Document:

MYCFO, INC

EXHIBIT 10.11

AMERICAN ETHANOL, INC.

SANJEEV GUPTA EMPLOYMENT AGREEMENT

This Agreement is made by and between American Ethanol, Inc. (the “Company”) and Sanjeev Gupta (“Employee”) to be effective as of September 5, 2007 (the “Effective Date”).

1.

Duties and Scope of Employment.

a.

Position; Employment Commencement Date; Duties.  Employee’s employment with the Company pursuant to this Agreement is effective as of September 5, 2007 (the “Employment Commencement Date”).  On and after the Employment Commencement Date, the Company shall employ the Employee as President of Biofuels Marketing, Inc., a wholly-owned subsidiary of the Company, reporting to the Board of Directors of the Company.  During the Employment Term (as defined in section 2 herein), Employee shall render such business and professional services in the performance of his duties as are consistent with Employee’s position within the Company, and as shall reasonably be assigned to him by the Board of Directors.

b.

Obligations.  During the Employment Term, Employee shall devote his full business efforts and time to the Company.  Employee agrees during the Employment Term, not to actively engage in any other employment, occupation or consulting activity for any direct or indirect remuneration without the prior approval of the Board; provided, however, that Employee may serve in any capacity with any civic, educational or charitable organization. 

2.

Employment Term.  It is intended that the employment arrangement contemplated by this Agreement shall continue until the third anniversary of the Effective Date, with automatic one-year extensions thereafter unless terminated by either party on sixty days notice prior to the end of each respective extension year (such three-year period and any extensions being referred to herein as the “Employment Term”).  Notwithstanding the foregoing, the parties agree that neither this Agreement nor any provision herein is intended to guarantee the continuation of Employee’s employment for the duration of the Employment Term.  In the event that Employee’s employment with the Company terminates prior to the expiration of the Employment Term for any reason, the parties agree that Employee shall be entitled to receive only those benefits that are expressly provided by this Agreement in such circumstances.  

3.

Employee Benefits.  During the Employment Term, Employee shall be eligible to participate in the employee and fringe benefit plans maintained by the Company that are applicable to other employees of the Company to the full extent provided for under those plans for the position held by the Employee. 

4.

Vacation.  During the Employment Term, Employee shall have three weeks of paid vacation per year.  In the event of termination, any unused vacation weeks shall be paid as salary continuation.   

5.

Expenses.  While Employee is employed during the Employment Term, the Company will reimburse Employee for reasonable travel, entertainment or other expenses incurred by 

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Employee in the furtherance of or in connection with the performance of Employee's duties hereunder, in accordance with the Company's expense reimbursement policy as in effect from time to time. 

6.

Compensation.

a.

Base Salary.  While employed by the Company, the Company shall pay the Employee as compensation for his services a base salary at the annualized rate of One Hundred Eighty Thousand ($180,000) per year (the “Base Salary”).  Such salary shall be paid periodically in accordance with normal Company payroll practices and subject to required withholding.  Employee’s Base Salary shall be reviewed annually by the Company for possible adjustments in light of Employee’s performance and competitive data.

b.

Bonus.  Employee shall be entitled to receive, within 90 days after the end of each year, an annual bonus (the “Bonus”) of up to $50,000 based upon Employee’s performance and other criteria to be established by the Company.  Except as permitted under Section 7, Employee must be employed by the Company during the entire applicable bonus period for the payment of the Bonus.  With respect to any subjective milestones, the determination of whether Employee has attained the mutually agreed upon milestones for the Bonus shall be reasonably determined by the Employee’s supervisor.

c.

Severance.

i.

Involuntary Termination Other Than for Cause; Constructive Termination.  If Employee’s employment with the Company is Constructively Terminated or involuntarily terminated by the Company other than for Cause (as defined below), Employee’s death, or Employee’s Total Disability, then, subject to Employee executing and not revoking a standard form of mutual release of claims with the Company, Employee shall be entitled to receive continuing payments of severance pay (less applicable withholding taxes) at the rate equal to Employee’s Base Salary, as then in effect, for a period of three (3) months from the date of such termination in accordance with the Company’s normal payroll practices.  In addition to the foregoing severance benefits, Employee shall receive at the Company’s expense 100% of Company-paid health, dental and vision insurance benefits at the same level of coverage as was provided to Employee immediately prior to the termination of Employee’s employment with the Company (“Company-Paid Coverage”).  If such coverage included Employee’s dependents immediately prior to Employee’s termination, such dependents shall also be covered at the Company’s expense.  Company-Paid Coverage shall continue until the earlier of (i) three (3) months following the date of the termination of Employee’s employment ( the “Benefits Termination Date”), or (ii) the date upon which Employee or Employee’s dependents become covered under another employer’s group health, dental and vision insurance benefit plans.

ii.

Involuntary Termination Other Than for Cause; Constructive Termination On or Following Change of Control.  If, on or following a Change of Control, Employee’s employment with the Company is Constructively Terminated or involuntarily terminated by the Company other than for Cause, Employee’s death, or Employee’s Total Disability, then, subject to Employee executing and not revoking a standard form of mutual release of claims with the Company, in addition to the severance benefits set forth in Section 6d(i) above, all of Employee’s 

stock options and restricted stock shall immediately accelerate vesting as to 100% of the then unvested shares.

iii.

Cause Definition.  For the purposes of this Agreement, “Cause” means (1)  Employee’s material, willful and continuing breach of his obligations to the Company after thirty (30) days written notice from the Company specifying the nature of Employee’s breach and demanding that such breach be remedied (unless such breach by its nature cannot be cured, in which case notice and an opportunity to cure shall not be required); (2) Employee’s conviction of a felony that is injurious to the Company or its business; or (3) act or acts of dishonesty by Employee that are injurious to the Company or its business.

iv.

Constructive Termination Definition.  For the purposes of this Agreement, “Constructive Termination” means, without Employee’s written consent, (i) a material reduction in Employee’s salary or benefits; provided, however, that a reduction in Employee’s salary or benefits will not constitute a Constructive Termination if it is part of and proportional to a reduction in salary or benefits of the Company’s executive staff as a whole, (ii) a material diminution of Employee’s officer title, duties, authority or responsibilities as in effect immediately prior to such diminution.

v.

Change of Control Definition.  For the purposes of this Agreement, “Change of Control” means, in one or a series of transactions:  (1) a reorganization or merger of the Company with or into any other Company which will result in the Company’s shareholders immediately prior to such transaction not holding, as a result of such transaction, at least 50% of the voting power of the surviving or continuing entity or the entity controlling the surviving or continuing entity; (2) a sale of all or substantially all of the assets of the Company which will result in the Company’s shareholders immediately prior to such sale not holding, as a result of such sale, at least 50% of the voting power of the purchasing entity; (3) a change in the majority of the Board not approved by at least two-thirds of the Company’s directors in office prior to such change; or (4) the adoption of any plan of liquidation providing for the distribution of all or substantially all of the Company’s assets. It is the intent of the Company to move into the public arena and such transaction, which may include the merger or acquisition of the Company, shall not constitute a Change of Control for purposes of this agreement.

vi.

Total Disability Definition.  For the purposes of this Agreement, “Total Disability” shall mean Employee’s mental or physical impairment which has or is likely to prevent Employee from performing the responsibilities and duties of his position for three (3) months or more in the aggregate during any six (6) month period.  Any question as to the existence or extent of Employee’s disability upon which the Employee and the Company cannot agree shall be resolved by a qualified independent physician who is an acknowledged expert in the area of the mental or physical impairment, selected in good faith by the Board and Employee (or his personal administrator).

vii.

No Mitigation.  Except as specifically provided herein, the Employee shall not be required to mitigate the value of any severance benefits contemplated by this Agreement, nor shall any such benefits be reduced by any earnings or benefits that the Employee may receive from any other source.

viii.

Voluntary Termination other than pursuant to a Constructive Termination; Involuntary Termination for Cause.  If, during the Employment Term, the Employee's employment is terminated by the Company for Cause, or by Employee for any reason, other than death, Total Disability or pursuant to a Constructive Termination, then all further vesting of any option, restricted stock award or other Company equity compensation held by Employee will cease immediately (however, Employee shall be permitted to exercise vested options for the time period specified in his option agreements and he shall retain all vested restricted shares) and all payments of compensation by the Company to Employee hereunder will terminate immediately (except as to amounts already earned). 

ix.

Involuntary Termination on Death.  If, during the Employment Term, the Employee's employment is terminated by the Company as a result of Employee’s death, then 50% of unvested equity awards from the Company then held by Employee shall immediately vest, or if Employee is then holding unvested shares, the Company’s right to repurchase the then-unvested shares under each such equity award shall lapse, with respect to 50% of the shares under each such award. 

7.

Assignment.  This Agreement shall be binding upon and inure to the benefit of (a) the heirs, beneficiaries, executors and legal representatives of Employee upon Employee’s death and (b) any successor of the Company.  Any such successor of the Company shall be deemed substituted for the Company under the terms of this Agreement for all purposes.  As used herein, “successor” shall include any person, firm, corporation or other business entity which at any time, whether by purchase, merger or otherwise, directly or indirectly acquires all or substantially all of the assets or business of the Company. 

8.

Notices.  All notices, requests, demands and other communications called for hereunder shall be in writing and shall be deemed given if (i) delivered personally or by facsimile, (ii) one (1) day after being sent by Federal Express or a similar commercial overnight service, or (iii) three (3) days after being mailed by registered or certified mail, return receipt requested, prepaid and addressed to the parties or their successors in interest at the following addresses, or at such other addresses as the parties may designate by written notice in the manner aforesaid:

a.

If to the Company:

American Ethanol, Inc.

10600 N. De Anza Blvd., Suite 250

Cupertino, CA  95014

Fax:  (408) 904-7536

b.

If to Employee:

or at the last residential address known by the Company.

9.

Proprietary Information Agreement.  Employee agrees to enter into the Company’s standard Employment, Confidential Information and Invention Assignment Agreement (the “Proprietary Information Agreement”) upon commencing employment hereunder.

10.

Entire Agreement.  This Agreement, the Agreement and Plan of Merger, the employee benefit plans referred to in Section 3 and the Proprietary Information Agreement represent the entire agreement and understanding between the Company and Employee concerning Employee’s employment relationship with the Company, and supersede and replace any and all prior agreements and understandings concerning Employee’s employment relationship with the Company.

11.

No Oral Modification, Cancellation or Discharge.  This Agreement may only be amended, canceled or discharged in writing signed by Employee and the Company’s Executive Chairman.

12.

Withholding.  The Company shall be entitled to withhold, or cause to be withheld, from payment any amount of withholding taxes required by law with respect to payments made to Employee in connection with his employment hereunder.

13.

Governing Law.  This Agreement shall be governed by the laws of the State of California without reference to rules relating to conflict of law.

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of September 5, 2007:

AMERICAN ETHANOL, INC.

/s/ Eric A. McAfee

Eric A. McAfee

Executive Chairman

Date:  September 5, 2007

EMPLOYEE

/s/ Sanjeev Gupta

Sanjeev Gupta

Date:  September 5, 2007Ethan Frome

EXHIBIT 4.29

THE SECURITIES REPRESENTED BY THIS WARRANT HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAW.  THESE SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT.  ADDITIONALLY, THE TRANSFER OF THESE SECURITIES IS SUBJECT TO THE CONDITIONS SPECIFIED IN THAT CERTAIN LOAN AGREEMENT ATTACHED HERETO (INDIVIDUALLY AND COLLECTIVELY REFERRED TO HEREIN AS THE “NOTE”), EXECUTED BY BAYWOOD INTERNATIONAL, INC., A NEVADA CORPORATION (THE “COMPANY”), AS MAKER, IN FAVOR OF THE LENDER (AS THE SAME MAY BE AMENDED AND RESTATED FROM TIME TO TIME).  NO TRANSFER OF THESE SECURITIES WILL BE VALID OR EFFECTIVE UNTIL THE CONDITIONS OF THE NOTE AND THE TERMS OF THIS WARRANT HAVE BEEN FULFILLED. COPIES OF THE NOTE MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE COMPANY.

BAYWOOD INTERNATIONAL, INC.

COMMON STOCK PURCHASE WARRANT

		
	No. W – 151

	Issuance Date:  February 4, 2008

1.

Warrant

1.1

Grant of Warrant.  Baywood International, Inc., a Nevada corporation (the “Company”), hereby certifies that, for good and valuable consideration, the receipt of which is hereby acknowledged, the purchaser of this Warrant, O. Lee Tawes, III, (“Holder”), is entitled, subject to the terms set forth below and the terms and conditions of the Note attached hereto executed by the Company in favor of the Holder, to purchase at the Exercise Price (as defined in Section 1.2), from the Company at any time or from time to time during the Exercise Period (as defined in Section 9), Fifty Thousand (50,000) unregistered shares of the Company’s fully paid and non-assessable common stock, par value $0.001 per share (the “Common Stock”).  Holder acknowledges that the number of common shares described in the preceding sentence is the total of all common shares that the Holder is entitled to acquire under the Note attached hereto.

1.2

Exercise Price.  Holder shall pay a per share purchase price of $.80 for each share of the Company’s Common Stock purchased under this Warrant (such price per share is referred to herein as the “Exercise Price”).

1.3

Adjustments for Issuance of Common Stock and Amount of Outstanding Common Stock.  If there shall occur any stock split, stock dividend, reverse stock split, or other subdivision of the Company’s Common Stock (“Stock Event”), for which the Company receives no new value, then the number of shares of Common Stock to be received by the Holder of this Warrant shall be appropriately adjusted (upward or downward) so that the proportion of (a) the number of shares issuable hereunder, plus the number of shares of Warrant Stock (as defined below) held by the Holder of this Warrant, to (b) the total number of shares of the Company (on a fully diluted basis) prior to such Stock Event is equal to the proportion of (x) the number of shares issuable hereunder, plus the number of shares of Warrant Stock held by the Holder of this Warrant after such Stock Event to (y) the total number of shares of the Company (on a fully diluted basis) after such Stock Event.  No adjustment to the Exercise Price shall be made in connection with any adjustment of the number of shares of Common Stock receivable upon exercise of this Warrant, except that the Exercise Price shall be proportionally decreased or increased upon the occurrence of any stock split, stock dividend, reverse stock split or other subdivision of the Common Stock so that the aggregate Exercise Price payable if the Warrant was exercised in full shall be the same both before and after the Stock Event; provided, however, that in no event will the Exercise Price be less than the par value of the Common Stock.  The provisions of this Section 1.3 shall not apply if the Company issues its Common Stock or other securities for new consideration or if it repurchases its own shares.  For purposes of this Section 1.3, “Warrant Stock” means shares of Common Stock issued to the Holder upon the partial exercise of this Warrant.

2.

Exercise of Warrant.

2.1

Exercise.  This Warrant may be exercised, prior to its expiration pursuant to Section 2.3, by the Holder hereof at any time or from time to time during the Exercise Period (as defined in Section 9), by surrender of this Warrant, with the form of subscription at the end hereof duly executed by such holder, to the Company at its principal office, accompanied by payment, by certified or official bank check payable to the order of the Company or by wire transfer to its account, in the amount obtained by multiplying the number of shares of Common Stock for which this Warrant is then being exercised by the Exercise Price.  In the event the Warrant is not exercised in full, the Company, at its expense, will forthwith issue and deliver to, or upon the order of, the Holder hereof a new Warrant or Warrants of like tenor, in the name of the holder hereof or as such Holder (upon payment by such Holder of any applicable transfer taxes) may request, having in the aggregate in Section 1.1 thereof the number of shares of Common Stock equal (subject to any adjustment provided for herein) to the number of such shares called for in Section 1.1 of this Warrant minus the number of such shares (subject to any adjustment provided for herein) for which this Warrant shall have been exercised.  Upon exercise of this Warrant in accordance with this Section 2.1, the Holder shall be, and shall be deemed to be, for all purposes, a holder of record of the number of shares of Common Stock for which this Warrant has been exercised, notwithstanding any delay or failure of the Company to issue stock certificates as provided in Section 3 hereof.  Immediately upon exercise, the Holder shall have the right to vote on all matters on which holders of Common Stock have a right to vote, shall be deemed a record holder for the purposes of voting, dividends or any other distributions, and shall have all other rights of a stockholder of record under the laws of the State of Nevada.  Upon any exercise of this Warrant, in whole or in part, the Holder shall pay the aggregate Exercise Price with respect to the shares of Common Stock for which this Warrant is then being exercised (collectively, the “Exercise Shares”) by payment of cash in the form referred to in the first sentence of this Section 2.1.

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2.2

Class of Stock Receivable Upon Exercise.  If at the time of exercise the Company has more than one class of Common Stock outstanding, the shares of Common Stock receivable upon exercise of this Warrant shall be the shares of Common Stock designated herein upon such exercise by the Holder.  If at any time the Common Stock to which this Warrant is applicable is converted into any other class of stock (“Other Securities”), this Warrant shall continue in force and effect and shall be applicable with respect to such Other Securities.

2.3

Termination.  This Warrant shall terminate upon the earlier to occur of (a) the exercise in full, or (b) at 5:00 p.m. (Phoenix Time) on February 4, 2013.

3.

Delivery of Stock Certificates on Exercise.

3.1

Delivery.  As soon as practicable after the exercise of this Warrant in full or in part, and in any event within seven business days thereafter, the Company, at its expense (including the payment by it of any applicable issue taxes), will cause to be issued in the name of and delivered to the Holder hereof, or as such Holder (upon payment by such holder of any applicable transfer taxes) may direct, a certificate or certificates for the number of fully paid and non-assessable shares of Common Stock (or Other Securities (as defined in Section 2.2)) to which such Holder shall be entitled on such exercise, together with any other stock or other securities and property (including cash, where applicable) to which such holder is entitled upon such exercise.

3.2

Legend.  The Company may cause the following legend to be set forth on each certificate representing shares of Common Stock acquired under this Warrant or any other security issued or issuable upon the exercise of this Warrant, unless counsel for the Company is of the opinion as to any such certificate that such legend is unnecessary:

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ACT”) OR APPLICABLE STATE LAW AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED, OR HYPOTHECATED UNLESS REGISTERED UNDER THE ACT AND STATE LAW, OR, UNLESS IN THE OPINION OF COUNSEL, IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THE SECURITIES, SUCH OFFER, SALE, OR TRANSFER, PLEDGE OR HYPOTHECATION IS EXEMPT FROM REGISTRATION.

3.3

Fractional Shares.  In the event that the exercise of this Warrant, in whole  or in part, results in the issuance of any fractional share of Common Stock, then in such event the Holder shall be entitled to cash equal to the fair market value of such fractional share as determined in good faith by the Company’s Board of Directors.

4.

Continuation of Terms.  Upon any reorganization, consolidation, merger or transfer (and any dissolution following any transfer) of the Company, this Warrant shall continue in full force and effect and the terms hereof shall be applicable to the shares of stock and other securities and property receivable on the exercise of this Warrant after the consummation of such reorganization, consolidation or merger, or the effective date of dissolution following any such transfer, as the case may be, and shall be binding upon the issuer of any stock or other securities, including, in the case of any such transfer, the person acquiring all or substantially all of the properties or assets of the Company, whether or not such person shall have expressly assumed the terms of this Warrant.

5.

No Impairment; No Preemptive Rights.  The Company will not, by amendment of its Articles of Incorporation (or similar documents) or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek 

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to avoid the observance or performance of any of the terms of the Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the holder of the Warrant.  Nothing in this Warrant shall grant (or be construed to grant) Holder any preemptive or other preferential rights with respect to the issuance of any class of the Company debt or equity securities.

6.

Notices.  In the event of:

(a)

any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any transfer of all or substantially all the assets of the Company to or any consolidation or merger of the Company with or into any other Person; or

(b)

any voluntary or involuntary dissolution, liquidation or winding-up of the Company;

then, and in each such event, the Company will mail or cause to be mailed to the holder of this Warrant a notice specifying the date on which any such reorganization, reclassification, recapitalization, transfer, consolidation, merger, dissolution, liquidation or winding-up is anticipated to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock (or Other Securities) shall be entitled to exchange their shares of Common Stock (or Other Securities) for securities or other property deliverable on such reorganization, reclassification, recapitalization, transfer, consolidation, merger, dissolution, liquidation or winding-up.  Such notice shall be mailed at least 15 days prior to the date specified in such notice on which any such record or other action is to be taken.

7.

Reservation of Stock Issuable on Exercise of Warrant.  The Company will at all times reserve and keep available, solely for issuance and delivery on the exercise of this Warrant, a number of shares of Common Stock equal to the total number of shares of Common Stock from time to time issuable upon exercise of this Warrant, and, from time to time, will take all steps necessary to amend its Articles of Incorporation to provide sufficient reserves of shares of Common Stock issuable upon exercise of this Warrant, which is not reflected on its corporate register and which is not in compliance with federal and state securities laws.

8.

Registered Form.  This Warrant shall be in registered form only in accordance with the Note.  The Company shall treat the person reflected on its corporate register as the Holder of the Warrant.  The Company shall not be obligated to recognize any transfer of this Warrant which is not reflected in its corporate register and which is not in compliance with federal and state securities laws.

9.

Definitions.  As used herein the following terms, unless the context otherwise requires, have the following respective meanings:

(a)

The term “Common Stock” includes (i) the Company’s Common Stock, par value $0.001 per share (the “Common Stock”), (ii) any other capital stock of any class or classes (however designated) of the Company, the holders of which shall have the right, without limitation as to amount, either to all or to a share of the balance of current dividends and liquidating dividends after the payment of dividends and distributions on any shares entitled to preference, and (iii) any other securities into which or for which any of the securities described in clauses (i) or (ii) above have been converted or exchanged pursuant to a plan of recapitalization, reorganization, merger, sale of assets or otherwise.

(b)

The term “Exercise Period” shall mean the period beginning on the date of issuance and ending at 5:00 p.m. on February 4, 2013.

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(c)

The term “Warrant Stock” means shares of Common Stock issued to the holder upon the exercise of this Warrant.

(d)

The term “Other Securities” shall have the meaning stated in Section 2.2.

10.

Warrant Agent.  The Company may, by written notice to the holder of this Warrant, appoint an agent having an office in Phoenix, Arizona for the purpose of issuing Common Stock on the exercise of this Warrant pursuant to Section 2 hereof, or any of the foregoing, and thereafter any such issuance, exchange or replacement, as the case may be, shall be made at such office by such agent.

11.

Promissory Note.  This Warrant is issued pursuant to the terms and conditions of the aforementioned Note and shall be subject to all terms and conditions thereof pertaining to the Company’s issuance of Warrants.

12.

Accredited Investor.  The Holder of this Warrant is an “Accredited Investor” as such term is defined in the Securities Act of 1933 and any regulation issued thereunder.  By accepting this Warrant, the Holder represents and warrants to the Company that he is an Accredited Investor, as defined above.

13.

Remedies.  The Company stipulates that the remedies at law of the holder of this Warrant in the event of any default or threatened default by the Company in the performance of or compliance with any of the terms of this Warrant are not and will not be adequate, and that such terms may be specifically enforced by a decree for the specific performance of any agreement contained herein or by an injunction against a violation of any of the terms hereof or otherwise.

14.

Benefit.  This Warrant shall be binding upon, and inure solely to the benefit of the Company and Holder and no other person shall acquire or have any right under or by virtue of this Warrant.

15.

Registration Rights.  Subject to the limitations of this Section, the Company agrees to register shares of Warrant Stock, upon the request of Holder, if the Company files a registration statement under the Securities Act of 1933 (“the Act”), which relates to a current offering of the Company’s Common Stock (except a registration statement filed in connection with an offering of the Company’s equity securities to its employees pursuant to any employee benefit or stock option plan or any dividend reinvestment plan maintained or pursuant to a merger agreement or agreement to acquire the assets of another entity or similar transaction) so as to permit the public sale of the Warrant Stock by the Holder in compliance with the Act.  The Company shall give written notice (the “Registration Notice”) to Holder of its intention to file a registration statement under the Act relating to an offering of its Common Stock not less than sixty (60) days prior to the filing of such registration statement with the Securities and Exchange Commission (“SEC”).  The Holder may request that the Company include all or a portion of his Warrant Stock in such registration statement, only if such request is made not later than thirty (30) days prior to the date specified in the Registration Notice as the date on which the Company intends to file its registration statement with the SEC.  Neither the Company’s delivery of the Registration Notice nor the delivery of a request by Holder for registration of Warrant Stock shall obligate the Company to file a registration statement and, notwithstanding the filing of a registration statement, the Company may at any time prior to the effective date determine not to offer the securities described in the registration statement, and may withdraw the registration statement without liability to any Holder of Warrant Stock.  In that event, the Company shall pay all expenses of the registration statement incurred through the date it is withdrawn.  The Company shall pay the entire cost of any Registration Statement covering Warrant Stock, including, without limitation, attorneys’ fees, accounting fees, filing fees and printing costs, but excluding any underwriter’s discount.  The Holder shall be solely responsible for any underwriter 

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discount on Warrant Stock sold by the Holder.  Any Warrant Stock included in a registration statement filed by the Company shall be subject to underwriter cutbacks and any other limitations an underwriter, in its discretion, may impose on the inclusion of such Warrant Stock in the registration statement.

16.

Notices.  All notices and other communications from the Company to the holder of this Warrant shall be mailed by first class registered or certified mail, postage prepaid, or sent by overnight courier (or sent in the form of a telecopy) at the following addresses:

If to Company:

Baywood International, Inc.

14950 North 83rd Place, Suite 1

Scottsdale, Arizona  85260

Attn:  Mr. Neil Reithinger, President & C.E.O.

Facsimile:  (480)483-2168

If to Holder:

O. Lee Tawes, III

125 Davids Hill Road

Bedford Hills, NY 10507

Facsimile:  (____) __________

17.

Severability.  In case any provision of this Warrant shall be invalid, illegal or unenforceable, or partially invalid, illegal or unenforceable, the provision shall be enforced to the extent, if any, that it may legally be enforced and the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

18.

Integration.  This Warrant and any term hereof may be changed, waived, discharged or terminated only by a statement in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought.  The parties waive any common law right to orally modify this Warrant.

19.

Choice of Law.  This Warrant shall be governed by and construed in accordance with the domestic substantive laws (and not the conflict of law rules) of the State of Nevada.

20.

Headings.  The headings in this Warrant are for purposes of reference only, and shall not limit or otherwise affect any of the terms hereof.

IN WITNESS WHEREOF, the Company has caused this Common Stock Purchase Warrant to be executed by its duly authorized officer and attested by its Secretary.

Dated as of 4th February, 2008

Baywood International, Inc., a Nevada corporation

By:  /s/ Neil Reithinger________________

       Neil Reithinger

       President & C.E.O.

Attest:

_______________________________

/s/ Karl Rullich_______, Secretary

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