Exhibit 10.39

 

IRREVOCABLE PROXY

 

1.                                       Health Holdings & Botanicals, LLC, a
limited liability company organized under the laws of the State of California
(“HHB”), and a stockholder of Naturade, Inc., a Delaware corporation (the
“Company”), hereby irrevocably appoints and constitutes Westgate Group, LLC
(“Westgate Group”), as general partner of Westgate Equity Partners (the
“Proxyholder”), the attorney and proxy of HHB, to the full extent of HHB’s
rights with respect to the number of shares of the common stock, par value
$0.0001 per share, of the Company (the “Common Stock”) beneficially owned by HHB
set forth in Paragraph 2 below, together with any and all other shares issued or
issuable after the date of this Proxy with respect thereof, from the time of a
Triggering Event as defined in Paragraph 7 below until a Termination Event as
defined in Paragraph 8 below.  On the execution of this Proxy, all prior proxies
given by HHB with respect to the Proxy Shares (as defined below) are hereby
revoked, and no subsequent proxies with respect to the Proxy Shares will be
given until a Termination Event occurs.

 

2.                                       This Proxy entitles the Proxyholder to
vote the number of shares of Common Stock (the “Proxy Shares”) equal to 1.041
times the number of New Option Shares (as defined below) that are issued and
outstanding on the date of any voting event set forth in Paragraph 5.

 

3.                                       “New Option Shares” shall mean, up to a
maximum of 1,250,000 shares (as adjusted for splits, reverse splits, stock
dividends and similar changes in capitalization), the shares of Common Stock
issued on the exercise of options to purchase Common Stock granted by the
Company on or after January 2, 2002 (except for options to purchase shares
subject to cancelled or terminated options that were originally issued before
January 2, 2002, in accordance with the proviso to Section 7.14 of the
Securities Purchase Agreement dated as of December 20, 2001 among Westgate, the
Company and HHB (the “Purchase Agreement”)).  The number of New Option Shares
outstanding shall be deemed to be 1,250,000 unless the Proxyholder receives
evidence to the contrary, which evidence may be a certificate of the secretary
of the Company or of the Company’s transfer agent, a statement made in a report
or proxy statement filed with the Securities and Exchange Commission, or other
evidence reasonably acceptable to Westgate.

 

4.                                       This Proxy is irrevocable to the full
extent permitted by law and is coupled with an interest.

 

5.                                       The Proxyholder will be empowered, at
any time after a Triggering Event and prior to a Termination Event, to exercise
all voting rights (including, without limitation, the power to execute and
deliver written consents with respect to the Shares) over the Proxy Shares at
every annual or special meeting of the stockholders of the Company and at every
continuation or adjournment thereof, and on every action or approval by written
consent of the stockholders of the Company in lieu of any such meeting, and to
vote the Proxy Shares in a manner determined by the Proxyholder in its exclusive
discretion.

 

6.                                       HHB will not exercise, vote or attempt
to exercise or vote the Proxy Shares after a Triggering Event.

 

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7.                                       A “Triggering Event” is the delivery by
Westgate to the Company, with a copy to HHB, of its notice to exercise in full
(or, if a portion thereof has theretofore been exercised, its notice to exercise
the remaining portion thereof) the Westgate Warrants together with its delivery
to the Company of the exercise price therefor as provided in the Westgate
Warrants.  As used herein, “Westgate Warrants” means the warrants to purchase
33,641,548 shares of Series B Convertible Preferred Stock purchased by Westgate
pursuant to the Securities Purchase Agreement (the “Westgate Warrants”).

 

8.                                       Any of the following events shall
constitute a “Termination Event”:

 

(a)                                  January 1, 2005, unless prior to that date
Westgate has exercised all of the Westgate Warrants in full.

 

(b)                                 The sale or transfer by Westgate of any of
(i) the Westgate Warrants, (ii) the shares of Series B Convertible Preferred
Stock purchased pursuant to the Purchase Agreement or the exercise of the
Westgate Warrants, or (iii) the Common Stock issued on conversion of Series B
Convertible Preferred Stock, except a transfer to an affiliate of Westgate, as
the term “affiliate” is defined in Rule 405 under the Securities Exchange Act of
1933.

 

(c)                                  The consummation of a merger or other
business combination transaction involving the Company, except (i) a transaction
exclusively to change the Company’s state of organization or form of
organization in which the stockholders of the surviving entity are identical to
the stockholders of the Company, or (ii) a transaction in which the Company
survives, Westgate continues as a stockholder, and the Company does not issue
additional shares of voting securities.

 

(d)                                 The issuance by the Company (subject to the
consent of Westgate required under Section 7.1.4 of the Purchase Agreement and
the consent of a majority of the Series B Preferred Stock required under Article
B(2) of the Certificate of Designation of the Series B Convertible Preferred
Stock) of additional voting securities or securities convertible into voting
securities (excluding for purposes of this paragraph the New Option Shares and
any shares of Common Stock issued upon conversion in whole or in part of (i)
the  Convertible Secured Promissory Note dated October 31, 2000, payable (with
accrued interest) to Howard Shao, in the original principal amount of $100,000, 
(ii) the Convertible Secured Promissory Note dated November 30, 2000, payable
(with accrued interest) to Howard Shao, in the original principal amount of
$100,000, and (iii) the Convertible Secured Promissory Note dated September 12,
2001, in the principal amount of $50,000, payable to David Weil), in an amount
that would reduce Westgate’s total voting power, after giving effect to the
shares of Series B Convertible Preferred Stock originally sold in the Purchase
Agreement and issuable under the Westgate Warrants, and including the voting
power over the Proxy Shares, below a majority of the Common

 

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Stock issued and outstanding after the conversion of all other convertible
securities, options, warrants and rights outstanding after the issuance of such
additional voting securities.

 

9.                                       Any obligations of the undersigned
hereunder shall be binding upon the successors and assigns of the undersigned.

 

Dated:  April 14, 2003

 

 

 

 

 

 

HEALTH HOLDINGS & BOTANICALS, LLC

 

 

 

 

 

 

By:

/s/ Lionel Boissiere, Jr.

 

 

 

Lionel P. Boissiere

 

 

President

 

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