Document:

WWW.EXFILE.COM, INC. -- 888-775-4789 -- LIFEWAY FOODS, INC. -- EXHIBIT 10.1 TO FORM 8-K

    EXHIBIT
10.1

    

    

     

     

    
      

    

    
      

    

    

     

    LOAN
AND SECURITY AGREEMENT

     

     

    dated
as of February 6, 2009

     

    among

    

    LIFEWAY
FOODS, INC.,

    FRESH
MADE, INC.,

    LFI
ENTERPRISES, INC.,

    HELIOS
NUTRITION LIMITED,

    PRIDE
OF MAIN STREET DAIRY, LLC

    and

    STARFRUIT,
LLC, as the Borrowers

    

    and

    

    THE
PRIVATEBANK AND TRUST COMPANY

    

    

     

    
      

    

     

     

     

     

     

     

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Table of
Contents

     

    
      
        	
                1.  DEFINITIONS

              	
                1

              
	
                1.1  Defined
      Terms

              	
                1

              
	
                1.2  Accounting
      Terms

              	
                19

              
	
                1.3  Other
      Terms Defined in UCC

              	
                20

              
	
                1.4  Other
      Interpretive Provisions

              	
                20

              
	
                1.5  Multiple
      Borrowers

              	
                21

              
	 	
                 

              
	
                2  COMMITMENT
      OF THE BANK

              	
                21

              
	
                2.1  Revolving
      Loans

              	
                21

              
	
                2.2  Term
      Loan

              	
                22

              
	
                2.3  Additional
      LIBOR Loan Provisions

              	
                23

              
	
                2.4  Interest
      and Fee Computation; Collection of Funds

              	
                25

              
	
                2.5  Late
      Charge

              	
                25

              
	
                2.6  Letters
      of Credit

              	
                26

              
	
                2.7  Taxes

              	
                26

              
	
                2.8  All
      Loans to Constitute Single Obligation

              	
                27

              
	 	
                 

              
	
                3  CONDITIONS
      OF BORROWING

              	
                27

              
	
                3.1  Loan
      Documents

              	
                27

              
	
                3.2  Event
      of Default

              	
                31

              
	
                3.3  Material
      Adverse Effect

              	
                31

              
	
                3.4  Litigation

              	
                31

              
	
                3.5  Representations
      and Warranties

              	
                31

              
	 	
                 

              
	
                4  NOTES
      EVIDENCING LOANS

              	
                32

              
	
                4.1  Revolving
      Note

              	
                32

              
	
                4.2  Term
      Note

              	
                32

              
	 	
                 

              
	
                5  MANNER
      OF BORROWING

              	
                32

              
	
                5.1  Borrowing
      Procedures

              	
                32

              
	
                5.2  LIBOR
      Conversion and Continuation Procedures

              	
                33

              
	
                5.3  Letters
      of Credit

              	
                33

              
	
                5.4  Automatic
      Debit

              	
                33

              
	
                5.5  Discretionary
      Disbursements

              	
                34

              
	 	
                 

              
	
                6  SECURITY
      FOR THE OBLIGATIONS

              	
                34

              
	
                6.1  Security
      for Obligations

              	
                34

              
	
                6.2  Other
      Collateral

              	
                35

              
	
                6.3  Possession
      and Transfer of Collateral

              	
                35

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	
                6.4  Financing
      Statements

              	
                35

              
	
                6.5  Additional
      Collateral

              	
                36

              
	
                6.6  Preservation
      of the Collateral

              	
                36

              
	
                6.7  Other
      Actions as to any and all Collateral

              	
                37

              
	
                6.8  Collateral
      in the Possession of a Warehouseman or Bailee

              	
                37

              
	
                6.9  Letter-of-Credit
      Rights

              	
                37

              
	
                6.10  Commercial
      Tort Claims

              	
                37

              
	
                6.11  Electronic
      Chattel Paper and Transferable Records

              	
                38

              
	 	
                 

              
	
                7  REPRESENTATIONS
      AND WARRANTIES

              	
                38

              
	
                7.1  Borrowers
      Organization and Name

              	
                38

              
	
                7.2  Authorization

              	
                38

              
	
                7.3  Validity
      and Binding Nature

              	
                39

              
	
                7.4  Consent;
      Absence of Breach

              	
                39

              
	
                7.5  Ownership
      of Properties; Liens

              	
                39

              
	
                7.6  Equity
      Ownership

              	
                39

              
	
                7.7  Intellectual
      Property

              	
                39

              
	
                7.8  Financial
      Statements

              	
                40

              
	
                7.9  Litigation
      and Contingent Liabilities

              	
                40

              
	
                7.10  Event
      of Default

              	
                40

              
	
                7.12  Environmental
      Laws and Hazardous Substances

              	
                40

              
	
                7.13  Solvency,
      etc

              	
                41

              
	
                7.14  ERISA
      Obligations

              	
                41

              
	
                7.15  Labor
      Relations

              	
                41

              
	
                7.16  Security
      Interest

              	
                42

              
	
                7.17  Lending
      Relationship

              	
                42

              
	
                7.18  Business
      Loan

              	
                42

              
	
                7.19  Taxes

              	
                42

              
	
                7.20  Compliance
      with Regulation U

              	
                42

              
	
                7.21  Governmental
      Regulation

              	
                42

              
	
                7.22  Bank
      Accounts

              	
                43

              
	
                7.23  Place
      of Business

              	
                43

              
	
                7.24  Complete
      Information

              	
                43

              
	
                7.25  Subordinated
      Debt

              	
                43

              
	
                7.26  Internal
      Controls

              	
                43

              
	
                7.27  Real
      Property

              	
                44

              
	
                7.28  Hedging
      Agreements

              	
                44

              
	
                7.28  Lifeway’s
      Disclosure Documents

              	
                44

              
	 	 
	
                8  AFFIRMATIVE
      COVENANTS

              	
                44

              
	
                8.1  Compliance
      with Bank Regulatory Requirements; Increased Costs

              	
                44

              
	
                8.2  Borrowers
      Existence

              	
                45

              
	
                8.3  Compliance
      With Laws

              	
                45

              
	
                8.4  Payment
      of Taxes and Liabilities

              	
                45

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	
                8.5  Maintain
      Property

              	
                46

              
	
                8.6  Maintain
      Insurance

              	
                46

              
	
                8.7  ERISA
      Liabilities; Employee Plans

              	
                47

              
	
                8.8  Financial
      Statements

              	
                47

              
	
                8.9  Supplemental
      Financial Statements

              	
                48

              
	
                8.10  Borrowing
      Base Certificate

              	
                48

              
	
                8.11  Aged
      Accounts Schedule

              	
                48

              
	
                8.12  Inventory
      Reports

              	
                48

              
	
                8.13  Compliance
      Certificate

              	
                48

              
	
                8.14  Field
      Audits

              	
                49

              
	
                8.15  Securities
      and Exchange Commission Filings

              	
                49

              
	
                8.16  Other
      Reports

              	
                49

              
	
                8.17  Collateral
      Records

              	
                49

              
	
                8.18  Intellectual
      Property

              	
                49

              
	
                8.19  Notice
      of Proceedings

              	
                49

              
	
                8.20  Notice
      of Event of Default or Material Adverse Effect

              	
                50

              
	
                8.21  Environmental
      Matters

              	
                50

              
	
                8.22  Further
      Assurances

              	
                50

              
	
                8.23
      Banking Relationship

              	
                50

              
	 	
                 

              
	
                9  NEGATIVE
      COVENANTS

              	
                50

              
	
                9.1  Debt

              	
                50

              
	
                9.2  Encumbrances

              	
                51

              
	
                9.3  Investments

              	
                51

              
	
                9.4  Transfer;
      Merger; Sales

              	
                52

              
	
                9.5  Issuance
      of Capital Securities

              	
                52

              
	
                9.6  Distributions

              	
                52

              
	
                9.7  Transactions
      with Affiliates

              	
                53

              
	
                9.8  Unconditional
      Purchase Obligations

              	
                53

              
	
                9.9  Cancellation
      of Debt

              	
                53

              
	
                9.10  Inconsistent
      Agreements

              	
                53

              
	
                9.11  Use
      of Proceeds

              	
                53

              
	
                9.12  Bank
      Accounts

              	
                54

              
	
                9.13  Business
      Activities; Change of Legal Status and Organizational
      Documents

              	
                54

              
	
                9.15  Prepayment
      of Seller Note

              	
                54

              
	 	
                 

              
	
                10  FINANCIAL
      COVENANTS

              	
                54

              
	
                10.1  Tangible
      Net Worth

              	
                54

              
	
                10.2  Fixed
      Charge Coverage

              	
                54

              
	
                10.3  Capital
      Expenditures

              	
                54

              
	 	
                 

              
	
                11  EVENTS
      OF DEFAULT

              	
                54

              
	
                11.1  Nonpayment
      of Obligations

              	
                55

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	
                11.2  Misrepresentation

              	
                55

              
	
                11.3  Nonperformance

              	
                55

              
	
                11.4  Default
      under Loan Documents

              	
                55

              
	
                11.5  Default
      under Other Debt

              	
                55

              
	
                11.6  Other
      Material Obligations

              	
                55

              
	
                11.7  Bankruptcy,
      Insolvency, etc.

              	
                55

              
	
                11.8  Judgments

              	
                56

              
	
                11.9  Change
      in Control

              	
                56

              
	
                11.10  Collateral
      Impairment

              	
                56

              
	
                11.11  Material
      Adverse Effect

              	
                56

              
	
                11.12  Subordinated
      Debt

              	
                56

              
	 	 
	
                12  REMEDIES

              	
                56

              
	
                12.1  Possession
      and Assembly of Collateral

              	
                57

              
	
                12.2  Sale
      of Collateral

              	
                57

              
	
                12.3  Standards
      for Exercising Remedies

              	
                58

              
	
                12.4  UCC
      and Offset Rights

              	
                58

              
	
                12.5  Additional
      Remedies

              	
                59

              
	
                12.6  Attorney-in-Fact

              	
                60

              
	
                12.7  No
      Marshaling

              	
                60

              
	
                12.8  Application
      of Proceeds

              	
                61

              
	
                12.9  No
      Waiver

              	
                61

              
	
                12.10  Letters
      of Credit

              	
                61

              
	 	 
	
                13
      CROSS-GUARANTY

              	
                61

              
	
                13.1  Cross
      Guaranty

              	
                61

              
	
                13.2  Waivers
      By Borrowers

              	
                62

              
	
                13.3  Waivers
      By Borrowers

              	
                62

              
	
                13.4
      Subordination of Subrogation, Etc

              	
                62

              
	
                13.5
      Election of Remedies

              	
                62

              
	
                13.6
      Limitation

              	
                63

              
	
                13.7
      Contribution with Respect to Guaranty Obligations

              	
                63

              
	
                13.8
      Liability Cumulative

              	
                64

              
	 	
                 

              
	
                14  MISCELLANEOUS

              	
                64

              
	
                14.1  Obligations
      Absolute

              	
                64

              
	
                14.2  Entire
      Agreement

              	
                64

              
	
                14.3  Amendments;
      Waivers

              	
                65

              
	
                14.4  WAIVER
      OF DEFENSES

              	
                65

              
	
                14.5  FORUM
      SELECTION AND CONSENT TO JURISDICTION

              	
                65

              
	
                14.6  WAIVER
      OF JURY TRIAL

              	
                65

              
	
                14.7  Assignability

              	
                66

              
	
                14.8  Confirmations

              	
                66

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	
                14.9  Confidentiality

              	
                66

              
	
                14.10  Binding
      Effect

              	
                67

              
	
                14.11  Governing
      Law

              	
                67

              
	
                14.12  Enforceability

              	
                67

              
	
                14.13  Survival
      of Borrowers Representations

              	
                67

              
	
                14.14  Extensions
      of Bank’s Commitment

              	
                67

              
	
                14.15  Time
      of Essence

              	
                67

              
	
                14.16  Counterparts;
      Facsimile Signatures

              	
                67

              
	
                13.17  Notices

              	
                68

              
	
                14.18  Release
      of Claims Against Bank

              	
                68

              
	
                14.19  Costs,
      Fees and Expenses

              	
                69

              
	
                14.20  Indemnification

              	
                69

              
	
                14.21  Revival
      and Reinstatement of Obligations

              	
                70

              
	
                14.22  Customer
      Identification - USA Patriot Act Notice

              	
                70

              

      

 

    SCHEDULES

    
    

     

     

    
    

    
      
        	
                SCHEDULE
      6.1

              	
                Excluded
      Collateral

              
	
                SCHEDULE
      7.1

              	
                Borrower
      Organization Identification Numbers

              
	
                SCHEDULE
      7.6

              	
                Capital
      Securities

              
	
                SCHEDULE
      7.9

              	
                Litigation
      and Contingent Liabilities

              
	
                SCHEDULE
      7.12

              	
                Environmental
      Matters

              
	
                SCHEDULE
      7.22

              	
                Deposit
      Accounts

              
	
                SCHEDULE
      7.23

              	
                Location
      of All Collateral

              
	
                SCHEDULE
      7.27

              	
                Real
      Property

              
	
                SCHEDULE
      8.23

              	
                Excluded
      Bank Accounts

              
	
                SCHEDULE
      9.1

              	
                Debt

              
	
                SCHEDULE
      9.2

              	
                Permitted
      Liens

              
	
                SCHEDULE
      9.3

              	
                Investments

              

      

    

     

    

    EXHIBITS

     

     

    
      
        	
                EXHIBIT
      A

              	
                Form
      of Revolving Note

              
	
                EXHIBIT
      B

              	
                Form
      of Term Note

              
	
                EXHIBIT
      C

              	
                Form
      of Borrowing Base Certificate

              
	
                EXHIBIT
      D

              	
                Form
      of Compliance Certificate

              
	
                EXHIBIT
      E

              	
                Form
      of Notice of Borrowing

              
	
                EXHIBIT
      F

              	
                Form
      of Notice of
Conversion/Continuation

              

      

    

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    

    LOAN AND
SECURITY AGREEMENT

    

    This LOAN AND SECURITY AGREEMENT dated
as of February 6, 2009 (the “Agreement”), is executed by
and between LIFEWAY FOODS, INC., an Illinois corporation (“Lifeway”) which has its chief
executive office located at 6431 W. Oakton St., Morton Grove IL, 60053, FRESH
MADE, INC., a Pennsylvania corporation (“FMI”) which has its chief
executive office located at 810 Bleigh St., Philadelphia PA, 19111, LFI
ENTERPRISES, INC., an Illinois corporation (“LFI”) which has its chief
executive office located at 6431 W. Oakton St., Morton Grove IL, 60053, HELIOS
NUTRITION LIMITED, a Minnesota corporation (“Helios”) which has its chief
executive office located at 6431 W. Oakton St., Morton Grove IL, 60053; PRIDE OF
MAIN STREET DAIRY, LLC, a Minnesota limited liability company (“Pride”) which has its chief
executive office located at 6431 W. Oakton St., Morton Grove IL, 60053 and
STARFRUIT, LLC, an Illinois limited liability company (“Starfruit”) which has its
chief executive office located at 6431 W. Oakton St., Morton Grove IL, 60053,
and THE PRIVATEBANK AND TRUST COMPANY (the “Bank”), whose address is 120
S. LaSalle Street, Chicago, Illinois 60603.  Lifeway, FMI, LFI,
Helios, Pride and Starfruit are hereinafter sometimes individually referred to
as a “Borrower” and
collectively as the “Borrowers.”

    

    R E C I T A L S:

    

    A. The
Borrowers desire to borrow funds and obtain other financial accommodations from
the Bank.

    

    B. Pursuant
to the Borrowers’ request, the Bank is willing to extend such financial
accommodations to the Borrowers under the terms and conditions set forth
herein.

    

    NOW THEREFORE, in consideration of the
premises, and the mutual covenants and agreements set forth herein, the
Borrowers agree to borrow from the Bank, and the Bank agrees to lend to the
Borrowers, subject to and upon the following terms and conditions:

    

    A G R E E M E N T S:

    

    Section
1. DEFINITIONS.

    

    1.1. Defined
Terms.  For the purposes of this Agreement, the following
capitalized words and phrases shall have the meanings set forth
below.

    

    “Act” shall have the
meaning set forth in Section
14.22.

    

    “Affiliate” of any
Person shall mean (a) any other Person which, directly or indirectly, controls
or is controlled by or is under common control with such Person, (b) any officer
or director of such Person, and (c) with respect to the Bank, any entity
administered or managed by the Bank, or an Affiliate or investment advisor
thereof and which is engaged in making, purchasing, holding or otherwise
investing in commercial loans.  A Person shall be deemed to be
“controlled by” any other Person if such Person possesses, directly or
indirectly, 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    power to
direct or cause the direction of the management and policies of such Person
whether by contract, ownership of voting securities, membership interests or
otherwise.

    

    “Amani-Helios Note”
shall mean that certain Non-Negotiable Promissory Note in the original principal
amount of $4,200,000 payable by Lifeway to Amani Holdings LLC, the current
balance of which is $837,244.

    

    “Applicable Margin”
shall mean the rate per annum added to the Prime Rate and/or LIBOR to determine
the Revolving Interest Rate and/or Term Interest Rate.  The Applicable
Margin is 0% for Prime Loans and 2.5% for LIBOR Loans.

    

    “Asset Disposition”
shall mean the sale, lease, assignment or other transfer for value (each a
“Disposition”) by any of
the Borrowers or any Subsidiary to any Person (other than the Borrowers or any
Subsidiary) of any asset or right of any of the Borrowers or any Subsidiary
(including, the loss, destruction or damage of any thereof or any actual or
threatened (in writing to the Borrowers or such Subsidiary) condemnation,
confiscation, requisition, seizure or taking thereof), other than (a) the
Disposition of any asset which is to be replaced, and is in fact replaced,
within thirty (30) days with another asset performing the same or a similar
function other than any assets having a de minimis value which are obsolete or
no longer needed for the Borrowers’ business  and (b) the sale or
lease of inventory in the ordinary course of business.

    

    “Bank Product
Agreements” shall mean those certain agreements entered into from time to
time by any of the Borrowers or any Subsidiary with the Bank or any Affiliate of
the Bank concerning Bank Products.

    

    “Bank Product
Obligations” shall mean all obligations, liabilities, contingent
reimbursement obligations, fees, and expenses owing by any of the Borrowers or
any Subsidiary to the Bank or any Affiliate of the Bank pursuant to or evidenced
by the Bank Product Agreements and irrespective of whether for the payment of
money, whether direct or indirect, absolute or contingent, due or to become due,
now existing or hereafter arising.

    

    “Bank Products” shall
mean any service or facility extended to any of the Borrowers or any Subsidiary
by the Bank or any Affiliate of the Bank, including:  (a) credit
cards, (b) credit card processing services, (c) debit cards, (d) purchase cards,
(e) ACH transactions, (f) cash management, including controlled disbursement,
accounts or services, or (g) Hedging Agreements and Hedging
Obligations.

    

    “Bankruptcy Code”
shall mean the United States Bankruptcy Code, as now existing or hereafter
amended.

    

    “Borrowers” - see the
Preamble.

    

    “Borrowing Base
Amount” shall mean:

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    

    (a) an amount
equal to eighty percent (80%) of the net amount (after deduction of such
reserves and allowances as the Bank reasonably deems proper and necessary) of
all Eligible Accounts; plus

    

    (b) the
lesser of (i) an amount equal to fifty percent (50%) of the lower of cost or
market value (after deduction of such reserves and allowances as the Bank
reasonably deems proper and necessary) of all Eligible Inventory, and (ii) Two
Million and 00/100 Dollars ($2,000,000.00); minus

    

    (c) a One Hundred Thousand and
00/100 Dollar ($100,000) reserve for environmental matters related to the Niles
Property.

    

    “Borrowing Base
Certificate” shall mean a certificate to be signed by the Borrowers
certifying to the accuracy of the Borrowing Base Amount in the form of Exhibit
C.

    

    “Business Day” shall
mean any day other than a Saturday, Sunday or a legal holiday on which banks are
authorized or required to be closed for the conduct of commercial banking
business in Chicago, Illinois and, in the case of a Business Day which relates
to a LIBOR Loan, on which dealings are carried on in the London interbank
eurodollar market.

    

    “Capital Expenditures”
shall mean all expenditures (including Capitalized Lease Obligations) which, in
accordance with GAAP, would be required to be capitalized and shown on the
consolidated balance sheet of the Borrowers, but excluding expenditures made in
connection with the replacement, substitution or restoration of assets to the
extent financed (i) from insurance proceeds (or other similar recoveries) paid
on account of the loss of or damage to the assets being replaced or restored or
(ii) with awards of compensation arising from the taking by eminent domain or
condemnation of the assets being replaced.

    

    “Capital Lease” shall
mean, as to any Person, a lease of any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible, by such
Person, as lessee, that is, or should be, in accordance with Financial
Accounting Standards Board Statement No. 13, as amended from time to time, or,
if such statement is not then in effect, such statement of GAAP as may be
applicable, recorded as a “capital lease” on the financial statements of such
Person prepared in accordance with GAAP.

    

    “Capital Securities”
shall mean, with respect to any Person, all shares, interests, participations or
other equivalents (however designated, whether voting or non-voting) of such
Person’s capital, whether now outstanding or issued or acquired after the date
hereof, including common shares, preferred shares, membership interests in a
limited liability company, limited or general partnership interests in a
partnership or any other equivalent of such ownership interest.

    

    “Capitalized Lease
Obligations” shall mean, as to any Person, all rental obligations of such
Person, as lessee under a Capital Lease which are or will be required to be
capitalized on the books of such Person.

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    

    “Cash Equivalent
Investment” shall mean, at any time, (a) any evidence of Debt, maturing
not more than one year after such time, issued or guaranteed by the United
States government or any agency thereof, (b) commercial paper, maturing not more
than one year from the date of issue, or corporate demand notes, in each case
(unless issued by the Bank or its holding company) rated at least A-l by
Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies,
Inc. or P-l by Moody’s Investors Service, Inc., (c) any certificate of deposit,
time deposit or banker’s acceptance, maturing not more than one year after such
time, or any overnight Federal Funds transaction that is issued or sold by the
Bank or its holding company (or by a commercial banking institution that is a
member of the Federal Reserve System and has a combined capital and surplus and
undivided profits of not less than $500,000,000), (d) any repurchase agreement
entered into with the Bank, or other commercial banking institution of the
nature referred to in clause (c), which (i)
is secured by a fully perfected security interest in any obligation of the type
described in any of clauses (a) through
(c) above, and
(ii) has a market value at the time such repurchase agreement is entered into of
not less than 100% of the repurchase obligation of the Bank, or other commercial
banking institution, thereunder, (e) money market accounts or mutual funds which
invest exclusively in assets satisfying the foregoing requirements, and (f)
other short term liquid investments approved in writing by the
Bank.

    

    “Change in Control”
shall mean the occurrence of any of the following events: (a) the Smolyansky
Family shall cease to own and control, directly or indirectly, at least 45% of
the outstanding Capital Securities of Lifeway; (b) Lifeway shall cease to,
directly or indirectly, own and control 100% of each class of the outstanding
Capital Securities of the Borrowers (other than Lifeway); (c) the granting by
the Smolyansky
Family, directly or indirectly, of a security interest in their ownership
interest in Lifeway, which could result in a change in the identity of the
individuals or entities in control of Lifeway or (d) the granting by Lifeway or
any Borrowers, directly or indirectly, of a security interest in any Borrowers
or any Subsidiary, which could result in a change in the identity of the
individuals or entities in control of such entities.  For the purpose
hereof, the terms “control” or “controlling” shall mean the possession of the
power to direct, or cause the direction of, the management and policies of the
applicable entity by contract or voting of securities or ownership
interests.

    

    “Compliance
Certificate” means a Compliance Certificate in substantially the form of
Exhibit
D.

    

    “Collateral” shall
have the meaning set forth in Section 6.1
hereof.

    

    “Collateral Access
Agreement” shall mean an agreement in form and substance reasonably
satisfactory to the Bank pursuant to which a mortgagee or lessor of real
property on which Collateral is stored or otherwise located, or a warehouseman,
processor or other bailee of Inventory or other property owned by any of the
Borrowers or any Subsidiary, acknowledges the Liens of the Bank and waives any
Liens held by such Person on such property, and, in the case of any such
agreement with a mortgagee or lessor, permits the Bank reasonable access to and
use of such real property following the occurrence and during the continuance of
an Event of Default to assemble, complete and sell any collateral stored or
otherwise located thereon.

    
      
        
        

      

      
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    “Contingent Liability”
and “Contingent
Liabilities” shall mean, respectively, each obligation and liability of
any of the Borrowers and all such obligations and liabilities of any of the
Borrowers incurred pursuant to any agreement, undertaking or arrangement by
which such Borrowers:  (a) guarantee, endorse or otherwise become or
are contingently liable upon (by direct or indirect agreement, contingent or
otherwise, to provide funds for payment, to supply funds to, or otherwise to
invest in, a debtor, or otherwise to assure a creditor against loss) the
indebtedness, dividend, obligation or other liability of any other Person in any
manner (other than by endorsement of instruments in the course of collection),
including any indebtedness, dividend or other obligation which may be issued or
incurred at some future time; (b) guarantee the payment of dividends or other
distributions upon the shares or ownership interest of any other Person; (c)
undertake or agree (whether contingently or otherwise):  (i) to
purchase, repurchase, or otherwise acquire any indebtedness, obligation or
liability of any other Person or any property or assets constituting security
therefor, (ii) to advance or provide funds for the payment or discharge of any
indebtedness, obligation or liability of any other Person (whether in the form
of loans, advances, stock purchases, capital contributions or otherwise), or to
maintain solvency, assets, level of income, working capital or other financial
condition of any other Person, or (iii) to make payment to any other Person
other than for value received; (d) agree to lease property or to purchase
securities, property or services from such other Person with the purpose or
intent of assuring the owner of such indebtedness or obligation of the ability
of such other Person to make payment of the indebtedness or obligation; (e)
induce the issuance of, or in connection with the issuance of, any letter of
credit for the benefit of such other Person; or (f) undertake or agree otherwise
to assure a creditor against loss.  The amount of any Contingent
Liability shall (subject to any limitation set forth herein) be deemed to be the
outstanding principal amount (or maximum permitted principal amount, if larger)
of the indebtedness, obligation or other liability guaranteed or supported
thereby.

    

    “Debt” shall mean, as
to any Person, without duplication, (a) all indebtedness of such Person; (b) all
borrowed money of such Person (including principal, interest, fees and charges),
whether or not evidenced by bonds, debentures, notes or similar instruments; (c)
all obligations to pay the deferred purchase price of property or services; (d)
all obligations, contingent or otherwise, with respect to the maximum face
amount of all letters of credit (whether or not drawn), bankers’ acceptances and
similar obligations issued for the account of such Person (including the Letters
of Credit), and all unpaid drawings in respect of such letters of credit,
bankers’ acceptances and similar obligations; (e) all indebtedness secured by
any Lien on any property owned by such Person, whether or not such indebtedness
has been assumed by such Person (provided, however, if such Person has not
assumed or otherwise become liable in respect of such indebtedness, such
indebtedness shall be deemed to be in an amount equal to the fair market value
of the property subject to such Lien at the time of determination); (f) the
aggregate amount of all Capitalized Lease Obligations of such Person; (g) all
Contingent Liabilities of such Person, whether or not reflected on its balance
sheet; (h) all Hedging Obligations of such Person; (i) all Debt of any
partnership of which such Person is a general partner; and (j) all monetary
obligations of such Person under (i) a so-called synthetic, off-balance sheet or
tax retention lease, or (ii) an agreement for the use or possession of property
creating obligations that do not appear on the balance sheet of such Person but
which, upon the insolvency or bankruptcy of such 

    
      
        
        

      

      
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    Person,
would be characterized as the indebtedness of such Person (without regard to
accounting treatment).  Notwithstanding the foregoing, Debt shall not
include trade payables and accrued expenses incurred by such Person in
accordance with customary practices and in the ordinary course of business of
such Person.

    

    “Default Rate” shall
mean a per annum rate of interest equal to the Prime Rate plus three percent
(3%).

    

    “Depreciation” shall
mean the total amounts added to depreciation, amortization, obsolescence,
valuation and other proper reserves, as reflected on the Borrowers’ financial
statements and determined in accordance with GAAP.

    

    “Disposition” shall
have the meaning in the definition of Asset Disposition.

    

    “EBITDA” shall mean,
for any period, (a) the sum for such period of:  (i) Net Income, plus (ii) Interest
Charges, plus
(iii) federal and state income taxes (including the Illinois replacement tax),
plus (iv)
Depreciation, plus (v) non-cash
management compensation expense, plus (vi) all other
non-cash charges.

    

    “Eligible Account” and
“Eligible
Accounts” shall mean each Account and all such Accounts (exclusive of
sales, excise or other similar taxes) owing to any of the Borrowers or any
Subsidiary which meets each of the following requirements:

    

    (a) it is
genuine in all respects and has arisen in the ordinary course of the such
Borrower’s business from (i) the performance of services by such Borrower or the
applicable Subsidiary, which services have been fully performed, acknowledged
and accepted by the Account Debtor or (ii) the sale or lease of Goods by
such Borrower, including C.O.D. sales, which Goods have been completed in
accordance with the Account Debtor’s specifications (if any) and delivered to
and accepted by the Account Debtor, and such Borrower or the applicable
Subsidiary has possession of, or has delivered to the Bank at the Bank’s
request, shipping and delivery receipts evidencing such delivery;

    

    (b) it is
subject to a perfected, first priority Lien in favor of the Bank and is not
subject to any other assignment, claim or Lien;

    

    (c) it is the
valid, legally enforceable and unconditional obligation of the Account Debtor
with respect thereto, and is not subject to the fulfillment of any condition
whatsoever or any counterclaim, credit (except as provided in subsection (h) of
this definition), trade or volume discount, allowance, discount, rebate or
adjustment by the Account Debtor with respect thereto, or to any claim by such
Account Debtor denying liability thereunder in whole or in part and the Account
Debtor has not refused to accept and/or has not returned or offered to return
any of the Goods or services which are the subject of such Account;

    
      
        
        

      

      
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    (d) the
Account Debtor with respect thereto is a resident or citizen of, and is located
within, the United States, unless the sale of goods or services giving rise to
such Account is on letter of credit, banker’s acceptance or other credit support
terms reasonably satisfactory to the Bank;

    

    (e) it is not
an Account arising from a “sale on approval”, “sale or return”, “consignment”,
“guaranteed sale” or “bill and hold”, or are subject to any other repurchase or
return agreement;

    

    (f) it is not
an Account with respect to which possession and/or control of the goods sold
giving rise thereto is held, maintained or retained by any of the Borrowers or
any Subsidiary (or by any agent or custodian of any of the Borrowers or any
Subsidiary) for the account of, or subject to, further and/or future direction
from the Account Debtor with respect thereto;

    

    (g) it has
not arisen out of contracts with the United States or any department, agency or
instrumentality thereof, unless such Borrower has assigned its right
to payment of such Account to the Bank pursuant to the Assignment of Claims Act
of 1940, and evidence (satisfactory to the Bank) of such assignment has been
delivered to the Bank, or any state, county, city or other governmental body, or
any department, agency or instrumentality thereof;

    

    (h) if any of
the Borrowers maintain a credit limit for an Account Debtor, the aggregate
dollar amount of Accounts due from such Account Debtor, including such Account,
does not exceed such credit limit;

    

    (i) if the
Account is evidenced by chattel paper or an instrument, the originals of such
chattel paper or instrument shall have been endorsed and/or assigned and
delivered to the Bank or, in the case of electronic chattel paper, shall be in
the control of the Bank, in each case in a manner satisfactory to the
Bank;

    

    (j) such
Account is evidenced by an invoice delivered to the related Account Debtor and
is not more than sixty (60) days past the original invoice date thereof, in each
case according to the original terms of sale;

    

    (k) it is not
an Account with respect to an Account Debtor that is located in any jurisdiction
which has adopted a statute or other requirement with respect to which any
Person that obtains business from within such jurisdiction must file a notice of
business activities report or make any other required filings in a timely manner
in order to enforce its claims in such jurisdiction’s courts unless (i) such
notice of business activities report has been duly and timely filed by such
Borrower or the applicable Subsidiary is exempt from filing such report and has
provided the Bank with satisfactory evidence of such exemption or (ii) the
failure to make such filings may be cured retroactively by the Borrowers or the
applicable Subsidiary for a nominal fee;

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    

    (l) the
Account Debtor with respect thereto is not one of the Borrowers or an Affiliate
of any of the Borrowers;

    

    (m) such
Account does not arise out of a contract or order which, by its terms, forbids
or makes void or unenforceable the assignment thereof by any of the Borrowers or
any Subsidiary of the Borrowers to the Bank and is not unassignable to the Bank
for any other reason;

    

    (n) there is
no bankruptcy, insolvency or liquidation proceeding pending by or against the
Account Debtor with respect thereto, nor has the Account Debtor suspended
business, made a general assignment for the benefit of creditors or failed to
pay its debts generally as they come due, and/or no condition or event has
occurred having a Material Adverse Effect on the Account Debtor which would
require the Accounts of such Account Debtor to be deemed uncollectible in
accordance with GAAP;

    

    (o) it is not
owed by an Account Debtor with respect to which twenty five percent (25.00%) or
more of the aggregate amount of outstanding Accounts owed at such time by such
Account Debtor is classified as ineligible under clause (j) of this
definition;

    

    (p) if the
aggregate amount of all Accounts owed by the Account Debtor thereon exceeds
twenty five percent (25.00%) of the aggregate amount of all Accounts at such
time, then all Accounts owed by such Account Debtor in excess of such amount
shall be deemed ineligible; and

    

    (q) it does
not violate the negative covenants and does satisfy the affirmative covenants of
the Borrowers contained in this Agreement, and it is otherwise not unacceptable
to the Bank for any other reason.

    

    An
Account which is at any time an Eligible Account, but which subsequently fails
to meet any of the foregoing requirements, shall forthwith cease to be an
Eligible Account.  Further, with respect to any Account, if the Bank
at any time hereafter determine in its discretion that the prospect of payment
or performance by the Account Debtor with respect thereto is materially impaired
for any reason whatsoever, such Account shall cease to be an Eligible Account
after notice of such determination is given to the Borrowers.

    

    “Eligible Inventory”
shall mean all Inventory of any of the Borrowers or any Subsidiary of the
Borrowers which meets each of the following requirements:

    

    (a) it is
subject to a perfected, first priority Lien in favor of the Bank and is not
subject to any other assignment, claim or Lien;

    

    (b) it is
salable and not slow-moving, obsolete or discontinued, as determined in the sole
and absolute discretion of the Bank;

    
      
        
        

      

      
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    (c) it is in
the possession and control of any of the Borrowers or any Subsidiary of the
Borrowers and it is stored and held in facilities owned by any of the Borrowers
or any Subsidiary of the Borrowers or, if such facilities are not so owned, the
Bank is in possession of a Collateral Access Agreement with respect
thereto;

    

    (d) it is not
Inventory produced in violation of the Fair Labor Standards Act and subject to
the “hot goods” provisions contained in Title 29 U.S.C. §215;

    

    (e) it is not
subject to any agreement or license which would restrict the Bank’s ability to
sell or otherwise dispose of such Inventory;

    

    (f) it is
located in the United States or in any territory or possession of the United
States that has adopted Article 9 of the Uniform Commercial Code;

    

    (g) it is not
“in transit” to any of the Borrowers or any Subsidiary of the Borrowers or held
by the Borrowers or any Subsidiary of the Borrowers on consignment;

    

    (h) it is not
“work-in-progress” Inventory;

    

    (i) it is not
supply items, packaging or any other similar materials;

    

    (j) it is not
identified to any purchase order or contract to the extent progress or advance
payments are received with respect to such Inventory;

    

    (k) it does
not breach any of the representations, warranties or covenants pertaining to
Inventory set forth in the Loan Documents; and

    

    (l) the Bank
shall not have determined in its reasonable discretion that it is unacceptable
due to age, type, category, quality, quantity and/or any other reason
whatsoever.

    

    Inventory
which is at any time Eligible Inventory but which subsequently fails to meet any
of the foregoing requirements shall forthwith cease to be Eligible
Inventory.

    

    “Employee Plan”
includes any pension, stock bonus, employee stock ownership plan, retirement,
profit sharing, deferred compensation, stock option, bonus or other incentive
plan, whether qualified or nonqualified, or any disability, medical, dental or
other health plan, life insurance or other death benefit plan, vacation benefit
plan, severance plan or other employee benefit plan or arrangement, including
those pension, profit-sharing and retirement plans of any of the Borrowers
described from time to time in the financial statements of the Borrowers and any
pension plan, welfare plan, Defined Benefit Pension Plans (as defined in ERISA)
or any multi-employer plan, maintained or administered by any of the Borrowers
or to which any of the Borrowers is a party or may have any liability or by
which any of the Borrowers is bound.

    
      
        
        

      

      
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    “Environmental Laws”
shall mean all present or future federal, state or local laws, statutes, common
law duties, rules, regulations, ordinances and codes, together with all
administrative or judicial orders, consent agreements, directed duties,
requests, licenses, authorizations and permits of, and agreements with, any
governmental authority, in each case relating to any matter arising out of or
relating to public health and safety, or pollution or protection of the
environment or workplace, including any of the foregoing relating to the
presence, use, production, generation, handling, transport, treatment, storage,
disposal, distribution, discharge, emission, release, threatened release,
control or cleanup of any Hazardous Substance.

    

    “ERISA” shall mean the
Employee Retirement Income Security Act of 1974, as amended from time to
time.

    

    “Event of Default”
shall mean any of the events or conditions which are set forth in Section 11
hereof.

    

    “Exchange Act” shall
have the meaning set forth in Section
7.26(a).

    

    “Excluded Collateral”
shall mean the assets and property of the Borrowers as described on Schedule
6.1.

    

    “Former FMI
Shareholders” shall mean Ilya Mandel and Michael Edelson, each residing
in the State of Pennsylvania.

    

    “FMI” shall mean Fresh
Made, Inc., a Pennsylvania corporation.

    

    “Funded Debt” shall
mean, as to any Person, all Debt of such Person that matures more than one year
from the date of its creation (or is renewable or extendible, at the option of
such Person, to a date more than one year from such date).

    

    “GAAP” shall mean
generally accepted accounting principles set forth from time to time in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board (or agencies with similar functions of
comparable stature and authority within the U.S. accounting profession), which
are applicable to the circumstances as of the date of determination, provided,
however, that interim financial statements or reports shall be deemed in
compliance with GAAP despite the absence of footnotes and fiscal year-end
adjustments as required by GAAP.

    

    “Hazardous Substances”
shall mean (a) any petroleum or petroleum products, radioactive materials,
asbestos in any form that is or could become friable, urea formaldehyde foam
insulation, dielectric fluid containing levels of polychlorinated biphenyls,
radon gas and mold; (b) any chemicals, materials, pollutant or substances
defined as or included in the definition of “hazardous substances”, “hazardous
waste”, “hazardous materials”, “extremely hazardous substances”, “restricted
hazardous waste”, “toxic substances”, “toxic pollutants”, 

    
      
        
        

      

      
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    “contaminants”,
“pollutants” or words of similar import, under any applicable Environmental Law;
and (c) any other chemical, material or substance, the exposure to, or
release of which is prohibited, limited or regulated by any governmental
authority or for which any duty or standard of care is imposed pursuant to, any
Environmental Law.

    

    “Hedging Agreement”
shall mean any interest rate, currency or commodity swap agreement, cap
agreement or collar agreement, and any other agreement or arrangement designed
to protect a Person against fluctuations in interest rates, currency exchange
rates or commodity prices.

    

    “Hedging Obligation”
shall mean, with respect to any Person, any liability of such Person under any
Hedging Agreement.

    

    “Helios” shall mean
Helios Nutrition Limited, a Minnesota corporation.

    

    “Indemnified Party”
and “Indemnified
Parties” shall mean, respectively, each of the Bank and any parent
corporation, Affiliate or Subsidiary of the Bank, and each of their respective
officers, directors, employees, attorneys and agents, and all of such parties
and entities.

    

    “Intellectual
Property” shall mean the collective reference to all rights, priorities
and privileges relating to intellectual property, whether arising under United
States, multinational or foreign laws or otherwise, including copyrights,
patents, service marks and trademarks, and all registrations and applications
for registration therefor and all licensees thereof, trade names, domain names,
technology, know-how and processes, and all rights to sue at law or in equity
for any infringement or other impairment thereof, including the right to receive
all proceeds and damages therefrom.

    

    “Interest Charges”
shall mean, for any period, the sum of:  (a) all interest, charges and
related expenses payable with respect to that fiscal period to a lender in
connection with borrowed money or the deferred purchase price of assets that are
treated as interest in accordance with GAAP, plus (b) the portion
of Capitalized Lease Obligations with respect to that fiscal period that should
be treated as interest in accordance with GAAP, plus (c) all charges
paid or payable (without duplication) during that period with respect to any
Hedging Agreements.

    

    “Interest Period”
shall mean successive one, two, or three month periods, beginning and ending as
provided in this Agreement.

    

    “Investment” shall
mean, with respect to any Person, any investment in another Person, whether by
acquisition of any debt or equity security, by making any loan or advance, by
becoming obligated with respect to a Contingent Liability in respect of
obligations of such other Person (other than travel and similar advances to
employees in the ordinary course of business).

    

    “Letter of Credit” and
“Letters of
Credit” shall mean, respectively, a letter of credit and all such letters
of credit issued by the Bank, in its sole discretion, upon the execution

    
      
        
        

      

      
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    and
delivery by the Borrowers and the acceptance by the Bank of a Master Letter of
Credit Agreement and a Letter of Credit Application, as set forth in Section 2.7 of this
Agreement.

    

    “Letter of Credit
Application” shall mean, with respect to any request for the issuance of
a Letter of Credit, a letter of credit application in the form being used by the
Bank at the time of such request for the type of Letter of Credit
requested.

    

    “Letter of Credit
Commitment” shall mean, at any time, an amount equal to the lesser of (a)
the Revolving Loan Commitment minus the aggregate
amount of all Revolving Loans outstanding, or (b) the Borrowing Base Amount
minus the
aggregate amount of all Revolving Loans outstanding.

    

    “Letter of Credit Maturity
Date” shall mean six months following the Revolving Loan Maturity Date;
provided, however, that any outstanding Letter of Credit Obligations remaining
after the Revolving Loan Maturity Date are cash collateralized in a manner
acceptable to the Bank in its sole discretion.

    

    “Letter of Credit
Obligations” shall mean, at any time, an amount equal to the aggregate of
the original face amounts of all Letters of Credit minus the sum of (i) the
amount of any reductions in the original face amount of any Letter of Credit
which did not result from a draw thereunder, (ii) the amount of any payments
made by the Bank with respect to any draws made under a Letter of Credit for
which the Borrowers have reimbursed the Bank, (iii) the amount of any payments
made by the Bank with respect to any draws made under a Letter of Credit which
have been converted to a Revolving Loan as set forth in Section 2.7, and (iv)
the portion of any issued but expired Letter of Credit which has not been drawn
by the beneficiary thereunder.  For purposes of determining the
outstanding Letter of Credit Obligations at any time, the Bank’s acceptance of a
draft drawn on the Bank pursuant to a Letter of Credit shall constitute a draw
on the applicable Letter of Credit at the time of such acceptance.

    

    “Lifeway” shall mean
Lifeway Foods, Inc., an Illinois corporation.

    

    “LFI” shall mean LFI
Enterprises, Inc., an Illinois corporation.

    

    “Liabilities” shall
mean at all times all liabilities of the Borrowers that would be shown as such
on a balance sheet of the Borrowers prepared in accordance with
GAAP.

    

    “LIBOR” shall mean a
rate of interest equal to (a) the per annum rate of interest at which United
States dollar deposits for a period equal to the relevant Interest Period are
offered in the London Interbank Eurodollar market at 11:00 a.m. (London time)
two Business Days prior to the commencement of such Interest Period (or three
Business Days prior to the commencement of such Interest Period if banks in
London, England were not open and dealing in offshore United States dollars on
such second preceding Business Day), as displayed in the Bloomberg Financial Markets
system (or other authoritative source selected by the Bank in its sole
discretion), divided by (b) a number determined by subtracting from 1.00 the
then stated maximum reserve percentage for determining reserves to be maintained
by member banks of the 

    
      
        
        

      

      
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    Federal
Reserve System for Eurocurrency funding or liabilities as defined in Regulation
D (or any successor category of liabilities under Regulation D), or as LIBOR is
otherwise determined by the Bank in its sole and absolute
discretion.  The Bank’s determination of LIBOR shall be conclusive,
absent manifest error.

    

    “LIBOR Loan” or “LIBOR Loans” shall
mean that portion, and collectively those portions, of the aggregate outstanding
principal balance of the Loans that bear interest with reference  or
tied to the LIBOR Rate, of which at any time, the Borrowers may identify no more
than an aggregate of six (6) advances of the Revolving Loans and the Term Loan
which bear interest at the LIBOR Rate.

    

    “LIBOR Rate” shall
mean a per annum rate of interest equal to LIBOR for the relevant Interest
Period, which LIBOR Rate shall remain fixed during such Interest
Period.

    

    “Lien” shall mean,
with respect to any Person, any interest granted by such Person in any real or
personal property, asset or other right owned or being purchased or acquired by
such Person (including an interest in respect of a Capital Lease) which secures
payment or performance of any obligation and shall include any mortgage, lien,
encumbrance, title retention lien, charge or other security interest of any
kind, whether arising by contract, as a matter of law, by judicial process or
otherwise.

    

    “Loans” shall mean,
collectively, all Revolving Loans, and the Term Loan made by the Bank to the
Borrowers and all Letter of Credit Obligations, under and pursuant to this
Agreement.

    

    “Loan Documents” shall
mean each of the agreements, mortgages, documents, instruments and certificates
set forth in Section
3.1 hereof, and any and all such other instruments, documents,
certificates and agreements from time to time executed and delivered by the
Borrowers, or any of their Subsidiaries for the benefit of the Bank pursuant to
any of the foregoing, and all amendments, restatements, supplements and other
modifications thereto.

    

    “Master Letter of Credit
Agreement” shall mean, at any time, with respect to the issuance of
Letters of Credit, a Master Letter of Credit Agreement in the form being used by
the Bank at such time.

    

    “Material Adverse
Effect” shall mean (a) a material adverse change in, or a material
adverse effect upon, the assets, business, properties, prospects, condition
(financial or otherwise) or results of operations of the Borrowers and their
Subsidiaries taken as a whole, (b) a material impairment of the ability of any
of the Borrowers and their Subsidiaries to perform any of the Obligations under
any of the Loan Documents, or (c) a material adverse effect on (i) any
substantial portion of the Collateral, (ii) the legality, validity, binding
effect or enforceability against any of the Borrowers or their Subsidiaries of
any material provision of the Loan Documents (as reasonably determined by the
Bank), (iii) the perfection or priority of any Lien on any material asset
granted to the Bank under any Loan Document, or (iv) the rights or remedies of
the Bank under any Loan Document.

    
      
        
        

      

      
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    “Morgan Stanley” shall
mean Morgan Stanley.

    

    “Morgan Stanley Loan”
shall mean the Debt incurred by Lifeway to Morgan Stanley in an amount not to
exceed $2,500,000 (or such greater amount as the Bank shall approve it is sole
discretion) and secured by a Lien in some or all of the Excluded Collateral
(other than real property included in the Excluded Collateral) owned by Lifeway
and held at or controlled by Morgan Stanley.

    

    “Mortgage” shall mean
that certain Mortgage, Security Agreement, Assignment of Rents and Leases and
Fixture Filing; executed by Lifeway in favor of the Bank with respect to the
Morton Grove Property, the Niles Property and the Skokie Property.

    

    “Morton Grove
Property” shall mean the property owned that property owned by Lifeway
located at 6431 W. Oakton Street, Morton Grove, Illinois 60053.

    

    “Net Cash Proceeds”
shall mean:

    

    (a) with
respect to any Asset Disposition, the aggregate cash proceeds (including cash
proceeds received pursuant to policies of insurance or by way of deferred
payment of principal pursuant to a note, installment receivable or otherwise,
but only as and when received) received by any Borrower or any Subsidiary
pursuant to such Asset Disposition net of (i) the direct costs relating to such
sale, transfer or other disposition (including sales commissions and legal,
accounting and investment banking fees), (ii) taxes paid or reasonably estimated
by any Borrower or any Subsidiary to be payable as a result thereof (after
taking into account any available tax credits or deductions and any tax sharing
arrangements), and (iii) amounts required to be applied to the repayment of any
Debt secured by a Lien on the asset subject to such Asset Disposition (other
than the Loans);

    

    (b) with
respect to any issuance of Capital Securities, the aggregate cash proceeds
received by any Borrower or any Subsidiary pursuant to such issuance, net of the
direct costs relating to such issuance (including sales and underwriters’
commissions; and

    

    (c) with
respect to any issuance of Debt, the aggregate cash proceeds received by any
Borrower pursuant to such issuance, net of the direct costs of such issuance
(including up-front, underwriters’ and placement fees).

    

    “Net Income” shall
mean means, with respect to the Borrowers and their Subsidiaries for any period,
the consolidated net income (or loss) of the Borrowers and their Subsidiaries
for such period as determined in accordance with GAAP, excluding any gains
from Asset Dispositions, any extraordinary gains and any gains from discontinued
operations.

    
      
        
        

      

      
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    “Niles Property” shall
mean that property owned by Lifeway located at 6101 Gross Point Rd., Niles,
Illinois 60714.

    

    “Non-Excluded Taxes”
shall have the meaning set forth in Section 2.7(a)
hereof.

    

    “Note” and “Notes” shall mean,
respectively, each of and collectively, the Revolving Note in the Form of Exhibit A and the
Term Note in the form of Exhibit
B.

    

    “Obligations” shall
mean the Loans, as evidenced by any Note, all interest accrued thereon
(including interest which would be payable as post-petition in connection with
any bankruptcy or similar proceeding, whether or not permitted as a claim
thereunder), any fees due the Bank hereunder, any expenses incurred by the Bank
hereunder, including without limitation, all liabilities and obligations under
this Agreement, under any other Loan Document, any reimbursement obligations of
any of the Borrowers in respect of Letters of Credit and surety bonds, all
Hedging Obligations of any of the Borrowers which are owed to the Bank or any
Affiliate of the Bank, and all Bank Product Obligations of any of the Borrowers,
and any and all other liabilities and obligations owed by any of the Borrowers
to the Bank from time to time, howsoever created, arising or evidenced, whether
direct or indirect, joint or several, absolute or contingent, now or hereafter
existing, or due or to become due, together with any and all renewals,
extensions, restatements or replacements of any of the foregoing.

    

    “Obligor” shall mean
each of the Borrowers, any Subsidiary of the Borrowers, accommodation endorser,
third party pledgor, or any other party liable with respect to the
Obligations.

    

    “OFAC” shall have the
meaning set forth in Section
8.3.

    

    “Organizational
Documents” means, with respect to each of the Borrowers, its
articles/certificate of incorporation or formation, bylaws, partnership
agreement, operating agreement, shareholder agreement and any other documents or
instruments governing the formation and operation of such Borrower.

    

    “Organizational
Identification Number” means, with respect to each of the Borrowers, the
organizational identification number assigned to such Borrower by the applicable
governmental unit or agency of the jurisdiction of organization of such
Borrower.

    

    “Other Taxes” shall
mean any present or future stamp or documentary taxes or any other excise or
property taxes, charges or similar levies which arise from the execution,
delivery, enforcement or registration of, or otherwise with respect to, this
Agreement or any of the other Loan Documents.

    

    “Permitted Liens”
shall mean (a) Liens for Taxes,
assessments or other governmental charges not at the time delinquent or
thereafter payable without penalty or being contested in good faith by
appropriate proceedings and, in each case, for which it maintains adequate
reserves in accordance with GAAP and in respect of which no Lien has been filed;
(b) 

    
      
        
        

      

      
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    Liens
arising in the ordinary course of business (such as (i) Liens of carriers,
warehousemen, mechanics and materialmen and other similar Liens imposed by law,
and (ii) Liens in the form of deposits or pledges incurred in connection with
worker’s compensation, unemployment compensation and other types of social
security (excluding Liens arising under ERISA) or in connection with surety
bonds, bids, performance bonds and similar obligations) for sums not overdue or
being contested in good faith by appropriate proceedings and not involving any
advances or borrowed money or the deferred purchase price of property or
services, which do not in the aggregate materially detract from the value of the
property or assets of the Borrowers or materially impair the use thereof in the
operation of any of the Borrower’s business and, in each case, for which it
maintains adequate reserves in accordance with GAAP and in respect of which no
Lien has been filed; (c) Liens described on Schedule 9.2 as of the date hereof;
(d) easements, rights of way, restrictions, minor defects or irregularities in
title and other similar Liens not interfering in any material respect with the
ordinary conduct of the business of the Borrowers or any of their Subsidiaries;
(e) subject to the limitation set forth in Section 9.1(f), Liens
arising in connection with Capitalized Lease Obligations (and attaching only to
the property being leased); (f) subject to the limitation set forth in Section 9.1(g), Liens
that constitute purchase money security interests on any property securing Debt
incurred for the purpose of financing all or any part of the cost of acquiring
such property, provided that any
such Lien attaches to such property within twenty (20) days of the acquisition
thereof and attaches solely to the property so acquired; (g) Liens granted to the
Bank hereunder and under the Loan Documents, (h) Liens in and only in the
Excluded Collateral granted to the holder of (1) the Seller Note (but as to the
Seller Note only Excluded Collateral which is real estate or capital stock of
Lifeway) and (2) the Amani-Helios Note (but as to the Amani-Helios Note only
Excluded Collateral which is not real estate) and (h) Liens in and only in
Excluded Collateral (other than real property included in the Excluded
Collateral) owned by Lifeway securing the Morgan Stanley Loan and Wachovia Loan
provided such Excluded Collateral is held or controlled by Morgan Stanley and
Wachovia, as the case may be.

    

    “Person” shall mean
any natural person, partnership, limited liability company, corporation, trust,
joint venture, joint stock company, association, unincorporated organization,
government or agency or political subdivision thereof, or other entity, whether
acting in an individual, fiduciary or other capacity.

    

    “Pride” shall mean
Pride of Main Street Dairy, LLC, a Minnesota limited liability
company.

    

    “Prime Loan” or “Prime Loans” shall
mean that portion, and collectively, those portions of the aggregate outstanding
principal balance of the Loans that bear interest at the Prime Rate plus the Applicable
Margin.

    

    “Prime Rate” shall
mean the floating per annum rate of interest which at any time, and from time to
time, shall be most recently announced by the Bank as its Prime Rate, which is
not intended to be the Bank’s lowest or most favorable rate of interest at any
one time.  The effective date of any change in the Prime Rate shall
for purposes hereof be the date the Prime 

    
      
        
        

      

      
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    Rate is
changed by the Bank.  The Bank shall not be obligated to give notice
of any change in the Prime Rate.

    

    “Regulatory Change”
shall mean the introduction of, or any change in any applicable law, treaty,
rule, regulation or guideline or in the interpretation or administration thereof
by any governmental authority or any central bank or other fiscal, monetary or
other authority having jurisdiction over the Bank or its lending
office.

    

    “Revolving Interest
Rate” shall mean the Borrowers’ from time to time option of (i) a
floating per annum rate of interest equal to the Prime Rate plus the Applicable
Margin, or (ii) the LIBOR Rate plus the Applicable Margin.

    

    “Revolving Loan” and
“Revolving
Loans” shall mean, respectively, each direct advance and the aggregate of
all such direct advances made by the Bank to the Borrowers under and pursuant to
this Agreement, as set forth in Section 2.1 of this
Agreement.

    

    “Revolving Loan
Availability” shall mean, at any time, an amount equal to the lesser of
(a) the Revolving Loan Commitment minus the Letter of
Credit Obligations, or (b) the Borrowing Base Amount minus the Letter of
Credit Obligations.

    

    “Revolving Loan
Commitment” shall mean Five Million and 00/100 Dollars
($5,000,000.00).

    

    “Revolving Loan Maturity
Date” shall mean February 6, 2010, unless extended by the Bank pursuant
to any modification, extension or renewal note executed by the Borrowers and
accepted by the Bank in its sole and absolute discretion in substitution for the
Revolving Note.

    

    “Revolving Note” shall
mean a revolving note in the amount of the Revolving Loan Commitment and
maturing on the Revolving Loan Maturity Date, duly executed by the Borrowers and
payable to the order of the Bank, together with any and all renewal, extension,
modification or replacement notes executed by the Borrowers and delivered to the
Bank and given in substitution therefor.

    

    “Seller Note” shall
mean that certain note made by FMI in favor of the Former FMI
Shareholders.

    

    “Senior Debt” shall
mean all Debt of the Borrowers and their Subsidiaries to the Bank and/or any
Affiliates of the Bank.

    

    “Skokie Property”
shall mean that property owned by Lifeway located at 7625 N. Austin Ave.,
Skokie, Illinois 60077.

    

    “Smolyansky Family”
shall mean any of Ludmila Smolyansky, Julie Smolyansky and Edward
Smolyansky.

    
      
        
        

      

      
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    “Starfruit” shall mean
Starfruit, LLC, an Illinois limited liability company.

    

    “Subordinated Debt”
shall mean the Amani-Helios Note and the Seller Note which are subordinated to
the Obligations in a manner satisfactory to the Bank, including right and time
of payment of principal and interest.

    

    “Subsidiary” and
“Subsidiaries”
shall mean, respectively, with respect to any Person, each and all such
corporations, partnerships, limited partnerships, limited liability companies,
limited liability partnerships, joint ventures or other entities of which or in
which such Person owns, directly or indirectly, such number of outstanding
Capital Securities as have more than fifty percent (50.00%) of the ordinary
voting power for the election of directors or other managers of such
corporation, partnership, limited liability company or other
entity.  Unless the context otherwise requires, each reference to
Subsidiaries herein shall be a reference to Subsidiaries of any of the
Borrowers.

    

    “Tangible Assets”
shall mean the total of all assets appearing on a balance sheet of the Borrowers
prepared in accordance with GAAP (with Inventory being valued at the lower of
cost or market), after deducting all proper reserves (including reserves for
Depreciation) minus the sum of (i) goodwill, patents, trademarks, prepaid
expenses, deposits, deferred charges and other personal property which is
classified as intangible property in accordance with GAAP, and (ii) any amounts
due from shareholders, Affiliates, officers or employees of the
Borrowers.

    

    “Tangible Net Worth”
shall mean at any time the total of Tangible Assets minus Liabilities
plus
Subordinated Debt.

    

    “Taxes” shall mean any
and all present and future taxes, duties, levies, imposts, deductions,
assessments, charges or withholdings, and any and all liabilities (including
interest and penalties and other additions to taxes) with respect to the
foregoing.

    

    “Term Interest Rate”
shall mean the Borrowers’ from time to time option of (i) a floating per annum
rate of interest equal to the Prime Rate plus the Applicable
Margin, or (ii) the LIBOR Rate plus the Applicable
Margin.

    

    “Term Loan” shall mean
the direct advance or advances made by the Bank to the Borrowers in the form of
a Term Loan under and pursuant to this Agreement, as set forth in Section 2.2 of this
Agreement.

    

    “Term Loan Commitment”
shall mean Seven Million Six Hundred Thousand and 00/100 Dollars
($7,600,00.00).

    

    “Term Loan Maturity
Date” shall mean February 6, 2014, unless extended by the Bank pursuant
to any modification, extension or renewal note executed by the Borrowers and
accepted by the Bank in its sole and absolute discretion in substitution for the
Term Note.

    
      
        
        

      

      
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    “Term Note” shall mean
a term note in the amount of the Term Loan Commitment and maturing on the Term
Loan Maturity Date, duly executed by the Borrowers and payable to the order of
the Bank, together with any and all renewal, extension, modification or
replacement notes executed by the Borrowers and delivered to the Bank and given
in substitution therefor.

    

    “UCC” shall mean the
Uniform Commercial Code in effect in the state of Illinois from time to
time.

    

    “Unmatured Event of
Default” shall mean any event which, with the giving of notice, the
passage of time or both, would constitute an Event of Default.

    

    “Voidable Transfer”
shall have the meaning set forth in Section 14.21
hereof.

    

    “Wachovia” shall mean
Wachovia Securities.

    

    “Wachovia Loan” shall
mean the Debt incurred by Lifeway to Wachovia in an amount not to exceed
$750,000 (or such greater amount as the Bank shall approve it is sole
discretion) and secured by Lien in marketable securities owned by Lifeway and
held at or controlled by Wachovia.

    

    “Wholly-Owned
Subsidiary” shall mean any Subsidiary in which any of the Borrowers owns,
directly or indirectly, one hundred percent (100%) of the Capital Securities of
such Subsidiary.

    

    1.2. Accounting
Terms.  Any accounting terms used in this Agreement which are
not specifically defined herein shall have the meanings customarily given them
in accordance with GAAP.  Calculations and determinations of financial
and accounting terms used and not otherwise specifically defined hereunder and
the preparation of financial statements to be furnished to the Bank pursuant
hereto shall be made and prepared, both as to classification of items and as to
amount, in accordance with sound accounting practices and GAAP as used in the
preparation of the financial statements of the Borrowers on the date of this
Agreement.  If any changes in accounting principles or practices from
those used in the preparation of the financial statements are hereafter
occasioned by the promulgation of rules, regulations, pronouncements and
opinions by or required by the Financial Accounting Standards Board or the
American Institute of Certified Public Accountants (or any successor thereto or
agencies with similar functions), which results in a material change in the
method of accounting in the financial statements required to be furnished to the
Bank hereunder or in the calculation of financial covenants, standards or terms
contained in this Agreement, the parties hereto agree to enter into good faith
negotiations to amend such provisions so as equitably to reflect such changes to
the end that the criteria for evaluating the financial condition and performance
of the Borrowers will be the same after such changes as they were before such
changes; and if the parties fail to agree on the amendment of such provisions,
the Borrowers will furnish financial statements in accordance with such changes,
but shall provide calculations for all financial covenants, perform all
financial covenants and otherwise observe all financial standards and terms in
accordance 

    
      
        
        

      

      
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    with
applicable accounting principles and practices in effect immediately prior to
such changes.  Calculations with respect to financial covenants
required to be stated in accordance with applicable accounting principles and
practices in effect immediately prior to such changes shall be reviewed and
certified by the Borrowers’ accountants.

    

    1.3. Other Terms Defined in
UCC.  All other capitalized words and phrases used herein and
not otherwise specifically defined herein shall have the respective meanings
assigned to such terms in the UCC, to the extent the same are used or defined
therein.

    

    1.4. Other Interpretive
Provisions.

    

    (a) The
meanings of defined terms are equally applicable to the singular and plural
forms of the defined terms.  Whenever the context so requires, the
neuter gender includes the masculine and feminine, the single number includes
the plural, and vice versa, and in particular the word “Borrowers” shall be so
construed.

    

    (b) Section
and Schedule references are to this Agreement unless otherwise
specified.  The words “hereof”, “herein” and “hereunder” and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement.

    

    (c) The term
“including” is not limiting, and means “including, without
limitation”.

    

    (d) In the
computation of periods of time from a specified date to a later specified date,
the word “from” means “from and including”; the words “to” and “until” each mean
“to but excluding”, and the word “through” means “to and
including”.

    

    (e) Unless
otherwise expressly provided herein, (i) references to agreements
(including this Agreement and the other Loan Documents) and other contractual
instruments shall be deemed to include all subsequent amendments, restatements,
supplements and other modifications thereto, but only to the extent such
amendments, restatements, supplements and other modifications are not prohibited
by the terms of any Loan Document, and (ii) references to any statute or
regulation shall be construed as including all statutory and regulatory
provisions amending, replacing, supplementing or interpreting such statute or
regulation.

    

    (f) To the
extent any of the provisions of the other Loan Documents are inconsistent with
the terms of this Agreement, the provisions of this Agreement shall
govern.

    

    (g) This
Agreement and the other Loan Documents may use several different limitations,
tests or measurements to regulate the same or similar matters.  All
such limitations, tests and measurements are cumulative and each shall be
performed in accordance with its terms.

    
      
        
        

      

      
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    1.5. Multiple
Borrowers.  The term “Borrowers” refers to more than one
Borrower.  Each of the Borrowers hereby designates the other Borrowers
to act on behalf of all of the Borrowers for all purposes under this Agreement,
including, without limitation, the requesting of Loans hereunder, and the
reduction of any Revolving Loan Commitment.  Notice when given to any
of the Borrowers shall be sufficient notice to all of the
Borrowers.  Any document delivered to any of the Borrowers shall be
considered delivered to each and all of the Borrowers.

    

    Section
2. COMMITMENT OF THE
BANK.

    

    2.1. Revolving
Loans.

    

    (a) Revolving Loan
Commitment.  Subject to the terms and conditions of this
Agreement and the other Loan Documents, and in reliance upon the representations
and warranties of the Borrowers set forth herein and in the other Loan
Documents, the Bank agrees to make such Revolving Loans at such times as the
Borrowers may from time to time request until, but not including, the Revolving
Loan Maturity Date, and in such amounts as the Borrowers may from time to time
request, provided, however, that the aggregate principal balance of all
Revolving Loans outstanding at any time shall not exceed the Revolving Loan
Availability.  Revolving Loans made by the Bank may be repaid and,
subject to the terms and conditions hereof, borrowed again up to, but not
including the Revolving Loan Maturity Date unless the Revolving Loans are
otherwise accelerated, terminated or extended as provided in this
Agreement.  The Revolving Loans shall be used by the Borrowers for the
purpose of working capital and general corporate uses.

    

    (b) Revolving Loan Interest and
Payments.  Except as otherwise provided in this Section 2.1(b), the
principal amount of the Revolving Loans outstanding from time to time shall bear
interest at the applicable Revolving Interest Rate.  Accrued and
unpaid interest on the unpaid principal balance of all Revolving Loans
outstanding from time to time which are Prime Loans, shall be due and payable
monthly, in arrears, commencing on February 27, 2009 and continuing on the last
Business Day of each calendar month thereafter, and on the Revolving Loan
Maturity Date.  Accrued and unpaid interest on the unpaid principal
balance of all Revolving Loans outstanding from time to time which are LIBOR
Loans shall be payable on the last Business Day of each Interest Period,
commencing on the first such date to occur after the date hereof, on the date of
any principal repayment of a LIBOR Loan and on the Revolving Loan Maturity
Date.  From and after maturity, or after the occurrence and during the
continuation of an Event of Default, interest on the outstanding principal
balance of the Revolving Loans, at the option of the Bank, may accrue at the
Default Rate and shall be payable upon demand from the Bank.

    

    (c) Revolving Loan Principal
Payments.

    
      
        
        

      

      
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    (i) Revolving Loan Mandatory
Payments.  All Revolving Loans hereunder shall be repaid by the
Borrowers on the Revolving Loan Maturity Date, unless payable sooner pursuant to
the provisions of this Agreement.  In the event the aggregate
outstanding principal balance of all Revolving Loans hereunder exceeds the
Revolving Loan Availability, the Borrowers shall, without notice or demand of
any kind, immediately make such repayments of the Revolving Loans or take such
other actions as are satisfactory to the Bank as shall be necessary to eliminate
such excess.  Also, if the Borrowers chooses not to convert any
Revolving Loan which is a LIBOR Loan to a Prime Loan as provided in Section 2.3(b) and
Section 2.3(c),
then such Revolving Loan shall immediately be due and payable on the last
Business Day of the then existing Interest Period or on such earlier date as
required by law, all without further demand, presentment, protest or notice of
any kind, all of which are hereby waived by the Borrowers.

    

    (ii) Optional
Prepayments.   The Borrowers may from time to time prepay
the Revolving Loans which are Prime Loans, in whole or in part, without any
prepayment penalty whatsoever, provided that any prepayment of the entire
principal balance of the Prime Loans shall include accrued interest on such
Prime Loans to the date of such prepayment.

    

    2.2. Term
Loan.

    

    (a) Term Loan
Commitment.  Subject to the terms and conditions of this
Agreement and the other Loan Documents, and in reliance upon the representations
and warranties of the Borrowers set forth herein and in the other Loan
Documents, the Bank agrees to make a Term Loan equal to the Term Loan
Commitment.  The Term Loan shall be available to the Borrowers in a
single principal advance on such date as the conditions set forth in Section 3 shall have
been satisfied.  The Term Loan shall be used by the Borrowers for the
refinancing of its existing mortgage debt and for the acquisition of
FMI.  The Term Loan may be prepaid in whole or in part at any time
without penalty and subject to Section 2.2(d), but
shall be due in full on the Term Loan Maturity Date, unless the credit extended
under the Term Loan is otherwise accelerated, terminated or extended as provided
in this Agreement.

    

    (b) Term Loan
Interest and
Payments.  Except as otherwise provided in this Section 2.2(b), the
principal amount of the Term Loan outstanding from time to time shall bear
interest at the applicable Term Interest Rate.  Accrued and unpaid
interest on that portion of the principal balance of the Term Loan outstanding
from time to time which is a Prime Loan, shall be due and payable monthly, in
arrears, commencing on February 27, 2009 and continuing on the last Business Day
of each calendar month thereafter, and on the Term Loan Maturity
Date.  Accrued and unpaid interest on those portions of the principal
balance of the Term Loan outstanding from time to time which are LIBOR Loans
shall be payable on the last Business Day of each Interest Period, commencing on
the first such date to occur after the date hereof, on the date of any principal
repayment of a LIBOR Loan and on the Term Loan Maturity Date. From and after maturity,
or after 

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    the
occurrence and during the continuation of an Event of Default, interest on the
outstanding principal balance of the Term Loan, at the option of the Bank, may
accrue at the Default Rate and shall be payable upon demand from the
Bank.

    

    (c) Term Loan Interest
and Principal
Payments.  The outstanding principal balance of the Term Loan
shall be repaid in equal principal
installments each in the amount of Forty Two Thousand and Two Hundred Twenty-Two
and 22/100 Dollars ($42,222.22), together with an additional amount representing
accrued and unpaid interest on the principal amount of the Term Loan outstanding
as set forth above, beginning on February 27, 2009 and continuing on the last
Business Day of each calendar month thereafter, with a final payment of all
outstanding principal and accrued interest due on the Term Loan Maturity
Date.  Principal amounts repaid on the Term Note may not be borrowed
again.  Also, if the Borrowers chooses not to convert any portion of
the Term Loan which is a LIBOR Loan to a Prime Loan as provided in Section 2.3(b) and
Section 2.3(c),
then such portion of the Term Loan shall immediately be due and payable on the
last Business Day of the then existing Interest Period or on such earlier date
as required by law, all without further demand, presentment, protest or notice
of any kind, all of which are hereby waived by the Borrowers.

    

    (d) Term Loan Mandatory
Prepayment.  The Borrowers shall make a prepayment of the
outstanding principal amount of the Term Loan until paid in full upon the
occurrence of any of the following events, at the following times and in the
following amounts:

    

    (i) Concurrently
with the receipt by any Borrower or by any Subsidiary of any Net Cash Proceeds
from any Asset Disposition, in an amount equal to 100% of such Net Cash
Proceeds.

    

    (ii) Concurrently
with the receipt by the Borrower of any Net Cash Proceeds from any issuance of
Capital Securities (excluding (A) any
issuance of Capital Securities pursuant to any employee
or director option program, benefit plan or compensation program, and (B) any
issuance by a Subsidiary to the Borrower or another Subsidiary), in an amount
equal to 100% of such Net Cash Proceeds.

    

    (e) Term Loan Optional
Prepayments.  The Borrowers may from time to time prepay the
Term Loan in whole or in part; provided that the
Borrowers shall give the Lender notice thereof not later than 10:00 A.M.,
Chicago time, on the day of such prepayment (which shall be a Business Day),
specifying the Loans to be prepaid and the date and amount of
prepayment.  Any such partial prepayment shall be in an amount equal
to $100,000 or a higher integral multiple of $100,000.

    

    2.3. Additional LIBOR Loan
Provisions.

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

    

    (a) LIBOR Loan
Prepayments.  Notwithstanding anything to the contrary
contained herein, the principal balance of any LIBOR Loan may not be prepaid in
whole or in part at any time.  If, for any reason, a LIBOR Loan is
paid prior to the last Business Day of any Interest Period, whether voluntary,
involuntary, by reason of acceleration or otherwise, each such prepayment of a
LIBOR Loan will be accompanied by the amount of accrued interest on the amount
prepaid and any and all costs, expenses, penalties and charges incurred by the
Bank as a result of the early termination or breakage of a LIBOR Loan, plus the
amount, if any, by which (i) the additional interest which would have been
payable during the Interest Period on the LIBOR Loan prepaid had it not been
prepaid, exceeds (ii) the interest which would have been recoverable by the Bank
by placing the amount prepaid on deposit in the domestic certificate of deposit
market, the eurodollar deposit market, or other appropriate money market
selected by the Bank, for a period starting on the date on which it was prepaid
and ending on the last day of the Interest Period for such LIBOR
Loan.  The amount of any such loss or expense payable by the Borrowers
to the Bank under this section shall be determined in the Bank’s sole discretion
based upon the assumption that the Bank funded its loan commitment for LIBOR
Loans in the London Interbank Eurodollar market and using any reasonable
attribution or averaging methods which the Bank deems appropriate and practical,
provided, however, that the Bank is not obligated to accept a deposit in the
London Interbank Eurodollar market in order to charge interest on a LIBOR Loan
at the LIBOR Rate.

    

    (b) LIBOR
Unavailability.  If the Bank determines in good faith (which
determination shall be conclusive, absent manifest error) prior to the
commencement of any Interest Period that (i) the making or maintenance of any
LIBOR Loan would violate any applicable law, rule, regulation or directive,
whether or not having the force of law, (ii) United States dollar deposits in
the principal amount, and for periods equal to the Interest Period for funding
any LIBOR Loan are not available in the London Interbank Eurodollar market in
the ordinary course of business, (iii) by reason of circumstances affecting the
London Interbank Eurodollar market, adequate and fair means do not exist for
ascertaining the LIBOR Rate to be applicable to the relevant LIBOR Loan, or (iv)
the LIBOR Rate does not accurately reflect the cost to the Bank of a LIBOR Loan,
the Bank shall promptly notify the Borrowers thereof and, so long as the
foregoing conditions continue, none of the Loans may be advanced as a LIBOR Loan
thereafter.  In addition, at the Borrowers’ option, each existing
LIBOR Loan shall be immediately (i) converted to a Prime Loan on the last
Business Day of the then existing Interest Period, or (ii) due and payable on
the last Business Day of the then existing Interest Period, without further
demand, presentment, protest or notice of any kind, all of which are hereby
waived by the Borrowers.

    

    (c) Regulatory
Change.  In addition, if, after the date hereof, a Regulatory
Change shall, in the reasonable determination of the Bank, make it unlawful for
the Bank to make or maintain the LIBOR Loans, then the Bank shall promptly
notify the Borrowers and none of the Loans may be advanced as a LIBOR Loan
thereafter.  In addition, at the Borrowers’ option, each existing
LIBOR Loan shall be immediately (i) converted to a 

    
      
        
        

      

      
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    Prime
Loan on the last Business Day of the then existing Interest Period or on such
earlier date as required by law, or (ii) due and payable on the last Business
Day of the then existing Interest Period or on such earlier date as required by
law, all without further demand, presentment, protest or notice of any kind, all
of which are hereby waived by the Borrowers.

    

    (d) LIBOR
Indemnity.  If any Regulatory Change, or compliance by the Bank
or any Person controlling the Bank with any request or directive of any
governmental authority, central bank or comparable agency (whether or not having
the force of law) shall (a) impose, modify or deem applicable any assessment,
reserve, special deposit or similar requirement against assets held by, or
deposits in or for the account of or loans by, or any other acquisition of funds
or disbursements by, the Bank; (b) subject the Bank or any LIBOR Loan to any
tax, duty, charge, stamp tax or fee or change the basis of taxation of payments
to the Bank of principal or interest due from the Borrowers to the Bank
hereunder (other than a change in the taxation of the overall net income of the
Bank); or (c) impose on the Bank any other condition regarding such LIBOR Loan
or the Bank’s funding thereof, and the Bank shall determine (which determination
shall be conclusive, absent manifest error) that the result of the foregoing is
to increase the cost to, or to impose a cost on, the Bank or such controlling
Person of making or maintaining such LIBOR Loan or to reduce the amount of
principal or interest received by the Bank hereunder, then the Borrowers shall
pay to the Bank or such controlling Person, on demand, such additional amounts
as the Bank shall, from time to time, determine are sufficient to compensate and
indemnify the Bank for such increased cost or reduced amount.

    

    2.4. Interest and Fee
Computation; Collection of Funds.  Except as otherwise set
forth herein, all interest and fees shall be calculated on the basis of a year
consisting of 360 days and shall be paid for the actual number of days
elapsed.  Principal payments submitted in funds not immediately
available shall continue to bear interest until collected.  If any
payment to be made by the Borrowers hereunder or under any Note shall become due
on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day and such extension of time shall be included in
computing any interest in respect of such payment.  Notwithstanding
anything to the contrary contained herein, the final payment due under any of
the Loans must be made by wire transfer or other immediately available
funds.  All payments made by the Borrowers hereunder or under any of
the Loan Documents shall be made without setoff, counterclaim, or other
defense.  To the extent permitted by applicable law, all payments
hereunder or under any of the Loan Documents (including any payment of
principal, interest, or fees) to, or for the benefit, of any Person shall be
made by the Borrowers free and clear of, and without deduction or withholding
for, or account of, any taxes now or hereinafter imposed by any taxing
authority.

    

    2.5. Late
Charge.  If any payment of interest or principal due hereunder
is not made within ten (10) days after such payment is due in accordance with
the terms hereof, then, in addition to the payment of the amount so due, the
Borrowers shall pay to the Bank a “late charge” of five cents for each whole
dollar so overdue to defray part of the cost of collection and 

    
      
        
        

      

      
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    handling
such late payment, provided, however, that the late charge provisions shall not
apply to the payment of any outstanding principal balance under the Notes due
upon maturity of the Notes, if Borrowers are in the process of obtaining
refinancing at such time and Borrowers are diligently pursuing such
refinancing.  The Borrowers agree that the damages to be sustained by
the Bank for the detriment caused by any late payment are extremely difficult
and impractical to ascertain, and that the amount of five cents for each one
dollar due is a reasonable estimate of such damages, does not constitute
interest, and is not a penalty.

    

    2.6. Letters of
Credit. Subject to the terms and
conditions of this Agreement and upon (i) the execution by the Borrowers and the
Bank of a Master Letter of Credit Agreement in form and substance acceptable to
the Bank and (ii) the execution and delivery by the Borrowers, and the
acceptance by the Bank, in its sole and absolute discretion, of a Letter of
Credit Application, the Bank agrees to issue for the account of the Borrowers
such Letters of Credit in the standard form of the Bank and otherwise in form
and substance acceptable to the Bank, from time to time during the term of this
Agreement, provided that the Letter of Credit Obligations may not at any time
exceed the Letter of Credit Commitment and provided further, that no Letter of
Credit shall have an expiration date later than the Letter of Credit Maturity
Date; provided, however, that any outstanding Letter of Credit Obligations
remaining after the Revolving Loan Maturity Date are cash collateralized in a
manner acceptable to the Bank in its sole discretion.  The amount of
any payments made by the Bank with respect to draws made by a beneficiary under
a Letter of Credit for which the Borrowers have failed to reimburse the Bank
upon the earlier of (i) the Bank’s demand for repayment, or (ii) five (5) days
from the date of such payment to such beneficiary by the Bank, shall be deemed
to have been converted to a Revolving Loan as of the date such payment was made
by the Bank to such beneficiary.  Upon the occurrence of an Event of a
Default and at the option of the Bank, all Letter of Credit Obligations shall be
converted to Revolving Loans consisting of Prime Loans, all without demand,
presentment, protest or notice of any kind, all of which are hereby waived by
the Borrowers. To the extent the provisions of the Master Letter of Credit
Agreement differ from, or are inconsistent with, the terms of this Agreement,
the provisions of this Agreement shall govern.

    

    2.7. Taxes.

    

    (a) All
payments made by the Borrowers under this Agreement shall be made free and clear
of, and without deduction or withholding for or on account of, any present or
future income, stamp or Other Taxes, levies, imposts, duties, charges, fees,
deductions or withholdings, now or hereafter imposed, levied, collected,
withheld or assessed by any governmental authority, excluding net income taxes
and franchise taxes (imposed in lieu of net income taxes) imposed on the Bank as
a result of a present or former connection between the Bank and the jurisdiction
of the governmental authority imposing such tax or any political subdivision or
taxing authority thereof or therein (other than any such connection arising
solely from the Bank having executed, delivered or performed its obligations or
received a payment under, or enforced, this Agreement or any other Loan
Document).  If any such non-excluded taxes, levies, imposts, duties,
charges, fees, deductions or withholdings (collectively, “Non-Excluded Taxes”) or Other
Taxes are required to be withheld from any amounts payable to the Bank
hereunder, the amounts so 

    
      
        
        

      

      
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    payable
to the Bank shall be increased to the extent necessary to yield to the Bank
(after payment of all Non-Excluded Taxes and Other Taxes) interest or any such
other amounts payable hereunder at the rates or in the amounts specified in this
Agreement, provided, however, that the Borrowers shall not be required to
increase any such amounts payable to the Bank with respect to any Non-Excluded
Taxes that are attributable to the Bank’s failure to comply with the
requirements of Section
2.7(c).

    

    (b) The
Borrowers shall pay any Other Taxes to the relevant governmental authority in
accordance with applicable law.

    

    (c) At the
request of the Borrowers and at the Borrowers’ sole cost, the Bank shall take
reasonable steps to (i) contest its liability for any Non-Excluded Taxes or
Other Taxes that have not been paid, or (ii) seek a refund of any Non-Excluded
Taxes or Other Taxes that have been paid.

    

    (d) Whenever
any Non-Excluded Taxes or Other Taxes are payable by the Borrowers, as promptly
as possible thereafter the Borrowers shall send to the Bank a certified copy of
an original official receipt received by the Borrowers showing payment
thereof.  If the Borrowers fails to pay any Non-Excluded Taxes or
Other Taxes when due to the appropriate taxing authority or fails to remit to
the Bank the required receipts or other required documentary evidence or if any
governmental authority seeks to collect a Non-Excluded Tax or Other Tax directly
from the Bank for any other reason, the Borrowers shall indemnify the Bank on an
after-tax basis for any incremental taxes, interest or penalties that may become
payable by the Bank.

    

    (e) The
agreements in this Section shall survive the satisfaction and payment of the
Obligations and the termination of this Agreement.

    

    2.8. All Loans to Constitute
Single Obligation.  The Loans shall constitute one general
obligation of the Borrowers, and shall be secured by Bank’s priority security
interest in and Lien upon all of the Collateral and by all other security
interests, Liens, claims and encumbrances heretofore, now or at any time or
times hereafter granted by the Borrowers and any Subsidiary of
the Borrowers to Bank.  Without limiting the generality of the
foregoing, each of the Loans is cross-defaulted and cross- collateralized with
each other Loan.

    

    Section
3. CONDITIONS OF
BORROWING.

    

    Notwithstanding any other provision of
this Agreement, the Bank shall not be required to disburse, make or continue all
or any portion of the Loans, if any of the following conditions shall have
occurred on or before the date hereof (unless a later date is otherwise
expressly provided for herein or the parties otherwise agree to a later date in
writing).

    

    3.1. Loan
Documents.  The Borrowers shall have failed to execute and
deliver to the Bank any of the following Loan Documents, all of which must be
satisfactory to the Bank and the Bank’s counsel in form, substance and
execution:

    
      
        
        

      

      
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    (a) Loan
Agreement.  Two copies of this Agreement duly executed by the
Borrowers.

    

    (b) Revolving
Note.  A Revolving Note duly executed by the Borrowers, in the
form prepared by and acceptable to the Bank.

    

    (c) Term
Note.  A Term Note duly executed by the Borrowers, in the form
prepared by and acceptable to the Bank.

    

    (d) Notice of
Borrowing.  A Notice of Borrowing duly executed by the
Borrowers, in the form prepared by and acceptable to the Bank.

    

    (e) Notice of
Conversion/Continuation. A Notice of Conversion/Continuation duly
executed by the Borrowers, in the form prepared by and acceptable to the
Bank.

    

    (f) Master Letter of Credit
Agreement.  A Master Letter of Credit Agreement prepared by and
acceptable to the Bank, duly executed by the Borrowers in favor of the
Bank.

    

    (g) Pledge
Agreements.  Pledge Agreements dated as of the date of this
Agreement, executed by Lifeway and Helios, in the form prepared by and
acceptable to the Bank.

    

    (h) Subordination
Agreements.  Subordination Agreements dated as of the date of
this Agreement, from each holder of Subordinated Debt (except with respect to
the Amani-Helios Note), in the form prepared by and acceptable to the
Bank.

    

    (i) Collateral Access
Agreement.  Within sixty (60) days of the date hereof,
Collateral Access Agreements dated on or about the date of this Agreement, from
the owner, lessor or mortgagee, as the case may be, of any real estate whereon
any Collateral is stored or otherwise located, in the form prepared by and
acceptable to the Bank.

    

    (j) Real Estate
Documents.  The duly executed Mortgage for the Morton Grove
Property, the Niles Property and the Skokie Property providing for a fully
perfected Lien, in favor of the Bank, in all right, title and interest of the
such Borrowers or such Subsidiary in such real property, together
with:

    

    (i) an
Assignment of Rents and Leases executed by Lifeway in favor of the Bank with
respect to the Morton Grove Property, the Niles Property, and the Skokie
Property;

    

    (ii) an ALTA
Loan Title Insurance Policy, issued by an insurer acceptable to the Bank,
insuring the Bank’s Lien on such real property and containing such endorsements
as the Bank may reasonably require (it being 

    
      
        
        

      

      
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    understood
that the amount of coverage, exceptions to coverage and status of title set
forth in such policy shall be acceptable to the Bank);

    

    (iii) copies of
all documents of record concerning such real property as shown on the commitment
for the ALTA Loan Title Insurance Policy referred to above;

    

    (iv) original
or certified copies of all insurance policies required to be maintained with
respect to such real property by this Agreement, the applicable Mortgage or any
other Loan Document;

    

    (v) an ALTA
survey certified to the Bank and such title insurer referred to above, meeting
such standards as the Bank may reasonably establish and otherwise reasonably
satisfactory to the Bank;

    

    (vi) an
environmental site assessment report, the nature and scope of which is
reasonably satisfactory to the Bank, and prepared by environmental engineers
reasonably satisfactory to the Bank;

    

    (vii) an
Environmental Indemnity Agreement executed by each of the Borrowers in favor of
the Bank, in the form prepared by and acceptable to the Bank;

    

    (viii) a flood
insurance policy concerning such real property, if required by the Flood
Disaster Protection Act of 1973; and

    

    (ix) an
appraisal, prepared by an independent appraiser engaged directly by the Bank, of
such parcel of real property or interest in real property, which appraisal shall
satisfy the requirements of the Financial Institutions Reform, Recovery and
Enforcement Act, if applicable, and shall evidence compliance with the
supervisory loan-to-value limits set forth in the Federal Deposit Insurance
Corporation Improvement Act of 1991, if applicable.

    

    Additionally,
in the case of any leased real property of any of the Borrowers, a consent, in
form and substance satisfactory to the Bank, from the owner and/or mortgagee of
such leased real property (a) consenting to the Mortgage in favor of the Bank
with respect to such property, and (b) waiving any landlord’s Lien in respect of
personal property kept at the premises subject to such lease.

    

    (k) Borrowing Base
Certificate.  A Borrowing Base Certificate in the form prepared
by the Bank, certified as accurate by the Borrowers and acceptable to the Bank
in its sole discretion.

    

    (l) Search Results; Lien
Terminations.  Copies of UCC search reports dated such a date
as is reasonably acceptable to the Bank, listing all effective financing

    
      
        
        

      

      
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    statements
which name the Borrowers and any of their Subsidiaries, under their present
names and any previous names, as debtors, together with (i) copies of such
financing statements, (ii) payoff letters evidencing repayment in full of all
existing Debt to be repaid with the Loans, the termination of all agreements
relating thereto and the release of all Liens granted in connection therewith,
with UCC or other appropriate termination statements and documents effective to
evidence the foregoing (other than Permitted Liens), and (iii) such other UCC
termination statements as the Bank may reasonably request.

    

    (m) Organizational and
Authorization Documents.  Copies of (i) the Organizational
Documents for each of the Borrowers and each of their Subsidiaries; (ii)
resolutions of the shareholders, board of directors, and members and/or managers
of the Borrowers and each of their Subsidiaries, as applicable, approving and
authorizing such Person’s execution, delivery and performance of the Loan
Documents to which it is party and the transactions contemplated thereby; (iii)
signature and incumbency certificates of the officer, members, or managers of
the Borrowers and each of their Subsidiaries, as applicable, executing any of
the Loan Documents, each of which the Borrowers hereby certifies to be true and
complete, and in full force and effect without modification, it being understood
that the Bank may conclusively rely on each such document and certificate until
formally advised by the such Borrowers of any changes therein; and (iv) good
standing certificates in the state of incorporation and/or formation (as
applicable) of the Borrowers and each of their Subsidiaries and in each other
state requested by the Bank.

    

    (n) Insurance.  Evidence
satisfactory to the Bank of the existence of insurance required to be maintained
pursuant to Section
8.6, together with evidence that the Bank has been named as a lender’s
loss payee and as an additional insured on all related insurance
policies.

    

    (o) Perfection
Certificate.  Perfection Certificate certified as accurate by
the Borrowers and acceptable to the Bank in its sole discretion.

    

    (p) Membership and Stock
Assignments.  Membership and Stock Assignments acceptable to
the Bank, duly executed by the Borrowers in favor of the Bank.

    

    (q) Trademark/Patent Security
Agreement. Trademark/Patent Security Agreement prepared by and acceptable
to the Bank, duly executed by the Borrowers in favor of the Bank.

    

    (r) Copyright Security
Agreement. Copyright Security Agreement prepared by and acceptable to the
Bank, duly executed by the Borrowers in favor of the Bank.

    

    (s) Letter of
Direction.  Letter of Direction prepared by and acceptable to
the Bank, duly executed by the Borrowers in favor of the Bank.

    
      
        
        

      

      
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    (t) Deposit Account Control
Agreements.  Within sixty (60) days of the date hereof, Deposit
Account Control Agreements for each of the Borrowers prepared by and acceptable
to the Bank, duly executed by the Borrowers in favor of the Bank.

    

    (u) Certified Copy of the
Purchase Agreement/Assignment Of Representations, Warranties, Covenants And
Indemnities.  Lifeway shall deliver to the Bank a certified
copy of the Stock Purchase Agreement between Lifeway and the Former FMI
Shareholders duly executed by Lifeway and each of the Former FMI Shareholders
along with the Assignment of Representations, Warranties, Covenants and
Indemnities in the Purchase Agreement duly executed by Lifeway in a form
acceptable to the Bank.

    

    (v) Solvency
Certificate.  Solvency Certificates for each of the Borrowers
prepared by and acceptable to the Bank, duly executed by the Borrowers in favor
of the Bank.

    

    (w) Closing
Certificate.  Closing Certificates for each of the Borrowers
prepared by and acceptable to the Bank, duly executed by the Borrowers in favor
of the Bank.

    

    (x) Evidence of Extension of the
Shareholders Agreement.  Lifeway shall deliver to the Bank, in
a form satisfactory to the Bank, evidence that the Shareholders Agreement
between Lifeway and DS Waters, LP (a wholly owned subsidiary of Groupe Danone,
SA) has been extended through 2009.

    

    (y) Legal
Opinion.  The Borrowers shall deliver to the Bank in a form
acceptable to the Bank the executed legal opinion of McDonald Hopkins, LLC,
counsel to the Borrowers,

    

    (z) Additional
Documents.  Such other certificates, financial statements,
schedules, resolutions, opinions of counsel, notes and other documents which are
provided for hereunder or which the Bank shall require.

    

    3.2. Event of
Default.  Any Event of Default, or Unmatured Event of Default
shall have occurred and be continuing.

    

    3.3. Material Adverse
Effect.  The occurrence of any event having a Material Adverse
Effect upon any of the Borrowers.

    

    3.4. Litigation.  Any
litigation or governmental proceeding shall have been instituted against any of
the Borrowers or any of their officers or shareholders having a Material Adverse
Effect upon any of the Borrowers.

    

    3.5. Representations and
Warranties.  Any representation or warranty of the Borrowers
contained herein or in any Loan Document shall be untrue or incorrect as of the
date of any Loan 

    
      
        
        

      

      
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    as though
made on such date, except to the extent such representation or warranty
expressly relates to an earlier date.

    

    Section
4. NOTES EVIDENCING
LOANS.

    

    4.1. Revolving
Note.  The Revolving Loans and the Letter of Credit Obligations
shall be evidenced by the Revolving Note.  At the time of the initial
disbursement of a Revolving Loan and at each time any additional Revolving Loan
shall be requested hereunder or a repayment made in whole or in part thereon, a
notation thereof shall be made on the books and records of the
Bank.  All amounts recorded shall be, absent manifest error,
conclusive and binding evidence of (i) the principal amount of the Revolving
Loans advanced hereunder and the amount of all Letter of Credit Obligations,
(ii) any accrued and unpaid interest owing on the Revolving Loans, and (iii) all
amounts repaid on the Revolving Loans or the Letter of Credit
Obligations.  The failure to record any such amount or any error in
recording such amounts shall not, however, limit or otherwise affect the
obligations of the Borrowers under the Revolving Note to repay the principal
amount of the Revolving Loans, together with all interest accruing
thereon.

    

    4.2. Term
Note.  The Term Loan shall be evidenced by the Term
Note.  At the time of the disbursement of the Term Loan or a repayment
made in whole or in part thereon, a notation thereof shall be made on the books
and records of the Bank.  All amounts recorded shall be, absent
demonstrable error, conclusive and binding evidence of (i) the principal amount
of the Term Loan advanced hereunder, (ii) any accrued and unpaid interest owing
on the Term Loan and (iii) all amounts repaid on the Term Loan.  The
failure to record any such amount or any error in recording such amounts shall
not, however, limit or otherwise affect the obligations of the Borrowers under
the Term Note to repay the principal amount of the Term Loan, together with all
interest accruing thereon.

    

    Section
5. MANNER OF
BORROWING.

    

    5.1. Borrowing
Procedures.  Each Revolving Loan and Term Loan may be advanced
either as a Prime Loan or a LIBOR Loan, provided, however, that at any time, the
Borrowers may identify no more than six (6) Loans which may be LIBOR
Loans.  Each Loan shall be made available to the Borrowers upon any
written, verbal, electronic, telephonic or telecopy loan request which the Bank
in good faith believes to emanate from a properly authorized representative of
the Borrowers, whether or not that is in fact the case.  Each such
request shall be effective upon receipt by the Bank, shall be irrevocable, and
shall specify the date, amount and type of borrowing and, in the case of a LIBOR
Loan, the initial Interest Period therefor.  The Borrowers shall
select Interest Periods so as not to require a payment or prepayment of any
LIBOR Loan during an Interest Period for such LIBOR Loan.  The final
Interest Period for any LIBOR Loan must be such that its expiration occurs on or
before the Maturity Date of such Loan.  A request for a Prime Loan
must be received by the Bank no later than 11:00 a.m. Chicago, Illinois time, on the day it is
to be funded.  A request for a LIBOR Loan must be (i) received by the
Bank no later than 11:00 a.m. Chicago, Illinois time, three days before the day
it is to be funded, and (ii) in an amount equal to Five Hundred Thousand and
00/100 Dollars ($500,000.00) or a higher integral multiple of One Hundred
Thousand and 00/100 Dollars ($100,000.00).  The 

    
      
        
        

      

      
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    proceeds
of each Loan shall be made available at the office of the Bank by credit to the
account of the Borrowers or by other means requested by the Borrowers and
acceptable to the Bank.  The Borrowers do hereby irrevocably confirm,
ratify and approve all such advances by the Bank and does hereby indemnify the
Bank against losses and expenses (including court costs, attorneys’ and
paralegals’ fees) and shall hold the Bank harmless with respect
thereto.

    

    5.2. LIBOR Conversion and
Continuation Procedures.  Each LIBOR Loan shall automatically
renew for the Interest Period specified in the initial request received by the
Bank pursuant to Section 5.1, at the
then current LIBOR Rate unless the Borrowers, pursuant to a subsequent written
notice received by the Bank, shall elect a different Interest Period or the
conversion of all or a portion of such LIBOR Loan to a Prime Loan. Each Interest Period
occurring after the initial Interest Period with respect to any LIBOR Loan shall
commence on the same day of each applicable month as the first day of the
initial Interest Period.  Whenever the last day of any Interest Period
with respect to any LIBOR Loan would otherwise occur on a day other than a
Business Day, the last day of such Interest Period shall be extended to occur on
the next succeeding Business Day.  Whenever an Interest Period with
respect to any LIBOR Loan would otherwise end on a day of a month for which
there is no numerically corresponding day in the calendar month, such Interest
Period shall end on the last day of such calendar month, unless such day is not
a Business Day, in which event such Interest Period shall be extended to end on
the next Business Day. Upon receipt by the Bank
of such subsequent notice, the Borrowers may, subject to the terms and
conditions of this Agreement, elect, as of the last day of the applicable
Interest Period, to continue any LIBOR Loan having an Interest Period expiring
on such day for a different Interest Period, or to convert any such LIBOR Loan
to a Prime Loan.  Such notice shall, in the case of a conversion to a
Prime Loan, be given before 11:00 a.m., Chicago time, on the proposed date of
such conversion, and in the case of conversion to a LIBOR Loan having a
different Interest Period, be given before 11:00 a.m., Chicago time, at least
three Business Days prior to the proposed date of such conversion, specifying:
(i) the proposed date of conversion; (ii) the aggregate amount of Loans to be
converted; (iii) the type of Loans resulting from the proposed conversion; and
(iv) the duration of the requested Interest Period.  The Borrowers may
not elect a LIBOR Rate, and an Interest Period for a LIBOR Loan shall not
automatically renew, with respect to any principal amount which is scheduled to
be repaid before the last day of the applicable Interest Period, and any such
amounts shall bear interest at the Prime Rate plus the Applicable Margin for
Prime Loans.

    

    5.3. Letters of
Credit.  All Letters of Credit shall bear such application,
issuance, renewal, negotiation and other fees and charges, and bear such
interest as charged by the Bank or otherwise payable pursuant to the Master
Letter of Credit Agreement.  In addition to the foregoing, each
standby Letters of Credit issued under and pursuant to this Agreement shall bear
an annual issuance fee equal to two percent (2.0%) of the face amount of
such standby Letter of Credit, payable by the Borrowers prior to the issuance by
the Bank of such Letter of Credit and annually thereafter, until (i) such Letter
of Credit has expired or has been returned to the Bank, or (ii) the Bank has
paid the beneficiary thereunder the full face amount of such Letter of
Credit.

    

    5.4. Automatic
Debit.  In order to effectuate the timely payment of any of the
Obligations when due, the Borrowers hereby authorizes and directs the Bank, at
the Bank’s option, to (a) debit the amount of the Obligations to any ordinary
deposit account of the Borrowers, or (b) make a Revolving Loan hereunder to pay
the amount of the Obligations.

    
      
        
        

      

      
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    5.5. Discretionary
Disbursements.  The Bank, in its sole and absolute discretion,
may immediately upon notice to the Borrowers, disburse any or all proceeds of
the Loans made or available to the Borrowers pursuant to this Agreement to pay
any fees, costs, expenses or other amounts required to be paid by the Borrowers
hereunder and not so paid.  All monies so disbursed shall be a part of
the Obligations, payable by the Borrowers on demand from the Bank.

    

    Section
6. SECURITY FOR THE
OBLIGATIONS.

    

    6.1. Security for
Obligations.  As security for the payment and performance of
the Obligations, the Borrowers does hereby pledge, assign, transfer, deliver and
grant to the Bank, for its own benefit and as agent for its Affiliates, a
continuing and unconditional first priority security interest in and to any and
all property of the Borrowers, of any kind or description, tangible or
intangible, wheresoever located and whether now existing or hereafter arising or
acquired (other than the Excluded Collateral), including the following (all of
which property, along with the products and proceeds therefrom, are individually
and collectively referred to as the “Collateral”):

    

    (a) all
property of, or for the account of, the Borrowers now or hereafter coming into
the possession, control or custody of, or in transit to, the Bank or any agent
or bailee for the Bank or any parent, Affiliate or Subsidiary of the Bank or any
participant with the Bank in the Loans (whether for safekeeping, deposit,
collection, custody, pledge, transmission or otherwise), including all earnings,
dividends, interest, or other rights in connection therewith and the products
and proceeds therefrom, including the proceeds of insurance thereon;
and

    

    (b) the
additional property of the Borrowers, whether now existing or hereafter arising
or acquired, and wherever now or hereafter located, together with all additions
and accessions thereto, substitutions, betterments and replacements therefor,
products and Proceeds therefrom, and all of the Borrowers’ books and records and
recorded data relating thereto (regardless of the medium of recording or
storage), together with all of the Borrowers’ right, title and interest in and
to all computer software required to utilize, create, maintain and process any
such records or data on electronic media, identified and set forth as
follows:

    

    
      	
              (i)  

            	
              All
      Accounts and all Goods whose sale, lease or other disposition by the
      Borrowers have given rise to Accounts and have been returned to, or
      repossessed or stopped in transit by, the Borrowers, or rejected or
      refused by an Account Debtor;

            

    

    

    
      	
              (ii)  

            	
              All
      Inventory, including raw materials, work-in-process and finished
      goods;

            

    

    
      
        
        

      

      
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              (iii)  

            	
              All
      Goods (other than Inventory), including embedded software, Equipment,
      vehicles, furniture and Fixtures;

            

    

    

    
      	
              (iv)  

            	
              All
      Software and computer programs;

            

    

    

    
      	
              (v)  

            	
              All
      Securities, Investment Property, Financial Assets and Deposit
      Accounts;

            

    

    

    
      	
              (vi)  

            	
              All
      Chattel Paper, Electronic Chattel Paper, Instruments, Documents, Letter of
      Credit Rights, all proceeds of letters of credit, Health-Care-Insurance
      Receivables, Supporting Obligations, notes secured by real estate,
      Commercial Tort Claims and General Intangibles, including Payment
      Intangibles; and

            

    

    

    
      	
              (vii)  

            	
              All
      Proceeds (whether Cash Proceeds or Noncash Proceeds) of the foregoing
      property, including all insurance policies and proceeds of insurance
      payable by reason of loss or damage to the foregoing property, including
      unearned premiums, and of eminent domain or condemnation
      awards.

            

    

    

    6.2. Other
Collateral.  In addition, the Obligations are also secured by
the Mortgage.

    

    6.3. Possession and Transfer of
Collateral.  Unless an Event of Default exists hereunder, the
Borrowers shall be entitled to possession or use of the Collateral (other than
Instruments or Documents, Tangible Chattel Paper, Investment Property consisting
of certificated securities and other Collateral required to be delivered to the
Bank pursuant to this Section
6).  The cancellation or surrender of any Note, upon payment or
otherwise, shall not affect the right of the Bank to retain the Collateral for
any other of the Obligations.  The Borrowers shall not sell, assign
(by operation of law or otherwise), license, lease or otherwise dispose of, or
grant any option with respect to any of the Collateral, except that the
Borrowers may sell Inventory in the ordinary course of business or any Asset
Disposition permitted hereunder.

    

    6.4. Financing
Statements.  The Borrowers shall, at the Bank’s request, at any
time and from time to time, execute and deliver to the Bank such financing
statements, amendments and other documents and do such acts as the Bank deems
necessary in order to establish and maintain valid, attached and perfected first
priority security interests in the Collateral in favor of the Bank, free and
clear of all Liens and claims and rights of third parties whatsoever, except
Permitted Liens.  The Borrowers hereby irrevocably authorizes the Bank
at any time, and from time to time, to file in any jurisdiction any initial
financing statements and amendments thereto without the signature of the
Borrowers that (a) indicate the Collateral (i) is comprised of all assets of the
Borrowers (excluding, in the case of Lifeway, the Excluded Collateral) or words
of similar effect, regardless of whether any particular asset comprising a part
of the Collateral falls within the scope of Article 9 of the Uniform Commercial
Code of the jurisdiction wherein such financing statement or amendment is filed,
or (ii) as being of an equal or lesser scope or within greater detail as the
grant of the security interest set forth herein, and (b) contain any other
information 

    
      
        
        

      

      
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    required
by Section 5 of Article 9 of the Uniform Commercial Code of the jurisdiction
wherein such financing statement or amendment is filed regarding the sufficiency
or filing office acceptance of any financing statement or amendment, including
(i) whether the  each Borrower is an organization, the type of
organization and any Organizational Identification Number issued to each
Borrower, and (ii) in the case of a financing statement filed as a fixture
filing or indicating Collateral as as-extracted collateral or timber to be cut,
a sufficient description of the real property to which the Collateral
relates.  The Borrowers hereby agree that a photocopy or other
reproduction of this Agreement is sufficient for filing as a financing statement
and the Borrowers authorize the Bank to file this Agreement as a financing
statement in any jurisdiction.  The Borrowers agree to furnish any
such information to the Bank promptly upon request.  Each of the
Borrowers further ratify and affirm its authorization for any financing
statements and/or amendments thereto, executed and filed by the Bank in any
jurisdiction prior to the date of this Agreement.  In addition, the
Borrowers shall make appropriate entries on each of their respective books and
records disclosing the Bank’s security interests in the Collateral.

    

    6.5. Additional
Collateral.  The Borrowers shall deliver to the Bank
immediately upon its demand, such other collateral as the Bank may from time to
time request, should the value of the Collateral, in the Bank’s sole and
absolute discretion, decline, deteriorate, depreciate or become impaired, and
does hereby grant to the Bank a continuing security interest in such other
collateral, which, when pledged, assigned and transferred to the Bank shall be
and become part of the Collateral.  The Bank’s security interests in
all of the foregoing Collateral shall be valid, complete and perfected whether
or not covered by a specific assignment.

    

    6.6. Preservation of the
Collateral.  The Bank may, but is not required, to take such
actions from time to time as the Bank deems appropriate to maintain or protect
the Collateral.  The Bank shall have exercised reasonable care in the
custody and preservation of the Collateral if the Bank takes such action as any
of the Borrowers shall reasonably request in writing which is not inconsistent
with the Bank’s status as a secured party, but the failure of the Bank to comply
with any such request shall not be deemed a failure to exercise reasonable care;
provided, however, the Bank’s responsibility for the safekeeping of the
Collateral shall (i) be deemed reasonable if such Collateral is accorded
treatment substantially equal to that which the Bank accords its own property,
and (ii) not extend to matters beyond the control of the Bank, including acts of
God, war, insurrection, riot or governmental actions.  In addition,
any failure of the Bank to preserve or protect any rights with respect to the
Collateral against prior or third parties, or to do any act with respect to
preservation of the Collateral, not so requested by any of the Borrowers, shall
not be deemed a failure to exercise reasonable care in the custody or
preservation of the Collateral.  The Borrowers shall have the sole
responsibility for taking such action as may be necessary, from time to time, to
preserve all rights of the Borrowers and the Bank in the Collateral against
prior or third parties.  Without limiting the generality of the
foregoing, where Collateral consists in whole or in part of securities, the
Borrowers represent to, and covenant with, the Bank that the Borrowers have made
arrangements for keeping informed of changes or potential changes affecting the
securities (including rights to convert or subscribe, payment of dividends,
reorganization or other exchanges, tender offers and voting rights), and each of
the Borrowers agree that the Bank shall have no responsibility or liability for
informing 

    
      
        
        

      

      
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    the
Borrowers of any such or other changes or potential changes or for taking any
action or omitting to take any action with respect thereto.

    

    6.7. Other Actions as to any and
all Collateral. Each of the Borrowers
further agree to take any other action reasonably requested by the Bank to
ensure the attachment, perfection and first priority of, and the ability of the
Bank to enforce, the Bank’s security interest in any and all of the Collateral,
including (a) causing the Bank’s name to be noted as secured party on any
certificate of title for a titled good if such notation is a condition to
attachment, perfection or priority of, or ability of the bank to enforce, the
Bank’s security interest in such Collateral, (b) complying with any provision of
any statute, regulation or treaty of the United States as to any Collateral if
compliance with such provision is a condition to attachment, perfection or
priority of, or ability of the Bank to enforce, the Bank’s security interest in
such Collateral, (c) obtaining governmental and other third party consents and
approvals, including any consent of any licensor, lessor or other Person
obligated on Collateral, (d) obtaining waivers from mortgagees and landlords in
form and substance satisfactory to the Bank, and (e) taking all actions required
by the UCC in effect from time to time or by other law, as applicable in any
relevant UCC jurisdiction, or by other law as applicable in any foreign
jurisdiction.  Each of the Borrowers further agree to indemnify and
hold the Bank harmless against claims of any Persons not a party to this
Agreement concerning disputes arising over the Collateral.

    

    6.8. Collateral in the Possession
of a Warehouseman or Bailee.  If any of the Collateral at any
time is in the possession of a warehouseman or bailee, the Borrowers shall
promptly notify the Bank thereof, and shall promptly obtain a Collateral Access
Agreement.  The Bank agrees with the Borrowers that the Bank shall not
give any instructions to such warehouseman or bailee pursuant to such Collateral
Access Agreement unless an Event of Default has occurred and is continuing, or
would occur after taking into account any action by the Borrowers with respect
to the warehouseman or bailee.

    

    6.9. Letter-of-Credit
Rights.  If any of the Borrowers at any time is a beneficiary
under a letter of credit now or hereafter issued in favor of such Borrower, such
Borrower shall promptly notify the Bank thereof and, at the request and option
of the Bank, such Borrower shall, pursuant to an agreement in form and substance
satisfactory to the Bank, either (i) arrange for the issuer and any confirmer of
such letter of credit to consent to an assignment to the Bank of the proceeds of
any drawing under the letter of credit, or (ii) arrange for the Bank to become
the transferee beneficiary of the letter of credit, with the Bank agreeing, in
each case, that the proceeds of any drawing under the letter to credit are to be
applied as provided in this Agreement.

    

    6.10. Commercial Tort
Claims.  If the Borrowers shall at any time hold or acquire a
Commercial Tort Claim, the Borrowers shall immediately notify the Bank in
writing signed by the Borrowers of the details thereof and grant to the Bank in
such writing a security interest therein and in the proceeds thereof, all upon
the terms of this Agreement, in each case in form and substance satisfactory to
the Bank, and shall execute any amendments hereto deemed reasonably necessary by
the Bank to perfect its security interest in such Commercial Tort
Claim.

    
      
        
        

      

      
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    6.11. Electronic Chattel Paper and
Transferable Records.  If any of the Borrowers at any time
holds or acquires an interest in any electronic chattel paper or any
“transferable record”, as that term is defined in Section 201 of the federal
Electronic Signatures in Global and National Commerce Act, or in Section 16 of
the Uniform Electronic Transactions Act as in effect in any relevant
jurisdiction, such Borrower shall promptly notify the Bank thereof and, at the
request of the Bank, shall take such action as the Bank may reasonably request
to vest in the Bank control under Section 9-105 of the UCC of such electronic
chattel paper or control under Section 201 of the federal Electronic Signatures
in Global and National Commerce Act or, as the case may be, Section 16 of the
Uniform Electronic Transactions Act, as so in effect in such jurisdiction, of
such transferable record.  The Bank agrees with the Borrowers that the
Bank will arrange, pursuant to procedures satisfactory to the Bank and so long
as such procedures will not result in the Bank’s loss of control, for the
Borrowers to make alterations to the electronic chattel paper or transferable
record permitted under Section 9-105 of the UCC or, as the case may be, Section
201 of the federal Electronic Signatures in Global and National Commerce Act or
Section 16 of the Uniform Electronic Transactions Act for a party in control to
make without loss of control.

    

    Section
7. REPRESENTATIONS AND
WARRANTIES.

    

    To induce the Bank to make the Loans,
the Borrowers, jointly and severally, make the following representations and
warranties to the Bank, each of which shall survive the execution and delivery
of this Agreement:

    

    7.1. Borrowers Organization and
Name.  Each of the Borrowers is duly organized, existing and in
good standing under the laws of the State of its formation or organization, with
full and adequate power to carry on and conduct its business as presently
conducted and each
Subsidiary of the Borrowers is validly existing and in good standing under the
laws of the jurisdiction of its organization.  Each of the Borrowers
and their Subsidiaries is duly
licensed or qualified in all foreign jurisdictions wherein the nature of its
activities require such qualification or licensing, except for such
jurisdictions where the failure to so qualify would not have a Material Adverse
Effect.  Each of the Borrowers’ Organizational Identification Numbers
is listed on Schedule
7.1.  The exact legal name of each of the Borrowers is as set
forth in the first paragraph of this Agreement, and none of the Borrowers
currently conduct, nor has any of the Borrowers during the last five (5) years
conducted, business under any other name or trade name; provided, however, that
as to Freshmade Borrowers’ representation is limited to their knowledge of any
such name change.

    

    7.2. Authorization.  Each
of the Borrowers have full right, power and authority to enter into this
Agreement, to make the borrowings and execute and deliver the Loan Documents as
provided herein and to perform all of its duties and obligations under this
Agreement and the other Loan Documents.  The execution and delivery of
this Agreement and the other Loan Documents will not, nor will the observance or
performance of any of the matters and things herein or therein set forth,
violate or contravene any provision of law or the Organizational Documents of
any of the Borrowers.  All necessary and appropriate action has been
taken on the part of the Borrowers to authorize the execution and delivery of
this Agreement and the Loan Documents.

    
      
        
        

      

      
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    7.3. Validity and Binding
Nature.  This Agreement and the other Loan Documents are the
legal, valid and binding obligations of the Borrowers, enforceable against the
Borrowers in accordance with their terms, subject to bankruptcy, insolvency and
similar laws affecting the enforceability of creditors’ rights generally and to
general principles of equity.

    

    7.4. Consent; Absence of
Breach.  The execution, delivery and performance of this
Agreement, the other Loan Documents and any other documents or instruments to be
executed and delivered by the Borrowers in connection with the Loans, and the
borrowings by the Borrowers hereunder, do not and will not (a) require any
consent, approval, authorization of, or filings with, notice to or other act by
or in respect of, any governmental authority or any other Person (other than any
consent or approval which has been obtained and is in full force and effect);
(b) conflict with (i) any provision of law or any applicable regulation, order,
writ, injunction or decree of any court or governmental authority, (ii) the
Organizational Documents  of any of the Borrowers or any of their
Subsidiaries, or (iii) any material agreement, indenture, instrument or other
document, or any judgment, order or decree, which is binding upon the Borrowers
or any of their Subsidiaries or any of their respective properties or assets; or
(c) require, or result in, the creation or imposition of any Lien on any asset
of Borrowers or any of their Subsidiaries, other than Liens in favor of the Bank
created pursuant to this Agreement.

    

    7.5. Ownership of Properties;
Liens.  Each of the Borrowers is the sole owner or has other
rights in all of its respective properties and assets, real and personal,
tangible and intangible, of any nature whatsoever (including patents,
trademarks, trade names, service marks and copyrights), free and clear of all
Liens, charges and claims (including infringement claims with respect to
patents, trademarks, service marks, copyrights and the like), other than
Permitted Liens.

    

    7.6. Equity
Ownership.  All issued and outstanding Capital Securities of each of the Borrowers
and each of their Subsidiaries are duly authorized and validly issued, fully
paid, non-assessable, and free and clear of all Liens other than those in favor
of the Bank, if any, and such securities were issued in compliance with all
applicable state and federal laws concerning the issuance of
securities.  As of the date hereof, there are no pre-emptive or other
outstanding rights, options, warrants, conversion rights or other similar
agreements or understandings for the purchase or acquisition of any Capital
Securities of the
any of the Borrowers and any of their respective Subsidiaries.  Schedule 7.6 sets
forth the authorized and issued Capital Securities of each of the Borrowers as
of the date hereof.

    

    7.7. Intellectual
Property.  Each of the Borrowers own and possess or have a
license or other right to use all Intellectual Property, as are necessary for
the conduct of the businesses of the Borrowers, without any infringement upon
rights of others which could reasonably be expected to have a Material Adverse
Effect upon the Borrowers, and no material claim has been asserted and is
pending by any Person challenging or questioning the use of any Intellectual
Property or the validity or effectiveness of any Intellectual Property nor does
the Borrowers know of any valid basis for any such claim.

    
      
        
        

      

      
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    7.8. Financial
Statements.  All financial statements submitted to the Bank
have been prepared in accordance with sound accounting practices and GAAP on a
basis, except as otherwise noted therein, consistent with the previous fiscal
year and present fairly the financial condition of the Borrowers and the results
of the operations for the Borrowers as of such date and for the periods
indicated.  Since the date of the most recent financial statement
submitted by the Borrowers to the Bank, there has been no change in the
financial condition or in the assets or liabilities of the Borrowers having a
Material Adverse Effect on the Borrowers.

    

    7.9. Litigation and Contingent
Liabilities.  There is no litigation, arbitration proceeding,
demand, charge, claim, petition or governmental investigation or proceeding
pending, or, threatened, against any of the Borrowers, which, if adversely
determined, which might reasonably be expected to have a Material Adverse Effect
upon any of the Borrowers, except as set forth in Schedule
7.9.  Other than any liability incident to such litigation or
proceedings, none of the Borrowers have any material guarantee obligations,
contingent liabilities, liabilities for taxes, or any long-term leases or
unusual forward or long-term commitments, including any interest rate or foreign
currency swap or exchange transaction or other obligation in respect of
derivatives, that are not fully-reflected or fully reserved for in the most
recent audited financial statements delivered pursuant to Section 8.8(a) or
fully-reflected or fully reserved for in the most recent quarterly financial
statements delivered pursuant to Section 8.8(b) and
not permitted by Section
9.1.

    

    7.10. Event of
Default.  No Event of Default or Unmatured Event of Default
exists or would result from the incurrence by any of the Borrowers of any of the
Obligations hereunder or under any of the other Loan Documents, and none of the
Borrowers is in default (without regard to grace or cure periods) under any
other contract or agreement to which it is a party.

    

    7.11. Adverse
Circumstances.  No condition, circumstance, event, agreement,
document, instrument, restriction, litigation or proceeding (or threatened
litigation or proceeding or basis therefor) exists which (a) would have a
Material Adverse Effect upon any of the Borrowers, or (b) would constitute an
Event of Default or an Unmatured Event of Default.

    

    7.12. Environmental Laws and
Hazardous Substances.  None of the Borrowers have generated,
used, stored, treated, transported, manufactured, handled, produced or disposed
of any Hazardous Substances, on or off any of the premises of the Borrowers
(whether or not owned by it) in any manner which at any time violates any
Environmental Law or any license, permit, certificate, approval or similar
authorization thereunder.  Each of the Borrowers will comply in all
material respects with all Environmental Laws and will obtain all licenses,
permits certificates, approvals and similar authorizations
thereunder.  Except as set forth on Schedule 7.12, there
has been no investigation, proceeding, complaint, order, directive, claim,
citation or notice by any governmental authority or any other Person, nor is any
pending or, to the best of the Borrowers’ knowledge, threatened, and the
Borrowers shall immediately notify the Bank upon becoming aware of any such
investigation, proceeding, complaint, order, directive, claim, citation or
notice, and shall take prompt and appropriate actions to respond thereto, with
respect to any non-compliance with, or violation of, the requirements of any
Environmental Law by any of the Borrowers or the release, spill or discharge,
threatened or actual, of any Hazardous 

    
      
        
        

      

      
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    Material
or the generation, use, storage, treatment, transportation, manufacture,
handling, production or disposal of any Hazardous Material or any other
environmental, health or safety matter, which affects any of the Borrowers or
their business, operations or assets or any properties at which any of the
Borrowers have transported, stored or disposed of any Hazardous
Substances.  Except as set forth on Schedule 7.12, none
of the Borrowers have any material liability, contingent or otherwise, in
connection with a release, spill or discharge, threatened or actual, of any
Hazardous Substances or the generation, use, storage, treatment, transportation,
manufacture, handling, production or disposal of any Hazardous
Material.  Each of the Borrowers further agree to allow the Bank or
its agent access to the properties of the Borrowers and their Subsidiaries to
confirm compliance with all Environmental Laws, and each of the Borrowers shall,
following determination by the Bank that there is non-compliance, or any
condition which requires any action by or on behalf of any of the Borrowers in
order to avoid any non-compliance, with any Environmental Law, at the Borrowers’
sole expense, cause an independent environmental engineer acceptable to the Bank
to conduct such tests of the relevant site as are appropriate, and prepare and
deliver a report setting forth the result of such tests, a proposed plan for
remediation and an estimate of the costs thereof.

    

    7.13. Solvency,
etc.  As of the date hereof, and immediately prior to and after
giving effect to the issuance of each Letter of Credit and each Loan hereunder
and the use of the proceeds thereof, (a) the fair value of each of the
Borrowers’ assets is greater than the amount of its liabilities (including
disputed, contingent and unliquidated liabilities) as such value is established
and liabilities evaluated as required under the Section 548 of the Bankruptcy
Code, (b) the present fair saleable value of each of the Borrowers’ assets is
not less than the amount that will be required to pay the probable liability on
its debts as they become absolute and matured, (c) each of the Borrowers is able
to realize upon its assets and pay its debts and other liabilities (including
disputed, contingent and unliquidated liabilities) as they mature in the normal
course of business, (d) none of the Borrowers intend to, and does not believe
that it will, incur debts or liabilities beyond its ability to pay as such debts
and liabilities mature, and (e) none of the Borrowers is engaged in business or
a transaction, and is not about to engage in business or a transaction, for
which its property would constitute unreasonably small capital.

    

    7.14. ERISA
Obligations.  All Employee Plans of the Borrowers meet the
minimum funding standards of Section 302 of ERISA and 412 of the Internal
Revenue Code where applicable, and each such Employee Plan that is intended to
be qualified within the meaning of Section 401 of the Internal Revenue Code of
1986 is qualified.  No withdrawal liability has been incurred under
any such Employee Plans and no “Reportable Event” or “Prohibited Transaction”
(as such terms are defined in ERISA), has occurred with respect to any such
Employee Plans, unless approved by the appropriate governmental
agencies.  Each of the Borrowers have promptly paid and discharged all
obligations and liabilities arising under ERISA of a character which if unpaid
or unperformed might result in the imposition of a Lien against any of its
properties or assets.

    

    7.15. Labor
Relations.  Except as could not reasonably be expected to have
a Material Adverse Effect, (i) there are no strikes, lockouts or other labor
disputes against any of the Borrowers or threatened, (ii) hours worked by and
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    have not
been in violation of the Fair Labor Standards Act or any other applicable law,
and (ii) no unfair labor practice complaint is pending against any of the
Borrowers or threatened before any governmental authority.

    

    7.16. Security
Interest.  This Agreement creates a valid security interest in
favor of the Bank in the Collateral and, when properly perfected by filing in
the appropriate jurisdictions, or by possession or Control of such Collateral by
the Bank or delivery of such Collateral to the Bank, shall constitute a valid,
perfected, first-priority security interest in such Collateral subject to
Permitted Liens.

    

    7.17. Lending
Relationship.  The relationship hereby created between the
Borrowers and the Bank is and has been conducted on an open and arm’s length
basis in which no fiduciary relationship exists, and the Borrowers have not
relied and is not relying on any such fiduciary relationship in executing this
Agreement and in consummating the Loans.  The Bank represents that it
will receive any Note payable to its order as evidence of a bank
loan.

    

    7.18. Business
Loan.  The Loans, including interest rate, fees and charges as
contemplated hereby, (i) are business loans within the purview of 815 ILCS
205/4(1)(c), as amended from time to time, (ii) are an exempted transaction
under the Truth In Lending Act, 12 U.S.C. 1601 et seq., as amended from
time to time, and (iii) do not, and when disbursed shall not, violate the
provisions of the Illinois usury laws, any consumer credit laws or the usury
laws of any state which may have jurisdiction over this transaction, the
Borrowers or any property securing the Loans.

    

    7.19. Taxes.  The
Borrowers have timely filed all tax returns and reports required by law to have
been filed by it and has paid all taxes, governmental charges and assessments
due and payable with respect to such returns, except any such taxes or charges
which are being diligently contested in good faith by appropriate proceedings
and for which adequate reserves in accordance with GAAP shall have been set
aside on its books, are insured against or bonded over to the satisfaction of
the Bank and the contesting of such payment does not create a Lien on the
Collateral which is not a Permitted Lien.  There is no controversy or
objection pending, or threatened in respect of any tax returns of the
Borrowers.  The Borrowers have made adequate reserves on its books and
records in accordance with GAAP for all taxes that have accrued but which are
not yet due and payable.

    

    7.20. Compliance with Regulation U
U.  No portion of the proceeds of the Loans shall be used by
the Borrowers, or any Affiliate of the Borrowers, either directly or indirectly,
for the purpose of purchasing or carrying any margin stock, within the meaning
of Regulation U as adopted by the Board of Governors of the Federal Reserve
System or any successor thereto.

    

    7.21. Governmental
Regulation.  The Borrowers and their Subsidiaries
are not, or after giving effect to any loan, will not be, subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act, the
ICC Termination Act of 1995 or the Investment Company Act of 1940 or to any
federal or state statute or regulation limiting its ability to incur
indebtedness for borrowed money.

    
      
        
        

      

      
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    7.22. Bank
Accounts.  All Deposit Accounts and operating bank accounts of
the Borrowers and its Subsidiaries are located at the Bank and the Borrowers
have no other Deposit Accounts except those listed on Schedule 7.22
attached hereto.

    

    7.23. Place of
Business.  The principal place of business and books and
records of the Borrowers is set forth in the preamble to this Agreement, and the
location of all Collateral, if other than at such principal place of business,
is as set forth on Schedule 7.23
attached hereto and made a part hereof, and the Borrowers shall promptly notify
the Bank of any change in such locations.  The Borrowers will not
remove or permit the Collateral to be removed from such locations without the
prior written consent of the Bank, except for Inventory sold in the usual and
ordinary course of the Borrowers’ business.

    

    7.24. Complete
Information.  This Agreement and all financial statements,
schedules, certificates, confirmations, agreements, contracts, and other
materials and information heretofore or contemporaneously herewith furnished in
writing by the Borrowers to the Bank for purposes of, or in connection with,
this Agreement and the transactions contemplated hereby is, and all written
information hereafter furnished by or on behalf of the Borrowers to the Bank
pursuant hereto or in connection herewith will be, true and accurate in every
material respect on the date as of which such information is dated or certified,
and none of such information is or will be incomplete by omitting to state any
material fact necessary to make such information not misleading in light of the
circumstances under which made (it being recognized by the Bank that any
projections and forecasts provided by the Borrowers are based on good faith
estimates and assumptions believed by the Borrowers to be reasonable as of the
date of the applicable projections or assumptions and that actual results during
the period or periods covered by any such projections and forecasts may differ
from projected or forecasted results).

    

    7.25. Subordinated
Debt.  The subordination provisions of the Subordinated Debt
are enforceable against the holders of the Subordinated Debt by the
Bank.  The Obligations constitute Senior Debt entitled to the benefits
of the subordination provisions contained in the Subordinated
Debt.  The Borrowers acknowledges that the Bank is entering into this
Agreement and is making the Loans in reliance upon the subordination provisions
of the Subordinated Debt and this Section
7.25.

    

    7.26. Internal
Controls. 

    

    (a) The
Borrowers have established and maintains disclosure controls and procedures (as
such term is defined in Rule 13a-14 under the U.S. Securities Exchange Act or
1934, as amended (the “Exchange
Act”)), which (i) are designed to ensure that material information
relating to the Borrowers is made known to the Borrowers’ principal executive
officer and its principal financial offer or persons performing similar
functions by others within those entities, particularly during the periods in
which the periodic reports required under the Exchange Act are being prepared;
(ii) have been evaluated for effectiveness as a date within ninety (90) days
prior to the filing of the Borrowers’ most recent annual or quarterly report
filed with the Securities Exchange Commission; and (iii) are effective in all
material respects to perform he functions for which they were
established;

    
      
        
        

      

      
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    (b) Based on
the evaluation of its disclosure controls and procedures, the Borrowers are not
aware of (i) any significant deficiency in the design or operation of internal
controls which could adversely affect the Borrowers’ ability to record, process,
summarize and report financial data or any material weaknesses in internal
controls or (ii) any fraud, whether or not material, that involves management or
other employees who have a significant role in the Borrowers’ internal controls;
and

    

    (c) Since the
date of the most recent evaluation of such disclosure controls and procedures,
there have been no significant changes in internal controls or in other factors
that could significantly affect internal controls, including any corrective
actions with regard to significant deficiencies and material
weaknesses.

    

    7.27. Real Property.   Set forth on
Schedule 7.27
is a complete and accurate list, as of the date hereof, of the address of all
real property owned or leased by any Borrower, together with, in the case of
leased property, the name and mailing address of the lessor of such
property.

    

    7.28. Hedging Agreements.
No Borrower is a party to, nor will it be a party to, any Hedging Agreement
other than bona fide (not speculative) unsecured Hedging Agreement, in form and
substance reasonably acceptable to the Bank, to protect the Borrowers against
fluctuations in interest rates.

    

    7.29. Lifeway’s Disclosure
Documents.  Lifeway has heretofore delivered to Bank copies of
its annual report on Form 10-K for the fiscal year ending December 31, 2007 as
filed with the Securities and Exchange Commission under the Exchange and the
reports or documents required to be filed by Lifeway under Sections 13(a),
14(a), 14(c) and 15(d) of the Exchange Act subsequent to December 31,
2007.  None of the information concerning Lifeway in any of the
documents delivered by Lifeway pursuant to this Section 7.29 contains
any untrue statement of a material fact or omits to state a material fact
necessary to make the statements therein made, in light of the circumstances
under which they are made, not misleading.

    

    

    Section
8. AFFIRMATIVE
COVENANTS.

    

    8.1. Compliance with Bank
Regulatory Requirements; Increased Costs.  If the Bank shall
reasonably determine that any Regulatory Change, or compliance by the Bank or
any Person controlling the Bank with any request or directive (whether or not
having the force of law) of any governmental authority, central bank or
comparable agency has or would have the effect of reducing the rate of return on
the Bank’s or such controlling Person’s capital as a consequence of the Bank’s
obligations hereunder or under any Letter of Credit to a level below that which
the Bank or such controlling Person could have achieved but for such Regulatory
Change or compliance (taking into consideration the Bank’s or such controlling
Person’s policies with respect to capital adequacy) by an amount deemed by the
Bank or such controlling Person to be 

    
      
        
        

      

      
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    material
or would otherwise reduce the amount of any sum received or receivable by the
Bank under this Agreement or under any Note with respect thereto, then from time
to time, upon demand by the Bank (which demand shall be accompanied by a
statement setting forth the basis for such demand and a calculation of the
amount thereof in reasonable detail), the Borrowers shall pay directly to the
Bank or such controlling Person such additional amount as will compensate the
Bank for such increased cost or such reduction, so long as (a) such amounts have
accrued on or after the day which is one hundred eighty days (180) days prior to
the date on which the Bank first made demand therefore and (b) the Bank is
generally attempting to collect such amounts from other similarly situated
Persons borrowing from the Bank.

    

    8.2. Borrowers
Existence.  Each of the Borrowers shall at all times (a)
preserve and maintain its existence and good standing in the jurisdiction of its
organization, (b) preserve and maintain its qualification to do business and
good standing in each jurisdiction where the nature of its business makes such
qualification necessary (other than such jurisdictions in which the failure to
be qualified or in good standing could not reasonably be expected to have a
Material Adverse Effect), and (c) continue as a going concern in the business
which the Borrowers is presently conducting.  If any of the Borrowers
does not have an Organizational Identification Number and later obtains one,
such Borrower shall promptly notify the Bank of such Organizational
Identification Number.  Notwithstanding the foregoing, Borrowers have
advised Bank that Borrowers intend to merge or liquidate LFI into Lifeway and
Bank will not unreasonably withhold its consent to such merger or liquidation
provided such merger or liquidation does not have a Material Adverse
Effect.

    

    8.3. Compliance With
Laws.  The Borrowers shall use the proceeds of the Loans for
working capital and other business purposes set forth in this Agreement not in
contravention of any requirements of law and not in violation of this Agreement,
and shall comply, and cause each
Subsidiary to comply, in all respects, including the conduct of its business and
operations and the use of its properties and assets, with all applicable laws,
rules, regulations, decrees, orders, judgments, licenses and permits, except
where failure to comply could not reasonably be expected to have a Material
Adverse Effect.  In addition, and without limiting the foregoing
sentence, each of the Borrowers shall (a) ensure, and cause each Subsidiary to
ensure, that no person who owns a controlling interest in or otherwise controls
the Borrowers or any Subsidiary is or shall be listed on the Specially
Designated Nationals and Blocked Person List or other similar lists maintained
by the Office of Foreign Assets Control (“OFAC”), the Department of the
Treasury or included in any Executive Orders, (b) not use or permit the use of
the proceeds of the Loans to violate any of the foreign asset control
regulations of OFAC or any enabling statute or Executive Order relating thereto,
and (c) comply, and cause each Subsidiary to comply, with all applicable Bank
Secrecy Act laws and regulations, as amended.

    

    8.4. Payment of Taxes and
Liabilities.  Each of the Borrowers shall pay, and cause each
Subsidiary to pay, and discharge, prior to delinquency and before penalties
accrue thereon, all property and Other Taxes, and all governmental charges or
levies against it or any of the Collateral, as well as claims of any kind which,
if unpaid, could become a Lien on any of its property; provided that the
foregoing shall not require the Borrowers or any Subsidiary to pay any such tax
or charge so long as it shall contest the validity thereof in good faith by
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    proceedings
and shall set aside on its books adequate reserves with respect thereto in
accordance with GAAP and, in the case of a claim which could become a Lien on
any of the Collateral, such contest proceedings stay the foreclosure of such
Lien or the sale of any portion of the Collateral to satisfy such
claim.

    

    8.5. Maintain
Property.  Each of the Borrowers shall at all times maintain,
preserve and keep its plant, properties and Equipment, including any Collateral,
in good repair, working order and condition, (ordinary wear and tear and
obsolescence excluded) and shall from time to time make all needful and proper
repairs, renewals, replacements, and additions thereto so that at all times the
efficiency thereof shall be fully preserved and maintained.  Each of
the Borrowers shall permit the Bank to examine and inspect such plant,
properties and Equipment, including any Collateral, at all reasonable
times.

    

    8.6. Maintain
Insurance.  Each of the Borrowers shall at all times maintain,
and cause each Subsidiary to maintain, with insurance companies reasonably
acceptable to the Bank, such insurance coverage as may be required by any law or
governmental regulation or court decree or order applicable to it and such other
insurance, to such extent and against such hazards and liabilities, including
employers’, public and professional liability risks, as is customarily
maintained by companies similarly situated, and shall have insured amounts no
less than, and deductibles no higher than, are reasonably acceptable to the
Bank.  Each of the Borrowers shall furnish to the Bank a certificate
setting forth in reasonable detail the nature and extent of all insurance
maintained by such Borrower, which shall be reasonably acceptable in all
respects to the Bank. Each of the Borrowers shall cause each issuer of an
insurance policy to provide the Bank with an endorsement (i) showing the Bank as
lender’s loss payee with respect to each policy of property or casualty
insurance and naming the Bank as an additional insured with respect to each
policy of liability insurance; and (ii) providing that thirty (30) days notice
will be given to the Bank prior to any cancellation of, material reduction or
change in coverage provided by or other material modification to such
policy.  Each of the Borrowers shall execute and deliver to the Bank a
collateral assignment, in form and substance satisfactory to the Bank, of each
business interruption insurance policy maintained by such Borrower.

    

    In the
event any of the Borrowers either fail to provide the Bank with evidence of the
insurance coverage required by this Section or at any time hereafter shall fail
to obtain or maintain any of the policies of insurance required above, or to pay
any premium in whole or in part relating thereto, then the Bank, without waiving
or releasing any obligation or default by the Borrowers hereunder, may at any
time (but shall be under no obligation to so act), obtain and maintain such
policies of insurance and pay such premiums and take any other action with
respect thereto, which the Bank deems advisable.  This insurance
coverage (a) may, but need not, protect the Borrowers’ interests in such
property, including the Collateral, and (b) may not pay any claim made by, or
against, the Borrowers in connection with such property, including the
Collateral. The Borrowers may later cancel any such insurance purchased by the
Bank, but only after providing the Bank with evidence that the Borrowers have
obtained the insurance coverage required by this Section.  If the Bank
purchases insurance for the Collateral, the Borrowers will be responsible for
the costs of that insurance, including interest and any other charges that may
be imposed with the placement of the insurance, until the effective date of the
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    expiration
of the insurance.  The costs of the insurance may be added to the
principal amount of the Loans owing hereunder.  The costs of the
insurance may be more than the cost of the insurance the Borrowers may be able
to obtain on its own.

    

    8.7. ERISA Liabilities; Employee
Plans.  Each of the Borrowers shall (i) keep in full force and
effect any and all Employee Plans which are presently in existence or may, from
time to time, come into existence under ERISA, and not withdraw from any such
Employee Plans, unless such withdrawal can be effected or such Employee Plans
can be terminated without liability to the Borrowers; (ii) make contributions to
all of such Employee Plans in a timely manner and in a sufficient amount to
comply with the standards of ERISA; including the minimum funding standards of
ERISA; (iii) comply with all material requirements of ERISA which relate to such
Employee Plans; (iv) notify the Bank immediately upon receipt by the Borrowers
of any notice concerning the imposition of any withdrawal liability or of the
institution of any proceeding or other action which may result in the
termination of any such Employee Plans or the appointment of a trustee to
administer such Employee Plans; (v) promptly advise the Bank of the occurrence
of any “Reportable Event” or “Prohibited Transaction” (as such terms are defined
in ERISA), with respect to any such Employee Plans; and (vi) amend any Employee
Plan that is intended to be qualified within the meaning of Section 401 of the
Internal Revenue Code of 1986 to the extent necessary to keep the Employee Plan
qualified, and to cause the Employee Plan to be administered and operated in a
manner that does not cause the Employee Plan to lose its qualified
status.

    

    8.8. Financial
Statements.  Each of the Borrowers shall at all times maintain
a standard and modern system of accounting, on the accrual basis of accounting
and in all respects in accordance with GAAP, and shall furnish to the Bank or
its authorized representatives such information regarding the business affairs,
operations and financial condition of the Borrowers, including:

    

    (a) promptly
when available, and in any event, within ninety (90) days after the close of
each of its fiscal years, a copy of the annual audited financial statements of
the Borrowers and their Subsidiaries, including consolidated balance sheet,
statement of income and retained earnings, statement of cash flows for the
fiscal year then ended and such other information (including nonfinancial
information) as the Bank may reasonably request, in reasonable detail, prepared
and certified without adverse reference to going concern value and without
qualification by an independent auditor of recognized standing, selected by the
Borrowers and reasonably acceptable to the Bank, certified as true and correct
by the Borrowers’ treasurer or chief financial officer; and

    

    (b) promptly
when available, and in any event, within forty five (45) days following the end
of each fiscal quarter, a copy of the consolidated financial statements of the
Borrowers and their Subsidiaries regarding such fiscal quarter and such fiscal
year to date, including balance sheet, statement of income and retained
earnings, statement of cash flows for the fiscal quarter then ended and such
other information (including nonfinancial information) as the Bank may request,
in reasonable detail, prepared and certified as true and correct by the
Borrowers’ treasurer or chief financial officer.

    
      
        
        

      

      
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    No change
with respect to such accounting principles shall be made by any of the Borrowers
without giving prior notification to the Bank.  Each of the Borrowers
represent and warrant to the Bank that the financial statements delivered to the
Bank at or prior to the execution and delivery of this Agreement and to be
delivered at all times thereafter accurately reflect and will accurately reflect
the financial condition of the Borrowers.  The Bank shall have the
right at all times during business hours to inspect the books and records of the
Borrowers and make extracts therefrom.

    

    8.9. Supplemental Financial
Statements.  Each of the Borrowers shall immediately upon
receipt thereof, provide to the Bank copies of interim and supplemental reports
if any, submitted to the Borrowers by independent accountants in connection with
any interim audit or review of the books of the Borrowers.

    

    8.10. Borrowing Base
Certificate.  Each of the Borrowers shall while any Revolving
Loan is outstanding, (a) within twenty (20) days after the end of each month,
and (b) if a Borrowing Base Certificate has not been delivered pursuant to the
foregoing clause (a) for the prior month just ended, at any time the Borrowers
shall request a Loan hereunder, execute and deliver to the Bank a Borrowing Base
Certificate dated as of the last Business Day of such month, certified as true
and correct by an authorized representative of the Borrowers and acceptable to
the Bank in its sole and absolute discretion, provided, however, at any time an
Event of Default exists, the Bank may require the Borrowers to deliver Borrowing
Base Certificates more frequently.

    

    8.11. Aged Accounts
Schedule.  Each of the Borrowers shall while any Revolving Loan
is outstanding, within twenty (20) days after the end of each month, deliver to
the Bank an aged schedule of the Accounts of the Borrowers, listing the name and
amount due from each Account Debtor and showing the aggregate amounts due from
(a) 0-30 days, (b) 31-60 days, (c) 61-90 days and (d) more than 90 days, and
certified as accurate by the Borrowers’ treasurer or chief financial
officer.

    

    8.12. Inventory
Reports.  Each of the Borrowers shall while any Revolving Loan
is outstanding, within twenty (20) days after the end of each fiscal quarter,
deliver to the Bank an inventory report, certified as accurate by the Borrowers’
treasurer or chief financial officer, and within such time as the Bank may
specify, such other schedules and reports as the Bank may require.

    

    8.13. Compliance
Certificate.  Each of the Borrowers shall, contemporaneously
with the furnishing of the financial statements pursuant to Section 8.8, executed
and deliver to the Bank a duly completed Compliance Certificate, dated the date
of such financial statements and certified as true and correct by an appropriate
officer of the Borrowers, containing a computation of each of the financial
covenants set forth in Section 10 and
stating that the Borrowers have not become aware of any Event of Default or
Unmatured Event of Default that has occurred and is continuing or, if there is
any such Event of Default or Unmatured Event of Default describing it and the
steps, if any, being taken to cure it.

    
      
        
        

      

      
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    8.14. Field
Audits.  Each of the Borrowers shall permit the Bank to inspect
the Inventory, other tangible assets and/or other business operations of the
Borrowers and each Subsidiary, to perform appraisals of the Equipment of the
Borrowers and each Subsidiary, and to inspect, audit, check and make copies of,
and extracts from, the books, records, computer data, computer programs,
journals, orders, receipts, correspondence and other data relating to Inventory,
Accounts and any other Collateral, the results of which must be satisfactory to
the Bank in the Bank’s sole and absolute discretion.  All such
inspections or audits by the Bank shall be at the Borrowers’ sole expense,
provided, however, that so long as no Event of Default or Unmatured Event of
Default exists, the Borrowers shall not be required to reimburse the Bank for
inspections or audits more frequently than once each fiscal year.

    

    8.15. Securities and Exchange
Commission Filings  Lifeway shall deliver to the Bank a copy of
its Form 10-K within two (2) Business Days after filing same with the Securities
and Exchange Commission (but in no event later than ninety (90) days after
following the end of each fiscal year of Lifeway) and copy of its Form 10-Q
within two (2) Business Days after filing same with the Securities and Exchange
Commission (but in no event later than forty-five (45) days after the end of
each fiscal quarter of Lifeway). In addition, Lifeway shall deliver to the Bank
a copy of it proxy statement and all other reports or documents required to be
filed by Lifeway under Sections 13(a), 14(a), 14(c) and 15(d) of the Exchange
Act within two (2) Business Days after filing same with the Securities and
Exchange Commission. None of the information concerning Lifeway in any of the
documents delivered or to be delivered by Lifeway pursuant to this Section 8.15 will
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements therein made, in light of the
circumstances under which they are made, not misleading.

    

    8.16. Other
Reports.  Each of the Borrowers shall, within such period of
time as the Bank may specify, deliver to the Bank such other schedules and
reports as the Bank may require.

    

    8.17. Collateral
Records.  Each of the Borrowers shall keep full and accurate
books and records relating to the Collateral and shall mark such books and
records to indicate the Bank’s Lien in the Collateral, including placing a
legend, in form and content acceptable to the Bank, on all Chattel Paper created
by the Borrowers indicating that the Bank has a Lien in such Chattel
Paper.

    

    8.18. Intellectual
Property.  Each of the Borrowers shall maintain, preserve and
renew all Intellectual Property necessary for the conduct of its business as and
where the same is currently located as heretofore or as hereafter conducted by
it.

    

    8.19. Notice of
Proceedings.  Each of the Borrowers, promptly upon becoming
aware, shall give written notice to the Bank of any litigation, arbitration or
governmental investigation or proceeding not previously disclosed by the
Borrowers to the Bank which has been instituted or, to the knowledge of the
Borrowers, is threatened against the Borrowers or any of their Subsidiaries or
to which any of their respective properties is subject which might reasonably be
expected to have a Material Adverse Effect.

    
      
        
        

      

      
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    8.20. Notice of Event of Default
or Material Adverse Effect.  Borrowers shall, immediately after
the commencement thereof, give notice to the Bank in writing of the occurrence
of any Event of Default or any Unmatured Event of Default, or the occurrence of
any condition or event having a Material Adverse Effect.

    

    8.21. Environmental
Matters.  If any release or threatened release or other
disposal of Hazardous Substances shall occur or shall have occurred on any real
property or any other assets of any the Borrowers or any of their Subsidiaries,
the Borrowers shall, or shall cause the applicable Subsidiary to, cause the
prompt containment and removal of such Hazardous Substances and the remediation
of such real property or other assets as necessary to comply with all
Environmental Laws and to preserve the value of such real property or other
assets.  Without limiting the generality of the foregoing, each of
Borrowers shall, and shall cause each Subsidiary to, comply with any Federal or
state judicial or administrative order requiring the performance at any real
property of the Borrowers or any Subsidiary of activities in
response to the release or threatened release of a Hazardous
Substance.  To the extent that the transportation of Hazardous
Substances is permitted by this Agreement, each of the Borrowers shall, and
shall cause its Subsidiaries to, dispose of such Hazardous Substances, or of any
other wastes, only at licensed disposal facilities operating in compliance with
Environmental Laws.

    

    8.22. Further
Assurances.  The Borrowers shall take, and cause each
Subsidiary to take, such actions as are necessary or as the Bank may reasonably
request from time to time to ensure that the Obligations under the Loan
Documents are secured by substantially all of the assets of the Borrowers and their Subsidiaries,
in each case as the Bank may determine, including (a) the execution and delivery
of security agreements, pledge agreements, mortgages, deeds of trust, financing
statements and other documents, and the filing or recording of any of the
foregoing, and (b) the delivery of certificated securities and other collateral
with respect to which perfection is obtained by possession.

    

    8.23. Banking
Relationship.  Other than those accounts specified on Schedule 8.23, each
of the Borrowers covenant and agree, at all times during the term of this
Agreement, to utilize the Bank as its primary bank of account and depository for
all financial services, including all receipts, disbursements, cash management
and related service.

    

    Section
9. NEGATIVE
COVENANTS.

    

    9.1. Debt.  The
Borrowers shall not, either directly or indirectly, create, assume, incur or
have outstanding any Debt (including purchase money indebtedness), or become
liable, whether as endorser, guarantor, surety or otherwise, for any debt or
obligation of any other Person, except:

    

    (a) the
Obligations under this Agreement and the other Loan Documents;

    

    (b) obligations
of the Borrowers for Taxes, assessments, municipal or other governmental
charges;

    
      
        
        

      

      
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    (c) obligations
of the Borrowers for accounts payable, other than for money borrowed, incurred
in the ordinary course of business;

    

    (d) Subordinated
Debt;

    

    (e) Hedging
Obligations incurred in favor of the Bank or an Affiliate thereof for bona fide
hedging purposes and not for speculation;

    

    (f) Capitalized
Lease Obligations and purchase money obligations (as defined in the UCC),
provided that the aggregate amount of all such Debt outstanding at any time
shall not exceed One Million Five Hundred Thousand and 00/100 Dollars
($1,500,000.00) in the aggregate;

    

    (g) Debt
described on Schedule
9.1 and any extension, renewal or refinancing thereof so long as the
principal amount thereof is not increased; and

    

    (h) The
Morgan Stanley Loan and Wachovia Loan.

    

    9.2. Encumbrances.  The
Borrowers shall not, either directly or indirectly, create, assume, incur or
suffer or permit to exist any Lien or charge of any kind or character upon any
asset of the Borrowers, whether owned at the date hereof or hereafter acquired,
except for those Permitted Liens described in Schedule
9.2.  Without limiting the generality of the foregoing, each of
the Borrowers shall not, directly or indirectly, create, assume, incur or suffer
or permit to exist any Lien or charge of any kind or character upon of any real
estate owned by such Borrower or any of its Subsidiaries, except Permitted
Liens.

    

    9.3. Investments.  The
Borrowers shall not, either directly or indirectly, make or have outstanding any
Investment, except:

    

    (a) contributions
by the Borrowers to the capital of any Subsidiary which have granted a first
perfected security interest in all of its assets in favor of the Bank, or by any
Subsidiary to the capital of any other domestic Wholly-Owned
Subsidiary;

    

    (b) Investments
constituting Debt permitted by Section
9.1;

    

    (c) Contingent
Liabilities constituting Debt permitted by Section 9.1 or Liens
permitted by Section
9.2;

    

    (d) Cash
Equivalent Investments;

    

    (e) Investments
in securities of Account Debtors received pursuant to any plan of reorganization
or similar arrangement upon the bankruptcy or insolvency of such account
debtors; and

    

    (f) Investments
listed on Schedule
8.23 or  Schedule 9.3 as of
the date hereof.

    
      
        
        

      

      
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    provided,
however, that (i) any Investment which when made complies with the requirements
of the definition of the term “Cash Equivalent Investment” may continue to be
held notwithstanding that such Investment if made thereafter would not comply
with such requirements; and (ii) no Investment otherwise permitted by
subsections (b) or (c) shall be permitted to be made if, immediately before or
after giving effect thereto, any Event of Default or Unmatured Event of Default
exists.

    

    9.4. Transfer; Merger;
Sales.  The Borrowers shall not and not permit any Subsidiary
to, whether in one transaction or a series of related transactions, (a) be a
party to any merger or consolidation, or purchase or otherwise acquire all or
substantially all of the assets or any Capital Securities of any class of, or
any partnership or joint venture interest in, any other Person, except for (i)
any such merger, consolidation, sale, transfer, liquidation, conveyance, lease
or assignment of or by any Wholly-Owned Subsidiary into the Borrowers or into
any other domestic Wholly-Owned Subsidiary; (ii) any such purchase or other
acquisition by the Borrowers or any domestic Wholly-Owned Subsidiary of the
assets or equity interests of any Wholly-Owned Subsidiary, (b) sell, transfer,
convey or lease all or any substantial part of its assets or Capital Securities
(including the sale of Capital Securities of any Subsidiary), except for sales
of Inventory in the ordinary course of business and Assets Dispositions
permitted hereunder, or (c) sell or assign, with or without recourse, any
receivables.

    

    9.5. Issuance of Capital
Securities.  The Borrowers shall not and shall not permit any
Subsidiary to issue any Capital Securities other than (a) any issuance of shares
of the Borrowers’ common Capital Securities pursuant to any employee or director
option program, benefit plan or compensation program, or (b) any issuance of
Capital Securities by a Subsidiary to the Borrowers or another Subsidiary in
accordance with Section
9.6.

    

    9.6. Distributions.  The
Borrowers shall not and shall not permit any Subsidiary to, (a) make any
distribution or dividend (other than stock dividends), whether in cash or
otherwise, to any of its equity holders, (b) purchase or redeem any of its
equity interests or any warrants, options or other rights in respect thereof,
(c) pay any management fees or similar fees to any of its equity holders or any
Affiliate thereof, (d) pay or prepay interest on, principal of, premium, if any,
redemption, conversion, exchange, purchase, retirement, defeasance, sinking fund
or any other payment in respect of any Subordinated Debt, or (e) set aside funds
for any of the foregoing.  Notwithstanding the foregoing, (i) any
Subsidiary may pay dividends or make other distributions to the Borrowers or to
a domestic Wholly-Owned Subsidiary; and (ii) so long as no Event of Default or
Unmatured Event of Default exists or would result therefrom (including, but not
limited to, any Event of Default or Unmatured Event of Default under Section 10
hereof), the Borrowers may make regularly scheduled payments of interest in
respect of Subordinated Debt to the extent permitted under the subordination
provisions thereof,
(iii) the applicable Borrowers may make payments to the extent permitted under
the Subordination Agreement(s);
and (iv) so
long as no Event of Default or Unmatured Event of Default exists or would result
therefrom (including, but not limited to, any Event of Default or Unmatured
Event of Default under Section 10 hereof), Lifeway may declare and pay cash
distributions or dividends on its outstanding capital stock and purchase or
redeem any of its equity interests or any warrants, options or other rights in
respect thereof.

    
      
        
        

      

      
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    9.7. Transactions with
Affiliates.  The Borrowers shall not, directly or indirectly,
enter into or permit to exist any transaction with any of its Affiliates
(excluding transactions between Borrowers so long as such Borrowers (other than
Lifeway) are Wholly-Owned Subsidiaries of Lifeway) or with any director, officer
or employee of the Borrowers other than transactions in the ordinary course of,
and pursuant to the reasonable requirements of, the business of the Borrowers
and upon fair and reasonable terms which are fully disclosed to the Bank and are
no less favorable to the Borrowers than would be obtained in a comparable arm’s
length transaction with a Person that is not an Affiliate of the
Borrowers.

    

    9.8. Unconditional Purchase
Obligations.  The Borrowers shall not and shall not permit any
Subsidiary to enter into or be a party to any contract for the purchase of
materials, supplies or other property or services if such contract requires that
payment be made by it regardless of whether delivery is ever made of such
materials, supplies or other property or services.

    

    9.9. Cancellation of
Debt.  The Borrowers shall not, and not permit any Subsidiary
to, cancel any claim or debt owing to it, except for reasonable consideration or
in the ordinary course of business.

    

    9.10. Inconsistent
Agreements.  The Borrowers shall not and shall not permit any
Subsidiary to enter into any agreement containing any provision which would (a)
be violated or breached by any borrowing by the Borrowers hereunder or by the
performance by the Borrowers or any Subsidiary of any of its Obligations
hereunder or under any other Loan Document, (b) prohibit the Borrowers or any
Subsidiary from granting to the Bank a Lien on any of its assets or (c) create
or permit to exist or become effective any encumbrance or restriction on the
ability of any Subsidiary to (i) pay dividends or make other distributions to
the Borrowers or any other Subsidiary, or pay any Debt owed to the Borrowers or
any other Subsidiary, (ii) make loans or advances to the Borrowers or any other
Subsidiary, or (iii) transfer any of its assets or properties to the Borrowers
or any other Subsidiary, other than (A) customary restrictions and conditions
contained in agreements relating to the sale of all or a substantial part of the
assets of any Subsidiary pending such sale, provided that such restrictions and
conditions apply only to the Subsidiary to be sold and such sale is permitted
hereunder, (B) restrictions or conditions imposed by any agreement relating
to purchase money Debt, Capital Leases and other secured Debt permitted by this
Agreement if such restrictions or conditions apply only to the property or
assets securing such Debt, and (C) customary provisions in leases and other
contracts restricting the assignment thereof.

    

    9.11. Use of
Proceeds.  Neither the Borrowers nor any of its Subsidiaries or
Affiliates shall use any portion of the proceeds of the Loans, either directly
or indirectly, for the purpose of purchasing any securities underwritten by the
Bank or any Affiliate of the Bank.

    
      
        
        

      

      
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    9.12. Bank
Accounts.  The Borrowers shall not establish any new Deposit
Accounts or other bank accounts, other than Deposit Accounts or other bank
accounts established at or with the Bank.

    

    9.13. Business Activities; Change
of Legal Status and Organizational Documents.  The Borrowers
shall not and shall not permit any Subsidiary to (a) engage in any line of
business other than the businesses engaged in on the date hereof and businesses
reasonably related thereto, (b) change its name, its Organizational
Identification Number, if it has one, its type of organization, its jurisdiction
of organization or other legal structure, or (b) permit its Organizational
Documents to be amended or modified in any way which could reasonably be
expected to materially adversely affect the interests of the Bank.

    

    9.14. Prepayment of Seller
Note.  None of the Borrowers will amend or otherwise prepay the
Seller Note as long as this Agreement is in effect and the Obligations remain
outstanding without the Bank’s prior written approval (in its sole
discretion).

    

    Section
10. FINANCIAL
COVENANTS.

    

    10.1. Tangible Net
Worth.  As of the end of each of its fiscal quarters, the
Borrowers and their Subsidiaries shall maintain consolidated Tangible Net Worth
in an amount not less than Nine Million and 00/100 Dollars ($9,000,000.00),
plus thirty
percent (30.00%) of the aggregate consolidated Net Income earned by the
Borrowers and their Subsidiaries during all previous fiscal years, commencing
with the fiscal year ending on December 31, 2009, provided, however, that net
losses incurred in any fiscal year of the Borrowers or its Subsidiaries shall
not be subtracted in the determination of the Tangible Net Worth
requirement.

    

    10.2. Fixed Charge
Coverage.  As of the end of each of its fiscal quarters, the
Borrowers and their Subsidiaries shall maintain a ratio of (a) the total for the
four fiscal quarters then ending of consolidated EBITDA minus, in respect of
such four fiscal quarters, the sum of (i) all income taxes paid in cash by the
Borrowers and their Subsidiaries, (ii) all Capital Expenditures which are not
financed with Funded Debt, (iii) cash distributions or dividends and (iv)
amounts paid to repurchase or redeem stock or equity, to (b) the sum for such
four fiscal quarters of (i) Interest Charges plus (ii) required
payments of principal of Funded Debt (including the Term Loan, but excluding the
Revolving Loans), of not less than 1.10 to 1.

    

    10.3. Capital
Expenditures.  The Borrowers and their Subsidiaries shall not collectively
incur Capital Expenditures in an amount greater than Seven Hundred Fifty
Thousand and 00/100 Dollars ($750,000.00) in the aggregate in each fiscal year,
tested quarterly.

    

    Section
11. EVENTS OF
DEFAULT.

    

    The Borrowers, without notice or demand
of any kind, shall be in default under this Agreement upon the occurrence of any
of the following events (each an “Event of
Default”).

    
      
        
        

      

      
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    11.1. Nonpayment of
Obligations.  Any amount due and owing on any Note or any of
the Obligations, whether by its terms or as otherwise provided herein, is not
paid within three (3) Business Days when due.

    

    11.2. Misrepresentation.  Any
material oral or written warranty, representation, certificate or statement of
any Obligor in this Agreement, the other Loan Documents or any other agreement
with the Bank shall be false when made or at any time thereafter, or if any
financial data or any other information now or hereafter furnished to the Bank
by or on behalf of any Obligor shall prove to be false, inaccurate or misleading
in any material respect.

    

    11.3. Nonperformance.  Any
failure to perform or default in the performance of any covenant, condition or
agreement contained in this Agreement and, if capable of being cured, such
failure to perform or default in performance continues for a period of ten (10)
days after the Borrowers receives notice or knowledge from any source of such
failure to perform or default in performance, or in the other Loan Documents or
any other agreement with the Bank and such failure to perform or default in
performance continues beyond any applicable grace or cure period.

    

    11.4. Default under Loan
Documents.  A default under any of the other Loan Documents,
all of which covenants, conditions and agreements contained therein are hereby
incorporated in this Agreement by express reference, shall be and constitute an
Event of Default under this Agreement and any other of the
Obligations.

    

    11.5. Default under Other
Debt.  Any default by any Obligor in the payment of any Debt
for any other obligation beyond any period of grace provided with respect
thereto or in the performance of any other term, condition or covenant contained
in any agreement (including any capital or operating lease or any agreement in
connection with the deferred purchase price of property) under which any such
obligation is created, the effect of which default is to cause or permit the
holder of such obligation (or the other party to such other agreement) to cause
such obligation to become due prior to its stated maturity or terminate such
other agreement.

    

    11.6. Other Material
Obligations.  Any default in the payment when due, or in the
performance or observance of, any material obligation of, or condition agreed to
by, any Obligor with respect to any material purchase or lease of goods or
services where such default, singly or in the aggregate with all other such
defaults, might reasonably be expected to have a Material Adverse
Effect.

    

    11.7. Bankruptcy, Insolvency,
etc.  Any Obligor becomes insolvent or generally fails to pay,
or admits in writing its inability or refusal to pay, debts as they become due;
or any Obligor applies for, consents to, or acquiesces in the appointment of a
trustee, receiver or other custodian for such Obligor or any property thereof,
or makes a general assignment for the benefit of creditors; or, in the absence
of such application, consent or acquiescence, a trustee, receiver or other
custodian is appointed for any Obligor or for a substantial part of the property
of any thereof; or any bankruptcy, reorganization, debt arrangement, or other
case or proceeding under any bankruptcy or insolvency law, or any dissolution or
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    respect
of any Obligor, and if such case or proceeding is not commenced by such Obligor,
it is consented to or acquiesced in by such Obligor, or remains undismissed for
sixty (60) days; or any Obligor takes any action to authorize, or in furtherance
of, any of the foregoing.

    

    11.8. Judgments.  The
entry of any final judgment, decree, levy, attachment, garnishment or other
process, or the filing of any Lien against any Obligor which is not fully
covered by insurance and in the Bank’s reasonable judgment may have a Material
Adverse Effect.

    

    11.9. Change in
Control.  The occurrence of any Change in Control.

    

    11.10. Collateral
Impairment.  The entry of any judgment, decree, levy,
attachment, garnishment or other process, or the filing of any Lien against, any
of the Collateral or any collateral under a separate security agreement securing
any of the Obligations, which in the Bank’s reasonable judgment may have a
Material Adverse Effect. and such judgment or other process shall not have been,
within thirty (30) day from the entry thereof, (i) bonded over to the
satisfaction of the Bank and appealed, (ii) vacated, or (iii) discharged, or the
loss, theft, destruction, seizure or forfeiture, or the occurrence of any
material deterioration or impairment of any of the Collateral or any of the
collateral under any security agreement securing any of the Obligations, or any
material decline or depreciation in the value or market price thereof (whether
actual or reasonably anticipated), which causes the Collateral, in the sole
opinion of the Bank acting in good faith, to become unsatisfactory as to value
or character, or which causes the Bank to reasonably believe that it is insecure
and that the likelihood for repayment of the Obligations is or will soon be
impaired, time being of the essence. The cause of such deterioration,
impairment, decline or depreciation shall include, but is not limited to, the
failure by the Borrowers to do any act deemed reasonably necessary by the Bank
to preserve and maintain the value and collectability of the
Collateral.

    

    11.11. Material Adverse
Effect.  The occurrence of any development, condition or event
which has a Material Adverse Effect on any of the Borrowers.

    

    11.12. Subordinated
Debt.  The subordination provisions of any Subordinated Debt
shall for any reason be revoked or invalid or otherwise cease to be in full
force and effect.  Any of the Borrowers shall contest in any manner,
or any other holder thereof shall contest in any judicial proceeding, the
validity or enforceability of the Subordinated Debt or deny that it has any
further liability or obligation thereunder, or the Obligations shall for any
reason not have the priority contemplated by the subordination provisions of the
Subordinated Debt.

    

    Section
12. REMEDIES.

    

    Upon the occurrence of an Event of
Default, the Bank shall have all rights, powers and remedies set forth in the
Loan Documents, in any written agreement or instrument (other than this
Agreement or the Loan Documents) relating to any of the Obligations or any
security therefor, as a secured party under the UCC or as otherwise provided at
law or in equity.  Without limiting the generality of the foregoing,
the Bank may, at its option upon the occurrence of an 

    
      
        
        

      

      
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    Event of
Default, declare its commitments to the Borrowers to be terminated and all
Obligations to be immediately due and payable, provided, however, that upon the
occurrence of an Event of Default under Section 11.7, all
commitments of the Bank to the Borrowers shall immediately terminate and all
Obligations shall be automatically due and payable, all without demand, notice
or further action of any kind required on the part of the Bank.  The
Borrowers hereby waives any and all presentment, demand, notice of dishonor,
protest, and all other notices and demands in connection with the enforcement of
Bank’s rights under the Loan Documents, and hereby consents to, and waives
notice of release, with or without consideration, of any of the Borrowers of any
Collateral, notwithstanding anything contained herein or in the Loan Documents
to the contrary.  In addition to the foregoing:

    

    12.1. Possession and Assembly of
Collateral.  The Bank may, without notice, demand or legal
process of any kind, take possession of any or all of the Collateral (in
addition to Collateral of which the Bank already has possession), wherever it
may be found, and for that purpose may pursue the same wherever it may be found,
and may at any time enter into any of the Borrowers’ premises where any of the
Collateral may be or is supposed to be, and search for, take possession of,
remove, keep and store any of the Collateral until the same shall be sold or
otherwise disposed of and the Bank shall have the right to store and conduct a
sale of the same in any of the Borrowers’ premises without cost to the
Bank.  At the Bank’s request, the Borrowers will, at the Borrowers’
sole expense, assemble the Collateral and make it available to the Bank at a
place or places to be designated by the Bank which is reasonably convenient to
the Bank and the Borrowers.

    

    12.2. Sale of
Collateral.  The Bank may sell any or all of the Collateral at
public or private sale, upon such terms and conditions as the Bank may deem
proper, and the Bank may purchase any or all of the Collateral at any such
sale.  The Borrowers acknowledges that the Bank may be unable to
effect a public sale of all or any portion of the Collateral because of certain
legal and/or practical restrictions and provisions which may be applicable to
the Collateral and, therefore, may be compelled to resort to one or more private
sales to a restricted group of offerees and purchasers.  Each of the
Borrowers consents to any such private sale so made even though at places and
upon terms less favorable than if the Collateral were sold at public
sale.  The Bank shall have no obligation to clean-up or otherwise
prepare the Collateral for sale.  The Bank may apply the net proceeds,
after deducting all costs, expenses, attorneys’ and paralegals’ fees incurred or
paid at any time in the collection, protection and sale of the Collateral and
the Obligations, to the payment of any Note and/or any of the other Obligations,
returning the excess proceeds, if any, to the Borrowers.  The
Borrowers shall remain liable for any amount remaining unpaid after such
application, with interest at the Default Rate.  Any notification of
intended disposition of the Collateral required by law shall be conclusively
deemed reasonably and properly given if given by the Bank at least ten (10)
calendar days before the date of such disposition.  Each of the
Borrowers hereby confirms, approves and ratifies all acts and deeds of the Bank
relating to the foregoing, and each part thereof, and expressly waives any and
all claims of any nature, kind or description which it has or may hereafter have
against the Bank or its representatives, by reason of taking, selling or
collecting any portion of the Collateral.  Each of the Borrowers
consent to releases of the Collateral at any time (including prior to default)
and to sales of the Collateral in groups, parcels or portions, or as an
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    appropriate.  Each
of the Borrowers expressly absolve the Bank from any loss or decline in market
value of any Collateral by reason of delay in the enforcement or assertion or
nonenforcement of any rights or remedies under this Agreement.

    

    12.3. Standards for Exercising
Remedies. To
the extent that applicable law imposes duties on the Bank to exercise remedies
in a commercially reasonable manner, each of the Borrowers acknowledge and agree
that it is not commercially unreasonable for the Bank (a) to fail to incur
expenses reasonably deemed significant by the Bank to prepare Collateral for
disposition or otherwise to complete raw material or work-in-process into
finished goods or other finished products for disposition, (b) to fail to obtain
third party consents for access to Collateral to be disposed of, or to obtain
or, if not required by other law, to fail to obtain governmental or third party
consents for the collection or disposition of Collateral to be collected or
disposed of, (c) to fail to exercise collection remedies against Account Debtors
or other Persons obligated on Collateral or to remove liens or encumbrances on
or any adverse claims against Collateral, (d) to exercise collection remedies
against Account Debtors and other Persons obligated on Collateral directly or
through the use of collection agencies and other collection specialists, (e) to
advertise dispositions of Collateral through publications or media of general
circulation, whether or not the Collateral is of a specialized nature, (f) to
contact other Persons, whether or not in the same business as the Borrowers, for
expressions of interest in acquiring all or any portion of the Collateral, (g)
to hire one or more professional auctioneers to assist in the disposition of
Collateral, whether or not the collateral is of a specialized nature, (h) to
dispose of Collateral by utilizing internet sites that provide for the auction
of assets of the types included in the Collateral or that have the reasonable
capability of doing so, or that match buyers and sellers of assets, (i) to
dispose of assets in wholesale rather than retail markets, (j) to disclaim
disposition warranties, including any warranties of title, (k) to purchase
insurance or credit enhancements to insure the Bank against risks of loss,
collection or disposition of Collateral or to provide to the Bank a guaranteed
return from the collection or disposition of Collateral, or (l) to the extent
deemed appropriate by the Bank, to obtain the services of other brokers,
investment bankers, consultants and other professionals to assist the Bank in
the collection or disposition of any of the Collateral.  Each of the
Borrowers acknowledge that the purpose of this section is to provide
non-exhaustive indications of what actions or omissions by the Bank would not be
commercially unreasonable in the Bank’s exercise of remedies against the
Collateral and that other actions or omissions by the Bank shall not be deemed
commercially unreasonable solely on account of not being indicated in this
section.  Without limitation upon the foregoing, nothing contained in
this section shall be construed to grant any rights to the Borrowers or to
impose any duties on the Bank that would not have been granted or imposed by
this Agreement or by applicable law in the absence of this section.

    

    12.4. UCC and Offset
Rights.  The Bank may exercise, from time to time, any and all
rights and remedies available to it under the UCC or under any other applicable
law in addition to, and not in lieu of, any rights and remedies expressly
granted in this Agreement or in any other agreements between any Obligor and the
Bank, and may, without demand or notice of any kind, appropriate and apply
toward the payment of such of the Obligations, whether matured or unmatured,
including costs of collection and attorneys’ and paralegals’ fees, and in such
order of application as the Bank may, from time to time, elect, any indebtedness
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    Obligor,
however created or arising, including balances, credits, deposits, accounts or
moneys of such Obligor in the possession, control or custody of, or in transit
to the Bank.  Each of the Borrowers, on behalf of itself and each
Obligor, hereby waive the benefit of any law that would otherwise restrict or
limit the Bank in the exercise of its right, which is hereby acknowledged, to
appropriate at any time hereafter any such indebtedness owing from the Bank to
any Obligor.

    

    12.5. Additional
Remedies.  The Bank shall have the right and power
to:

    

    (a) instruct
the Borrowers, at its own expense, to notify any parties obligated on any of the
Collateral, including any Account Debtors, to make payment directly to the Bank
of any amounts due or to become due thereunder, or the Bank may directly notify
such obligors of the security interest of the Bank, and/or of the assignment to
the Bank of the Collateral and direct such obligors to make payment to the Bank
of any amounts due or to become due with respect thereto, and thereafter,
collect any such amounts due on the Collateral directly from such Persons
obligated thereon;

    

    (b) enforce
collection of any of the Collateral, including any Accounts, by suit or
otherwise, or make any compromise or settlement with respect to any of the
Collateral, or surrender, release or exchange all or any part thereof, or
compromise, extend or renew for any period (whether or not longer than the
original period) any indebtedness thereunder;

    

    (c) take
possession or control of any proceeds and products of any of the Collateral,
including the proceeds of insurance thereon;

    

    (d) extend,
renew or modify for one or more periods (whether or not longer than the original
period) any Note, any other of the Obligations, any obligation of any nature of
any other obligor with respect to any Note or any of the
Obligations;

    

    (e) grant
releases, compromises or indulgences with respect to any Note, any of the
Obligations, any extension or renewal of any of the Obligations, any security
therefor, or to any other obligor with respect to any Note or any of the
Obligations;

    

    (f) transfer
the whole or any part of securities which may constitute Collateral into the
name of the Bank or the Bank’s nominee without disclosing, if the Bank so
desires, that such securities so transferred are subject to the security
interest of the Bank, and any corporation, association, or any of the managers
or trustees of any trust issuing any of such securities, or any transfer agent,
shall not be bound to inquire, in the event that the Bank or such nominee makes
any further transfer of such securities, or any portion thereof, as to whether
the Bank or such nominee has the right to make such further transfer, and shall
not be liable for transferring the same;

    

    (g) vote the
Collateral;

    
      
        
        

      

      
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    (h) make an
election with respect to the Collateral under Section 1111 of the Bankruptcy
Code or take action under Section 364 or any other section of the Bankruptcy
Code; provided, however, that any such action of the Bank as set forth herein
shall not, in any manner whatsoever, impair or affect the liability of the
Borrowers hereunder, nor prejudice, waive, nor be construed to impair, affect,
prejudice or waive the Bank’s rights and remedies at law, in equity or by
statute, nor release, discharge, nor be construed to release or discharge, the
Borrowers, any guarantor or other Person liable to the Bank for the Obligations;
and

    

    (i) at any
time, and from time to time, accept additions to, releases, reductions,
exchanges or substitution of the Collateral, without in any way altering,
impairing, diminishing or affecting the provisions of this Agreement, the Loan
Documents, or any of the other Obligations, or the Bank’s rights hereunder,
under any Note or under any of the other Obligations.

    

    Each of
the Borrowers hereby ratifies and confirms whatever the Bank may do with respect
to the Collateral and agree that the Bank shall not be liable for any error of
judgment or mistakes of fact or law with respect to actions taken in connection
with the Collateral.

    

    12.6. Attorney-in-Fact.  Each
of the Borrowers hereby irrevocably makes, constitutes and appoints the Bank
(and any officer of the Bank or any Person designated by the Bank for that
purpose) as the Borrowers’ true and lawful proxy and attorney-in-fact (and
agent-in-fact) in the Borrowers’ name, place and stead, with full power of
substitution, from and after the occurrence of an Event of Default, to (i) take
such actions as are permitted in this Agreement, (ii) execute such financing
statements and other documents and to do such other acts as the Bank may require
to perfect and preserve the Bank’s security interest in, and to enforce such
interests in the Collateral, and (iii) carry out any remedy provided for in this
Agreement, including endorsing the any of the Borrowers’ names to checks,
drafts, instruments and other items of payment, and proceeds of the Collateral,
executing change of address forms with the postmaster of the United States Post
Office serving the address of any of the Borrowers, changing the address of any
Borrower to that of the Bank, opening all envelopes addressed to each or any
Borrower and applying any payments contained therein to the
Obligations.  Each of the Borrowers hereby acknowledges that the
constitution and appointment of such proxy and attorney-in-fact are coupled with
an interest and are irrevocable.  Each of the Borrowers hereby
ratifies and confirms all that such attorney-in-fact may do or cause to be done
by virtue of any provision of this Agreement.

    

    12.7. No
Marshaling.  The Bank shall not be required to marshal any
present or future collateral security (including this Agreement and the
Collateral) for, or other assurances of payment of, the Obligations or any of
them or to resort to such collateral security or other assurances of payment in
any particular order.  To the extent that it lawfully may, each
Borrower hereby agrees that it will not invoke any law relating to the
marshaling of collateral which might cause delay in or impede the enforcement of
the Bank’s rights under this Agreement or under any other instrument creating or
evidencing any of the Obligations or under which any of the Obligations is
outstanding or by which any of the Obligations is secured or payment thereof is

    
      
        
        

      

      
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    otherwise
assured, and, to the extent that it lawfully may, each of the Borrowers hereby
irrevocably waives the benefits of all such laws.

    

    12.8. Application of
Proceeds.  The Bank will within one (1) Business Day after
receipt of cash or solvent credits from collection of items of payment, proceeds
of Collateral or any other source, apply the whole or any part thereof against
the Obligations secured hereby.  The Bank shall further have the
exclusive right to determine how, when and what application of such payments and
such credits shall be made on the Obligations, and such determination shall be
conclusive upon the Borrowers.  Any proceeds of any disposition by the
Bank of all or any part of the Collateral may be first applied by the Bank to
the payment of expenses incurred by the Bank in connection with the Collateral,
including attorneys’ fees and legal expenses as provided for in Section 14
hereof.

    

    12.9. No
Waiver.  No Event of Default shall be waived by the Bank except
in writing. No failure or delay on the part of the Bank in exercising any right,
power or remedy hereunder shall operate as a waiver of the exercise of the same
or any other right at any other time; nor shall any single or partial exercise
of any such right, power or remedy preclude any other or further exercise
thereof or the exercise of any other right, power or remedy
hereunder.  There shall be no obligation on the part of the Bank to
exercise any remedy available to the Bank in any order.  The remedies
provided for herein are cumulative and not exclusive of any remedies provided at
law or in equity.  Each of the Borrowers agree that in the event that
any of the Borrowers fails to perform, observe or discharge any of its
Obligations or liabilities under this Agreement or any other agreements with the
Bank, no remedy of law will provide adequate relief to the Bank, and further
agree that the Bank shall be entitled to temporary and permanent injunctive
relief in any such case without the necessity of proving actual
damages.

    

    12.10. Letters of
Credit.  With respect to all Letters of Credit for which
presentment for honor shall not have occurred at the time of an acceleration
pursuant to this Section 12, the
Borrowers shall at such time deposit in a cash collateral account opened by the
Bank an amount equal to the Letter of Credit Obligations then
outstanding.  Amounts held in such cash collateral account shall be
applied by the Bank to the payment of drafts drawn under such Letters of Credit,
and the unused portion thereof after all such Letters of Credit shall have
expired or been fully drawn upon, if any, shall be applied to repay the
Obligations, in such order of application as the Bank may, in its sole
discretion, from time to time elect.  After all such Letters of Credit
shall have expired or been fully drawn upon, all commitments to make Loans
hereunder have terminated and all other Obligations have been indefeasibly
satisfied and paid in full in cash, the balance, if any, in such cash collateral
account shall be returned to the Borrowers or such other Person as may be
lawfully entitled thereto.

    

    Section
13. CROSS-GUARANTY.

    

    13.1           Cross-Guaranty.  Each
of the Borrowers hereby agree that the Borrowers are jointly and severally
liable for, and hereby absolutely and unconditionally guarantees to Lender and
its successors and assigns, the full and prompt payment (whether at stated
maturity, by acceleration or otherwise) and performance of, all Obligations owed
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    by each
other Borrowers.  Each of the Borrowers agree that its guaranty
obligation hereunder is a continuing guaranty of payment and performance and not
of collection, that its obligations under this Section 13 shall not
be discharged until payment and performance, in full, of the Obligations has
occurred, and that its obligations under this Section 13 shall be
absolute and unconditional, irrespective of, and unaffected by, the genuineness,
validity, regularity, enforceability or any future amendment of, or change in,
this Agreement, any Loan Document or any other agreement, document or instrument
to which any Borrowers is or may become a party; the absence of any action to
enforce this Agreement (including this Section 13) or any
Loan Document or the waiver or consent by Bank with respect to any of the
provisions thereof; the existence, value or condition of, or failure to perfect
its Lien against, any security for the Obligations or any action, or the absence
of any action, by Bank in respect thereof (including the release of any such
security); the insolvency of any Borrowers; or any other action or circumstances
that might otherwise constitute a legal or equitable discharge or defense of a
surety or guarantor. Each of the Borrowers shall be regarded, and shall be in
the same position, as principal debtor with respect to the Obligations
guaranteed hereunder.

    

               13.2           Waivers By Borrowers.
Each Borrowers expressly waives all rights it may have now or in the future
under any statute, or at common law, or at law or in equity, or otherwise, to
compel Bank to marshal assets or to proceed in respect of the Obligations
hereunder, against any other party or against any security for the payment and
performance of the Obligations before proceeding against, or as a condition to
proceeding against, such Borrowers.  It is agreed among each Borrowers
and Bank that the foregoing waivers are of the essence of the transaction
contemplated by this Agreement and the Loan Documents and that, but for the
provisions of this Section 13.2 and such
waivers, Bank would decline to enter into this Agreement.

    

    13.3           Benefit of
Guaranty.   Each of the Borrowers agree that the
provisions of this Section 13 are for
the benefit of Bank and its successors, transferees, endorsees and assigns, and
nothing herein contained shall impair, as between any other Borrowers and Bank,
the obligations of such other Borrowers under this Agreement and the Loan
Documents.

    

    13.4           Subordination of
Subrogation, Etc.  Notwithstanding anything to the contrary in
this Agreement or in any of the other Loan Documents, and except as set forth in
Section 13.7,
each Borrowers hereby expressly and irrevocably subordinates to payment of the
Obligations any and all rights at law or in equity to subrogation,
reimbursement, exoneration, contribution, indemnification or set off and any and
all defenses available to a surety, guarantor or accommodation co-obligor until
the Obligations are indefeasibly paid in full.  Each of the Borrowers
acknowledge and agree that this subordination is intended to benefit Bank and
shall not limit or otherwise affect such Borrowers’ liability hereunder or the
enforceability of this Section 13, and that
Bank and its successors and assigns are intended third party beneficiaries of
the waivers and agreements set forth in this Section
13.4.

    

    13.5           Election of
Remedies.   If Bank may, under applicable law, proceed to
realize its benefits under this Agreement or any Loan Document giving Bank a
Lien upon any Collateral, whether owned by any Borrowers or by any other Person,
either by judicial foreclosure or by non-judicial sale or enforcement, Bank may,
at its sole option, determine which of its remedies or 

    
      
        
        

      

      
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    rights it
may pursue without affecting any of its rights and remedies under this Section
13.  If, in the exercise of any of its rights and remedies,
Bank shall forfeit any of its rights or remedies, including its right to enter a
deficiency judgment against any Borrowers or any other Person, whether because
of any applicable laws pertaining to “election of remedies” or the like, each
Borrowers hereby consents to such action by Bank and waives any claim based upon
such action, even if such action by Bank shall result in a full or partial loss
of any rights of subrogation that each Borrowers might otherwise have had but
for such action by Bank.  Any election of remedies that results in the
denial or impairment of the right of Bank to seek a deficiency judgment against
any Borrowers shall not impair any and all other Borrowers’ obligation to pay
the full amount of the Obligations.  In the event Bank shall bid at
any foreclosure or trustee's sale or at any private sale permitted by law or
this Agreement or any Loan Documents, Bank may bid all or less than the amount
of the Obligations and the amount of such bid need not be paid by Bank but shall
be credited against the Obligations.  The amount of the successful bid
at any such sale, whether Bank or any other party is the successful bidder,
shall be conclusively deemed to be the fair market value of the Collateral and
the difference between such bid amount and the remaining balance of the
Obligations shall be conclusively deemed to be the amount of the Obligations
guaranteed under this Section 13,
notwithstanding that any present or future law or court decision or ruling may
have the effect of reducing the amount of any deficiency claim to which Bank
might otherwise be entitled but for such bidding at any such sale.

    

    13.6           Limitation.  Notwithstanding
any provision herein contained to the contrary, each Borrower’s liability under
this Section 13
(which liability is in any event in addition to amounts for which such Borrower
is primarily liable under Section 2 of this
Agreement) shall be limited to an amount not to exceed as of any date of
determination the greater of:  (i) the net amount of all Loans
advanced to any other Borrowers under this Agreement and then re-loaned or
otherwise transferred to, or for the benefit of, such Borrowers; and (ii) the
amount that could be claimed by Bank from such Borrowers under this Section 13 without
rendering such claim voidable or avoidable under Section 548 of Chapter 11 of
the Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer
Act, Uniform Fraudulent Conveyance Act or similar statute or common law after
taking into account, among other things, such Borrowers’ right of contribution
and indemnification from each other Borrowers under Section
13.7.

    

    13.7           Contribution with Respect to
Guaranty Obligations.  To the extent that any Borrowers shall
make a payment under this Section 13 of all or
any of the Obligations (other than Loans made directly to that Borrowers), then,
following indefeasible payment in full in cash of the Obligations) such
Borrowers shall be entitled to receive contribution and indemnification payments
from, and be reimbursed by, each other Borrowers in such amounts as the
Borrowers shall mutually agree.  This Section 13.7 is
intended only to define the relative rights of Borrowers and nothing set forth
in this Section
13.7 is intended to or shall impair the obligations of Borrowers to pay
any amounts as and when the same shall become due and payable in accordance with
the terms of this Agreement.  Nothing contained in this Section 13.7 shall
limit the liability of any Borrowers to pay the Loans made directly or
indirectly to those Borrowers and accrued interest, fees and expenses with
respect thereto for which such Borrowers shall be primarily
liable.  The rights of the indemnifying Borrowers against any other
Borrowers under this Section 13.7 shall be
exercisable upon the full and indefeasible payment of the Obligations and the
termination of the Bank’s commitment to lend and provide any other financial
accommodations to any Borrowers under this Agreement.

    
      
        
        

      

      
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    13.8           Liability
Cumulative.  The liability of Borrowers under this Section 13 is in
addition to and shall be cumulative with all Obligations of each Borrowers to
Bank under this Agreement and the Loan Documents to which such Borrowers are a
party or in respect of any Obligations or obligation of the other Borrowers,
without any limitation as to amount, unless the instrument or agreement
evidencing or creating such other liability specifically provides to the
contrary.

    

    Section
14. MISCELLANEOUS.

    

    14.1. Obligations
Absolute.  None of the following shall affect the Obligations
of the Borrowers to the Bank under this Agreement or the Bank’s rights with
respect to the Collateral:

    

    (a) acceptance
or retention by the Bank of other property or any interest in property as
security for the Obligations;

    

    (b) release
by the Bank of any of the Borrowers all or any part of the Collateral or of any
party liable with respect to the Obligations;

    

    (c) release,
extension, renewal, modification or substitution by the Bank of any Note, or any
note evidencing any of the Obligations, or the compromise of the liability of
any of the Borrowers of the Obligations; or

    

    (d) failure
of the Bank to resort to any other security or to pursue any of the Borrowers or
any other obligor liable for any of the Obligations before resorting to remedies
against the Collateral.

    

    14.2. Entire
Agreement.  This Agreement and the other Loan Documents (i) are
valid, binding and enforceable against the Borrowers and the Bank in accordance
with their respective provisions and no conditions exist as to their legal
effectiveness; (ii) constitute the entire agreement between the parties with
respect to the subject matter hereof and thereof; and (iii) are the final
expression of the intentions of the Borrowers and the Bank.  No
promises, either expressed or implied, exist between the Borrowers and the Bank,
unless contained herein or therein.  This Agreement, together with the
other Loan Documents, supersedes all negotiations, representations, warranties,
commitments, term sheets, discussions, negotiations, offers or contracts (of any
kind or nature, whether oral or written) prior to or contemporaneous with the
execution hereof with respect to any matter, directly or indirectly related to
the terms of this Agreement and the other Loan Documents.  This
Agreement and the other Loan Documents are the result of negotiations among the
Bank, the Borrowers and the other parties thereto, and have been reviewed (or
have had the opportunity to be reviewed) by counsel to all such parties, and are
the products of all parties.  Accordingly, this Agreement and the
other Loan Documents shall not be construed more strictly against the Bank
merely because of the Bank’s involvement in their preparation.

    
      
        
        

      

      
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    14.3. Amendments;
Waivers.  No delay on the part of the Bank in the exercise of
any right, power or remedy shall operate as a waiver thereof, nor shall any
single or partial exercise by the Bank of any right, power or remedy preclude
other or further exercise thereof, or the exercise of any other right, power or
remedy.  No amendment, modification or waiver of, or consent with
respect to, any provision of this Agreement or the other Loan Documents shall in
any event be effective unless the same shall be in writing and acknowledged by
the Bank, and then any such amendment, modification, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.

    

    14.4. WAIVER OF
DEFENSES.  EACH OF THE BORROWERS WAIVES EVERY PRESENT AND
FUTURE DEFENSE, CAUSE OF ACTION, COUNTERCLAIM OR SETOFF WHICH ANY OF THE
BORROWERS MAY NOW HAVE OR HEREAFTER MAY HAVE TO ANY ACTION BY THE BANK IN
ENFORCING THIS AGREEMENT.  PROVIDED THE BANK ACTS IN GOOD FAITH, EACH
OF THE BORROWERS RATIFIES AND CONFIRMS WHATEVER THE BANK MAY DO PURSUANT TO THE
TERMS OF THIS AGREEMENT.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR
THE BANK GRANTING ANY FINANCIAL ACCOMMODATION TO THE BORROWERS.

    

    14.5. FORUM SELECTION AND CONSENT
TO JURISDICTION.  ANY LITIGATION BASED HEREON, OR ARISING OUT
OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT,
SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF
ILLINOIS OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF
ILLINOIS; PROVIDED THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO
PRECLUDE THE BANK FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER
JURISDICTION.  EACH OF THE BORROWERS HEREBY EXPRESSLY AND IRREVOCABLY
SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS AND OF THE
UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS FOR THE
PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE.  EACH OF THE
BORROWERS FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED
MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF
ILLINOIS.  EACH OF THE BORROWERS HEREBY EXPRESSLY AND IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY
SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.

    

    14.6. WAIVER OF JURY
TRIAL.  THE BANK AND EACH OF THE BORROWERS, AFTER CONSULTING OR
HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, EACH KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVE IRREVOCABLY, ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION
OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE,
ANY 

    
      
        
        

      

      
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    OTHER
LOAN DOCUMENT, ANY OF THE OTHER OBLIGATIONS, THE COLLATERAL, OR ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE
DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY LENDING
RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING, OR ANY COURSE OF
CONDUCT OR COURSE OF DEALING IN WHICH THE BANK AND ANY OF THE BORROWERS ARE
ADVERSE PARTIES, AND EACH AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE
TRIED BEFORE A COURT AND NOT BEFORE A JURY.  THIS PROVISION IS A
MATERIAL INDUCEMENT FOR THE BANK GRANTING ANY FINANCIAL ACCOMMODATION TO THE
BORROWERS.

    

    14.7. Assignability.  The
Bank may at any time assign the Bank’s rights in this Agreement, the other Loan
Documents, the Obligations, or any part thereof and transfer the Bank’s rights
in any or all of the Collateral, and the Bank thereafter shall be relieved from
all liability with respect to such Collateral.  In addition, the Bank
may at any time sell one or more participations in the Loans.  None of
the Borrowers may sell or assign this Agreement, or any other agreement with the
Bank or any portion thereof, either voluntarily or by operation of law, without
the prior written consent of the Bank in its sole and absolute
discretion.  This Agreement shall be binding upon the Bank and each of
the Borrowers and their respective legal representatives and
successors.  All references herein to the Borrowers shall be deemed to
include any successors, whether immediate or remote.  In the case of a
joint venture or partnership, the term “Borrowers” shall be deemed to include
all joint venturers or partners thereof, who shall be jointly and severally
liable hereunder.

    

    14.8. Confirmations.  The
Borrowers and the Bank agree from time to time, upon written request received by
it from the other, to confirm to the other in writing the aggregate unpaid
principal amount of the Loans then outstanding.

    

    14.9. Confidentiality.  The
Bank agrees to use commercially reasonable efforts (equivalent to the efforts
the Bank applies to maintain the confidentiality of its own confidential
information) to maintain as confidential all information provided to it by the
Borrowers, including all information designated as confidential, except that the
Bank may disclose such information (a) to Persons employed or engaged by the
Bank in evaluating, approving, structuring or administering the Loans; (b) to
any assignee or participant or potential assignee or participant that has agreed
to comply with the covenant contained in this Section 14.9 (and any
such assignee or participant or potential assignee or participant may disclose
such information to Persons employed or engaged by them as described in clause
(a) above); (c) as required or requested by any federal or state regulatory
authority or examiner, or any insurance industry association, or as reasonably
believed by the Bank to be compelled by any court decree, subpoena or legal or
administrative order or process; (d) as, on the advice of the Bank’s counsel, is
required by law; (e) in connection with the exercise of any right or remedy
under the Loan Documents or in connection with any litigation to which the Bank
is a party; (f) to any nationally recognized rating agency that requires access
to information about the Bank’s investment portfolio in connection with ratings
issued with respect to the Bank; (g) to any Affiliate of the Bank who may

    
      
        
        

      

      
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    provide
Bank Products to any one or more of the Borrowers or any Subsidiary, or (h) that
ceases to be confidential through no fault of the Bank.

    

    14.10. Binding
Effect.  This Agreement shall become effective upon execution
by the Borrowers and the Bank.  If this Agreement is not dated or
contains any blanks when executed by the Borrowers, the Bank is hereby
authorized, without notice to the Borrowers, to date this Agreement as of the
date when it was executed by the Borrowers, and to complete any such blanks
according to the terms upon which this Agreement is executed.

    

    14.11. Governing
Law.  This Agreement, the Loan Documents and any Note shall be
delivered and accepted in and shall be deemed to be contracts made under and
governed by the internal laws of the State of Illinois (but giving effect to
federal laws applicable to national banks) applicable to contracts made and to
be performed entirely within such state, without regard to conflict of laws
principles.

    

    14.12. Enforceability.  Wherever
possible, each provision of this Agreement shall be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by, unenforceable or invalid under any
jurisdiction, such provision shall as to such jurisdiction, be severable and be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other
jurisdiction.

    

    14.13. Survival of Borrowers
Representations.  All covenants, agreements, representations
and warranties made by each of the Borrowers herein shall, notwithstanding any
investigation by the Bank, be deemed material and relied upon by the Bank and
shall survive the making and execution of this Agreement and the Loan Documents
and the issuance of any Note, and shall be deemed to be continuing
representations and warranties until such time as the Borrowers have fulfilled
all of their Obligations to the Bank, and the Bank has been indefeasibly paid in
full in cash.  The Bank, in extending financial accommodations to the
Borrowers, is expressly acting and relying on the aforesaid representations and
warranties.

    

    14.14. Extensions of Bank’s
Commitment.  This Agreement shall secure and govern the terms
of (i) any extensions or renewals of the Bank’s commitment hereunder, and (ii)
any replacement note executed by the Borrowers and accepted by the Bank in its
sole and absolute discretion in substitution for any Note.

    

    14.15. Time of
Essence.  Time is of the essence in making payments of all
amounts due the Bank under this Agreement and in the performance and observance
by the Borrowers of each covenant, agreement, provision and term of this
Agreement.

    

    14.16. Counterparts; Facsimile
Signatures.  This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts and
each such counterpart shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same
Agreement.  Receipt of an executed signature page to this Agreement by
facsimile or other electronic transmission (such as a pdf file) shall constitute
effective delivery 

    
      
        
        

      

      
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    thereof.  Electronic
records of executed Loan Documents maintained by the Bank shall deemed to be
originals thereof.

    

    14.17. Notices.  Except
as otherwise provided herein, the Borrowers waives all notices and demands in
connection with the enforcement of the Bank’s rights hereunder.  All
notices, requests, demands and other communications provided for hereunder shall
be in writing and addressed as follows:

    

    
      	
              To
      the Borrowers:

            	
              c/o
      Lifeway Foods, Inc.

              6431
      West Oakton Street

              Morton
      Grove, Illinois  60053

              Attention:  Edward
      Smolyansky

              Fax:
      (847) 967-6558

            
	 
      	 
      
	
              With
      a copy to:

            	
              McDonald
      Hopkins LLC

              640
      North LaSalle Street, Suite 590

              Chicago,
      Illinois 60654

              Attention:
      Joel Dalinka, Esq.

              Fax:
      (312) 280-8232

            
	 
      	 
      
	
              To
      the Bank:

            	
              The
      PrivateBank and Trust Company

              120
      S. LaSalle Street

              Chicago,
      IL 60603

              Attention:
      Thomas Estey and Douglas Buchler

              Fax:
      (312) 564-6886

            
	 
      	 
      
	
              With
      copy to:

            	
              Patzik,
      Frank & Samotny Ltd.

              150
      South Wacker Drive

              Suite
      1500

              Chicago,
      Illinois 60606

              Attn:
      Gary I. Walt, Esq.

              Fax:  (312)
      551-1101

            

    

    

    or, as to
each party, at such other address as shall be designated by such party in a
written notice to each other party complying as to delivery with the terms of
this subsection.  All notices addressed as above shall be deemed to
have been properly given (i) if served in person, upon acceptance or refusal of
delivery; (ii) if mailed by certified or registered mail, return receipt
requested, postage prepaid, on the third (3rd) day following the day such notice
is deposited in any post office station or letter box; or (iii) if sent by
recognized overnight courier, on the first (1st) day following the day such
notice is delivered to such carrier.  No notice to or demand on the
Borrowers in any case shall entitle the Borrowers to any other or further notice
or demand in similar or other circumstances.

    

    14.18. Release of Claims Against
Bank.  In consideration of the Bank making the Loans, the
Borrowers and all other Obligors do each hereby release and discharge the Bank
of and from 

    
      
        
        

      

      
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    any and
all claims, harm, injury, and damage of any and every kind, known or unknown,
legal or equitable, which any Obligor may have against the Bank from the date of
their respective first contact with the Bank until the date of this Loan
Agreement, including any claim arising from any reports (environmental reports,
surveys, appraisals, etc.) prepared by any parties hired or recommended by the
Bank.  The Borrowers and all other Obligors confirm to Bank that they
have reviewed the effect of this release with competent legal counsel of their
choice, or have been afforded the opportunity to do so, prior to execution of
this Agreement and the Loan Documents and do each acknowledge and agree that the
Bank is relying upon this release in extending the Loans to the
Borrowers.

    

    14.19. Costs, Fees and
Expenses.  The Borrowers shall pay or reimburse the Bank for
all reasonable costs, fees and expenses incurred by the Bank or for which the
Bank becomes obligated in connection with the negotiation, preparation,
consummation, collection of the Obligations or enforcement of this Agreement,
the other Loan Documents and all other documents provided for herein or
delivered or to be delivered hereunder or in connection herewith (including any
amendment, supplement or waiver to any Loan Document), or during any
workout, restructuring or negotiations in respect thereof, including reasonable
consultants’ fees and attorneys’ fees and time charges of counsel to the Bank,
which shall also include attorneys’ fees and time charges of attorneys who may
be employees of the Bank or any Affiliate of the Bank, plus costs and expenses
of such attorneys or of the Bank; search fees, costs and expenses; and all taxes
payable in connection with this Agreement or the other Loan Documents, whether
or not the transaction contemplated hereby shall be consummated.  In
furtherance of the foregoing, the Borrowers shall pay any and all stamp and
Other Taxes, UCC search fees, filing fees and other costs and expenses in
connection with the execution and delivery of this Agreement, any Note and the
other Loan Documents to be delivered hereunder, and agree to save and hold the
Bank harmless from and against any and all liabilities with respect to or
resulting from any delay in paying or omission to pay such costs and
expenses.  That portion of the Obligations consisting of costs,
expenses or advances to be reimbursed by the Borrowers to the Bank pursuant to
this Agreement or the other Loan Documents which are not paid on or prior to the
date hereof shall be payable by the Borrowers to the Bank on
demand.  If at any time or times hereafter the Bank: (a) employs
counsel for advice or other representation (i) with respect to this
Agreement or the other Loan Documents, (ii) to represent the Bank in any
litigation, contest, dispute, suit or proceeding or to commence, defend, or
intervene or to take any other action in or with respect to any litigation,
contest, dispute, suit, or proceeding (whether instituted by the Bank, the
Borrowers, or any other Person) in any way or respect relating to this
Agreement, the other Loan Documents or the Borrowers’ business or affairs, or
(iii) to enforce any rights of the Bank against the Borrowers or any other
Person that may be obligated to the Bank by virtue of this Agreement or the
other Loan Documents; (b) takes any action to protect, collect, sell,
liquidate, or otherwise dispose of any of the Collateral; and/or
(c) attempts to or enforces any of the Bank’s rights or remedies under the
Agreement or the other Loan Documents, the costs and expenses incurred by the
Bank in any manner or way with respect to the foregoing, shall be part of the
Obligations, payable by the Borrowers to the Bank on demand.

    

    14.20. Indemnification.  Each
of the Borrowers agree to defend (with counsel satisfactory to the Bank),
protect, indemnify, exonerate and hold harmless each Indemnified Party from and

    
      
        
        

      

      
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    against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, expenses and distributions of any kind or
nature (including the disbursements and the reasonable fees of counsel for each
Indemnified Party thereto, which shall also include, without limitation,
reasonable attorneys’ fees and time charges of attorneys who may be employees of
any Indemnified Party), which may be imposed on, incurred by, or asserted
against, any Indemnified Party (whether direct, indirect or consequential and
whether based on any federal, state or local laws or regulations, including
securities laws, Environmental Laws, commercial laws and regulations, under
common law or in equity, or based on contract or otherwise) in any manner
relating to or arising out of this Agreement or any of the Loan Documents, or
any act, event or transaction related or attendant thereto, the preparation,
execution and delivery of this Agreement and the Loan Documents, including the
making or issuance and management of the Loans, the use or intended use of the
proceeds of the Loans, the enforcement of the Bank’s rights and remedies under
this Agreement, the Loan Documents, any Note, any other instruments and
documents delivered hereunder, or under any other agreement between the
Borrowers and the Bank; provided, however, that the Borrowers shall not have any
obligations hereunder to any Indemnified Party with respect to matters
determined by a court of competent jurisdiction by final and nonappealable
judgment to have been caused
by or resulting from the willful misconduct or gross negligence of such
Indemnified Party.  To the extent that the undertaking to indemnify
set forth in the preceding sentence may be unenforceable because it violates any
law or public policy, the Borrowers shall satisfy such undertaking to the
maximum extent permitted by applicable law.  Any liability,
obligation, loss, damage, penalty, cost or expense covered by this indemnity
shall be paid to each Indemnified Party on demand, and failing prompt payment,
together with interest thereon at the Default Rate from the date incurred by
each Indemnified Party until paid by the Borrowers, shall be added to the
Obligations of the Borrowers and be secured by the Collateral.  The
provisions of this Section shall survive the satisfaction and payment of the
other Obligations and the termination of this Agreement.

    

    14.21. Revival and Reinstatement of
Obligations.  If the incurrence or payment of the Obligations
by any Obligor or the transfer to the Bank of any property should for any reason
subsequently be declared to be void or voidable under any state or federal law
relating to creditors’ rights, including provisions of the Bankruptcy Code
relating to fraudulent conveyances, preferences, or other voidable or
recoverable payments of money or transfers of property (collectively, a “Voidable Transfer”), and if
the Bank is required to repay or restore, in whole or in part, any such Voidable
Transfer, or elects to do so upon the reasonable advice of its counsel, then, as
to any such Voidable Transfer, or the amount thereof that the Bank is required
or elects to repay or restore, and as to all reasonable costs, expenses, and
attorneys fees of the Bank, the Obligations shall automatically shall be
revived, reinstated, and restored and shall exist as though such Voidable
Transfer had never been made.

    

    14.22. Customer Identification -
USA Patriot Act Notice.  The Bank hereby notifies the Borrowers
that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L.
107-56, signed into law October 26, 2001) (the “Act”), and the Bank’s policies
and practices, the Bank is required to obtain, verify and record certain
information and documentation that identifies the Borrowers, which information
includes the name and address of the Borrowers and such other information that
will allow the Bank to identify the Borrowers in accordance with the
Act.

     

    

    [Signature
page follows on next page]

     

    
      
        70

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    IN WITNESS WHEREOF, the Borrowers and
the Bank have executed this Loan and Security Agreement as of the date first
above written.

     

    
    

     

    
      	 	
                    
                
                  LIFEWAY
      FOODS, INC.

                

                

                

                
                  By:   /s/ Julie
      Smolyansky

                  
                    
      

                

                
                  Title:  
      President and CEO 

                    
                      
      

                  

                

                 

                FRESH
      MADE, INC.

                

                By:  
      /s/ Edward
      Smolyansky

                

                  
      

                Title:   
      President

                

                  
      

                 

                LFI
      ENTERPRISES, INC.

                

                

                  
                    By:  
      /s/ Julie
      Smolyansky

                    
                      
      

                  

                  
                    Title:  
      President and CEO 

                      
                        
      

                       

                    

                  

                

                HELIOS
      NUTRITION LIMITED

                

                

                  
                    By:  
      /s/ Julie
      Smolyansky

                    
                      
      

                  

                  
                    Title:  
      President and CEO 

                      
                        
      

                       

                    

                  

                

                PRIDE
      OF MAIN STREET DAIRY, LLC

                

                

                  
                    By:  
      /s/ Julie
      Smolyansky

                    
                      
      

                  

                  
                    Title:  
      President and CEO 

                      
                        
      

                       

                    

                  

                

                STARFRUIT,
      LLC

                

                

                  
                    By:  
      /s/ Julie
      Smolyansky

                    
                      
      

                  

                  
                    Title:  
      President and CEO 

                      
                        
      

                       

                    

                  

                

              

            

    

     

    [Loan
and Security Agreement Signature Page Continued]

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    

     

    
      	 	
              Agreed
      and accepted:

              

              THE
      PRIVATEBANK AND TRUST COMPANY,

              

              

              By: /s/                                                                     
       

              Name:_______________________________
      

              Title: _______________________________
 

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      

      EXHIBIT
A

      

      Form of
Revolving Note

       

       

       

       

      

      

 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
REVOLVING
NOTE

      

      
        	
                $5,000,000.00

              	
                Chicago,
      Illinois

                February
      _, 2009

              

      

      

      On the
Revolving Loan Maturity Date or on such earlier date as required by the Loan
Agreement (as defined below), FOR VALUE RECEIVED, the
undersigned (the “Borrowers”), jointly and
severally, promise to pay to the order of The PrivateBank and Trust Company (the
“Lender”) at Lender’s office at
120 South LaSalle Street, Chicago, Illinois 60603, or such other place as Lender
may designate from time to time hereafter, the principal amount of Five Million
and 00/100 Dollars ($5,000,000.00) or, if less, the aggregate unpaid principal
amount of all Loans made by Lender under the Revolving Loan pursuant to that
certain Loan and Security Agreement dated of even date herewith by and among
Borrowers and Lender (herein, as the same may be amended, modified or
supplemented, the “Loan
Agreement”) as shown on the Lender’s books and records. All capitalized
terms used herein without definition shall have the same meanings herein as such
terms are given in the Loan Agreement.

      

      This Note evidences those certain Loans
under the Revolving Loan Commitment made from time to time to Borrowers by
Lender under the Loan Agreement, and Borrowers hereby promise to pay interest at
the office described above on the Loans evidenced hereby at the rates and at the
times and in the manner specified therefor in the Loan Agreement.

      

      Repayments of principal hereon shall be
recorded by the Lender on the Lender’s books and records.  Borrowers
agree that in any action or proceeding instituted to collect or enforce
collection of this Note, the entries so recorded on a schedule to this Note or
recorded on the books and records of the Lender shall, absent demonstrable
error, be conclusive evidence of the amount of the Loans made by Lender to
Borrowers and the interest and payments thereon.

      

      This Note is issued by Borrowers under
the terms and provisions of the Loan Agreement and is secured by, among other
things, the Collateral and the Loan Documents and this Note and the holder
hereof is entitled to all of the benefits and security provided for thereby or
referred to therein, to which reference is hereby made for a statement
thereof.  This Note may be declared to be, or be and become, due prior
to its expressed maturity, voluntary prepayments may be made hereon, and certain
prepayments are required to be made hereon, all in the events, on the terms and
with the effects provided in the Loan Agreement.

      

      All of Lender’s rights and remedies are
cumulative and non-exclusive.  The acceptance by Lender of any partial
payment made hereunder after the time when any of the Obligations hereunder
become due and payable will not establish a custom, or waive any rights of
Lender to enforce prompt payment thereof.  Lender’s failure to require
strict performance by Borrowers of any provision of this Note shall not waive,
affect or diminish any right of Lender thereafter to demand strict compliance
and performance therewith.  Any waiver of an Event of Default
hereunder shall not suspend, waive or affect any other Event of Default
hereunder.  Except as provided in the Loan Agreement, each Borrower
and every endorser waives presentment, demand and protest and notice of
presentment, protest, default, non-payment, maturity, release, 

       

      
        
          
          

        

        
          A-1

          
            

          

        

        
          
          

        

      

      compromise,
settlement, extension or renewal of this Note.  Except as provided in
the Loan Agreement, each Borrower further waives any and all notice or demand to
which such Borrower might be entitled with respect to this Note by virtue of any
applicable statute or law (to the extent permitted by law)

      

      THIS NOTE SHALL BE DELIVERED AND
ACCEPTED IN AND SHALL BE DEEMED TO BE CONTRACTS MADE UNDER AND GOVERNED BY THE
INTERNAL LAWS OF THE STATE OF ILLINOIS (BUT GIVING EFFECT TO FEDERAL LAWS
APPLICABLE TO NATIONAL BANKS) APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED
ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES.

      

      ANY LITIGATION BASED HEREON, OR ARISING
OUT OF, UNDER, OR IN CONNECTION WITH THIS NOTE OR ANY OTHER LOAN DOCUMENT, SHALL
BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF ILLINOIS OR
IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS;
PROVIDED THAT NOTHING IN THIS NOTE SHALL BE DEEMED OR OPERATE TO PRECLUDE THE
LENDER FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER
JURISDICTION.  EACH OF THE BORROWERS HEREBY EXPRESSLY AND IRREVOCABLY
SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS AND OF THE
UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS FOR THE
PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE.  EACH OF THE
BORROWERS FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED
MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF
ILLINOIS.  EACH OF THE BORROWERS HEREBY EXPRESSLY AND IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY
SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.

      

      THE LENDER AND EACH OF THE BORROWERS,
AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, EACH
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE IRREVOCABLY, ANY RIGHT TO A TRIAL
BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS
NOTE, THE LOAN AGREEMENT OR ANY OTHER LOAN DOCUMENT, ANY OF THE OTHER
OBLIGATIONS, THE COLLATERAL, OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR NOTE
DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR
THEREWITH OR ARISING FROM ANY LENDING RELATIONSHIP EXISTING IN CONNECTION WITH
ANY OF THE FOREGOING, OR ANY COURSE OF CONDUCT OR COURSE OF DEALING IN WHICH THE
LENDER AND ANY OF THE BORROWERS ARE ADVERSE PARTIES, AND EACH AGREE THAT ANY
SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A
JURY.  THIS PROVISION IS A MATERIAL 

       

      
        
          
          

        

        
          A-2

          
            

          

        

        
          
          

        

      

      INDUCEMENT
FOR THE LENDER GRANTING ANY FINANCIAL ACCOMMODATION TO THE
BORROWERS.

      

      [signature
page attached]

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      
 

      
        
          
            
               

            

             

          

          
            A-3

            
              

            

          

          
             

          

        

      

      

      IN WITNESS WHEREOF, this
Revolving Note has been duly executed as of the day and year first written
above.

      

      

      
        	
                 
      

              	
                LIFEWAY
      FOODS, INC.

              

      

      

      

      
        By:
___________________________________

      

      
        Title:__________________________________

      

       

      FRESH
MADE, INC.

      

      By:  ___________________________________

      Title:
__________________________________

       

      LFI
ENTERPRISES, INC.

      

      By:  ___________________________________

      Title:
__________________________________

       

      HELIOS
NUTRITION LIMITED

      

      By:  ___________________________________

      Title:
__________________________________

       

      PRIDE OF
MAIN STREET DAIRY, LLC

      

      By:  ___________________________________

      Title:
__________________________________

       

      STARFRUIT,
LLC

      

      By:  ___________________________________

      Title:
__________________________________

      

      
        
          
            
               

            

             

          

          
            A-4

            
              

            

          

          
             

          

        

      

      

      EXHIBIT
B

      

      Form of
Term Note

      

 

       

       

       

      
 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      TERM
NOTE

       

      

       

      
        	$7,600,000 	
                Chicago,
      Illinois

                February
      _, 2009 

              

      

       

      FOR VALUE RECEIVED, the
undersigned (the “Borrowers”), jointly and
severally,  promise to pay to the order of The PrivateBank and Trust
Company (the “Lender”),
at the Lender’s office at 120 South LaSalle Street, Chicago, Illinois 60603, or
such other place as Lender may designate from time to time hereafter, the
principal sum of Seven Million Six Hundred Thousand and 00/100 Dollars
($7,600,000.00), payable as set forth in the that certain Loan and Security
Agreement dated of even date herewith by and among Borrowers and Lender (herein,
as the same may be amended, modified or supplemented, the “Loan
Agreement”).  The final payment of all then outstanding
principal and interest on the Loan shall be due on the Term Loan Maturity
Date.  All capitalized terms used herein without definition shall have
the same meanings herein as such terms are given in the Loan
Agreement.

      

      This Note evidences the Term Loan made
to Borrowers by the Lender under the Loan Agreement, and Borrowers hereby
promise to pay interest at the office described above on the Loan evidenced
hereby at the rates and at the times and in the manner specified therefor in the
Loan Agreement.

      

      The Loan evidenced hereby and any
repayment of principal hereon, shall be recorded by the Lender on Lender’s books
and records.  Borrowers agree that in any action or proceeding
instituted to collect or enforce collection of this Note, the entries so
recorded on the books and records of the Lender shall, absent demonstrable error
be conclusive evidence of the amount of the Loans made by Lender to Borrowers
and the interest and payments thereon.

      

      This Note is issued by Borrowers under
the terms and provisions of the Loan Agreement and is secured by, among other
things, the Collateral and the Loan Documents and this Note and the holder
hereof is entitled to all of the benefits and security provided for
thereby.  This Note may be declared to be, or be and become, due prior
to its expressed maturity, voluntary prepayments may be made hereon, and certain
prepayments are required to be made hereon, all in the events,
on the terms and with the effects provided in the Loan
Agreement.

      

      All of Lender’s rights and remedies are
cumulative and non-exclusive.  The acceptance by Lender of any partial
payment made hereunder after the time when any of the Obligations hereunder
become due and payable will not establish a custom, or waive any rights of
Lender to enforce prompt payment thereof.  Lender’s failure to require
strict performance by Borrowers of any provision of this Note shall not waive,
affect or diminish any right of Lender thereafter to demand strict compliance
and performance therewith.  Any waiver of an Event of Default
hereunder shall not suspend, waive or affect any other Event of Default
hereunder.  Except as provided in the Loan Agreement, each Borrower
and every endorser waives presentment, demand and protest and notice of
presentment, protest, default, non-payment, maturity, release, compromise,
settlement, extension or renewal of this Note.  Except as provided in
the Loan Agreement, each Borrower further waives any and all notice or demand to
which such Borrower 

       

      
        
          
          

        

        
          B-1

          
            

          

        

        
          
          

        

      

      might be
entitled with respect to this Note by virtue of any applicable statute or law
(to the extent permitted by law).

      

      THIS NOTE SHALL BE DELIVERED AND
ACCEPTED IN AND SHALL BE DEEMED TO BE CONTRACTS MADE UNDER AND GOVERNED BY THE
INTERNAL LAWS OF THE STATE OF ILLINOIS (BUT GIVING EFFECT TO FEDERAL LAWS
APPLICABLE TO NATIONAL BANKS) APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED
ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES.

      

      ANY LITIGATION BASED HEREON, OR ARISING
OUT OF, UNDER, OR IN CONNECTION WITH THIS NOTE OR ANY OTHER LOAN DOCUMENT, SHALL
BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF ILLINOIS OR
IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS;
PROVIDED THAT NOTHING IN THIS NOTE SHALL BE DEEMED OR OPERATE TO PRECLUDE THE
LENDER FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER
JURISDICTION.  EACH OF THE BORROWERS HEREBY EXPRESSLY AND IRREVOCABLY
SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS AND OF THE
UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS FOR THE
PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE.  EACH OF THE
BORROWERS FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED
MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF
ILLINOIS.  EACH OF THE BORROWERS HEREBY EXPRESSLY AND IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY
SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.

      

      THE LENDER AND EACH OF THE BORROWERS,
AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, EACH
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE IRREVOCABLY, ANY RIGHT TO A TRIAL
BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS
NOTE, THE LOAN AGREEMENT OR ANY OTHER LOAN DOCUMENT, ANY OF THE OTHER
OBLIGATIONS, THE COLLATERAL, OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR NOTE
DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR
THEREWITH OR ARISING FROM ANY LENDING RELATIONSHIP EXISTING IN CONNECTION WITH
ANY OF THE FOREGOING, OR ANY COURSE OF CONDUCT OR COURSE OF DEALING IN WHICH THE
LENDER AND ANY OF THE BORROWERS ARE ADVERSE PARTIES, AND EACH AGREE THAT ANY
SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A
JURY.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE BANK GRANTING
ANY FINANCIAL ACCOMMODATION TO THE BORROWERS.

      

      [signature
page attached]

       

      
        
          
          

        

        
          B-2

          
            

          

        

        
          
          

        

      

      IN WITNESS WHEREOF, this Term
Note has been duly executed as of the day and year first written
above.

      

      

      
        LIFEWAY
FOODS, INC.

      

      

      

      
        By:
___________________________________

      

      
        Title:__________________________________

      

       

      FRESH
MADE, INC.

      

      By:  ___________________________________

      Title:
__________________________________

       

      LFI
ENTERPRISES, INC.

      

      By:  ___________________________________

      Title:
__________________________________

       

      HELIOS
NUTRITION LIMITED

      

      By:  ___________________________________

      Title:
__________________________________

       

      

      PRIDE OF
MAIN STREET DAIRY, LLC

      

      By:  ___________________________________

      Title:
__________________________________

       

      STARFRUIT,
LLC

      

      By:  ___________________________________

      Title:
__________________________________

       

      
 

      
        
          
          

        

        
          B-3

          
            

          

        

        
          
          

        

      

      EXHIBIT
C

      

      Form of
Borrowing Base Certificate

      

      
 

       

       

       

       

       

       

       

       

       

       

       

      
 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      BORROWING
BASE CERTIFICATE

      FOR

      LOAN
AND SECURITY AGREEMENT

      DATED
FEBRUARY _, 2009 (“AGREEMENT”) BY AND AMONG

      

      LIFEWAY
FOODS, INC.

      FRESH
MADE, INC.

      LFI
ENTERPRISES, INC.

      HELIOS
NUTRITION LIMITED

      PRIDE
OF MAIN STREET DAIRY, LLC

      STARFRUIT,
LLC

      

      AND

      

      THE
PRIVATEBANK AND TRUST COMPANY

      

      
        

      

      BORROWING BASE
COMPUTATION

      

      I.    ACCOUNTS
RECEIVABLE

      

      
        	
                (a)

              	
                Billed
      Accounts Receivable

              	
                $__________

              

      

      

      Less:

      
        	
                
                

              	
                Over
      60 days

              	
                $__________

              

      

      
        	
                
                

              	
                25%Rule,
      +60 days

              	
                $__________

              

      

      
        	
                
                

              	
                Contra
      accounts 

              	
                $__________

              

      

      
        	
                
                

              	
                Government
      Contracts 

              	
                $__________

              

      

      
        	
                
                

              	
                Foreign
      Accounts 

              	
                $__________

              

      

      
        	
                
                

              	
                Subject
      to other Liens

              	
                $__________

              

      

      
        	
                
                

              	
                Affiliate
      Accounts 

              	
                $__________

              

      

      
        	
                
                

              	
                Other
      exclusions 

              	
                $__________

              

      

       

      
        
          	
                   

                	
                   

                	
                  $__________

                

        

      

      
        
          	
                  (b)

                	
                  Total
      of Eligible Receivables

                	
                  $__________

                

          
            	
                    (c)

                  	
                    80%
      of (b)

                  	
                    $__________

                  

          

        

      

      

      II.           INVENTORY

       

      
        
          	
                  (a)

                	
                  Inventory

                	
                  $__________

                

        

         

      

      Less:

      
        	
                
                

              	
                Damaged
      or Defective

              	
                $__________

              

        
          	
                  
                  

                	
                  
                    Consigned,
      in transit, bill

                    of
      lading

                  

                	
                  $__________

                

        

         

        
          
            
            

          

          
            C-1

            
              

            

          

          
            
            

          

        

        
          	
                  
                  

                	
                  
                    Inventory
      not located at

                    Eligible
      collateral location

                  

                	
                  $__________

                

        

        
          	
                  
                  

                	
                  Other
      exclusions 

                	
                  $__________

                

        

        
        

        
        

        
        

        
        

      

       

      
        
          
            	
                     

                  	
                     

                  	
                    $__________

                  

          

        

        
          
            	
                    (b)

                  	
                    Total
      of Eligible Inventory

                  	
                    $__________

                  

            
              	
                      (c)

                    	
                      Lesser
      of 50% of (b) or $2,000,000

                    	
                      $__________

                    

            

          

        

      

       

      
        
          
            	
                    III.

                  	
                    
                      “AVAILABILITY”,
      lesser of I (c) + II (c) minus
      $100,000

                      environmental
      reserve for the Niles Property

                      and
      Revolving Loan Commitment 

                    

                  	
                    $__________

                  

          

           

        

        
          
            	
                    IV.

                  	
                    
                      
                        OUTSTANDING
      REVOLVING LOANS

                        &
      LETTER OF CREDIT OBLIGATIONS

                      

                    

                  	
                    $__________

                  

            
               

            

          

        

      

      
        	
                V.

              	
                
                  
                    
                      AVAILABILITY
      REMAINING

                      (III
      minus IV)

                    

                  

                

              	
                $__________

              

        
           

        

      

      Except as
specifically described herein, the undersigned represent and warrant that: the
above Borrowing Base Certificate is true and accurate as of the date appearing
hereinabove; no “Event of Default” or “Unmatured Event of Default” as defined in
the Agreement, pursuant to which this Borrowing Base Certificate is executed,
has occurred and is continuing on the date hereof and the individual signing
this Certificate on its behalf is authorized to do so.  Terms in
quotation marks are used as defined in such Agreement.

      

      [signature
page attached]

       

      
 

      
 

      
        
          
          

        

        
          C-2

          
            

          

        

        
          
          

        

      

      IN WITNESS WHEREOF, the
undersigned has caused this Borrowing Base Certificate to be executed and
delivered by its duly authorized representative as of the date set forth
below.

      

      

      
         
LIFEWAY
FOODS, INC.

      

      

      

      
        By:
___________________________________

      

      
        Title:__________________________________

      

       

      FRESH
MADE, INC.

      

      By:  ___________________________________

      Title:
__________________________________

       

      LFI
ENTERPRISES, INC.

      

      By:  ___________________________________

      Title:
__________________________________

       

      HELIOS
NUTRITION LIMITED

      

      By:  ___________________________________

      Title:
__________________________________

       

      PRIDE OF
MAIN STREET DAIRY, LLC

      

      By:  ___________________________________

      Title:
__________________________________

       

      STARFRUIT,
LLC

      

      By:  ___________________________________

      Title:
__________________________________

       

      

      
 

      
 

      
        
          
          

        

        
          C-3

          
            

          

        

        
          
          

        

      

      EXHIBIT
D

      

      Form of
Compliance Certificate

      
 

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      
 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      COMPLIANCE
CERTIFICATE

      FOR

      LOAN
AND SECURITY AGREEMENT

      dated
February _, 2009 by and among

      

      LIFEWAY
FOODS, INC.

      FRESH
MADE, INC.

      LFI
ENTERPRISES, INC.

      HELIOS
NUTRITION LIMITED

      PRIDE
OF MAIN STREET DAIRY, LLC

      STARFRUIT,
LLC

      

      AND

      

      THE
PRIVATEBANK AND TRUST COMPANY

      
        

      

      

      I.    MINIMUM
TANGIBLE NET WORTH (Section 10.1):

      

      1.           Tangible
Net Worth as of December 31,
200_                                                                      $__________

      

      2.           30%
of Net Income for fiscal year
ended                                                                               $__________

      as of December 31, 200_

      

      3.           Minimum
Tangible Net Worth Required [(1) plus
(2)]                                                        $__________

      

      4.           Actual
Tangible Net Worth as of ______ __,
200_                                                            $__________

      

      Covenant
in
Compliance?                                                                                                                       
__________

      

      

      
        	
                II.

              	
                FIXED CHARGE COVERAGE RATIO
      (Section
      10.2):1

              

      

      

      1.           EBITDA                                                                                                          
$__________

      

      2.            
Minus:  Permitted Distributions, stock

      Purchases
and redemptions and other

      Cash
Distributions,                                                                                    
 $__________

      Unfinanced
Capital
Expenditures                                                              $­­­__________

      Cash
Taxes                                                                                                  
 $__________

      3.            
Total From Line Item
2                                                                                 $__________

      

      4.           Remainder
of (1) minus
(3)                                                                            $__________

      

      5.           Interest
Charges                                                                                          
  $__________

       

      
        
          
            

          

          1 To be
tested quarterly commencing the quarter ended _______, 2009.

      

      
        
          
          

        

        
          D-1

          
            

          

        

        
          
          

        

      

      6.           Principal
Payments for Funded
Debt                                                          $__________

      

      7.           Capitalized
Lease Obligation
Payments                                                      $___________

      

      8.           Sum
of (5), (6) and
(7)                                                                                    
$___________

      

      9.           Ratio
of (4) to (8)        _____ to
1

      

      10.           Minimum
Required   1.1 to 1

      

      Covenant
in
Compliance?                                                                                                      __________

      

      III.  MAXIMUM
CAPITAL EXPENDITURES (SECTION 10.3):

      

      1.           Capital
Expenditures during prior
12-months                                             $__________

      

      2.           Minimum
Capital Expenditures
Permitted                                                   $___________

      

      Covenant
in
Compliance?                                                 
                                                   __________

      

      

      

      This
Compliance Certificate is being delivered pursuant to Section 8.13 of that
certain Loan and Security Agreement dated as of February _, 2009 (the “Loan Agreement”) by and among
Lifeway Foods, Inc, an Illinois corporation (“Lifeway”), Fresh Made, Inc., a
Pennsylvania corporation (“FMI”), LFI Enterprises, Inc.,
an Illinois corporation (“LFI”), Helios Nutrition
Limited, a Minnesota corporation (“Helios”), Pride of Main Street
Dairy, LLC, a Minnesota limited liability company (“Main Street”), and Starfruit,
LLC, an Illinois limited liability company (“Starfruit”; Lifeway, FMI, LFI,
Helios, Main Street and Starfruit are hereinafter collectively referred to as
the “Borrowers”).  Capitalized
terms used herein which are not defined shall have the meanings ascribed to them
in the Loan Agreement.  Except as specifically described herein, the
Borrowers represent and warrant to Lender that: the above Compliance Certificate
is true and accurate as of the date hereof for the Borrower’s fiscal quarter
ended _________, 20__; no “Event of Default” or “Unmatured Event of Default” as
defined in the Agreement, pursuant to which this Compliance Certificate is
executed, has occurred and is continuing on the date hereof and the individual
signing this Compliance Certificate on its behalf is authorized to do
so.

      

      [signature
page attached]

       

      
        
          
          

        

        
          D-2

          
            

          

        

        
          
          

        

      

      IN WITNESS WHEREOF, the
undersigned has caused this Compliance Certificate to be executed and delivered
by its duly authorized representative as of the date set forth
below.

      

      

      
        LIFEWAY
FOODS, INC.

      

      

      

      
        By:
___________________________________

      

      
        Title:__________________________________

      

       

      FRESH
MADE, INC.

      

      By:  ___________________________________

      Title:
__________________________________

       

      LFI
ENTERPRISES, INC.

      

      By:  ___________________________________

      Title:
__________________________________

       

      HELIOS
NUTRITION LIMITED

      

      By:  ___________________________________

      Title:
__________________________________

       

      PRIDE OF
MAIN STREET DAIRY, LLC

      

      By:  ___________________________________

      Title:
__________________________________

       

      STARFRUIT,
LLC

      

      By:  ___________________________________

      Title:
__________________________________

       

      
 

      
 

      
        
          
          

        

        
          D-3

          
            

          

        

        
          
          

        

      

      EXHIBIT
E

      

      Form of
Notice of Borrowing

      
 

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      
 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      LIFEWAY
FOODS, INC.

      FRESH
MADE, INC.

      LFI
ENTERPRISES, INC.

      HELIOS
NUTRITION LIMITED

      PRIDE
OF MAIN STREET DAIRY, LLC

      STARFRUIT,
LLC

      C/O
6431 WEST OAKTON STREET

      MORTON
GROVE, ILLINOIS  60053

      

      

      

      February
_, 2009

      

      

      

      The
PrivateBank and Trust Company

      120 South
LaSalle Street

      Chicago,
Illinois  60603

      

      To Whom
It May Concern:

      

      Reference
is made to that certain made to that certain Loan and Security Agreement dated
as of February _, 2009 (the “Agreement”) among by and among
Lifeway Foods, Inc, an Illinois corporation (“Lifeway”), Fresh Made, Inc., a
Pennsylvania corporation (“FMI”), LFI Enterprises, Inc.,
an Illinois corporation (“LFI”), Helios Nutrition
Limited, a Minnesota corporation (“Helios”), Pride of Main Street
Dairy, LLC, a Minnesota limited liability company (“Main Street”), and Starfruit,
LLC, an Illinois limited liability company (“Starfruit”; Lifeway, FMI, LFI,
Helios, Main Street and Starfruit are hereinafter collectively referred to as
the “Borrowers”).  Capitalized
terms used herein which are not defined shall have the meanings ascribed to them
in the Agreement.

      

      Borrowers
hereby request that the Lender disburse the proceeds of the Revolving Loan and
Term Loan in the manner specified on Exhibit A attached
hereto and incorporated herein by reference.

      

      Very
truly yours,

      

      

      
        LIFEWAY
FOODS, INC.

      

      

      

      
        By:
___________________________________

      

      
        Title:__________________________________

      

       

      

       

      
        
          
          

        

        
          E-1

          
            

          

        

        
          
          

        

      

      FRESH
MADE, INC.

      

      By:  _________________________________

      Title:
________________________________

       

      LFI
ENTERPRISES, INC.

      

      By:  _________________________________

      Title:
________________________________

       

      HELIOS
NUTRITION LIMITED

      

      By:  _________________________________

      Title:
________________________________

       

      PRIDE OF
MAIN STREET DAIRY, LLC

      

      By:  _________________________________

      Title:
________________________________

       

      STARFRUIT,
LLC

      

      By:  _________________________________

      Title:
________________________________

       

      

 

      
        
          
          

        

        
          E-2

          
            

          

        

        
          
          

        

      

      EXHIBIT
A

      

      DISBURSEMENT
DIRECTIONS

      

      

      

      Term
Loan:

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      Revolving
Loan:

      

      
 

      
 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      EXHIBIT
F

      

      Form of
Notice of Notice of Conversion/Continuation

      
 

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      
 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      NOTICE OF
CONVERSION/CONTINUATION

       

      To:                      The
PrivateBank and Trust Company, as Lender

       

      Reference
is made to that certain Loan and Security Agreement dated as of February _, 2009
(the “Loan Agreement”)
by and among by and among Lifeway Foods, Inc, an Illinois corporation (“Lifeway”), Fresh Made, Inc., a
Pennsylvania corporation (“FMI”), LFI Enterprises, Inc.,
an Illinois corporation (“LFI”), Helios Nutrition
Limited, a Minnesota corporation (“Helios”), Pride of Main Street
Dairy, LLC, a Minnesota limited liability company (“Main Street”), and Starfruit,
LLC, an Illinois limited liability company (“Starfruit”; Lifeway, FMI, LFI,
Helios, Main Street and Starfruit are hereinafter collectively referred to as
the “Borrowers”)and The
PrivateBank and Trust Company (“Lender”).  Terms
used but not otherwise defined herein are used herein as defined in the Loan
Agreement.

       

      The
Borrowers hereby gives irrevocable notice to Lender, pursuant to Section 5.1 of
the Loan Agreement, of their request to:

       

      
        	
                ·  

              	
                disburse
      as a LIBOR Loan, $____________ of the Term Loan being requested pursuant
      to the notice of borrowing of even date herewith with an Interest Period
      of _____________ months and $____________ of the Revolving Loan being
      requested pursuant to the notice of borrowing of even date herewith with
      an Interest Period of _____________
months;

              

      

       

      
        	
                ·  

              	
                on
      [    date    ] convert
      $[________]of the aggregate outstanding principal amount of the [_______]
      Loan, bearing interest at the [________] Rate, into a(n) [________] Loan
      [and, in the case of a LIBOR Loan, having an Interest Period of [_____]
      month(s)];

              

      

       

      
        	
                ·  

              	
                on
      [    date    ] continue
      $[________]of the aggregate outstanding principal amount of the [_______]
      Loan, bearing interest at the LIBOR Rate, as a LIBOR Loan having an
      Interest Period of [_____]
month(s)].

              

      

       

      

      The
undersigned hereby represents and warrants that all of the conditions contained
in Section 3 of the Loan Agreement have been satisfied on and as of the date
hereof, and will continue to be satisfied on and as of the date of the
conversion/continuation requested hereby, before and after giving effect
thereto.

      

      The Borrowers have caused this Notice
of Conversion/Continuation to be executed and delivered by its officer thereunto
duly authorized on ___________, 20__.

      

      [signature
page attached]

       

       

      
        
          
          

        

        
          F-1

          
            

          

        

        
          
          

        

      

      IN WITNESS WHEREOF, the
undersigned has caused this Notice of Conversion/Continuation to be executed and
delivered by its duly authorized representative as of the date set forth
above.

      

      

      
        LIFEWAY
FOODS, INC.

      

      

      

      
        By:
___________________________________

      

      
        Title:__________________________________

      

       

      FRESH
MADE, INC.

      

      By:  ___________________________________

      Title:
__________________________________

       

      LFI
ENTERPRISES, INC.

      

      By:  ___________________________________

      Title:
__________________________________

       

      HELIOS
NUTRITION LIMITED

      

      By:  ___________________________________

      Title:
__________________________________

       

      PRIDE OF
MAIN STREET DAIRY, LLC

      

      By:  ___________________________________

      Title:
__________________________________

       

      STARFRUIT,
LLC

      

      By:  ___________________________________

      Title:
__________________________________

       

      
 

      
 

      
        
          
          

        

        
          F-2

          
            

          

        

        
          
          

        

      

      SCHEDULE
6.1

      

      Excluded
Collateral

      

      

      

      Real
property owned by Freshmade and located at 810-820 Bleigh Avenue, Philadelphia,
Pennsylvania.

      

      

      

      The
following Morgan Stanley accounts and amounts held therein:

      

      

      Lifeway
Foods,
Inc.                                                      Account
No. xxx-xxx-xxxxx-xxx

      Lifeway
Foods,
Inc.                                                      Account
No. xxx-xxx-xxxxx-xxx

      Lifeway
Foods,
Inc.                                                      Account
No. xxx-xxx-xxxxx-xxx

      Lifeway
Foods,
Inc.                                                      Account
No. xxx-xxx-xxxxx-xxx

      Lifeway
Foods,
Inc.                                                      Account
No. xxx-xxx-xxxxx-xxx

      Lifeway
Foods,
Inc.                                                      Account
No. xxx-xxx-xxxxx-xxx

      Lifeway
Foods,
Inc.                                                      Account
No. xxx-xxx-xxxxx-xxx

      Lifeway
Foods,
Inc.                                                      Account
No. xxx-xxx-xxxxx-xxx

      

      

      The
following Wachovia accounts and amounts held therein:

      

      Lifeway Foods,
Inc.                                                      Account
No. xxxx-xxxx  

      Lifeway Foods,
Inc.                                                      Account
No. xxxx-xxxx

      

      
 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      SCHEDULE
7.1

      

      Borrower
Organization Identification Numbers

      

      

        
          
            	
                    Borrower

                  	
                    Jurisdiction

                  	
                    Organization Identification
      Number

                  
	 
      	 
      	 
      
	
                    Lifeway
      Foods, Inc.

                  	
                    Illinois

                  	
                    5425-124-6

                  
	
                    Fresh
      Made, Inc.

                  	
                    Pennsylvania

                  	
                    822425

                  
	
                    LFI
      Enterprises, Inc.

                  	
                    Illinois

                  	
                    5700-566-1

                  
	
                    Helios
      Nutrition Limited

                  	
                    Minnesota

                  	
                    9P-79

                  
	
                    Pride
      of Main Street Dairy, LLC

                  	
                    Minnesota

                  	
                    18391-LLC

                  
	
                    Starfruit,
      LLC

                  	
                    Illinois

                  	
                    02155133

                  

          

        

      
 

      
 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      SCHEDULE
7.6

      

      Capital
Securities

      

      
        
          
            	
                    Borrower

                  	
                    #
      of Authorized Shares

                  	
                    #
      of Issued Shares

                  
	
                    Lifeway
      Foods, Inc.

                  	
                    22,500,000

                  	
                    16,867,890*

                  
	
                    Fresh
      Made, Inc.

                  	
                    10,000

                  	
                    10,000

                  
	
                    LFI
      Enterprises, Inc.

                  	
                    1,000,000

                  	
                    1,000

                  
	
                    Helios
      Nutrition Limited

                  	
                    15,000,000

                  	
                    809,888

                  

          

        

      

      *Weighted
average number of shares outstanding as of the 9 month period ending September
30, 2008.

      

      
        
          
            
              
                	
                        Borrower

                      	
                        #
      of

                        Membership
      Interests

                      
	
                        Pride
      of Main Street Dairy, LLC

                      	
                        3,433,400

                      
	
                        Starfruit,
      LLC

                      	
                        100

                      

              

            

          

        

      

      

      

      
 

       

       

       

       

       

       

      
 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      SCHEDULE
7.9

      

      Litigation
and Contingent Liabilities

      

      

      None.

      
 

       

       

       

       

       

       

      
 

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      SCHEDULE
7.12

      

      Environmental
Matters

      

      1.           Phase
I Environmental Site Assessment of 6431 West Oakton Street, Morton Grove,
Illinois, prepared by The English Company, dated as of October 20, 2008,
and known as Project No. 2718-544.

      

      2.           Limited
Subsurface Investigation of 6431 West Oakton Street, Morton Grove, Illinois,
prepared by The English Company, dated as of December 30, 2008, and known
as Project No. 2751-554.

      

      3.           Phase
I Environmental Site Assessment of 6101 Gross Point Road, Niles, Illinois,
prepared by Advanced Environmental Corporation, dated as of July 6, 2005,
and known as Project No. 05.21080092.

      

      4.           Phase
I Environmental Site Assessment of 7625 North Austin Avenue, Skokie, Illinois,
prepared by The English Company, dated as of October 20, 2008, and known as
Project No. 2717-544.

      

      5.           Phase
I Environmental Site Assessment and Limited Environmental Compliance Review of
810-820 Bleigh Avenue, Philadelphia, Pennsylvania, prepared by Environ
International Corporation, dated as of November, 2008, and known as Project No.
02-21727A.

      

      6.           Geophysical
Investigation Report of 810-820 Bleigh Avenue, Philadelphia, Pennsylvania,
prepared by Enviroprobe Service, Inc., dated as of December 12,
2008.

      

      7.           Letter
from Environ International Corporation, dated as of January 6, 2009, and
addressed to Ted Esborn, Esq. of McDonald Hopkins, with respect to 810-820
Bleigh Avenue, Philadelphia, Pennsylvania.

      

      8.           Letter
from Environ International Corporation, dated as of December 8, 2008, and
addressed to Ted Esborn, Esq. of McDonald Hopkins, with respect to 810-820
Bleigh Avenue, Philadelphia, Pennsylvania.

      

      9.           Letter
from Environ International Corporation, dated as of December 15, 2008, and
addressed to Ted Esborn, Esq. of McDonald Hopkins, with respect to 810-820
Bleigh Avenue, Philadelphia, Pennsylvania.

      

      10.         Phase
I Environmental Site Assessment of 214 Main Street South, Sauk Centre,
Minnesota, prepared by Widseth Smith Nolting, dated as of April, 2000, and known
as WSN No. 260B676.

      

      
 

      
 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      SCHEDULE
7.22

      

      Deposit
Accounts

      

      

      

      
        
          
            
              	
                      Lifeway
      Foods, Inc.

                    	
                      MB
      Financial, Chicago, IL2

                      The
      Private Bank, 70 West Madison, Chicago, IL

                    	
                      xxxxxxxxxx

                      xxxxxxx

                    	
                      Business
      checking

                      Business
      Checking

                    
	
                      Fresh
      Made, Inc.

                    	
                      PNC
      Bank, Pittsburgh, PA

                      Wachovia,
      Philadelphia, PA

                      VIST
      Bank, Leesport, PA 19533

                      VIST
      Same

                    	
                      xx-xxxx-xxxx

                      xxxxxxxxxxxxx

                      xxxxxxxxxx

                      xx-x;
      xx-x

                    	
                      Business
      Checking

                      Business
      Checking

                      Checking

                      CD’s

                    
	
                      LFI
      Enterprises

                    	
                      Citizens
      Bank, Philadelphia, PA

                    	
                      xxxxxx-xxx-x

                    	
                      Business
      Checking

                    
	
                      Pride
      of Main Street Dairy

                    	
                      Minnesota
      National Bank, 235 Main St, Sauk Centre MN, 56378

                    	
                      xxxxxxx

                    	
                      Business
      Checking

                    
	
                      Helios
      Nutrition

                    	
                      None

                    	 
      	 
      
	
                      Starfruit
      LLC

                    	
                      MB
      Financial, Chicago IL

                    	
                      xxxxxxxxxx

                    	
                      Business
      Checking

                    

            

          

        

      

      
 

      
        
          

        

        2 This account
will be closed within 60 days of initial closing.

      

      
 

      
 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      SCHEDULE
7.23

      

      Location
of All Collateral

      

      

      
        
          
            	
                    Lifeway
      Foods, Inc.

                  	
                    6431
      W. Oakton St. Morton Grove IL, 60053 Cook

                    6101
      W. Gross Point Rd, Niles IL

                    7625
      N. Austin Ave, Skokie IL,  60077 Cook

                    214
      Main Street S. Sauk Centre MN, 56378

                     5201
      N. Harbison Ave, Philadelphia, PA 19012

                  
	
                    Fresh
      Made, Inc.

                  	
                    810
      Bleigh St. Philadelphia PA, 19111

                  
	
                    Pride
      of Main Street Dairy

                  	
                    214
      Main Street S. Sauk Centre MN, 56378

                  
	
                    Helios
      Nutrition

                  	
                    214
      Main Street S. Sauk Centre MN, 56378

                  
	
                    Starfruit
      LLC

                  	
                    1745
      W. Division St, Chicago IL 60612

                  
	
                    LFI
      Enterprises

                  	
                    5201
      N. Harbison Ave, Philadelphia, PA
19012

                  

          

        

      

      

      

      
 

      
 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      SCHEDULE
7.27

      

      Real
Property

      

      

      

      

      

      
        
          
            
              	
                      Lifeway
      Foods, Inc.

                    	
                      6431
      W. Oakton St. Morton Grove IL, 60053 Cook

                      6101
      W. Gross Point Rd, Niles IL

                      7625
      N. Austin Ave, Skokie IL,

                       

                    	
                      Owned

                       

                       

                       

                       

                       

                       

                       

                    	
                      Lifeway
      Foods Inc

                       

                       

                       

                       

                       

                       

                    
	
                      Fresh
      Made, Inc.

                    	
                      810
      Bleigh St. Philadelphia PA, 19111

                    	
                      Owned

                    	
                      Freshmade
      Inc

                    
	
                      LFI
      Enterprises

                    	
                      LFI
      Enterprises, 5201 N. Harbison Ave, Philadelphia, PA

                       

                    	
                      Leased

                    	
                      Michael
      Kofman

                    
	
                      Pride
      of Main Street Dairy

                    	
                      214
      Main Street S, Sauk Centre MN, 56378

                    	
                      Owned

                    	
                      Pride
      of Main Street Dairy

                    
	
                      Helios
      Nutrition

                    	
                      None

                    	 
      	 
      
	
                      Starfruit
      LLC

                    	
                      1745
      W. Division St. Chicago, IL 60612

                    	
                      Leased

                    	
                      John
      Leydon- Ruby Room

                    
	
                      Starfruit
      LLC

                    	
                      2142
      North Halsted, Chicago, IL 60614

                    	
                      Leased

                    	 
      

            

          

        

      

      

      
 

      
 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      SCHEDULE
8.23

      

      Excluded
Bank Accounts

      

      

      

      
        
          
            	
                    Lifeway
      Foods, Inc.

                  	
                    MB
      Financial, Chicago, IL

                  	
                    xxxxxxxxxx

                  	
                    Business
      checking

                  
	
                    Fresh
      Made, Inc.

                  	
                    PNC
      Bank, Pittsburgh, PA

                    Wachovia,
      Philadelphia, PA

                    VIST
      Bank, Leesport, PA 19533

                    VIST
      Same

                  	
                    xx-xxxx-xxxx

                    xxxxxxxxxxxxx

                    xxxxxxxxxx

                    xx-x;
      xx-x

                  	
                    Business
      Checking

                    Business
      Checking

                    Checking

                    CD’s

                  
	
                    LFI
      Enterprises

                  	
                    Citizens
      Bank, Philadelphia, PA

                  	
                    xxxxxx-xxx-x

                  	
                    Business
      Checking

                  
	
                    Pride
      of Main Street Dairy

                  	
                    Minnesota
      National Bank, 235 Main St, Sauk Centre MN, 56378

                  	
                    xxxxxxx

                  	
                    Business
      Checking

                  
	
                    Starfruit
      LLC

                  	
                    MB
      Financial, Chicago IL

                  	
                    xxxxxxxxxx

                  	
                    Business
      Checking

                  

          

        

      

      
 

      
 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      SCHEDULE
9.1

      

      Debt

      

      None
other than the Amani-Helios Debt

      
 

      
 

       

       

       

       

       

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      SCHEDULE
9.2

      

      Permitted
Liens

      

      

      

      Lien
filed against assets of Pride of Main Street Dairy filed by First National Bank
of Sauk Centre.  Such Lien shall be released no later than March 31,
2009.

      
 

       

       

       

       

       

       

       

       

       

      
 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      SCHEDULE
9.3

      

      Investments

      

      All the
Morgan Stanley and Wachovia accounts identified on Schedule
6.1.WWW.EXFILE.COM, INC. -- 888-775-4789 -- LIFEWAY FOODS, INC. -- EXHIBIT 10.2 TO FORM 8-K

    
EXHIBIT 10.2

    
REVOLVING
NOTE

    

    
      	
              $5,000,000.00

            	
              Chicago,
      Illinois

              February
      6, 2009

            

    

    

    On the
Revolving Loan Maturity Date or on such earlier date as required by the Loan
Agreement (as defined below), FOR VALUE RECEIVED, the
undersigned (the “Borrowers”), jointly and
severally, promise to pay to the order of The PrivateBank and Trust Company (the
“Lender”) at Lender’s office at
120 South LaSalle Street, Chicago, Illinois 60603, or such other place as Lender
may designate from time to time hereafter, the principal amount of Five Million
and 00/100 Dollars ($5,000,000.00) or, if less, the aggregate unpaid principal
amount of all Loans made by Lender under the Revolving Loan pursuant to that
certain Loan and Security Agreement dated of even date herewith by and among
Borrowers and Lender (herein, as the same may be amended, modified or
supplemented, the “Loan
Agreement”) as shown on the Lender’s books and records. All capitalized
terms used herein without definition shall have the same meanings herein as such
terms are given in the Loan Agreement.

    

    This Note evidences those certain Loans
under the Revolving Loan Commitment made from time to time to Borrowers by
Lender under the Loan Agreement, and Borrowers hereby promise to pay interest at
the office described above on the Loans evidenced hereby at the rates and at the
times and in the manner specified therefor in the Loan Agreement.

    

    Repayments of principal hereon shall be
recorded by the Lender on the Lender’s books and records.  Borrowers
agree that in any action or proceeding instituted to collect or enforce
collection of this Note, the entries so recorded on a schedule to this Note or
recorded on the books and records of the Lender shall, absent demonstrable
error, be conclusive evidence of the amount of the Loans made by Lender to
Borrowers and the interest and payments thereon.

    

    This Note is issued by Borrowers under
the terms and provisions of the Loan Agreement and is secured by, among other
things, the Collateral and the Loan Documents and this Note and the holder
hereof is entitled to all of the benefits and security provided for thereby or
referred to therein, to which reference is hereby made for a statement
thereof.  This Note may be declared to be, or be and become, due prior
to its expressed maturity, voluntary prepayments may be made hereon, and certain
prepayments are required to be made hereon, all in the events, on the terms and
with the effects provided in the Loan Agreement.

    

    All of Lender’s rights and remedies are
cumulative and non-exclusive.  The acceptance by Lender of any partial
payment made hereunder after the time when any of the Obligations hereunder
become due and payable will not establish a custom, or waive any rights of
Lender to enforce prompt payment thereof.  Lender’s failure to require
strict performance by Borrowers of any provision of this Note shall not waive,
affect or diminish any right of Lender thereafter to demand strict compliance
and performance therewith.  Any waiver of an Event of Default
hereunder shall not suspend, waive or affect any other Event of Default
hereunder.  Except as provided in the Loan Agreement, each Borrower
and every endorser waives presentment, demand and protest and notice of
presentment, protest, default, non-payment, maturity, release, 

     

    
      
        
        

      

      
        A-1

        
          

        

      

      
        
        

      

    

    compromise,
settlement, extension or renewal of this Note.  Except as provided in
the Loan Agreement, each Borrower further waives any and all notice or demand to
which such Borrower might be entitled with respect to this Note by virtue of any
applicable statute or law (to the extent permitted by law)

    

    THIS NOTE SHALL BE DELIVERED AND
ACCEPTED IN AND SHALL BE DEEMED TO BE CONTRACTS MADE UNDER AND GOVERNED BY THE
INTERNAL LAWS OF THE STATE OF ILLINOIS (BUT GIVING EFFECT TO FEDERAL LAWS
APPLICABLE TO NATIONAL BANKS) APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED
ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES.

    

    ANY LITIGATION BASED HEREON, OR ARISING
OUT OF, UNDER, OR IN CONNECTION WITH THIS NOTE OR ANY OTHER LOAN DOCUMENT, SHALL
BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF ILLINOIS OR
IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS;
PROVIDED THAT NOTHING IN THIS NOTE SHALL BE DEEMED OR OPERATE TO PRECLUDE THE
LENDER FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER
JURISDICTION.  EACH OF THE BORROWERS HEREBY EXPRESSLY AND IRREVOCABLY
SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS AND OF THE
UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS FOR THE
PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE.  EACH OF THE
BORROWERS FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED
MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF
ILLINOIS.  EACH OF THE BORROWERS HEREBY EXPRESSLY AND IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY
SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.

    

    THE LENDER AND EACH OF THE BORROWERS,
AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, EACH
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE IRREVOCABLY, ANY RIGHT TO A TRIAL
BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS
NOTE, THE LOAN AGREEMENT OR ANY OTHER LOAN DOCUMENT, ANY OF THE OTHER
OBLIGATIONS, THE COLLATERAL, OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR NOTE
DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR
THEREWITH OR ARISING FROM ANY LENDING RELATIONSHIP EXISTING IN CONNECTION WITH
ANY OF THE FOREGOING, OR ANY COURSE OF CONDUCT OR COURSE OF DEALING IN WHICH THE
LENDER AND ANY OF THE BORROWERS ARE ADVERSE PARTIES, AND EACH AGREE THAT ANY
SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A
JURY.  THIS PROVISION IS A MATERIAL 

     

    
      
        
        

      

      
        A-2

        
          

        

      

      
        
        

      

    

    INDUCEMENT
FOR THE LENDER GRANTING ANY FINANCIAL ACCOMMODATION TO THE
BORROWERS.

    

    [signature
page attached]

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
 

    
      
        
           

        

         

      

      
        A-3

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, this
Revolving Note has been duly executed as of the day and year first written
above.

    

    

     

    
      	      
              
                LIFEWAY
      FOODS, INC.

              

              

              

              
                By:   /s/ Julie
      Smolyansky

                
                  
      

              

              
                Title:  
      President and CEO
      
                  
                    
      

                

              

               

              FRESH
      MADE, INC.

              

              By:  
      /s/ Edward
      Smolyansky

                    
                
      

              Title:   
      President

                    
                
      

               

              LFI
      ENTERPRISES, INC.

              

                    
                
                  By:  
      /s/ Julie
      Smolyansky

                  
                    
      

                

                
                  Title:  
      President and CEO
      
                    
                      
      

                     

                  

                

              

              HELIOS
      NUTRITION LIMITED

              

                    
                
                  By:  
      /s/ Julie
      Smolyansky

                  
                    
      

                

                
                  Title:  
      President and CEO
      
                    
                      
      

                     

                  

                

              

              PRIDE
      OF MAIN STREET DAIRY, LLC

              

                    
                
                  By:  
      /s/ Julie
      Smolyansky

                  
                    
      

                

                
                  Title:  
      President and CEO
      
                    
                      
      

                     

                  

                

              

              STARFRUIT,
      LLC

              

                    
                
                  By:  
      /s/ Julie
      Smolyansky

                  
                    
      

                

                
                  Title:  
      President and CEO
      
                    
                      
      

                     

                  

                
 

            	 

    

     

    

      
        
          
             

          

           

        

        
          A-4

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00152-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00152-of-00352.parquet"}]]