**Exhibit 10.39**

 

**IRREVOCABLE PROXY**

 

1.                                       Health Holdings & Botanicals, LLC, alimited 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’srights 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 byHHB set forth in Paragraph 2 below, together with any and all other sharesissued or issuable after the date of this Proxy with respect thereof, from thetime of a Triggering Event as defined in Paragraph 7 below until a TerminationEvent as defined in Paragraph 8 below. On the execution of this Proxy, all prior proxies given by HHB withrespect to the Proxy Shares (as defined below) are hereby revoked, and nosubsequent proxies with respect to the Proxy Shares will be given until aTermination Event occurs.

 

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

 

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

 

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

 

5.                                       The Proxyholder will be empowered, at anytime after a Triggering Event and prior to a Termination Event, to exercise allvoting rights (including, without limitation, the power to execute and deliverwritten consents with respect to the Shares) over the Proxy Shares at everyannual or special meeting of the stockholders of the Company and at everycontinuation or adjournment thereof, and on every action or approval by writtenconsent of the stockholders of the Company in lieu of any such meeting, and tovote the Proxy Shares in a manner determined by the Proxyholder in itsexclusive discretion.

 

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

 

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7.                                       A “Triggering Event” is the delivery byWestgate 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 toexercise the remaining portion thereof) the Westgate Warrants together with itsdelivery to the Company of the exercise price therefor as provided in theWestgate Warrants.  As used herein,“Westgate Warrants” means the warrants to purchase 33,641,548 shares of SeriesB Convertible Preferred Stock purchased by Westgate pursuant to the SecuritiesPurchase Agreement (the “Westgate Warrants”).

 

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

 

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

 

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

 

(c)                                  The consummation of a merger or otherbusiness combination transaction involving the Company, except (i) atransaction exclusively to change the Company’s state of organization or formof organization in which the stockholders of the surviving entity are identicalto the stockholders of the Company, or (ii) a transaction in which the Companysurvives, Westgate continues as a stockholder, and the Company does not issueadditional shares of voting securities.

 

(d)                                 The issuance by the Company (subject tothe consent of Westgate required under Section 7.1.4 of the Purchase Agreementand the consent of a majority of the Series B Preferred Stock required underArticle B(2) of the Certificate of Designation of the Series B ConvertiblePreferred Stock) of additional voting securities or securities convertible intovoting securities (excluding for purposes of this paragraph the New Option Sharesand any shares of Common Stock issued upon conversion in whole or in part of(i) the  Convertible Secured PromissoryNote dated October 31, 2000, payable (with accrued interest) to Howard Shao, inthe 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 principalamount of $100,000, and (iii) the Convertible Secured Promissory Note datedSeptember 12, 2001, in the principal amount of $50,000, payable to DavidWeil), in an amount that would reduce Westgate’s total voting power, aftergiving effect to the shares of Series B Convertible Preferred Stock originallysold in the Purchase Agreement and issuable under the Westgate Warrants, and includingthe voting power over the Proxy Shares, below a majority of the Common 

 

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Stockissued and outstanding after the conversion of all other convertiblesecurities, options, warrants and rights outstanding after the issuance of suchadditional voting securities.

 

9.                                       Any obligations of the undersignedhereunder 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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