ex4_27.htm


    
      

    

    Exhibit
      4.27

    


    Northeast
      Securities, Inc.

    100
      Wall Street, 8th
      Floor

    New
      York, NY 10005

    


    


    
      	 	
              As
                of March 12, 2007

            


    

    


    


    Baywood
      International, Inc.

    14950
      North 83rd
      Place

    Suite
      I

    Scottsdale,
      AZ 85260

    Attention:  President

    


    Ladies
      and Gentlemen:

    


    Reference
      is made to the Engagement Letter (the “Engagement Letter”) dated
      September 7, 2006 between Baywood International, Inc. (the “Company”) and
      Northeast Securities, Inc. (“NESC”) in which the Company has engaged NESC
      on an exclusive basis in connection with the purchase and sale of securities
      of
      the Company on a “best efforts” basis to accredited investors, as the term
“accredited investors” is defined in the Securities Act of 1933, as amended (the
“Act”), and the rules and regulations thereunder, all as further set
      forth in the Engagement Letter.  The Company proposes to complete an
      offering (the “Offering”) to purchase a minimum of 100 units (each a
“Unit”) and a maximum of 150 Units, each Unit having a purchase price
      of
      $50,000 and consisting of (i) 5,000 shares of Series I 8% Convertible Preferred
      Stock and (ii) a warrant to purchase 250,000 shares of Common Stock at an
      exercise price of $.02 per share, all as described in the Amended and Restated
      Confidential Private Placement Memorandum dated March 12, 2007 (the
“PPM”) and a Subscription Agreement (the “Subscription Agreement”)
      between the Company and each of the investors in the Offering, and various
      other
      transaction documents, in which NESC will act as placement agent.

    


    Pursuant
      to this letter agreement (the “Agreement”), the Company confirms and
      makes certain representations, warranties, agreements and covenants to and
      for
      the benefit of NESC as follows:

    


    
      	
              1.

            	
              The
                Company and NESC confirm that the terms of the Engagement Letter
                shall
                remain in full force and effect.  In connection therewith, the
                Company hereby confirms its representations, warranties, agreements
                and
                covenants contained therein, including, without limitation, its
                obligations to indemnify and hold harmless NESC as set forth in Exhibit
                A
                to the Engagement Letter.  In the event of any conflict between
                this letter agreement and the Engagement Letter, the terms of the
                Engagement Letter shall be binding and shall supersede the terms
                of this
                letter agreement.

            


    

    


    
      	
              2.

            	
              In
                each Subscription Agreement the Company makes to such investors certain
                representations, warranties, agreements and covenants.  Without
                limiting the Company’s obligations to NESC under the Engagement Letter,
                the Company hereby (i) makes to NESC those representations, warranties,
                agreements and covenants contained in Sections C.II (the “Company
                Representations”)  and D.I (the “Company Covenants”)
                of each Subscription Agreement and (ii) confirms that NESC shall
                receive
                the benefits of and be entitled to rely upon such representations,
                warranties, covenants and agreements, as well as those representations
                and
                warranties made by investors in Section C.I and D.II of the Subscription
                Agreement.

            


    


    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    


    
      	
              3.

            	
              The
                Company understands that NESC shall not have any obligation or
                responsibility to verify (i) the accuracy or completeness of any
                information contained in the PPM or any of the documents incorporated
                by
                reference therein or of any Subscription Agreement or any other documents
                or agreements provided by investors in the Offering or (ii) the
                authenticity, sufficiency or validity of any check or other payment
                made
                by such investors in the Offering.

            


    

    


    
      	
              4.

            	
              NESC’s
                obligations pursuant to the Engagement Letter shall be subject, in
                its
                discretion, to (i) the continuing accuracy of the Company Representations
                contained in the Subscription Agreement and in each certificate and
                document contemplated hereunder to be delivered to NESC or otherwise
                at
                the Closing (as defined below) (including, without limitation, all
                documents contemplated to be delivered by the Company as set forth
                in each
                Subscription Agreement (the “Subscription Documents”), as of
                the  closing of the Offering (the “Closing”; the date of
                such Closing being referred to herein as the “Closing Date”), (ii) the
                performance by the Company of its obligations hereunder, and (iii)
                the
                following conditions precedent:

            


    

    


    (a)           At
      the Closing, NESC shall have received the favorable opinion of Meltzer, Lippe,
      Goldstein & Breitstone, LLP, counsel for the Company, substantially in the
      form attached hereto as Exhibit A;

    


    (b)           At
      the  Closing, (i) at least 100 Units shall have been subscribed for
      and accepted by the Company, and Vineyard Bank, N.A., escrow agent for the
      Company in connection with the Offering (the “Escrow Agent”), shall be in
      receipt of subscription proceeds of at least $5,000,000 million, and (ii) the
      Closing shall occur simultaneously with the consummation by the Company of
      the
      purchase of all of the assets of Nutritional Specialties, Inc. (the “Lifetime
      Acquisition”);

    


    (c)           Promptly
      following the Closing, the Company shall have transmitted to the Securities
      and
      Exchange Commission a preliminary  information statement (the
“Information Statement”) pursuant to Rule 14C of the Securities and
      Exchange Act of 1934, as amended (the “Exchange Act”), in connection with
      stockholder approval of the amendment of the Company’s articles of incorporation
      to, among other things, (i) increase the number of shares of Common Stock from
      200,000,000 to 500,000,000, (ii) reduce the par value of the Company’s preferred
      stock from $1.00 per share to $.001 per share and (iii) fix the number of
      directors constituting the Company’s board of directors (the “Board”) at five
      for a three-year period;

    


    (d)           Simultaneously
      with the Closing, NESC, the Company and certain of the Company’s stockholders
      shall enter into a three-year voting agreement substantially in the form
      attached hereto as Exhibit B, whereby each such stockholder agrees to
      vote his, her or its stock in favor of (2) two persons designated by NESC to
      be
      members of the Board;

    


    (e)           On
      or prior to the Closing, NESC shall have been furnished such information,
      documents and certificates as it may reasonably require for the purpose of
      enabling it to review the matters referred to in this Section 4 and in order
      to
      evidence the accuracy, completeness or satisfaction of any of the
      representations, warranties, covenants, agreements or conditions herein
      contained, or as it may otherwise reasonably request;

    


    (f)           At
      the Closing, NESC shall have received a certificate of the chief executive
      officer of the Company, dated as of the Closing Date, to the effect that, as
      of
      the date thereof, the Company Representations were accurate, and that, as of
      such date, the obligations to be performed by the Company hereunder on or prior
      thereto have been fully performed in all material respects;


    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    


    (g)           At
      the Closing, NESC shall have received a Certificate of Good Standing or
      comparable certificate as to the Company, certified as of a recent date prior
      to
      the Closing Date by the Secretary of State of the Company’s state of
      incorporation;

    


    (h)           At
      the Closing, NESC shall have received a customary certificate of the Secretary
      of the Company, dated as of the Closing Date, in form and substance reasonably
      satisfactory to NESC and its counsel;

    


    (i)           All
      proceedings taken in connection with the issuance, sale and delivery of the
      Units and the Placement Agent Warrants (as defined in the PPM) shall be
      reasonably satisfactory in form and substance to NESC and its counsel, including
      without limitation execution and delivery of the various Transaction Documents
      (as defined in the Subscription Agreement), as well as the Placement Agent
      Warrant, by each of the parties thereto;

    


    (j)           At
      the Closing, the Company shall execute and deliver a “Joint Disbursement Letter”
in substantially the form attached hereto as Exhibit C, which letter
      shall be countersigned by NESC as set forth thereon and submitted to the Escrow
      Agent in connection with the disbursement of subscription proceeds;

    


    (k)           On
      or prior to the Closing, the Company shall have obtained a $5 million “key-man”
insurance policy with respect to the life of Thomas Pinkowski at the Company’s
      sole expense and with the Company as the sole beneficiary thereof;
      and

    


    (l)           Any
      certificate or other document signed by any officer of the Company and delivered
      to NESC and its counsel as required hereunder shall be deemed a representation
      and warranty by the Company hereunder as to the statements made
      therein.  If any conditions to NESC’s obligations hereunder have not
      been fulfilled as and when required to be so fulfilled, NESC may terminate
      the
      Engagement Letter or, if NESC so elects, in writing waive any such conditions
      that have not been fulfilled or extend the time for their
      fulfillment.  In the event that NESC elects to terminate the
      Engagement Letter, NESC shall notify the Company of such election in
      writing.  Upon such termination, neither party shall have any further
      liability nor obligation to the other except as otherwise provided in the
      Engagement Letter.

    


    
      	
              5.

            	
              The
                Company covenants to and agrees with NESC that it
                shall:

            


    

    


    (a)           Notify
      NESC as soon as practicable, and confirm such notice promptly in writing: (i)
      when any event shall have occurred during the period commencing on the date
      hereof and ending on the Closing Date as a result of which the PPM would include
      any untrue statement of a material fact or omit to state any material fact
      required to be stated therein or necessary to make the statements therein not
      misleading, and (ii) of the receipt of any notification with respect to the
      modification, rescission, withdrawal or suspension of the qualification or
      registration of the Units or of an exemption from such registration or
      qualification in any jurisdiction.  The Company will use its
      reasonable best efforts to prevent the issuance of any such modification,
      rescission, withdrawal or suspension and, if any such modification, rescission,
      withdrawal or suspension is issued, to obtain the lifting thereof as promptly
      as
      possible.

    


    (b)           Not
      supplement or amend the PPM unless NESC and its counsel shall have approved
      of
      such supplement or amendment in writing, such approval not to be unreasonably
      withheld, delayed or conditioned.  If, at any time during the period
      commencing on the date hereof and ending on the Closing Date, any event shall
      have occurred as a result of which the PPM contains any untrue statement of
      a
      material fact or omits to state any material fact required to be stated therein
      or necessary to make the statements therein not misleading, or if, in the
      opinion of counsel to the Company or counsel to NESC, it is necessary at any
      time to supplement or amend the PPM to comply with the Act, Regulation D or
      any
      applicable securities or “blue sky” laws, the Company will promptly prepare an
      appropriate supplement or amendment (in form and substance reasonably
      satisfactory to NESC and its counsel) that will correct such statement or
      omission or that will effect such compliance.


    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    


    (c)           Use
      best efforts to have the Information Statement declared effective by the
      Securities and Exchange Commission (the “SEC”).

    


    (d)           Deliver
      without charge to NESC such number of copies of the PPM and any supplement
      or
      amendment thereto as may reasonably be requested by NESC.

    


    (e)           Not,
      directly or indirectly, in connection with the Offering, solicit any offer
      to
      buy from, or offer to sell to, any person or entity any Units or other
      securities of the Company except through NESC.

    


    (f)           Not
      solicit any offer to buy or offer to sell Units by any form of general
      solicitation or advertising, including, without limitation, any advertisement,
      article, notice or other communication published in any newspaper, magazine
      or
      similar medium or broadcast over the Internet, television or radio or at any
      seminar or meeting whose attendees have been invited by any general solicitation
      or advertising.

    


    (g)           At
      all times during the period commencing on the date hereof and ending on the
      Closing Date, provide to each prospective investor or his, her or its
      representative, if any, on reasonable request, such information (in addition
      to
      that contained in the PPM) concerning the Offering, the Company, the Units
      and
      any other relevant matters as it possesses or can acquire without unreasonable
      effort or expense and extend to each prospective investor or his purchaser
      representative, if any, the opportunity to ask questions of, and receive answers
      from the Company concerning the terms and conditions of the Offering, the
      business of the Company and/or the business of “Lifetime” or the “Lifetime
      Acquisition” (as such terms are defined in the PPM), and to obtain any other
      additional information, to the extent it possesses the same or can acquire
      it
      without unreasonable effort or expense, as such prospective investor or
      purchaser representative, if any, may consider necessary in making an informed
      investment decision or in order to verify the accuracy of the information
      furnished to such prospective Investor or purchaser representative, as the
      case
      may be.

    


    (h)           Notify
      NESC promptly of the acceptance or rejection of any subscription.

    


    (i)           File
      five (5) copies of a Notice of Sales of Units on Form D with the SEC no later
      than 15 days after the first sale of the Units, if required by
      law.  The Company will also comply with any filing requirement imposed
      by the laws of any State in which offers and sales are made.  The
      Company shall furnish NESC and its counsel with copies of all such
      filings.

    


    (j)           Not,
      directly or indirectly, engage in any act or activity that may jeopardize the
      status of the offering and sale of the Units as exempt transactions under the
      Act or under the securities or “blue sky” laws of any State in which the
      Offering may be made.

    


    (k)           Apply
      the net proceeds from the sale of the Units for the purposes set forth under
      the
      caption “Use of Proceeds” in the PPM substantially in the manner indicated
      thereunder.

    


    (l)           Not,
      during the period commencing on the date hereof and ending on
      the  Closing Date, issue any press release or other communication or
      hold any press conference with respect to the Company, its financial condition,
      results of operations, business properties, assets, liabilities or future
      prospects of the Offering, without the prior written consent of NESC, which
      consent will not be unreasonably withheld.  NESC agrees that, during
      the period commencing on the date hereof and ending on the Closing Date, it
      shall also not issue any press release or other communication or hold any press
      conference with respect to the Company, its financial condition, results of
      operations, business properties, assets, liabilities or future prospects of
      the
      Offering, without the prior written consent of the Company, which consent will
      not be unreasonably withheld, except in connection with usual and customary
      marketing activity related to the Offering as would reasonably be conducted
      by a
      placement agent in connection with offerings similar to the
      Offering.


    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    


    (m)           Not,
      prior to the completion of the Offering, bid for, purchase, attempt to induce
      others to purchase, or sell, directly or indirectly, any shares of Common Stock
      or any other securities in violation of the provisions of Regulation M under
      the
      Exchange Act.

    


    
      	
              6.

            	
              No
                later than the Closing, the Company shall expand its board of directors
                (the “Board”) to five (5) directors (each a “Director”), two of whom shall
                be designated by NESC (collectively, the “NESC Designees”) pursuant
                to the rights granted to NESC in the Voting Agreement.  NESC
                shall name its initial designees on or before the Closing
                Date.  The Company agrees to take all necessary measures in
                order to carry out the agreements set forth in this Section 6;
                provided, however, that NESC agrees and acknowledges that
                the action set forth in this Section 6 is subject to the entering
                into the
                Voting Agreement by the parties thereto, as contemplated by Section
                4(d)
                hereof.  From the Closing and for a period of three (3) years
                thereafter, the Company shall not take any action with the intent
                or the
                effect of (i) changing the size of the Board, (ii) removing either
                of the
                NESC Designees or (iii) frustrating the rights accorded NESC set
                forth in
                this Section 6, in each case without the prior written approval of
                NESC.  To the extent that any provisions of this Section 6
                conflict with or are inconsistent with the provisions of the Voting
                Agreement, the provisions of the Voting Agreement shall prevail to
                the
                extent of such conflict or
                inconsistency.

            


    

     

    
      	
              7.

            	
              All
                notices under this Agreement (except payment) must be in writing,
                and are
                sufficiently given if delivered to the addressees in person, by overnight
                courier service, or, if mailed, postage prepaid, by certified mail
                (return
                receipt requested), and will be effective three days after being
                placed in
                the mail if mailed, or upon receipt or refusal of receipt, if delivered
                personally or by courier or confirmed telecopy, in each case addressed
                to
                a party.  All communications to the Company should be sent
                to:

            


    

     

    
      	 	
              Baywood
                International, Inc.

            
	 	
              14950
                North 83rd
                Place

            
	 	
              Suite
                1

            
	 	
              Scottsdale,
                AZ 85260

            
	 	
              (450)
                951-3956 (phone)

            
	 	
              (480)
                483-2168(fax)

            
	 	
              Attn:
                President

            
	 	 
	
              With
                a copy to:

            
	 	 
	 	
              Meltzer,
                Lippe, Goldstein & Breitstone, LLP

            
	 	
              190
                Willis Avenue

            
	 	
              Mineola,
                New York 11501

            
	 	
              (516)
                747-0300 (phone)

            
	 	
              (516)
                747-0653 (fax)

            
	 	
              Attn:
                David I. Schaffer, Esq.

            


    


    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    


    
      	
              All
                communications to NESC should be sent to:

            
	 	 
	 	
              Northeast
                Securities, Inc.

            
	 	
              100
                Wall Street, 8th
                Floor

            
	 	
              New
                York, NY 10005

            
	 	
              (212)
                607-5400 (phone)

            
	 	
              (212)
                269-0126 (fax)

            
	 	
              Attn.
                David Tsiang

            
	 	
              Senior
                Vice President

            
	 	 
	
              With
                a copy to:

            
	 	 
	 	
              Hand
                Baldachin & Amburgey LLP

            
	 	
              1775
                Broadway, 23rd
                Floor

            
	 	
              New
                York, NY 10019

            
	 	
              (212)
                956-9500

            
	 	
              (212)
                259-3910

            
	 	
              Attn.
                Alan Baldachin, Esq.

            


    


    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    
      	
              8.

            	
              This
                Agreement shall be governed by and construed in accordance with the
                laws
                of the State of New York, without giving effect to such state's rules
                concerning conflicts of laws.  This Agreement may be executed in
                counterparts, each of which together shall be considered a single
                document.

            


    

    


    
      	
              9.

            	
              It
                is understood and agreed that NESC and its affiliates may from time
                to
                time make a market in, have a long or short position in, buy and
                sell or
                otherwise effect transactions for customer accounts and for their
                own
                accounts in the securities of, or perform investment banking or other
                services, for, the Company and other
                entities.

            


    

    


    


    
      	 	
              Very
                truly yours,

            	 
	 	 	 	 
	 	
              NORTHEAST SECURITIES, INC.

            	 
	 	 	 	 
	 	 	 	 
	 	
              By: 
                

            	
              /s/
                David Tsiang

            	 
	 	 	
              Name:  David
                Tsiang

            	 
	 	 	
              Title:   Senior
                Vice President

            	 


    

    


    
      	
              ACCEPTED
                AND AGREED:

            	 	 
	 	 	 	 
	
              BAYWOOD INTERNATIONAL, INC.

            	 	 
	 	 	 	 
	 	 	 	 
	
              By: 
                

            	
              /s/
                Neil Reithinger

            	 	 
	 	
              Name:  Neil
                Reithinger

            	 	 
	 	
              Title:
                Chief Executive Officer

            	 	 


    

    


    
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