Document:

ex4_34.htm

    
      

    

    Exhibit
      4.34

    PROMISSORY
      NOTE

    October
      25, 2005

    

    
      	
              U.S.
                $100,000

            	
                  Scottsdale,
                Arizona

            

    

     

    For
      consideration received, the receipt and sufficiency of which is hereby
      acknowledged, the undersigned, Baywood International, Inc. (hereinafter
“Borrower”), promises to pay to Ronald E. Patterson (hereinafter “Lender”), at
      the location here below set forth, the principal sum of One Hundred Thousand
      and
      00/100 U.S. Dollars (U.S. $100,000), with interest on the outstanding unpaid
      principal balance as hereinafter set forth.  Borrower’s execution of
      this Promissory Note (the “Note”) shall evidence Borrower’s receipt on the date
      hereinabove set forth of funds in the foregoing amount.

    

    1.           Maturity.  The
      maturity date (“Maturity Date”) of this Note shall be July 1, 2007.

    

    2.           Interest.  In
      addition to the principal sum of this Note, Borrower promises to pay Lender
      basic interest.  The basic interest rate (the “Contract Rate”) shall
      be twelve (12%) per annum, compounded, and all due and payable of One Hundred
      Twenty Thousand and 00/100 U.S. Dollars (U.S. $120,000) (principal and interest)
      on or before Maturity Date.  If prepaid early, all accrued interest
      through date of prepayment shall be due and payable to Lender.  Should
      it be necessary to calculate interest for a partial month, such amount shall
      be
      calculated by dividing a full month’s interest by the total number of days in
      that particular month and then multiplying the resulting daily interest amount
      by the number of days in that particular month that interest has
      accrued.

    

    3.           Payment.  The
      entire unpaid balance of principal owing on this Note and accrued and unpaid
      interest thereon shall be due and payable in full on or before Maturity
      Date.

    

    4.           Manner
      and Place of Payments.  Unless notified otherwise, Borrower shall
      make all payments due under this Note to Lender in monthly payments that include
      principal and interest starting on December 1, 2005 and ending July 1, 2007,
      each in the amount of $6,000.  Lender agrees that Borrower may mail
      such payments via regular U.S. mail to the following address:

     

    Ronald
      E.
      Patterson

    12343
      Fairway Pointe Row

    San
      Diego, CA  92128

    

    5.           U.S.
      Dollars.  All payments shall be in U.S. Dollars and be made via
      check drawn on a U.S. bank.

    

    6.           Prepayment
      Privilege.  Borrower shall have the privilege to prepay and,
      conditioned as hereinafter set forth, Lender shall have an obligation to accept
      tendered prepayments of all of the principal balance of this Note together
      with
      the accrued interest to the Maturity Date of the Note.

    

    7.           Equity
      Kicker.  As additional interest to Lender under this Note, Company
      agrees to issue and Lender agrees to accept a warrant for Five Hundred Thousand
      (500,000) shares of the Company’s common stock at an exercise price of $0.02
      (the “Warrant”).  Such Warrant is attached to this Note as Exhibit
      A.  Lender understands that the availability of the Company’s common
      stock underlying the Warrant is subject to the increase in the Company’s
      authorized common stock as contemplated in the Company’s 2005 Proxy Statement
      and that such increase will not take place until the Company’s Annual Meeting on
      November 17, 2005.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    8.           Event
      of Default.  Should Borrower fail to make payments to Lender as
      per Section 4 of this Note, Borrower shall have five (5) days by which to cure
      such default.  If such default is not cured within five days, Lender
      shall give notice to Borrower of such default via facsimile or regular
      mail.  Unless notified otherwise, Lender shall send any notices to
      Borrower via facsimile or U.S. mail to the following address:

    

    Baywood
      International, Inc.

    Attn:  Neil
      Reithinger

    14950
      North 83rd
      Place, Suite 1

    Scottsdale,
      AZ  85260

    Fax:  (480)
      483-2168

    

    9.           Lender’s
      Rights Cumulative.  The rights and remedies of Lender as provided
      in this Note and/or under applicable law shall be cumulative and concurrent,
      and
      may be pursued singly, successively, or together against Borrower, and any
      other
      funds, property of security held by Lender for the payment hereof or otherwise
      at the sole, absolute and unfettered discretion of Lender, subject to any
      limitations imposed by applicable law.  The failure to exercise any
      such right or remedy shall in no event be construed as a waiver or release
      of
      said rights or remedies or of the right to exercise them at any later
      time.

    

    10.          Consents
      and Waiver of Defenses.  Except as otherwise provided herein,
      Borrower, endorsers, guarantors, sureties, accommodation parties, assuming
      parties hereof, and all other persons liable or to become liable for all or
      any
      part of this indebtedness, jointly and severally waive all applicable exemption
      rights, whether under the state constitution, homestead laws or otherwise,
      and
      also jointly and severally waive diligence, presentment, protest and demand,
      and
      also notice of protest, of demand, of nonpayment, of dishonor and of maturity
      and also recourse to suretyship defenses generally, marshaling of assets,
      laches, estoppels and equitable defenses generally; and they also jointly and
      severally hereby consent to any and all renewals, extensions or modifications
      of
      the terms hereof, including time of payment, and further agree that any such
      renewal, extension or modification of the terms hereof, or the release or
      substitution of any security for the indebtedness evidenced hereby or any other
      indulgences agreed upon by Borrower shall not affect the liability of any of
      said parties for the indebtedness evidenced by this Note.  Any such
      medications agreed upon by Borrower and Lender may be made without notice to
      any
      said parties.  All said parties hereby specifically consent to any
      future action whereby with Borrower’s and Lender’s consent:

     

            (a)           This
      Note may from time-to-time be extended or renewed or its terms (including the
      terms of payment of principal or interest or both or any part thereof) otherwise
      modified;

     

            (b)           Any
      of the provisions of this Note may be amended or any requirement hereof or
      default hereunder waived or any departure there from consented to or any other
      forbearance or indulgence exercised with respect hereto; and

     

            (c)           Any
      collateral now or hereafter securing this Note may be exchanged, substituted,
      realized upon, released, extended or otherwise dealt with or disposed
      of.

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    11.          Fees
      and Expenses.  Borrower, indemnitors, endorsers, guarantors,
      sureties, accommodation parties, assuming parties hereof and all persons liable
      or to become liable on this Note, agree jointly and severally, to pay or
      reimburse Lender for, as the case may be, all costs of collection, including
      reasonable attorneys’ fees as determined by the judge of the court and all costs
      of suit, in the event that the unpaid principal sum of this Note, or any payment
      of interest or principal and interest thereon, late charge or premium, is not
      paid when due, or in the event that it becomes necessary to protect any security
      for the indebtedness evidenced hereby, or for the foreclosure or other
      enforcement by Lender or on behalf of Lender of any lien or document providing
      such security, or in the event that Lender is made party to any litigation
      because of the existence of the indebtedness evidenced by this Note, or because
      of the existence of any security, whether suit be brought or not, and whether
      through courts of original jurisdiction, as well as courts of appellate
      jurisdiction, or through a Bankruptcy Court or other legal
      proceedings.

    

    12.          Amendment
      and Modification.  This Note may not be amended, modified or
      changed, nor shall any waiver of any provision hereof be effective, except
      only
      by an instrument in writing and signed by the party against whom enforcement
      of
      any waiver, amendment, change, modification or discharge is sought; provided,
      however, that this paragraph shall in no way be a limitation on the provisions
      of the consents and waivers set forth in Paragraph 10 hereof.

    

    13.          Interest
      Not to Exceed Legal Maximum.  Notwithstanding any provision herein
      or in any instrument now or hereafter securing this Note, the total liability
      for payments in the nature of interest shall not exceed the limits imposed
      by
      the usury laws of the State of Arizona.  If Lender receives as
      interest an amount which would exceed such limits, such amount which would
      be
      excessive interest shall be applied to the reduction of the unpaid principal
      balance and not to the payment of interest; and if a surplus remains after
      full
      payment of principal and lawful interest, the surplus shall be remitted to
      Borrower by Lender, and Borrower hereby agrees to accept such
      remittance.  If the preceding sentence becomes operative, the total
      unpaid principal balance of this Note, if any, shall bear interest at the
      maximum rate then permitted by the usury laws of the State of Arizona until
      all
      the then obligations of this Note, as modified by this paragraph, are paid
      and
      performed in full.

    

    14.          Additional
      Sums.  All fees (including origination fees), points, charges,
      goods, things in action or any other sums or things of value (collectively,
      the
“Additional Sums”) paid by Borrower to Lender, whether pursuant to this Note or
      otherwise howsoever with respect to the indebtedness evidenced hereby, or with
      respect to any other document or agreement securing this Note, which, under
      the
      law of the State of Arizona, are deemed to be interest with respect to this
      Note
      or such indebtedness, shall, for the purpose of any laws of the State of Arizona
      which may limit the maximum rate of interest to be charged with respect to
      this
      Note or such indebtedness, be payable by Borrower as, and shall be deemed to
      be,
      additional interest, and for such purposes only, the agreed upon and contracted
      rate of interest described above shall be deemed to be increased by the
      Additional Sums.

    

    15.          Successors
      and Assigns.  Whenever used herein, the words “Borrower” and
“Lender” shall be deemed to include their respective heirs, personal
      representatives, successors and assigns.  This paragraph shall not be
      construed as Lender’s consent to Borrower’s assignment or transfer of any
      property securing payment hereof or any rights, powers, obligations or duties
      of
      Borrower.

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

    16.          Governing
      Law.  Except where preempted by the laws of the United States, or
      regulations promulgated there under, this Note shall be interpreted and
      construed in accordance with and be governed by the substantive laws of the
      State of Arizona.

    

    17.          Notices.  All
      notices or other communications required or permitted to be given or delivered
      under this Note shall be in writing and shall be delivered (a) by hand in
      exchange for a receipt, or (b) by certified or registered mail, return receipt
      requested, postage prepaid, and addressed or delivered to the respective
      addresses as herein provided.

    

    18.          Attorneys
      Fees.  Notwithstanding any provision hereof to the contrary, if
      any dispute arising under the terms of this Note shall result in litigation,
      the
      prevailing party shall, in addition to any other relief to which it is entitled,
      be entitled to an award of its reasonable attorneys’ fees as determined by the
      court, together with an award of all of its costs of litigation.

    

    19.          Controlling
      Agreement.  This Note embodies the entire agreement and
      understanding between the Borrower and Lender with respect to the repayment
      of
      the indebtedness evidenced hereby.  In the event of a conflict between
      the terms of this Note and the terms of any other documents, the terms of this
      Note shall control.

    

    20.          Severability.  If
      any provision of this Note or the application thereof to any person or
      circumstances shall be held invalid or unenforceable by any court or other
      governmental authority to any extent, the remainder of this Note and the
      application of such provisions to other persons or circumstances shall not
      be
      affected thereby and shall remain enforceable.

    

    DATED
      as
      of the day first hereinabove set forth.

     

    
      
        	
                BORROWER:

              	 	
                LENDER:

              
	
                 

              	 	 
	
                BAYWOOD
                  INTERNATIONAL, INC.

              	 	
                RONALD
                  E. PATTERSON

              
	
                A
                  Nevada Corporation

              	 	
                 

              
	 	 	 	 
	
                By:

              	 	 	
                By:

              	 
	 	 	 	 	 
	
                Its:

              	 	 	
                Its:

              	 
	 	 	 	 	 
	
                Date:

              	 	 	
                Date:

              	 

      

    

     

    
      
        
          
          

        

        
          -4-

          
            

          

        

        
          
          

        

      

    

     

    EXHIBIT
      A

     

     

    -5-ex4_35.htm

    
      
        
          

        

      

      Exhibit
        4.35

      PROMISSORY
        NOTE

      

      
        
          	
                  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.

              	
                Lender:

              	 	
                Vineyard
                  Bank, N.A.

              
	 	 	 Nutritional
                Specialties, Inc.	 	 	Anaheim
                Business Banking
	 	 	
                 14950
                  North 83rd Place

              	 	 	500
                North State College Boulevard, Suite 530
	 	 	 Scottsdale,
                AZ  85260	 	 	Orange,
                CA  92868

      

      

      
        	
                Principal
                  Amount:  $2,000,000.00

              	 	
                Initial
                  Rate:  10.250%

              	 	
                Date
                  of Note:  July 9,
                  2007

              

      

       

      PROMISE
        TO PAY.  Baywood International, Inc.; and Nutritional Specialties,
        Inc. ("Borrower") jointly and severally promise to pay to Vineyard Bank,
        N.A.
        ("Lender"), or order, in lawful money of the United States of America, the
        principal amount of Two Million & 00/100 Dollars ($2,000,000.00), together
        with interest on the unpaid principal balance from July 9, 2007, until paid
        in
        full.

       

      PAYMENT.  Borrower
        will pay this loan in full immediately upon Lender's demand.  If no
        demand is made, subject to any payment changes resulting from changes in
        the
        Index, Borrower will pay this loan in 11 principal payments of $16,666.67
        each
        and one final principal and interest payment of
        $1,832,183.99.  Borrower's first principal payment is due August 9,
        2008, and all subsequent principal payments are due on the same day of each
        month after that.  In addition, Borrower will pay regular monthly
        payments of all accrued unpaid interest due as of each payment date, beginning
        August 9, 2007, with all subsequent interest payments to be due on the same
        day
        of each month after that.  Borrower's final payment due July 9, 2009,
        will be for all principal and all accrued interest not yet
        paid.  Unless otherwise agreed or required by applicable law, payments
        will be applied first to any accrued unpaid interest; then to principal;
        then to
        any unpaid collection costs; and then to any late charges.  The annual
        interest rate for this Note is computed on a 365/360 basis; that is, by applying
        the ratio of the annual interest rate over a year of 360 days, multiplied
        by the
        outstanding principal balance, multiplied by the actual number of days the
        principal balance is outstanding.  Borrower will pay Lender at
        Lender's address shown above or at such other place as Lender may designate
        in
        writing.

       

      VARIABLE
        INTEREST RATE.  The interest rate on this Note is subject to
        change from time to time based on changes in an independent index which is
        the
        Prime rate as published in the Wall Street Journal.  When a range of
        rates is published, the higher of the rates will be used (the
        "Index").  The Index is not necessarily the lowest rate charged by
        Lender on its loans.  If the Index becomes unavailable during the term
        of this loan, Lender may designate a substitute index after notifying
        Borrower.  Lender will tell Borrower the current Index rate upon
        Borrower's request.  The interest rate change will not occur more
        often than each Day.  Borrower understands that Lender may make loans
        based on other rates as well.  The Index currently is
        8.250%.  The interest rate to be applied to the unpaid
        principal balance during this Note will be at a rate of 2.000 percentage
        points
        over the Index, resulting in an initial rate of
        10.250%.  NOTICE:  Under no circumstances will the interest
        rate on this Note be more than the maximum rate allowed by applicable
        law.

       

      PREPAYMENT;
        MINIMUM INTEREST CHARGE.  Borrower agrees that all loan fees
        and other prepaid finance charges are earned fully as of the date of the
        loan
        and will not be subject to refund upon early payment (whether voluntary or
        as a
        result of default), except as otherwise required by law.   In any
        event, even upon full prepayment of this Note, Borrower understands that
        Lender
        is entitled to a minimum interest charge of
        $100.00.  Other than Borrower's obligation to pay any minimum
        interest charge, Borrower may pay without penalty all or a portion of the
        amount
        owed earlier than it is due.  Early payments will not, unless agreed
        to by Lender in writing, relieve Borrower of Borrower's obligation to continue
        to make payments under the payment schedule.  Rather, early payments
        will reduce the principal balance due and may result in Borrower's making
        fewer
        payments.  Borrower agrees not to send Lender payments marked "paid in
        full", "without recourse", or similar language.  If Borrower sends
        such a payment, Lender may accept it without losing any of Lender's rights
        under
        this Note, and Borrower will remain obligated to pay any further amount owed
        to
        Lender.  All written communications concerning disputed amounts,
        including any check or other payment instrument that indicates that the payment
        constitutes "payment in full" of the amount owed or that is tendered with
        other
        conditions or limitations or as full satisfaction of a disputed amount must
        be
        mailed or delivered to:  Vineyard Bank, N.A., Credit Administration,
        P. O. Box 2319 Corona, CA  92878-2319.

       

      LATE
        CHARGE.  If a payment is 10 days or more late, Borrower will
        be charged 5.000% of the unpaid portion of the regularly scheduled
        payment or $5.00, whichever is greater.

       

      INTEREST
        AFTER DEFAULT.  Upon default, the interest rate on this Note
        shall, if permitted under applicable law, immediately increase by adding
        a 5.000
        percentage point margin ("Default Rate Margin").  The Default Rate
        Margin shall also apply to each succeeding interest rate change that would
        have
        applied had there been no default.

       

      DEFAULT.  Each
        of the following shall constitute an event of default ("Event of Default")
        under
        this Note:

       

      Payment
        Default.  Borrower fails to make any payment when due under
        this Note.

       

      Other
        Defaults.  Borrower fails to comply with or to perform any
        other term, obligation, covenant or condition contained in this Note 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 property or Borrower's ability to
        repay
        this Note or perform Borrower's obligations under this Note 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 Note
        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.

       

      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 evidenced by this Note.  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 this Note is impaired.

       

      Cure
        Provisions.  If any default, other than a default in payment
        is curable and if Borrower has not been given a notice of a breach of the
        same
        provision of this Note within the preceding twelve (12) months, it may be
        cured
        if Borrower, after receiving written notice from Lender demanding cure of
        such
        default:  (1)  cures the default within fifteen (15) days;
        or  (2)  if the cure requires more than fifteen (15) days,
        immediately initiates steps which Lender deems in Lender's sole discretion
        to be
        sufficient to cure the default and thereafter continues and completes all
        reasonable and necessary steps sufficient to produce compliance as soon as
        reasonably practical.

       

      LENDER'S
        RIGHTS.  Upon default, Lender may declare the entire unpaid
        principal balance under this Note and all accrued unpaid interest immediately
        due, and then Borrower will pay that amount.

       

      ATTORNEYS'
        FEES; EXPENSES.  Lender may hire or pay someone else to help
        collect this Note if Borrower does not pay.  Borrower will pay Lender
        that amount.  This includes, subject to any limits under applicable
        law, Lender's attorneys' fees and Lender's legal expenses, whether or not
        there
        is a lawsuit, including attorneys' fees, expenses for bankruptcy proceedings
        (including efforts to modify or vacate any automatic stay or injunction),
        and
        appeals.  Borrower also will pay any court costs, in addition to all
        other sums provided by law.

       

      GOVERNING
        LAW.  This Note 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
        Note has been accepted by Lender in the State of
        California.

       

      DISHONORED
        ITEM FEE.  Borrower will pay a fee to Lender of $27.50 if
        Borrower makes a payment on Borrower's loan and the check or preauthorized
        charge with which Borrower pays is later dishonored.

       

      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.

       

      COLLATERAL.  Borrower
        acknowledges this Note is secured by the following collateral described in
        the
        security instruments listed herein:  inventory, chattel paper,
        accounts, equipment and general intangibles described in Commercial Security
        Agreements dated July 9, 2007.

       

      ARBITRATION.Lender
        and Borrower agree that all disputes, claims and controversies between them
        whether individual, joint, or class in nature, arising from this Note 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 securing this Note 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 securing this Note, including any claim to rescind,
        reform, or otherwise modify any agreement relating to the collateral securing
        this Note, 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 Note 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.

       

      SUCCESSOR
        INTERESTS.  The terms of this Note shall be binding upon
        Borrower, and upon Borrower's heirs, personal representatives, successors
        and
        assigns, and shall inure to the benefit of Lender and its successors and
        assigns.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      GENERAL
        PROVISIONS.  This Note is payable on demand.  The
        inclusion of specific default provisions or rights of Lender shall not preclude
        Lender's right to declare payment of this Note on its demand.  If any
        part of this Note cannot be enforced, this fact will not affect the rest
        of the
        Note.  Lender may delay or forgo enforcing any of its rights or
        remedies under this Note without losing them.  Each Borrower
        understands and agrees that, with or without notice to Borrower, Lender may
        with
        respect to any other Borrower  (a) make one or more additional secured
        or unsecured loans or otherwise extend additional credit;  (b) 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)  apply such security and direct the order
        or manner of sale thereof, including without limitation, any non-judicial
        sale
        permitted by the terms of the controlling security agreements, as Lender
        in its
        discretion may determine;  (e) release, substitute, agree not to sue,
        or deal with any one or more of Borrower's sureties, endorsers, or other
        guarantors on any terms or in any manner Lender may
        choose;  and  (f) determine how, when and what application
        of payments and credits shall be made on any other indebtedness owing by
        such
        other Borrower.  Borrower and any other person who signs, guarantees
        or endorses this Note, to the extent allowed by law, waive any applicable
        statute of limitations, presentment, demand for payment, and notice of
        dishonor.  Upon any change in the terms of this Note, and unless
        otherwise expressly stated in writing, no party who signs this Note, whether
        as
        maker, guarantor, accommodation maker or endorser, shall be released from
        liability.  All such parties agree that Lender may renew or extend
        (repeatedly and for any length of time) this loan or release any party or
        guarantor or collateral; or impair, fail to realize upon or perfect Lender's
        security interest in the collateral; and take any other action deemed necessary
        by Lender without the consent of or notice to anyone.  All such
        parties also agree that Lender may modify this loan without the consent of
        or
        notice to anyone other than the party with whom the modification is
        made.  The obligations under this Note are joint and
        several.

       

      PRIOR
        TO SIGNING THIS NOTE, EACH BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS
        OF
        THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS.  EACH
        BORROWER AGREES TO THE TERMS OF THE NOTE.

       

      BORROWER
        ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY
        NOTE.

       

      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.

              

      

       

       

      LASER
        PRO
        Lending, Ver. 5.36.00.004  Copr. Harland Financial Solutions, Inc.
        1997, 2007.   All Rights Reserved.   -
        CA  F:\Laserpro\CFI\LPL\D20.FC  TR-6274  PR-22
        (M)

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