Series I Preferred Stock by the Conversion
Price  in  effect at the time of conversion.  Such right may be exercised by the
Company  only upon written notice to the holders of the Series I Preferred Stock
delivered  within  sixty (60) days of the end of such consecutive 30-day trading
period.

          (c)     All  holders  of  record of shares of Series I Preferred Stock
will  be  given  at least thirty (30) days prior written notice of the date (the
"Mandatory  Conversion  Date")  fixed  and  the  place  designated for mandatory
conversion  of  all  shares of Series I Preferred Stock pursuant to this Section
6.2.  Such  notice  will  be  sent by first class mail, postage prepaid, to each
registered  holder  of  Series  I  Preferred Stock at such holder's address last
shown on the records of the transfer agent for the Series I Preferred Stock.  On
or  before  the Mandatory Conversion Date, each holder of the shares of Series I
Preferred  Stock  shall  surrender  its certificate or certificates for all such
shares  to  the  Company at the place designated in such notice.  If required by
the  Company,  certificates  surrendered  for  conversion  shall  be endorsed or
accompanied  by  written  instrument  or  instruments  of  transfer,  in  form
satisfactory  to  the  Company,  duly  executed  by the registered holder or its
attorney  duly  authorized  in  writing.  On  and after the Mandatory Conversion
Date,  all  rights  with  respect  to the Series I Preferred Stock so converted,
including  the  rights,  if any, to receive notices and to vote, will terminate,
except  only  the  rights  of  the  holders  thereof,  upon  surrender  of their
certificate  or certificates therefor, to receive certificates for the number of
shares  of  Common  Stock  into  which  such  Series  I Preferred Stock has been
converted, and payment of any accrued but unpaid dividends thereon.  As promptly
as  practicable,  the  Company  shall  (i)  issue  the  Common Stock issued upon
conversion  in  accordance with the provisions of this Article 6, and (ii) cause
to  be mailed for delivery by overnight courier to such holder (x) a certificate
or  certificate(s)  representing the number of Common Shares to which the Holder
is  entitled by virtue of such conversion, (y) cash, as provided in Section 6.6,
in  respect  of any fraction of a Common Share issuable upon such conversion and
(z)  if  such  holder does not choose to convert accrued and unpaid dividends in
accordance  with  Section  6.1(a),


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<PAGE>
cash  in  the  amount  of  accrued  and  unpaid  dividends  as  of the Mandatory
Conversion  Date.

     6.3     Conversion  Price.  The initial conversion price shall be $0.04 per
             -----------------
share of Common Stock, and shall be subject to adjustment from time to time, and
such  conversion  price  as  adjusted  shall  be  likewise  subject  to  further
adjustment,  as  hereinafter set forth.  The Term "Conversion Price" shall mean,
as  of  any  time,  the conversion price of the Series I Preferred Stock at that
time,  as  specified  in  this Section 6.3 in case no adjustment shall have been
required,  or  such conversion price as adjusted pursuant to Section 6.4, as the
case  may  be.

     6.4     Effect  on  Conversion  Price  of  Certain  Events.
             --------------------------------------------------

     (a)     (i)     The  Conversion  Price  and  the number of shares of Common
Stock issuable upon conversion of the Series I Preferred Stock, shall be subject
to adjustment, as follows: in the event that the Company shall at any time after
the  date  hereof (A) declare a dividend on the outstanding Common Stock payable
in  shares of its Capital Stock, (B) subdivide the outstanding Common Stock, (C)
combine (including by way of a reverse stock split) the outstanding Common Stock
into a smaller number of shares, or (D) issue any shares of its Capital Stock by
reclassification  of  the  Common  Stock (including any such reclassification in
connection with a consolidation or merger in which the Company is the continuing
corporation),  then, in each case, the Conversion Price in effect at the time of
the  record  date for the determination of stockholders entitled to receive such
dividend  or  distribution  or  of  the  effective  date  of  such  subdivision,
combination,  or  reclassification  shall be adjusted so that it shall equal the
price  determined  by  multiplying  such  Conversion  Price  by  a fraction, the
numerator  of  which  shall  be the number of shares of Common Stock outstanding
immediately  prior  to  such  action,  and the denominator of which shall be the
number of shares of Common Stock outstanding after giving effect to such action.
Such adjustment shall be made successively whenever any event listed above shall
occur and shall become effective at the close of business on such record date or
at  the close of business on the date immediately preceding such effective date,
as  applicable.  Notwithstanding  the foregoing, in the event any dividend shall
not  be  paid  in full within ten (10) days from the applicable Dividend Payment
Due  Date,  then  for each Dividend Period or portion thereof that such dividend
shall  not be paid in full, (x) the Conversion Price shall be reduced by $0.0025
(  of  1 cent); provided, however that in no event shall the Conversion Price be
reduced  below  $0.03  per share of Common Stock (the "Conversion Price Floor");
provided,  further  that  the  amount of each reduction and the Conversion Price
Floor  shall be adjusted on the same basis as and in accordance with adjustments
to  the  Conversion  Price  pursuant  to  clauses  (A), (B), (C) and (D) of this
Section  6.4(a)(i),  and  (y) the Dividend Rate shall be increased by fifty (50)
basis  points  (  of  1%); provided, however that in no event shall the Dividend
Rate  exceed  ten  percent  (10%)  per  annum.

          (ii)     (A)     If  at  any  time  or  from  time  to  time after the
original  issuance  date  of the Series I Preferred Stock, the Company issues or
sells,  or  is  deemed  by the express provisions of this subsection (i) to have
issued  or  sold,  Additional  Shares  of Common Stock (as defined in subsection
(ii)(D)  below),  other  than  as a result of, or in connection with, any action
referenced  in  Section  6.4(a)(i)  hereof,  for  an  Effective  Price


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<PAGE>
(as  defined  in  subsection  (a)(ii)(D)  below)  less  than  the then effective
Conversion  Price,  then  in  each  such case the then existing Conversion Price
shall  be  reduced,  as  of the opening of business on the date of such issue or
sale,  to  a price determined by multiplying the then effective Conversion Price
by  a  fraction  (i) the numerator of which shall be (A) the number of shares of
Common  Stock  deemed  outstanding  (as defined below) immediately prior to such
issue or sale, plus (B) the number of shares of Common Stock which the aggregate
consideration  received (as defined in subsection (a)(ii)(B)) by the Company for
the  total  number of Additional Shares of Common Stock so issued would purchase
at  such  Conversion Price and (ii) the denominator of which shall be the number
of  shares  of  Common  Stock  deemed outstanding (as defined below) immediately
prior to such issue or sale plus the total number of Additional Shares of Common
Stock  so  issued.  For  the  purposes  of the preceding sentence, the number of
shares  of  Common Stock deemed to be outstanding as of a given date shall equal
the  number of shares of Common Stock actually outstanding.  No adjustment shall
be  made to the Conversion Price in an amount less than one percent per share of
Series  I  Preferred  Stock.  Any  adjustment otherwise required by this Section
6.4(a)(ii)(A)  that  is  not  required  to be made due to the preceding sentence
shall  be  included  in  any  subsequent  adjustment  to  the  Conversion Price.

               (B)     For  the  purpose of making any adjustment required under
this Section 6.4(a)(ii), the consideration received by the Company for any issue
or  sale  of securities shall (1) to the extent it consists of cash, be computed
at  the  net  amount  of  cash  received  by  the Company after deduction of any
underwriting or similar commissions, compensation or concessions paid or allowed
by  the  Company  in connection with such issue or sale but without deduction of
any  expenses  payable by the Company, (2) to the extent it consists of property
other than cash, be computed at the fair value of that property as determined in
good  faith  by  the  Board of Directors, and (3) if Additional Shares of Common
Stock, Convertible Securities (as defined in subsection (a)(ii)(C)) or rights or
options  to  purchase  either  Additional  Shares of Common Stock or Convertible
Securities  are  issued or sold together with other stock or securities or other
assets  of the Company for a consideration which covers both, be computed as the
portion  of  the  consideration so received that may be reasonably determined in
good  faith  by the Board of Directors to be allocable to such Additional Shares
of  Common  Stock,  Convertible  Securities  or  rights  or  options.

               (C)     For  the  purpose  of  the adjustment required under this
Section 6.4(a)(ii), if the Company issues or sells (i) stock or other securities
convertible into Additional Shares of Common Stock other than Series I Preferred
Stock  (such  convertible  stock  or  securities  being  herein  referred  to as
"Convertible  Securities"),  or  (ii)  rights  or  options  for  the purchase of
Additional  Shares  of  Common  Stock  or  Convertible  Securities,  and  if the
Effective  Price  of  such  Additional  Shares  of Common Stock is less than the
Conversion  Price, the Company shall be deemed to have issued at the time of the
issuance  of such rights or options or Convertible Securities the maximum number
of  Additional  Shares  of  Common  Stock  issuable  upon exercise or conversion
thereof and to have received as consideration for the issuance of such shares an
amount  equal  to the total amount of the consideration, if any, received by the
Company  for  the  issuance of such rights or options or Convertible Securities,
plus,  in  the  case  of  such  rights  or  options,  the  minimum  amounts  of
consideration,  if  any,  payable  to  the  Company  upon  the


                                        9
<PAGE>
exercise of such rights or options, plus, in the case of Convertible Securities,
the minimum amounts of consideration, if any, payable to the Company (other than
by  cancellation  of  liabilities  or  obligations evidenced by such Convertible
Securities)  upon  the conversion thereof; provided, however that if in the case
of  Convertible  Securities  the minimum amounts of such consideration cannot be
ascertained,  but  are a function of antidilution or similar protective clauses,
the  Company  shall  be  deemed  to  have  received  the  minimum  amounts  of
consideration  without  reference to such clauses; provided, further that if the
minimum  amount  of  consideration  payable  to the Company upon the exercise or
conversion  of rights, options or Convertible Securities is reduced over time or
on  the occurrence or non-occurrence of specified events other than by reason of
antidilution  adjustments,  the  Effective Price shall be recalculated using the
figure  to  which  such  minimum  amount  of consideration is reduced; provided,
                                                                       ---------
further  that if the minimum amount of consideration payable to the Company upon
-------
the  exercise or conversion of such rights, options or Convertible Securities is
subsequently  increased,  the  Effective Price shall be again recalculated using
the  increased  minimum  amount of consideration payable to the Company upon the
exercise  or  conversion  of  such rights, options or Convertible Securities. No
further  adjustment  of  the  Conversion Price, as adjusted upon the issuance of
such rights, options or Convertible Securities, shall be made as a result of the
actual issuance of Additional Shares of Common Stock on the exercise of any such
rights  or  options or the conversion of any such Convertible Securities. If any
such  rights  or  options  or  the  conversion privilege represented by any such
Convertible  Securities  shall  expire  without having been fully exercised, the
Conversion  Price  as  adjusted  upon  the  issuance  of such rights, options or
Convertible  Securities  shall be readjusted to the Conversion Price which would
have  been  in  effect  had  an  adjustment been made on the basis that the only
Additional Shares of Common Stock so issued were the Additional Shares of Common
Stock, if any, actually issued or sold on the exercise of such rights or options
or  rights  of  conversion  of  such Convertible Securities, and such Additional
Shares  of  Common  Stock,  if  any,  were  issued or sold for the consideration
actually  received by the Company upon such exercise, plus the consideration, if
any,  actually  received  by  the Company for the granting of all such rights or
options,  whether  or not exercised, plus the consideration received for issuing
or  selling  the  Convertible  Securities  actually  converted,  plus  the
consideration,  if  any,  actually  received  by  the  Company  (other  than  by
cancellation  of  liabilities  or  obligations  evidenced  by  such  Convertible
Securities)  on  the  conversion  of  such  Convertible  Securities.

               (D)     "Additional Shares of Common Stock" shall mean all shares
of  Common  Stock  issued by the Company or deemed to be issued pursuant to this
Section 6.4(a)(ii), other than (1) shares of Common Stock issued upon conversion
of  the  Series  I  Preferred  Stock  or  exercise of the Warrants or in lieu of
accrued  but  unpaid  dividends in accordance with Section 6.1(a), (2) shares of
Common Stock issued as a result of, or in connection with, any action referenced
in  Section  6.4(a)(i)  hereof,  (3)  securities  issued upon the exercise of or
conversion of convertible securities, options or warrants issued and outstanding
on  the  date  of  this Certificate of Designation, provided, however, that such
securities  have  not  been  amended  since  the  date  of  this  Certificate of
Designation  to  increase  the  number  of  such  securities  or to decrease the
exercise  or  conversion  price  of  any  such  securities  (other  than  by the
antidilution  provisions thereof, if any), (4) issuances of equity securities to
employees,  consultants,  landlords  or  suppliers


                                       10
<PAGE>
of  or  to  the  Company  in  one  or more transactions approved by the Board of
Directors  or  in  mergers,  consolidations,  acquisitions,  joint  ventures  or
strategic  alliances  approved  by  the Board of Directors, and (5) issuances of
equity  securities  to  commercial banks or other lenders in connection with the
Company  obtaining  loan  financing  in one or more transactions approved by the
Board  of  Directors.  References  to  Common  Stock  in the subsections of this
clause  (D) above shall mean all shares of Common Stock issued by the Company or
deemed  to be issued pursuant to this Section 6.4(a)(ii).  The "Effective Price"
of  Additional  Shares  of  Common  Stock  shall mean the quotient determined by
dividing  the  total number of Additional Shares of Common Stock issued or sold,
or  deemed  to  have  been  issued  or  sold  by  the Company under this Section
6.4(a)(ii),  into  the  aggregate consideration received, or deemed to have been
received  by  the  Company  for such issue under this Section 6.4(a)(ii)(D), for
such  Additional  Shares  of  Common  Stock.

     (b)     If  the Company, at any time while any shares of Series I Preferred
Stock  are  outstanding, shall distribute to all or substantially all holders of
Common  Stock  (and  not to the holders of Series I Preferred Stock) evidence of
its  indebtedness  or  assets  (including  cash and cash dividends) or rights or
warrants  to  subscribe for or purchase any security other than the Common Stock
(which  shall  be  subject  to  Section  6.4(a)),  then  in  each  such case the
Conversion Price shall be adjusted by multiplying the Conversion Price in effect
immediately  prior  to  the  record date fixed for determination of stockholders
entitled to receive such distribution by a fraction of which (i) the denominator
shall be the Current Market Price per share of Common Stock determined as of the
record  date mentioned above and (ii) the numerator shall be such Current Market
Price per share of Common Stock on such record date less the then per share fair
market value at such record date of the portion of such evidence of indebtedness
or assets (including cash and cash dividends) or rights or warrants to subscribe
for  or  purchase  any  security  other  than  the  Common  Stock so distributed
applicable to one outstanding share of the Common Stock, which fair market value
shall  be reduced by the fair market value of consideration, if any, paid to the
Company by holders of Common Stock in exchange for such evidence of indebtedness
or assets or rights or warrants so distributed, in each case as such fair market
value  is  determined  by  the  Board of Directors of the Company in good faith.

     (c)     As  used herein, the Current Market Price per share of Common Stock
on  any  date  shall be deemed to be the average of the daily closing prices for
the 30 consecutive trading days immediately preceding the date in question.  The
closing  price  for  each day shall be the last reported sales price regular way
or, in case no such reported sale takes place on such day, the closing bid price
regular  way,  in  either  case  on  the  principal national securities exchange
(including, for purposes hereof, the Nasdaq National Market) on which the Common
Stock  is listed or admitted to trading or, if the Common Stock is not listed or
admitted  to  trading  on any national securities exchange, the highest reported
bid  price  for  the  Common  Stock  as furnished by the National Association of
Securities  Dealers,  Inc.  through  the  Nasdaq  SmallCap  Market  or a similar
organization  if  the  Nasdaq  SmallCap  Market  is  no  longer  reporting  such
information. If, on any such date, the Common Stock is not listed or admitted to
trading  on  any  national  securities  exchange and is not quoted on the Nasdaq
SmallCap  Market  or any similar organization, the Current Market Price shall be
deemed  to  be  the  fair  value  of  a  share  of


                                       11
<PAGE>
Common Stock on such date, as determined in good faith by the Board of Directors
of  the  Company,  absent  manifest  error.

     (d)     All  calculations  under  this  Section  6.4  shall  be made to the
nearest  cent  or  to  the nearest one-hundredth of a share, as the case may be.

     (e)     Whenever  there  shall be an adjustment as provided in this Section
6.4, the Company shall within 15 days thereafter cause written notice thereof to
be  sent  in  accordance  with Section 8.7 hereunder to the holder, which notice
shall  be  accompanied  by  an officer's certificate setting forth the number of
Conversion  Shares  issuable  and  the  Conversion  Price  thereof  after  such
adjustment  and  setting  forth  a  brief  statement of the facts requiring such
adjustment  and  the  computation  thereof, which officer's certificate shall be
conclusive  evidence  of  the correctness of any such adjustment absent manifest
error.
     (f)     The  Company  shall not be required to issue fractions of shares of
Common Stock or other Capital Stock of the Company upon the conversion of Series
I Preferred Stock. If any fraction of a share of Capital Stock would be issuable
on  the  conversion of Series I Preferred Stock (or specified portions thereof),
the Company shall purchase such fraction for an amount in cash equal to the same
fraction  of  the Current Market Price of such share of Common Stock on the date
of  conversion  of  Series  I  Preferred  Stock.

     6.6     Taxes.  The  Company  will pay all stock transfer taxes (other than
             -----
taxes based upon income) and other governmental charges that may be imposed with
respect  to  the  issue or delivery of shares of Common Stock upon conversion of
shares of Series I Preferred Stock, excluding any tax or other charge imposed in
connection  with  any  transfer  involved in the issue and delivery of shares of
Common Stock in a name other than that in which the shares of Series I Preferred
Stock  so  converted  were  registered.

     6.7     Return.  All  shares  of  the  Series  I  Preferred Stock converted
             ------
pursuant  to  this Section 6, or otherwise acquired by the Company in any manner
whatsoever,  shall  be  returned  to  the  pool  of the Company's authorized but
unissued  shares  of undesignated preferred stock; and the Company may from time
to time take such appropriate corporate action as may be necessary to reduce the
number  of  authorized  shares  of  Series  I  Preferred  Stock  accordingly.

     6.8     Reserve.  The Company shall at all times reserve and keep available
             -------
out  of  its  authorized  but  unissued  shares  of Common Stock, solely for the
purpose of effecting the conversion of the Series I Preferred Stock, such number
of its shares of Common Stock as shall from time to time be sufficient to effect
the  conversion of all outstanding Series I Preferred Stock.  The Company shall,
from  time  to  time, subject to and in accordance with applicable law, increase
the  authorized  shares  of Common Stock if at any time the number of authorized
shares  of Common Stock remaining unissued shall not be sufficient to permit the
conversion  at  such  time  of  all  then  outstanding Series I Preferred Stock.

     6.9     Avoidance.  The  Company  shall  not  amend  this  Certificate  of
             ---------
Designation,  its  Articles  of Incorporation, its By-laws or participate in any
reorganization,  transfer  of


                                       12
<PAGE>
assets,  consolidation,  merger, dissolution, issue or sale of securities or any
other  voluntary  action  for  the  purpose  of avoiding or seeking to avoid the
observance or performance of any of the terms to be observed or performed by the
Company  pursuant to this Section 6, but shall at all times in good faith assist
in carrying out all such action as may be reasonably necessary or appropriate in
order  to  protect the rights of the holders of Series I Preferred Stock against
dilution  or  other  impairment  as  provided  herein.

                                    ARTICLE 7
                                  VOTING RIGHTS

     Except as otherwise provided by the Nevada Revised Statutes, each holder of
shares  of  Series  I  Preferred  Stock shall be entitled to the number of votes
equal to the number of shares of Common Stock into which such shares of Series I
Preferred  Stock  may  be  converted  at the record date for any vote, and shall
(except  as  otherwise  expressly  provided  herein  or as required by law) have
voting  rights  and  powers  equal to the voting rights and powers of the Common
Stock,  voting  together  with  the  Common Stock as a single class and shall be
entitled to notice of any shareholder's meeting in accordance with the bylaws of
the  Company.  Fractional  votes  shall  not,  however,  be  permitted  and  any
fractional voting rights resulting from the above formula (after aggregating all
shares  into which shares of Series I Preferred Stock held by each holder may be
converted)  shall  be  rounded  upward  to the nearest whole number.  Holders of
shares  of  Series  I  Preferred  Stock shall not have cumulative voting rights.

                                    ARTICLE 8
                                  MISCELLANEOUS

     8.1     Loss,  Theft,  Destruction  of  Preferred  Stock.  Upon  receipt of
             ------------------------------------------------
evidence  satisfactory  to  the  Company  of  the  loss,  theft,  destruction or
mutilation  of  a  certificate  or  certificates representing shares of Series I
Preferred  Stock  and,  in the case of any such loss, theft or destruction, upon
receipt  of indemnity or security reasonably satisfactory to the Company, or, in
the  case  of  any  such  mutilation,  upon  surrender  and cancellation of such
certificate(s), the Company shall make, issue and deliver, in lieu of such lost,
stolen,  destroyed  or mutilated certificate(s), new certificate(s) representing
shares  of  Series I Preferred Stock of like tenor. The Series I Preferred Stock
shall  be  held and owned upon the express condition that the provisions of this
Section  8.1  are  exclusive  with  respect  to  the  replacement  of mutilated,
destroyed,  lost  or  stolen certificate(s) and shall preclude any and all other
rights  and  remedies  notwithstanding  any law or statute existing or hereafter
enacted  to  the  contrary  with  respect  to  the  replacement  of  negotiable
instruments  or  other  securities  without  the  surrender  thereof.

     8.2     Who  Deemed  Absolute  Owner.  The  Company  may deem the Person in
             ----------------------------
whose  name  the  Series I Preferred Stock shall be registered upon the registry
books  of  the  Company  to  be,  and may treat it as, the absolute owner of the
Series  I  Preferred  Stock for the purpose of receiving payment of dividends on
the Series I Preferred Stock, for the conversion of the Series I Preferred Stock
and  for all other purposes, and the Company shall not be affected by any notice
to  the  contrary.  All  such  payments  and  such conversion shall be valid and
effectual  to  satisfy  and  discharge  the  liability  upon  the


                                       13
<PAGE>
Series  I  Preferred  Stock  to  the  extent  of  the sum or sums so paid or the
conversion  so  made.

     8.3     Permits,  Consents  and Approvals.  The Company will (a) obtain and
             ---------------------------------
keep  effective  any and all permits, consents and approvals of Federal or state
governmental  agencies  and  authorities  and make all filings under Federal and
state  securities  laws,  that  are  required in connection with the issuance of
Series  I  Preferred  Stock, the conversion of Series I Preferred Stock, and the
issuance  and delivery of the Conversion Shares issued upon conversion of Series
I  Preferred  Stock, and (b) have the Conversion Shares, upon their issuance and
eligibility  for listing, listed on each securities exchange on which the Common
Stock  are  then  listed.

     8.4     Subsequent  Transfer  Agent.      Promptly  upon the appointment of
             ----------------------------
any  subsequent  transfer  agent  of  the  Common Stock, or any other securities
issuable  upon  the  conversion  of  Series  I Preferred Stock, the Company will
deliver  to  the  holder  a statement setting forth the name and address of such
subsequent  transfer  agent.

     8.5     Withholding.  To the extent required by applicable law, the Company
             -----------
may  withhold  amounts for or on account of any taxes imposed or levied by or on
behalf of any taxing authority in the United States having jurisdiction over the
Company  from  any  payments  made  pursuant  to  the  Series I Preferred Stock.

     8.6     Amendments.  No  amendment, modification or waiver shall be binding
             ----------
or  effective  with respect to this Certificate of Designation without the prior
written  consent  of  the  holders of two-thirds of the Series I Preferred Stock
outstanding  at  the  time  such  action  is taken and provided, further that no
change in the terms hereof may be accomplished by merger or consolidation of the
Company  with  another corporation or entity unless the Company has obtained the
prior  written  consent  of  the holders of two-thirds of the Series I Preferred
Stock  then  outstanding.

     8.7      Headings.  The  headings  of  the  Articles  and  Sections of this
              --------
Certificate  of  Designation  are  inserted  for  convenience  only  and  do not
constitute  a  part  of  this  Certificate  of  Designation.

     8.8     Severability.  If any provision of this Certificate of Designation,
             ------------
or  the  application  thereof  to  any  person or entity or any circumstance, is
invalid  or  unenforceable,  (i)  a  suitable  and  equitable provision shall be
substituted  therefor  in  order  to  carry  out,  so  far  as  may be valid and
enforceable,  the intent and purpose of such invalid or unenforceable provision,
and (ii) the remainder of this Certificate of Designation and the application of
such provision to other persons, entities or circumstances shall not be affected
by  such  invalidity  or  unenforceability,  nor  shall  such  invalidity  or
unenforceability affect the validity or enforceability of such provision, or the
application  thereof,  in  any  other  jurisdiction.

     8.9     Notices.     All  notices  that are required or permitted hereunder
shall  be  in  writing  and shall be sufficient if personally delivered, sent by
facsimile  in  the  case of notice to the Company only, or sent by registered or
certified  mail  or  Federal  Express  or  other nationally recognized overnight
delivery  service.  Any  notices  shall  be  deemed


                                       14
<PAGE>
given  upon the earlier of the date when received at, the day when delivered via
facsimile  or  the third day after the date when sent by registered or certified
mail  or the day after the date when sent by Federal Express to, the address set
forth below, unless such address is changed by notice to the other party hereto:

     if to the Company:

     Baywood International, Inc.
     14950 North 83rd Place
     Suite 1
     Scottsdale, Arizona 85260
     Attention:  Chief Executive Officer
     Facsimile: (480) 483-2168

     if  to  the  holder:  As  set  forth  in  the  register  of  the  Company.

The  Company or the holder by notice to the other party may designate additional
or  different  addresses  as  shall  be  furnished  in  writing  by  such party.

                            [SIGNATURE PAGE FOLLOWS]


                                       15
<PAGE>
     IN  WITNESS WHEREOF, the Company has caused this Certificate of Designation
to  be  executed  by  its  duly  authorized  officers  as  of  March  30,  2007.


                                        BAYWOOD  INTERNATIONAL,  INC.


                                        By:  /s/ Neil Reithinger
                                             ------------------------------
                                             Name:  Neil Reithinger
                                             Title: President & C.E.O.


                                             BAYWOOD  ACQUISITION,  INC.


                                        By:  /s/ Neil Reithinger
                                             ------------------------------
                                             Name:  Neil Reithinger
                                             Title: President


                                       16
<PAGE>
ANNEX I

                           FORM OF CONVERSION NOTICE


TO:  Baywood  International,  Inc.
     14950  North  83rd  Place,  Suite  1
     Scottsdale,  Arizona  85260

     The  undersigned owner of Series I 8%Cumulative Convertible Preferred Stock
(the  "Series  I  Preferred  Stock")  issued by Baywood International, Inc. (the
"Company")  hereby irrevocably exercises its option to convert __________ shares
of  the  Series  I Preferred Stock into shares of common stock, par value $0.001
per  share  ("Common Stock"), of the Company in accordance with the terms of the
Certificate  of  Designation.  The  undersigned  hereby instructs the Company to
convert  the  number  of  shares of the Series I Preferred Stock specified above
[and  $ _________ in  accrued  and unpaid dividends] into shares of Common Stock
issued  upon  conversion  in  accordance with the provisions of Article 6 of the
Certificate  of  Designation.  The  undersigned  directs  that  the Common Stock
issuable  and  certificates  therefore  deliverable  upon  conversion  and  the
recertificated  Series  I  Preferred  Stock,  if  any, not being surrendered for
conversion  hereby,  together  with  any  check in payment for fractional Common
Stock  [or  payment of dividends], be issued in the name of and delivered to the
undersigned  unless  a  different  name has been indicated below. So long as the
Series  I Preferred Stock shall have been surrendered for conversion hereby, the
conversion pursuant hereto shall be deemed to have been effected at the date and
time specified below, and at such time the rights of the undersigned as a holder
of  the  Series I Preferred Stock shall cease and the Person or Persons in whose
name or names the Common Stock issued upon conversion shall be issuable shall be
deemed  to  have  become  the  holder  or holders of record of the Common Shares
represented  thereby  and  all  voting  and  other  rights  associated  with the
beneficial  ownership  of  such  Common Shares shall at such time vest with such
Person  or  Persons.

All  capitalized  terms used and not defined herein have the respective meanings
assigned  to  them  in  the  Certificate  of  Designation.


Date  and  time:___________________________


___________________________
       Signature

Fill  in  for  registration  of  Series  I  Preferred  Stock:


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

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

----------------------------------------
Please  print  name  and  address  (including  zip  code)


                                       17