WWW.EXFILE.COM, INC. -- 888-775-4789 -- LIFEWAY FOODS, INC. -- DEFINITIVE PROXY STATEMENT
UNITED
STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C.
20549
SCHEDULE 14A
(Rule 14a-101)
Proxy
Statement Pursuant to Section 14(a)
of the
Securities Exchange Act of 1934
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the Registrant þ
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Preliminary
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Confidential,
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Rule 14a-6(e)(2))
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Definitive
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Additional Materials
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Soliciting
Material Pursuant to §240.14a-12
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LIFEWAY FOODS,
INC.
(Name of
Registrant as Specified In Its Charter)
(Name of
Person(s) Filing Proxy Statement, if other than the Registrant)
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of Filing Fee (Check the appropriate box):
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computed on table below per Exchange Act Rules 14a-6(i)(1) and
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LIFEWAY
FOODS, INC.
6431 W.
OAKTON
MORTON
GROVE, IL 60053
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD JUNE 20, 2008
TO OUR
SHAREHOLDERS:
You are
invited to be present either in person or by proxy at the Annual Meeting of
Shareholders of Lifeway Foods, Inc., an Illinois corporation (the “Company”), to
be held at the Holiday Inn North Shore, 5300 West Touhy Avenue, Skokie, Illinois
60077, on Friday, June 20, 2008 at 4:00 p.m. local time (the
“Meeting”), to consider and act upon the following:
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1.
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The
election of six Directors to serve until the next meeting or until their
successors are duly elected and qualified.
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2.
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The
ratification of the appointment of Plante & Moran, PLLC, as
independent auditors for the next fiscal year.
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3.
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The
transaction of such other business as may properly come before the Meeting
or any adjournments thereof.
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Only
shareholders of Common Stock of record at the close of business on May 23,
2008 will be entitled to notice of and to vote at the Meeting. The stock
transfer books of the Company will remain open.
WE INVITE
EACH OF YOU TO ATTEND THE MEETING. IF YOU CANNOT ATTEND, PLEASE MARK, DATE AND
SIGN THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN THE ENVELOPE PROVIDED. NO
STAMP IS NECESSARY IF MAILED IN THE UNITED STATES.
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BY
ORDER OF THE BOARD OF DIRECTORS
Ludmila
Smolyansky
Chairperson
of the Board
Skokie,
Illinois
June
2, 2008
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LIFEWAY
FOODS, INC.
PROXY
STATEMENT
PROCEDURAL
MATTERS
THIS
PROXY STATEMENT IS FURNISHED TO THE SHAREHOLDERS OF LIFEWAY FOODS, INC., AN
ILLINOIS CORPORATION (THE “COMPANY” or “LIFEWAY”), IN CONNECTION WITH THE
SOLICITATION OF PROXIES BY AND ON BEHALF OF THE BOARD OF DIRECTORS OF THE
COMPANY TO BE VOTED AT THE ANNUAL MEETING OF SHAREHOLDERS (THE “MEETING”) TO BE
HELD AT 4:00 P.M.,
LOCAL TIME, ON FRIDAY, JUNE 20, 2008, OR AT ANY ADJOURNMENT OR POSTPONEMENT
THEREOF.
Shareholders
of record of Common Stock of the Company at the close of business on
May 23, 2008 (the “Record Date”), will be entitled to notice of and to vote
at the Meeting. The Meeting will be held at the Holiday Inn North Shore, 5300
West Touhy Avenue, Skokie, Illinois 60077. Proxies received prior to the Meeting
will be voted in accordance with the instructions contained in the proxy and, if
no choice is specified, will be voted in favor of each of management’s nominees
for Director and in favor of each of management’s proposals set forth in the
Notice of Annual Meeting of Shareholders. A shareholder who signs and returns
the enclosed proxy may revoke it at any time before it is voted by a written
revocation delivered to any of the proxy holders named therein, by submitting
another valid proxy bearing a later date or by attending the Meeting and voting
in person. Beneficial owners wishing to vote at the Meeting who are not
shareholders of record on the Company’s books (e.g., persons holding in street
name) must bring to the Meeting a Power of Attorney or proxy in their favor
signed by the holder of record in order to be able to vote.
SOLICITATION
OF PROXIES
This
Proxy Statement and the form of proxy are first being mailed to the shareholders
beginning approximately June 2, 2008. All of the costs and expenses in
connection with the solicitation of proxies with respect to the matters
described herein will be borne by the Company. In addition to solicitation of
proxies by mail, the directors, officers and investor relations staff (who will
receive no compensation therefore in addition to their regular remuneration) of
the Company named herein may solicit the return of proxies by telephone,
telegram or personal interview. As of this date, the Company has retained
Computershare Investor Services (“Computershare”), an outside firm, to solicit
proxies solely from individual shareholders of record and to print proxy notices
and other related materials. The services provided by Computershare to the
Company are expected to cost approximately $3,000. The Company has also retained
Automatic Data Processing, Inc. (“ADP”), at an approximate cost of $3,000, to
contact banks, brokerage houses and other custodians, nominees and fiduciaries
with requests to forward copies of the proxy materials to their respective
principals and to request instructions for voting the proxies. The expenses of
such banks, brokerage houses and other custodians, nominees and fiduciaries in
connection therewith are covered by the estimated fee to be paid by the Company
to ADP. Action may be taken on the business to be transacted at the Meeting on
the date specified in the Notice of Meeting or on any date or dates to which
such Meeting may be adjourned.
VOTING OF
PROXIES
A form of
proxy is enclosed for use at the Meeting if a shareholder is unable to attend in
person. Each proxy may be revoked at any time thereafter by writing to the
Secretary of the Company prior to the Meeting, by execution and delivery of a
subsequent proxy, or by attendance and voting in person at the Meeting, except
as to any matter or matters upon which, prior to such revocation, a vote shall
have been cast pursuant to the authority conferred by such proxy. Shares
represented by a valid proxy which if received pursuant to this solicitation and
not revoked before it is exercised, will be voted as provided on the proxy at
the Meeting or at any adjournment or adjournments thereof. Management intends to
vote on the 8,507,269 (approximately 50.6%) of Common Stock which it controls in
favor
of the
proposals to (i) elect six Directors to serve until the next Annual Meeting
or until each of their successors is duly elected and qualified (ii) ratify
the appointment of Plante & Moran, PLLC as independent auditors for 2008,
and (iii) transact such other as may properly come before the Meeting or an
adjournment thereof.
VOTING
SECURITIES AND VOTE REQUIRED
Only
holders of the 16,761,863 shares of Common Stock, no par value per share, of
record outstanding at the close of business on May 23, 2008 (the “Record Date”),
will be entitled to vote at the Meeting. Each holder of Common Stock is entitled
to one vote for each share held by such holder. The presence, in person or by
proxy, of the holders of a majority of the outstanding shares of Common Stock is
necessary to constitute a quorum at the Meeting. Under the rules of the
Securities and Exchange Commission (the “SEC”), boxes and a designated blank
space are provided on the proxy card for shareholders to mark if they wish to
withhold authority to vote for one or more nominees for Director and for
Proposal 2. Votes withheld in connection with the election of one or more of the
nominees for Director or Proposal 2 will be counted as votes cast against such
individuals or Proposal 2 and will be counted toward the presence of a quorum
for the transaction of business. If no direction is indicated, the proxy will be
voted for the election of the nominees for Director. The form of proxy provides
for withholding of votes with respect to the election of Directors and a
shareholder present at the Meeting also may abstain with respect to such
election.
ANNUAL
REPORT ON FORM 10-KSB
This
Proxy Statement is accompanied by the Company’s Annual Report on Form 10-KSB,
for the fiscal year ended December 31, 2007, as amended (the “Annual
Report”). Shareholders are referred to the Annual Report for information
concerning the Company’s business and operations, but the Annual Report is not
part of the proxy soliciting materials.
PROPOSAL
1: ELECTION OF DIRECTORS
Six
Directors are to be elected at the Meeting. The Directors will be elected at the
Meeting to serve until the next annual meeting of shareholders of the Company or
until each of their successors shall be duly elected and qualified. As noted,
unless otherwise indicated thereon, all proxies received will be voted in favor
of the election of each of the six nominees of the Board named below as
Directors of the Company. Should any of the nominees not remain a candidate for
election at the date of the Meeting (which contingency is not now contemplated
or foreseen by the Company), proxies solicited thereunder will be voted in favor
of those nominees who do remain candidates and may be voted for substitute
nominees elected by the Board. The six nominees receiving the highest number of
affirmative votes of the shares present or represented and entitled to be voted
for them shall be elected as Directors. Votes withheld from any Director are
counted for purposes of determining the presence or absence of a quorum for the
transaction of business, but have no other legal effect under Illinois law. Each
of the nominees currently is serving as a Director of the Company.
THE BOARD
OF DIRECTORS RECOMMENDS A VOTE TO ELECT THE DIRECTORS NOMINATED HEREIN TO SERVE
AND PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR THEREOF UNLESS A
SHAREHOLDER HAS INDICATED OTHERWISE ON THE PROXY.
The names
of the nominees and certain information with regard to each nominee
follows:
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NAME
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AGE
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TITLE
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Ludmila
Smolyansky
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58
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Director
and Chairperson of the Board of Directors
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Julie
Smolyansky
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33
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CEO,
President, and Director
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Pol
Sikar
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59
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Director
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Renzo
Bernardi
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55
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Director
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Juan
Carlos Dalto
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44
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Director
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Julie
Oberweis
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33
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Director
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NOMINEES
FOR ELECTION AS DIRECTORS
LUDMILA
SMOLYANSKY was appointed as a Director by the Board to fill a vacancy created by
an increase of the maximum number of Directors up to seven and unanimously
elected as the Chairperson of the Board in November 2002. The Company has
determined to intentionally keep one seat vacant at this time, for a total of
six directors. For more than 20 years, Mrs. Smolyansky has been the
operator of several independent delicatessen, gourmet food distributorship
businesses and imported food distributorships. In 2002, prior to the
commencement of her tenure as a Director, she was hired by the Company as its
General Manager. Mrs. Smolyansky devotes as much time as necessary to the
business of the Company and currently holds no other directorships in any other
reporting company. Mrs. Smolyansky is the mother of Julie Smolyansky (the
President, Chief Executive Officer (CEO), and a Director of the Company) and
Edward P. Smolyansky (the Company Treasurer and Chief Financial and Accounting
Officer).
JULIE
SMOLYANSKY was appointed as a Director, and elected President, CEO, CFO and
Treasurer of the Company by the Board of Directors to fill the vacancies in
those positions created by the death of her father, Michael Smolyansky, in
June 2002. She is a graduate with a Bachelor’s degree from the University
of Illinois at Chicago. Prior to her appointment, Ms. Smolyansky spent six
years as the Company’s Director of Sales and Marketing. She devotes as much time
as necessary to the business of the Company and currently holds no other
directorships in any other reporting company. Ms. Smolyansky is the daughter of
Ludmila Smolyansky, the Chairperson of the Board. In 2004, Ms. Smolyansky
resigned as CFO and Treasurer and Edward Smolyansky, Ms. Smolyansky’s
brother, was appointed to such positions.
POL SIKAR
has been a Director of the Company since its inception in February 1986. He
is a graduate with a Master’s degree from the Odessa State Institute of Civil
Engineering in Russia. For more than 11 years, he has been President and a
major shareholder of Montrose Glass & Mirror Co., a company providing glass
and mirror products to the wholesale and retail trade in the greater Chicago
area. Mr. Sikar devotes as much time as necessary to the business of the
Company. Mr. Sikar holds no other directorships in any other reporting
company.
RENZO
BERNARDI has been a Director of the Company since 1994. Mr. Bernardi is the
president and founder of Renzo & Sons, Inc., a Dairy and Food Service
Company which has been in business since 1969 (formerly, Renzo-Milk Distribution
Systems). He has over 30 years of experience in the dairy distribution
industry. Mr. Bernardi is a graduate of Instituto Teonico E Commerciale of
Macomer, Sardinia. Mr. Bernardi devotes as much time as necessary to the
business of the Company. Mr. Bernardi holds no other directorships in any other
reporting company.
JUAN
CARLOS DALTO has served as a director of the Company since July 2004. Juan
Carlos Dalto is President and CEO of The Dannon Company. He has extensive
international background in the packaged goods industry and has strategic and
direct responsibilities for Dannon’s dairy products in the United States and
Canada. Mr. Dalto joined Dannon’s parent company, Groupe Danone, as
Marketing VP for Danone Argentina, his native country, in December 1997
after which he served as CEO for Danone Portugal in 2000. Mr. Dalto holds a
Masters in Strategic Marketing from Adam Smith Open University, Buenos Aires,
Argentina and a Diploma for Business Executives in Strategic Marketing Planning
from University of Michigan. He also holds a degree in Industrial Engineering
from the Buenos Aires Institute of Technology.
JULE
OBERWEIS has served as a director of the Company since June 2006.
Ms. Oberweis is the co-founder and CFO of Stratigent, LLC, a web analytics
consulting company. Prior to Stratigent, she worked in investment consulting at
Cambridge Associates as well as at Ritchie Capital, a hedge fund. She currently
sits on the board of Oberweis Group, Inc., the holding company of Oberweis
Dairy, and the DuPage Childrens Museum. Julie holds a degree in finance from the
University of Illinois and is a Chartered Financial Analyst
(CFA) charterholder.
SECTION
16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a)
of the Securities and Exchange Act of 1934 requires the Company’s officers and
Directors, and persons who own more than 10% of a registered class of the
Company’s equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission (“SEC”). Officers,
directors, and greater than 10% shareholders are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file. Based
solely on its review of copies of such reports received or representations from
certain reporting persons, the Company believes that, during the year ended
December 31, 2007, other than the filings listed below, all other Section
16(a) filing requirements applicable to its officers, Directors and 10%
shareholders were timely met. Those filings were:
Form 4
filed on behalf of Renzo Bernardi on March 12, 2007 for the sale of shares on
the earliest transaction date of March 7, 2007.
Form 4
filed on behalf of Julie Smolyansky on June 29, 2007 for the acquisition of
shares on the earliest transaction date of June 1, 2007.
Form 4
filed on behalf of Edward Smolyansky on June 29, 2007 for the acquisition of
shares on the earliest transaction date of June 1, 2007.
Form 4
filed on behalf of Pol Sikar on September 26, 2007 for six sales of shares on
the earliest transaction date of September 10, 2007.
BOARD AND
COMMITTEE MEETINGS
During
2007, the Company’s Board of Directors held four regular meetings (the Company’s
annual meeting of shareholders and Directors and three quarterly meetings). In
2007, four of six Directors attended the Company’s annual meeting. Each director
attended at least 75% of all meetings of our board of directors and committees
on which he or she served that were held during 2007. Shareholders of
the Company may send communications to the Board of Directors via the Company’s
Investor Relations department, which makes such communications available to the
Directors as appropriate, to LIFEWAY FOODS, INC., 6431 W. OAKTON, MORTON GROVE,
IL 60053, telephone (847) 967-1010, fax (847) 967-6558. The Investor
Relations department can be reach via email at: info@lifeway.net.
The
Company’s
Audit Committee consists of Mr. Sikar and Ms. Oberweis, each of whom
has an understanding of finance and accounting and is able to read and
understand fundamental financial statements. Audit Committee members are
appointed by the full Board.
The
functions of the Audit Committee are to review the Company’s internal controls,
accounting policies and financial reporting practices; to review the financial
statements, the arrangements for and scope of the independent audit, as well as
the results of the audit engagement; to review the services and fees of the
independent auditors, including pre-approval of non-audit services, the
auditors’ independence; and recommend to the Board of Directors for its approval
and for ratification by the shareholders the engagement of the independent
auditors to serve the following year in examining the accounts of the Company.
No member of the Audit Committee is a “financial expert,” as defined in
Item 407 of Regulation S-B. The Board examined the qualifications of
its Audit Committee members and determined that the present members of the Audit
Committee were sufficiently capable of performing the duties of the Audit
Committee in 2007 without being “financial experts” within the definition
provided in Item 407 of Regulation S-B promulgated by the
SEC.
At its
December 2003 meeting, the Audit Committee amended its Charter in order to
comply with the requirements set forth in Rule 4350(d) of the Nasdaq listing
standards. Among the requirements of Rule 4350(d) is that the Audit Committee
must have three members. In order to comply with the NASD listing standards the
Board is compiling information on potential candidates to fill the necessary
open seats. At present it is unknown whether the new member of the Audit
Committee shall be a “financial expert,” but potential candidates who satisfy
the “financial expert” requirements of Item 401 of Regulation S-B are
among those being considered by the Board.
The Board
of Directors does not have a standing nominating committee, compensation
committee or any committees performing similar functions. As there are only six
Directors serving on the Board, it is the view of the Board that all Directors
should participate in the process for the nomination and review of potential
Director candidates and for the review of the Company’s executive pay practices.
Accordingly, Julie Smolyansky, Ludmila Smolyansky, Renzo Bernardi, Pol Sikar,
Julie Oberweis and Juan Carlos Dalto all participate in the nominating process,
in the review of executive employment contracts and in review of the Company’s
executive compensation practices. It is the view of the Board that the
participation of all Directors in the duties of nominating and compensation
committees ensures not only as comprehensive as possible a review of Director
candidates and
executive
compensation, but also that the views of independent, employee, and shareholder
Directors are considered.
The Board
does not have any formal policy regarding the consideration of director
candidates recommended by shareholders; any recommendation would be considered
on an individual basis. The Board believes this is appropriate due to the lack
of such recommendations made in the past, and its ability to consider the
establishment of such a policy in the event of an increase of such
recommendations. The Board welcomes properly submitted recommendations from
shareholders and would evaluate shareholder nominees in the same manner that it
evaluates a candidate recommended by other means. Shareholders may submit
candidate recommendations by mail to LIFEWAY FOODS, INC., 6431 W. OAKTON, MORTON
GROVE, IL 60053. With respect to the evaluation of director nominee candidates,
the Board has no formal requirements or minimum standards for the individuals
that it nominates. Rather, the Board considers each candidate on his or her own
merits. However, in evaluating candidates, there are a number of factors that
the Board generally views as relevant and is likely to consider, including the
candidate’s professional experience, his or her understanding of the business
issues affecting the Company, his or her experience in facing issues generally
of the level of sophistication that the Company faces, and his or her integrity
and reputation. With respect to the identification of nominee candidates, the
Board has not developed a formalized process. Instead, its members and the
Company’s senior management have recommended candidates whom they are aware of
personally or by reputation.
CODE OF
ETHICS
The Board
expects the Directors, as well as officers and employees, to act ethically at
all times and to acknowledge their adherence to the policies comprising the
Company’s code of ethics set forth in Exhibit 14 to its Annual Report on Form
10-KSB for the fiscal year ended December 31, 2007. Lifeway will not make
any personal loans or extensions of credit to Directors or executive officers.
No non-employee Director may provide personal services for compensation to the
Company, other than in connection with serving as a Lifeway Director. The Board
will not permit any waiver of any ethics policy for any Director or executive
officer. If an actual or potential conflict of interest arises for a Director,
the Director shall promptly inform the CEO and the presiding Director. If a
significant conflict exists and cannot be resolved, the Director should resign.
All Directors will recuse themselves from any discussion or decision affecting
their personal, business or professional interests. The board shall resolve any
conflict of interest question involving the CEO and other Directors or officers,
and the CEO shall resolve any conflict of interest issue involving any other
officer of the company.
REPORT OF
THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit
Committee assists the Board of Directors in fulfilling its responsibility for
oversight of the quality and integrity of the accounting, auditing, internal
control and financial reporting practices of the Company. Currently, the Audit
Committee consists of Mr. Sikar and Ms. Oberweis, each of whom are
independent directors in accordance with the Securities and Exchange Act of 1934
and the Nasdaq listing standards. Each of the Audit Committee members has an
understanding of finance and accounting and is able to read and understand
fundamental financial statements. To the extent Company employees are aware of
any financial irregularities, the Audit Committee has been designated to receive
such information in a confidential manner.
The Audit
Committee reviewed and discussed the audited financial statements for the fiscal
year ended December 31, 2007 with Management and the independent auditors,
Plante & Moran, PLLC (“Plante”). Additionally, the Audit Committee discussed
with Plante matters as required by the Statement of Auditing Standards
No. 61, which included Plante’s judgments as to the quality not just the
acceptability of the financial statements, changes in accounting policies and
sensitive accounting estimates.
Plante
provided the Audit Committee with written disclosures and a letter required by
Independence Standards Board Standard No. 1 (“ISB Standard No. 1”).
ISB Standard No. 1 requires (i) Plante to disclose in writing all
relationships between Plante and related entities and the Company and its
related entities, in Plante’s professional judgment, that may reasonably be
thought to bear on independence; (ii) confirm that, in Plante’s
professional opinion, they are independent of the Company within the meaning of
the Securities Acts and (iii) discuss Plante’s independence with the Audit
Committee. The Audit Committee discussed with Plante its independent
status.
The Audit
Committee amended and restated its written charter governing its actions
effective December 17, 2003. The charter of the Audit Committee is attached
to this Proxy Statement as Appendix A. The Audit Committee reviews and
reassesses the charter annually. The Company is required to attach the charter
as an appendix to the Company’s proxy statement every three years.
Based on
the Audit Committee’s review of the year-end audited financial statements and
the various discussions noted above, the Audit Committee recommended to the
Board of Directors that the audited financial statements be included in the
Company’s Annual Report on Form 10-KSB, as amended, for the fiscal year ended
December 31, 2007.
The Audit
Committee:
Pol
Sikar, Director
Julie
Oberweis, Director
AUDIT
COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES
The
Lifeway Audit Committee (the “Committee”), comprised of Messrs. Sikar and
Ms. Oberweis, pre-approved Plante as the Company’s independent auditor for
the year-ended December 31, 2007 and has adopted the following guidelines
regarding the engagement of the Company’s independent auditor to perform
services for the Company:
For audit
services (including statutory audit engagements as required under local country
laws), the independent auditor will provide the Committee with an engagement
letter during the January-March quarter of each year outlining the scope of the
audit services proposed to be performed during the fiscal year. If agreed to by
the Committee, this engagement letter will be formally accepted by the Committee
at its first or second quarter meeting.
The
independent auditor will submit to the Committee for approval an audit services
fee proposal after acceptance of the engagement letter.
For
non-audit services, company management will submit to the Committee for approval
(during the second or third quarter of each fiscal year) the list of non-audit
services that it recommends the Committee engage the independent auditor to
provide for the fiscal year. Company management and the independent auditor will
each confirm to the Committee that each non-audit service on the list is
permissible under all applicable legal requirements. In addition to the list of
planned non-audit services, a budget estimating non-audit service spending for
the fiscal year will be provided. The Committee will approve both the list of
permissible non-audit services and the budget for such services. The Committee
will be informed routinely as to the non-audit services actually provided by the
independent auditor pursuant to this pre-approval process.
To ensure
prompt handling of unexpected matters, the Committee delegates to either member
thereof the authority to amend or modify the list of approved permissible
non-audit services and fees. Either member will report action taken to the
Committee at the next Committee meeting.
The
independent auditor must ensure that all audit and non-audit services provided
to the Company have been approved by the Committee. The Controller or Chief
Financial Officer is responsible for tracking all independent auditor fees
against the budget for such services and report at least annually to the
Committee.
EXECUTIVE
COMPENSATION
Summary
Compensation Table
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Name
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Year
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Salary
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Bonus
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Stock
Awards (6)
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All
other Comp. (5)
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Total
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Julie
Smolyansky, CEO and President (1)
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2007
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$
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166,153
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$
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22,500
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$
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17,325
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$
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7,546
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$
|
213,524
|
|
| |
|
|
2006 |
|
|
$ |
147,692 |
|
|
$ |
40,000 |
|
|
$ |
12,500 |
|
|
$ |
7,508 |
|
|
$ |
207,700 |
|
|
Edward
Smolyansky, CFO Chief Accounting Officer and Controller
(2)
|
|
|
2007
|
|
|
$
|
178,461
|
|
|
$
|
22,500
|
|
|
$
|
17,325
|
|
|
$
|
8,038
|
|
|
$
|
226,324
|
|
| |
|
|
2006 |
|
|
$ |
140,000 |
|
|
$ |
30,000 |
|
|
$ |
12,500 |
|
|
$ |
6,800 |
|
|
$ |
189,300 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ludmila
Smolyansky, Chairman (3)
|
|
|
2007
|
|
|
$
|
|
|
|
$
|
|
|
|
|
—
|
|
|
$
|
|
|
|
$
|
|
|
| |
|
|
2006 |
|
|
$ |
|
|
|
$ |
55,000
|
|
|
|
— |
|
|
$ |
5,200
|
|
|
$ |
159,200
|
|
|
Val
Nikolenko, Vice President of Operations and Secretary (4)
|
|
|
2007
|
|
|
$
|
110,832
|
|
|
$
|
10,000
|
|
|
$
|
2,887
|
|
|
$
|
4,833
|
|
|
$
|
128,552
|
|
| |
|
|
2006 |
|
|
$ |
101,192 |
|
|
$ |
22,741 |
|
|
$ |
3,125 |
|
|
$ |
4,704 |
|
|
$ |
131,762 |
|
NOTES TO SUMMARY
COMPENSATION TABLE
|
|
|
|
|
(1)
|
|
The
Board appointed Julie Smolyansky as the CEO, CFO, President and Treasurer
of the Company on June 10, 2002. Until that date and since
September 21, 1998 she had been Director of Sales and Marketing of
the Company. Since November 2004, Ms. Smolyansky has served
solely as CEO and President.
|
|
|
|
|
|
(2)
|
|
The
Board appointed Edward Smolyansky as the CFO, Chief Accounting Officer and
Controller of the Company in November 2004.
|
|
|
|
|
|
(3)
|
|
The
Company approves, on an annual basis, the payment to Ludmila Smolyansky of
salary and bonus as other compensation for continuing advisory services to
the Company, and in light of her extensive experience. Ludmila Smolyansky
devotes as much time as necessary to the business of the
Company.
|
|
|
|
|
|
(4)
|
|
The
Board appointed Val Nikolenko as the Vice President of Operations and
Secretary of the Company in December 1993.
|
|
|
|
|
|
(5)
|
|
Represents
the Company’s portion of the matching contributions to the Company’s
401(k) plan on behalf of the Named Executive Officer.
|
| |
|
|
| (6) |
|
The
terms of the stock awards are described below under Employee Consultants
and Service Providers Benefit Plan. |
Outstanding
Equity Awards At Fiscal Year-End
|
|
Stock
Awards
|
|
Name
|
Number
of Shares or Units of
Stock
That Have Not Vested
|
Market
Value of Shares or Unites of
Stock
That Have Not Vested
|
|
Julie
Smolyansky
|
1,500
|
$14,850
|
|
Edward
Smolyansky
|
1,500
|
$14,850
|
|
Ludmila
Smolyansky
|
--
|
--
|
|
Val
Nikolenko
|
250
|
$
2,475
|
The terms
of the stock awards are described below under Employee, Consultants and Service
Providers Benefit Plan.
Director
Compensation
|
Name
|
|
Fees
Earned or Paid in Cash
|
|
Total
|
|
Pol
Sikar
|
|
$
|
1,500
|
|
|
$
|
1,500
|
|
|
Renzo
Bernardi
|
|
$
|
1,500
|
|
|
$
|
1,500
|
|
|
Julie
Oberweis
|
|
$
|
1,500
|
|
|
$
|
1,500
|
|
During
2007, each outside (non-employee) director was compensated at the rate of $500
per meeting attended. Neither any employee director (Ludmila Smolyansky and
Julie Smolyansky) nor any Director serving as the nominee of Danone (Juan Carlos
Dalto) was compensated as a Director during 2007.
As other
compensation for continuing advisory services to the Company, and in light of
her extensive experience, the Company approved the payment to Ludmila Smolyansky
of a salary of $162,807 and a bonus of $55,000 in 2007. Ludmila Smolyansky
devotes as much time as necessary to the business of the Company.
EMPLOYMENT
CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
Julie
Smolyansky has an employment agreement (the “Employment Agreement”) with the
Company pursuant to which she serves as Chief Executive Officer. Pursuant to the
Employment Agreement, Ms. Smolyansky is entitled to an annual base salary and an
annual bonus subject to such incentive bonus targets and plans which the Company
may adopt from time to time. The Company has not currently set any such targets
in advance or adopted any such plans. In lieu thereof, the Board of Directors
determines Ms. Smolyansky’s salary and bonus on an annual basis
concurrently with determining amounts for other executive officers. In the event
that (a) Ms. Smolyansky is terminated other than for Cause (as defined
therein) or (b) Ms. Smolyansky terminates her employment for Good
Reason (as defined therein) or death, then Ms. Smolyansky is entitled to a
lump sum payment consisting of (y) twice her then-current base salary and
(z) the aggregate of the annual bonus for which she is then eligible under
the Employment Agreement and any such plans.
|
|
(2)
|
|
EMPLOYEE,
CONSULTANTS AND SERVICE PROVIDERS BENEFIT
PLAN
|
On
June 9, 1995, the Company filed a registration statement on Form S-8 with
the Securities and Exchange Commission in connection with the “Lifeway Foods,
Inc. Consulting and Services Compensation Plan” (the “Plan”) covering 600,000,
as adjusted, shares of its Common Stock. The Plan was adopted by the Company on
June 5, 1995.
Pursuant
to such Plan, the Company may issue common stock or options to purchase common
stock to certain consultants, service providers, and employees of the
Company. There were a total of 468,000 shares eligible for issuance
under the Plan at December 31, 2007 and 2006. The option price,
number of shares, grant date, and vesting terms are determined at the discretion
of the Company’s Board of Directors.
As of
December 31, 2006 and 2007, there were no stock options outstanding or
exercisable.
On May
23, 2005, Lifeway’s Board of Directors approved awards of an aggregate amount of
11,200 common shares to be awarded under its Employee and Consulting Services
and Compensation Plan to certain employees and consultants for services rendered
to the Company. The stock awards were made on June 1, 2005 and have
vesting periods of one year. The expense for the awards is measured
as of June 1, 2005 at $6.25 per share for 11,200 shares, or a total stock award
expense of $70,000. This expense will be recognized as the stock
awards vest in 12 equal portions of $5,833, or 932 shares per month for one
year. During 2005, 7,534 shares vested and the Company recognized a
related expense of $40,833. During the year ended December 31, 2006,
4,666 shares vested for an expense of $29,166.
On May
18, 2007, Lifeway’s Board of Directors approved awards of an aggregate amount of
8,400 shares to be awarded under its Employee and Consulting Services and
Compensation Plan to certain key employees and consultants for services rendered
to the Company. The stock awards were made on June 1, 2007 and have
vesting periods of one year. The expense for the awards is measured as of June
1, 2007 at $9.90 per share for 8,400 shares, or a total stock award expense of
$83,160. This expense will be recognized as the stock awards vest in 12 equal
portions of $6,930, or 700 shares per month for one year.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth certain information known to the Company regarding
the beneficial ownership of the Company’s Common Stock, the Company’s only
outstanding class of securities, as of May 15, 2008 by (a) each shareholder
known by the Company to be the beneficial owner of more than five percent of the
Company’s Common Stock, (b) each of the Company’s directors, (c) each
of the Company’s executive officers named in the Summary Compensation Table
above and (d) all executive officers and directors of the Company as a
group. The shareholders listed below have sole voting and investment power
except as noted.
|
|
|
Amount
and Nature of Beneficial
|
|
Percent
Owned Beneficially
|
|
Name
and Address of Beneficial Owner (1)
|
|
Ownership
of Common Stock
|
|
and
of Record (2)
|
|
Ludmila
Smolyansky (3,4)
|
|
|
|
(3)
|
|
|
45.1
|
%
|
|
Julie
Smolyansky (4)
|
|
|
|
|
|
|
3.0
|
%
|
|
Edward
Smolyansky (4)
|
|
|
|
|
|
|
2.4
|
%
|
|
Pol
Sikar (4)
|
|
|
|
|
|
|
*
|
|
|
Renzo
Bernardi (4)
|
|
|
|
|
|
|
*
|
|
|
Juan
Carlos Dalto (4,5)
|
|
|
0
|
|
|
|
*
|
|
|
Julie
Oberweis (4)
|
|
|
0
|
|
|
|
*
|
|
|
Val
Nikolenko
|
|
|
5,000
|
|
|
|
*
|
|
|
Directors
and Officers of the Company as a Group (eight persons in
total)
|
|
|
|
|
|
|
50.6
|
%
|
|
DS
Waters, LP
|
|
|
|
|
|
|
20.5
|
%
|
NOTES TO BENEFICIAL
OWNERSHIP TABLE
|
|
|
|
|
(1)
|
|
With
the exception of Juan Carlos Dalto and DS Waters, LP, the address for all
Directors and shareholders listed in this table is 6431 Oakton St., Morton
Grove, IL 60053. The address for Juan Carlos Dalto and DS Waters, LP is
120 White Plains Road, Tarrytown, NY 10591.
|
|
|
|
|
|
(2)
|
|
Based
upon 16,810,326 shares of Common Stock outstanding as of May 15,
2008.
|
|
|
|
|
|
(3)
|
|
On
May 15, 2008, Mrs. Smolyansky directly owned 7,553,754 shares of
Common Stock. Additionally, Mrs. Smolyansky is deemed to be the
indirect beneficial owner of 5,519 shares of Common Stock held in the
Smolyansky Family Foundation, of which Mrs. Smolyansky is the
Trustee.
|
|
|
|
|
|
(4)
|
|
A
Director or Officer of the Company.
|
|
|
|
|
|
(5)
|
|
Mr. Dalto
is also an officer of The Dannon Company, Inc., which is an affiliate of
DS Waters, LP.
|
PROPOSAL
2: RATIFICATION OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board
has designated the firm of Plante & Moran, PLLC (“Plante”), as independent
auditors of the Company for the next fiscal year. The Audit Committee and the
Company have been advised by Plante that neither it nor any member or associate
of such firm has any relationship with the Company or with any of its affiliates
other than as independent accountants and auditors.
During
the two most recent fiscal years, there have been no disagreements with Plante
on matters of accounting principles or practices, financial statement
disclosure, auditing scope or procedure, or any reportable event.
Representatives
of Plante are not expected to be present at the Meeting.
In the
event that ratification of the appointment of Plante as the independent public
accountants for the Company is not obtained at the Meeting, the Board of
Directors will reconsider its appointment.
AUDIT
FEES
In 2007
and 2006, Plante & Moran, PLLC, billed Lifeway approximately $151,000 and
$136,000, respectively, for professional services rendered for the audit of
Lifeway’s annual financial statements and review of financial statements
included in Lifeway’s Forms 10-QSB or services that are normally provided in
connection with statutory and regulatory filings or engagements in 2006 and
2007.
AUDIT-RELATED
FEES
In 2007
and 2006, Lifeway’s principal accountant billed Lifeway approximately $55,000
and $0, respectively, for professional services rendered in connection with the
audit of the consolidated financial statements of Helios Nutrution, LTD and
subsidiary as of and for the year ended December 31, 2005 included in the
Company’s 8-K/A dated October 19, 2006.
TAX
FEES
No
professional services were rendered by Plante & Moran, PLLC to Lifeway
regarding tax advice, tax compliance and tax planning during 2006 and
2007.
ALL OTHER
FEES
No other
fees were billed to Lifeway by Plante during 2006 and 2007 other than those
described in this report. No hours expended by Plante & Moran. PLLC in its
engagement to audit Lifeway’s financial statements for the most recent fiscal
year were attributable to work performed by persons other than Plante’s
full-time permanent employees. The Audit Committee has approved 100% of all
services performed by Plante for Lifeway and disclosed above.
No
representative of Plante is expected to be present at the Meeting.
REQUIRED
VOTE
An
affirmative vote of the holders of a majority of the shares of Common Stock
issued and outstanding is required for ratification of the appointment of Plante
& Moran, PLLC. Abstentions and broker non-votes are considered shares of
stock present in person or represented by proxy at the Meeting and entitled to
vote and are counted in determining the number of votes necessary for a
majority. An abstention will therefore have the practical effect of voting
against ratification of the appointment because it represents one fewer vote for
ratification of the appointment.
THE BOARD
OF DIRECTORS RECOMMENDS A VOTE TO APPROVE THE RATIFICATION OF THE APPOINTMENT OF
PLANTE & MORAN, PLLC AS THE INDEPENDENT AUDITORS FOR THE CURRENT FISCAL YEAR
(ENDING DECEMBER 31, 2008), AND PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN
FAVOR THEREOF UNLESS A SHAREHOLDER HAS INDICATED OTHERWISE ON THE
PROXY.
OTHER
MATTERS
The Board
of Directors knows of no other business to come before the meeting. If, however,
other matters properly come before the meeting, it is the intention of the
persons named in the enclosed proxy to vote the shares represented thereby in
accordance with their best judgment.
SHAREHOLDER
PROPOSALS
Any
proposal that a shareholder may desire to present to the Company’s 2009 Annual
Meeting of Shareholders must be received in writing by Val Nikolenko, the
Secretary of the Company, on or before January 23, 2009, in order to be
considered for possible inclusion in the Company’s proxy materials relating to
such meeting.
UNTIMELY
SHAREHOLDER PROPOSALS
Any
shareholder proposals received by the Company after January 23, 2009 shall
be considered an untimely proposal. The Company, in its sole discretion, may
consider untimely proposals for possible inclusion in its 2009 Annual Meeting
proxy materials if such untimely proposals are received on or before April 7,
2009. Any untimely shareholder proposals received after April 7, 2009 shall not
be considered for possible inclusion in the Company’s 2009 Annual Meeting proxy
materials.
| |
BY
ORDER OF THE BOARD OF DIRECTORS
Ludmila
Smolyansky
Chairperson
of the Board
June
2, 2008
|
APPENDIX
A
AMENDED
AND RESTATED
CHARTER
OF THE AUDIT COMMITTEE
This
Amended and Restated Charter of the Board of Directors of Lifeway Foods, Inc.
was adopted as of this 17th day of December, 2003 by the Audit Committee (the
“Committee”) of the Board of
Directors (the “Board”) of Lifeway Foods, Inc. (the “Company”).
I. AUDIT
COMMITTEE PURPOSE
1. The
Audit Committee (the “Committee”) is appointed by the Board of Directors (the
“Board”) of Lifeway Foods, Inc. (the “Company”) to assist the Board in
fulfilling its oversight responsibilities. The
Committee’s primary duties and responsibilities are
to:
a.
Monitor the integrity of the Company’s financial reporting process and systems
of internal controls regarding finance, accounting, and legal
compliance;
b.
Monitor the independence and performance of the Company’s independent auditors
and internal auditing department; and
c.
Provide an avenue of communication among the independent auditors, management,
the internal auditing department and the Board.
2. The
Committee has the authority to conduct any investigation appropriate to
fulfilling its responsibilities, and it has direct access to the independent
auditors as well as anyone in the organization. The Committee has the ability to
retain, at the Company’s expense, special legal, accounting, or other
consultants or experts it deems necessary in the performance of its
duties.
II. AUDIT
COMMITTEE COMPOSITION AND MEETINGS
1. The
Committee shall meet the requirements of The Securities Act of 1933, as amended,
The Securities Exchange Act of 1934, as amended, the rules and
regulations promulgated thereunder by the U.S. Securities
and Exchange Commission (SEC) and the Qualitative Listing
Requirements for Nasdaq National Market and Nasdaq SmallCap Market
Issuers applicable to the Company, as amended from time to time, regarding the
composition and duties of the Committee. The Committee shall be comprised of at
least three, but no more than seven directors, as determined by the Board, all
of whom shall be independent directors.
2. All
members of the Committee shall have a basic understanding of finance and
accounting and be able to read and understand fundamental financial statements.
In the event the Company files reports under SEC Regulation S-K, at least
one member of the Committee shall have past employment experience in finance or
accounting, requisite professional certification in accounting, or any other
comparable experience or background which results in the individual’s financial
sophistication, including being or having been a chief executive officer, chief
financial officer or other senior officer with financial oversight
responsibilities.
3. Committee
members shall be appointed by the Board. If the Committee Chair is not
designated or present, the members of the Committee may designate a Chair by a
majority vote of the Committee membership.
4. The
Committee shall meet four times annually, or more or less frequently as
circumstances may dictate. The Committee Chair may prepare and/or approve an
agenda in advance of each meeting, consistent with the provisions of this
Charter. The Committee should meet privately in executive session at least
annually with each of management, the independent auditors, and as a committee
to discuss any matters that the Committee or each of these groups believe should
be discussed.
The
Committee may ask members of management or others to attend the meetings and
provide pertinent information as necessary. In addition, the
Committee, or at least its Chair, should communicate quarterly with
the management and the independent auditors to review the Company’s
financial statements and significant findings based upon the independent
auditors’ limited review procedures.
III.
AUDIT COMMITTEE RESPONSIBILITIES AND DUTIES
Review
Procedures
1. Review
and reassess the adequacy of this Charter at least annually. Submit the Charter
to the Board for approval and have the document published as an appendix to the
Company’s annual proxy statement at least every three years or otherwise
prescribed by applicable SEC regulations.
2. Review
the Company’s annual audited and quarterly unaudited financial statements prior
to filing or distribution. Review should include discussion with management and
independent auditors of significant issues regarding accounting principles,
practices and judgments.
3. In
consultation with management, the independent auditors, and the internal
auditors, consider the integrity of the Company’s financial reporting processes
and controls. Discuss significant financial risk exposures and steps management
has taken to monitor, control, and report such exposures. Review significant
findings prepared by the independent auditors and the internal auditing
department together with management’s responses including the status of previous
recommendations.
4. Review
with financial management and the independent auditors the Company’s quarterly
financial results prior to the release of earning and/or the Company’s quarterly
financial statements prior to filing or distribution. Discuss any significant
changes to the Company’s accounting principles and any items required to be
communicated by the independent auditors in accordance with the Statement of
Auditing Standards No. 61 (“SAS 61”) which requires that auditors communicate,
either in writing or orally before or after the financial statements have been
issued. The Chair of the Committee may represent the entire Committee for
purposes of this review or in certain cases may request that the entire
Committee participate.
Independent
Auditors
5. The
independent auditors are ultimately accountable to the Committee and the Board.
The Committee shall review the independence and performance of the auditors and
annually recommend to the Board the appointment of the independent auditors
or approve any discharge of the independent auditors when circumstances
warrant.
6. Approve
the fees and other significant compensation to be paid to the independent
auditors. Review and approve requests for significant management consulting
engagements to be performed by the independent auditors’ firm and be
advised of any other significant study undertaken at the request of management
that is beyond the scope of the audit engagement letter.
7. On
an annual basis, the Committee should review and discuss with the independent
auditors all significant relationships they have with the Company that could
impair the auditors’ independence.
8. Review
the independent auditors’ engagement letter and audit plan discuss scope,
staffing, locations, reliance upon management, and internal audit and general
audit approach.
9. Prior
to releasing the year-end earnings, discuss the results of the audit with the
independent auditors. Discuss certain matters required to be communicated to the
Committee by the independent auditors in accordance with SAS 61.
10. Consider
the independent auditors’ judgments
about the quality and appropriateness of the Company’s accounting principles as
applied in its financial reporting.
11. Discuss
with management and the independent auditors the quality of the accounting
principles and underlying estimates used in the preparation of the Company’s
financial statements.
12. Discuss
with the independent auditors the clarity of the financial disclosure practices
used or proposed by the Company.
13. Inquire
as to the independent auditors’ views about whether management’s choices of
accounting principles appear reasonable from the prospective of income, asset
and liability recognition and whether those principles are common practices or
are minority practices.
Internal
Audit Department and Legal Compliance
14.
Review the budget, plan, changes in plan, activities, organization structure,
and qualifications of the internal audit department, as needed.
15.
Review the appointment, performance, and replacement of the senior internal
audit executive.
16.
Review significant reports prepared by the internal audit department together
with management’s response and follow-up to these reports.
17.
On at least an annual basis, review with the Company’s counsel, any legal
matters that could have a significant impact on the organization’s financial
statements, the Company’s compliance with applicable laws and regulations, and
inquiries received from regulators or governmental agencies.
Other
Audit Committee Responsibilities
18.
Annually prepare a report to shareholders as required by the SEC. The
report should be included in the Company’s annual proxy statement.
19.
Perform any other activities consistent with this Charter, the Company’s
by-laws, and governing law, as the Committee or the Board deems necessary or
appropriate.
20.
Maintain minutes of meetings and periodically report to the Board on significant
results of the foregoing activities.
APPENDIX
B
CODE OF
ETHICS
I. Introduction
This Code
of Ethics (this “Code”) is applicable to the officers of Lifeway Foods, Inc.
(“Lifeway”). References in this Code of Ethics to Lifeway mean Lifeway or any of
its subsidiaries.
While
Lifeway and its stockholders expect honest and ethical conduct in all aspects of
its business from all employees, Lifeway and its stockholders expect the highest
possible standards of honest and ethical conduct from its
officers. The officers are setting an example for other employees and
are expected to foster a culture of ransparency, integrity and honesty.
Compliance with this Code and all other applicable codes of business conduct or
ethics adopted by the Board of Directors of Lifeway is mandatory and any
violations will be addressed severely.
II. Conflicts
of Interest
Conflicts
of interest are strictly prohibited as a matter of Lifeway
policy. Officers must be scrupulous in avoiding any action or
interest that conflicts with, or gives the appearance of a conflict with,
Lifeway’s interests. A “conflict of
interest”
exists whenever an individual’s private interests in any way interfere or
conflict with, or appear to interfere or conflict with, the interests of Lifeway
or make, or appear to make, it difficult for the individual to perform his or
her work for Lifeway objectively and effectively. Conflicts of interest arise
when:
(a) personal
interests interfere, or appear to interfere, in any way, with the interests of
Lifeway (for example, competetition with Lifeway);
(b) undertakings
for an officer’s direct or indirect benefit or the direct or indirect benefit of
a third party that is inconsistent with the interests of Lifeway (for example,
causing Lifeway to engage in business transactions with a company under the
control of an officer, whether solely or with friends or
relatives);
(c) an
officer, or a member of an officer’s family, receives improper personal benefits
as a result of such officer’s position in Lifeway (for example, a loan or other
benefit from a third party to direct Lifeway business to a
third-party).
There are
other situations in which conflicts of interest may
arise. Conflicts of interest may not always be clear-cut.
Questions regarding conflicts of interest should be directed to the Company’s
Counsel.
III.
Accurate Periodic Reports
Full,
fair, accurate, timely and understandable disclosure (as required in the reports
and other documents that filed with, or submitted to, the SEC and in our other
public communications) is critical for the Company to maintain its good
reputation, to comply with its obligations under the securities laws and to meet
the expectations of our stockholders and other members of the investment
community. Officers are to exercise the highest standard of care in preparing
such reports and documents and other public communications, in accordance with
the following guidelines:
(a) all
accounting records, and the reports produced from such records, must be in
accordance with all applicable laws and regulations;
(b) all
accounting records must fairly and accurately reflect the transactions or
occurrences to which they relate;
(c) all
accounting records must fairly and accurately reflect in reasonable detail
Lifeway’s assets, liabilities, revenues and expenses;
(d) no
accounting records may contain any false or intentionally misleading
entries;
(e) no
transactions should be intentionally misclassified as to accounts, departments
or accounting periods;
(f) all
transactions must be supported by accurate documentation in reasonable detail
and recorded in the proper account and in the proper accounting
period;
(g) no
material information should be concealed from the internal auditors or the
independent auditors; and compliance with Lifeway’s system of internal controls
is required.
IV. Compliance
with Laws
Officers
are expected to understand and comply with both the letter and spirit of all
applicable laws and governmental rules and regulations.
V. Reporting
Violations
Officers
are expected to report any violations of this Code of Ethics promptly to the
Chairman of the Board of Directors.
VI. Consequences
of Non-Compliance with this Code
Violations
of this Code will be reported to the Audit Committee and the Board of Directors.
Failure to comply with this Code of Ethics or applicable laws, rules or
regulations (including without limitation all rules and regulations of the
Securities and Exchange Commission) may result in disciplinary measures, up to
and including discharge from Lifeway, and any appropriate legal
action.
VII.
Amendment, Modification and Waiver
This Code
may be amended or modified by the Board of Directors. Waivers of this Code may
only be granted by the Board of Directors or a committee of the Board of
Directors with specifically delegated authority. Waivers will be disclosed to
stockholders as required by the Securities Exchange Act of 1934.
LIFEWAY
FOODS, INC. PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING OF SHAREHOLDERS TO BE HELD AT THE HOLIDAY INN NORTH SHORE, 5300 WEST
TOUHY AVENUE, SKOKIE, ILLINOIS, FRIDAY, JUNE 20, 2008, AT 4:00 P.M. LOCAL
TIME.
The
undersigned hereby appoints Ludmila Smolyansky or Julie Smolyansky, with full
power of substitution, as proxy to vote the Common Stock of the undersigned in
Lifeway Foods, Inc. at the above Annual Meeting and at any adjournment
thereof.
THE
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS HEREIN SPECIFIED. IF A CHOICE
IS NOT SPECIFIED, SUCH SHARES WILL BE VOTED FOR PROPOSALS 1 and 2.
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1.
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Election
of Directors:
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Nominees:
Ludmila Smolyansky, Julie Smolyansky, Pol Sikar, Renzo Bernardi, Juan
Carlos Dalto and Julie Oberweis:
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o FOR
o
WITHHELD
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For,
except vote withheld from the following nominees:
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2.
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Ratification
of Plante & Moran, PLLC, as independent auditors:
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o FOR
o AGAINST
o
ABSTAIN
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THIS
PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER.
PLEASE
MARK, SIGN, DATE AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE.
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SIGNATURE
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DATED
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SIGNATURE
(IF JOINTLY OWNED)
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PRINT
NAME
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PRINT
NAME (IF JOINTLY OWNED)
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NOTE:
This Proxy must be signed exactly as your name appears hereon. Executors,
administrators, trustees, etc. should give full title as such. If the signer is
a corporation, please sign full corporate name by duly authorized
officer.