exv10w1



 







Exhibit 10.1




 




STOCK PURCHASE AGREEMENT

 








by and among




George Economy




Amani Holdings, LLC




The Other Shareholders of Helios Nutrition, Ltd.




Pride of Main Street Dairy, L.L.C.




and




Lifeway Foods; Inc.



 
 





July 27, 2006



 






 









 








TABLE OF CONTENTS







	 	 	 	 	 	Page	 
	 
	 	 	 	 	 	 
	ARTICLE I DEFINITIONS, CONSTRUCTION	 	 	1	 
	 
	 	 	 	 	 	 
	1.1
	 	Definitions	 	 	1	 
	1.2
	 	Construction	 	 	7	 
	 
	 	 	 	 	 	 
	ARTICLE II CLOSING	 	 	7	 
	 
	 	 	 	 	 	 
	2.1
	 	Closing	 	 	7	 
	 
	 	 	 	 	 	 
	ARTICLE III PURCHASE AND SALE OF STOCK	 	 	7	 
	 
	 	 	 	 	 	 
	3.1
	 	Purchase and Sale of Stock	 	 	7	 
	 
	 	 	 	 	 	 
	ARTICLE IV PURCHASE PRICE	 	 	7	 
	 
	 	 	 	 	 	 
	4.1
	 	Purchase Price	 	 	7	 
	4.2
	 	Purchase Price Adjustment	 	 	13	 
	 
	 	 	 	 	 	 
	ARTICLE V REPRESENTATIONS AND WARRANTIES	 	 	15	 
	 
	 	 	 	 	 	 
	5.1
	 	Representations and Warranties of the Minoru Shareholders	 	 	15	 
	5.2
	 	Representations and Warranties of Amani	 	 	15	 
	5.3
	 	Representations and Warranties of Buyer	 	 	25	 
	 
	 	 	 	 	 	 
	ARTICLE VI COVENANTS	 	 	27	 
	 
	 	 	 	 	 	 
	6.1
	 	Further Assurances	 	 	27	 
	6.2
	 	Confidentiality	 	 	27	 
	6.3
	 	Public Announcements	 	 	27	 
	6.4
	 	Access to Information and Facilities	 	 	27	 
	6.5
	 	Operating Covenants	 	 	27	 
	6.6
	 	No Shop	 	 	28	 
	6.7
	 	Sales and Transfer Tax Expenses	 	 	29	 
	6.8
	 	Employees	 	 	29	 
	 
	 	 	 	 	 	 
	ARTICLE VII CONDITIONS TO CLOSING; CLOSING DELIVERIES	 	 	29	 
	 
	 	 	 	 	 	 
	7.1
	 	Buyer’s Conditions to Closing	 	 	29	 
	7.2
	 	The Selling Shareholders’ Conditions to Closing	 	 	30	 
	7.3
	 	Selling Shareholders’ Closing Deliveries	 	 	31	 
	7.4
	 	Buyer’s Closing; Deliveries	 	 	31	 
	7.5
	 	Mutual Deliveries	 	 	32	 
	 
	 	 	 	 	 	 
	ARTICLE VIII INDEMNIFICATION	 	 	32	 






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TABLE OF CONTENTS

(continued)







	 	 	 	 	 	Page	 
	 
	 	 	 	 	 	 
	8.1
	 	Indemnification by the Selling Shareholders and Economy	 	 	32	 
	8.2
	 	Indemnification by Buyer	 	 	33	 
	8.3
	 	Survival	 	 	33	 
	8.4
	 	Limitations	 	 	33	 
	8.5
	 	Third-Party Claims	 	 	34	 
	 
	 	 	 	 	 	 
	ARTICLE IX TERMINATION	 	 	35	 
	 
	 	 	 	 	 	 
	9.1
	 	Termination	 	 	35	 
	9.2
	 	Effect of Termination	 	 	35	 
	 
	 	 	 	 	 	 
	ARTICLE X MISCELLANEOUS	 	 	35	 
	 
	 	 	 	 	 	 
	10.1
	 	Assignment	 	 	35	 
	10.2
	 	Notices	 	 	35	 
	10.3
	 	Expenses; Attorneys’ Fees	 	 	36	 
	10.4
	 	Governing Law; Forum	 	 	37	 
	10.5
	 	Partial Invalidity: Injunctive Rights	 	 	37	 
	10.6
	 	Execution in Counterparts: Facsimile Signatures	 	 	38	 
	10.7
	 	Entire Agreement; Amendments and Waivers	 	 	38	 
	10.8
	 	Time of Essence	 	 	38	 






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EXHIBITS




	 	 	 
	EXHIBIT A

	 	Consulting and Non-Competition Agreement
	EXHIBIT B

	 	Current Assets and Liabilities
	EXHIBIT C

	 	Noncompetition Agreement
	EXHIBIT D

	 	Purchase Note
	EXHIBIT E

	 	Letter of Credit
	EXHIBIT F

	 	Control Agreement
	 
	 	 
	SCHEDULES
	 	 
	 
	 	 
	Schedule 3.1

	 	Stock Ownership
	Schedule 4.1

	 	Payment of Consideration
	Schedule 5.2(a)(ii)

	 	Amani Ownership
	Schedule 5.2(d)

	 	Non-Contravention
	Schedule 5 2(e)(i)

	 	Financial Statements
	Schedule 5.2(e)(iii)

	 	No Material Adverse change
	Schedule 5.2(f)(ii)

	 	Title Exceptions
	Schedule 5.2(g)(i)

	 	Helios Capitalization
	Schedule 5.2(g)(ii)

	 	Pride Capitalization
	Schedule 5.2(g)(iii)

	 	Options and Other Convertible Securities
	Schedule 5.2(h)(i)

	 	Leased Real Estate
	Schedule 5.2(h)(ii)

	 	Owned Real Estate
	Schedule 5.20)

	 	Litigation
	Schedule 5.2(k)

	 	Legal Compliance
	Schedule 5.2(1)

	 	Insurance
	Schedule 5.2(in)

	 	Environmental Laws and Regulations
	Schedule 5.2(n)

	 	Permits
	Schedule 5.2(o)

	 	Material Contracts
	Schedule 5.1(p)

	 	Labor and Employment Matters
	Schedule 5.2(q)

	 	Benefit Plans
	Schedule 5.2(r)

	 	Intellectual Property
	Schedule 5.2(s)

	 	Affiliated Transactions
	Schedule 5.2(u)(i)

	 	Material Customers
	Schedule 52(u)(ii)

	 	Material Suppliers
	Schedule 521(v)

	 	Equipment






 









 





STOCK PURCHASE AGREEMENT




     THIS STOCK PURCHASE AGREEMENT, entered into as of July 27, 2006, by and among George Economy
(“Economy”), an individual residing in Bainbridge Island, Washington, Amani Holdings, LLC, a
Minnesota limited liability company (“Amani”) and the other Persons listed as stockholders of
Helios Nutrition, Ltd., a Minnesota corporation (“Helios”), on Schedule 2.1 (the “Minority
Shareholders”) (Amani and the Minority Shareholders are hereinafter sometimes collectively referred
to as the “Selling Shareholders”), Pride of Main Street Dairy, LLC (“Pride”), a Minnesota limited
liability company, and Lifeway Foods, Inc. (“Lifeway” ), Illinois corporation(“Buyer”).



WITNESSETH THAT:




     WHEREAS, Helios Nutrition Ltd., a Minnesota corporation (“Helios”), is engaged in the business
of marketing, distributing and selling organic kefir (the “Helios Business”); and



     WHEREAS, as of the Closing (as hereinafter defined) the Selling Shareholders will own all of
the issued and outstanding common stock of Helios (the “Stock”);



     WHEREAS, Pride is engaged in the business of fluid milk and kefir processing (the “Pride
Business”) and as of the Closing shall be a wholly-owned subsidiary of Helios; and



     WHEREAS, pursuant to and subject to the terms and conditions set forth in this Agreement, the
Selling Shareholders desire to sell to Lifeway and Lifeway desires to purchase from the Selling
Shareholders all of the Stock.



     NOW THEREFORE, in consideration of the premises and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:



ARTICLE I




DEFINITIONS, CONSTRUCTION




     1.1 Definitions. All initially-capitalized terms used in this Agreement shall have the
meanings given to such terms in this Section 1.1 below:



     “Acquisition Transaction” has the meaning ascribed to it in Section 6.6 of this Agreement.



     “Additional Lifeway Shares” has the meaning ascribed to it in Section 4.1 of this Agreement.



     “Affiliate” means, with respect to any Person, any other Person that directly, or indirectly
through one or more intermediaries, controls, is controlled by, or is under common control with,
such. Person. As used in this definition, control shall mean possession, directly or indirectly, of
power to direct the management or policies of a Person through the ownership of the securities of
such Person.



 









 





     “Agreement” means this Stock Purchase Agreement, executed by and among Buyer, Economy and the
Selling Shareholders on the date set forth above. “Amani” means Amani Holdings LLC, a Minnesota
limited liability company.



     “Ancillary Agreements” means the other agreements and instruments to be executed and delivered
pursuant hereto, including, without limitation, the Purchase Note, the Noncompetition Agreement and
the Consulting and Noncompetition Agreement.



     “Basket” has the meaning ascribed to it in Section 8.4 of this Agreement. “Benefit Plans”
means any and all profit sharing plans, bonus plans, incentive compensation plans, stock ownership
plans, stock purchase plans, stock option plans, stock appreciation plans, retirement plans,
employee insurance plans, severance plans, disability plans, health care plans, death benefit
playas and each Pension Plan and Multiemployer Plan.



     “Broker” has the meaning ascribed to it in Section 4.1 (iv) of this Agreement. “Businesses”
means, collectively, the Helios Business and the Pride Business.



     “Buyer” has the meaning ascribed to it in the introductory paragraph of this Agreement. “Cap”
has the meaning ascribed to it in Section 8.4 of this Agreement. “Closing” has the meaning ascribed
to it in Article 1. “Closing Date” means the date on which Closing occurs.



     “Closing Date Balance Sheet” has the meaning ascribed to it in Section 4.2(a)(i) of this
Agreement.



     “Closing Date Working Capital” has the meaning ascribed to it in Section 4.2(a)(ii) of this
Agreement.



     “Closing Lifeway Stock Price” has the meaning ascribed to it in Section 4.1(iii) of this
Agreement.



     “COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and the
regulations (including proposed regulations) thereunder.



     “Code” means the Internal Revenue Code of 1986, as amended.



     “Companies” shall mean collectively Helios and Pride.



     “Consulting and Noncompetition Agreement” means that certain Consulting and Noncompetition
Agreement made by Economy in favor of Buyer and delivered at Closing in the form of Exhibit A
attached hereto.



     “Contract” has the meaning ascribed to it in Section 53(g) of this Agreement.



     “Control Agreement “ has the meaning ascribed to it in Section 4.1(ii) of this Agreement.



     “Current Assets” means the current assets of the Companies in the categories listed on Exhibit
B hereto, as reflected on the Closing Date Balance Sheet (as finally determined pursuant to this
Agreement).



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     “Current Liabilities” means the current liabilities of the Companies in the categories listed
on Exhibit B hereto, as reflected on the Closing Date Balance Sheet (as finally determined pursuant
to this Agreement).



     “Debt” means any indebtedness or obligation other than Current Liabilities, including without
limitation: (i) indebtedness for borrowed money (including such indebtedness evidenced by bonds,
notes or similar instruments); (ii) lease obligations with respect to leases that the Companies or
their Affiliates account for as capital leases; (iii) obligations under letters of credit other
than performance bonds issued in the ordinary course consistent with past practice); (iv)
obligations under interest rate swap agreements, interest rate cap agreements, interest rate collar
agreements and other agreements and arrangements designed to protect against fluctuations in
interest rates; and (v) guarantees or similar instruments with respect to any of the foregoing.
Debt shall not include the Department of Agriculture LC.



     “Department of Agriculture LC” means a $20,000 Letter of Credit issued to the Minnesota
Department of Agriculture the obligation to indemnify the issuer of which will be assumed by Buyer.



     “Dispute Notice” has the meaning ascribed to it in Section 4.2(b) of this Agreement.



     “Dispute Period” has the meaning ascribed to it in Section 4.2(b) of this Agreement.



     “Economy” has the meaning ascribed to it in the introductory paragraph to this Agreement.



     “Environmental Laws” means any Law which relates to or otherwise imposes liability or
standards of conduct concerning mining or reclamation of rained land, discharges, emissions,
releases or threatened releases of any pollutants, contaminants or hazardous or toxic wastes,
substances or materials, whether as matter or energy, into ambient air, water, or land, or
otherwise relating to the manufacture, processing, generation, distribution, use, treatment,
storage, disposal, cleanup, transport or handling of pollutants, contaminants, or hazardous or
toxic wastes, substances or materials, including; (but not limited to) the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act of 1986, as amended, the Resource Conservation and Recovery Act of 1976, as
amended, the Toxic Substances Control Act of 1976, as amended, the Federal Water Pollution Control
Act Amendments of 1972, the Clean Water Act of 1977, as amended, any so-called “Superlien” law, and
any other similar federal, state or local statutes.



     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.



     “ERISA Affiliate” means any member of a controlled group of corporations under Section 414(b)
of the Code of which one or both of the Companies is a member, and any trade or business (whether
or not incorporated) under common control with one or both of the Companies under Section 414(c) of
the Code, and all other entities which together with Seller are or were within any of three (3)
years prior to the date hereof treated as a single employer wader Section 414(m) or 414(o) of the
Code.



     “Exchange Act” has the meaning ascribed to it in Section 5.3(g) of this Agreement.



3









 





     “Financial Statements” has the meaning ascribed to it in Section 5.2(e)(i) of this Agreement.



     “GAAP” means Generally Accepted Accounting Principles in the United States of America,
consistently applied.



     “Hazardous Activity” means the distribution, generation, handling, importing, management,
manufacturing, processing, production, refinement, release, storage; transfer, transportation,
treatment or use of Hazardous Material in, on, under, about or from any of the Leased Real Estate
or Owned Real Estate.



     “Hazardous Material” means any substance, material or waste which is currently regulated by
any governmental authority, including any material, substance or waste defined as a “hazardous
waste,” “hazardous material,” “hazardous substance,” “extremely hazardous waste,” “restricted
hazardous waste,” “contaminant,” “toxic waste” or “toxic substance” under any provision of
Environmental Law.



     “Helios Business” has the meaning ascribed to it in the recitals to this Agreement.



     “Indemnified Person” has the meaning ascribed to it in Section 8.5(a) of this Agreement.



     “Indemnifying Person” has the meaning ascribed to it in Section 8.5(a) of this Agreement.



     “Independent Accountants” means RSM McGladrey or KPMG, if RSM McGladrey refuses to accept such
assignment hereunder.



     “Intellectual Property” means all of the Companies’: (i) registered and unregistered
copyrights in both published works and unpublished works (whether United States or foreign); (ii)
legal names, assumed fictional business names, trade names, registered and unregistered trademarks,
service marks and applications (whether United States or foreign); (iii) patents, patent
applications and inventions, processes and discoveries that inky be patentable (whether United
States or foreign); and (iv) trade secrets.



     “Interim Financial Statements” has the meaning ascribed to it in Section 5.2(e)(i) of this
Agreement.



     “IRS” means the Internal Revenue Service.



     “Issuer” has the meaning ascribed to it in Section 4.1(iii).



     “Knowledge” means, (i) when used in reference to the Selling Shareholders or Economy, that the
fact or other matter to which the term “Knowledge” relates is known to persons with significant
operational responsibilities at either of the Companies, the Selling Shareholders, Economy, Long or
any other individual who is on the date hereof an officer or director of Helios or a legal manager
of Pride (as identified as a manager in Pride’s Articles of Organization or operating agreement, as
applicable) of the Companies and (ii) when used in reference to Buyer,



4









 







that the fact or other matter to which the term “Knowledge” relates is known to any individual
who is on the date hereof an executive officer of Buyer.



     “Labor and Employment Laws” means all Laws relating to employment practices, terms and
conditions of employment, equal opportunity, nondiscrimination, immigration, wages, hours, benefits
and collective bargaining, the payment of social security and similar taxes, unemployment
compensation, workers compensation and occupational safety and health.



     “Law” means any and all laws, statutes, rules, regulations codes and ordinances of federal,
state, provincial and local governments.



     “Leased Real Estate” has the meaning ascribed to it in Section 5.2(h)(i) of this Agreement.



     “Liens” means all liens, pledges and security interests in favor of any Person.



     “Lifeway Letter of Credit” has the meaning ascribed to it in Section 4.1(ii) of this
Agreement.



     “Lifeway Shares” has the meaning ascribed to it in Section 4.1(vi) of this Agreement.



     “Litigation” means any legal action, suit or proceeding pending in or before any court,
arbitrator or administrative agency as of the date hereof.



     “Long” means Linda Long, a consultant to the Companies and the spouse of Economy.



     “Losses” means all losses, liabilities, costs, damages and expenses (including, without
limitation, reasonable attorney’s fees) actually incurred or paid by an Indemnified Person.



     “Material Adverse Effect” means a material adverse effect on the business, operations, assets,
financial condition of the Companies or Buyer as the case may be.



     “Multiemployer Plan” means a plan as defined in ERISA Section 4001(a)(3).



     “Noncompetition Agreements” means those certain Noncompetition Agreement made by each of the
Selling Shareholders and Long in favor of Buyer and delivered at Closing in the form of Exhibit C
-attached hereto.



     “Notice” has the meaning ascribed to it in Section 10.2 of this Agreement.



     “Notice Party” has the meaning ascribed to it in Section 10.2(a) of this Agreement.



     “Order” means any injunction, judgment or order issued in writing by any governmental entity
or arbitrator.



     “Owned Real Estate” means all real property, leasehold interests, easements, estates and other
real estate interests and improvements of every kind and description, together with all buildings,
structures, and improvements of every nature located thereon, including fixtures.



5









 





     “Parties” means the parties to this Agreement.



     “PBGC” means the Pension Benefit Guaranty Corporation.



     “Pension Plan” means an employee pension benefit plan, as defined in ERISA Section 3(2), other
than a Multiemployer Plan, which is covered by Title IV of ERISA.



     “Permit” means each permit or license issued in writing to either of the Companies (i) by any
governmental authority, or (ii) pursuant to any Law that directly relates to the Businesses.



     “Permitted Liens” means (i) Liens for or relating to Taxes and assessments not yet due and
payable, and (ii) Liens that will be released at or prior to Closing, and (iii) such easements,
covenants, rights of way building and use restrictions arising as a matter of law, and such other
exceptions, reservations and limitations listed on the title reports deliverer) to Buyer



     “Person” means an individual, partnership, corporation, business trust, limited liability
company, limited liability partnership, joint stock company, trust, unincorporated association,
Joint venture, company or ether entity or any governmental authority.



     “Pride Business” has the meaning ascribed to it in the recitals of this Agreement.



     “Position Statement” has the meaning ascribed to it Jan Section 4.2(c) of this Agreement.



     “Post-Closing Delivery” has the meaning ascribed to it in Section 4.2(a) of this Agreement.



     “Purchase Note” has the meaning ascribed to it in Section 4.1(ii) of the Agreement. “Purchase
Price” has the meaning ascribed to it in Section 4.1 of this Agreement.



     ”Registration Statement” has the meaning ascribed to it in Section 4.1 of this Agreement.



     “Representatives” has the meaning ascribed to it in Section 6.6 of this Agreement.



     “Resolution Period” has the meaning ascribed to it in Section 42(d) of this Agreement.



     “SEC” has the meaning ascribed to it in Section 4.1(vi)(b) of this Agreement.



     “SEC Documents” has the meaning ascribed to it in Section 5.3(g) of this Agreement.



     “Selling Shareholders” has the meaning ascribed to it in the introductory paragraph of this
Agreement.



     “Stock Plans” shall mean any plan, agreement or other instrument under or pursuant to which
any Person has any right, whether vested or otherwise, to purchase or acquire any stock, option,
warrant or other security in either of the Companies.



     “Third-Party Claim” has the meaning ascribed to it in Section 8.5(a) of this Agreement.



6









 




     1.2 Construction.





          (a) The meanings of terms defined herein are equally applicable to the singular and plural of
such defined terms.




          (b) The headings of articles and sections to this Agreement are provided for convenience only
and will not affect the construction or interpretation hereof.




          (c) This Agreement and all Exhibits and Schedules hereto are a result of negotiations among
the parties hereto. Accordingly, neither this Agreement nor any Exhibit or Schedule hereto shall be
construed against Buyer, the Selling Shareholders or Economy because of their or their counsel’s
involvement in its preparation..




ARTICLE II

CLOSING




     2.1 Closing. The closing of the purchases and sales contemplated hereby (the
“Closing”) will tape place in person or via overnight mail, email and/or fax at the offices of
Harris Kessler & Goldstein LLC in Chicago, Illinois, with an effective time for purposes hereunder
of 5:00 p.m. (Chicago Time) on August 2, 2006. At the Closing, the Parties will deliver or cause to
be delivered the funds, documents and certificates described in Article VII.



ARTICLE III

PURCHASE AND SALE OF STOCK




     3.1 Purchase and Sale of Stock. On the terms: and subject to the conditions hereof, at
the Closing, each of the Selling Shareholders shall sell, assign, transfer, convey and deliver to
Lifeway the Stock owned by such Selling Stockholder as set forth opposite the name of such Selling
Stockholder on Schedule 3.1, and Lifeway shall purchase and acquire from the Selling
Shareholders, all right, title and interest of the Selling Shareholders in and to the Stock, free
and clear of all Liens.



ARTICLE IV

PURCHASE PRICE




     4.1 Purchase Price. The aggregate purchase price for the Stock shall be Eight Million
and No/00 Dollars ($8,000,000.00) as such amount may be adjusted pursuant to the provisions of
Section 4.2 (the “Purchase Price”). The Purchase Price shall be payable as follows:



               (i) Two Million Five Hundred Thousand and No/100 Dollars ($2,500,000.00) payable by wire
transfer at Closing.



               (ii) The aggregate sum of Four Million Two Hundred Thousand and No/100 Dollars ($4,200,000.00)
shall be evidenced by a promissory note (the “Purchase Note”) to be executed and delivered at
Closing in the form of Exhibit D attached hereto. The Purchase Note shall provide for equal
quarterly payments of principal plus accrued interest commencing on the first day following the
Closing, with a final payment of all unpaid principal and interest due and payable four (4) years
after the first payment. The Purchase Note shall bear interest at the floating “prime rate” per
annum as published from time to time in the Wall Street Journal. The Purchase Note shall be secured
by a (i) a Letter of Credit issued by the Issuer (the “Lifeway



7









 







Letter of Credit”) in favor of Amani in the original face amount of Three Million Two Hundred
and No/100 Dollars ($3,200,000.00) in the form of Exhibit E attached hereto and (ii) a security
interest in a brokerage account maintained by Lifeway with the Broker containing securities valued
at Closing in an amount not less than. One :Million and No/100 Dollars ($1,000,000.00), pursuant to
the terms of a Securities Account Control Agreement (the “Control Agreement”) in the form of
Exhibit F attached hereto. The sum of the face amount of the Letter of Credit and balance of the
brokerage account which is subject to the Control Agreement shall be in an aggregate amount from
time to time not less the then outstanding principal balance of the Purchase Note. In the event of
an uncured event of default under the Purchase Note, Amani may, at its sole election, draw on the
Lifeway Letter of Credit, pursue collection under the Securities Account Control Agreement or both.
Amani may reallocate the security for the Purchase Note in different proportions between the
Lifeway Letter of Credit and Control Agreement The Purchase Note may be prepaid at any time and
from time to time without premium or penalty.



               (iii) The Lifeway Letter of Credit shall be issued by Custodial Trust Company, an affiliate of
Bear, Stearns Securities Corp. or any substitute issuer as hereinafter provided (the “Issuer”). The
Lifeway- Letter of Credit shall have a term of one (1) year (automatically renewable as provided in
the Lifeway Letter of Credit) and shall provide, among other things, that Amani may draw on the
Lifeway Letter of Credit only in the event and to the extent that Amani provides the Issuer with a
signed statement certifying that (A) there exists an uncured event of default under the Purchase
Note and specifying the amount of the sums then due and owing under the Purchase ?dote and (B)
Amani has not received notice that Lifeway has exercised its right of offset with respect to such
sums or if Amani has received such notice, the amount that Lifeway has exercised its right to
withhold payment is less than the amounts then due and awing under the Purchase Note. In addition,
if the Letter of Credit does not automatically renew for successive one-year periods, Amani shall
have the right to draw on the Lifeway Letter of Credit in the event Amani is not provided with
written notice of renewal of the Lifeway Letter of Credit at least thirty (30) days prior to the
expiry thereof. Subject to Section 4.1 (ii) above, the face amount of the Lifeway Letter of Credit
may be reduced by Lifeway from time to time as payments are made under the Purchase Note
(including, without limitation, payments into escrow as provided in subparagraph (iv) below},
provided that the sum of the face amount of the Lifeway Letter of Credit and balance of securities
in the brokerage account which is subject to the Control Agreement shall be in an aggregate amount
not less the then outstanding principal balance of the Purchase Note. Buyer shall obtain a
substitute; Issuer for the Lifeway Letter of Credit reasonably acceptable to Amani in the event
that Custodial Trust Company shall fail to maintain an A+ rating by Pitch Ratings or, if Fitch does
not them provide such rating, a comparable rating with Moody’s Investor Services or Standard and
Poor’s. In addition, Buyer and Amani may mutually agree upon a substitute Issuer. Amani shall be
solely responsible for paying the customary fees associated with maintaining the Lifeway Letter of
Credit, in an amount not to exceed one percent (I %) of the face amount thereof, which fees shall
be payable quarterly or as otherwise required by the Issuer. Buyer shall be solely responsible for
paying any set-up or other similar fees in connection with the establishment of the Lifeway Letter
of Credit and for fees in excess of the one percent (1%) of the face amount.



               (iv) Buyer shall maintain a brokerage account with Bear, Stearns Securities Corp. or another
reputable brokerage firm reasonably acceptable to Amani (the “Broker”). The account maintained by
the Broker shall be subject to the Control Agreement



8









 







which shall provide, among other things, that Amani may direct the disposition of the
securities in the account subject to the Control Agreement only in the event and to the extent that
(A) Amani provides the Broker with a signed statement certifying that there exists an uncured event
of default under the Purchase Note and specifying the amount of the sums then due and owing under
the Purchase Note and (B) Buyer does not dispute, in whole or in part, the occurrence of such
uncured event of default by sending written notice of such dispute to Amani and the Broker within
five (5) days after receipt of notice from the Broker that it has received a default certificate
from Amani as described in clause (A) above. Subject to Section 4.1 (ii) above, the amount of
securities in the brokerage account subject to the Control Agreement may be reduced by Buyer from
time to time as payments are made under the Purchase Note, provided that the sum of the face amount
of the Lifeway Letter of Credit and balance of securities in the brokerage account which is subject
to the Control Agreement shall be in an aggregate amount from time to time not less the then
outstanding principal balance of the Purchase Note.



               (v) Provided Buyer has made a claim for indemnification pursuant to Section S.1, Buyer shall
have the absolute right to offset against the sums due Amani under the Purchase Note any loss or
damages, including reasonable attorneys’ fees and casts, resulting from any breach by the Selling
Shareholders or Economy of this Agreement, any Ancillary Agreement or any other loss or damage for
which Buyer is entitled to indemnification hereunder., provided, however, that Buyer shall notify
Amani in writing within three (3) business days of any offset, and further provided that Buyer
shall continue making scheduled payments under the Purchase Note as long as the amounts subject to
offset are less that the remaining unpaid principal balance of the Purchase Note. Notwithstanding
the foregoing, if Amani disputes any offset to the Purchase Note made by Buyer hereunder, Amani
shall so notify Buyer in writing within ten (10) business days of receipt of Bayer’s notice of
offset, which notice shall set forth the amount so disputed and the basis therefor. Any sums
subject to Amani’s dispute notice shall be deemed to be “frozen” and the following terms shall
apply thereto: (i) any “frozen” sums shall remain outstanding under the Purchase Note until the
parties mutually agree to the disposition thereof or such dispute is finally resolved pursuant to
Section 10.4, and (ii) interest shall accrue (but not be paid) with respect to such “frozen” funds
pending final resolution of the dispute in accordance with Section 10.4 or the parties otherwise
agree.



               (vi) (a) At the Closing, Buyer shall issue the aggregate number of shares of Buyer’s common
stock (the “Lifeway Shares”) equal to the quotient of (a) One Million Three Hundred Thousand and
No/100 Dollars ($1,300,000.00) divided by (b) the average of the closing prices of Lifeway Stock as
reported on NASDAQ for the five (5) trading days ending on July 26, 2006 (the “Closing Lifeway
Stock Price”).



          (b) Buyer agrees to file with the Securities and Exchange Commission (“SEC”) within 30 days of
Closing, a registration statement on Form S-3, or such equivalent form (the `Registration
Statement”), registering the Lifeway Shares for resale by the Selling Shareholders. Buyer shall use
its commercially or reasonable best efforts to cause such Registration Statement to become
effective with the SEC.




          (c) In the event the effective date of such Registration Statement with the SEC is prior to
three months after the Closing, to the extent the closing sales price of the Lifeway

9









 








common stock on the effective date of such. Registration. Statement (“Effective Date Lifeway
Stock Price”) is less than the Closing Lifeway Stock Price. Buyer shall, at the option of Buyer,




     (i) issue cash in aggregate amounts equal to .15 x the Lifeway Shares x (Closing Lifeway Stock
Price — Effective Date Lifeway Stock Price)



     or



               (ii) issue a number of additional shares of Lifeway common stock (the “Additional Lifeway
Shares”), equal to (a) the product of (.15 x the Lifeway Shares x (Effective Date Lifeway Stock
Price – Closing Lifeway Stock Price) divided by (b) the Effective Date Lifeway Stock Price.



          (d) In the event the effective date of such Registration Statement with the SEC is after three
but prior to six months after the Closing, to the extent the Effective Date Lifeway Stock Price on
the effective date of such Registration Statement is less than the Closing Lifeway Stock Price
three months after Closing. Buyer shall, at the option of Buyer,




     or



               (i) (a) issue cash as determined in Section 4.1(c)(i), plus (b) issue cash in aggregate
amounts equal to .30 x the Lifeway Shares x (Closing Lifeway Stock Price three months after Closing
– Effective Date Lifeway Stock Price)



     or



               (ii) (a) issue Additional Lifeway Shares as determined in Section 4.1(c)(ii), plus (b) issue
Additional Lifeway Shares equal to (a) the product of (.30 x the Lifeway Shares x (Effective Date
Lifeway Stock Price – Closing Lifeway Stock Price three months after Closing) divided by (b) the
Effective Date Lifeway Stock Price.



          (e) In the event the effective date of such Registration Statement with the SEC is after six
months but prior to twelve months after the Closing, to the extent the Effective Date Lifeway Stock
Price on the effective date of such Registration Statement (“Effective Date Lifeway Stock Price”)
is less than the Closing Lifeway Stock Price six months after Closing. Buyer shall, at the option
of Buyer,




               (i) (a)
issue cash as determined in Sections 4.1(e)(i) and 4.1(d)(ii), plus (b) issue cash in
aggregate amounts equal to .30 x the Lifeway Shares x (Closing Lifeway Stock Price six months after
Closing – Effective Date Lifeway Stock Price)



     or



               (ii) (a) issue Additional Lifeway Shares as determined in Sections 4.1(c)(ii) and 4.1(d)(ii)
plus (b) issue a number of Additional Lifeway Shares equal to (a) the product of (.30 x the Lifeway
Shares x (Effective Date Lifeway Stock Price — Closing Lifeway Stock Price six months after
Closing) divided by (b) the Effective Date Lifeway Stock Price.



10









 





          (f) In the event the effective date of such Registration Statement with the SEC is after
twelve months after the Closing, to the extent the Effective Date Lifeway Stock Price on the
effective date of such Registration Statement is less than the Closing Lifeway Stock Price twelve
months after Closing.. Buyer shall, at the option of Buyer,




               (i) (a) issue cash as determined in Sections 4.1(c)(i), 4,1(d)(i) and 4,1(e)(i) above, plus
(b) issue cash in aggregate amounts equal to .25 x the Lifeway Shares x (dosing Lifeway Stock Price
twelve months after Closing — Effective Date Lifeway Stock Price)



     or



               (ii) (a) issue Additional Lifeway Shares as determined in Sections. 4.1(c)(ii), 4.1(d)(ii) and
4.2(d)(ii) pigs (b) issue a number of Additional Lifeway Shares equal to (a) the product of (1.00 x
the Lifeway Shares x (Effective Date Lifeway Stock Price – Closing Lifeway Stock Price twelve
months after Closing) divided by (b) the Effective Date Lifeway Stock Price.



          (g) Buyer agrees to keep such Registration Statement effective with the SEC until the earlier
of (1) two years from the Closing; or (2) Lifeway Shares and the Additional Lifeway Shares are sold
by the Selling Shareholders or can be sold by the Selling Shareholders within a three month period
pursuant to Rule 144(k) as promulgated under the Securities Act of 1933, as amended. Buyer also
agrees to have such Lifeway Shares and Additional Lifeway Shares listed on the exchange or
marketplace where the common stock of Buyer is then listed..




          (h) The holders of the Lifeway Shares and Additional Lifeway Shares shall be responsible for
making all required securities filings in connection with their receipt of such shares.




          (i) Notwithstanding anything contained herein to the contrary, the following resale
restrictions shall apply to the Lifeway Shares and any Additional Lifeway Shares:




               (i) Subject to the daily sales limits set forth below, during the period commencing on the
Closing Date and ending on the three (3). month: anniversary of the Closing Date, the holders shall
not sell in the aggregate more than fifteen percent (15%) of the total Lifeway Shares and
Additional Lifeway Shares;



               (ii) Subject to the daily sales limits set forth below, during the period commencing on the
Closing Date and ending on the six (6) month anniversary of the Closing Date, the holders shall not
sell in the aggregate more than forty five percent (45%) of the total Lifeway Shares and Additional
Lifeway Shares;



               (iii) Subject to the daily sales limits set forth below, during the period commencing on the
Closing Date and ending on the twelve (12) month anniversary of the Closing Date, the holders shall
not sell in the aggregate more than seventy percent (75%) of the total Lifeway Shares and
Additional Lifeway Shares;



               (iv) During the period commencing on the Closing Date and ending on the three (3) month
anniversary of the Closing Date, the holders shall not, during any trading



11









 







day, sell Lifeway Shares and Additional Lifeway Shares in an amount that exceeds one third
(1/3) of the average daily trading volume calculated based upon the volume during the immediately
preceding calendar week. Such daily trading limit will be reset on Monday of each week based upon
the volume during the previous calendar week.



               (v) The Lifeway Shares and Additional Lifeway Shares shall not be subject to any such resale
restrictions after the twelve (12) month anniversary of the Closing bate.



          (j) In connection with the receipt of the Lifeway Shares and any Additional Lifeway Shares as
part of the Purchase Price for Stock, each recipient, as to itself only and for no other Person,
represents to Buyer the following:




               (i) Such recipient is aware of the Buyer’s business affairs and financial condition and has
acquired sufficient information about the Buyer to reach an informed and knowledgeable decision to
accept a portion of the Purchase Price in Lifeway Shares. Such recipient is acquiring the Lifeway
Shares for investment for such recipient’s own account only and not with a view to, or for resale
in connection with, any “distribution” thereof within the meaning of the Securities Act of 1933, as
amended.



               (ii) Such recipient understands that, prior to the effective date of the Registration
Statement, the Lifeway Shares have not been registered under the Act by reason of a specific
exemption therefrom, which exemption depends upon, among other things, the bona fide nature of such
Purchaser’s investment intent as expressed herein.



               (iii) Such recipient further acknowledges and understands that the Lifeway Shares must be held
indefinitely until the effective date of the Registration Statement or an exemption from such
registration is available. Such recipient understands that the certificate evidencing the Lifeway
Shares will be imprinted with a legend which prohibits the transfer of the Lifeway Shares unless
the Lifeway Shares are registered or such registration is not required in the opinion of counsel
for the Buyer.



               (iv) Such recipient is familiar with the provisions of Rules 144, under the Securities Act of
1933, as amended, as in effect from time to time, which, in substance, permit limited public resale
of “restricted securities” acquired, directly or indirectly, from the issuer thereof (or from an
affiliate of such issuer), in a non-public offering subject to the satisfaction of certain
conditions. The Lifeway Shares may be resold by such recipient in certain limited circumstances
subject to the provisions of Rule 144, which requires, among other things: (1) the availability of
certain public information about the Buyer and (ii) the resale occurring following the required
holding period under Rule 144 after the recipient has purchased, and made full payment of (within
the meaning of Rule 144), the securities to be sold.



               (v) Such recipient further warrants and represents that such recipient has either (i)
preexisting personal or business relationships, with the Buyer or any of its officers, directors or
controlling persons, or (ii) the capacity to protect his own interests in connection with the
acquisition of the Lifeway Shares by virtue of the business or financial expertise of



12









 







himself or of professional advisors to such recipient who are unaffiliated with and who are
not compensated by the Buyer or any of its affiliates, directly or indirectly.



          (k) For purposes of this Section 4.1, all references to Lifeway Shares, Additional Lifeway
Shares, Closing Lifeway Stock Price and Effective Date Lifeway Closing Stock Price, shall be
adjusted on a pro rata basis to account for stock splits and stock dividends for Lifeway Common
Stock.




               (i) The Purchase Price shall be payable to each of the Selling Shareholders as set forth on
Schedule 4.1. At the Closing, each Selling Shareholder and Economy shall deliver to Buyer a release
whereby, among other things, each Selling Shareholder and Economy releases Buyer and agrees that
Buyer shall have no liability, obligation or responsibility with respect to the allocation of the
Purchase Price among the Selling Shareholders as set forth on Schedule 4.1.



     4.2 Purchase Price Adjustment.



          (a) As promptly as reasonably practicable, and in any event not later than forty-five (45)
days after Closing, the Buyer shall cause the Companies to permit the Selling Shareholders to
prepare and deliver to Buyer (such delivery, the “Post-Closing Delivery”):




               (i) a consolidated balance sheet of the Companies (without giving effect to the consummation
of the transactions contemplated hereby) prepared as of the close of business on the Closing Date
in accordance with GAAP (it being agreed that if GAAP permits different methods of preparing any
item on the Closing Date Balance Sheets, the methodology used in the Financial Statements with
respect to such item shall be used with respect to such item in the preparation of the Closing Date
Balance Sheets) (collectively, the “Closing Date :Balance Sheets”);




               (ii) a calculation of the working capital of the Companies on a consolidated basis as of the
close of business on the Closing Date (the “Closing Date Working Capital”). The Closing Date
Dorking Capital shall be an amount equal to the difference between each of the Companies’ Current
Assets and Current Liabilities, respectively. If Current Assets exceed Current Liabilities, Closing
Date Working Capital shall be a positive number. If Current Liabilities exceed Current Assets,
Closing Date Working Capital shall be a negative number, and



               (iii) a calculation of Debt.




     Buyer shall be entitled to observe and participate in, and provide consultation with respect
to, the preparation of the Post-Closing Delivery



          (b) Buyer shall have thirty (30) days from the date Selling Shareholders make the Post-Closing
Delivery (such period, the “Dispute Period”) to notify the Selling Shareholders, in writing, as to
whether Buyer agrees or disagrees with the Post-Closing Delivery (such written notice, the “Dispute
Notice”). During the Dispute Period, Buyer and its accountants shall be permitted to review (during
regular business hours and upon reasonable prior notice) the working papers of the Selling
Shareholders, the Companies and (where applicable) the Selling Shareholders’ accountants relating
to the matters set forth in the Post-Closing Delivery.




13









 








          (c) If Buyer fad to deliver a Dispute Notice to the Selling Shareholders during the Dispute
Period: (i) the Closing Date Balance Sheets as prepared by the Selling Shareholders shall be deemed
to have been correctly prepared; and (ii) the Selling Shareholders calculation of the Closing Date
Working Capital shall be deemed to be final and correct and shall be binding upon each of the
Parties.




          (d) If Buyer delivers a Dispute Notice to the Selling Shareholders during the Dispute Period,
Sellers and Buyer shall, for a period of thirty (30) days from the date the Dispute Notice is
delivered to the Selling Shareholders (such period, the “Resolution Period”), use their respective
reasonable business efforts to amicably resolve the items in dispute. Any items so resolved by the
parties shall be deemed to be final and correct as so resolved and shall be binding upon each of
the parties hereto.




          (e) If the Selling Shareholders and Buyer are unable to resolve all of the items in dispute
during the Resolution Period, then either Buyer or the Selling Shareholders may refer the items
remaining in dispute to the Independent Accountants. Such referral shall be made in writing to the
Independent Accountants, copies of which shall concurrently be delivered to the non-referring Party
hereto. The referring Party shall furnish the Independent Accountants, at the time of such
referral, with the Post-Closing Delivery and the Dispute Notice. The Parties shall also furnish the
Independent Accountants with such other information and documents as the Independent Accountants
may reasonably request in order for them to resolve the items in dispute. The Parties shall also,
within fifteen (1;) days of the date the items in dispute are referred to the Independent
Accountants, provide the Independent Accountants with a written notice (a “Position Statement”)
describing in reasonable detail their respective positions on the items in dispute (copies of which
will concurrently be delivered to the other panes hereto). If any Party fails to timely deliver its
Position Statement to the Independent Accountants, the Independent Accountants shall resolve the
items in dispute solely upon the basis of the information otherwise provided to them. The
Independent Accountants shall resolve all disputed items in a written determination to be delivered
to each of the Parties within forty (40) days after such matter is referred to them; provided,
however, that any delay in delivering such determination shall not invalidate such determination or
deprive the Independent Accountants of the power and jurisdiction to resolve the items in dispute.
The decision of the Independent Accountants as to the items in dispute shall be final and binding
upon the Parties and shall not be subject to judicial review. The fees and expenses of the
Independent Accountants incurred in the resolution of any items in dispute shall be determined by
the Independent Accountants and set forth in their report and shall be allocated and paid one-half
(1/2) by Buyer and one-half (1/2) by the Selling Shareholders.




          (f) Within five (5) days after the final determination of the Closing Date Balance Sheets and
the calculation of the Closing Date Working Capital (whether through failure of Buyer to timely
deliver a Dispute Notice, agreement of the Parties, or determination of the Independent
Accountants) if (i) Closing Date Working Capital is negative, Buyer shall have the right to
immediately offset such negative amount dollar for dollar against sums due under the Purchase Note
and (ii) if the Closing Date Balance Sheet reflects any Debt or other items in non-compliance with
the Agreement, Buyer shall have the right to immediately offset such amounts against sums due under
the Purchase Note.




14









 








ARTICLE V

REPRESENTATIONS AND WARRANTIES




     5.1 Representations and Warranties of the Minoru Shareholders. The Minority
Shareholders hereby represent and warrant with respect to themselves or itself as the case may be
to Buyer as of the date of this Agreement and as of the Closing Date as follows:



          (a) Due Authorization. Each of the Minority Shareholders has full power, capacity and
authority to execute and deliver this Agreement and to perform its obligations hereunder. The
execution, delivery and performance of this Agreement by each of the Minority Shareholders has been
duly authorized by all necessary action on the part of each of the Minority Shareholders and will
not require any further authorization or consent of the Minority Shareholders.




          (b) Validity; Binding Effect. This Agreement has been duly and validly executed and
delivered by the Minority Shareholders. This Agreement constitutes a valid and legally binding
obligation of the Minority Shareholders, enforceable against the Minority Shareholders in
accordance with its terms. Upon the execution of the Ancillary Documents to which it is a party at
Closing, each of the Ancillary Documents will constitute a valid and legally binding obligation of
the Minority Shareholders.




          (c) Noncontravention. The execution, delivery and performance of this Agreement by the
Minority Shareholders. the consummation by the Minority Shareholders of the transactions
contemplated hereunder and thereunder, and the compliance with or fulfillment of the terms and
provisions hereof and thereof by the Minority Shareholders, do not contravene any Law or Order
specifically applicable to the Minority Shareholders.




          (d) Title. The Minority Shareholders shall own one hundred percent (100%) of the
issued and outstanding Stack indicated on Schedule 3. 1, free and clear of any and all Liens,
options or other rights or restrictions as described in Section 52(g)(iii).




     5.2 Representations and Warranties of Amani. Amani and Economy hereby jointly and
severally represent and warrant to Buyer as of the date of this Agreement and as of the Closing
Date as follows:



          (a) Due Organization.




               (i) Each of the Companies is duly organized, validly existing and in good standing under the
laws of the State of Minnesota, and each of the Companies is duly authorized, qualified or licensed
to do business, and is in good standing, under the lades of each jurisdiction in which the
character of its properties owned, operated or leased. or the nature of its activities, makes such
qualification necessary except where failure to qualify as a foreign corporation will not have a
Material Adverse Effect on the Companies.



               (ii) Amani is duly organized, validly existing and in good standing under the laws of the
State of Minnesota, and is duly authorized, qualified or licensed to do business, and is in good
standing, under the lags of each jurisdiction in which the character of its properties owned,
operated or leased, or the nature of its activities, makes such qualification



15









 







necessary. Economy and his immediate family beneficially own 100% of the membership interests
of Amani as set forth on Schedule 5.2 (a)(ii) attached hereto. Schedule 5.2(a)(ii) also sets forth
the directors and managers of Amani.



          (b) Due Authorization. Each of Amani and Economy has full power, capacity and
authority to execute and deliver this Agreement and the Ancillary Agreements to which it is a party
and to perform its obligations hereunder and thereunder. The execution., delivery and performance
of this Agreement by each of Amani and Economy has been duly authorized by all necessary action on
the part of each of Amani and Economy and will not require any further authorization or consent of
Amani or Economy.




          (c) Validity, Binding Effect. This Agreement has been duly and validly executed and
delivered by Amani and Economy. This Agreement constitutes a valid and legally binding obligation
of Amani and Economy, enforceable against Amani and Economy in accordance with its terms. Upon the
execution of the Ancillary Documents to which it is a party at Closing, each of the Ancillary
Documents will constitute a valid and legally binding obligation of the Amani, Economy and Long, as
applicable.




          (d) Noncontravention. The execution, delivery and performance of this Agreement by
Amani, Economy and Lang and the Ancillary Agreements to which each is a party, the consummation by
Amani, Economy and Long of the transactions contemplated hereunder acid thereunder, and the
compliance with or fulfillment of the terms and provisions hereof and thereof by the Amani, Economy
and Long, do not: (i) result in a breach of any of the provisions of the Articles of Incorporation,
Articles of Organization, By-Laws or Operating Agreement, of either of the Companies, as
applicable; (ii) contravene any Law or Carder specifically applicable to Amani, Economy, Long or
the Companies; (iii) conflict with or violate in any material respect, constitute a material
default (or event which with the giving of notice or lapse of time or both would become a material
default under; give rise to any termination, amendment, modification, acceleration or cancellation
of any material obligation or loss of any material benefit under any material contract to which
either of the Companies is a party or under any Permit; or (iv) except as set forth in Schedule
5.2{d), require Amani, Economy, Long and/or the Companies to obtain the approval, consent or
authorization of any governmental authority or any other third party which has not been obtained in
writing prior to the date of this Agreement or the Closing Date, as applicable.




          (e) Financial Statements.




               (i) Attached hereto as Schedule 5.2(e)(i) are copies of the following: (A) the
consolidated balance sheets of the Companies as of December 31, 2005 and the related consolidated
statement of operations and income, equity, and cash flogs for the fiscal year then ended, (B) the
unaudited consolidated balance sheets of the Companies as of June 30, 2006 and the related
consolidated statement of operations and income for the six (6) months then ended (“Interim
Financial Statements”) and (C) a statement of the outstanding Debt as of June 30, 2006 (items (A),
(B) and (C), collectively, the “Financial Statements”).



               (ii) The Financial Statements (A) fairly present, in all material respects, the operating
results, the financial condition:, changes in equity and cash flow of the



16









 







Companies on the dates and for the periods indicated, and (B) were materially prepared in
accordance with GAAP; provided, however, that the Interim Financial Statements are
subject to normal year-end adjustments and lack footnotes and other presentation items. The
Financial Statements make, and the Closing Date Balance Sheet will make full and adequate
disclosure of, and provision for, all obligations and liabilities of the Companies as of the dates
thereof in accordance with GAAP, including, without limitation, hall and adequate disclosure of all
Debt. Except as set forth on the Interim Financial Statements or as disclosed herein or in the
Schedules hereto, and except for trade payables and accrued expenses incurred in the ordinary
course of business, the Companies have no liabilities, debts, claims, or obligations, whether
accrued, absolute, contingent or otherwise, whether due or to become due, which arose on or after
the date of the Interim Financial Statements or known to Amani or Economy. The accounts receivable
(less any reserves reflected on the Closing Date Balance Sheet) are valid and collectible.



               (iii) Except as set forth in Schedule 5.2(e)(iii) hereto, since the date of the
Interim Financial Statements: (A) there has not been any Material Adverse Effect on or with respect
to either of the Companies; (B) the Businesses have operated only in the ordinary course (and have
not made any change in the method utilized to calculate commissions payable to its agents or
employees or increased the compensation of any of its employees, other than pay raises implemented
in the ordinary coarse of business.), and (C) the Businesses have not experienced any material
damage or destruction (not covered by insurance) to any material portion of either of their assets.



          (f) Title.




               (i) On or prior to the Closing, the Selling Shareholders shall own one hundred percent (100%)
of the issued and outstanding Stock The Stock owned by Amani is free and clear of any and all
Liens. The Stock is duly authorized, validly issued, fully paid and non-assessable.



               (ii) Except as disclosed on Schedule 5.2(f), the Companies (i) have good and marketable title
to, and are the owners of, all of the tangible and intangible assets, properties and rights used in
connection with the Businesses and all of the tangible and intangible assets, properties and rights
reflected in the Interim Financial Statements (other than assets leased under the leases set forth
in Schedule 5.1(h) and assets disposed of in the ordinary course of business since the date of the
Interim Financial Statements), and (ii) on the Closing Date will have good and marketable title to,
and will be the lawful owners of, all of the tangible and intangible assets, properties and rights
to be reflected on the Closing Date Balance Sheet, in any case free of all Liens.



          (g) Capitalization.




               (i) The authorized capital stock of Helios consists of 65,000,000 shares of capital stock.
There are currently issued and outstanding 51;400 Restricted Common Shares, 193,674 Preferred
Shares (which may be more properly classified as convertible debt) and 809,858 Common Shares. All
of the issued and outstanding shares are validly issued, fully paid and nonassessable and are and
when issued free of preemptive rights. All certificates representing the Stock listed in
Schedule 2.1 which are transferred to Buyer at Closing validly



17









 







represent the number of shares of Stock purported to be represented thereby. There are no
shares of Stock held in the treasury of Helios. Schedule 5.2(g)(i) accurately sets forth
the ownership of all outstanding capital stock of Helios as of the date of this Agreement on fully
diluted basis.



               (ii) The capital of Pride consists of membership interests, all of which have been validly
issued. Schedule 5.2(g)(ii) accurately sets forth the ownership of all outstanding
membership interests of Pride as of the date of this Agreement on a fully diluted basis. At the
Closing, Helios shall own 100% of the membership interests of Pride, free of any and all Liens.



          (iii) Except as set forth above or in Schedule 5.2(g)(iii), there are no shares of
capital stock or other equity interests of the Companies issued or outstanding or any
subscriptions, options, warrants, calls, rights, convertible securities or other agreements or
commitments of any character obligating the Companies, or obligating Helios to cause Pride to
issue, transfer, or sell any shares of capital stock or equity interests of the Companies. Except
as set forth in Schedule 5.1(g)(iii), there are no outstanding contractual obligations of
the Companies with relate to the purchase, sale, issuance, repurchase, redemption, acquisition,
transfer, disposition, holding or voting of any shares of capital stack or membership interests of
the Companies.




          (h) Real Estate.




               (i) Schedule 5.2(h)(i) hereto lists each parcel of real property leased or sub-leased
to either of the Companies (the “Leased Real Estate”), all of which is held under real property
leases, true and complete copies of which have been made available to Buyer.



               (ii) Schedule 5.2(hl(ii) sets forth a true, correct and complete list of all Owned
Real Estate. Pride has made available to Buyer true and complete copies of the title reports listed
on Schedule 5.2(h}(ii). Pride has good and marketable fee simple title to the Owned Real
Estate, free and clear of Liens, other than Permitted Liens.



               (iii) Each separate parcel included in the Owned Real Estate or Leased Real Estate has
adequate water supply, storm and sanitary sewer facilities, access to telephone, gas, electrical
and other utility connections, fire protection, drainage and public utilities, and parking
facilities that are required to operate the Businesses as currently conducted and which, to the
Knowledge of the Selling Shareholders or Economy, meet all requirements imposed by applicable Lave.



               (iv) There is no pending or to the Knowledge of the Selling Shareholders or Economy threatened
or proposed proceeding or governmental action to modify the zoning, classification of, or to
condemn or take by the power of eminent domain (or to purchase in lieu thereof), or to classify as
a landmark, or to impose special assessments on, or otherwise to take or restrict in any way the
right to use, develop or alter, all or any part of the Owned Real Estate or Leased Real Estate.



               (v) All rent and other amounts due and payable under any leases of the Leased Real Estate have
been paid through the date of this Agreement. The Companies are in



18









 







material compliance with all covenants, conditions and restrictions of record affecting their
current use of the Owned Real Estate and Leased Real Estate, as applicable.



          (i) Tax Matters. Each of the Companies has filed or has caused to be filed all tax
returns that either waves required to file and has paid all federal, state and local taxes,
interest and penalties owed by either of the Companies as of the date hereof. Each of the Companies
has withheld, deducted, collected and paid all tares required to have been withheld, deducted,
collected and paid in connection with amounts paid or owing to any employees of either of the
Companies, including, without limitation, income and employment taxes. The Companies have not
waived any statute of limitations in respect of income or other taxes or agreed to any extension of
time with respect to an income or other tax assessment or deficiency. Neither of the Companies is
the beneficiary of any extension of time within which to file any income or other tax return.




          (j) Litigation. Except as set forth in Schedule 5.2(j), neither the Companies,
the Selling Shareholders nor Economy are: (i) subject to any outstanding Order; or (ii) a party to
any Litigation, or to the Knowledge of the Selling Shareholders or Economy, threatened to be made a
party to any Litigation or investigation.




          (k) Legal Compliance. The Companies are currently in material compliance with all
applicable Laws, including all Environmental Laws and all Labor and Employment Laws. Neither the
Companies, the Selling Shareholders nor Economy have received any notice from any governmental
authority alleging any such failure to comply with any Law, including, without limitation, any
Environmental Law attached hereto as Schedule 5.2(k) is a schedule listing to the Knowledge
of the Selling Shareholders or Economy, each and every inspection, or other visit to any of the
Companies’ premises by any federal, state or local governmental authority since January 1, 2004
which is or was related to the businesses, including: (i) the date of such inspection or visit;
(ii) the name of the applicable governmental authority, (iii) the substance of any communication
from the organization or authority after such visit; and (iv) the responsive action (if any) taken
by either of the Companies. Except as set forth on Schedule 5.1(k), since their inception, the
products sold and or distributed by either of the Companies have been tested for quality by
independent testing entities and neither of the Companies has received any negative report
concerning such tests that resulted in disciplinary action. Schedule 5.2(k) also contains a
complete list of (A) all products which have been withdrawn, suspended, or recalled by the
Companies (whether voluntarily or otherwise) since January 1, 2004, (B) all proceedings pending
against or involving the Companies seeking withdrawal, suspension, cessation of marketing, recall
or seizure of any product, or seeking criminal or civil penalties or injunctive relief for
violations of any Law relating to any product, and (C) all instances where the Companies have
suspended the operation of any facility or portion thereof (whether voluntarily or otherwise) since
January 1, 2004. Except as set forth on Schedule 5.2(k), to the Knowledge of the Selling
Shareholders or Economy, the Companies are in full compliance with all registration, labeling,
advertising and other requirements of any applicable Laws, including, without limitation
regulations of the United States Department of Agriculture, the United States Food and Drug
Administration and the Minnesota Department of Agriculture.




          (l) Insurance. Schedule 5.1(l) contains an accurate and complete list of all policies
of fire, liability, workmen’s compensation, title and other forms of insurance owned or




19









 








held by the Companies, and the Companies have heretofore delivered to Buyer a true and a
complete copy of all such policies, including all occurrence-based policies applicable to the
Companies or their respective Businesses for all periods prior to the Closing Date. All such
policies are in full force and effect, all premiums with respect thereto covering all periods up to
and including the Closing Date have been paid, and no notice of cancellation or termination has
been received with respect to any such policy. The Companies have never been refused any insurance
with respect to their assets or operations, nor has coverage been limited by any insurance carrier
to which the Companies have applied for any such insurance or with which the Companies have carried
insurance, during the last three (3) years. Schedule 5.1(1) also contains a list of all claims
which have been made by the Companies since January 1, 2004 under any such policy of insurance and
except as set forth on said list there are no pending or, to the Knowledge of the Selling
Shareholders or Economy threatened claims under any insurance policy.




          (m) Environmental Laws and Regulations. Except as set forth on Schedule
5.2(m):




               (i) There are no Hazardous Materials currently present on the Owned Real Estate or Leased Real
Estate, except in material compliance with Environmental Laws. The Companies have not permitted or
conducted any Hazardous Activity except in material compliance with applicable Environmental Laws.



               (ii) Within the last two (2) years, there has not been a release of any Hazardous Materials at
or from the Owned Real Estate or Leased Real Estate, except in material compliance with applicable
Environmental Laws.



          (n) Permits. Schedule 5.2(n) contains a complete and accurate list of each Permit. The
Companies are currently in material compliance with the terms and requirements of each Permit. The
Companies possess all permits necessary for the operation of the Businesses as currently conducted,
except for any permits the failure of which to possess could not reasonably be expected to have a
Material Adverse Effect.




          (o) Material Contracts. Schedule 5.2(o) lists:




               (i) each agreement to which either of the Companies is a party, under which either of the
Companies would be in breach or violation as a result of the execution of this Agreement and the
completion of the transactions contemplated hereby;



               (ii) each agreement, guarantee or arrangement that (x) is not in the ordinary course of
business of either of the Companies, or (y) involves performance of services or delivery of goods
or materials by or to either of the Companies of an annual amount or value in excess of $25,000;



               (iii) each lease by either of the Companies of personal property requiring annual payments in
excess of$10,000;



               (iv) each agreement with any labor union or other employee representative of a group of
employees relating to wages, hours and other conditions of



20









 







employment and each employment or consulting agreement to which either or the Companies is a
party;



               (v) each material agreement to which either of the Companies is a party containing covenants
that expressly purport to restrict either of the Companies’ business activities or limit the
freedom of either of the Companies to engage in any line of business or to compete with any other
Person;



               (vi) each power of attorney of either of the Companies that is currently effective and
outstanding;



               (vii) each agreement for pending capital expenditures by either of the Companies in excess of
$10,000;



               (viii) each agreement of either of the Companies not denominated in U.S. dollars;



               (ix) each agreement of either of the Companies relating to any of the Intellectual Property;



               (x) each agreement of either of the Companies with any Affiliate of the Companies, the Selling
Shareholders or Economy;



               (xi) each material agency, sales representation or commission allocation or sharing agreement
of either of the Companies;



               (xii) each vacation pay, severance pay or other so-called fringe benefit agreement of either
of the Companies;



               (xiii) a commission schedule applicable to the employees and agents of either of the
Companies;



               (xiv) each contract with present or former shareholders, officers, employees, agents or
consultants of either of the Companies; and



               (xv) each of the Companies’ respective employee manuals, handbooks and policies.


Except as set forth in Schedule 5.2(o), (1) each such agreement is binding and enforceable
in accordance with its terns against each of the Companies, as applicable, and against the other
parties thereto, (2) the Companies, as applicable, and each other party thereto is in material
compliance with the terms of such agreements, (3) no party thereto has repudiated any material
provision of any such agreements and neither of the Companies has received any written notice of
any, material dispute; claim or default (or event which with the passage of time or the giving of
notice would constitute a default) under any such agreements and (4) none of such agreements
contains any provisions whereby the transactions contemplated by this Agreement and the Ancillary
Agreements are considered an assignment or change in control requiring the consent of a party
thereto or third party or enabling a party thereto to terminate or modify such agreement.




21









 








          (p) Labor and Employment Matters. Schedule 5.2(p) hereto contains a list of
the following information for each employee of the Companies, including each employee on leave of
absence or layoff status: naive; job title; date of hiring; date of commencement of employment;
current compensation paid or payable and any change in compensation since December 31, 2005; sick
and vacation leave that is accrued but unused; use of leave under the Family and Medical Leave Act
and the applicable twelve month period used for the same; information concerning an employee’s
leave of absence or layoff status if applicable; and service credited for purposes of vesting and
eligibility to participate under any Benefit Plan (including a description of the terms and level
of coverage of all forms of health, life and disability insurance being provided to the employee
and/or dependents and the amount being paid by the employee therefor). Except as set forth in
Schedule 5.1(p) hereto: (i) neither of the Companies is currently a party to any collective
bargaining agreement or other labor contract; (ii) there is not presently pending, and to the
Knowledge of the Selling Shareholders or Economy there is not threatened, any strike, slowdown,
picketing, work stoppage, lock out, or employee grievance process involving either of the Companies
which could reasonably be expected to have a Material Adverse Effect on either of the Companies;
(iii) to the Knowledge of the Selling Shareholders or Economy, no event has occurred or
circumstance exists that could reasonably be expected to provide the basis for any work stoppage or
other labor dispute which could reasonably be expected to have a Material Adverse Effect on either
of the Companies, (iv) there is no grievance or arbitration proceeding pending against the
Companies, the Selling Shareholders or Economy by any employee of either of the Companies which
could reasonably be expected to have a Material Adverse Effect on either of the Companies; and (v)
to the Knowledge of the Selling Shareholders or Economy, no attempt is currently being made, or
since January 1, 2005 has been made, to organize any facilities or operations of the Companies.




          (q) Employee Benefits.




               (i) Schedule 5.2(q) hereto sets forth a list of each Benefit Plan of the Companies
which is currently sponsored or maintained by the Companies for employees or former employees of
the Companies. Schedule 5.2(q) identifies as such any Benefit Plan that is a Pension Plan
or a plan intended to meet the requirements of Section 401(a) of the Code. Except as set forth in
Schedule 5.2(q) hereto, neither of the Companies has sponsored, maintained, contributed to
or accrued an obligation to contribute to a Pension Plan at any time in the current year or in the
last six (b) calendar years. A copy of each of the Benefit Plans and all material written contracts
relating thereto, or to the funding thereof, including, without limitation, all material trust
agreements, insurance contracts, administration contracts, investment management agreements,
subscription and participation agreements, and recordkeeping agreements, each as in effect on the
date hereof. has been made available to Buyer. A true and correct copy of the most recent annual
report, accountant’s opinion of the plan’s financial statements, summary plan description, and
Internal Revenue Service determination letter with respect to each Benefit Plan, to the extent
applicable, has been made available to Buyer.




               (ii) Neither of the Companies nor any ERISA Affiliate of either of the Companies does now or
has within the last six (6) calendar years: (A) sponsored, maintained or contributed to any
Multiemployer Plan; or (B) had any obligation to contribute to or accrue or pay any benefits ender
any Multiemployer Plan.




22









 









                    (iii) Except as set forth on Schedule 52(q), neither of the Companies has, nor within
the last six (6) calendar years has had, any ERISA Affiliate.




                    (iv) Pull payment has been made or will be made by each of the Companies of all amounts that
are due to be paid before the date hereof under the terms of each Benefit Plan as contributions,
premiums or benefits. With respect to each Pension Plan, each of the Companies has satisfied the
minimum funding standards of ERISA and the Code and have paid in full all insurance premiums to the
PBGC which were due before the date hereof.




                    (v) Except as set forth on Schedule 5.2(q), in the current year or the previous six
(6) calendar years, no Pension Plan has been completely or partially terminated and the PBGC has
not instituted a proceeding to terminate any Pension Plan or to appoint a trustee to administer any
Pension Plan. Within the last six (6) calendar years, no Pension Plan has been the subject of a
reportable event (as defined in Section 4043 of ERISA) as to which a notice is required to be filed
with the PBGC.




                    (vi) The Benefit Plans have been operated in material compliance with applicable Law and the
Companies have not received any written notice issued by any governmental authority questioning or
challenging such compliance.




                    (vii) All Pension Plans comply, in all material respects, in form and in operation with all
applicable requirements of sections 401(a) and 501(a) of the Code.




                    (viii) None of the assets of any Benefit Plan are invested in employer securities or employer
real property.




                    (ix) There has not been any “prohibited transaction” (as described in section 406 of ERISA or
section 4975 of the Code) with respect to any Benefit Plan and Seller has not otherwise engaged in
any prohibited transaction, except as specifically exempted by section 4975(d)(1) of the Code.




                    (x) There has been no act or omission which has given rise to or may give rise to fines,
penalties, taxes, or related charges under sections 502(c), 502(i) or 4071 of ERISA or Chapters 43,
47, or 68 of the Code for which any Seller may be liable.




                    (xi) None of the payments contemplated by the Benefit Plans would, in the aggregate,
constitute excess parachute payments as defined in section 28OG of the Code (without regard to
subsection (b)(4) thereof).




                    (xii) No Benefit Plan is a Multiemployer Plan.




                    (xiii) Each Benefit plan which constitutes a “group health plan” (as defined in section 607(1)
of ERISA or section 4980B(g)(2) of the Code), including any plans of current and former ERISA
Affiliates which must be taken into account under section 4980B and 414(1) of the Code or section
601 of ERISA, have been operated in material compliance with the group health plan continuation
coverage requirements of section 4980B of the Code and section 601 of ERISA to the extent such
requirements are applicable.




23









 








               (xiv) Except as set forth on Schedule 5.2(q), there have been no “leased employees”
within the meaning of section 414(n) of the Code.




               (xv) Neither of the Companies has any liability or contingent liability under any Benefit Plan
for providing post-retirement medical or life insurance benefits, other than statutory liability
for providing group health plan continuation coverage under Part 6 of Title I of ERISA and section
4980B or former section 162(k) of the Code.




               (xvi) There has been no act or omission by the Companies, the Selling Shareholders or Economy
that would impair the right or ability of either of the Companies to unilaterally amend or
terminate any Benefit Plan.




          (r) Intellectual Property. Schedule 5.2(r) hereto lists all Intellectual
Property of each of the Companies. All of the registered Intellectual Property is registered in
each of the Companies’ name, as applicable, is in material compliance with all formal legal
requirements and is valid and enforceable in all material respects. None of the registered
Intellectual Property is currently involved in any interference, reissue, reexamination, or
opposition proceeding. To the Knowledge of the Selling Shareholders or Economy, there is no
intellectual property of any third party that infringes any of the Intellectual Property. To the
Knowledge of the Selling Shareholders or Economy, none of the Intellectual Property infringes any
intellectual property right of any other Person.




          (s) Affiliate Transactions. Neither of the Companies, the Selling Shareholders or
Economy nor any of their Affiliates currently owns a material equity interest in any person that
(i) has had material business dealings with the Companies, other than business dealings or
transactions disclosed in Schedule 5.2(s) hereto, each of which has been conducted in the
ordinary course of business at substantially prevailing market prices and on substantially
prevailing market terms, or (ii) is currently engaged in direct competition with either of the
Companies. The Companies have no subsidiaries or any equity investment in any joint venture or any
other Person not a party to this Agreement.




          (t) Broker’s Fees. Neither the Selling Shareholders, Economy nor the Companies have
any liability or obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement.




          (u) Suppliers; Customers.




               (i) Schedule 5.2(u)(i) hereto lists each Companies’ customers constituting in excess
of five percent (5%) of the Companies’ sales volume and the percentage sales volumes of such
customers during the fiscal year ended December 31, 2005. To the Knowledge of the Selling
Shareholders or Economy, no customer listed in Schedule 5.2(u)(i) hereto has terminated its
business relationship with Seller or has materially reduced (or has informed Seller in writing that
it intends to materially reduce) the volume of goods or services it is currently purchasing from
the level of goods or services purchased by such customer historically.



               (ii) Schedule 5.2(u)(ii) sets forth the material suppliers of the Companies. To the
Knowledge of the Selling Shareholders or Economy, none of the suppliers



24









 







listed in Schedule 5.2(u)(ii) hereto has indicated in writing its intention to
terminate its business relationship with the Companies, materially reduce the level of products or
services supplied to the Companies from historic levels, or materially change the price or terms on
which such products or services are sold to the Companies.



          (v) Inventory and Equipment. Except as provided in Schedule 5.2(v), all of the
equipment used in the Businesses is in good working order, ordinary wear and tear excepted. All of
the inventory and work in process in the Businesses is saleable and of good quality.



          (w) Schedules. The information set forth in the Schedules to this Agreement is correct
and complete in all material respects.




     5.3 Representations and Warranties of Buyer. Buyer represents and warrants to the
Selling Shareholders as of the date of this Agreement and as of the Closing Date that:



          (a) Organization of Buyer. Buyer is duly organized, validly existing and in good
standing under the laws of the State of Illinois.




          (b) Authorization. Buyer has full power and authority to execute and deliver this
Agreement and the Ancillary Agreements to which it is a party and to perform. its obligations
hereunder and thereunder. The execution, delivery and performance of this Agreement and the
Ancillary Agreements to which Buyer is a party by Buyer has been duly authorized by all necessary
action on the part of Buyer.




          (c) Validity; Binding Effect. This Agreement has been duly and validly executed and
delivered by Buyer. This Agreement constitutes a valid and legally binding obligation of Buyer,
enforceable against Buyer in accordance with its terms. Upon the execution of the Ancillary
Agreements to which Buyer is a partly at Closing, each of the Ancillary Agreements will constitute
valid and legally binding obligation of Buyer.




          (d) Noncontravention. The execution, delivery and performance of this Agreement and
the Ancillary Agreements to which Buyer is a party by Buyer, the consummation of the transactions
contemplated hereby and thereby and the compliance with or fulfillment of the terms and provisions
hereof or thereof or of any other agreement or instrument contemplated hereby, do not (i) result in
a material breach of any of the provisions of the Articles of Incorporation or By-Laws of Buyer, as
applicable (ii) contravene, in any material respect, any Law or Order specifically applicable to
Buyer, or (iii) require Buyer to obtain the approval, consent or authorization of any governmental
authority or other third party which has not been obtained in writing prior to the date of this
Agreement.




          (e) Broker’s Fees. Buyer has no liability or obligation to pay any fees or commissions
to any broker, finder, or agent with respect to the transactions contemplated by this Agreement.




          (f) Lifeway Shares. The Lifeway Shares and the Additional Lifeway Shares, when issued,
are duly authorized, validly issued, fully paid and non-assessable shares of Buyer.




25









 








          (g) SEC Filings. Since January 1, 2005, Buyer has timely filed (including extensions
granted by the SEC) all reports, schedules, forms, statements and other documents required to be
filed by it with the SEC pursuant to the reporting requirements of the Securities Exchange Act of
1934, as amended (the “Exchange Act”) (all of the foregoing filed prior to the date hereof and all
exhibits included therein and financial statements and schedules thereto and documents (other than
exhibits) incorporated by reference therein, being hereinafter referred to as the “SEC Documents”).
As of their respective dates, and taking into account any amendments thereto fled prior to the date
hereof, the SEC Documents complied in all material respects with the requirements of the Exchange
Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC
Documents, and none of the SEC Documents, at the time they were filed with the SEC, and taking into
account any amendments thereto filed prior to the date hereof, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which they were made, not
misleading. As of their respective dates, and taking into account any amendments thereto filed
prior to the date hereof, the financial statements of the Buyer included in the SEC Documents
complied as to form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto. Such financial statements have
been prepared in accordance with generally accepted accounting principles, consistently applied,
during the periods involved (except (i) as may be otherwise indicated in such financial statements
or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may
exclude footnotes or may be condensed or summary statements) and fairly present in all material
respects the financial position of the Buyer as of the dates thereof and the results of its
operations and cash flows for the periods them ended (subject, in the case of un-audited
statements, to normal year-end audit adjustments). Except as set forth in the financial statements
of Buyer included in the SEC Documents, Buyer has no liabilities, contingent or otherwise, other
than (i) liabilities incurred in the ordinary course of business subsequent to the date of such
financial statements and (ii) obligations under contracts and commitments incurred in the ordinary
course of business and not required under generally accepted accounting principles to be reflected
in such financial statements, in each case of clause (i) and (ii) next above which, individually or
in the aggregate, are not material to the financial condition, business, operations, properties,
operating results or prospects of Buyer. The SEC Documents contain a complete and accurate list of
all written and oral contracts, agreements, leases or other instruments to which Buyer or any
subsidiary is a party or by which Buyer or any subsidiary is subject which are required by the
rules and regulations promulgated by the SEC to be so listed (each a “Contract”). None of Buyer,
its subsidiaries or, to the best of Buyer’s Knowledge, any of the other parties thereto, is in
breach or violation of any Contract, which breach or violation would, or with the lapse of time,
the giving of notice, or both, have a Material Adverse Effect.




          (h) Buyer Material Adverse Effect. Since the Company’s Form 10-Q for the period ended March
31, 24016, (i) there has not been any Material Adverse Effect on or with respect to Buyer, (ii)
Buyer has operated its business only in the ordinary course; and (iii) the Buyer’s business has not
experienced a Material Adverse Effect to its assets (not covered by insurance).




26









 








ARTICLE VI

COVENANTS




     6.1 Further Assurances. If any further action is necessary or desirable to carry out
the purposes of this Agreement, each of the Parties hereto will take such further action
(including, without limitation, the execution and delivery of such further instruments and
documents) as any other Party reasonably may request, all at the sole cost and expense of the
requesting Party (unless the requesting Party is entitled to indemnification therefor pursuant to
the terms hereof).



     6.2 Confidentiality. The Parties will treat and hold as confidential all confidential
information concerning each other including without limitation information regarding products,
suppliers, operational methods, technical processes, plans for future developments, financial
information, customer information and other information not readily available to the public, the
disclosure of which to third parties could in each case reasonably be expect to have a Material
Adverse Effect (“Confidential Business Information”), and shall refrain from using any of the
Confidential Business Information except in connection with this Agreement or as may be required to
be disclosed by any Law or administrative or legal process or pursuant to any securities exchange
rules. “Confidential Business Information” shall not include any information which: (i) is already
generally available to the public; or (ii) is lawfully disclosed to a third party who at the time
of such disclosure was, to the knowledge of the applicable Party, not bound by any confidentiality
agreement. Notwithstanding anything contained herein to the contrary, the Parties agree and
acknowledge that each Party (and each employee, representative or other agent of each Party) may
disclose Confidential Business Information to such Party’s legal counsel and other professional
advisers.



     6.3 Public Announcements. No Party shall male any press release or public announcement
concerning the existence of this Agreement or the transactions contemplated hereby, except with the
consent of the other Parties and except as and to the extent that any such Party shall be so
obligated by Law, in which case the other Parties shall be advised and the Parties shall use their
reasonable efforts to cause a mutually agreeable release or announcement to be issued; provided,
however, that the foregoing shall not preclude communications or disclosures necessary to implement
the provisions of this Agreement to comply with accounting and Securities and Exchange Commission
disclosure obligations or applicable regulatory disclosure obligations.



     6.4 Access to Information and Facilities. From and after the date of this Agreement,
the Selling Shareholders and Economy shall cause the Companies to give Buyer and its respective
Representatives access during normal business hours to all of the facilities, properties, books,
contracts, commitments and records of each of the Companies and shall make the officers and
employees of each of the Companies available to Buyer and their Representatives from time to time
as they may reasonably request. Buyer and its Representatives will be furnished with any and all
information concerning the Companies, the Businesses and the Stock, and copies of any and all
documents which any of their may reasonably request.



     6.5 Operating Covenants. Between the date hereof and the Closing Date, except as
permitted by this Agreement or with the prior written consent of Buyer, which shall not be



27









 







unreasonably withheld, delayed or conditioned, the Selling Shareholders and Economy shall, and
shall cause each of the Companies to:



          (a) operate the Businesses in the ordinary course of business consistent with past practice,




          (b) use commercially reasonable efforts to preserve the goodwill and business of the
customers, employees, and suppliers each of the Companies;




          (c) maintain the books of account and records of each of the Companies in the ordinary course
of business consistent with past practices;




          (d) maintain all material casualty, liability (primary, umbrella and excess) and property
insurance relating to the Businesses as in effect or the date of this Agreement in the ordinary
course of business consistent with past practice;




          (e) (i) maintain, consistent with its past practices, all of its current credit, collections
and payment policies, procedures and practices, (ii) collect trade accounts and other receivables
in the ordinary course of business consistent with its current collection policies, procedures and practices; (iii) except where subject to a good faith dispute, pay
all accounts payable in the ordinary course of business consistent with past practice,




          (f) maintain the Companies’ assets, in all material respects, in good operating condition and
repair (subject to normal wear and tear); and




          (g) promptly notify Buyer of any written notice or other written communication, including any
written threat, filing, service or institution of any Action brought by any Person, adverse to the
consummation of this Agreement or the other transactions contemplated hereby.




     6.6 No Shop.



          (a) The Selling Shareholders and Economy shall not, and shall not permit any of the Companies,
or any of their respective Affiliates, directors, officers, employees, representatives or agents
(collectively, the “Representatives’) to, directly or indirectly, (i) discuss, negotiate,
undertake, initiate, authorize, recommend, propose or eater into, either as the proposed surviving,
merged, acquiring or acquired entity, any transaction involving a merger, consolidation, business
combination, purchase or disposition of any material amount of the business, operations,
properties, or asset relating to the Companies or any Stock other than the transactions
contemplated by this Agreement (an “Acquisition Transaction”), (ii) facilitate, solicit or initiate
discussions, negotiations or submissions of proposals or offers in respect of an Acquisition
Transaction, (iii) furnish or cause to be furnished, to any Person, any information concerning the
business, operations, properties or assets of any of the Companies in connection with an
Acquisition Transaction, or (iv) otherwise cooperate in any way with, or assist or participate in,
or facilitate, any effort or attempt by any other Person to do or seek any of the foregoing.




28









 









          (b) The Selling Shareholders and Economy shall (and shall cause their Affiliates and
Representatives to) immediately cease and cause to be terminated any existing discussions or
negotiations with any Persons (other than Buyer) conducted heretofore with respect to any
Acquisition Transaction.




     6.7 Sales and Transfer Tax Expenses. If the transactions contemplated by this
Agreement are not exempt from sales and use Taxes and other transfer Taxes, the Selling
Shareholders shall pay such Taxes and any and all recording fees imposed upon the transfer of the
Stock hereunder and the filing of any instruments.



     6.8 Employees. Buyer shall have no obligation whatsoever to continue the employment of
any employees of either of the Companies. ?clothing contained. herein shall be deemed to give any
employees of either of the Companies any rights of any kind against Buyer, and done of such
employees shall be third party beneficiaries.



ARTICLE VII

CONDITIONS TO CLOSING; CLOSING DELIVERIES




     7.1 Buyer’s Conditions to Closing. The obligations of the Buyer to consummate the
Closing hereunder are subject to the satisfaction, at or prior to Closing, of each of the following
conditions (unless waived in writing by the Buyer):



          (a) Representations and Warranties. The representations and warranties of the Selling
Shareholders and Economy made in this Agreement shall be true in all material respects as of the
Closing Date (except to the extent that such representations or warranties expressly related to an
earlier date, in which case as of such earlier date and except for changes permitted or
contemplated by the terms of this Agreement), except where the failure of such representations or
warranties to be true or correct would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.




          (b) No Other Material Adverse Effect. Between the date hereof and the Closing, there
shall not have occurred any Material Adverse Effect with respect to any of the Selling
Shareholders, Economy or the Companies.




          (c) Covenants. The covenants and agreements to be complied with and performed by the
Selling Shareholders and/or Economy shall have been complied with or performed in all material
respects.




          (d) No Order. No Party shall be subject to any Order restraining or prohibiting the
consummation of the transactions contemplated hereby.




          (e) Consents. All consents required to be given hereunder or in connection with the
transactions contemplated hereby shall have been obtained and delivered to Buyer and shall be in
full force and effect as of the Closing and shall not be subject to any condition, modification or
amendment that Buyer has not waived in writing.




          (f) Agreements. All agreements and contracts between either of the Companies and
Economy or any other employee, including but not limited to any employment

29









 








agreements, consulting agreements, compensation agreements and the like, shall be terminated,
rescinded and/or cancelled and rendered void and of no further effect; provided, however, that this
Section 7.1 shall not apply to this Agreement, any Ancillary Agreement or any other document
necessary or appropriate to effect the transactions contemplated hereunder.




          (g) Waiver of Certain Rights by the Selling Shareholders and Economy. The Selling
Shareholders and Economy hereby waive, release and forever discharge, effective as of the Closing
Date, any and all rights and any and all provisions of any contracts or Benefit Plans to which they
or their Affiliates may be parties or beneficiaries, to the extent such rights and provisions
consist of or contain rights of first refusal, put rights, transfer restrictions or other
obligations with respect to the Stock or which would conflict or be inconsistent with the
execution, delivery, or performance of this Agreement or the transactions contemplated by this
Agreement, and none of such rights or provisions shall thereafter be enforceable by any party
thereto with respect to the transactions contemplated hereby. The Selling Shareholders and Economy
agree that effective as of the Closing, all rights of the Selling Shareholders, Economy and their
respective Affiliates to indemnification by the Companies are terminated, void, of no effect and
unenforceable by any of them.




          (h) Stock Plans, etc. All Stock Plans and any and all rights existing thereunder shall
have been terminated and Helios shall not have any outstanding preferred or restricted stock and
(i) the Selling Shareholders shall own 100% of the issued and outstanding common stock of Helios
and (ii) Helios shall own 100% of the membership interests of Pride.




          (i) Debt. Drone of the Companies shall have any Debt as of the Closing; provided,
however, that Buyer shall assume the obligations with respect to the Department of Agriculture LC
and shall either (A) use best efforts to secure the release of Economy’s personal guaranty of the
Companies reimbursement obligations with respect to the Department of Agriculture LC within three
months of Closing after which time, Economy may withdraw his guaranty or (B) indemnify Economy from
and against any liability or loss with respect to such guaranty.




     7.2 The Selling Shareholders’ Conditions to Closing. The obligations of the Selling
Shareholders to consummate the Closing hereunder are subject to the satisfaction, at or prior to
Closing, of each of the following conditions (unless waived in writing by the Selling
Shareholders):



          (a) Representations and Warranties. The representations and warranties of the Buyer
made in this Agreement shall be true in all material respects as of the Closing Date (except to the
extent that such representations or warranties expressly related to an earlier date, in which case
as of such earlier date and except for changes permitted or contemplated by the terms of this
Agreement), except where the failure of such representations or warranties to be true or correct
would not reasonably be expected to have, individually or in the aggregate, a Material Adverse
Effect.




          (b) No Other Material Adverse Effect. Between the date hereof and the Closing, there
shall not have occurred any Material Adverse Effect with respect to any of the Buyer.




30








 








          (c) No Order. No Party shall. be subject to any Order restraining or prohibiting the
consummation of the transactions contemplated hereby.




     7.3 Selling Shareholders’ Closing Deliveries. At the Closing, in addition to any other
documents specifically required to be delivered pursuant to this Agreement, the Selling
Shareholders and Economy shall, in form and substance reasonably satisfactory to Buyer and its
counsel, deliver to Buyer the following:



          (a) copies of resolutions authorizing the execution, delivery and performance of this
Agreement, including the consummation of the transactions contemplated hereby, and the copies of
each Company’s charter and bylaws (or equivalent organizational documents), each certified by an
officer of each Seller or such Company, as applicable;




          (b) good standing certificates for each of the Companies issued by the Secretary of State of
the jurisdiction of incorporation or formation, as the case may be, dated no earlier than ten (10)
days prior to the Closing; Date; and




          (c) the certificates representing the Stock accompanies by Stock powers duly endorsed in
blank, sufficient to convey and transfer to Buyer title to the Stock, free and clear of all Liens;




          (d) a release by the Selling Shareholders, Economy and all other senior managers of the
Companies of all claims against the Companies.




          (e) to the extent required by Law to create an effective conveyance, assignments of all items
of Intellectual Property, in proper form for recordation with the United States Patent and
Trademark Office; or other appropriate office, duly executed by the appropriate Persons, free and
clear of all Liens;




          (f) for each parcel of Leased Real Estate or other material contract requiring approval for a
“change in control” as contemplated by this Agreement (i) an assignment and assumption of any such
lease or contract, consented to by each landlord or other party thereof, and (ii) an original lease
for such parcel, as amended to date or in the case of a contract the original of such contract
amended to date;




          (g) resignations, effective as of the Closing, from all officers, directors and Managers of
each of the Companies; and




          (h) any other documents or instruments of conveyance, assignment and transfer that may be
reasonably necessary to convey, transfer and assign the Stock from the Selling Shareholders to
Buyer, free and clear of Liens, or otherwise reasonably necessary to effect the transactions
contemplated hereby.




     7.4 Buyer’s Closing; Deliveries. At the Closing, in addition to any other documents
specifically required to be delivered pursuant to this Agreement, Buyer shall deliver to the
Selling Shareholders:



31









 





          (a) the cash portion of the Purchase Price, in immediately available fiends to the Selling
Shareholders in accordance with Schedule 4.1;




          (b) the Purchase Note to Amani in accordance with Schedule 4.1;




          (c) the Lifeway Letter of Credit;




          (d) certificates representing the Lifeway Shares in accordance with Schedule 4.1 and
as set forth in Section 4.1;




          (e) a certificate of the secretary of Buyer, dated as of the date hereof-certifying (i) the
resolutions duly adopted by Buyer authorizing and approving the execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated hereby, (ii) as to
incumbency of officers, and (iii) that such resolutions have not been rescinded or modified and
remain in full force and effect as of the date hereof;




          (f) a certificate of good standing for Buyer, certified by the Illinois Secretary of State,
dated no earlier than ten (10) days prior to the Closing Date; and




          (g) such other documents or instruments reasonably necessary to effect the transactions
contemplated hereby.




          (h) a certificate of insurance evidencing that Buyer has obtained products liability insurance
for the Business for the period commencing on the Closing Date.




     7.5 Mutual Deliveries. At Closing the Parties shall mutually execute and deliver:



          (a) the Consulting and Noncompetition Agreement;




          (b) the Noncompetition Agreements; and




          (c) the Control Agreement.




ARTICLE VIII

INDEMNIFICATION




     8.1 Indemnification by the Selling Shareholders and Economy. Subject to Section
8.3 and Section 8.4 below, the Selling Shareholders and Economy shall, jointly and
severally, indemnify Buyer against any and all Losses arising directly out of (a) any inaccuracy of
a representation or warranty made by any Selling Shareholder or Economy in this Agreement or any
other agreement, certificate, document or instrument executed in connection herewith, and (b) any
breach of any covenant or agreement made by any Selling Shareholder or Economy in this Agreement or
any Ancillary Agreement or any other agreement, certificate, document or instrument executed in
connection herewith or therewith; provided that Buyer shall first exhaust its remedy of offset
against the Purchase Note before pursuing indemnification claims against any other Party.



32









 





     8.2 Indemnification by Buyer. Subject to Section 8.3 and Section 8.4
below, Buyer shall indemnify the Selling Shareholders against any and all Losses arising directly
out of (a) any inaccuracy of a representation or warranty made by Buyer in this Agreement or any
other agreement, certificate, document or instrument executed in connection herewith, and (b) any
breach of any covenant or agreement made by Buyer in this Agreement or any Ancillary Agreements or
any other agreement, certificate, document or instrument executed in connection herewith or
therewith.



     8.3 Survival.



          (a) All representations and warranties made by the Selling Shareholders, Economy or Buyer in
this Agreement, and any other agreement, certificate, document or instrument delivered pursuant
hereto, shall survive the Closing and be enforceable against Seller for the fallowing period after
the date hereof, after which time they shall expire and be of no further force or effect: (i)
Section 5.1 (authorization), Section 5.1(b) (validity), Section 5.1(d) (title), Section 5.2(b)
(authorization), Section 5.2(c) (validity), and Section 5.2(f) (title), and Section 5.3(b)
(authorization) indefinitely; (ii) Section 5.2(i) (taxes), Section 5.2(q) (ERISA) and Section
5.1(m) (environmental), for the applicable statute of limitations; (iii) Section 5.2 (v) (inventory
and equipment) six (6) months and (iv) all other representations and warranties, eighteen months
(18) months. Any claim for indemnification with respect to any such matter which is not asserted by
a notice given as herein provided, that specifically identifies the particular breach underlying
such claim, within such period of survival may not be pursued and shall be thereafter forever
barred.




          (b) For purposes of clarity, the limitations set forth in Sections 8.3(a) above only apply to
claims for indemnification relating to inaccuracies or breaches of representations and warranties.
Specifically, and without limiting the generality of the foregoing, such limitations shall not
apply to indemnification claims relating to breaches of covenants, including without limitation,
covenants related to the satisfaction of Debt




          (c) Buyer shall have the absolute right to offset against sums due to Amani under the Purchase
Dote any amounts for which Buyer i s entitled to indemnification under this Agreement as provided
in Section 4.1(v).




     8.4 Limitations.



          (a) Notwithstanding anything in this Section 8 to the contrary, except as provided below, the
Selling Shareholders and Economy shall be liable for Losses arising under Section 8.1 only to the
extent the Losses therefrom exceed an aggregate amount of $50,010 (the “Basket”), in which case all
such Losses from the first dollar shall be promptly paid in accordance with this Agreement. In
addition, except as provided below, the indemnification obligations of Selling Shareholders and
Economy arising under Section 8.1 shall in no event exceed an aggregate amount equal to $4,200,000
(the “Cap”). Notwithstanding the foregoing, the limitations set forth in this Section 8.4(a) shall
not apply to claims for indemnification brought for breach of a representation or warranty set
forth in Section 5.1(a) (authorization), Section 5.1(b) (validity), Section 5.1(d) (title), Section
5.2 (b) (authorization), Section 5.2(c) (validity), Section 5.2(f) (title), Section 5.2(i) (taxes)
and Section 5.2(q) (ERISA) or to claims for fraud or

33









 








intentional material misrepresentation. In addition, the Selling Shareholder shall not be
required to indemnify for any breach of Section 5.2 (Tax Matters) to the extent of any disallowed
deductions that benefit the Companies after the Closing.




          (b) Notwithstanding anything in this Section 8 to the contrary; except as provided below, (i)
Buyer shall be liable: for Losses arising under Section 8.2 only to the extent the Losses exceed
the Basket, in which case all such Losses from the first dollar shall be promptly paid in
accordance with this Agreement and (ii) in no event shall the indemnification obligations of Buyer
arising under Section 8.2 exceed an aggregate amount equal to the Cap. Notwithstanding the
foregoing, the limitations set forth in this Section 8.4 (b) shall not apply to claims for
indemnification brought for breach of a representation or warranty set forth in Section 5.3(b)
(authorization) or to claims for fraud or intentional material misrepresentation..(d) There shall
be no duty to indemnify for claims of Selling Shareholders’ breaches of representations or
warranties disclosed to Buyer in writing in the Schedules attached hereto.




     8.5 Third-Party Claims.



          (a) Promptly after receipt by a party hereto entitled to indemnity under Section. 8.1
or Section 8.2 (are “Indemnified Person”) of notice of the assertion of a claim for which
such party hereto is entitled to indemnity hereunder against it by a third party (a “Third-Party
Claim”), such Indemnified Person shall give notice to the party hereto obligated to indemnify under
such Section (an “Indemnifying Person”) of the assertion of such Third-Party Claim,
provided, that the failure to notify the Indemnifying Person will not relieve the
Indemnifying Person of any liability that it may have to any Indemnified Person, except to the
extent that the Indemnifying Person demonstrates that the defense of such Third-Party Claim is
prejudiced by the Indemnified Person’s failure to give such notice.




          (b) If an Indemnified Person gives notice to the Indemnifying Person pursuant to Section
8.4(a) of the assertion of a Third-Party Claim, the Indemnifying Person shall be entitled to
participate in the defense of such Third-Party Claire and, to the extent that it wishes, to assume
the defense of such Third-Party Claim with counsel satisfactory to the Indemnifying Person. After
notice from the Indemnifying Person to the Indemnified Person of its election to assume the defense
of such Third-Party Claim, the Indemnifying Person shall not, so long as it diligently conducts
such defense be liable to the Indemnified Person under this Article 8 for any fees or costs of
other counsel or any other expenses with respect to the defense of such Third-Party Claim, in each
case subsequently incurred by the Indemnified Person in connection with the defense of such
Third-Party Claim.. If the Indemnifying Person assumes the defense of a Third-Party Claim, (i) such
assumption. will not establish for purposes of this Agreement that the claims made in that
Third-Party Claim are within the scope of and subject to indemnification, and (ii) no compromise or
settlement of such Third-Party Claim may be effected by the Indemnifying Person without the
Indemnified Person’s consent unless (A) there is no finding or admission of any violation of Law or
any violation of the rights of any party; and (B) the sole relief provided is monetary damages that
are paid in full by the Indemnifying Person.




          (c) Notwithstanding the foregoing, the Indemnified Person may, by notice to the Indemnifying
Person, assume the exclusive right to defend, compromise or settle such. Third-Party Claim, but the
Indemnifying Person will not be bound by any determination of any Third-

34









 








Party Claim so defended for the purposes of this Agreement or any compromise or settlement
effected without its consent.




ARTICLE IX

TERMINATION




     9.1 Termination. This Agreement may be terminated at any time prior to the Closing
Date:



          (a) by mutual written agreement of the Parties;




          (b) by any Party if the Closing shall not have occurred on or prior to August 10, 2006 (or
such later date as the Parties may have agreed in writing); or




          (c) by any Party if a court of competent jurisdiction or governmental authority shall have
issued an order, decree or ruling or taken any other action, in each case permanently restraining,
enjoining or otherwise prohibiting the transactions contemplated by this Agreement, and such order,
decree, ruling or other action shall have become final and nonappealable.




     9.2 Effect of Termination. In the event of termination of this Agreement pursuant to
Section 9.1, all obligations of the Parties hereto tinder this Agreement shall, terminate and there
shall be no liability or obligation on the part of the Selling Shareholders; Economy or Buyer to
any other Party hereto, except (i) that the obligations of the Parties under Section 6.2
(Confidentiality), Section 6.3 (Public Announcements), Section 10.3 (Expenses) and Section 10.4
(Governing Law) of this Agreement shall retrain in full force and effect, (ii) that such
termination shall not relieve any Party of any liability for any breach of this Agreement if this
Agreement is terminated by operation of Section 9.1(b) as a result of a Party’s breach of the terms
of this Agreement.



ARTICLE X

MISCELLANEOUS




     10.1 Assignment. No party may assign any of its rights or delegate any of its
obligations tender this Agreement without the prior written consent of the other party hereto.



     10.2 Notices. All notices, requests, consents and other communications hereunder
(each, a “Notice”) shall be in writing and shall be deemed to have been given (a) if mailed, two
(2) business days after such Notice is sent, when sent via first class United States registered
mail, return receipt requested, postage prepaid to the address listed below for the party to whom
the Notice is being sent (the “Notice Party”), (b) if hand delivered or delivered by courier, upon
actual delivery of such Notice to the Notice Party at the address listed below for such Notice
Party, or (c) if sent by facsimile, on the first business dad` after the date of the sender’s
receipt of a confirmed transmission of such Notice to the Notice Party at the facsimile number, if
any, listed below for such Notice Party provided the party giving such Notice mails a copy of such
Notice within two (2) business days after the transmission of such Notice by facsimile to the
Notice Party. The addresses and facsimile numbers for each party to this Agreement, as of the date
hereof, are.



35









 





	 	 	 	 	 	 	 
	 	 	If to Buyer:	 	Lifeway Foods, Inc.
	 	 	 	 	6431 W. Oakton
	 	 	 	 	Morton Grove, Illinois 60053
	 

	 	 	 	Attention:
	 	Mr. Edward Smolyansky
	 

	 	 	 	Telephone:
	 	847-967-1010
	 

	 	 	 	Facsimile:
	 	847-967-6558
	 
	 	 	 	 	 	 
	 	 	With copies to:	 	Harris Kessler & Goldstein LLC
	 	 	 	 	640 North LaSalle St., Suite 590
	 	 	 	 	Chicago, Illinois 60610
	 

	 	 	 	Attention:
	 	Richard N. Kessler, Esq.
	 

	 	 	 	 	 	Alan D. Leib, Esq.
	 

	 	 	 	Telephone:
	 	312-280-0111
	 

	 	 	 	Facsimile:
	 	312-280-8232
	 
	 	 	 	 	 	 
	 	 	If to the Selling	 	Mr. George Economy
	 	 	Shareholders or	 	321 High. School Road NE Suite 3
	 	 	Economy:	 	PMB 385
	 	 	 	 	Bainbridge Island, Washington 98110
	 
	 	 	 	 	Stephen Chao, Madison Chao 1993 Trust and
Virgil Nicholas Chao 1994 Trust
	 	 	 	 	c/o Stephen Chao
	 	 	 	 	211 Alta Avenue
	 	 	 	 	Santa Monica, California 90402-2738
	 
	 	 	 	 	Philip Tasho
	 	 	 	 	128 Queen Street
	 	 	 	 	Alexandria, Virginia 22314-2611
	 
	 	 	 	 	 	 
	 	 	With copies to:	 	Maslon Edelman Borman & Brand, LLP
	 	 	 	 	90 South Seventh Street
	 	 	 	 	3300 Wells Fargo Center
	 	 	 	 	Minneapolis, Minnesota 55402
	 

	 	 	 	Attention:
	 	Douglas T. Holod, Esq.
	 

	 	 	 	Telephone:
	 	612-672-5313
	 

	 	 	 	Facsimile:
	 	612-642-8313





Either party may change its address or facsimile number by providing written notice, in accordance
with the foregoing provisions of this Section 10.2, to the other Parties of such change.




     10.3 Expenses; Attorneys’ Fees.



          (a) Each party hereto will pay all costs, fees and expenses incident to its negotiation and
preparation of this Agreement and to its performance and compliance with all


36









 








agreements contained herein on its part to be performed, including the fees, expenses and
disbursements of its respective counsel and accountants.




          (b) In any litigation between the parties regarding this Agreement, the losing party shall pay
to the prevailing party all reasonable expenses and court costs, including, without limitation,
reasonable attorneys’ fees and costs, incurred by the prevailing party-A party shall be considered
the prevailing party if (1) it initiated the litigation and obtains substantially all of the relief
or remedy it sought, either through a judgment or the losing party’s voluntary action., (ii) the
other party withdraws its action without substantially obtaining the relief or remedy it sought, or
(iii) it did not initiate the litigation and judgment is entered for either party, but without
substantially granting the relief or remedy sought by the initiating party.




     10.4 Governing Law; Forum.



          (a) This Agreement shall be governed by and construed in accordance with the Laws of the State
of Illinois, without regard to such jurisdiction’s conflict of laws principles.




          (b) Any controversy, claim or dispute arising out of or relating to this Agreement or the
breach, termination, enforceability or validity of this Agreement shall be brought only in (i) if
brought by the Selling Shareholders or Economy, in Coop County, State of Illinois or if it has or
can acquire jurisdiction, any United States District Court sitting in Cook County, Illinois or (ii)
if brought by Buyer in Hennepin County, State of Minnesota, if it has or can acquire jurisdiction,
any United States District Court sitting in Hennepin County, Minnesota and each of the parties
irrevocably submits to the exclusive jurisdiction of each such courts in any such matter, waives
any objection it may now or hereafter have to venue or to convenience of forum, agrees that all
claims in respect of the matter shall be heard and determined only in any such courts.




          (c) The Parties agree that either of them may file a copy of this Section 10.4 with any court
as written evidence of the knowing, voluntary and bargained agreement between the parties
irrevocably to waive any objections to venue or to convenience of forum. Process in any matter
referred to in this Section 10.4 may be served oil any Party anywhere in the world.




     10.5 Partial Invalidity: Injunctive Rights.



          (a) In case any one or more of the provisions contained herein shall, for any reason, be held
to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Agreement, but this Agreement shall
be construed as if such invalid, illegal or unenforceable provision or provisions had never been
contained herein. If any applicable statute, rule or regulation contains any (nonwaivable)
requirement that is contrary to or conflicts with any provision herein, such requirement shall be
substituted for such provision or part thereof to the minim-am extent necessary to validate such
provision or part thereof. In the event that any provision of this Agreement is finally determined
by any court or agency to not be effective or enforceable as written, and if such determination is
upheld on appeal or no appeal from such determination is taken then the parties agree that such
court or agency shall (or if such court or agency is unwilling or fails to do so then the parties
shall) amend and modify such provision or part thereof to restrict the duration, area or scope to




37








 







the minimum extent required to make such provision or part thereof enforceable and the parties
hereby consent to the entry of an order so restricting such provision, or part thereof.




          (b) In the event of an actual or overtly threatened breach of any provisions of this
Agreement, Buyer, in addition to any other remedies available for such breach or threatened breach,
including the recovery of damages, shall be entitled to seek an injunction (without the posting of
bond) restraining the offender from such conduct




          10.6 Execution in Counterparts: Facsimile Signatures. This Agreement may be executed
in one or more counterparts, each of which shall be considered an original counterpart, and all of
which shall be considered to be but one agreement and shall become a binding agreement when each
party shall have executed one counterpart and delivered it to the other party hereto. A signature
affixed to a counterpart of this Agreement and delivered by facsimile by any Person is intended to
be its, his or her signature and shall be valid, binding and enforceable against the party on whose
behalf it has been affixed.




          10.7 Entire Agreement; Amendments and Waivers. This Agreement (along with each other
agreement, certificate, document or instrument executed in connection herewith) contains the entire
understanding of the parties hereto with regard to the subject matter contained in this Agreement
and supersedes all prior agreements or understandings of the parties. The parties, only by mutual
agreement in writing, may amend, modify and supplement this Agreement. The failure of any party to
this Agreement to enforce at any time any provision of this Agreement shall not be construed to be
a waiver of such provision, nor in any way to affect the validity of this Agreement or any part
hereof or the right of such party thereafter to enforce each and every such provision. No waiver of
any breach of this Agreement shall be held to constitute a waiver of any other or subsequent
breach.




          10.8 Time of Essence. Time is of the essence with regard to all dates and time periods
set forth or referred to in this Agreement.




38









 








     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the
dray and year first above written.



	 	 	 	 	 	 	 
	 	 	 	 	 
	GEORGE ECONOMY	 	 	 	STEPHEN CHAO
	 
	 	 	 	 	 	 
	AMANI HOLDINGS LLC	 	 	 	MADISON CHAO 1993 TRUST
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	                                        , Trustee
	Name:
	 	 	 	 	 	 
	 

	 	 

	 	 	 	 
	 

	 	 	 	 	 	VIRGIL NICHOLAS CHAO 1994 TRUST
	Title:
	 	 	 	 	 	 
	 

	 	 

	 	 	 	 
	 

	 	 	 	 	 	                                        , Trustee
	 
	 	 	 	 	 	 
	PRIDE OF MAIN STREET DAIRY, L.L.C.	 	 	 	 
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 

	 	 

	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	PHILIP TASHO
	 
	 	 	 	 	 	 
	Name:
	 	 	 	 	 	 
	 

	 	 

	 	 	 	 
	 
	 	 	 	 	 	 
	Title:
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	LIFEWAY FOODS, INC.	 	 	 	 
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 

	 	 

	 	 	 	 
	 
	 	 	 	 	 	 
	Name:
	 	 	 	 	 	 
	 

	 	 

	 	 	 	 
	 
	 	 	 	 	 	 
	Title:
	 	 	 	 	 	 
	 

	 	 

	 	 	 	 







39