ex10_11.htm


    
      

    

    Exhibit
      10.11

    BUSINESS
      LOAN AGREEMENT

    


    
      	
              Principal

            	
              Loan
                Date

            	
              Maturity

            	
              Loan
                No

            	
              Call
                / Coll

            	
              Account

            	
              Officer

            	
              Initials

            
	
              $2,000,000.00

            	
              07-09-2007

            	
              07-09-2009

            	
              8613586982

            	
              98

            	
              135869

            	
              601

            	 


    

    


    References
      in the shaded area are for Lender's use only and do not limit the applicability
      of this document to any particular loan or item.

     

    Any
      item
      above containing "***" has been omitted due to text length
      limitations.

    


    
      	
              Borrower:

            	
              Baywood
                International, Inc.

              Nutritional
                Specialties, Inc.

              14950
                North 83rd Place

              Scottsdale,
                AZ  85260

            	
              Lender:

            	
              Vineyard
                Bank, N.A.

              Anaheim
                Business Banking

              500
                North State College Boulevard, Suite 530

              Orange,
                CA  92868

            


    

    


    


    THIS
      BUSINESS LOAN AGREEMENT dated July 9, 2007, is made and executed between Baywood
      International, Inc.; and Nutritional Specialties, Inc. ("Borrower") and Vineyard
      Bank, N.A.  ("Lender") on the following terms and
      conditions.  Borrower has received prior commercial loans from Lender
      or has applied to Lender for a commercial loan or loans or other financial
      accommodations, including those which may be described on any exhibit or
      schedule attached to this Agreement ("Loan").  Borrower understands
      and agrees that:  (A)  in granting, renewing, or extending
      any Loan, Lender is relying upon Borrower's representations, warranties, and
      agreements as set forth in this Agreement;  (B)  the
      granting, renewing, or extending of any Loan by Lender at all times shall be
      subject to Lender's sole judgment and discretion;
      and  (C)  all such Loans shall be and remain subject to the
      terms and conditions of this Agreement.

    


    TERM.  This
      Agreement shall be effective as of July 9, 2007, and shall continue in full
      force and effect until such time as all of Borrower's Loans in favor of Lender
      have been paid in full, including principal, interest, costs, expenses,
      attorneys' fees, and other fees and charges, or until such time as the parties
      may agree in writing to terminate this Agreement.

    


    CONDITIONS
      PRECEDENT TO EACH ADVANCE.  Lender's obligation to make the
      initial Advance and each subsequent Advance under this Agreement shall be
      subject to the fulfillment to Lender's satisfaction of all of the conditions
      set
      forth in this Agreement and in the Related Documents.

    


    Loan
      Documents.  Borrower shall provide to Lender the following
      documents for the Loan:  (1)  the
      Note;  (2)  Security Agreements granting to Lender security
      interests in the Collateral;  (3)  financing statements and
      all other documents perfecting Lender's Security
      Interests;  (4)  evidence of insurance as required
      below;  (5)  guaranties;  (6)  together
      with all such Related Documents as Lender may require for the Loan; all in
      form
      and substance satisfactory to Lender and Lender's counsel.

    


    Borrower's
      Authorization.  Borrower shall have provided in form and
      substance satisfactory to Lender properly certified resolutions, duly
      authorizing the execution and delivery of this Agreement, the Note and the
      Related Documents.  In addition, Borrower shall have provided such
      other resolutions, authorizations, documents and instruments as Lender or its
      counsel, may require.

    


    Payment
      of Fees and Expenses.  Borrower shall have paid to Lender all
      fees, charges, and other expenses which are then due and payable as specified
      in
      this Agreement or any Related Document.

    


    Representations
      and Warranties.  The representations and warranties set forth
      in this Agreement, in the Related Documents, and in any document or certificate
      delivered to Lender under this Agreement are true and correct.

    


    No
      Event of Default.  There shall not exist at the time of any
      Advance a condition which would constitute an Event of Default under this
      Agreement or under any Related Document.

    


    MULTIPLE
      BORROWERS.  This Agreement has been executed by multiple
      obligors who are referred to in this Agreement individually, collectively and
      interchangeably as "Borrower."  Unless specifically stated to the
      contrary, the word "Borrower" as used in this Agreement, including without
      limitation all representations, warranties and covenants, shall include all
      Borrowers.  Borrower understands and agrees that, with or without
      notice to any one Borrower, Lender may  (A)  make one or
      more additional secured or unsecured loans or otherwise extend additional credit
      with respect to any other Borrower;  (B)  with respect to
      any other Borrower alter, compromise, renew, extend, accelerate, or otherwise
      change one or more times the time for payment or other terms of any
      indebtedness, including increases and decreases of the rate of interest on
      the
      indebtedness;  (C)  exchange, enforce, waive, subordinate,
      fail or decide not to perfect, and release any security, with or without the
      substitution of new collateral;  (D)  release, substitute,
      agree not to sue, or deal with any one or more of Borrower's or any other
      Borrower's sureties, endorsers, or other guarantors on any terms or in any
      manner Lender may choose;  (E)  determine how, when and what
      application of payments and credits shall be made on any
      indebtedness;  (F)  apply such security and direct the order
      or manner of sale of any Collateral, including without limitation, any
      non-judicial sale permitted by the terms of the controlling security agreement
      or deed of trust, as Lender in its discretion may
      determine;  (G)  sell, transfer, assign or grant
      participations in all or any part of the
      Loan;  (H)  exercise or refrain from exercising any rights
      against Borrower or others, or otherwise act or refrain from
      acting;  (I)  settle or compromise any indebtedness;
      and  (J)  subordinate the payment of all or any part of any
      of Borrower's indebtedness to Lender to the payment of any liabilities which
      may
      be due Lender or others.

    


    REPRESENTATIONS
      AND WARRANTIES.  Borrower represents and warrants to Lender,
      as of the date of this Agreement, as of the date of each disbursement of loan
      proceeds, as of the date of any renewal, extension or modification of any Loan,
      and at all times any Indebtedness exists:

    


    Organization.  Baywood
      International, Inc. is a corporation for profit which is, and at all times
      shall
      be, duly organized, validly existing, and in good standing under and by virtue
      of the laws of the State of Nevada.  Baywood International, Inc. is
      duly authorized to transact business in all other states in which Baywood
      International, Inc. is doing business, having obtained all necessary filings,
      governmental licenses and approvals for each state in which Baywood
      International, Inc. is doing business.  Specifically, Baywood
      International, Inc. is, and at all times shall be, duly qualified as a foreign
      corporation in all states in which the failure to so qualify would have a
      material adverse effect on its business or financial
      condition.  Baywood International, Inc. has the full power and
      authority to own its properties and to transact the business in which it is
      presently engaged or presently proposes to engage.  Baywood
      International, Inc. maintains an office at 14950 North 83rd Place, Scottsdale,
      AZ  85260.  Unless Baywood International, Inc. has
      designated otherwise in writing, the principal office is the office at which
      Baywood International, Inc. keeps its books and records including its records
      concerning the Collateral.  Baywood International, Inc. will notify
      Lender prior to any change in the location of Baywood International, Inc.'s
      state of organization or any change in Baywood International, Inc.'s
      name.  Baywood International, Inc. shall do all things necessary to
      preserve and to keep in full force and effect its existence, rights and
      privileges, and shall comply with all regulations, rules, ordinances, statutes,
      orders and decrees of any governmental or quasi-governmental authority or court
      applicable to Baywood International, Inc. and Baywood International, Inc.'s
      business activities.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    Nutritional
      Specialties, Inc. is a corporation for profit which is, and at all times shall
      be, duly organized, validly existing, and in good standing under and by virtue
      of the laws of the State of Nevada.  Nutritional Specialties, Inc. is
      duly authorized to transact business in all other states in which Nutritional
      Specialties, Inc. is doing business, having obtained all necessary filings,
      governmental licenses and approvals for each state in which Nutritional
      Specialties, Inc. is doing business.  Specifically, Nutritional
      Specialties, Inc. is, and at all times shall be, duly qualified as a foreign
      corporation in all states in which the failure to so qualify would have a
      material adverse effect on its business or financial
      condition.  Nutritional Specialties, Inc. has the full power and
      authority to own its properties and to transact the business in which it is
      presently engaged or presently proposes to engage.  Nutritional
      Specialties, Inc. maintains an office at 14950 North 83rd Place, Scottsdale,
      AZ  85260.  Unless Nutritional Specialties, Inc. has
      designated otherwise in writing, the principal office is the office at which
      Nutritional Specialties, Inc. keeps its books and records including its records
      concerning the Collateral.  Nutritional Specialties, Inc. will notify
      Lender prior to any change in the location of Nutritional Specialties, Inc.'s
      state of organization or any change in Nutritional Specialties, Inc.'s
      name.  Nutritional Specialties, Inc. shall do all things necessary to
      preserve and to keep in full force and effect its existence, rights and
      privileges, and shall comply with all regulations, rules, ordinances, statutes,
      orders and decrees of any governmental or quasi-governmental authority or court
      applicable to Nutritional Specialties, Inc. and Nutritional Specialties, Inc.'s
      business activities.

    


    Assumed
      Business Names.  Borrower has filed or recorded all documents
      or filings required by law relating to all assumed business names used by
      Borrower.  Excluding the name of Borrower, the following is a complete
      list of all assumed business names under which Borrower does
      business:

    


    
      	
              Borrower

            	 	
              Assumed
                Business Name

            	 	
              Filing
                Location

            	 	
              Date

            
	 	 	 	 	 	 	 
	
              Nutritional
                Specialties, Inc.

            	 	
              LIFETIME

            	 	
              Maricopa
                County

            	 	
              05-07-2007

            


    

    


    Authorization.  Borrower's
      execution, delivery, and performance of this Agreement and all the Related
      Documents have been duly authorized by all necessary action by Borrower and
      do
      not conflict with, result in a violation of, or constitute a default
      under  (1)  any provision
      of  (a)  Borrower's articles of incorporation or
      organization, or bylaws, or  (b)  any agreement or other
      instrument binding upon Borrower or  (2)  any law,
      governmental regulation, court decree, or order applicable to Borrower or to
      Borrower's properties.

    


    Financial
      Information.  Each of Borrower's financial statements
      supplied to Lender truly and completely disclosed Borrower's financial condition
      as of the date of the statement, and there has been no material adverse change
      in Borrower's financial condition subsequent to the date of the most recent
      financial statement supplied to Lender.  Borrower has no material
      contingent obligations except as disclosed in such financial
      statements.

    


    Legal
      Effect.  This Agreement constitutes, and any instrument or
      agreement Borrower is required to give under this Agreement when delivered will
      constitute legal, valid, and binding obligations of Borrower enforceable against
      Borrower in accordance with their respective terms.

    


    Properties.  Except
      as contemplated by this Agreement or as previously disclosed in Borrower's
      financial statements or in writing to Lender and as accepted by Lender, and
      except for property tax liens for taxes not presently due and payable, Borrower
      owns and has good title to all of Borrower's properties free and clear of all
      Security Interests, and has not executed any security documents or financing
      statements relating to such properties.  All of Borrower's properties
      are titled in Borrower's legal name, and Borrower has not used or filed a
      financing statement under any other name for at least the last five (5)
      years.

    


    Hazardous
      Substances.  Except as disclosed to and acknowledged by
      Lender in writing, Borrower represents and warrants
      that:  (1)  During the period of Borrower's ownership of the
      Collateral, there has been no use, generation, manufacture, storage, treatment,
      disposal, release or threatened release of any Hazardous Substance by any person
      on, under, about or from any of the
      Collateral.  (2)  Borrower has no knowledge of, or reason to
      believe that there has been  (a)  any breach or violation of
      any Environmental Laws;  (b)  any use, generation,
      manufacture, storage, treatment, disposal, release or threatened release of
      any
      Hazardous Substance on, under, about or from the Collateral by any prior owners
      or occupants of any of the Collateral; or  (c)  any actual
      or threatened litigation or claims of any kind by any person relating to such
      matters.  (3)  Neither Borrower nor any tenant, contractor,
      agent or other authorized user of any of the Collateral shall use, generate,
      manufacture, store, treat, dispose of or release any Hazardous Substance on,
      under, about or from any of the Collateral; and any such activity shall be
      conducted in compliance with all applicable federal, state, and local laws,
      regulations, and ordinances, including without limitation all Environmental
      Laws.  Borrower authorizes Lender and its agents to enter upon the
      Collateral to make such inspections and tests as Lender may deem appropriate
      to
      determine compliance of the Collateral with this section of the
      Agreement.  Any inspections or tests made by Lender shall be at
      Borrower's expense and for Lender's purposes only and shall not be construed
      to
      create any responsibility or liability on the part of Lender to Borrower or
      to
      any other person.  The representations and warranties contained herein
      are based on Borrower's due diligence in investigating the Collateral for
      hazardous waste and Hazardous Substances.  Borrower
      hereby  (1)  releases and waives any future claims against
      Lender for indemnity or contribution in the event Borrower becomes liable for
      cleanup or other costs under any such laws, and  (2)  agrees
      to indemnify, defend, and hold harmless Lender against any and all claims,
      losses, liabilities, damages, penalties, and expenses which Lender may directly
      or indirectly sustain or suffer resulting from a breach of this section of
      the
      Agreement or as a consequence of any use, generation, manufacture, storage,
      disposal, release or threatened release of a hazardous waste or substance on
      the
      Collateral.  The provisions of this section of the Agreement,
      including the obligation to indemnify and defend, shall survive the payment
      of
      the Indebtedness and the termination, expiration or satisfaction of this
      Agreement and shall not be affected by Lender's acquisition of any interest
      in
      any of the Collateral, whether by foreclosure or otherwise.

    


    Litigation
      and Claims.  No litigation, claim, investigation,
      administrative proceeding or similar action (including those for unpaid taxes)
      against Borrower is pending or threatened, and no other event has occurred
      which
      may materially adversely affect Borrower's financial condition or properties,
      other than litigation, claims, or other events, if any, that have been disclosed
      to and acknowledged by Lender in writing.

    


    Taxes.  To
      the best of Borrower's knowledge, all of Borrower's tax returns and reports
      that
      are or were required to be filed, have been filed, and all taxes, assessments
      and other governmental charges have been paid in full, except those presently
      being or to be contested by Borrower in good faith in the ordinary course of
      business and for which adequate reserves have been provided.

    


    Lien
      Priority.  Unless otherwise previously disclosed to Lender in
      writing, Borrower has not entered into or granted any Security Agreements,
      or
      permitted the filing or attachment of any Security Interests on or affecting
      any
      of the Collateral directly or indirectly securing repayment of Borrower's Loan
      and Note, that would be prior or that may in any way be superior to Lender's
      Security Interests and rights in and to such Collateral.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    Binding
      Effect.  This Agreement, the Note, all Security Agreements
      (if any), and all Related Documents are binding upon the signers thereof, as
      well as upon their successors, representatives and assigns, and are legally
      enforceable in accordance with their respective terms.

    


    AFFIRMATIVE
      COVENANTS.  Borrower covenants and agrees with Lender that,
      so long as this Agreement remains in effect, Borrower will:

    


    Notices
      of Claims and Litigation.  Promptly inform Lender in writing
      of  (1)  all material adverse changes in Borrower's
      financial condition, and  (2)  all existing and all
      threatened litigation, claims, investigations, administrative proceedings or
      similar actions affecting Borrower or any Guarantor which could materially
      affect the financial condition of Borrower or the financial condition of any
      Guarantor.

    


    Financial
      Records.  Maintain its books and records in accordance with
      GAAP, applied on a consistent basis, and permit Lender to examine and audit
      Borrower's books and records at all reasonable times.

    


    Financial
      Statements.  Furnish Lender with the following:

    


    Additional
      Requirements.

    


    Accounts
      Receivable Aging and Accounts Payable Aging. As soon as available, but
      in no event later than thirty (30) days after the end of each quarter, Borrower
      shall deliver to Lender a detailed aging, by total and by customer, of
      Borrower's Accounts of which shall be set forth in a form and shall contain
      such
      information as is acceptable to Lender.

    


    Guarantors'
      annual, signed and dated financial statement to be submitted as of June 30
      of
      each year end, self-prepared.

    


    Guarantors'
      annual tax returns, including all K-1 schedules to be submitted no later than
      thirty (30) days after filing, or in the case of extensions (copies also to
      be
      provided), no later than six (6) months after first filing due
      date.

    


    All
      financial reports required to be provided under this Agreement shall be prepared
      in accordance with GAAP, applied on a consistent basis, and certified by
      Borrower as being true and correct.

    


    Additional
      Information.  Furnish such additional information and
      statements, as Lender may request from time to time.

    


    Insurance.  Maintain
      fire and other risk insurance, public liability insurance, and such other
      insurance as Lender may require with respect to Borrower's properties and
      operations, in form, amounts, coverages and with insurance companies acceptable
      to Lender.  Borrower, upon request of Lender, will deliver to Lender
      from time to time the policies or certificates of insurance in form satisfactory
      to Lender, including stipulations that coverages will not be cancelled or
      diminished without at least ten (10) days prior written notice to
      Lender.  Each insurance policy also shall include an endorsement
      providing that coverage in favor of Lender will not be impaired in any way
      by
      any act, omission or default of Borrower or any other person.  In
      connection with all policies covering assets in which Lender holds or is offered
      a security interest for the Loans, Borrower will provide Lender with such
      lender's loss payable or other endorsements as Lender may require.

    


    Insurance
      Reports.  Furnish to Lender, upon request of Lender, reports
      on each existing insurance policy showing such information as Lender may
      reasonably request, including without limitation the
      following:  (1)  the name of the
      insurer;  (2)  the risks
      insured;  (3)  the amount of the
      policy;  (4)  the properties
      insured;  (5)  the then current property values on the basis
      of which insurance has been obtained, and the manner of determining those
      values; and  (6)  the expiration date of the
      policy.  In addition, upon request of Lender (however not more often
      than annually), Borrower will have an independent appraiser satisfactory to
      Lender determine, as applicable, the actual cash value or replacement cost
      of
      any Collateral.  The cost of such appraisal shall be paid by
      Borrower.

    


    Guaranties.  Prior
      to disbursement of any Loan proceeds, furnish executed guaranties of the Loans
      in favor of Lender, executed by the guarantor named below, on Lender's forms,
      and in the amount and under the conditions set forth in those
      guaranties.

    


    
      	
              Name
                of Guarantor

            	 	
              Amount

            	 
	 	 	 	 
	
              Orrie
                Lee Tawes, III

            	 	$	
              2,000,000.00

            	 


    

    


    Other
      Agreements.  Comply with all terms and conditions of all
      other agreements, whether now or hereafter existing, between Borrower and any
      other party and notify Lender immediately in writing of any default in
      connection with any other such agreements.

    


    Loan
      Proceeds.  Use all Loan proceeds solely for Borrower's
      business operations, unless specifically consented to the contrary by Lender
      in
      writing.

    


    Taxes,
      Charges and Liens.  Pay and discharge when due all of its
      indebtedness and obligations, including without limitation all assessments,
      taxes, governmental charges, levies and liens, of every kind and nature, imposed
      upon Borrower or its properties, income, or profits, prior to the date on which
      penalties would attach, and all lawful claims that, if unpaid, might become
      a
      lien or charge upon any of Borrower's properties, income, or
      profits.

    


    Performance.  Perform
      and comply, in a timely manner, with all terms, conditions, and provisions
      set
      forth in this Agreement, in the Related Documents, and in all other instruments
      and agreements between Borrower and Lender.  Borrower shall notify
      Lender immediately in writing of any default in connection with any
      agreement.

    


    Operations.  Maintain
      executive and management personnel with substantially the same qualifications
      and experience as the present executive and management personnel; provide
      written notice to Lender of any change in executive and management personnel;
      conduct its business affairs in a reasonable and prudent manner.

    


    Environmental
      Studies.  Promptly conduct and complete, at Borrower's
      expense, all such investigations, studies, samplings and testings as may be
      requested by Lender or any governmental authority relative to any substance,
      or
      any waste or by-product of any substance defined as toxic or a hazardous
      substance under applicable federal, state, or local law, rule, regulation,
      order
      or directive, at or affecting any property or any facility owned, leased or
      used
      by Borrower.

    


    Compliance
      with Governmental Requirements.  Comply with all laws,
      ordinances, and regulations, now or hereafter in effect, of all governmental
      authorities applicable to the conduct of Borrower's properties, businesses
      and
      operations, and to the use or occupancy of the Collateral, including without
      limitation, the Americans With Disabilities Act.  Borrower may contest
      in good faith any such law, ordinance, or regulation and withhold compliance
      during any proceeding, including appropriate appeals, so long as Borrower has
      notified Lender in writing prior to doing so and so long as, in Lender's sole
      opinion, Lender's interests in the Collateral are not
      jeopardized.  Lender may require Borrower to post adequate security or
      a surety bond, reasonably satisfactory to Lender, to protect Lender's
      interest.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    Inspection.  Permit
      employees or agents of Lender at any reasonable time to inspect any and all
      Collateral for the Loan or Loans and Borrower's other properties and to examine
      or audit Borrower's books, accounts, and records and to make copies and
      memoranda of Borrower's books, accounts, and records.  If Borrower now
      or at any time hereafter maintains any records (including without limitation
      computer generated records and computer software programs for the generation
      of
      such records) in the possession of a third party, Borrower, upon request of
      Lender, shall notify such party to permit Lender free access to such records
      at
      all reasonable times and to provide Lender with copies of any records it may
      request, all at Borrower's expense.

    


    Environmental
      Compliance and Reports.  Borrower shall comply in all
      respects with any and all Environmental Laws; not cause or permit to exist,
      as a
      result of an intentional or unintentional action or omission on Borrower's
      part
      or on the part of any third party, on property owned and/or occupied by
      Borrower, any environmental activity where damage may result to the environment,
      unless such environmental activity is pursuant to and in compliance with the
      conditions of a permit issued by the appropriate federal, state or local
      governmental authorities; shall furnish to Lender promptly and in any event
      within thirty (30) days after receipt thereof a copy of any notice, summons,
      lien, citation, directive, letter or other communication from any governmental
      agency or instrumentality concerning any intentional or unintentional action
      or
      omission on Borrower's part in connection with any environmental activity
      whether or not there is damage to the environment and/or other natural
      resources.

    


    Additional
      Assurances.  Make, execute and deliver to Lender such
      promissory notes, mortgages, deeds of trust, security agreements, assignments,
      financing statements, instruments, documents and other agreements as Lender
      or
      its attorneys may reasonably request to evidence and secure the Loans and to
      perfect all Security Interests.

    


    LENDER'S
      EXPENDITURES.  If any action or proceeding is commenced that
      would materially affect Lender's interest in the Collateral or if Borrower
      fails
      to comply with any provision of this Agreement or any Related Documents,
      including but not limited to Borrower's failure to discharge or pay when due
      any
      amounts Borrower is required to discharge or pay under this Agreement or any
      Related Documents, Lender on Borrower's behalf may (but shall not be obligated
      to) take any action that Lender deems appropriate, including but not limited
      to
      discharging or paying all taxes, liens, security interests, encumbrances and
      other claims, at any time levied or placed on any Collateral and paying all
      costs for insuring, maintaining and preserving any Collateral.  All
      such expenditures incurred or paid by Lender for such purposes will then bear
      interest at the rate charged under the Note from the date incurred or paid
      by
      Lender to the date of repayment by Borrower.  All such expenses will
      become a part of the Indebtedness and, at Lender's option,
      will  (A)  be payable on
      demand;  (B)  be added to the balance of the Note and be
      apportioned among and be payable with any installment payments to become due
      during either  (1)  the term of any applicable insurance
      policy; or  (2)  the remaining term of the Note;
      or  (C)  be treated as a balloon payment which will be due
      and payable at the Note's maturity.

    


    NEGATIVE
      COVENANTS.  Borrower covenants and agrees with Lender that
      while this Agreement is in effect, Borrower shall not, without the prior written
      consent of Lender:

    


    Indebtedness
      and Liens.  (1)  Except for trade debt incurred in
      the normal course of business and indebtedness to Lender contemplated by this
      Agreement, create, incur or assume indebtedness for borrowed money, including
      capital leases,  (2)  sell, transfer, mortgage, assign,
      pledge, lease, grant a security interest in, or encumber any of Borrower's
      assets (except as allowed as Permitted Liens), or  (3)  sell
      with recourse any of Borrower's accounts, except to Lender.

    


    Continuity
      of Operations.  (1)  Engage in any business
      activities substantially different than those in which Borrower is presently
      engaged,  (2)  cease operations, liquidate, merge, transfer,
      acquire or consolidate with any other entity, change its name, dissolve or
      transfer or sell Collateral out of the ordinary course of business,
      or  (3)  pay any dividends on Borrower's stock (other than
      dividends payable in its stock), provided, however that notwithstanding the
      foregoing, but only so long as no Event of Default has occurred and is
      continuing or would result from the payment of dividends, if Borrower is a
      "Subchapter S Corporation" (as defined in the Internal Revenue Code of 1986,
      as
      amended), Borrower may pay cash dividends on its stock to its shareholders
      from
      time to time in amounts necessary to enable the shareholders to pay income
      taxes
      and make estimated income tax payments to satisfy their liabilities under
      federal and state law which arise solely from their status as Shareholders
      of a
      Subchapter S Corporation because of their ownership of shares of Borrower's
      stock, or purchase or retire any of Borrower's outstanding shares or alter
      or
      amend Borrower's capital structure.

    


    Loans,
      Acquisitions and Guaranties.  (1)  Loan, invest in
      or advance money or assets to any other person, enterprise or
      entity,  (2)  purchase, create or acquire any interest in
      any other enterprise or entity, or  (3)  incur any
      obligation as surety or guarantor other than in the ordinary course of
      business.

    


    Agreements.  Borrower
      will not enter into any agreement containing any provisions which would be
      violated or breached by the performance of Borrower's obligations under this
      Agreement or in connection herewith.

    


    CESSATION
      OF ADVANCES.  If Lender has made any commitment to make any
      Loan to Borrower, whether under this Agreement or under any other agreement,
      Lender shall have no obligation to make Loan Advances or to disburse Loan
      proceeds if:  (A)  Borrower or any Guarantor is in default
      under the terms of this Agreement or any of the Related Documents or any other
      agreement that Borrower or any Guarantor has with
      Lender;  (B)  Borrower or any Guarantor dies, becomes
      incompetent or becomes insolvent, files a petition in bankruptcy or similar
      proceedings, or is adjudged a bankrupt;  (C)  there occurs a
      material adverse change in Borrower's financial condition, in the financial
      condition of any Guarantor, or in the value of any Collateral securing any
      Loan;
      or  (D)  any Guarantor seeks, claims or otherwise attempts
      to limit, modify or revoke such Guarantor's guaranty of the Loan or any other
      loan with Lender.

    


    RIGHT
      OF SETOFF.  To the extent permitted by applicable law, Lender
      reserves a right of setoff in all Borrower's accounts with Lender (whether
      checking, savings, or some other account).  This includes all accounts
      Borrower holds jointly with someone else and all accounts Borrower may open
      in
      the future.  However, this does not include any IRA or Keogh accounts,
      or any trust accounts for which setoff would be prohibited by
      law.  Borrower authorizes Lender, to the extent permitted by
      applicable law, to charge or setoff all sums owing on the Indebtedness against
      any and all such accounts.

    


    DEFAULT.  Each
      of the following shall constitute an Event of Default under this
      Agreement:

    


    Payment
      Default.  Borrower fails to make any payment when due under
      the Loan.

    


    Other
      Defaults.  Borrower fails to comply with or to perform any
      other term, obligation, covenant or condition contained in this Agreement or
      in
      any of the Related Documents or to comply with or to perform any term,
      obligation, covenant or condition contained in any other agreement between
      Lender and Borrower.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Default
      in Favor of Third Parties.  Borrower or any Grantor defaults
      under any loan, extension of credit, security agreement, purchase or sales
      agreement, or any other agreement, in favor of any other creditor or person
      that
      may materially affect any of Borrower's or any Grantor's property or Borrower's
      or any Grantor's ability to repay the Loans or perform their respective
      obligations under this Agreement or any of the Related
      Documents.


    False
      Statements.  Any warranty, representation or statement made
      or furnished to Lender by Borrower or on Borrower's behalf under this Agreement
      or the Related Documents is false or misleading in any material respect, either
      now or at the time made or furnished or becomes false or misleading at any
      time
      thereafter.

    


    Insolvency.  The
      dissolution or termination of Borrower's existence as a going business, the
      insolvency of Borrower, the appointment of a receiver for any part of Borrower's
      property, any assignment for the benefit of creditors, any type of creditor
      workout, or the commencement of any proceeding under any bankruptcy or
      insolvency laws by or against Borrower.

    


    Defective
      Collateralization.  This Agreement or any of the Related
      Documents ceases to be in full force and effect (including failure of any
      collateral document to create a valid and perfected security interest or lien)
      at any time and for any reason.

    


    Creditor
      or Forfeiture Proceedings.  Commencement of foreclosure or
      forfeiture proceedings, whether by judicial proceeding, self-help, repossession
      or any other method, by any creditor of Borrower or by any governmental agency
      against any collateral securing the Loan.  This includes a garnishment
      of any of Borrower's accounts, including deposit accounts, with
      Lender.  However, this Event of Default shall not apply if there is a
      good faith dispute by Borrower as to the validity or reasonableness of the
      claim
      which is the basis of the creditor or forfeiture proceeding and if Borrower
      gives Lender written notice of the creditor or forfeiture proceeding and
      deposits with Lender monies or a surety bond for the creditor or forfeiture
      proceeding, in an amount determined by Lender, in its sole discretion, as being
      an adequate reserve or bond for the dispute.

    


    Events
      Affecting Guarantor.  Any of the preceding events occurs with
      respect to any Guarantor of any of the Indebtedness or any Guarantor dies or
      becomes incompetent, or revokes or disputes the validity of, or liability under,
      any Guaranty of the Indebtedness.  In the event of a death, Lender, at
      its option, may, but shall not be required to, permit the Guarantor's estate
      to
      assume unconditionally the obligations arising under the guaranty in a manner
      satisfactory to Lender, and, in doing so, cure any Event of
      Default.

    


    Change
      in Ownership.  Any change in ownership of twenty-five percent
      (25%) or more of the common stock of Borrower.

    


    Adverse
      Change.  A material adverse change occurs in Borrower's
      financial condition, or Lender believes the prospect of payment or performance
      of the Loan is impaired.

    


    Right
      to Cure.  If any default, other than a default on
      Indebtedness, is curable and if Borrower or Grantor, as the case may be, has
      not
      been given a notice of a similar default within the preceding twelve (12)
      months, it may be cured if Borrower or Grantor, as the case may be, after
      receiving written notice from Lender demanding cure of such
      default:  (1)  cure the default within fifteen (15) days;
      or  (2)  if the cure requires more than fifteen (15) days,
      immediately initiate steps which Lender deems in Lender's sole discretion to
      be
      sufficient to cure the default and thereafter continue and complete all
      reasonable and necessary steps sufficient to produce compliance as soon as
      reasonably practical.

    


    EFFECT
      OF AN EVENT OF DEFAULT.  If any Event of Default shall occur,
      except where otherwise provided in this Agreement or the Related Documents,
      all
      commitments and obligations of Lender under this Agreement or the Related
      Documents or any other agreement immediately will terminate (including any
      obligation to make further Loan Advances or disbursements), and, at Lender's
      option, all Indebtedness immediately will become due and payable, all without
      notice of any kind to Borrower, except that in the case of an Event of Default
      of the type described in the "Insolvency" subsection above, such acceleration
      shall be automatic and not optional.  In addition, Lender shall have
      all the rights and remedies provided in the Related Documents or available
      at
      law, in equity, or otherwise.  Except as may be prohibited by
      applicable law, all of Lender's rights and remedies shall be cumulative and
      may
      be exercised singularly or concurrently.  Election by Lender to pursue
      any remedy shall not exclude pursuit of any other remedy, and an election to
      make expenditures or to take action to perform an obligation of Borrower or
      of
      any Grantor shall not affect Lender's right to declare a default and to exercise
      its rights and remedies.

    


    BORROWER'S
      CONSENT TO USE PHOTOGRAPHS. Borrower irrevocably grants to Lender the
      right to create, distribute, transmit, publish, copy or otherwise exploit,
      either in print, electronic, digital or in any other medium now known or later
      discovered, photographs, images, illustrations, graphics or other
      representations or depictions of the Property (collectively "the Photographs"),
      for advertising, publicity, marketing or other promotional purposes of
      Lender.  Borrower understands and agrees that Lender may use and
      exploit the Photographs without identifying the Property as their subject or
      the
      Borrower as the owner or the developer of the Property. Borrower releases and
      discharges Lender and its agents, representatives, and assignees from any claim
      or cause of action, now known or later discovered, for, among other things,
      right of publicity, arising out of the use and exploitation of the
      Photographs.

    


    MISCELLANEOUS
      PROVISIONS.  The following miscellaneous provisions are a
      part of this Agreement:

    


    Amendments.  This
      Agreement, together with any Related Documents, constitutes the entire
      understanding and agreement of the parties as to the matters set forth in this
      Agreement.  No alteration of or amendment to this Agreement shall be
      effective unless given in writing and signed by the party or parties sought
      to
      be charged or bound by the alteration or amendment.

    


    Arbitration.Lender
      and Borrower agree that all disputes, claims and controversies between them
      whether individual, joint, or class in nature, arising from this Agreement
      or
      otherwise, including without limitation contract and tort disputes, shall be
      arbitrated pursuant to the financial services rules of Endispute, Inc., d/b/a
      J.A.M.S./ENDISPUTE or its successor in effect at the time the claim is filed,
      upon request of either party.  No act to take or dispose of any
      Collateral shall constitute a waiver of this arbitration agreement or be
      prohibited by this arbitration agreement.  This includes, without
      limitation, obtaining injunctive relief or a temporary restraining order;
      invoking a power of sale under any deed of trust or mortgage; obtaining a writ
      of attachment or imposition of a receiver; or exercising any rights relating
      to
      personal property, including taking or disposing of such property with or
      without judicial process pursuant Article 9 of the Uniform Commercial
      Code.  Any disputes, claims, or controversies concerning the
      lawfulness or reasonableness of any act, or exercise of any right, concerning
      any Collateral, including any claim to rescind, reform, or otherwise modify
      any
      agreement relating to the Collateral, shall also be arbitrated, provided however
      that no arbitrator shall have the right or the power to enjoin or restrain
      any
      act of any party.  Borrower and Lender agree that in the event of an
      action for judicial foreclosure pursuant to California Code of Civil Procedure
      Section 726, or any similar provision in any other state, the commencement
      of
      such an action will not constitute a waiver of the right to arbitrate and the
      court shall refer to arbitration as much of such action, including
      counterclaims, as lawfully may be referred to arbitration.  Judgment
      upon any award rendered by any arbitrator may be entered in any court having
      jurisdiction.  Nothing in this Agreement shall preclude any party from
      seeking equitable relief from a court of competent jurisdiction.  The
      statute of limitations, estoppel, waiver, laches, and similar doctrines which
      would otherwise be applicable in an action brought by a party shall be
      applicable in any arbitration proceeding, and the commencement of an arbitration
      proceeding shall be deemed the commencement of an action for these
      purposes.  The Federal Arbitration Act shall apply to the
      construction, interpretation, and enforcement of this arbitration
      provision.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    Attorneys'
      Fees; Expenses.  Borrower agrees to pay upon demand all of
      Lender's costs and expenses, including Lender's attorneys' fees and Lender's
      legal expenses, incurred in connection with the enforcement of this
      Agreement.  Lender may hire or pay someone else to help enforce this
      Agreement, and Borrower shall pay the costs and expenses of such
      enforcement.  Costs and expenses include Lender's attorneys' fees and
      legal expenses whether or not there is a lawsuit, including attorneys' fees
      and
      legal expenses for bankruptcy proceedings (including efforts to modify or vacate
      any automatic stay or injunction), appeals, and any anticipated post-judgment
      collection services.  Borrower also shall pay all court costs and such
      additional fees as may be directed by the court.

    


    Caption
      Headings.  Caption headings in this Agreement are for
      convenience purposes only and are not to be used to interpret or define the
      provisions of this Agreement.

    


    Consent
      to Loan Participation.  Borrower agrees and consents to
      Lender's sale or transfer, whether now or later, of one or more participation
      interests in the Loan to one or more purchasers, whether related or unrelated
      to
      Lender.  Lender may provide, without any limitation whatsoever, to any
      one or more purchasers, or potential purchasers, any information or knowledge
      Lender may have about Borrower or about any other matter relating to the Loan,
      and Borrower hereby waives any rights to privacy Borrower may have with respect
      to such matters.  Borrower additionally waives any and all notices of
      sale of participation interests, as well as all notices of any repurchase of
      such participation interests.  Borrower also agrees that the
      purchasers of any such participation interests will be considered as the
      absolute owners of such interests in the Loan and will have all the rights
      granted under the participation agreement or agreements governing the sale
      of
      such participation interests.  Borrower further waives all rights of
      offset or counterclaim that it may have now or later against Lender or against
      any purchaser of such a participation interest and unconditionally agrees that
      either Lender or such purchaser may enforce Borrower's obligation under the
      Loan
      irrespective of the failure or insolvency of any holder of any interest in
      the
      Loan.  Borrower further agrees that the purchaser of any such
      participation interests may enforce its interests irrespective of any personal
      claims or defenses that Borrower may have against Lender.

    


    Governing
      Law.  This Agreement will be governed by federal law applicable to
      Lender and, to the extent not preempted by federal law, the laws of the State
      of
      California without regard to its conflicts of law provisions.  This
      Agreement has been accepted by Lender in the State of
      California.

    


    Joint
      and Several Liability.  All obligations of Borrower under
      this Agreement shall be joint and several, and all references to Borrower shall
      mean each and every Borrower.  This means that each Borrower signing
      below is responsible for all obligations in this Agreement.  Where any
      one or more of the parties is a corporation, partnership, limited liability
      company or similar entity, it is not necessary for Lender to inquire into the
      powers of any of the officers, directors, partners, members, or other agents
      acting or purporting to act on the entity's behalf, and any obligations made
      or
      created in reliance upon the professed exercise of such powers shall be
      guaranteed under this Agreement.

    


    No
      Waiver by Lender.  Lender shall not be deemed to have waived
      any rights under this Agreement unless such waiver is given in writing and
      signed by Lender.  No delay or omission on the part of Lender in
      exercising any right shall operate as a waiver of such right or any other
      right.  A waiver by Lender of a provision of this Agreement shall not
      prejudice or constitute a waiver of Lender's right otherwise to demand strict
      compliance with that provision or any other provision of this
      Agreement.  No prior waiver by Lender, nor any course of dealing
      between Lender and Borrower, or between Lender and any Grantor, shall constitute
      a waiver of any of Lender's rights or of any of Borrower's or any Grantor's
      obligations as to any future transactions.  Whenever the consent of
      Lender is required under this Agreement, the granting of such consent by Lender
      in any instance shall not constitute continuing consent to subsequent instances
      where such consent is required and in all cases such consent may be granted
      or
      withheld in the sole discretion of Lender.

    


    Notices.  Any
      notice required to be given under this Agreement shall be given in writing,
      and
      shall be effective when actually delivered, when actually received by
      telefacsimile (unless otherwise required by law), when deposited with a
      nationally recognized overnight courier, or, if mailed, when deposited in the
      United States mail, as first class, certified or registered mail postage
      prepaid, directed to the addresses shown near the beginning of this
      Agreement.  Any party may change its address for notices under this
      Agreement by giving formal written notice to the other parties, specifying
      that
      the purpose of the notice is to change the party's address.  For
      notice purposes, Borrower agrees to keep Lender informed at all times of
      Borrower's current address.  Unless otherwise provided or required by
      law, if there is more than one Borrower, any notice given by Lender to any
      Borrower is deemed to be notice given to all Borrowers.

    


    Severability.  If
      a court of competent jurisdiction finds any provision of this Agreement to
      be
      illegal, invalid, or unenforceable as to any person or circumstance, that
      finding shall not make the offending provision illegal, invalid, or
      unenforceable as to any other person or circumstance.  If feasible,
      the offending provision shall be considered modified so that it becomes legal,
      valid and enforceable.  If the offending provision cannot be so
      modified, it shall be considered deleted from this Agreement.  Unless
      otherwise required by law, the illegality, invalidity, or unenforceability
      of
      any provision of this Agreement shall not affect the legality, validity or
      enforceability of any other provision of this Agreement.

    


    Subsidiaries
      and Affiliates of Borrower.  To the extent the context of any
      provisions of this Agreement makes it appropriate, including without limitation
      any representation, warranty or covenant, the word "Borrower" as used in this
      Agreement shall include all of Borrower's subsidiaries and
      affiliates.  Notwithstanding the foregoing however, under no
      circumstances shall this Agreement be construed to require Lender to make any
      Loan or other financial accommodation to any of Borrower's subsidiaries or
      affiliates.

    


    Successors
      and Assigns.  All covenants and agreements by or on behalf of
      Borrower contained in this Agreement or any Related Documents shall bind
      Borrower's successors and assigns and shall inure to the benefit of Lender
      and
      its successors and assigns.  Borrower shall not, however, have the
      right to assign Borrower's rights under this Agreement or any interest therein,
      without the prior written consent of Lender.

    


    Survival
      of Representations and Warranties.  Borrower understands and
      agrees that in making the Loan, Lender is relying on all representations,
      warranties, and covenants made by Borrower in this Agreement or in any
      certificate or other instrument delivered by Borrower to Lender under this
      Agreement or the Related Documents.  Borrower further agrees that
      regardless of any investigation made by Lender, all such representations,
      warranties and covenants will survive the making of the Loan and delivery to
      Lender of the Related Documents, shall be continuing in nature, and shall remain
      in full force and effect until such time as Borrower's Indebtedness shall be
      paid in full, or until this Agreement shall be terminated in the manner provided
      above, whichever is the last to occur.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    Time
      is of the Essence.  Time is of the essence in the performance
      of this Agreement.

    


    DEFINITIONS.  The
      following capitalized words and terms shall have the following meanings when
      used in this Agreement.  Unless specifically stated to the contrary,
      all references to dollar amounts shall mean amounts in lawful money of the
      United States of America.  Words and terms used in the singular shall
      include the plural, and the plural shall include the singular, as the context
      may require.  Words and terms not otherwise defined in this Agreement
      shall have the meanings attributed to such terms in the Uniform Commercial
      Code.  Accounting words and terms not otherwise defined in this
      Agreement shall have the meanings assigned to them in accordance with generally
      accepted accounting principles as in effect on the date of this
      Agreement:

    


    Advance.  The
      word "Advance" means a disbursement of Loan funds made, or to be made, to
      Borrower or on Borrower's behalf on a line of credit or multiple advance basis
      under the terms and conditions of this Agreement.

    


    Agreement.  The
      word "Agreement" means this Business Loan Agreement, as this Business Loan
      Agreement may be amended or modified from time to time, together with all
      exhibits and schedules attached to this Business Loan Agreement from time to
      time.

    


    Borrower.  The
      word "Borrower" means Baywood International, Inc.; and Nutritional Specialties,
      Inc. and includes all co-signers and co-makers signing the Note and all their
      successors and assigns.

    


    Collateral.  The
      word "Collateral" means all property and assets granted as collateral security
      for a Loan, whether real or personal property, whether granted directly or
      indirectly, whether granted now or in the future, and whether granted in the
      form of a security interest, mortgage, collateral mortgage, deed of trust,
      assignment, pledge, crop pledge, chattel mortgage, collateral chattel mortgage,
      chattel trust, factor's lien, equipment trust, conditional sale, trust receipt,
      lien, charge, lien or title retention contract, lease or consignment intended
      as
      a security device, or any other security or lien interest whatsoever, whether
      created by law, contract, or otherwise.

    


    Environmental
      Laws.  The words "Environmental Laws" mean any and all state,
      federal and local statutes, regulations and ordinances relating to the
      protection of human health or the environment, including without limitation
      the
      Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
      as amended, 42 U.S.C. Section 9601, et seq. ("CERCLA"), the Superfund Amendments
      and Reauthorization Act of 1986, Pub. L. No. 99-499 ("SARA"), the Hazardous
      Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource
      Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., Chapters 6.5
      through 7.7 of Division 20 of the California Health and Safety Code, Section
      25100, et seq., or other applicable state or federal laws, rules, or regulations
      adopted pursuant thereto.

    


    Event
      of Default.  The words "Event of Default" mean any of the
      events of default set forth in this Agreement in the default section of this
      Agreement.

    


    GAAP.  The
      word "GAAP" means generally accepted accounting principles.

    


    Grantor.  The
      word "Grantor" means each and all of the persons or entities granting a Security
      Interest in any Collateral for the Loan, including without limitation all
      Borrowers granting such a Security Interest.

    


    Guarantor.  The
      word "Guarantor" means any guarantor, surety, or accommodation party of any
      or
      all of the Loan.

    


    Guaranty.  The
      word "Guaranty" means the guaranty from Guarantor to Lender, including without
      limitation a guaranty of all or part of the Note.

    


    Hazardous
      Substances.  The words "Hazardous Substances" mean materials
      that, because of their quantity, concentration or physical, chemical or
      infectious characteristics, may cause or pose a present or potential hazard
      to
      human health or the environment when improperly used, treated, stored, disposed
      of, generated, manufactured, transported or otherwise handled.  The
      words "Hazardous Substances" are used in their very broadest sense and include
      without limitation any and all hazardous or toxic substances, materials or
      waste
      as defined by or listed under the Environmental Laws.  The term
      "Hazardous Substances" also includes, without limitation, petroleum and
      petroleum by-products or any fraction thereof and asbestos.

    


    Indebtedness.  The
      word "Indebtedness" means the indebtedness evidenced by the Note or Related
      Documents, including all principal and interest together with all other
      indebtedness and costs and expenses for which Borrower is responsible under
      this
      Agreement or under any of the Related Documents.

    


    Lender.  The
      word "Lender" means Vineyard Bank, N.A., its successors and
      assigns.

    


    Loan.  The
      word "Loan" means any and all loans and financial accommodations from Lender
      to
      Borrower whether now or hereafter existing, and however evidenced, including
      without limitation those loans and financial accommodations described herein
      or
      described on any exhibit or schedule attached to this Agreement from time to
      time.

    


    Note.  The
      word "Note" means the Note executed by Baywood International, Inc.; and
      Nutritional Specialties, Inc. in the principal amount of $2,000,000.00 dated
      July 9, 2007, together with all renewals of, extensions of, modifications of,
      refinancings of, consolidations of, and substitutions for the note or credit
      agreement.

    


    Permitted
      Liens.  The words "Permitted Liens"
      mean  (1)  liens and security interests securing
      Indebtedness owed by Borrower to Lender;  (2)  liens for
      taxes, assessments, or similar charges either not yet due or being contested
      in
      good faith;  (3)  liens of materialmen, mechanics,
      warehousemen, or carriers, or other like liens arising in the ordinary course
      of
      business and securing obligations which are not yet
      delinquent;  (4)  purchase money liens or purchase money
      security interests upon or in any property acquired or held by Borrower in
      the
      ordinary course of business to secure indebtedness outstanding on the date
      of
      this Agreement or permitted to be incurred under the paragraph of this Agreement
      titled "Indebtedness and Liens";  (5)  liens and security
      interests which, as of the date of this Agreement, have been disclosed to and
      approved by the Lender in writing; and  (6)  those liens and
      security interests which in the aggregate constitute an immaterial and
      insignificant monetary amount with respect to the net value of Borrower's
      assets.

    


    Related
      Documents.  The words "Related Documents" mean all promissory
      notes, credit agreements, loan agreements, environmental agreements, guaranties,
      security agreements, mortgages, deeds of trust, security deeds, collateral
      mortgages, and all other instruments, agreements and documents, whether now
      or
      hereafter existing, executed in connection with the Loan.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    Security
      Agreement.  The words "Security Agreement" mean and include
      without limitation any agreements, promises, covenants, arrangements,
      understandings or other agreements, whether created by law, contract, or
      otherwise, evidencing, governing, representing, or creating a Security
      Interest.

    


    Security
      Interest.  The words "Security Interest" mean, without
      limitation, any and all types of collateral security, present and future,
      whether in the form of a lien, charge, encumbrance, mortgage, deed of trust,
      security deed, assignment, pledge, crop pledge, chattel mortgage, collateral
      chattel mortgage, chattel trust, factor's lien, equipment trust, conditional
      sale, trust receipt, lien or title retention contract, lease or consignment
      intended as a security device, or any other security or lien interest whatsoever
      whether created by law, contract, or otherwise.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    BORROWER
      ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN AGREEMENT
      AND
      BORROWER AGREES TO ITS TERMS.  THIS BUSINESS LOAN AGREEMENT IS DATED
      JULY 9, 2007.

    


    
      	
              BORROWER:

            	 
	 	 	 
	 	 	 
	
              BAYWOOD
                INTERNATIONAL, INC.

            	 
	 	 	 
	
              By:

            	
              /s/
                Neil Reithinger

            	 
	
              Neil
                Reithinger, President of Baywood International,
                Inc.

            	 
	 	 	 
	 	 	 
	
              NUTRITIONAL
                SPECIALTIES, INC.

            	 
	 	 	 
	
              By:

            	
              /s/
                Neil Reithinger

            	 
	
              Neil
                Reithinger, President of Nutritional Specialties,
                Inc.

            	 
	 	 
	 	 
	
              LENDER:

            	 
	 	 
	 	 	 
	
              VINEYARD
                BANK, N.A.

            	 
	 	 	 
	
              By:

            	
              /s/
                Laura Green

            	 
	
              Authorized
                Signer