BRIDGE LOAN AGREEMENT
This Bridge Loan
Agreement (the "Note"), is made and effective as of this
10th day of May, 2004
("Effective Date"), by and between Baywood
International,
Inc., a Nevada Corporation
("Company"), having an address at 14950 North 83rd
Place, Suite 1, Scottsdale,
AZ 85260 and O. L.
Tawes, Inc., a New York
Corporation, ("Lender"),
having an address at 125 Davids Hill Road, Bedford
Hills, NY 10507. Company and Lender may be referred
to hereinafter
individually as "Party" or
collectively as "Parties".
RECITALS
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WHEREAS, the
Lender and the Company desire to enter into this Note to
facilitate Company's payment
under a certain Letter of Intent dated May 18, 2004
("LOI"), as
attached;
NOW,
THEREFORE,
in consideration
received, the receipt and sufficiency of
which is hereby acknowledged, the Parties agree as follows:
AGREEMENT
---------
1. Amount.
Company promises to pay to Lender the principal sum
of
------
Three Hundred Seventy-Five
Thousand and 00/100 U.S. Dollars (U.S.$375,000), with
interest on the outstanding unpaid principal
balance as hereinafter set forth.
Company's execution of this Note shall evidence Company's
receipt on the date
hereinabove set forth of funds in the foregoing amount.
2. Maturity.
The maturity date
("Maturity Date") of this Note shall be
--------
one (1) year from the date of
receipt of funds from the Lender, or May 10, 2005.
3. Interest.
In addition to the principal sum in this Note,
Company
--------
promises to pay Lender basic interest.
The basic interest
rate (the "Contract
Rate") shall be ten percent (10%) per annum, or
.83% per month, on outstanding
principal balance. The entire principal balance and
accrued interest is due on
or before Maturity Date. If prepaid early, all interest
accrued to prepayment
date 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.
4. Equity
Kicker. As additional interest to Lender under this
Note,
--------------
Company agrees to issue and Lender agrees to accept
a warrant for One Million
Seven Hundred Twenty-Five
Thousand (1,725,000) common shares of the Company (the
"Warrants") at an exercise price of $0.04. Such Warrant is attached to
this
Note as Exhibit A.
5. Payment.
The entire unpaid balance of principal
owing on this Note
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and accrued and unpaid interest thereon shall be due and payable
in full on
Maturity Date.
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6. Manner
and Place of Payments. Unless notified otherwise,
Company
-------------------------------
shall make all payments due under this
Note to Lender to the following address:
O. L. Tawes,
Inc.
125 Davids Hill Road
Bedford Hills, NY
10507
7. U.S. Dollars.
All payments shall be
in U.S. Dollars and be made via
------------
check drawn on a U.S. bank.
8. Prepayment
Privilege.
Company 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.
Furthermore, if Company
successfully completes an equity financing of $2,000,000
or more before the Maturity Date, the
parties agree that Lender shall have the
right to accelerate the Maturity Date to the closing date
of any such equity
financing.
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
Company
and any other funds 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, Company, 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 Company
shall not affect the liability of
any of said parties for the indebtedness evidenced by this
Note. Any
such
medications agreed upon by Company and Lender
may be made without notice to any
said parties. All said parties hereby
specifically consent to any future action
whereby with Company'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;
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(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.
11. Fees
and Expenses. Company, 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 8 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
Company by Lender, and Company 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 Company 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,
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be payable by Company 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 "Company"
-----------------------
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
Company's assignment or transfer of any property
securing
payment hereof or any rights, powers, obligations or duties of Company.
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
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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 Company 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
"COMPANY"
"LENDER"
BAYWOOD INTERNATIONAL, INC.
O. L. TAWES, INC.
A Nevada Corporation
A New York Corporation
By: /s/ Neil Reithinger
By: /s/ O.L.
Tawes
-------------------
--------------
Its: President & C.E.O.
Its:
President
-----------------
---------
Date: May 18, 2004
Date: June 1,
2004
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------------
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<PAGE>
EXHIBIT A
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<PAGE>
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 BRIDGE 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 CE
