EMPLOYMENT AGREEMENT

Exhibit 10.10

EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (“Agreement”) is made as of September 9, 2008, by and between Baywood International, Inc., a Nevada corporation (the “Company”), and Eric Skae, an individual residing at c/o 60 Dutch Hill Road, #9 Orangeburg, NY 10962 (“Employee”).

W I T N E S S E T H:

WHEREAS, Baywood New Leaf Acquisition, Inc., a Nevada corporation and a wholly-owned subsidiary of the Company (“Buyer”), intends to purchase certain assets (the “Purchased Assets”) of Skae Beverage International, LLC, a Delaware limited liability company, (“SBI”), pursuant to an Asset Purchase Agreement, of even date herewith, by and among the Company, Buyer, SBI and Employee (the “Asset Purchase Agreement”);

WHEREAS, immediately prior to the closing of the transactions contemplated in the Asset Purchase Agreement (the “Closing”), Employee is employed as President of SBI;

WHEREAS, this Agreement is to be effective upon the Closing;

WHEREAS, the Company wishes to ensure that it will continue to have the benefits of Employee’s services after the Closing on the terms and conditions hereinafter set forth; and

WHEREAS, Employee desires to work for the Company on the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth, the parties hereto hereby agree as follows:

1.

Employment; Term.  The Company hereby employs Employee, and Employee hereby accepts employment with the Company, in accordance with and subject to the terms and conditions set forth herein.  The term of employment shall commence upon the Closing and shall continue for a period of five (5) years (the “Term”), unless earlier terminated in accordance with Section 5 hereof.

2.

Employment.  

(a)

The Company hereby agrees to employ Employee as a Vice President of the Company and as President of Buyer for the Term.  Employee agrees to serve in such capacity and shall have primary responsibility for the operation of the business formerly conducted by SBI, including the responsibility for recruiting and managing the management team and other employees of such business, preparing and implementing the budget for such business, and such other duties, responsibilities and authority, commensurate with such position as shall be assigned to him by the Board of Directors (the “Board”) or the Chief Executive Officer of the Company (the “CEO”) subject, in each case, to the direction of the CEO and/or the Board, as applicable.

2

(b)

Except as expressly set forth in Section 7(b) hereof with respect to Employee’s permitted duties as a consultant for Iceland Springs, Employee shall devote Employee’s full business time and attention to Employee’s duties on the Company’s behalf.  

(c)

As set forth in the Asset Purchase Agreement, within thirty (30) days of Closing, Company shall cause its board of directors to appoint Employee as a director of Baywood and to maintain such appointment, subject to approval by the shareholders of Company in accordance with the Articles of Incorporation and the by-laws of the Company, for the longer of (i) such period as Employee is owed an amount exceeding One Hundred and Fifty Thousand Dollars ($150,000) by Baywood in connection with the sale and purchase of the Purchased Assets (as defined in the Asset Purchase Agreement) or (ii) Employee is employed by Buyer in the office of President (or such other office where the duties are materially similar to those duties of Employee as President).  Employee’s reasonable expenses as a member of Company’s board of directors shall be reimbursed by Company in accordance with the Company’s policy as it may be ame nded from time to time.

3.

Compensation.  

(a)

The Company shall pay Employee a base salary of One Hundred Seventy-Five Thousand Dollars ($175,000) per annum (the “Base Salary”), payable bi-weekly, in accordance with the Company’s then existing payroll practices and subject to all legally required or customary withholdings and other applicable taxes.  Executive shall be entitled to an increase in Base Salary of five percent (5%) per annum upon meeting performance standards reasonably established by the Board or otherwise based on performance as reasonably determined by the Board.

(b)

Employee shall be entitled to receive an annual bonus award (“Annual Bonus”) based on the achievement of established financial goals as set forth below.  Employee’s Annual Bonus shall equal 4% of the net profit for the business formerly know as SBI as defined under U.S.GAAP.  Net profits under U.S. GAAP shall include all direct revenues and direct cost of the business and allocations of those shared common costs with the Company.  By means of example share cost would include such items as Product and General Liability Insurance, Employer portion Health Insurance and similar such shared cost.  The Employee’s Annual Bonus shall be for each fiscal year upon meeting performance standards reasonably established by the Board or otherwise based on performance as reasonably determined by the Board, commencing twelve months from date of Closing.  Employee’s Annual Bonus shall be s ubject to review and approval each year by the Board.  Notwithstanding the foregoing, the Annual Bonus for each fiscal year completed during the Term shall be no less than Fifty Thousand Dollars ($50,000) pro-rated with respect to any partial fiscal year during the Term.  The Annual Bonus shall be paid out as follows: Twenty Five Thousand Dollars ($25,000) (or such lesser pro-rated amount with respect to any partial year during the Term) within fifteen (15) days of the end of the completion of the applicable year of the Term, with the balance paid out calculated and paid within thirty (30) days of the end of the applicable fiscal year end; provided, however, that in the event of the expiration of the Term on September 7, 2013 (i.e., such expiration other than by an event of early termination under Section 6 hereof) Employee shall receive any accrued but unpaid Annual Bonus to the date of such expiration, calculated and paid within thirty (30) days of such expiration.    

3

(c)

At Closing, the Company shall grant to Employee from the Company’s executive option pool, pursuant to the Company’s 2008 Stock Option Plan (the “Plan”), options (the “Options”) to purchase 250,000 shares of Common Stock, par value $0.001 per share, of the Company (the “Common Stock”) at an exercise price equal to the Current Market Price (as hereinafter defined) on the date of grant.  The Options will vest as to 20% on the date of grant and as to an additional 20% on each anniversary date of the date of grant.  The Options will expire as to each vested portion if not exercised within five (5) years after the date of vesting.  Subject to the foregoing, the terms and provision of the Options shall be consistent with the Plan and all exhibits thereto.

For purposes of this Agreement, “Current Market Price” on any day of determination means the closing price of a share of Common Stock on the over-the-counter bulletin board as reported by the National Quotation Bureau Incorporated, or a similar generally accepted reporting service, or if not so available, in such manner as furnished by any Nasdaq member firm of the National Association of Securities Dealers, Inc. selected from time to time by the Board for that purpose, or if not so available, a price determined in good faith by the Board as being equal to the fair market value thereof, as the case may be.

4.

Benefits.

(a)

The Company agrees to reimburse Employee for all reasonable out-of-pocket business expenses incurred by Employee in the normal course of business in connection with the performance of Employee’s duties under this Agreement in accordance with the Company’s policy as it may be amended from time to time.  The Company shall make such reimbursements within a reasonable amount of time after submission by Employee of vouchers, receipts, credit card bills or other documentation in accordance with the Company’s then applicable policies and procedures.  The Company shall provide Employee with a corporate credit card solely for use in charging such business expenses as set forth above.

(b)

Employee shall be entitled to participate in any and all medical insurance, group health care programs, disability insurance, pension and other benefit plans which are made generally available by the Company to other similarly situated senior level employees of the Company performing similar functions as Employee.  The Company, in its sole discretion, may at any time amend or terminate its benefit plans or programs; provided, however, that the Company shall not do so except to the extent that such amendment or termination is in good faith and applies generally to the employees of the Company.

4

(c)

The Company shall maintain, at its expense, key man life insurance (the “Policy”) on the life of Employee for the benefit of the Company with a benefit of Two Million Five Hundred Thousand Dollars ($2,500,000).  Employee’s signature to this Agreement constitutes Employee’s written consent to being insured under the Policy and that the Company may continue such life insurance coverage after Employee’s employment with the Company terminates, regardless of the cause of such termination.  Employee shall make all necessary applications, submit to physical examinations and otherwise cooperate with the Company with respect to the purchase of the Policy.

(d)

The Company shall match Employee’s contributions, if any, made to the Company’s 401(k) plan, dollar for dollar, up to 4% per annum of the Employee compensation subject to the limits imposed by the Internal Revenue Service regulations.

(e)

Employee shall be entitled to four (4) weeks paid vacation per annum, at a time or times to be determined in consultation with the Chief Executive Officer of the Company.  Vacation not taken or used shall be deferred or paid in cash to the extent, if at all, consistent with the Company’s employment polices in effect from time to time.

(f)

Employee shall be entitled to such other benefits as are generally available to other similarly situated senior level employees of the Company performing similar functions as Employee.

(g)

Company shall pay Employee a monthly automobile allowance in the amount of Seven Hundred and Fifty ($750) Dollars per month, payable within ten (10) days of the first of each calendar month starting September 10, 2008.  

5.

Termination.  Employee’s employment hereunder may be terminated under the following circumstances:

(a)

Death.  Employee’s employment hereunder shall terminate immediately upon Employee’s death.

(b)

Disability.  The Company may terminate Employee’s employment hereunder at any time after Employee becomes “Disabled.”  For purposes of this Agreement, Employee shall be “Disabled” upon the earlier of (i) the date Employee becomes entitled to receive disability benefits under the Company’s long-term disability plan or (ii) Employee’s inability to perform the essential functions of the duties and responsibilities contemplated under this Agreement for a period of more than ninety (90) consecutive days or for more than one hundred twenty (120) days in any 270-day period due to physical or mental incapacity or impairment, as determined in the reasonable judgment of a physician licensed in the State of New York, selected by the Company.  Such termination shall become effective five (5) business days after the Company gives written notice of such termination to Employee o r to his legal representative, in accordance with Section 9 hereof.

5

(c)

Termination by the Company without Cause.  The Company may terminate Employee’s employment hereunder without Cause (as hereinafter defined) at any time after providing written notice to Employee.

(d)

Termination by the Company for Cause.  The Company may terminate Employee’s employment hereunder for Cause at any time after providing written notice to Employee, which notice shall provide in reasonable detail the reason(s) for such termination.  For purposes of this Agreement, “Cause” shall mean any of the following: (i) Employee’s willful or intentional failure or refusal to perform or observe Employee’s significant duties, responsibilities or obligations set forth in, or as contemplated under (by virtue of Employee’s office), this Agreement where such failure or refusal shall not have ceased or been remedied within thirty (30) days following written warning from the Company, provided that such obligation to provide written warning and the related right to cure shall not apply to (x) such matters as are not curable, or (y) repeated violations of this clause (i); (ii) acts or omissions by Employee involving Employee’s gross negligence related to the discharge of Employee’s duties; (iii) any act or failure to act by Employee constituting fraud or involving a knowing, willful or intentional misrepresentation, theft, embezzlement, dishonesty or moral turpitude (collectively, “Fraud”); (iv) conviction of (or a plea of nolo contendere to) an offense which is a felony in the jurisdiction involved or which is a misdemeanor in the jurisdiction involved but which involves Fraud; (v) any willful or intentional act or omission by Employee which is intended to or which materially injures the reputation, business or business relationships of the Company, or Employee’s reputation or business relationships; (vi) alcoholism, drug abuse or other substance abuse having a material adverse effect on the performance of Employee’s duties hereunder; or (vii) Employee’s willful or intentional failure or refusal to comply with any reasonable and lawful request or direction of the Company not contrary to the provisions of this Agreement, where such failure or refusal shall not have ceased or been remedied within thirty (30) days following written warning from the Company, provided that such obligation to provide written warning and the related right to cure shall not apply to (x) such matters as are not curable, or (y) repeated violations of this clause (vii).  

(e)

Termination by Employee for Good Reason.  Employee may terminate Employee’s employment hereunder at any time for either of the following reasons (a termination for “Good Reason”):  (i) the Company’s breach of any material provision of this Agreement or the Asset Purchase Agreement, which shall continue unremedied for thirty (30) days after written notice by Employee to the Company, (ii) Company defaults with respect to any of its obligations under the Promissory Notes (Skae Creditors) and such default or defaults remain unremedied for thirty (30) days, (iii) if Employee is relieved by the Company of primary responsibility for the operations of the  business formerly conducted by SBI, except (x) for Cause, or (y) if Employee is given other duties of substantially the same responsibility and importance to the Company or (iv) if Buyer and/or Company causes SBI’s Orangeburg, New York sales and marketing office to be closed down at any time prior to the date which is six (6) months from the Closing Date.

(f)

Other Termination by Employee.  Employee may terminate Employee’s employment hereunder at any time, other than for Good Reason, after providing thirty (30) days-prior written notice to the Company.

6

6.

Compensation Following Termination Prior to the End of the Term.  In the event that Employee’s employment hereunder is terminated prior to the end of the Term, Employee shall be entitled only to the following compensation and benefits upon such termination:

(a)

Termination by Reason of Death or Disability.  In the event that Employee’s employment is terminated by reason of Employee’s death or Disability, respectively, the Company shall pay the following amounts to Employee (or Employee’s spouse or estate, as applicable):

(i)

Any accrued but unpaid Base Salary (as determined pursuant to Section 3(a) hereof) for services rendered to the date of termination; provided, however, that in the case of Death, and only to the extent that Baywood, in its sole discretion, has a “key-man” life insurance policy in place with respect to the life of Employee in the amount of $2,500,000 or more, shall pay Employee’s estate an amount equal to twelve (12) months Base Salary.

(ii)

Any accrued but unpaid expenses required to be reimbursed pursuant to Section 4(a) hereof.

(iii)

A pro rata share, based on the portion of the fiscal year in which Employee was employed at the time of his death or Disability, of the Annual Bonus to which Employee would have been entitled had Employee remained employed by the Company through the end of the then current fiscal year (as determined pursuant to Section 3(b) hereof).  Such amount shall be paid as soon as reasonably practicable following the calculation thereof at the end of such fiscal year.

Except as otherwise specifically provided herein, in the event Employee’s employment is terminated pursuant to this Section 6(a), the benefits to which Employee may be entitled upon such termination pursuant to the plans, programs and arrangements referred to in Section 4(b) hereof shall be determined and paid in accordance with the terms of such plans, programs and arrangements.

(b)

Termination by the Company for Cause or by Employee without Good Reason.  In the event that Employee’s employment hereunder is terminated by the Company for Cause or by Employee without Good Reason, the Company shall pay the following amounts to Employee:

(i)

Any accrued but unpaid Base Salary (as determined pursuant to Section 3(a) hereof) for services rendered to the date of termination.

(ii)

Any accrued but unpaid expenses required to be reimbursed pursuant to Section 4(a) hereof.

(c)

Termination by the Company Without Cause or by Employee for Good Reason.  (A)  In the event that Employee’s employment hereunder is terminated by the Company without Cause or by Employee for Good Reason, the Company shall pay the following amounts to Employee:

7

(i)

Any accrued but unpaid Base Salary (as determined pursuant to Section 3(a) hereof) for services rendered to the date of termination.

(ii)

Any accrued but unpaid expenses required to be reimbursed pursuant to Section 4(a) hereof.

(iii)

Base Salary then in effect for the remainder of the Term following such termination date had such termination not occurred, as well as health and medical benefits for the lesser of (x) twelve (12) months or (y) the remainder of the Term following such termination date had such termination not occurred.  

(iv)

A pro rata share, based on such period of the fiscal year in which Employee was employed, of the Annual Bonus to which Employee would have been entitled had Employee remained employed by the Company through the end of the then current fiscal year (as determined pursuant to Section 3(b) hereof); provided, however, that Employee shall be entitled to the entire Annual Bonus to which Employee would have been entitled had Employee remained employed by the Company through the end of the then current fiscal year if, at the time of termination of Employee’s employment pursuant to this Section 6(c), Employee was employed by the Company for at least the first six (6) months of such fiscal year.   Such amount shall be paid as soon as reasonably practicable following the calculation thereof at the end of such fiscal year.

(B)

Notwithstanding the foregoing, the Company shall have no obligation to make any further payments pursuant to Section 6(c)(A)(iii) or 6(c)(A)(iv) hereof in the event that Employee breaches any of his obligations set forth in Section 7 hereof.

(C)

Except as otherwise specifically provided herein, in the event Employee’s employment is terminated pursuant to this Section 6(c), the benefits to which Employee may be entitled upon such termination pursuant to the plans, programs and arrangements referred to in Section 4(b) hereof shall be determined and paid in accordance with the terms of such plans, programs and arrangements.

(d)

General.  

In the event that Employee’s employment is terminated for any reason, Employee shall cease to be an employee of the Company for all purposes, and, except as may be provided under this Agreement or under the terms of any incentive compensation, employee benefit or fringe benefit plan applicable to Employee at the time of Employee’s termination prior to the end of the Term, shall have no right to receive any other compensation, employee benefits or perquisites, or to participate in any other plan, arrangement or benefit, with respect to any future period after such termination.  In the event that Employee’s employment is terminated for any reason, the Company’s payment of salary and other amounts specifically provided for in the applicable previous paragraph of this Section 6 shall constitute complete satisfaction of all payment obligations of the Company to Employee pursuant to this Agreement, and Employee’s rights set out in this Section 6 shall constitute Employee’s sole and exclusive rights and remedies as a result of any actual or constructive termination of his employment hereunder.

8

7.

Non-Competition and Non-Solicitation; Non-Disclosure of Proprietary Information; Surrender of Records; Company Property.  

(a)

General. Employee acknowledges that the Company would not consummate the transactions contemplated by the Asset Purchase Agreement without the assurance that Employee will not engage in any of the activities prohibited by this Section 7 for the periods set forth below.  Employee agrees to restrict Employee’s actions as provided for in this Section 7.  Employee understands that the provisions of this Section 7 may limit Employee’s ability to earn a livelihood in a business similar to the business of the Company but nevertheless agrees and hereby acknowledges that the consideration provided under the Asset Purchase Agreement and this Agreement, including any amounts provided under Section 3 hereof, are sufficient to justify the restrictions contained in such provisions.  In consideration thereof, and in light of Employee’s education, skills and abilities, Employee agrees that Employee w ill not assert in any forum that the provisions of this Section 7 prevent Employee from earning a living or otherwise are void or unenforceable or should be held void or unenforceable.  Notwithstanding anything set forth herein to the contrary, the provisions set forth in clauses (b) and (c) hereof shall terminate and be of no further force and effect to the extent that Employee’s employment hereunder is terminated pursuant to Section 5(e)(i) or Section 5(e)(ii) hereof.  

(b)

Non-Competition. Employee acknowledges and recognizes the highly competitive nature of the Company’s business and that Employee’s position with the Company and access to the Company’s confidential records and proprietary information renders Employee special and unique.  In consideration of payments made and to be made by the Company to Employee pursuant to this Agreement and the Asset Purchase Agreement (including, without limitation, pursuant to Section 3 hereof), Employee agrees that (A) during the Term  or (B) in the event Employee’s employment is terminated prior to the end of the Term, until the later of (x) three (3) years from the Closing Date (as defined below) or (y) six (6) months from the termination of this Agreement if, at the time of such termination, there exists an Event of Default (as that term is defined in the Notes), or one (1) year from the termination of this Agr eement in all other circumstances, Employee will not, either directly or indirectly, in North America or any other place in which the Company then does business, engage in, or be affiliated in any manner with any individual, partnership, venture, unincorporated association, organization, syndicate, corporation, limited liability company, or other entity, trust and trustee, executor, administrator or other legal or personal representative, or any government or agency or political subdivision thereof (any of the foregoing, a “Person”) engaged in, the business of manufacturing, marketing, distributing and/or selling (A) non-carbonated, non-alcoholic beverage products, including but not limited to iced tea; (B) any other product categories the Company is actively manufacturing, marketing, distributing and/or selling as of the date of termination or expiration of this Agreement; or (C) any other product categories manufactured, marketed, distributed and/or sold by the Company during the Term, except< /u> for Employee performing consulting services for Pure Distribution  and/or Iceland Springs Water, so long as such consulting services do not materially interfere or conflict with his obligations to the Buyer and the Company under this Agreement.  As used in this Agreement, “Closing Date” means the date on which the Closing actually occurs.