<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant[ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (ss.)240.14a-11(c) or (ss.)240.14a-12
LIFEWAY FOODS, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 3
LIFEWAY FOODS, INC.
7625 North Austin Avenue, Suite 1100
Skokie, Illinois 60077
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 16, 1998
TO OUR STOCKHOLDERS:
You are invited to be present either in person or by proxy at the
Annual Meeting of Stockholders 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 Saturday, May 16, 1998, at 11:00 a.m., local
time (the "Meeting"), to consider and act upon the following:
1. To elect four Directors to serve until the next meeting and
until their successors are duly elected and qualified;
2. To ratify the appointment of Gleeson, Sklar, Sawyers & Cumpata
LLP as independent auditors for the next fiscal year.
3. To transact such other business as may properly come before
the meeting or any adjournments thereof.
Only stockholders of Common Stock of record at the close of business on
April 15, 1998, 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.
BY ORDER OF THE BOARD OF DIRECTORS
MICHAEL SMOLYANSKY
Chairman of the Board
Skokie, Illinois
April 17, 1998
YOUR VOTE IS IMPORTANT
WHETHER YOU OWN A FEW OR MANY SHARES OF STOCK AND WHETHER OR NOT YOU
PLAN TO ATTEND THE MEETING, YOU ARE URGED TO MARK, DATE, SIGN AND RETURN YOUR
PROXY CARD PROMPTLY SO THAT YOUR SHARES MAY BE VOTED IN ACCORDANCE WITH YOUR
WISHES AND IN ORDER THAT THE PRESENCE OF A QUORUM MAY BE ASSURED. THE PROMPT
RETURN OF YOUR SIGNED PROXY WILL AID THE COMPANY IN REDUCING THE EXPENSE OF
PROXY SOLICITATION.
<PAGE> 4
LIFEWAY FOODS, INC.
PROXY STATEMENT
PROCEDURAL MATTERS
THIS PROXY STATEMENT IS FURNISHED TO THE STOCKHOLDERS OF LIFEWAY FOODS,
INC., AN ILLINOIS CORPORATION (THE "COMPANY"), 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 STOCKHOLDERS TO BE HELD AT 11:00
A.M., CDT, ON SATURDAY, MAY 16, 1998, OR AT ANY ADJOURNMENT OR POSTPONEMENT
THEREOF. Stockholders of record of Common Stock of the Company at the close of
business on April 15, 1998 (the "Record Date"), will be entitled to notice of
and to vote at the meeting. The Annual 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 Stockholders. A
stockholder 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 stockholders 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 stockholders beginning April 17, 1998. 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 use of the mails, directors, officers and employees (who will receive
no compensation therefor in addition to their regular remuneration) of the
Company may solicit the return of proxies by telephone, telegram or personal
interview. As of this date, the Company has no plans to retain an outside firm
to solicit proxies. The Company will request banks, brokerage houses and other
custodians, nominees and fiduciaries to forward copies of the proxy material to
their principals and to request instructions for voting the proxies. The Company
may reimburse such banks, brokerage houses and other custodians, nominees and
fiduciaries for their expenses in connection therewith. 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 stockholder 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 the 2,375,860 shares (62.8%) of Common Stock
which it controls in favor of the proposals to: (i) elect four Directors to
serve until the next Meeting and until their successors are duly elected and
qualified; (ii) to ratify the appointment of Gleeson, Sklar, Sawyers & Cumpata
LLP as independent auditors for 1998; and (iii) to transact such other business
as may properly come before the meeting or any adjournments thereof.
<PAGE> 5
VOTING SECURITIES AND VOTE REQUIRED
Only holders of Common Stock, no par value per share, of record at the
close of business on April 15, 1998 (the "Record Date"), will be entitled to
vote at the meeting. As of the Record Date, 3,778,877 shares of Common Stock,
the only class of voting securities of the Company, were outstanding. 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
"Commission"), 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 or 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 does not provide for abstentions with respect to the
election of Directors; however, a shareholder present at the meeting 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, 1997 (the "Annual Report").
Stockholders 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.
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PROPOSAL 1
ELECTION OF DIRECTORS
Four Directors are to be elected at the meeting. The Directors will be
elected at the meeting to serve until the next annual meeting of stockholders of
the Company and until their successors shall be duly elected and shall qualify.
As noted, unless otherwise indicated thereon, all proxies received will be voted
in favor of the election individually, of the four 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 Board), 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 four 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 are currently serving as Directors of the
Company.
THE BOARD OF DIRECTORS RECOMMENDS A
VOTE FOR EACH OF THE NOMINEES.
The names of the nominees and certain information with regard to each
nominee follows:
<TABLE>
<CAPTION>
Name Age Position Director Since
- ---- --- -------- --------------
<S> <C> <C> <C>
Michael Smolyansky 50 CEO, CFO, President, Treasurer and Director 1986
Pol Sikar 50 Director 1986
Rick D. Salm 46 Director 1986
Lorenzo Bernardi 60 Director 1994
</TABLE>
NOMINEES FOR ELECTION AS DIRECTORS
MICHAEL SMOLYANSKY has been Chief Executive Officer, Chief Financial
Officer, President, Treasurer and a director of the Company since its inception
in February 1986. From 1976 to 1985, he was Project Engineer and Department
Manager of E.J. Littell Machine Co., of Chicago, Illinois, where he had primary
responsibility for design of material handling equipment. Mr. Smolyansky is a
graduate of the Kiev Institute of Technology (M.S., Mechanical Engineering,
1971). Mr. Smolyansky devotes full time to the business of the Company. Mr.
Smolyansky holds no other directorships in any other reporting company.
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 10 years he has been
President and major stockholder of Still-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.
RICK D. SALM, a director of the Company since its inception in February
1986, is first Vice-President of the First Commercial Bank of Chicago, Illinois.
Mr. Salm joined First Commercial in 1982 and is currently in charge of
commercial lending activities. Mr. Salm holds a Bachelor's degree from St.
Norbert College, from which he graduated in 1974. Mr. Salm devotes as much time
as necessary to the business of the Company. Mr. Salm holds no other
directorships in any other reporting company.
LORENZO BERNARDI has been a director of the Company since 1994 and has
been a director of the Company's subsidiary, Lifeway International, Inc. Mr.
Bernardi is the president and founder of Renzo & Sons, Inc. - Dairy and Food
Service Company which has been in business since 1969 (formerly, Renzo-Milk
Distribution Systems). He has over 29 years of experience in the dairy
distribution industry. Mr. Bernardi is a graduate of
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<PAGE> 7
Instituto Teonico E Commerciale of Macomer, Sardinia. Mr. Bernardi will devote
as much time as necessary to the business of the Company. Mr. Bernardi holds no
other directorships in any other reporting company.
COMMITTEES OF THE BOARD OF DIRECTORS
In August of 1997, the Company's Board of Directors formed an Audit
Committee comprised of three directors, a majority of whom are outside
directors. The members of the initial Audit Committee are Michael Smolyansky,
Pol Sikar, and Rick Salm. Members are appointed annually 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; and to review the services and fees of the
independent auditors, their independence, and recommend to the Board for its
approval and for ratification by the stockholders the engagement of the
independent auditors to serve the following year in examining the accounts of
the Company.
ATTENDANCE AT MEETINGS OF THE BOARD AND COMMITTEES
During 1997, the Company's Board of Directors held three regular
meetings. The attendance, in person or by telephone, at the meetings of the
Board and the Audit Committee of the Board was 100%. In addition, the Board of
Directors acted by unanimous consent pursuant to Illinois law and the Company's
By-laws.
In August of 1997, the Company's Board of Directors formed an Audit
Committee comprised of three directors, a majority of whom are outside
directors. The members of the initial Audit Committee are Michael Smolyansky,
Pol Sikar, and Rick Salm. Members are appointed annually by the full Board of
Directors. 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; and to review
the services and fees of the independent auditors, their independence, and
recommend to the Board of Directors or its approval and for ratification by the
stockholders the engagement of the independent auditors to serve the following
year in examining the accounts of the Company. The Audit Committee held one
meeting in 1997.
COMPENSATION OF DIRECTORS
During 1997, the Board of Directors participated in three meetings and
each were compensated at the rate of $500 per meeting.
EXECUTIVE COMPENSATION
(a) General
The following information discloses all plan and non-plan compensation
awarded to, earned by, or paid to Mr. Michael Smolyansky, CEO, CFO, President,
Treasurer and Director of the Company, for all services rendered in all
capacities to the registrant and its subsidiaries. Mr. Smolyansky is the only
person meeting the reporting requirements of Item 402 of Regulation S-B. No
other executive officer of the Company had total annual salary and bonus
exceeded $100,000 for the fiscal year ended December 31, 1997.
(b) Summary Compensation Table
The following table sets forth all compensation, including bonuses,
stock option awards and other payments, paid or accrued by the Company during
each of the fiscal years ended December 31, 1997, 1996 and 1995, to or for the
Company's Chief Executive Officer and each of the other executive officers of
the Company whose total annual salary and bonus, if any, exceeded $100,000 for
the fiscal year ended 1997.
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<PAGE> 8
<TABLE>
<CAPTION>
Annual Compensation
------------------------------------------------------
(a) (b) (c) (d) (e)
Name Year Other
and Ended Annual
Principal December Salary Bonus Compensation
Position 31 ($) ($) ($)
- -------------------------------- ------------ ---------------- ---------------- --------------------
<S> <C> <C> <C> <C>
Michael Smolyansky 1997 115,000.00 -0- -0-
CEO, CFO, President 1996 120,000.00 3,000.00 -0-
1995 99,999.84 15,000.00 -0-
</TABLE>
<TABLE>
<CAPTION>
Long Term Compensation
-----------------------------------------------
Awards Payouts
-----------------------------------------------
(a) (b) (f) (g) (h) (i)
Name Year Restricted All
and Ended Stock Shares LTIP Other
Principal December Award(s) Underlying Payouts Compensation
Position 31 ($) Options ($) ($)
- ---------------------- ----------- --------------- ----------------- ------------- ----------------
<S> <C> <C> <C> <C> <C>
Michael Smolyansky 1997 -0- -0- -0- -0-
CEO, CFO, President 1996 -0- -0- -0- -0-
1995 -0- -0- -0- -0-
</TABLE>
(c) Option/SAR Grants in Last Fiscal Year
This table has been omitted, as Mr. Smolyansky, the only person meeting
the reporting requirements of Item 402 of Regulation S-B, has not received any
individual grants of stock options during fiscal 1997 or stock appreciation
rights during 1997.
(d) Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal
Year-End Option/SAR Values
This table has been omitted, as Mr. Smolyansky, the only person meeting
the reporting requirements of Item 402 of Regulation S-B, has not exercised any
stock options during fiscal 1997.
(e) Long-Term Incentive Plans ("LTIP") - Awards in Last Fiscal Year
This table has been omitted, as Mr. Smolyansky, the only person meeting
the reporting requirements of Item 402 of Regulation S-B, has not received any
awards pursuant to any LTIP during fiscal 1997.
(f) Employment Contracts and Termination of Employment and
Change-in-Control Arrangements
(f)(1) Employment Contracts
The President of the Company, Michael Smolyansky, was engaged by the
Company under an employment agreement that expired in April 1997. A formal
extension to the agreement is currently being negotiated. It is anticipated that
the extension will continue to provide for a base salary, which may be
increased, subject to approval of the Board of Directors, on a yearly basis in
proportion to the Company's profitability and cash bonuses at the discretion of
the Board of Directors.
(f)(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")
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covering 300,000 shares of its Common Stock. Pursuant to the Plan, the Company
may issue Common Stock and/or options to purchase Common Stock to certain
consultants, service providers and employees, including officers and directors,
of the Company. The purpose of the Plan is to promote the best interests of the
Company and its stockholders by providing a means of non-cash remuneration to
eligible participants who contribute to operating progress and earning power of
the Company. The Plan is administered by the Company's Board of Directors or a
committee consisting of three members which has the discretion to determine from
time to time the eligible participants to receive an award; the number of shares
of stock issuable directly or to be granted pursuant to option; the price at
which the option may be exercised or the price per share in cash or cancellation
of fees or other payment which the Company is liable if a direct issue of stock
and all other terms on which each option shall be granted. As of December 31,
1997, a total of 23,900 shares has been issued under the Plan and 55,000 options
remained outstanding.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) 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 class of securities, as of March 31, 1998 (except as indicated below) by
(a) each stockholder 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.
<TABLE>
<CAPTION>
Percent Owned
Name and Address of Amount and Nature of Beneficially and
Beneficial Owner Beneficial Ownership of Record
(1) (2)
------------------- -------------------- ----------------
<S> <C> <C>
Michael Smolyansky (5) 2,353,560 (3) 62.3
7625 N. Austin Ave.
Skokie, IL 60077
Rick D. Salm (5) 2,900 *
6945 N. Clark St.
Chicago, IL 60626
Pol Sikar (5) 11,700 *
3907 Miller Drive
Glenview, IL 60025
Lorenzo Bernardi (5) 1,600 *
2919 N. Natoma
Chicago, IL 60634
Valeriy Nikolenko (5) 6,100 (4) *
8917 Lamon Ave.
Skokie, IL 60077
All officers and directors of 2,375,860 62.8
the Company as a group (five
persons)
</TABLE>
6
<PAGE> 10
- -----------------------
* Represents less than one percent of the outstanding Common Stock.
(1) Unless otherwise indicated, all shares are directly owned and
investing power is held by the persons named.
(2) Based upon 3,778,877 shares of Common Stock outstanding as of
March 31, 1998.
(3) Mr. Smolyansky directly owns 2,275,100 shares of Common Stock of
the Company. 69,460 shares of Common Stock are owned by his wife
and therefore deemed to be beneficially owned by Mr. Smolyansky.
Also included are 9,000 shares of Common Stock owned by the
Smolyansky Family Foundation, a charitable trust, of which Mr.
and Mrs. Smolyansky are the trustees. The Smolyansky's disclaim
any beneficial ownership of the trust.
(4) Mr. Nikolenko directly owns 3,000 shares of Common Stock of the
Company. 1,100 shares of Common Stock are owned by his wife and
therefore deemed to be beneficially owned by Mr. Nikolenko. Also
included are vested options to acquire 2,000 shares of common
stock at an average price of $5.00 per share.
(5) Director or officer. The majority of the shares of Common Stock
held by officers, directors and principal shareholders listed
above are "restricted securities" and, as such, are subject to
limitations on resale. The shares may be sold pursuant to Rule
144 of the Securities Act of 1933, as amended, under certain
circumstances.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1994, the Company determined that it would not be able to
implement its business plan for its subsidiary, Lifeway International, Inc.
("LII"). As a result, the Company conducted an exchange offer to the minority
shareholders of LII, whereby each minority shareholder could alternatively
exchange their shares for (i) restricted shares of Common Stock in the Company;
or (ii) receive a return of their original investment in cash plus interest on
their investment paid in restricted shares of Common Stock in the Company. On
February 21, 1995, Mr. Michael Smolyansky, the Company's CEO, CFO, President,
Treasurer and director, and his wife elected to exchange their shares of LII for
the return of their original investment in cash aggregating $10,000 plus
interest paid in an aggregate 800 restricted shares of Common Stock in the
Company. On March 25, 1995, Mr. Pol Sikar, a director of the Company, elected to
exchange his shares of LII for 4,400 restricted shares of Common Stock in the
Company. On January 10, 1995, Mr. Lorenzo Bernardi, a director of the Company,
elected to exchange his shares of LII for the return of his $10,000 investment
in cash plus interest paid in 1,600 restricted shares of Common Stock in the
Company.
On October 13, 1997, pursuant to the Unanimous Written Consent of the
Board of Directors, in payment for consulting services, 1,800 shares of the
Company's Common Stock registered with the Securities and Exchange Commission on
Form S-8 were issued to a company owned by Mr. Pol Sikar, a director of the
Company.
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<PAGE> 11
PROPOSAL 2
RATIFICATION OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board has designated the firm of Gleeson, Sklar, Sawyers & Cumpata
LLP, independent auditors, as auditors of the Company for the next fiscal year.
The Company has been advised by such firm 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 Gleeson, Sklar, Sawyers & Cumpata LLP on matters of
accounting principles or practices, financial statement disclosure, auditing
scope or procedure, or any reportable event.
The Company expects that representatives of Gleeson, Sklar, Sawyers &
Cumpata LLP will be present at the Meeting, with the opportunity to make a
statement if they so desire, and will be available to respond to appropriate
questions.
In the event that ratification of the appointment of Gleeson, Sklar,
Sawyers & Cumpata LLP as the independent public accountants for the Company is
not obtained at the Meeting, the Board of Directors will reconsider its
appointment.
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 Gleeson, Sklar, Sawyers & Cumpata LLP. Abstentions and broker
non-votes are considered shares of stock present in person or represented by
proxy at the Annual 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 GLEESON, SKLAR, SAWYERS & CUMPATA LLP AS THE INDEPENDENT
AUDITORS FOR THE CURRENT FISCAL YEAR (ENDING DECEMBER 31, 1998), AND PROXIES
SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR THEREOF UNLESS A STOCKHOLDER HAS
INDICATED OTHERWISE ON THE PROXY.
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<PAGE> 12
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.
STOCKHOLDER PROPOSALS
Any proposal that a stockholder may desire to present to the Company's
1999 Annual Meeting of Stockholders must be received in writing by the Secretary
of the Company on or before January 1, 1999, in order to be considered for
possible inclusion in the Company's proxy materials relating to such meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Michael Smolyansky
MICHAEL SMOLYANSKY
Chairman of the Board
April 17, 1998
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<PAGE> 13
PROXY PROXY
LIFEWAY FOODS, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AT THE HOLIDAY INN NORTH SHORE, SKOKIE, ILLINOIS,
SATURDAY, MAY 16, 1998, AT 11:00 A.M. LOCAL TIME
The undersigned hereby appoints Michael 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.
1. Election of Directors:
Nominees: Michael Smolyansky Pol Sikar Rick D. Salm Lorenzo Bernardi
[ ] FOR [ ] WITHHELD For, except vote withheld from the
following nominees:
---------------------------------------------------------------------
2. Ratification of Gleeson, Sklar, Sawyers & Cumpata LLP as independent
auditors:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
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<PAGE> 14
3. Other Matters:
In his discretion, to vote with respect to any other matters that may
come before the meeting or any adjournment thereof, including matters incident
to its conduct.
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.
SIGNATURE DATED:*
------------------------------------- -----------------
- --------------------------------------------- ----------------------------
SIGNATURE IF JOINTLY OWNED PRINT NAME
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.
11
