UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 3)*
Lifeway Foods, Inc.
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(Name of Issuer)
Common Stock, no par value
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(Title of Class of Securities)
531914109
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(CUSIP Number)
Fanny Picard Michael Harrison, Esq.
GROUPE DANONE Danone Foods, Inc.
7 rue de Teheran 120 White Plains Road
75381 Paris Cedex 08 Tarrytown, New York 10591
France
Telephone: (33-1) 44-35-20-20 Telephone: (914) 366-9700
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(Name, Address and Telephone Number of Persons Authorized to Receive Notices
and Communications)
Copy to:
John J. Madden, Esq.
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Telephone: (212) 848-4000
December 24, 1999
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(Date of Event which requires Filing of this Statement)
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If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of ss. 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box |_|.
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See ss. 240.13d-7(b) for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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CUSIP No. 531914109
1. Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
GROUPE DANONE
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2. Check the Appropriate Box if a Member of a Group
(a) |_|
(b) |_|
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3. SEC Use Only
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4. Source of Funds (See Instructions)
WC
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5. Check if Disclosure of Legal Proceedings is Required Pursuant to
Item 2(d) or 2(e).
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6. Citizenship or Place of Organization
France
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7. Sole Voting Power
0
- ----- Number of Shares ---------------------------------------------
8. Beneficially Shared Voting Power
Owned
By 863,689
- ----- Each ---------------------------------------------
9. Reporting Person Sole Dispositive Power
With
0
- ----- ---------------------------------------------
10. Shared Dispositive Power
863,689
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11. Aggregate Amount Beneficially Owned by Each Reporting Person
863,689
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12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions)
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13. Percent of Class Represented by Amount in Row (11)
20.0%
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14. Type of Reporting Person (See Instructions)
HC/CO
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CUSIP No. 531914109
1. Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Danone Foods, Inc.
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2. Check the Appropriate Box if a Member of a Group
(a) |_|
(b) |_|
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3. SEC Use Only
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4. Source of Funds (See Instructions)
AF
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5. Check if Disclosure of Legal Proceedings is Required Pursuant to
Item 2(d) or 2(e).
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6. Citizenship or Place of Organization
Delaware
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7. Sole Voting Power
0
- ----- Number of Shares ---------------------------------------------
8. Beneficially Shared Voting Power
Owned
By 863,689
- ----- Each ---------------------------------------------
9. Reporting Person Sole Dispositive Power
With
0
- ----- ---------------------------------------------
10. Shared Dispositive Power
863,689
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11. Aggregate Amount Beneficially Owned by Each Reporting Person
863,689
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12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions)
|_|
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13. Percent of Class Represented by Amount in Row (11)
20.0%
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14. Type of Reporting Person (See Instructions)
CO
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Amendment No. 3 to Schedule 13D
GROUPE DANONE, a societe anonyme organized under the laws of the
Republic of France, and Danone Foods, Inc. ("Danone Foods"), a Delaware
corporation, hereby amend and supplement the statement on Schedule 13D (the
"Statement") previously filed by GROUPE DANONE and Danone Foods with the
Securities and Exchange Commission on October 12, 1999, as amended, with respect
to the common stock, no par value (the "Lifeway Common Stock") of Lifeway Foods,
Inc., an Illinois corporation, with its principal executive offices at 6431 W.
Oakton Street, Morton Grove, Illinois 60053 (the "Issuer"). Except as amended
and supplemented, the Statement, including the definitions of terms not
otherwise defined herein, remains in full force and effect.
Item 3. Source and Amount of Funds or Other Consideration
On November 23, 1999, Danone Foods entered into a Stock Purchase
Agreement with Val Nikolenko (the "Nikolenko Stock Purchase Agreement").
Pursuant to the Nikolenko Stock Purchase Agreement, on November 23, 1999, Danone
Foods acquired 3,900 shares of Lifeway Common Stock directly from Val Nikolenko
at a price of U.S. $10.00 per share. The total consideration paid by Danone
Foods to acquire the 3,900 shares of Lifeway Common Stock was U.S. $39,000.
On November 23, 1999, Danone Foods entered into a Stock Purchase
Agreement with Michael Smekhov and Helen Smekhov (the "Smekhov Stock Purchase
Agreement"). Pursuant to the Smekhov Stock Purchase Agreement, on November 23,
1999, Danone Foods acquired 8,200 shares of Lifeway Common Stock directly from
Michael Smekhov and Helen Smekhov at a price of U.S. $10.00 per share. The total
consideration paid by Danone Foods to acquire the 8,200 shares of Lifeway Common
Stock was U.S. $82,000.
On December 1, 1999, Danone Foods entered into a Stock Purchase
Agreement with Lydia Averbukh and Miron Averbukh (the "Averbukh Stock Purchase
Agreement"). Pursuant to the Averbukh Stock Purchase Agreement, on December 1,
1999, Danone Foods acquired 25,300 shares of Lifeway Common Stock directly from
Lydia Averbukh and Miron Averbukh at a price of U.S. $10.00 per share. The total
consideration paid by Danone Foods to acquire the 25,300 shares of Lifeway
Common Stock was U.S. $253,000.
On December 14, 1999, Danone Foods entered into a Stock Purchase
Agreement (the "Shaw III Stock Purchase Agreement") with the Roger D. Shaw Trust
U/A/D 7/28/33 F/B/O Margaret W. Shaw and the William W. Shaw Trust U/A/D
12/28/63 (collectively the "Shaw Entities"). Pursuant to the Shaw III Stock
Purchase Agreement, on December 14, 1999, Danone Foods acquired 5,000 shares of
Lifeway Common Stock directly from the Shaw Entities at a price of U.S. $10.00
per share. The total consideration paid by Danone Foods to acquire the 5,000
shares of Lifeway Common Stock was U.S. $50,000.
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On December 24, 1999, Danone Foods entered into a Stock Purchase
Agreement with Michael Smolyansky (the "Smolyansky Stock Purchase Agreement").
Pursuant to the Smolyansky Stock Purchase Agreement, on December 24, 1999,
Danone Foods acquired 38,362 shares of Lifeway Common Stock directly from
Michael Smolyansky at a price of U.S. $10.00 per share. The total consideration
paid by Danone Foods to acquire the 38,362 shares of Lifeway Common Stock was
U.S. $383,620.
GROUPE DANONE provided Danone Foods with funds from internally
generated working capital to finance the foregoing acquisitions.
Item 4. Purpose of Transactions
Danone Foods has acquired the 80,762 shares of Lifeway Common Stock for
the purpose of making an additional equity investment in the Issuer and to
complement the development of a commercial relationship with the Issuer. Danone
Foods has no present intention to acquire any additional shares of Lifeway
Common Stock.
Danone Foods has also entered into a Letter Agreement, dated as of
December 24, 1999 (the "Letter Agreement"), among the Issuer, Danone Foods,
Michael Smolyansky, Ludmila Smolyansky, Julie Smolyansky and Edward Smolyansky
(such Letter Agreement being more fully described in Item 6 hereto). The Letter
Agreement amends the Stockholders' Agreement, dated as of October 1, 1999 (the
"Stockholders' Agreement"), among the Issuer, Danone Foods, Michael Smolyansky,
Ludmila Smolyansky, Julie Smolyansky and Edward Smolyansky (such Stockholders'
Agreement filed as Exhibit 3 to the Statement and incorporated herein by
reference). Pursuant to the Letter Agreement, the parties have agreed to amend
the Stockholders' Agreement to provide that the parties will cause the Issuer's
Articles of Incorporation to be amended, as promptly as practicable, to provide
that the Issuer has the power to grant preemptive rights to any of its
shareholders by contract.
Item 5. Interest in Securities of the Issuer
1. GROUPE DANONE
(a)-(b) Following the acquisition of shares of Lifeway Common Stock
pursuant to the Nikolenko Stock Purchase Agreement, the Smekhov Stock Purchase
Agreement, the Averbukh Stock Purchase Agreement, the Shaw III Stock Purchase
Agreement and the Smolyansky Stock Purchase Agreement, GROUPE DANONE
beneficially owns and has the shared power to vote and to dispose of 863,689
shares of Lifeway Common Stock, representing 20.0% of the shared voting power of
the outstanding shares of Lifeway Common Stock. The calculation of the foregoing
percentage is based on the number of shares of Lifeway Common Stock disclosed to
Danone Foods by the Issuer as outstanding as of December 24, 1999. Except as set
forth herein, to the knowledge of GROUPE DANONE, no director or executive
officer of GROUPE DANONE beneficially owns any other shares of Lifeway Common
Stock.
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(c) Except as set forth in the Statement, as amended, and except
as described herein, there have been no transactions by GROUPE DANONE in
securities of the Issuer during the past sixty days. Except as set forth herein,
to the knowledge of GROUPE DANONE, there have been no transactions by any
director or executive officer of GROUPE DANONE in securities of the Issuer
during the past sixty days.
(d) No one other than GROUPE DANONE and Danone Foods is known to
have the right to receive or the power to direct the receipt of dividends from,
or the proceeds from the sale of, the shares of Lifeway Common Stock purchased
by Danone Foods.
(e) Not applicable.
2. Danone Foods, Inc.
(a)-(b) Following the acquisition of shares of Lifeway Common Stock
pursuant to the Nikolenko Stock Purchase Agreement, the Smekhov Stock Purchase
Agreement, the Averbukh Stock Purchase Agreement, the Shaw III Stock Purchase
Agreement and the Smolyansky Stock Purchase Agreement, Danone Foods beneficially
owns and has the shared power to vote and to dispose of 863,689 shares of
Lifeway Common Stock, representing 20.0% of the shared voting power of the
outstanding shares of Lifeway Common Stock. The calculation of the foregoing
percentage is based on the number of shares of Lifeway Common Stock disclosed to
Danone Foods by the Issuer as outstanding as of December 24, 1999. Except as set
forth herein, to the knowledge of Danone Foods, no director or executive officer
of Danone Foods beneficially owns any other shares of Lifeway Common Stock.
(c) Except as set forth in the Statement, as amended, and except
as described herein, there have been no transactions by Danone Foods in
securities of the Issuer during the past sixty days. Except as set forth herein,
to the knowledge of Danone Foods, there have been no transactions by any
director or executive officer of Danone Foods in securities of the Issuer during
the past sixty days.
(d) No one other than Danone Foods and GROUPE DANONE is known to
have the right to receive or the power to direct the receipt of dividends from,
or the proceeds from the sale of, the shares of Lifeway Common Stock purchased
by Danone Foods.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understanding or Relationships with
Respect to Securities of the Issuer
The Nikolenko Stock Purchase Agreement
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Pursuant to the Nikolenko Stock Purchase Agreement, on
November 23, 1999, Danone Foods purchased 3,900 shares of Lifeway Common Stock
directly from Val Nikolenko at a purchase price of U.S. $10.00 per share.
The Smekhov Stock Purchase Agreement
Pursuant to the Smekhov Stock Purchase Agreement, on November
23, 1999, Danone Foods purchased 8,200 shares of Lifeway Common Stock directly
from Michael Smekhov and Helen Smekhov at a purchase price of U.S. $10.00 per
share.
The Averbukh Stock Purchase Agreement
Pursuant to the Averbukh Stock Purchase Agreement, on December
1, 1999, Danone Foods purchased 25,300 shares of Lifeway Common Stock directly
from Lydia Averbukh and Miron Averbukh at a purchase price of U.S. $10.00 per
share.
The Shaw III Stock Purchase Agreement
Pursuant to the Shaw III Stock Purchase Agreement, on December
14, 1999, Danone Foods purchased 5,000 shares of Lifeway Common Stock directly
from the Roger D. Shaw Trust U/A/D 7/28/33 F/B/O Margaret W. Shaw and the
William W. Shaw Trust U/A/D 12/28/63 at a purchase price of U.S. $10.00 per
share.
The Smolyansky Stock Purchase Agreement
Pursuant to the Smolyansky Stock Purchase Agreement, on
December 24, 1999, Danone Foods purchased 38,362 shares of Lifeway Common Stock
directly from Michael Smolyansky at a purchase price of U.S. $10.00 per share.
The Letter Agreement
The Letter Agreement amends the Stockholders' Agreement to
provide anti-dilutive rights to Danone Foods in situations where the Issuer
proposes to issue, subject to limited exceptions, any capital stock of the
Issuer other than Lifeway Common Stock, to any person.
The Letter Agreement also amends the Stockholders' Agreement
to provide that the rights of first refusal conferred upon Danone Foods and
Michael Smolyansky by the Stockholders' Agreement shall also apply, subject to
limited exceptions, to the issue, sale or transfer of any capital stock of the
Issuer other than Lifeway Common Stock, by Danone Foods or by Michael
Smolyansky, Ludmila Smolyansky, Julie Smolyansky and Edward
Smolyansky, as the case may be.
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The Letter Agreement also amends the Stockholders' Agreement
to provide that the parties will cause the Issuer's Articles of Incorporation to
be amended, as promptly as practicable, to provide that the Issuer has the power
to grant pre-emptive rights to any of its shareholders by contract.
The preceding summary of the above agreements is not intended
to be complete and is qualified in its entirety by reference to the full text of
the Nikolenko Stock Purchase Agreement, the Smekhov Stock Purchase Agreement,
the Averbukh Stock Purchase Agreement, the Shaw III Stock Purchase Agreement,
the Smolyansky Stock Purchase Agreement, the Stockholders' Agreement and the
Letter Agreement, copies of each of which are filed as an Exhibit hereto and are
incorporated herein by reference.
Item 7. Material to be Filed as Exhibits
The following Exhibits are filed with this Amendment No. 3:
Exhibit 18 Power of Attorney, dated October 12, 1999, granted by
GROUPE DANONE authorizing Fanny Picard to sign
statements on Schedule 13D and amendments thereto
(filed as Exhibit 4 to the Statement and incorporated
herein by reference).
Exhibit 19 Power of Attorney, dated October 12, 1999, granted by
Danone Foods authorizing Fanny Picard to sign
statements on Schedule 13D and amendments thereto
(filed as Exhibit 5 to the Statement and incorporated
herein by reference).
Exhibit 20 Stock Purchase Agreement, dated as of November 23,
1999, between Danone Foods and Val Nikolenko.
Exhibit 21 Stock Purchase Agreement, dated as of November 23,
1999, among Danone Foods, Michael Smekhov and Helen
Smekhov.
Exhibit 22 Stock Purchase Agreement, dated as of December 1,
1999, among Danone Foods, Lydia Averbukh and Miron
Averbukh.
Exhibit 23 Stock Purchase Agreement, dated as of December 14,
1999, among Danone Foods, the Roger D. Shaw Trust
U/A/D 7/28/33 F/B/O Margaret W. Shaw and the
William W. Shaw Trust U/A/D 12/28/63.
Exhibit 24 Stock Purchase Agreement, dated as of December 24,
1999, between Danone Foods and Michael Smolyansky.
Exhibit 25 Stockholders' Agreement, dated as of October 1, 1999,
among the Issuer, Danone Foods, Michael Smolyansky,
Ludmila Smolyansky, Julie
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Smolyansky and Edward Smolyansky (filed as Exhibit 3
to the Statement and incorporated herein by
reference).
Exhibit 26 Letter Agreement, dated as of December 24, 1999, a
mong the Issuer, Danone Foods, Michael Smolyansky,
Ludmila Smolyansky, Julie Smolyansky and Edward
Smolyansky.
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After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: January 3, 2000
GROUPE DANONE
By: /s/ Fanny Picard
--------------------------------
Name: Fanny Picard
Title: Attorney-In-Fact
<PAGE>
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: January 3, 2000
DANONE FOODS, INC.
By: /s/ Fanny Picard
--------------------------------
Name: Fanny Picard
Title: Attorney-In-Fact
<PAGE>
Exhibit 20
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STOCK PURCHASE AGREEMENT
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Between
VAL NIKOLENKO
and
DANONE FOODS, INC.
Dated as of November 23, 1999
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<PAGE>
TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINITIONS
1.01. Certain Defined Terms...................................................1
ARTICLE II
PURCHASE AND SALE
2.01. Purchase and Sale of the Shares.........................................2
2.02. Purchase Price..........................................................2
2.03. Closing.................................................................3
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
3.01. Authorization...........................................................3
3.02. Ownership of Shares.....................................................3
3.03. No Conflict.............................................................4
3.04. Absence of Litigation...................................................4
3.05. Brokers.................................................................4
3.06. Disclosure; Access to Information.......................................4
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
4.01. Organization and Authority of the Purchaser.............................5
4.02. No Conflict.............................................................5
4.03. Investment Purpose......................................................5
4.04. Brokers.................................................................5
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Section Page
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ARTICLE V
ADDITIONAL AGREEMENTS
5.01. Public Announcements....................................................6
5.02. Further Action..........................................................6
5.03. Investigation...........................................................6
ARTICLE VI
CONDITIONS TO CLOSING
6.01. Condition to Obligations of the Seller..................................7
6.02. Conditions to Obligations of the Purchaser..............................7
ARTICLE VII
TERMINATION
7.01. Termination.............................................................7
7.02. Effect of Termination...................................................8
ARTICLE VIII
GENERAL PROVISIONS
8.01. Waiver..................................................................8
8.02. Expenses................................................................8
8.03. Notices.................................................................8
8.04. Headings...............................................................10
8.05. Severability...........................................................10
8.06. Entire Agreement.......................................................10
8.07. Assignment.............................................................10
8.08. No Third Party Beneficiaries...........................................10
8.09. Amendment..............................................................10
8.10. Governing Law..........................................................10
8.11. Waiver of Jury Trial...................................................10
8.12. Counterparts...........................................................11
8.13. Specific Performance...................................................11
8.14. Survival of Representations and Warranties.............................11
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STOCK PURCHASE AGREEMENT, dated as of November 23, 1999,
between Val Nikolenko, care of Lifeway Foods, Inc., 6431 W. Oakton St., Morton
Grove, Illinois (the "Seller") and Danone Foods, Inc., a Delaware corporation
(the "Purchaser").
W I T N E S S E T H:
WHEREAS, the Seller owns at least 3,900 shares of common
stock, no par value per share (the "Common Stock") of Lifeway Foods, Inc., an
Illinois corporation (the "Company"); and
WHEREAS, the Seller wishes to sell to the Purchaser, and the
Purchaser wishes to purchase from the Seller, 3,900 shares of the Common Stock
(such shares to be sold pursuant to this Agreement being individually, a "Share"
and, collectively, the "Shares"), upon the terms and subject to the conditions
set forth herein.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements and covenants hereinafter set forth, the Purchaser and the
Seller hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this
Agreement, the following terms shall have the following meanings:
"Action" means any claim, action, suit, arbitration, inquiry,
proceeding or investigation by or before any Governmental Authority.
"Affiliate" means, with respect to any specified Person, any
other Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person.
"Business" means the business of manufacturing, marketing and
selling cultured, probiotic and functional food products in the health food
industry and all other business which prior to the date hereof has been
conducted by the Company and the Subsidiaries.
"Closing" has the meaning specified in Section 2.03(a).
"Closing Date" has the meaning specified in Section 2.03(a).
"Common Stock" has the meaning specified in the recitals to
this Agreement.
<PAGE>
"control" (including the terms "controlled by" and "under
common control with"), with respect to the relationship between or among two or
more Persons, means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the affairs or
management of a Person, whether through the ownership of voting securities, as
trustee or executor, by contract or otherwise, including, without limitation,
the ownership, directly or indirectly, of securities having the power to elect a
majority of the board of directors or similar body governing the affairs of such
Person.
"Encumbrance" means any security interest, pledge, mortgage,
lien (including, without limitation, environmental and tax liens), charge,
encumbrance, adverse claim, preferential arrangement or restriction of any kind,
including, without limitation, any restriction on the use, voting, transfer,
receipt of income or other exercise of any attributes of ownership.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Governmental Authority" means any United States federal,
state, local, supranational or any foreign government, governmental, regulatory
or administrative authority, agency or commission or any court, tribunal, or
judicial or arbitral body.
"Governmental Order" means any order, writ, judgment,
injunction, decree, stipulation, determination or award entered by or with any
Governmental Authority.
"Law" means any federal, state, local or foreign statute, law,
ordinance, regulation, rule, code, order, other requirement or rule of law.
"Person" means any individual, partnership, firm, corporation,
association, trust, unincorporated organization or other entity, as well as any
syndicate or group that would be deemed to be a person under Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended.
"Purchase Price" has the meaning specified in Section 2.02.
ARTICLE II
PURCHASE AND SALE
SECTION 2.01. Purchase and Sale of the Shares. Upon the terms
and subject to the conditions contained in this Agreement, at the Closing, the
Seller shall sell to the Purchaser, and the Purchaser shall purchase from the
Seller, 3,900 Shares.
SECTION 2.02. Purchase Price. The purchase price shall be
$10.00 per Share (the "Purchase Price") payable as provided in Section 2.03(b).
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SECTION 2.03. Closing. (a) Subject to the terms and conditions
of this Agreement, the sale and purchase of the Shares contemplated by this
Agreement shall take place at a closing (the "Closing") to be held at the
offices of Shearman & Sterling at 10:00 A.M., New York time, on such date on or
before December 31, 1999 as the Purchaser may determine, or at such other place
or at such other time or on such other date as the Seller and the Purchaser may
mutually agree upon in writing (the date on which the Closing takes place being
the "Closing Date").
(b) At the Closing, (i) the Seller shall deliver or cause to
be delivered to the Purchaser stock certificates evidencing the Shares duly
endorsed in blank, or accompanied by stock powers duly executed in blank, in
form satisfactory to the Purchaser and (ii) the Purchaser shall, at the election
of the Seller, (x) deliver to the Seller a certified check in the amount of
$39,000, made payable to the order of the Seller or (y) pay to the Seller the
amount of $39,000 by wire transfer of immediately available funds to the bank
account designated by the Seller. The Seller agrees to provide the Purchaser
with notice of such election at least one day prior to the Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
As an inducement to the Purchaser to enter into this
Agreement, the Seller hereby represents and warrants to the Purchaser as
follows:
SECTION 3.01. Authorization. The Seller, if it is an
individual, has all requisite right, power and authority and full legal capacity
to execute and deliver this Agreement, to perform his or her obligations
hereunder and to consummate the transactions contemplated hereby. The Seller, if
it is a corporation or other legal entity, is duly organized, validly existing
and in good standing under the laws of its incorporation or formation and has
all requisite power and authority to enter into this Agreement, to carry out its
obligations hereunder and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by the Seller, the performance by
the Seller of its obligations hereunder and the consummation by the Seller of
the transactions contemplated hereby have been duly authorized by all requisite
action on the part of the Seller. This Agreement has been duly and validly
executed and delivered by the Seller, and this Agreement constitutes a legal,
valid and binding obligation of the Seller enforceable against the Seller in
accordance with its terms.
SECTION 3.02. Ownership of Shares. The Seller has good and
marketable title to, and is the record and beneficial owner of, the Shares, free
and clear of all Encumbrances. Upon delivery of the Shares by the Seller to the
Purchaser at the Closing and payment of the Purchase Price for the Shares, as
herein provided, the Purchaser will receive good and marketable title to the
Shares, free and clear of all Encumbrances.
3
<PAGE>
SECTION 3.03. No Conflict. Except as may result from any facts
or circumstances relating solely to the Purchaser, the execution, delivery and
performance of this Agreement by the Seller do not and will not (a) conflict
with or violate any Law or Governmental Order applicable to the Seller or (b)
conflict with, result in any breach of, constitute a default (or event which
with the giving of notice or lapse of time, or both, would become a default)
under, require any consent under, or give to others any rights of termination,
amendment, acceleration, suspension, revocation or cancellation of, or result in
the creation of any Encumbrance on any of the Shares pursuant to, any note,
bond, mortgage or indenture, contract, agreement, lease, sublease, license,
permit, franchise or other instrument, obligation or arrangement to which the
Seller is a party or by which any of the Shares are bound or affected or which
would have a material adverse effect on the ability of the Seller to consummate
the transactions contemplated by this Agreement.
SECTION 3.04. Absence of Litigation. There are no Actions by
or against the Seller pending before any Governmental Authority (or, to the best
knowledge of the Seller after due inquiry, threatened to be brought by or before
any Governmental Authority) relating to or affecting the Shares or which could
affect the legality, validity or enforceability of this Agreement or the
consummation of the transactions contemplated hereby. The Seller is not subject
to any Governmental Order (nor, to the best knowledge of the Seller, are there
any such Governmental Orders threatened to be imposed by any Governmental
Authority) relating to or affecting the Shares or which would affect the
legality, validity or enforceability of this Agreement or the consummation of
the transactions contemplated hereby.
SECTION 3.05. Brokers. No broker, finder or investment banker
is entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Seller.
SECTION 3.06. Disclosure; Access to Information. The Seller
has received and reviewed the materials listed in Schedule A to this Agreement,
but has not necessarily relied on all the information contained in such
materials. The Seller acknowledges that the materials listed in Schedule A to
this Agreement contain certain information concerning the Company and the Seller
agrees to maintain, and to cause its Affiliates to maintain the confidentiality
of any and all such information furnished to the Seller, except with the prior
written consent of the Purchaser or as may be required by any Governmental
Order.
4
<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
As an inducement to the Seller to enter into this Agreement,
the Purchaser hereby represents and warrants to the Seller as follows:
SECTION 4.01. Organization and Authority of the Purchaser. The
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of Delaware. The Purchaser has all necessary corporate power and
authority to enter into this Agreement, to carry out its obligations hereunder
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement by the Purchaser, the performance by the Purchaser of
its obligations hereunder and the consummation by the Purchaser of the
transactions contemplated hereby have been duly authorized by all requisite
action on the part of the Purchaser. This Agreement has been duly executed and
delivered by the Purchaser, and (assuming due authorization, execution and
delivery by the Seller party thereto) constitute legal, valid and binding
obligations of the Purchaser enforceable against the Purchaser in accordance
with their terms.
SECTION 4.02. No Conflict. Except as may result from any facts
or circumstances relating solely to the Seller, the execution, delivery and
performance of this Agreement by the Purchaser do not and will not (a) violate,
conflict with or result in the breach of any provision of the certificate of
incorporation, by-laws or other similar organizational documents of the
Purchaser, (b) conflict with or violate any Law or Governmental Order applicable
to the Purchaser or (c) conflict with, or result in any breach of, constitute a
default (or event which with the giving of notice or lapse or time, or both,
would become a default) under, require any consent under, or give to others any
rights of termination, amendment, acceleration, suspension, revocation, or
cancellation of, or result in the creation of any Encumbrance on any of the
assets or properties of the Purchaser pursuant to, any note, bond, mortgage or
indenture, contract, agreement, lease, sublease, license, permit, franchise or
other instrument or arrangement to which the Purchaser is a party or by which
any of such assets or properties are bound or affected which, with respect to
clauses (b) and (c) above would have a material adverse effect on the ability of
the Purchaser to consummate the transactions contemplated by this Agreement.
SECTION 4.03. Investment Purpose. The Purchaser is acquiring
the Shares solely for the purpose of investment and not with a view to, or for
offer or sale in connection with, any distribution thereof.
SECTION 4.04. Brokers. No broker, finder or investment banker
is entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Purchaser.
5
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ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Public Announcements. The Seller shall not make,
or cause to be made, any press release or public announcement in respect of this
Agreement or the transactions contemplated hereby or otherwise communicate with
any news media without the prior written consent of the Purchaser, and the
Seller shall cooperate with the Purchaser as to the timing and contents of any
such press release or public announcement.
SECTION 5.02. Further Action. Each of the parties hereto shall
use all reasonable efforts to take, or cause to be taken, all appropriate
action, do or cause to be done all things necessary, proper or advisable under
applicable Law, and execute and deliver such documents and other papers, as may
be required to carry out the provisions of this Agreement and consummate and
make effective the transactions contemplated hereby.
SECTION 5.03. Investigation. (a) The Seller acknowledges and
agrees that it (i) has made its own inquiry and investigation into, and, based
thereon, has formed an independent judgment concerning, the Company, the
Business and the Shares, including with limitation, the value thereof, (ii) has
been furnished with or given adequate access to such information as it has
requested about the Company, the Business and the Shares and (iii) except as
provided in this Agreement, will not assert any claim against the Purchaser, the
Company or any of their respective directors, officers, employees, agents,
stockholders, Affiliates, consultants, investment bankers or representatives, or
hold the Purchaser, the Company or any such Persons liable, for any
inaccuracies, misstatements or omissions with respect to information furnished
by the Purchaser, the Company or such Persons concerning the Company, the
Business or the Shares.
(b) In connection with the Seller's investigation of the
Company and the Business, the Seller may receive from the Purchaser and the
Company, or their respective representatives, certain estimates, projections and
other forecasts for the Company and the Business. The Seller acknowledges that
there are uncertainties inherent in attempting to make such estimates,
projections, forecasts, plans and budgets, that the Seller is familiar with such
uncertainties, that it is taking full responsibility for making its own
evaluation of, and neither the Purchaser nor the Company shall have any
responsibility with respect to, the adequacy and accuracy of any such estimates,
projections, forecasts, plans and budgets so furnished to it, and that the
Seller will not assert any claim against the Purchaser, the Company or any of
their respective directors, officers, employees, agents, stockholders,
Affiliates, consultants, investment bankers or representatives, or hold the
Purchaser, the Company or any such Persons liable with respect thereto.
6
<PAGE>
ARTICLE VI
CONDITIONS TO CLOSING
SECTION 6.01. Condition to Obligations of the Seller. The
obligations of the Seller to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment, at or prior to the Closing, of
the condition that the representations and warranties of the Purchaser contained
in this Agreement shall have been true and correct when made and shall be true
and correct in all material respects as of the Closing Date, with the same force
and effect as if made as of the Closing Date, and the covenants and agreements
contained in this Agreement to be complied with by the Purchaser at or prior to
the Closing shall have been complied with in all material respects.
SECTION 6.02. Conditions to Obligations of the Purchaser. The
obligations of the Purchaser to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment, at or prior the Closing, of the
condition that the representations and warranties of the Seller contained in
this Agreement shall have been true and correct when made and shall be true and
correct in all material respects as of the Closing Date with the same force and
effect as if made as of the Closing Date, the covenants and agreements contained
in this Agreement to be complied with by the Seller at or prior to the Closing
shall have been complied with in all material respects, and the Purchaser shall
have received a certificate signed by the Seller to such effect.
ARTICLE VII
TERMINATION
SECTION 7.01. Termination. This Agreement may be terminated at
any time prior to the Closing:
(a) by the mutual written consent of the Purchaser and the
Seller;
(b) by either the Purchaser or the Seller if the Closing shall
not have occurred by December 31, 1999; provided, however, that the
right to terminate this Agreement under this Section 7.01(b) shall not
be available to any party whose failure to fulfill any obligation
under this Agreement shall have been the cause of, or shall have
resulted in, the failure of the Closing to occur on or prior to such
date;
(c) by either the Purchaser or the Seller in the event that any
Governmental Authority shall have issued an order, decree or ruling or
taken any other action restraining, enjoining or otherwise prohibiting
the transactions contemplated by this
7
<PAGE>
Agreement and such order, decree, ruling or other action shall have
become final and nonappealable; or
(d) by the Purchaser if, between the date hereof and the time
scheduled for the Closing, the Seller makes a general assignment for
the benefit of creditors, or any proceeding shall be instituted by or
against the Seller seeking to adjudicate it bankrupt or insolvent, or
seeking arrangement, adjustment, protection, relief or composition of
its debts under any Law relating to bankruptcy, insolvency or
reorganization.
SECTION 7.02. Effect of Termination. In the event of
termination of this Agreement as provided in Section 7.01, this Agreement shall
forthwith become void and there shall be no liability on the part of any party
hereto except that nothing herein shall relieve any party from liability for any
breach of this Agreement.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. Waiver. The Seller and the Purchaser may (a)
extend the time for the performance of any of the obligations or other acts of
the other party, (b) waive any inaccuracies in the representations and
warranties of the other party contained herein or in any document delivered by
the other party pursuant hereto or (c) waive compliance with any of the
agreements or conditions of the other party contained herein. Any such extension
or waiver shall be valid only if set forth in an instrument in writing signed by
the party to be bound thereby. Any waiver of any term or condition shall not be
construed as a waiver of any subsequent breach or a subsequent waiver of the
same term or condition, or a waiver of any other term or condition, of this
Agreement. The failure of any party to assert any of its rights hereunder shall
not constitute a waiver of any of such rights.
SECTION 8.02. Expenses. (a) Except as otherwise specified in
this Agreement, all costs and expenses, including, without limitation, fees and
disbursements of counsel, financial advisors and accountants, incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such costs and expenses.
(b) The Seller will pay any stamp duties, capital duties and
taxes payable upon the sale of the Shares.
SECTION 8.03. Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given or
made (and shall be deemed to have been duly given or made upon receipt) by
delivery in person, by courier service, by cable, by telecopy, by telegram, by
telex or by registered or certified mail (postage prepaid, return
8
<PAGE>
receipt requested) to the respective parties at the following addresses (or at
such other address for a party as shall be specified in a notice given in
accordance with this Section 8.03):
(a) if to the Seller:
Lifeway Foods, Inc.
6431 W. Oakton St.
Morton Grove, IL 60053
Fax: (847) 967-6558
Attention: Val Nikolenko
(b) if to the Purchaser:
Danone Foods, Inc.
120 White Plains Road
Tarrytown, New York 10591
Fax: (914) 366-2865
Attention: General Counsel
with a copy to:
Groupe Danone
7 rue de Teheran
75381 Paris Cedex 08
Fax: 33-1-44-352-554
Attention: General Counsel
and a copy to:
Groupe Danone
7 rue de Teheran
75381 Paris Cedex 08
Fax: 33-1-44-352-097
Attention: Director of Corporate Development
and
Shearman & Sterling
599 Lexington Avenue
New York, NY 10022
Telecopy: 212-848-7179
Attention: John J. Madden, Esq.
9
<PAGE>
SECTION 8.04. Headings. The descriptive headings contained in
this Agreement are for convenience of reference only and shall not affect in any
way the meaning or interpretation of this Agreement.
SECTION 8.05. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any Law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner in
order that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
SECTION 8.06. Entire Agreement. This Agreement constitutes the
entire agreement of the parties hereto with respect to the subject matter hereof
and thereof and supersedes all prior agreements and undertakings, both written
and oral, among the parties hereto with respect to the subject matter hereof and
thereof.
SECTION 8.07. Assignment. This Agreement may not be assigned
by operation of law or otherwise without the express written consent of the
Seller and the Purchaser (which consent may be granted or withheld in the sole
discretion of the Seller or the Purchaser); provided, however, that the
Purchaser may assign this Agreement to an Affiliate of the Purchaser without the
consent of the Seller.
SECTION 8.08. No Third Party Beneficiaries. This Agreement
shall be binding upon and inure solely to the benefit of the parties hereto and
their permitted assigns and nothing herein, express or implied, is intended to
or shall confer upon any other Person any legal or equitable right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement.
SECTION 8.09. Amendment. This Agreement may not be amended or
modified except (a) by an instrument in writing signed by, or on behalf of, the
Seller and the Purchaser or (b) by a waiver in accordance with Section 8.01.
SECTION 8.10. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of Illinois, without
giving effect to its principles or rules of conflict of laws to the extent such
principles or rules would require or permit the application of the laws of
another jurisdiction.
SECTION 8.11. Waiver of Jury Trial. Each of the parties hereto
hereby waives to the fullest extent permitted by applicable law, any right it
may have to a trial by jury in respect to any litigation directly or indirectly
arising out of, under or in connection with this Agreement.
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Each of the parties hereto (a) certifies that no representative, agent or
attorney of any other party has represented, expressly or otherwise, that such
other party would not, in the event of litigation, seek to enforce that
foregoing waiver and (b) acknowledges that it and the other parties hereto have
been induced to enter into this Agreement, by, among other things, the mutual
waivers and certifications in this Section 8.11.
SECTION 8.12. Counterparts. This Agreement may be executed in
one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
SECTION 8.13. Specific Performance. The parties hereto agree
that irreparable damage would occur in the event any provision of this Agreement
was not performed in accordance with the terms hereof and that the parties shall
be entitled to specific performance of the terms hereof, in additional to any
other remedy at Law or equity.
SECTION 8.14. Survival of Representations and Warranties. The
representations and warranties of the parties hereto contained in Articles III
and IV shall survive the Closing until the second anniversary thereof.
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IN WITNESS WHEREOF, each of the parties hereto have caused
this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
By: /s/ Val Nikolenko
--------------------------------
Name: Val Nikolenko
DANONE FOODS, INC.
By: /s/ Michael Harrison
--------------------------------
Name: Michael Harrison
Title: a Vice President
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SCHEDULE A
1. The "Company Profile and Representation" prepared by the Company and
dated June 7, 1999; and
2. The "Due Diligence Findings" Report (without attachments), dated June
2, 1999, prepared for and on behalf of the Purchaser.
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Exhibit 21
----------
================================================================================
--------------------------------------
STOCK PURCHASE AGREEMENT
--------------------------------------
Between
MICHAEL SMEKHOV,
HELEN SMEKHOV
and
DANONE FOODS, INC.
Dated as of November 23, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
Section Page
- ------- ----
ARTICLE I
DEFINITIONS
1.01. Certain Defined Terms...................................................1
ARTICLE II
PURCHASE AND SALE
2.01. Purchase and Sale of the Shares.........................................2
2.02. Purchase Price..........................................................2
2.03. Closing.................................................................3
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
3.01. Authorization...........................................................3
3.02. Ownership of Shares.....................................................3
3.03. No Conflict.............................................................4
3.04. Absence of Litigation...................................................4
3.05. Brokers.................................................................4
3.06. Disclosure; Access to Information.......................................4
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
4.01. Organization and Authority of the Purchaser.............................5
4.02. No Conflict.............................................................5
4.03. Investment Purpose......................................................5
4.04. Brokers.................................................................5
-i-
<PAGE>
Section Page
- ------- ----
ARTICLE V
ADDITIONAL AGREEMENTS
5.01. Public Announcements....................................................6
5.02. Further Action..........................................................6
5.03. Investigation...........................................................6
ARTICLE VI
CONDITIONS TO CLOSING
6.01. Condition to Obligations of the Seller..................................7
6.02. Conditions to Obligations of the Purchaser..............................7
ARTICLE VII
TERMINATION
7.01. Termination.............................................................7
7.02. Effect of Termination...................................................8
ARTICLE VIII
GENERAL PROVISIONS
8.01. Waiver..................................................................8
8.02. Expenses................................................................8
8.03. Notices.................................................................8
8.04. Headings...............................................................10
8.05. Severability...........................................................10
8.06. Entire Agreement.......................................................10
8.07. Assignment.............................................................10
8.08. No Third Party Beneficiaries...........................................10
8.09. Amendment..............................................................10
8.10. Governing Law..........................................................10
8.11. Waiver of Jury Trial...................................................10
8.12. Counterparts...........................................................11
8.13. Specific Performance...................................................11
8.14. Survival of Representations and Warranties.............................11
-ii-
<PAGE>
STOCK PURCHASE AGREEMENT, dated as of November 23, 1999,
between Michael Smekhov and Helen Smekhov, both of 905 Sheridan Road, Glencoe,
Illinois (each a "Seller", and collectively, the "Sellers") and Danone Foods,
Inc., a Delaware corporation (the "Purchaser").
W I T N E S S E T H:
WHEREAS, the Sellers own at least 8,200 shares of common
stock, no par value per share (the "Common Stock") of Lifeway Foods, Inc., an
Illinois corporation (the "Company"); and
WHEREAS, the Sellers wish to sell to the Purchaser, and the
Purchaser wishes to purchase from the Sellers, 8,200 shares of the Common Stock
(such shares to be sold pursuant to this Agreement being individually, a "Share"
and, collectively, the "Shares"), upon the terms and subject to the conditions
set forth herein.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements and covenants hereinafter set forth, the Purchaser and the
Sellers hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this
Agreement, the following terms shall have the following meanings:
"Action" means any claim, action, suit, arbitration, inquiry,
proceeding or investigation by or before any Governmental Authority.
"Affiliate" means, with respect to any specified Person, any
other Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person.
"Business" means the business of manufacturing, marketing and
selling cultured, probiotic and functional food products in the health food
industry and all other business which prior to the date hereof has been
conducted by the Company and the Subsidiaries.
"Closing" has the meaning specified in Section 2.03(a).
"Closing Date" has the meaning specified in Section 2.03(a).
"Common Stock" has the meaning specified in the recitals to
this Agreement.
<PAGE>
"control" (including the terms "controlled by" and "under
common control with"), with respect to the relationship between or among two or
more Persons, means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the affairs or
management of a Person, whether through the ownership of voting securities, as
trustee or executor, by contract or otherwise, including, without limitation,
the ownership, directly or indirectly, of securities having the power to elect a
majority of the board of directors or similar body governing the affairs of such
Person.
"Encumbrance" means any security interest, pledge, mortgage,
lien (including, without limitation, environmental and tax liens), charge,
encumbrance, adverse claim, preferential arrangement or restriction of any kind,
including, without limitation, any restriction on the use, voting, transfer,
receipt of income or other exercise of any attributes of ownership.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Governmental Authority" means any United States federal,
state, local, supranational or any foreign government, governmental, regulatory
or administrative authority, agency or commission or any court, tribunal, or
judicial or arbitral body.
"Governmental Order" means any order, writ, judgment,
injunction, decree, stipulation, determination or award entered by or with any
Governmental Authority.
"Law" means any federal, state, local or foreign statute, law,
ordinance, regulation, rule, code, order, other requirement or rule of law.
"Person" means any individual, partnership, firm, corporation,
association, trust, unincorporated organization or other entity, as well as any
syndicate or group that would be deemed to be a person under Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended.
"Purchase Price" has the meaning specified in Section 2.02.
ARTICLE II
PURCHASE AND SALE
SECTION 2.01. Purchase and Sale of the Shares. Upon the terms
and subject to the conditions contained in this Agreement, at the Closing, the
Sellers shall sell to the Purchaser, and the Purchaser shall purchase from the
Sellers, 8,200 Shares.
SECTION 2.02. Purchase Price. The purchase price shall be
$10.00 per Share (the "Purchase Price") payable as provided in Section 2.03(b).
2
<PAGE>
SECTION 2.03. Closing. (a) Subject to the terms and conditions
of this Agreement, the sale and purchase of the Shares contemplated by this
Agreement shall take place at a closing (the "Closing") to be held at the
offices of Shearman & Sterling at 10:00 A.M., New York time, on such date on or
before December 31, 1999 as the Purchaser may determine, or at such other place
or at such other time or on such other date as the Sellers and the Purchaser may
mutually agree upon in writing (the date on which the Closing takes place being
the "Closing Date").
(b) At the Closing, (i) the Sellers shall deliver or cause to
be delivered to the Purchaser stock certificates evidencing the Shares duly
endorsed in blank, or accompanied by stock powers duly executed in blank, in
form satisfactory to the Purchaser and (ii) the Purchaser shall, at the election
of the Sellers, (x) deliver to the Sellers a certified check in the amount of
$37,000, made payable to the order of Michael Smekhov and a certified check in
the amount of $45,000, made payable to the order of Helen Smekhov or (y) pay to
the Sellers the amount of $82,000 by wire transfer of immediately available
funds to the bank accounts designated by the Sellers. The Sellers agree to
provide the Purchaser with notice of such election at least one day prior to the
Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
As an inducement to the Purchaser to enter into this
Agreement, each of the Sellers hereby, severally but not jointly, represent and
warrant to the Purchaser as follows:
SECTION 3.01. Authorization. Each Seller, if it is an
individual, has all requisite right, power and authority and full legal capacity
to execute and deliver this Agreement, to perform his or her obligations
hereunder and to consummate the transactions contemplated hereby. Each Seller,
if it is a corporation or other legal entity, is duly organized, validly
existing and in good standing under the laws of its incorporation or formation
and has all requisite power and authority to enter into this Agreement, to carry
out its obligations hereunder and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by such Seller, the
performance by such Seller of its obligations hereunder and the consummation by
such Seller of the transactions contemplated hereby have been duly authorized by
all requisite action on the part of such Seller. This Agreement has been duly
and validly executed and delivered by each Seller, and this Agreement
constitutes a legal, valid and binding obligation of such Seller enforceable
against such Seller in accordance with its terms.
SECTION 3.02. Ownership of Shares. Each Seller has good and
marketable title to, and is the record and beneficial owner of, the number of
Shares set forth next to such Seller's name in Schedule B to this Agreement,
free and clear of all Encumbrances. Upon delivery of the Shares by the Sellers
to the Purchaser at the Closing and payment of the Purchase Price for the
3
<PAGE>
Shares, as herein provided, the Purchaser will receive good and marketable title
to the Shares, free and clear of all Encumbrances.
SECTION 3.03. No Conflict. Except as may result from any facts
or circumstances relating solely to the Purchaser, the execution, delivery and
performance of this Agreement by each Seller do not and will not (a) conflict
with or violate any Law or Governmental Order applicable to such Seller or (b)
conflict with, result in any breach of, constitute a default (or event which
with the giving of notice or lapse of time, or both, would become a default)
under, require any consent under, or give to others any rights of termination,
amendment, acceleration, suspension, revocation or cancellation of, or result in
the creation of any Encumbrance on any of the Shares pursuant to, any note,
bond, mortgage or indenture, contract, agreement, lease, sublease, license,
permit, franchise or other instrument, obligation or arrangement to which such
Seller is a party or by which any of the Shares are bound or affected or which
would have a material adverse effect on the ability of such Seller to consummate
the transactions contemplated by this Agreement.
SECTION 3.04. Absence of Litigation. There are no Actions by
or against any Seller pending before any Governmental Authority (or, to the best
knowledge of such Seller after due inquiry, threatened to be brought by or
before any Governmental Authority) relating to or affecting the Shares or which
could affect the legality, validity or enforceability of this Agreement or the
consummation of the transactions contemplated hereby. Each Seller is not subject
to any Governmental Order (nor, to the best knowledge of each Seller, are there
any such Governmental Orders threatened to be imposed by any Governmental
Authority) relating to or affecting the Shares or which would affect the
legality, validity or enforceability of this Agreement or the consummation of
the transactions contemplated hereby.
SECTION 3.05. Brokers. No broker, finder or investment banker
is entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of each Seller.
SECTION 3.06. Disclosure; Access to Information. Each Seller
has received and reviewed the materials listed in Schedule A to this Agreement,
but has not necessarily relied on all the information contained in such
materials. Each Seller acknowledges that the materials listed in Schedule A to
this Agreement contain certain material non-public information concerning the
Company and each Seller agrees to maintain, and to cause its Affiliates to
maintain the confidentiality of any and all such material non-public information
furnished to each Seller, except with the prior written consent of the Purchaser
or as may be required by any Governmental Order.
4
<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
As an inducement to the Sellers to enter into this Agreement,
the Purchaser hereby represents and warrants to the Sellers as follows:
SECTION 4.01. Organization and Authority of the Purchaser. The
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of Delaware. The Purchaser has all necessary corporate power and
authority to enter into this Agreement, to carry out its obligations hereunder
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement by the Purchaser, the performance by the Purchaser of
its obligations hereunder and the consummation by the Purchaser of the
transactions contemplated hereby have been duly authorized by all requisite
action on the part of the Purchaser. This Agreement has been duly executed and
delivered by the Purchaser, and (assuming due authorization, execution and
delivery by the Sellers thereto) constitute legal, valid and binding obligations
of the Purchaser enforceable against the Purchaser in accordance with their
terms.
SECTION 4.02. No Conflict. Except as may result from any facts
or circumstances relating solely to any Seller, the execution, delivery and
performance of this Agreement by the Purchaser do not and will not (a) violate,
conflict with or result in the breach of any provision of the certificate of
incorporation, by-laws or other similar organizational documents of the
Purchaser, (b) conflict with or violate any Law or Governmental Order applicable
to the Purchaser or (c) conflict with, or result in any breach of, constitute a
default (or event which with the giving of notice or lapse or time, or both,
would become a default) under, require any consent under, or give to others any
rights of termination, amendment, acceleration, suspension, revocation, or
cancellation of, or result in the creation of any Encumbrance on any of the
assets or properties of the Purchaser pursuant to, any note, bond, mortgage or
indenture, contract, agreement, lease, sublease, license, permit, franchise or
other instrument or arrangement to which the Purchaser is a party or by which
any of such assets or properties are bound or affected which, with respect to
clauses (b) and (c) above would have a material adverse effect on the ability of
the Purchaser to consummate the transactions contemplated by this Agreement.
SECTION 4.03. Investment Purpose. The Purchaser is acquiring
the Shares solely for the purpose of investment and not with a view to, or for
offer or sale in connection with, any distribution thereof.
SECTION 4.04. Brokers. No broker, finder or investment banker
is entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Purchaser.
5
<PAGE>
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Public Announcements. The Sellers shall not
make, or cause to be made, any press release or public announcement in respect
of this Agreement or the transactions contemplated hereby or otherwise
communicate with any news media without the prior written consent of the
Purchaser, and the Sellers shall cooperate with the Purchaser as to the timing
and contents of any such press release or public announcement.
SECTION 5.02. Further Action. Each of the parties hereto shall
use all reasonable efforts to take, or cause to be taken, all appropriate
action, do or cause to be done all things necessary, proper or advisable under
applicable Law, and execute and deliver such documents and other papers, as may
be required to carry out the provisions of this Agreement and consummate and
make effective the transactions contemplated hereby.
SECTION 5.03. Investigation. (a) Each Seller acknowledges and
agrees that it (i) has made its own inquiry and investigation into, and, based
thereon, has formed an independent judgment concerning, the Company, the
Business and the Shares, including with limitation, the value thereof, (ii) has
been furnished with or given adequate access to such information as it has
requested about the Company, the Business and the Shares and (iii) except as
provided in this Agreement, will not assert any claim against the Purchaser, the
Company or any of their respective directors, officers, employees, agents,
stockholders, Affiliates, consultants, investment bankers or representatives, or
hold the Purchaser, the Company or any such Persons liable, for any
inaccuracies, misstatements or omissions with respect to information furnished
by the Purchaser, the Company or such Persons concerning the Company, the
Business or the Shares.
(b) In connection with each Seller's investigation of the
Company and the Business, each Seller may receive from the Purchaser and the
Company, or their respective representatives, certain estimates, projections and
other forecasts for the Company and the Business. Each Seller acknowledges that
there are uncertainties inherent in attempting to make such estimates,
projections, forecasts, plans and budgets, that such Seller is familiar with
such uncertainties, that it is taking full responsibility for making its own
evaluation of, and neither the Purchaser nor the Company shall have any
responsibility with respect to, the adequacy and accuracy of any such estimates,
projections, forecasts, plans and budgets so furnished to it, and that such
Seller will not assert any claim against the Purchaser, the Company or any of
their respective directors, officers, employees, agents, stockholders,
Affiliates, consultants, investment bankers or representatives, or hold the
Purchaser, the Company or any such Persons liable with respect thereto.
6
<PAGE>
ARTICLE VI
CONDITIONS TO CLOSING
SECTION 6.01. Condition to Obligations of the Seller. The
obligations of each Seller to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment, at or prior to the Closing, of
the condition that the representations and warranties of the Purchaser contained
in this Agreement shall have been true and correct when made and shall be true
and correct in all material respects as of the Closing Date, with the same force
and effect as if made as of the Closing Date, and the covenants and agreements
contained in this Agreement to be complied with by the Purchaser at or prior to
the Closing shall have been complied with in all material respects.
SECTION 6.02. Conditions to Obligations of the Purchaser. The
obligations of the Purchaser to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment, at or prior the Closing, of the
condition that the representations and warranties of the Sellers contained in
this Agreement shall have been true and correct when made and shall be true and
correct in all material respects as of the Closing Date with the same force and
effect as if made as of the Closing Date, the covenants and agreements contained
in this Agreement to be complied with by the Sellers at or prior to the Closing
shall have been complied with in all material respects, and the Purchaser shall
have received a certificate signed by each Seller to such effect.
ARTICLE VII
TERMINATION
SECTION 7.01. Termination. This Agreement may be terminated at
any time prior to the Closing:
(a) by the mutual written consent of the Purchaser and the
Sellers;
(b) by either the Purchaser or the Sellers if the Closing shall
not have occurred by December 31, 1999; provided, however, that the
right to terminate this Agreement under this Section 7.01(b) shall not
be available to any party whose failure to fulfill any obligation
under this Agreement shall have been the cause of, or shall have
resulted in, the failure of the Closing to occur on or prior to such
date;
(c) by either the Purchaser or the Sellers in the event that any
Governmental Authority shall have issued an order, decree or ruling or
taken any other action restraining, enjoining or otherwise prohibiting
the transactions contemplated by this
7
<PAGE>
Agreement and such order, decree, ruling or other action shall have
become final and nonappealable; or
(d) by the Purchaser if, between the date hereof and the time
scheduled for the Closing, any Seller makes a general assignment for
the benefit of creditors, or any proceeding shall be instituted by or
against any Seller seeking to adjudicate it bankrupt or insolvent, or
seeking arrangement, adjustment, protection, relief or composition of
its debts under any Law relating to bankruptcy, insolvency or
reorganization.
SECTION 7.02. Effect of Termination. In the event of
termination of this Agreement as provided in Section 7.01, this Agreement shall
forthwith become void and there shall be no liability on the part of any party
hereto except that nothing herein shall relieve any party from liability for any
breach of this Agreement.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. Waiver. The Sellers and the Purchaser may (a)
extend the time for the performance of any of the obligations or other acts of
the other party, (b) waive any inaccuracies in the representations and
warranties of the other party contained herein or in any document delivered by
the other party pursuant hereto or (c) waive compliance with any of the
agreements or conditions of the other party contained herein. Any such extension
or waiver shall be valid only if set forth in an instrument in writing signed by
the party to be bound thereby. Any waiver of any term or condition shall not be
construed as a waiver of any subsequent breach or a subsequent waiver of the
same term or condition, or a waiver of any other term or condition, of this
Agreement. The failure of any party to assert any of its rights hereunder shall
not constitute a waiver of any of such rights.
SECTION 8.02. Expenses. (a) Except as otherwise specified in
this Agreement, all costs and expenses, including, without limitation, fees and
disbursements of counsel, financial advisors and accountants, incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such costs and expenses.
(b) The Sellers will pay any stamp duties, capital duties and
taxes payable upon the sale of the Shares.
SECTION 8.03. Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given or
made (and shall be deemed to have been duly given or made upon receipt) by
delivery in person, by courier service, by cable, by telecopy, by telegram, by
telex or by registered or certified mail (postage prepaid, return
8
<PAGE>
receipt requested) to the respective parties at the following addresses (or at
such other address for a party as shall be specified in a notice given in
accordance with this Section 8.03):
(a) if to the Sellers:
905 Sheridan Road
Glencoe, Illinois 60022
Fax: (847) 677-2463
Attention: Michael Smekhov
Helen Smekhov
(b) if to the Purchaser:
Danone Foods, Inc.
120 White Plains Road
Tarrytown, New York 10591
Fax: (914) 366-2865
Attention: General Counsel
with a copy to:
Groupe Danone
7 rue de Teheran
75381 Paris Cedex 08
Fax: 33-1-44-352-554
Attention: General Counsel
and a copy to:
Groupe Danone
7 rue de Teheran
75381 Paris Cedex 08
Fax: 33-1-44-352-097
Attention: Director of Corporate Development
and
Shearman & Sterling
599 Lexington Avenue
New York, NY 10022
Telecopy: 212-848-7179
Attention: John J. Madden, Esq.
9
<PAGE>
SECTION 8.04. Headings. The descriptive headings contained in
this Agreement are for convenience of reference only and shall not affect in any
way the meaning or interpretation of this Agreement.
SECTION 8.05. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any Law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner in
order that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
SECTION 8.06. Entire Agreement. This Agreement constitutes the
entire agreement of the parties hereto with respect to the subject matter hereof
and thereof and supersedes all prior agreements and undertakings, both written
and oral, among the parties hereto with respect to the subject matter hereof and
thereof.
SECTION 8.07. Assignment. This Agreement may not be assigned
by operation of law or otherwise without the express written consent of the
Sellers and the Purchaser (which consent may be granted or withheld in the sole
discretion of the Sellers or the Purchaser); provided, however, that the
Purchaser may assign this Agreement to an Affiliate of the Purchaser without the
consent of the Sellers.
SECTION 8.08. No Third Party Beneficiaries. This Agreement
shall be binding upon and inure solely to the benefit of the parties hereto and
their permitted assigns and nothing herein, express or implied, is intended to
or shall confer upon any other Person any legal or equitable right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement.
SECTION 8.09. Amendment. This Agreement may not be amended or
modified except (a) by an instrument in writing signed by, or on behalf of, the
Sellers and the Purchaser or (b) by a waiver in accordance with Section 8.01.
SECTION 8.10. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of Illinois, without
giving effect to its principles or rules of conflict of laws to the extent such
principles or rules would require or permit the application of the laws of
another jurisdiction.
SECTION 8.11. Waiver of Jury Trial. Each of the parties hereto
hereby waives to the fullest extent permitted by applicable law, any right it
may have to a trial by jury in respect to any litigation directly or indirectly
arising out of, under or in connection with this Agreement.
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Each of the parties hereto (a) certifies that no representative, agent or
attorney of any other party has represented, expressly or otherwise, that such
other party would not, in the event of litigation, seek to enforce that
foregoing waiver and (b) acknowledges that it and the other parties hereto have
been induced to enter into this Agreement, by, among other things, the mutual
waivers and certifications in this Section 8.11.
SECTION 8.12. Counterparts. This Agreement may be executed in
one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
SECTION 8.13. Specific Performance. The parties hereto agree
that irreparable damage would occur in the event any provision of this Agreement
was not performed in accordance with the terms hereof and that the parties shall
be entitled to specific performance of the terms hereof, in additional to any
other remedy at Law or equity.
SECTION 8.14. Survival of Representations and Warranties. The
representations and warranties of the parties hereto contained in Articles III
and IV shall survive the Closing until the second anniversary thereof.
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IN WITNESS WHEREOF, each of the parties hereto have caused
this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
By:/s/ M. Smekhov
--------------------------------
Name: Michael Smekhov
By:/s/ H. Smekhov
--------------------------------
Name: Helen Smekhov
DANONE FOODS, INC.
By:/s/ Michael Harrison
--------------------------------
Name: Michael Harrison
Title: a Vice President
12
<PAGE>
SCHEDULE A
1. The "Company Profile and Representation" prepared by the Company and
dated June 7, 1999; and
2. The "Due Diligence Findings" Report (without attachments), dated June
2, 1999, prepared for and on behalf of the Purchaser.
13
<PAGE>
SCHEDULE B
Name: Shares:
- ----- -------
Michael Smekhov 3,700
Helen Smekhov 4,500
14
<PAGE>
Exhibit 22
----------
================================================================================
--------------------------------------
STOCK PURCHASE AGREEMENT
--------------------------------------
Between
LYDIA AVERBUKH,
MIRON AVERBUKH
and
DANONE FOODS, INC.
Dated as of December 1, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
Section Page
- ------- ----
ARTICLE I
DEFINITIONS
1.01. Certain Defined Terms...................................................1
ARTICLE II
PURCHASE AND SALE
2.01. Purchase and Sale of the Shares.........................................2
2.02. Purchase Price..........................................................2
2.03. Closing.................................................................3
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
3.01. Authorization...........................................................3
3.02. Ownership of Shares.....................................................3
3.03. No Conflict.............................................................4
3.04. Absence of Litigation...................................................4
3.05. Brokers.................................................................4
3.06. Disclosure; Access to Information.......................................4
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
4.01. Organization and Authority of the Purchaser.............................5
4.02. No Conflict.............................................................5
4.03. Investment Purpose......................................................5
4.04. Brokers.................................................................5
-i-
<PAGE>
Section Page
- ------- ----
ARTICLE V
ADDITIONAL AGREEMENTS
5.01. Public Announcements....................................................6
5.02. Further Action..........................................................6
5.03. Investigation...........................................................6
ARTICLE VI
CONDITIONS TO CLOSING
6.01. Condition to Obligations of the Seller..................................7
6.02. Conditions to Obligations of the Purchaser..............................7
ARTICLE VII
TERMINATION
7.01. Termination.............................................................7
7.02. Effect of Termination...................................................8
ARTICLE VIII
GENERAL PROVISIONS
8.01. Waiver..................................................................8
8.02. Expenses................................................................8
8.03. Notices.................................................................8
8.04. Headings...............................................................10
8.05. Severability...........................................................10
8.06. Entire Agreement.......................................................10
8.07. Assignment.............................................................10
8.08. No Third Party Beneficiaries...........................................10
8.09. Amendment..............................................................10
8.10. Governing Law..........................................................10
8.11. Waiver of Jury Trial...................................................10
8.12. Counterparts...........................................................11
8.13. Specific Performance...................................................11
8.14. Survival of Representations and Warranties.............................11
-ii-
<PAGE>
STOCK PURCHASE AGREEMENT, dated as of December 1, 1999,
between Miron Averbukh and Lydia Averbukh, both of 7114 North Kilpatrick Avenue,
Lincolnwood, Illinois (each a "Seller", and collectively, the "Sellers") and
Danone Foods, Inc., a Delaware corporation (the "Purchaser").
W I T N E S S E T H:
WHEREAS, the Sellers own at least 25,300 shares of common
stock, no par value per share (the "Common Stock") of Lifeway Foods, Inc., an
Illinois corporation (the "Company"); and
WHEREAS, the Sellers wish to sell to the Purchaser, and the
Purchaser wishes to purchase from the Sellers, 25,300 shares of the Common Stock
(such shares to be sold pursuant to this Agreement being individually, a "Share"
and, collectively, the "Shares"), upon the terms and subject to the conditions
set forth herein.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements and covenants hereinafter set forth, the Purchaser and the
Sellers hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this
Agreement, the following terms shall have the following meanings:
"Action" means any claim, action, suit, arbitration, inquiry,
proceeding or investigation by or before any Governmental Authority.
"Affiliate" means, with respect to any specified Person, any
other Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person.
"Business" means the business of manufacturing, marketing and
selling cultured, probiotic and functional food products in the health food
industry and all other business which prior to the date hereof has been
conducted by the Company and the Subsidiaries.
"Closing" has the meaning specified in Section 2.03(a).
"Closing Date" has the meaning specified in Section 2.03(a).
"Common Stock" has the meaning specified in the recitals to
this Agreement.
<PAGE>
"control" (including the terms "controlled by" and "under
common control with"), with respect to the relationship between or among two or
more Persons, means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the affairs or
management of a Person, whether through the ownership of voting securities, as
trustee or executor, by contract or otherwise, including, without limitation,
the ownership, directly or indirectly, of securities having the power to elect a
majority of the board of directors or similar body governing the affairs of such
Person.
"Encumbrance" means any security interest, pledge, mortgage,
lien (including, without limitation, environmental and tax liens), charge,
encumbrance, adverse claim, preferential arrangement or restriction of any kind,
including, without limitation, any restriction on the use, voting, transfer,
receipt of income or other exercise of any attributes of ownership.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Governmental Authority" means any United States federal,
state, local, supranational or any foreign government, governmental, regulatory
or administrative authority, agency or commission or any court, tribunal, or
judicial or arbitral body.
"Governmental Order" means any order, writ, judgment,
injunction, decree, stipulation, determination or award entered by or with any
Governmental Authority.
"Law" means any federal, state, local or foreign statute, law,
ordinance, regulation, rule, code, order, other requirement or rule of law.
"Person" means any individual, partnership, firm, corporation,
association, trust, unincorporated organization or other entity, as well as any
syndicate or group that would be deemed to be a person under Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended.
"Purchase Price" has the meaning specified in Section 2.02.
ARTICLE II
PURCHASE AND SALE
SECTION 2.01. Purchase and Sale of the Shares. Upon the terms
and subject to the conditions contained in this Agreement, at the Closing, the
Sellers shall sell to the Purchaser, and the Purchaser shall purchase from the
Sellers, 25,300 Shares.
SECTION 2.02. Purchase Price. The purchase price shall be
$10.00 per Share (the "Purchase Price") payable as provided in Section 2.03(b).
2
<PAGE>
SECTION 2.03. Closing. (a) Subject to the terms and conditions
of this Agreement, the sale and purchase of the Shares contemplated by this
Agreement shall take place at a closing (the "Closing") to be held at the
offices of Shearman & Sterling at 10:00 A.M., New York time, on such date on or
before October 31, 1999 as the Purchaser may determine, or at such other place
or at such other time or on such other date as the Sellers and the Purchaser may
mutually agree upon in writing (the date on which the Closing takes place being
the "Closing Date").
(b) At the Closing, (i) the Sellers shall deliver or cause to
be delivered to the Purchaser stock certificates evidencing the Shares duly
endorsed in blank, or accompanied by stock powers duly executed in blank, in
form satisfactory to the Purchaser and (ii) the Purchaser shall, at the election
of the Sellers, (x) deliver to the Sellers a certified check in the amount of
$70,000, made payable to the order of Miron Averbukh and a certified check in
the amount of $183,000, made payable to the order of Lydia Averbukh or (y) pay
to the Sellers the amount of $253,000 by wire transfer of immediately available
funds to the bank accounts designated by the Sellers. The Sellers agree to
provide the Purchaser with notice of such election at least one day prior to the
Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
As an inducement to the Purchaser to enter into this
Agreement, each of the Sellers hereby, severally but not jointly, represent and
warrant to the Purchaser as follows:
SECTION 3.01. Authorization. Each Seller, if it is an
individual, has all requisite right, power and authority and full legal capacity
to execute and deliver this Agreement, to perform his or her obligations
hereunder and to consummate the transactions contemplated hereby. Each Seller,
if it is a corporation or other legal entity, is duly organized, validly
existing and in good standing under the laws of its incorporation or formation
and has all requisite power and authority to enter into this Agreement, to carry
out its obligations hereunder and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by such Seller, the
performance by such Seller of its obligations hereunder and the consummation by
such Seller of the transactions contemplated hereby have been duly authorized by
all requisite action on the part of such Seller. This Agreement has been duly
and validly executed and delivered by each Seller, and this Agreement
constitutes a legal, valid and binding obligation of such Seller enforceable
against such Seller in accordance with its terms.
SECTION 3.02. Ownership of Shares. Each Seller has good and
marketable title to, and is the record and beneficial owner of, the number of
Shares set forth next to such Seller's name in Schedule B to this Agreement,
free and clear of all Encumbrances. Upon delivery of the Shares by the Sellers
to the Purchaser at the Closing and payment of the Purchase Price for the
3
<PAGE>
Shares, as herein provided, the Purchaser will receive good and marketable title
to the Shares, free and clear of all Encumbrances.
SECTION 3.03. No Conflict. Except as may result from any facts
or circumstances relating solely to the Purchaser, the execution, delivery and
performance of this Agreement by each Seller do not and will not (a) conflict
with or violate any Law or Governmental Order applicable to such Seller or (b)
conflict with, result in any breach of, constitute a default (or event which
with the giving of notice or lapse of time, or both, would become a default)
under, require any consent under, or give to others any rights of termination,
amendment, acceleration, suspension, revocation or cancellation of, or result in
the creation of any Encumbrance on any of the Shares pursuant to, any note,
bond, mortgage or indenture, contract, agreement, lease, sublease, license,
permit, franchise or other instrument, obligation or arrangement to which such
Seller is a party or by which any of the Shares are bound or affected or which
would have a material adverse effect on the ability of such Seller to consummate
the transactions contemplated by this Agreement.
SECTION 3.04. Absence of Litigation. There are no Actions by
or against any Seller pending before any Governmental Authority (or, to the best
knowledge of such Seller after due inquiry, threatened to be brought by or
before any Governmental Authority) relating to or affecting the Shares or which
could affect the legality, validity or enforceability of this Agreement or the
consummation of the transactions contemplated hereby. Each Seller is not subject
to any Governmental Order (nor, to the best knowledge of each Seller, are there
any such Governmental Orders threatened to be imposed by any Governmental
Authority) relating to or affecting the Shares or which would affect the
legality, validity or enforceability of this Agreement or the consummation of
the transactions contemplated hereby.
SECTION 3.05. Brokers. No broker, finder or investment banker
is entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of each Seller.
SECTION 3.06. Disclosure; Access to Information. Each Seller
has received and reviewed the materials listed in Schedule A to this Agreement,
but has not necessarily relied on all the information contained in such
materials. Each Seller acknowledges that the materials listed in Schedule A to
this Agreement contain certain information concerning the Company and each
Seller agrees to maintain, and to cause its Affiliates to maintain the
confidentiality of any and all such information furnished to each Seller, except
with the prior written consent of the Purchaser or as may be required by any
Governmental Order.
4
<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
As an inducement to the Sellers to enter into this Agreement,
the Purchaser hereby represents and warrants to the Sellers as follows:
SECTION 4.01. Organization and Authority of the Purchaser. The
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of Delaware. The Purchaser has all necessary corporate power and
authority to enter into this Agreement, to carry out its obligations hereunder
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement by the Purchaser, the performance by the Purchaser of
its obligations hereunder and the consummation by the Purchaser of the
transactions contemplated hereby have been duly authorized by all requisite
action on the part of the Purchaser. This Agreement has been duly executed and
delivered by the Purchaser, and (assuming due authorization, execution and
delivery by the Sellers thereto) constitute legal, valid and binding obligations
of the Purchaser enforceable against the Purchaser in accordance with their
terms.
SECTION 4.02. No Conflict. Except as may result from any facts
or circumstances relating solely to any Seller, the execution, delivery and
performance of this Agreement by the Purchaser do not and will not (a) violate,
conflict with or result in the breach of any provision of the certificate of
incorporation, by-laws or other similar organizational documents of the
Purchaser, (b) conflict with or violate any Law or Governmental Order applicable
to the Purchaser or (c) conflict with, or result in any breach of, constitute a
default (or event which with the giving of notice or lapse or time, or both,
would become a default) under, require any consent under, or give to others any
rights of termination, amendment, acceleration, suspension, revocation, or
cancellation of, or result in the creation of any Encumbrance on any of the
assets or properties of the Purchaser pursuant to, any note, bond, mortgage or
indenture, contract, agreement, lease, sublease, license, permit, franchise or
other instrument or arrangement to which the Purchaser is a party or by which
any of such assets or properties are bound or affected which, with respect to
clauses (b) and (c) above would have a material adverse effect on the ability of
the Purchaser to consummate the transactions contemplated by this Agreement.
SECTION 4.03. Investment Purpose. The Purchaser is acquiring
the Shares solely for the purpose of investment and not with a view to, or for
offer or sale in connection with, any distribution thereof.
SECTION 4.04. Brokers. No broker, finder or investment banker
is entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Purchaser.
5
<PAGE>
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Public Announcements. The Sellers shall not
make, or cause to be made, any press release or public announcement in respect
of this Agreement or the transactions contemplated hereby or otherwise
communicate with any news media without the prior written consent of the
Purchaser, and the Sellers shall cooperate with the Purchaser as to the timing
and contents of any such press release or public announcement.
SECTION 5.02. Further Action. Each of the parties hereto shall
use all reasonable efforts to take, or cause to be taken, all appropriate
action, do or cause to be done all things necessary, proper or advisable under
applicable Law, and execute and deliver such documents and other papers, as may
be required to carry out the provisions of this Agreement and consummate and
make effective the transactions contemplated hereby.
SECTION 5.03. Investigation. (a) Each Seller acknowledges and
agrees that it (i) has made its own inquiry and investigation into, and, based
thereon, has formed an independent judgment concerning, the Company, the
Business and the Shares, including with limitation, the value thereof, (ii) has
been furnished with or given adequate access to such information as it has
requested about the Company, the Business and the Shares and (iii) except as
provided in this Agreement, will not assert any claim against the Purchaser, the
Company or any of their respective directors, officers, employees, agents,
stockholders, Affiliates, consultants, investment bankers or representatives, or
hold the Purchaser, the Company or any such Persons liable, for any
inaccuracies, misstatements or omissions with respect to information furnished
by the Purchaser, the Company or such Persons concerning the Company, the
Business or the Shares.
(b) In connection with each Seller's investigation of the
Company and the Business, each Seller may receive from the Purchaser and the
Company, or their respective representatives, certain estimates, projections and
other forecasts for the Company and the Business. Each Seller acknowledges that
there are uncertainties inherent in attempting to make such estimates,
projections, forecasts, plans and budgets, that such Seller is familiar with
such uncertainties, that it is taking full responsibility for making its own
evaluation of, and neither the Purchaser nor the Company shall have any
responsibility with respect to, the adequacy and accuracy of any such estimates,
projections, forecasts, plans and budgets so furnished to it, and that such
Seller will not assert any claim against the Purchaser, the Company or any of
their respective directors, officers, employees, agents, stockholders,
Affiliates, consultants, investment bankers or representatives, or hold the
Purchaser, the Company or any such Persons liable with respect thereto.
6
<PAGE>
ARTICLE VI
CONDITIONS TO CLOSING
SECTION 6.01. Condition to Obligations of the Seller. The
obligations of each Seller to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment, at or prior to the Closing, of
the condition that the representations and warranties of the Purchaser contained
in this Agreement shall have been true and correct when made and shall be true
and correct in all material respects as of the Closing Date, with the same force
and effect as if made as of the Closing Date, and the covenants and agreements
contained in this Agreement to be complied with by the Purchaser at or prior to
the Closing shall have been complied with in all material respects.
SECTION 6.02. Conditions to Obligations of the Purchaser. The
obligations of the Purchaser to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment, at or prior the Closing, of the
condition that the representations and warranties of the Sellers contained in
this Agreement shall have been true and correct when made and shall be true and
correct in all material respects as of the Closing Date with the same force and
effect as if made as of the Closing Date, the covenants and agreements contained
in this Agreement to be complied with by the Sellers at or prior to the Closing
shall have been complied with in all material respects, and the Purchaser shall
have received a certificate signed by each Seller to such effect.
ARTICLE VII
TERMINATION
SECTION 7.01. Termination. This Agreement may be terminated at
any time prior to the Closing:
(a) by the mutual written consent of the Purchaser and the
Sellers;
(b) by either the Purchaser or the Sellers if the Closing shall
not have occurred by December 31, 1999; provided, however, that the
right to terminate this Agreement under this Section 7.01(b) shall not
be available to any party whose failure to fulfill any obligation
under this Agreement shall have been the cause of, or shall have
resulted in, the failure of the Closing to occur on or prior to such
date;
(c) by either the Purchaser or the Sellers in the event that any
Governmental Authority shall have issued an order, decree or ruling or
taken any other action restraining, enjoining or otherwise prohibiting
the transactions contemplated by this
7
<PAGE>
Agreement and such order, decree, ruling or other action shall have
become final and nonappealable; or
(d) by the Purchaser if, between the date hereof and the time
scheduled for the Closing, any Seller makes a general assignment for
the benefit of creditors, or any proceeding shall be instituted by or
against any Seller seeking to adjudicate it bankrupt or insolvent, or
seeking arrangement, adjustment, protection, relief or composition of
its debts under any Law relating to bankruptcy, insolvency or
reorganization.
SECTION 7.02. Effect of Termination. In the event of
termination of this Agreement as provided in Section 7.01, this Agreement shall
forthwith become void and there shall be no liability on the part of any party
hereto except that nothing herein shall relieve any party from liability for any
breach of this Agreement.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. Waiver. The Sellers and the Purchaser may (a)
extend the time for the performance of any of the obligations or other acts of
the other party, (b) waive any inaccuracies in the representations and
warranties of the other party contained herein or in any document delivered by
the other party pursuant hereto or (c) waive compliance with any of the
agreements or conditions of the other party contained herein. Any such extension
or waiver shall be valid only if set forth in an instrument in writing signed by
the party to be bound thereby. Any waiver of any term or condition shall not be
construed as a waiver of any subsequent breach or a subsequent waiver of the
same term or condition, or a waiver of any other term or condition, of this
Agreement. The failure of any party to assert any of its rights hereunder shall
not constitute a waiver of any of such rights.
SECTION 8.02. Expenses. (a) Except as otherwise specified in
this Agreement, all costs and expenses, including, without limitation, fees and
disbursements of counsel, financial advisors and accountants, incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such costs and expenses.
(b) The Sellers will pay any stamp duties, capital duties and
taxes payable upon the sale of the Shares.
SECTION 8.03. Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given or
made (and shall be deemed to have been duly given or made upon receipt) by
delivery in person, by courier service, by cable, by telecopy, by telegram, by
telex or by registered or certified mail (postage prepaid, return
8
<PAGE>
receipt requested) to the respective parties at the following addresses (or at
such other address for a party as shall be specified in a notice given in
accordance with this Section 8.03):
(a) if to the Sellers:
7114 North Kilpatrick Avenue
Lincolnwood, IL 60646
Fax: (847) 677-2463
Attention: Lydia Averbukh
Miron Averbukh
(b) if to the Purchaser:
Danone Foods, Inc.
120 White Plains Road
Tarrytown, New York 10591
Fax: (914) 366-2865
Attention: General Counsel
with a copy to:
Groupe Danone
7 rue de Teheran
75381 Paris Cedex 08
Fax: 33-1-44-352-554
Attention: General Counsel
and a copy to:
Groupe Danone
7 rue de Teheran
75381 Paris Cedex 08
Fax: 33-1-44-352-097
Attention: Director of Corporate Development
and
Shearman & Sterling
599 Lexington Avenue
New York, NY 10022
Telecopy: 212-848-7179
Attention: John J. Madden, Esq.
9
<PAGE>
SECTION 8.04. Headings. The descriptive headings contained in
this Agreement are for convenience of reference only and shall not affect in any
way the meaning or interpretation of this Agreement.
SECTION 8.05. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any Law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner in
order that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
SECTION 8.06. Entire Agreement. This Agreement constitutes the
entire agreement of the parties hereto with respect to the subject matter hereof
and thereof and supersedes all prior agreements and undertakings, both written
and oral, among the parties hereto with respect to the subject matter hereof and
thereof.
SECTION 8.07. Assignment. This Agreement may not be assigned
by operation of law or otherwise without the express written consent of the
Sellers and the Purchaser (which consent may be granted or withheld in the sole
discretion of the Sellers or the Purchaser); provided, however, that the
Purchaser may assign this Agreement to an Affiliate of the Purchaser without the
consent of the Sellers.
SECTION 8.08. No Third Party Beneficiaries. This Agreement
shall be binding upon and inure solely to the benefit of the parties hereto and
their permitted assigns and nothing herein, express or implied, is intended to
or shall confer upon any other Person any legal or equitable right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement.
SECTION 8.09. Amendment. This Agreement may not be amended or
modified except (a) by an instrument in writing signed by, or on behalf of, the
Sellers and the Purchaser or (b) by a waiver in accordance with Section 8.01.
SECTION 8.10. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of Illinois, without
giving effect to its principles or rules of conflict of laws to the extent such
principles or rules would require or permit the application of the laws of
another jurisdiction.
SECTION 8.11. Waiver of Jury Trial. Each of the parties hereto
hereby waives to the fullest extent permitted by applicable law, any right it
may have to a trial by jury in respect to any litigation directly or indirectly
arising out of, under or in connection with this Agreement.
10
<PAGE>
Each of the parties hereto (a) certifies that no representative, agent or
attorney of any other party has represented, expressly or otherwise, that such
other party would not, in the event of litigation, seek to enforce that
foregoing waiver and (b) acknowledges that it and the other parties hereto have
been induced to enter into this Agreement, by, among other things, the mutual
waivers and certifications in this Section 8.11.
SECTION 8.12. Counterparts. This Agreement may be executed in
one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
SECTION 8.13. Specific Performance. The parties hereto agree
that irreparable damage would occur in the event any provision of this Agreement
was not performed in accordance with the terms hereof and that the parties shall
be entitled to specific performance of the terms hereof, in additional to any
other remedy at Law or equity.
SECTION 8.14. Survival of Representations and Warranties. The
representations and warranties of the parties hereto contained in Articles III
and IV shall survive the Closing until the second anniversary thereof.
11
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto have caused
this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
By:/s/ Lydia Averbukh
--------------------------------
Name: Lydia Averbukh
By:/s/ Miron Averbukh
--------------------------------
Name: Miron Averbukh
DANONE FOODS, INC.
By:/s/ Michael Harrison
--------------------------------
Name: Michael Harrison
Title: a Vice President
12
<PAGE>
SCHEDULE A
1. The "Company Profile and Representation" prepared by the Company and
dated June 7, 1999; and
2. The "Due Diligence Findings" Report (without attachments), dated June
2, 1999, prepared for and on behalf of the Purchaser.
13
<PAGE>
SCHEDULE B
Name: Shares:
- ----- -------
Lydia Averbukh 18,300
Miron Averbukh 7,000
14
<PAGE>
Exhibit 23
----------
================================================================================
--------------------------------------
STOCK PURCHASE AGREEMENT
--------------------------------------
Between
THE ROGER D. SHAW TRUST U/A/D 7/28/33
F/B/O MARGARET W. SHAW,
THE WILLIAM E. SHAW TRUST U/A/D 12/28/63
and
DANONE FOODS, INC.
Dated as of December 14, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
Section Page
- ------- ----
ARTICLE I
DEFINITIONS
1.01. Certain Defined Terms...................................................1
ARTICLE II
PURCHASE AND SALE
2.01. Purchase and Sale of the Shares.........................................2
2.02. Purchase Price..........................................................2
2.03. Closing.................................................................3
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
3.01. Authorization...........................................................4
3.02. Ownership of Shares.....................................................4
3.03. No Conflict.............................................................4
3.04. Absence of Litigation...................................................4
3.05. Brokers.................................................................4
3.06. Disclosure; Access to Information.......................................4
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
4.01. Organization and Authority of the Purchaser.............................5
4.02. No Conflict.............................................................5
4.03. Investment Purpose......................................................5
4.04. Brokers.................................................................5
-i-
<PAGE>
Section Page
- ------- ----
ARTICLE V
ADDITIONAL AGREEMENTS
5.01. Public Announcements....................................................6
5.02. Further Action..........................................................6
5.03. Investigation...........................................................6
ARTICLE VI
CONDITIONS TO CLOSING
6.01. Condition to Obligations of the Seller..................................7
6.02. Conditions to Obligations of the Purchaser..............................7
ARTICLE VII
TERMINATION
7.01. Termination.............................................................7
7.02. Effect of Termination...................................................8
ARTICLE VIII
GENERAL PROVISIONS
8.01. Waiver..................................................................8
8.02. Expenses................................................................8
8.03. Notices.................................................................8
8.04. Headings...............................................................10
8.05. Severability...........................................................10
8.06. Entire Agreement.......................................................10
8.07. Assignment.............................................................10
8.08. No Third Party Beneficiaries...........................................10
8.09. Amendment..............................................................10
8.10. Governing Law..........................................................10
8.11. Waiver of Jury Trial...................................................10
8.12. Counterparts...........................................................11
8.13. Specific Performance...................................................11
8.14. Survival of Representations and Warranties.............................11
-ii-
<PAGE>
STOCK PURCHASE AGREEMENT, dated as of December 14, 1999,
between the Roger D. Shaw Trust U/A/D 7/28/33 F/B/O Margaret W. Shaw and the
William W. Shaw Trust U/A/D 12/28/63 (each a "Seller", and collectively, the
"Sellers") and Danone Foods, Inc., a Delaware corporation (the "Purchaser").
W I T N E S S E T H:
WHEREAS, the Sellers own at least 5,000 shares of common
stock, no par value per share (the "Common Stock") of Lifeway Foods, Inc., an
Illinois corporation (the "Company"); and
WHEREAS, the Sellers wish to sell to the Purchaser, and the
Purchaser wishes to purchase from the Sellers, 5,000 shares of the Common Stock
(such shares to be sold pursuant to this Agreement being individually, a "Share"
and, collectively, the "Shares"), upon the terms and subject to the conditions
set forth herein.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements and covenants hereinafter set forth, the Purchaser and the
Sellers hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this
Agreement, the following terms shall have the following meanings:
"Action" means any claim, action, suit, arbitration, inquiry,
proceeding or investigation by or before any Governmental Authority.
"Affiliate" means, with respect to any specified Person, any
other Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person.
"Business" means the business of manufacturing, marketing and
selling cultured, probiotic and functional food products in the health food
industry and all other business which prior to the date hereof has been
conducted by the Company and the Subsidiaries.
"Closing" has the meaning specified in Section 2.03(a).
"Closing Date" has the meaning specified in Section 2.03(a).
"Common Stock" has the meaning specified in the recitals to
this Agreement.
<PAGE>
"control" (including the terms "controlled by" and "under
common control with"), with respect to the relationship between or among two or
more Persons, means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the affairs or
management of a Person, whether through the ownership of voting securities, as
trustee or executor, by contract or otherwise, including, without limitation,
the ownership, directly or indirectly, of securities having the power to elect a
majority of the board of directors or similar body governing the affairs of such
Person.
"Encumbrance" means any security interest, pledge, mortgage,
lien (including, without limitation, environmental and tax liens), charge,
encumbrance, adverse claim, preferential arrangement or restriction of any kind,
including, without limitation, any restriction on the use, voting, transfer,
receipt of income or other exercise of any attributes of ownership.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Governmental Authority" means any United States federal,
state, local, supranational or any foreign government, governmental, regulatory
or administrative authority, agency or commission or any court, tribunal, or
judicial or arbitral body.
"Governmental Order" means any order, writ, judgment,
injunction, decree, stipulation, determination or award entered by or with any
Governmental Authority.
"Law" means any federal, state, local or foreign statute, law,
ordinance, regulation, rule, code, order, other requirement or rule of law.
"Person" means any individual, partnership, firm, corporation,
association, trust, unincorporated organization or other entity, as well as any
syndicate or group that would be deemed to be a person under Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended.
"Purchase Price" has the meaning specified in Section 2.02.
ARTICLE II
PURCHASE AND SALE
SECTION 2.01. Purchase and Sale of the Shares. Upon the terms
and subject to the conditions contained in this Agreement, at the Closing, the
Sellers shall sell to the Purchaser, and the Purchaser shall purchase from the
Sellers, 5,000 Shares.
SECTION 2.02. Purchase Price. The purchase price shall be
$10.00 per Share (the "Purchase Price") payable as provided in Section 2.03(b).
2
<PAGE>
SECTION 2.03. Closing. (a) Subject to the terms and conditions
of this Agreement, the sale and purchase of the Shares contemplated by this
Agreement shall take place at a closing (the "Closing") to be held at the
offices of Shearman & Sterling at 10:00 A.M., New York time, on such date on or
before November 30, 1999 as the Purchaser may determine, or at such other place
or at such other time or on such other date as the Sellers and the Purchaser may
mutually agree upon in writing (the date on which the Closing takes place being
the "Closing Date").
(b) At the Closing, (i) the Sellers shall deliver or cause to
be delivered to the Purchaser stock certificates evidencing the Shares duly
endorsed in blank, or accompanied by stock powers duly executed in blank, in
form satisfactory to the Purchaser and (ii) the Purchaser shall, at the election
of the Sellers, (x) deliver to the Sellers a certified check in the amount of
$30,000, made payable to the order of Roger D. Shaw Trust U/A/D 7/28/33 F/B/O
Margaret W. Shaw and a certified check in the amount of $20,000, made payable to
the order of William W. Shaw Trust U/A/D 12/28/63 or (y) pay to the Sellers the
amount of $50,000 by wire transfer of immediately available funds to the bank
accounts designated by the Sellers. The Sellers agree to provide the Purchaser
with notice of such election at least one day prior to the Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
As an inducement to the Purchaser to enter into this
Agreement, each of the Sellers hereby, severally but not jointly, represent and
warrant to the Purchaser as follows:
SECTION 3.01. Authorization. Each Seller, if it is an
individual, has all requisite right, power and authority and full legal capacity
to execute and deliver this Agreement, to perform his or her obligations
hereunder and to consummate the transactions contemplated hereby. Each Seller,
if it is a corporation or other legal entity, is duly organized, validly
existing and in good standing under the laws of its incorporation or formation
and has all requisite power and authority to enter into this Agreement, to carry
out its obligations hereunder and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by such Seller, the
performance by such Seller of its obligations hereunder and the consummation by
such Seller of the transactions contemplated hereby have been duly authorized by
all requisite action on the part of such Seller. This Agreement has been duly
and validly executed and delivered by each Seller, and this Agreement
constitutes a legal, valid and binding obligation of such Seller enforceable
against such Seller in accordance with its terms.
3
<PAGE>
SECTION 3.02. Ownership of Shares. Each Seller has good and
marketable title to, and is the record and beneficial owner of, the number of
Shares set forth next to such Seller's name in Schedule B to this Agreement,
free and clear of all Encumbrances. Upon delivery of the Shares by the Sellers
to the Purchaser at the Closing and payment of the Purchase Price for the
Shares, as herein provided, the Purchaser will receive good and marketable title
to the Shares, free and clear of all Encumbrances.
SECTION 3.03. No Conflict. Except as may result from any facts
or circumstances relating solely to the Purchaser, the execution, delivery and
performance of this Agreement by each Seller do not and will not (a) conflict
with or violate any Law or Governmental Order applicable to such Seller or (b)
conflict with, result in any breach of, constitute a default (or event which
with the giving of notice or lapse of time, or both, would become a default)
under, require any consent under, or give to others any rights of termination,
amendment, acceleration, suspension, revocation or cancellation of, or result in
the creation of any Encumbrance on any of the Shares pursuant to, any note,
bond, mortgage or indenture, contract, agreement, lease, sublease, license,
permit, franchise or other instrument, obligation or arrangement to which such
Seller is a party or by which any of the Shares are bound or affected or which
would have a material adverse effect on the ability of such Seller to consummate
the transactions contemplated by this Agreement.
SECTION 3.04. Absence of Litigation. There are no Actions by
or against any Seller pending before any Governmental Authority (or, to the best
knowledge of such Seller after due inquiry, threatened to be brought by or
before any Governmental Authority) relating to or affecting the Shares or which
could affect the legality, validity or enforceability of this Agreement or the
consummation of the transactions contemplated hereby. Each Seller is not subject
to any Governmental Order (nor, to the best knowledge of each Seller, are there
any such Governmental Orders threatened to be imposed by any Governmental
Authority) relating to or affecting the Shares or which would affect the
legality, validity or enforceability of this Agreement or the consummation of
the transactions contemplated hereby.
SECTION 3.05. Brokers. No broker, finder or investment banker
is entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of each Seller.
SECTION 3.06. Disclosure; Access to Information. Each Seller
has received and reviewed the materials listed in Schedule A to this Agreement,
but has not necessarily relied on all the information contained in such
materials. Each Seller acknowledges that the materials listed in Schedule A to
this Agreement contain certain information concerning the Company and each
Seller agrees to maintain, and to cause its Affiliates to maintain the
confidentiality of any and all such information furnished to each Seller, except
with the prior written consent of the Purchaser or as may be required by any
Governmental Order or judicial proceeding.
4
<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
As an inducement to the Sellers to enter into this Agreement,
the Purchaser hereby represents and warrants to the Sellers as follows:
SECTION 4.01. Organization and Authority of the Purchaser. The
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of Delaware. The Purchaser has all necessary corporate power and
authority to enter into this Agreement, to carry out its obligations hereunder
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement by the Purchaser, the performance by the Purchaser of
its obligations hereunder and the consummation by the Purchaser of the
transactions contemplated hereby have been duly authorized by all requisite
action on the part of the Purchaser. This Agreement has been duly executed and
delivered by the Purchaser, and (assuming due authorization, execution and
delivery by the Sellers thereto) constitute legal, valid and binding obligations
of the Purchaser enforceable against the Purchaser in accordance with their
terms.
SECTION 4.02. No Conflict. Except as may result from any facts
or circumstances relating solely to any Seller, the execution, delivery and
performance of this Agreement by the Purchaser do not and will not (a) violate,
conflict with or result in the breach of any provision of the certificate of
incorporation, by-laws or other similar organizational documents of the
Purchaser, (b) conflict with or violate any Law or Governmental Order applicable
to the Purchaser or (c) conflict with, or result in any breach of, constitute a
default (or event which with the giving of notice or lapse or time, or both,
would become a default) under, require any consent under, or give to others any
rights of termination, amendment, acceleration, suspension, revocation, or
cancellation of, or result in the creation of any Encumbrance on any of the
assets or properties of the Purchaser pursuant to, any note, bond, mortgage or
indenture, contract, agreement, lease, sublease, license, permit, franchise or
other instrument or arrangement to which the Purchaser is a party or by which
any of such assets or properties are bound or affected which, with respect to
clauses (b) and (c) above would have a material adverse effect on the ability of
the Purchaser to consummate the transactions contemplated by this Agreement.
SECTION 4.03. Investment Purpose. The Purchaser is acquiring
the Shares solely for the purpose of investment and not with a view to, or for
offer or sale in connection with, any distribution thereof.
SECTION 4.04. Brokers. No broker, finder or investment banker
is entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Purchaser.
5
<PAGE>
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Public Announcements. The Sellers shall not
make, or cause to be made, any press release or public announcement in respect
of this Agreement or the transactions contemplated hereby or otherwise
communicate with any news media without the prior written consent of the
Purchaser, and the Sellers shall cooperate with the Purchaser as to the timing
and contents of any such press release or public announcement.
SECTION 5.02. Further Action. Each of the parties hereto shall
use all reasonable efforts to take, or cause to be taken, all appropriate
action, do or cause to be done all things necessary, proper or advisable under
applicable Law, and execute and deliver such documents and other papers, as may
be required to carry out the provisions of this Agreement and consummate and
make effective the transactions contemplated hereby.
SECTION 5.03. Investigation. (a) Each Seller acknowledges and
agrees that it (i) has made its own inquiry and investigation into, and, based
thereon, has formed an independent judgment concerning, the Company, the
Business and the Shares, including with limitation, the value thereof, (ii) has
been furnished with or given adequate access to such information as it has
requested about the Company, the Business and the Shares and (iii) except as
provided in this Agreement, will not assert any claim against the Purchaser, the
Company or any of their respective directors, officers, employees, agents,
stockholders, Affiliates, consultants, investment bankers or representatives, or
hold the Purchaser, the Company or any such Persons liable, for any
inaccuracies, misstatements or omissions with respect to information furnished
by the Purchaser, the Company or such Persons concerning the Company, the
Business or the Shares.
(b) In connection with each Seller's investigation of the
Company and the Business, each Seller may receive from the Purchaser and the
Company, or their respective representatives, certain estimates, projections and
other forecasts for the Company and the Business. Each Seller acknowledges that
there are uncertainties inherent in attempting to make such estimates,
projections, forecasts, plans and budgets, that such Seller is familiar with
such uncertainties, that it is taking full responsibility for making its own
evaluation of, and neither the Purchaser nor the Company shall have any
responsibility with respect to, the adequacy and accuracy of any such estimates,
projections, forecasts, plans and budgets so furnished to it, and that such
Seller will not assert any claim against the Purchaser, the Company or any of
their respective directors, officers, employees, agents, stockholders,
Affiliates, consultants, investment bankers or representatives, or hold the
Purchaser, the Company or any such Persons liable with respect thereto.
6
<PAGE>
ARTICLE VI
CONDITIONS TO CLOSING
SECTION 6.01. Condition to Obligations of the Seller. The
obligations of each Seller to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment, at or prior to the Closing, of
the condition that the representations and warranties of the Purchaser contained
in this Agreement shall have been true and correct when made and shall be true
and correct in all material respects as of the Closing Date, with the same force
and effect as if made as of the Closing Date, and the covenants and agreements
contained in this Agreement to be complied with by the Purchaser at or prior to
the Closing shall have been complied with in all material respects.
SECTION 6.02. Conditions to Obligations of the Purchaser. The
obligations of the Purchaser to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment, at or prior the Closing, of the
condition that the representations and warranties of the Sellers contained in
this Agreement shall have been true and correct when made and shall be true and
correct in all material respects as of the Closing Date with the same force and
effect as if made as of the Closing Date, the covenants and agreements contained
in this Agreement to be complied with by the Sellers at or prior to the Closing
shall have been complied with in all material respects, and the Purchaser shall
have received a certificate signed by each Seller to such effect.
ARTICLE VII
TERMINATION
SECTION 7.01. Termination. This Agreement may be terminated at
any time prior to the Closing:
(a) by the mutual written consent of the Purchaser and the
Sellers;
(b) by either the Purchaser or the Sellers if the Closing shall
not have occurred by December 31, 1999; provided, however, that the
right to terminate this Agreement under this Section 7.01(b) shall not
be available to any party whose failure to fulfill any obligation
under this Agreement shall have been the cause of, or shall have
resulted in, the failure of the Closing to occur on or prior to such
date;
(c) by either the Purchaser or the Sellers in the event that any
Governmental Authority shall have issued an order, decree or ruling or
taken any other action restraining, enjoining or otherwise prohibiting
the transactions contemplated by this
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Agreement and such order, decree, ruling or other action shall have
become final and nonappealable; or
(d) by the Purchaser if, between the date hereof and the time
scheduled for the Closing, any Seller makes a general assignment for
the benefit of creditors, or any proceeding shall be instituted by or
against any Seller seeking to adjudicate it bankrupt or insolvent, or
seeking arrangement, adjustment, protection, relief or composition of
its debts under any Law relating to bankruptcy, insolvency or
reorganization.
SECTION 7.02. Effect of Termination. In the event of
termination of this Agreement as provided in Section 7.01, this Agreement shall
forthwith become void and there shall be no liability on the part of any party
hereto except that nothing herein shall relieve any party from liability for any
breach of this Agreement.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. Waiver. The Sellers and the Purchaser may (a)
extend the time for the performance of any of the obligations or other acts of
the other party, (b) waive any inaccuracies in the representations and
warranties of the other party contained herein or in any document delivered by
the other party pursuant hereto or (c) waive compliance with any of the
agreements or conditions of the other party contained herein. Any such extension
or waiver shall be valid only if set forth in an instrument in writing signed by
the party to be bound thereby. Any waiver of any term or condition shall not be
construed as a waiver of any subsequent breach or a subsequent waiver of the
same term or condition, or a waiver of any other term or condition, of this
Agreement. The failure of any party to assert any of its rights hereunder shall
not constitute a waiver of any of such rights.
SECTION 8.02. Expenses. (a) Except as otherwise specified in
this Agreement, all costs and expenses, including, without limitation, fees and
disbursements of counsel, financial advisors and accountants, incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such costs and expenses.
(b) The Sellers will pay any stamp duties, capital duties and
taxes payable upon the sale of the Shares.
SECTION 8.03. Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given or
made (and shall be deemed to have been duly given or made upon receipt) by
delivery in person, by courier service, by cable, by telecopy, by telegram, by
telex or by registered or certified mail (postage prepaid, return
8
<PAGE>
receipt requested) to the respective parties at the following addresses (or at
such other address for a party as shall be specified in a notice given in
accordance with this Section 8.03):
(a) if to the Sellers:
Thomasville Route Box 60B
Birch Tree, MO 65438
Fax: (417) 764-3706
Attention: William W. Shaw
(b) if to the Purchaser:
Danone Foods, Inc.
120 White Plains Road
Tarrytown, New York 10591
Fax: (914) 366-2865
Attention: General Counsel
with a copy to:
Groupe Danone
7 rue de Teheran
75381 Paris Cedex 08
Fax: 33-1-44-352-554
Attention: General Counsel
and a copy to:
Groupe Danone
7 rue de Teheran
75381 Paris Cedex 08
Fax: 33-1-44-352-097
Attention: Director of Corporate Development
and
Shearman & Sterling
599 Lexington Avenue
New York, NY 10022
Telecopy: 212-848-7179
Attention: John J. Madden, Esq.
9
<PAGE>
SECTION 8.04. Headings. The descriptive headings contained in
this Agreement are for convenience of reference only and shall not affect in any
way the meaning or interpretation of this Agreement.
SECTION 8.05. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any Law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner in
order that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
SECTION 8.06. Entire Agreement. This Agreement constitutes the
entire agreement of the parties hereto with respect to the subject matter hereof
and thereof and supersedes all prior agreements and undertakings, both written
and oral, among the parties hereto with respect to the subject matter hereof and
thereof.
SECTION 8.07. Assignment. This Agreement may not be assigned
by operation of law or otherwise without the express written consent of the
Sellers and the Purchaser (which consent may be granted or withheld in the sole
discretion of the Sellers or the Purchaser); provided, however, that the
Purchaser may assign this Agreement to an Affiliate of the Purchaser without the
consent of the Sellers.
SECTION 8.08. No Third Party Beneficiaries. This Agreement
shall be binding upon and inure solely to the benefit of the parties hereto and
their permitted assigns and nothing herein, express or implied, is intended to
or shall confer upon any other Person any legal or equitable right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement.
SECTION 8.09. Amendment. This Agreement may not be amended or
modified except (a) by an instrument in writing signed by, or on behalf of, the
Sellers and the Purchaser or (b) by a waiver in accordance with Section 8.01.
SECTION 8.10. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of Illinois, without
giving effect to its principles or rules of conflict of laws to the extent such
principles or rules would require or permit the application of the laws of
another jurisdiction.
SECTION 8.11. Waiver of Jury Trial. Each of the parties hereto
hereby waives to the fullest extent permitted by applicable law, any right it
may have to a trial by jury in respect to any litigation directly or indirectly
arising out of, under or in connection with this Agreement.
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Each of the parties hereto (a) certifies that no representative, agent or
attorney of any other party has represented, expressly or otherwise, that such
other party would not, in the event of litigation, seek to enforce that
foregoing waiver and (b) acknowledges that it and the other parties hereto have
been induced to enter into this Agreement, by, among other things, the mutual
waivers and certifications in this Section 8.11.
SECTION 8.12. Counterparts. This Agreement may be executed in
one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
SECTION 8.13. Specific Performance. The parties hereto agree
that irreparable damage would occur in the event any provision of this Agreement
was not performed in accordance with the terms hereof and that the parties shall
be entitled to specific performance of the terms hereof, in additional to any
other remedy at Law or equity.
SECTION 8.14. Survival of Representations and Warranties. The
representations and warranties of the parties hereto contained in Articles III
and IV shall survive the Closing until the second anniversary thereof.
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IN WITNESS WHEREOF, each of the parties hereto have caused
this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
ROGER D. SHAW TRUST U/A/D 7/28/33
F/B/O MARGARET W. SHAW
By: /s/ William W. Shaw
--------------------------------
Name: William W. Shaw
Title: Trustee
WILLIAM W. SHAW TRUST
U/A/D 12/28/63
By: /s/ Roger D. Shaw Jr.
--------------------------------
Name: Roger D. Shaw Jr.
Title: Trustee
DANONE FOODS, INC.
By:/s/ Michael Harrison
--------------------------------
Name: Michael Harrison
Title: a Vice President
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SCHEDULE A
1. The "Company Profile and Representation" prepared by the Company and
dated June 7, 1999; and
2. The "Due Diligence Findings" Report (without attachments), dated June
2, 1999, prepared for and on behalf of the Purchaser.
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SCHEDULE B
Name: Shares:
- ----- -------
Roger D. Shaw Trust 3,000
U/A/D 7/28/33
F/B/O Margaret W. Shaw
William W. Shaw Trust 2,000
U/A/D 12/28/63
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Exhibit 24
----------
================================================================================
-------------------------------------
STOCK PURCHASE AGREEMENT
--------------------------------------
Among
DANONE FOODS, INC.,
LIFEWAY FOODS, INC.
and
MICHAEL SMOLYANSKY
Dated as of December 24, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINITIONS
1.01. Certain Defined Terms...................................................2
ARTICLE II
PURCHASE AND SALE
2.01. Purchase and Sale of the Shares.........................................3
2.02. The Closing.............................................................3
2.03. Closing Deliveries by the Selling Stockholder...........................4
2.04. Closing Deliveries by the Purchaser.....................................4
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDER
AND OF THE COMPANY
3.01. Authorization...........................................................4
3.02. No Conflict.............................................................5
3.03. Governmental Consents and Approvals.....................................5
3.04. Accuracy of Representations and Warranties of the Company...............5
3.05. Ownership...............................................................5
3.06. Brokers.................................................................6
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
4.01. Organization and Authority of the Purchaser.............................6
4.02. No Conflict.............................................................6
4.03. Governmental Consents and Approvals.....................................7
4.04. Investment Purpose......................................................7
4.05. Brokers.................................................................7
-i-
<PAGE>
Section Page
ARTICLE V
ADDITIONAL AGREEMENTS
5.01. Public Announcements....................................................7
5.02. Further Action..........................................................7
ARTICLE VI
INDEMNIFICATION
6.01. Survival of Representations and Warranties..............................7
6.02. Indemnification.........................................................8
ARTICLE VII
GENERAL PROVISIONS
7.01. Waiver.................................................................10
7.02. Expenses...............................................................10
7.03. Notices................................................................10
7.04. Headings...............................................................12
7.05. Severability...........................................................12
7.06. Entire Agreement.......................................................12
7.07. Assignment.............................................................12
7.08. No Third Party Beneficiaries...........................................12
7.09. Amendment..............................................................12
7.10. Governing Law..........................................................12
7.11. Consent to Jurisdiction................................................12
7.12. Waiver of Jury Trial...................................................13
7.13. Counterparts...........................................................13
-ii-
<PAGE>
STOCK PURCHASE AGREEMENT, dated as of December 24, 1999, among
Danone Foods, Inc., a Delaware corporation (the "Purchaser"), Michael
Smolyansky, c/o 6431 W. Oakton Street, Morton Grove, Illinois (the "Selling
Stockholder") and Lifeway Foods, Inc., an Illinois corporation (the "Company").
W I T N E S S E T H:
WHEREAS, Danone, the Company and several stockholders of the
Company, including the Selling Stockholder, have entered into a Stock Purchase
Agreement, dated as of October 1, 1999 (the "Original Stock Purchase
Agreement"), providing for the acquisition by Danone of 647,767 shares of common
stock, no par value ("Common Stock"; shares of Common Stock being hereinafter
individually referred to as a "Share" and collectively referred to as "Shares")
of the Company; and
WHEREAS, Danone has also acquired an additional 177,560 shares
of Common Stock through privately negotiated transactions; and
WHEREAS, Danone, the Company and several stockholders of the
Company, including the Selling Stockholder, have entered into a Stockholders'
Agreement, dated as of October 1, 1999, as amended by a Letter Agreement among
Danone, the Company and several stockholders of the Company, including the
Selling Stockholder, dated December 24, 1999 (the "Stockholders' Agreement");
and
WHEREAS, The Dannon Company, Inc., a Delaware corporation
("Dannon") and a subsidiary of Danone, intends to enter into a Support Agreement
with the Company and the Selling Stockholder pursuant to which Dannon intends to
provide certain support services to the Company. Dannon's obligations to the
Company under the Support Agreement will commence only after Danone has acquired
20% of the issued and outstanding shares of Common Stock on a fully diluted
basis; and
WHEREAS, to enable Danone to acquire 20% of the issued and
outstanding shares of Common Stock on a fully diluted basis, the Selling
Stockholder wishes to sell to the Purchaser and the Purchaser wishes to purchase
from the Selling Stockholder a further 38,362 Shares, upon the terms and subject
to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the
mutual agreements and covenants hereinafter set forth, the Purchaser, the
Selling Stockholder and the Company hereby agree as follows:
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ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this
Agreement, the following terms shall have the following meanings:
"Action" means any claim, action, suit, arbitration, inquiry,
proceeding or investigation by or before any Governmental Authority.
"Affiliate" means, with respect to any specified Person, any
other Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person.
"Agreement" or "this Agreement" means this Stock Purchase
Agreement, dated as of December 24, 1999 among the Purchaser, the Selling
Stockholder and the Company and all amendments hereto made in accordance with
the provisions of Section 7.09.
"Business" means the business of manufacturing, marketing and
selling cultured, probiotic and functional food products in the health food
industry and all other business which prior to the date hereof has been
conducted by the Company and any subsidiary of the Company.
"Closing" has the meaning specified in Section 2.02.
"Closing Date" has the meaning specified in Section 2.02.
"Common Stock" has the meaning specified in the recitals to
this Agreement.
"Company" has the meaning specified in the recitals to this
Agreement.
"control" (including the terms "controlled by" and "under
common control with"), with respect to the relationship between or among two or
more Persons, means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the affairs or
management of a Person, whether through the ownership of voting securities, as
trustee or executor, by contract or otherwise, including, without limitation,
the ownership, directly or indirectly, of securities having the power to elect a
majority of the board of directors or similar body governing the affairs of such
Person.
"Encumbrance" means any security interest, pledge, mortgage,
lien (including, without limitation, environmental and tax liens), charge,
encumbrance, adverse claim, preferential arrangement or restriction of any kind,
including, without limitation, any restriction on the use, voting, transfer,
receipt of income or other exercise of any attributes of ownership.
2
<PAGE>
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Governmental Authority" means any United States federal,
state, local, supranational or any foreign government, governmental, regulatory
or administrative authority, agency or commission or any court, tribunal, or
judicial or arbitral body.
"Governmental Order" means any order, writ, judgment,
injunction, decree, stipulation, determination or award entered by or with any
Governmental Authority.
"Law" means any federal, state, local or foreign statute, law,
ordinance, regulation, rule, code, order, other requirement or rule of law.
"Material Adverse Effect" means any circumstance, change in,
or effect on the Business, the Company or any subsidiary of the Company that,
individually or in the aggregate with any other circumstances, changes in, or
effects on, the Business, the Company or any Subsidiary is, or could be
materially adverse to the business, operations, assets or liabilities, employee
relationships, customer or supplier relationships, prospects, results of
operations or the condition (financial or otherwise) of the Company and the
subsidiaries of the Company, taken as a whole.
"Person" means any individual, partnership, firm, corporation,
association, trust, unincorporated organization or other entity, as well as any
syndicate or group that would be deemed to be a person under Section 13(d)(3) of
the Exchange Act.
"Share" or "Shares" has the meaning specified in the recitals
to this Agreement.
ARTICLE II
PURCHASE AND SALE
SECTION 2.01. Purchase and Sale of the Shares. Subject to the
terms and conditions contained herein, upon the basis of the representations and
warranties contained herein of the Purchaser, the Selling Stockholder, agrees to
sell to the Purchaser and, upon the basis of the representations and warranties
contained herein of the Selling Stockholder and the Company, the Purchaser
agrees to purchase from the Selling Stockholder, 38,362 Shares for an aggregate
purchase price of $383,620 (the "Shares Purchase Price").
SECTION 2.02. The Closing. The purchase of the Shares
contemplated by this Agreement shall take place at a closing (the "Closing") to
be held at the offices of Shearman & Sterling in New York on the date hereof
("Closing Date") or at such other location as the parties may mutually agree.
3
<PAGE>
SECTION 2.03. Closing Deliveries by the Selling Stockholder.
At the Closing, the Selling Stockholder shall deliver to the Purchaser:
(a) stock certificates evidencing the Shares duly endorsed
in blank, or accompanied by stock powers duly executed in blank, in
form satisfactory to the Purchaser and with all required stock transfer
tax stamps affixed; and
(b) a receipt for the Shares Purchase Price.
SECTION 2.04. Closing Deliveries by the Purchaser. At the
Closing, the Purchaser shall deliver to the Selling Stockholder:
(a) the Shares Purchase Price by wire transfer of
immediately available funds to the bank account designated by the
Selling Stockholder; and
(b) a receipt acknowledging delivery of the stock
certificates specified in Section 2.03(a).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDER
AND OF THE COMPANY
As an inducement to the Purchaser to enter into this
Agreement, the Selling Stockholder and the Company hereby represent and warrant
to the Purchaser as follows:
SECTION 3.01. Authorization. (a) The Company and each
subsidiary of the Company is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation or
organization and the Company has all necessary power and authority to enter into
each of this Agreement, to carry out its obligations hereunder and to consummate
the transactions contemplated hereby. The Company and each subsidiary of the
Company is duly licensed or qualified to do business and is in good standing in
each jurisdiction in which the properties owned or leased by it or the operation
of its Business makes such licensing or qualification necessary, except to the
extent that the failure to be so licensed or qualified would not, individually
or in the aggregate, have a Material Adverse Effect.
(b) The Selling Stockholder is an individual and has all
requisite right, power and authority and full legal capacity to execute and
deliver this Agreement and to perform his obligation hereunder and to consummate
the transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by the Selling Stockholder, and this Agreement
constitutes the legal, valid and binding obligation of the Selling Stockholder
enforceable against the Selling Stockholder in accordance with its terms. The
failure of the spouse of the Selling
4
<PAGE>
Stockholder to be a party or signatory to this Agreement shall not (a) prevent
the Selling Stockholder from performing his obligations and from consummating
the transactions contemplated hereunder and thereunder or (b) prevent this
Agreement from constituting the legal, valid and binding obligation of the
Selling Stockholder enforceable against the Selling Stockholder in accordance
with its terms.
SECTION 3.02. No Conflict. The execution, delivery and
performance of this Agreement by the Selling Stockholder and by the Company do
not and will not conflict with or violate any Law or Governmental Order
applicable to the Selling Stockholder or to the Company, or conflict with,
result in any breach of, constitute a default (or event which with the giving of
notice or lapse of time, or both, would become a default) under, require any
consent under, or give to others any rights of termination, amendment,
acceleration, suspension, revocation or cancellation of, or result in the
creation of any Encumbrance on any of the Shares or on any of the assets or
properties of the Selling Stockholder pursuant to, any note, bond, mortgage or
indenture, contract, agreement, lease, sublease, license, permit, franchise or
other instrument, obligation or arrangement to which the Selling Stockholder is
a party or by which any of the Shares or any of such assets or properties is
bound or affected.
SECTION 3.03. Governmental Consents and Approvals. The
execution, delivery and performance of this Agreement by the Selling Stockholder
and by the Company do not and will not require any consent, approval,
authorization or other order of, action by, filing with or notification to any
Governmental Authority, except as may be required by the Exchange Act.
SECTION 3.04. Accuracy of Representations and Warranties of
the Company. The Company has reviewed the representations and warranties of the
Company contained in Article III of the Original Stock Purchase Agreement, and,
other than (a) the representation in Section 3.02 thereof concerning the number
of issued and outstanding shares of Common Stock on a Fully Diluted Basis which
the Company now represents and warrants to be 4,318,444 shares and (b) the
representation in Section 3.02 thereof concerning the 10,400 Shares held in the
treasury of the Company which the Company now represents and warrants to have
been canceled, to the best knowledge of the Company, such representations and
warranties of the Company remain true and correct (without giving effect to any
knowledge qualifier contained in such representation and warranty).
SECTION 3.05. Ownership. The Selling Stockholder owns 38,362
Shares and the Selling Stockholder has good and marketable title to such Shares,
free and clear of any Encumbrance of any kind, other than any rights conferred
upon Danone by the Stockholders' Agreement with respect to such Shares. All the
Shares have been duly authorized, validly issued, and are fully paid and
nonassessable and have been accorded full voting rights. There are no voting
trusts, stockholder agreements other than the Stockholders' Agreement, proxies
or other agreements or understandings in effect with respect to the voting or
transfer of any of the Shares and upon delivery of such Shares and payment of
the Purchase Price therefor as contemplated
5
<PAGE>
herein, the Purchaser, assuming it shall have purchased the Shares for value in
good faith and without notice of any adverse claim, will own the Shares free and
clear of all Encumbrances.
SECTION 3.06. Brokers. No broker, finder or investment bank is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Selling Stockholder.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
As an inducement to the Selling Stockholder and the Company to
enter into this Agreement, the Purchaser hereby represents and warrants to the
Selling Stockholder and the Company as follows:
SECTION 4.01. Organization and Authority of the Purchaser. The
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of Delaware. The Purchaser has all necessary corporate power and
authority to enter into this Agreement, to carry out its obligations hereunder
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement by the Purchaser, the performance by the Purchaser of
its obligations hereunder and the consummation by the Purchaser of the
transactions contemplated hereby have been duly authorized by all requisite
action on the part of the Purchaser. This Agreement has been duly executed and
delivered by the Purchaser, and (assuming due authorization, execution and
delivery by the Selling Stockholder and by the Company) constitutes the legal,
valid and binding obligation of the Purchaser enforceable against the Purchaser
in accordance with its terms.
SECTION 4.02. No Conflict. Assuming the making and obtaining
of all filings, notifications, consents, approvals, authorizations and other
actions referred to in Section 4.03, except as may result from any facts or
circumstances relating solely to the Company or the Selling Stockholder, the
execution, delivery and performance of this Agreement by the Purchaser do not
and will not (a) violate, conflict with or result in the breach of any provision
of the certificate of incorporation, by-laws or other similar organizational
documents of the Purchaser, (b) conflict with or violate any Law or Governmental
Order applicable to the Purchaser or (c) conflict with, or result in any breach
of, constitute a default (or event which with the giving of notice or lapse or
time, or both, would become a default) under, require any consent under, or give
to others any rights of termination, amendment, acceleration, suspension,
revocation, or cancellation of, or result in the creation of any Encumbrance on
any of the assets or properties of the Purchaser pursuant to, any note, bond,
mortgage or indenture, contract, agreement, lease, sublease, license, permit,
franchise or other instrument or arrangement to which the Purchaser is a party
or by which any of such assets or properties are bound or affected which, with
respect to
6
<PAGE>
clauses (b) and (c) above would have a material adverse effect on the ability of
the Purchaser to consummate the transactions contemplated by this Agreement.
SECTION 4.03. Governmental Consents and Approvals. The
execution, delivery and performance of this Agreement by the Purchaser do not
and will not require any consent, approval, authorization or other order of,
action by, filing with, or notification to, any Governmental Authority, except
for the applicable requirements of the Exchange Act.
SECTION 4.04. Investment Purpose. The Purchaser is acquiring
the Shares solely for the purpose of investment and not with a view to, or for
offer or sale in connection with, any distribution thereof.
SECTION 4.05. Brokers. No broker, finder or investment banker
is entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Purchaser.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Public Announcements. The Selling Stockholder
and the Company shall not make, or cause to be made, any press release or public
announcement in respect of this Agreement or the transactions contemplated
hereby or otherwise communicate with any news media without the prior written
consent of the Purchaser, and the parties shall cooperate as to the timing and
contents of any such press release or public announcement.
SECTION 5.02. Further Action. Each of the parties hereto shall
use all reasonable efforts to take, or cause to be taken, all appropriate
action, to do or cause to be done all things necessary, proper or advisable
under applicable Law, and execute and deliver such documents and other papers,
as may be required to carry out the provisions of this Agreement and consummate
and make effective the transactions contemplated hereby.
ARTICLE VI
INDEMNIFICATION
SECTION 6.01. Survival of Representations and Warranties. The
representations and warranties of each of the parties contained in this
Agreement and all statements contained in this Agreement shall survive until the
third anniversary of the Closing Date. If written notice of a claim has been
given prior to the expiration of the applicable representations and warranties,
then
7
<PAGE>
the relevant representations and warranties shall survive as to such claim,
until such claim has been finally resolved.
SECTION 6.02. Indemnification. (a) The Purchaser, their
Affiliates and their successors and assigns and the officers, directors,
employees and agents of the Purchaser, their Affiliates and their successors and
assigns shall be indemnified and held harmless by the Company for any and all
Liabilities, losses, damages, claims, costs and expenses, interest, awards,
judgments and penalties (including, without limitation, attorneys' and
consultants' fees and expenses) actually suffered or incurred by them
(including, without limitation, any Action brought or otherwise initiated by any
of them) (hereinafter a "Loss"), arising out of or resulting from:
(i) the breach of any representation or warranty made by
the Company contained in this Agreement;
(ii) the breach of any agreement by the Company contained in
this Agreement; or
(iii) any claim or cause of action of any third party
relating to the business conducted by the Company or any subsidiary of
the Company.
To the extent that the Company's undertakings set forth in this Section 6.02(a)
may be unenforceable, the Company shall contribute the maximum amount that it is
permitted to contribute under applicable Law to the payment and satisfaction of
all Losses incurred by the Purchaser.
(b) The Purchaser, their Affiliates and their
successors and assigns and the officers, directors, employees and agents of the
Purchaser, their Affiliates and their successors and assigns shall be
indemnified and held harmless by the Selling Stockholder for any and all Loss
arising out of or resulting from:
(i) the breach of any representation or warranty made by
the Selling Stockholder contained in this Agreement; or
(ii) the breach of any agreement by the Selling Stockholder
contained in this Agreement.
To the extent that the Selling Stockholder's undertakings set forth in this
Section 6.02(b) may be unenforceable, the Selling Stockholder shall contribute
the maximum amount that it is permitted to contribute under applicable Law to
the payment and satisfaction of all Losses incurred by the Purchaser.
8
<PAGE>
(c) The Company, its Affiliates and their successors
and assigns and the officers, directors, employees and agents of the Company,
their Affiliates and their successors and assigns and the Selling Stockholder
shall be indemnified and held harmless by the Purchaser for any and all Loss
arising out of or resulting from any claim by a third party based on or related
to the breach of any representation or warranty made by the Purchaser contained
in Article IV of this Agreement.
To the extent that the Purchaser's undertakings set forth in this Section
6.02(c) may be unenforceable, the Purchaser shall contribute the maximum amount
that it is permitted to contribute under applicable Law to the payment and
satisfaction of all such Losses incurred by the Company and the Selling
Stockholder.
(d) An indemnified party shall give the indemnifying
party notice of any matter which an indemnified party has determined has given
or could give rise to a right of indemnification under this Agreement, within 60
days of such determination, stating the amount of the Loss, if known, and method
of computation thereof, and containing a reference to the provisions of this
Agreement in respect of which such right of indemnification is claimed or
arises; provided, however, that the failure to provide such notice shall not
release the indemnifying party from any of its obligations under this Article VI
except to the extent the indemnifying party is materially prejudiced by such
failure and shall not relieve the indemnifying party from any other obligation
or Liability that it may have to any indemnified party otherwise than under this
Article VI.
(e) The obligations and Liabilities of the indemnifying
party under this Article VI with respect to Losses arising from claims of any
third party which are subject to the indemnification provided for in this
Article VI ("Third Party Claims") shall be governed by and contingent upon the
following additional terms and conditions: if an indemnified party shall receive
notice of any Third Party Claim, the indemnified party shall give the
indemnifying party notice of such Third Party Claim within 60 days of the
receipt by the indemnified party of such notice; provided, however, that the
failure to provide such notice shall not release the indemnifying party from any
of its obligations under this Article VI except to the extent the indemnifying
party is materially prejudiced by such failure and shall not relieve the
indemnifying party from any other obligation or Liability that it may have to
any indemnified party otherwise than under this Article VI. If the indemnifying
party acknowledges in writing its obligation to indemnify the indemnified party
hereunder against any Losses that may result from such Third Party Claim, then
the indemnifying party shall be entitled to assume and control the defense of
such Third Party Claim at its expense and through counsel of its choice if it
gives notice of its intention to do so to the indemnified party within ten days
of the receipt of such notice from the indemnified party; provided, however,
that if there exists or is reasonably likely to exist a conflict of interest
that would make it inappropriate in the judgment of the indemnified party, in
its reasonable discretion, for the same counsel to represent both the
indemnified party and the indemnifying party, then the indemnified party shall
be entitled to retain its own counsel at the expense of the indemnifying party.
In the event the indemnifying party exercises the right to
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undertake any such defense against any such Third Party Claim as provided above,
the indemnified party shall cooperate with the indemnifying party in such
defense and make available to the indemnifying party, at the indemnifying
party's expense, all witnesses, pertinent records, materials and information in
the indemnified party's possession or under the indemnified party's control
relating thereto as is reasonably required by the indemnifying party. Similarly,
in the event the indemnified party is, directly or indirectly, conducting the
defense against any such Third Party Claim, the indemnifying party shall
cooperate with the indemnified party in such defense and make available to the
indemnified party, at the indemnifying party's expense, all such witnesses,
records, materials and information in the indemnifying party's possession or
under the indemnifying party's control relating thereto as is reasonably
required by the indemnified party. No such Third Party Claim may be settled by
the indemnifying party without the prior written consent of the indemnified
party.
ARTICLE VII
GENERAL PROVISIONS
SECTION 7.01. Waiver. The Purchaser, the Selling Stockholder
and the Company may (a) extend the time for the performance of any of the
obligations or other acts of the other party, (b) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document delivered by the other party pursuant hereto or (c) waive compliance
with any of the agreements or conditions of the other party contained herein.
Any such extension or waiver shall be valid only if set forth in an instrument
in writing signed by the party to be bound thereby. Any waiver of any term or
condition shall not be construed as a waiver of any subsequent breach or a
subsequent waiver of the same term or condition, or a waiver of any other term
or condition, of this Agreement. The failure of any party to assert any of its
rights hereunder shall not constitute a waiver of any of such rights.
SECTION 7.02. Expenses. (a) Except as otherwise specified in
this Agreement, all costs and expenses, including, without limitation, fees and
disbursements of counsel, financial advisors and accountants, incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such costs and expenses.
(b) The Selling Stockholder will pay any stamp duties,
capital duties and taxes payable upon the sale of the Shares.
SECTION 7.03. Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given or
made (and shall be deemed to have been duly given or made upon receipt) by
delivery in person, by courier service, by cable, by telecopy, by telegram, by
telex or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties at the following addresses (or at such
other address for a party as shall be specified in a notice given in accordance
with this Section 7.03):
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(a) if to the Purchaser:
Danone Foods, Inc.
120 White Plains Road
Tarrytown, NY 10591
Fax: (914) 366-2865
Attention: General Counsel
with a copy to:
Groupe Danone
7 rue de Teheran
75381 Paris Cedex 08
France
Fax: 33-1-44-352-554
Attention: General Counsel
and a copy to:
Groupe Danone
7 rue de Teheran
75381 Paris Cedex 08
France
Fax: 33-1-44-352-097
Attention: Director of Corporate Development
and
Shearman & Sterling
599 Lexington Avenue
New York, NY 10022
Telecopy: 212-848-7179
Attention: John J. Madden, Esq.
(b) if to the Selling Stockholder or to the Company:
c/o Lifeway Foods, Inc.
6431 W. Oakton
Morton Grove, IL 60053
Fax: (847) 967-6558
Attention: Michael Smolyansky
11
<PAGE>
SECTION 7.04. Headings. The descriptive headings contained in
this Agreement are for convenience of reference only and shall not affect in any
way the meaning or interpretation of this Agreement.
SECTION 7.05. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any Law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner in
order that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
SECTION 7.06. Entire Agreement. This Agreement, the Original
Stock Purchase Agreement and the Stockholders' Agreement constitute the entire
agreement of the parties hereto with respect to the subject matter hereof and
thereof and supersedes all prior agreements and undertakings, both written and
oral, among the parties hereto with respect to the subject matter hereof and
thereof.
SECTION 7.07. Assignment. This Agreement may not be assigned
by operation of law or otherwise without the express written consent of the
Company, the Selling Stockholder and the Purchaser (which consent may be granted
or withheld in the sole discretion of the Purchaser); provided, however, that
the Purchaser may assign this Agreement to an Affiliate of the Purchaser without
the consent of the Company or of the Selling Stockholder.
SECTION 7.08. No Third Party Beneficiaries. Except for the
provisions of Article VI relating to indemnified parties, this Agreement shall
be binding upon and inure solely to the benefit of the parties hereto and their
permitted assigns and nothing herein, express or implied, is intended to or
shall confer upon any other Person any legal or equitable right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement.
SECTION 7.09. Amendment. This Agreement may not be amended or
modified except (a) by an instrument in writing signed by, or on behalf of, the
Selling Stockholder, the Company and the Purchaser or (b) by a waiver in
accordance with Section 7.01.
SECTION 7.10. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of Illinois, without
giving effect to its principles or rules of conflict of laws to the extent such
principles or rules would require or permit the application of the laws of
another jurisdiction.
SECTION 7.11. Consent to Jurisdiction. Each of the parties
hereto irrevocably submits to the exclusive jurisdiction of (a) a Federal court
for the Northern District, Eastern
12
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Division of Illinois and (b) any Illinois state court located in the County of
Cook, for the purposes of any suit, action or other proceeding arising out of
this Agreement or any transaction contemplated hereby. Each Party hereto agrees
to commence any action, suit or proceeding relating hereto either in a Federal
Court for the Northern District, Eastern Division of Illinois or in an Illinois
state court located in the County of Cook. Each of the parties hereto further
agrees that service of any process, summons, notice or document by U.S.
registered mail or internationally recognized courier to such party's respective
address set forth above shall be effective service of process for any action,
suit or proceeding in Illinois with respect to any matters to which it has
submitted to jurisdiction in this Section 7.11. Each of the parties hereto
irrevocably and unconditionally waives any objection to the laying of venue of
any action, suit or proceeding arising out of this Agreement or the transactions
contemplated hereby in (i) any Federal Court for the Northern District, Eastern
Division of Illinois or (ii) any Illinois state court located in the County of
Cook, and hereby further irrevocably and unconditionally waives and agrees not
to plead or claim in any such court that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum.
SECTION 7.12. Waiver of Jury Trial. Each of the parties hereto
hereby waives to the fullest extent permitted by applicable law, any right it
may have to a trial by jury in respect to any litigation directly or indirectly
arising out of, under or in connection with this Agreement. Each of the parties
hereto (a) certifies that no representative, agent or attorney of any other
party has represented, expressly or otherwise, that such other party would not,
in the event of litigation, seek to enforce that foregoing waiver and (b)
acknowledges that it and the other parties hereto have been induced to enter
into this Agreement, by, among other things, the mutual waivers and
certifications in this Section 7.12.
SECTION 7.13. Counterparts. This Agreement may be executed in
one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
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<PAGE>
IN WITNESS WHEREOF, each of the parties hereto have caused
this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
DANONE FOODS, INC.
By: /s/ Michael Harrison
--------------------------------
Name: Michael Harrison
Title: a Vice President
LIFEWAY FOODS, INC.
By: /s/ Michael Smolyansky
--------------------------------
Name: Michael Smolyansky
Title: President
By: /s/ Michael Harrison
--------------------------------
Name: Michael Smolyansky
14
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Exhibit 26
----------
DANONE FOODS, INC.
December 24, 1999
Lifeway Foods, Inc. Julie Smolyansky
6431 W. Oakton c/o Lifeway Foods, Inc.
Morton Grove, IL 60053 6431 W. Oakton
Attention: Michael Smolyansky Morton Grove, IL 60053
Michael Smolyansky Edward Smolyansky
c/o Lifeway Foods, Inc. c/o Lifeway Foods, Inc.
6431 W. Oakton 6431 W. Oakton
Morton Grove, IL 60053 Morton Grove, IL 60053
Ludmila Smolyansky
c/o Lifeway Foods, Inc.
6431 W. Oakton
Morton Grove, IL 60053
Ladies and Gentlemen:
Reference is made to the Stockholders' Agreement (the
"Stockholders' Agreement") dated October 1, 1999, among Lifeway Foods, Inc. (the
"Company"), Danone Foods, Inc. (the "Stockholder"), Michael Smolyansky and the
other stockholders listed on the signature pages thereof (the Stockholder,
Michael Smolyansky and such other stockholders collectively being the
"Holders"). Capitalized terms used and not defined herein are used herein as
defined in the Stockholders' Agreement.
You hereby agree to amend the Stockholders' Agreement by
inserting a definition of "New Securities" in Section 1.01 to read in its
entirety as follows:
""New Securities" means any capital stock of the
Company, other than Common Stock, whether now authorized or not;
provided that the term "New Securities" does not include (i) securities
of the Company issued upon the conversion or exchange of convertible or
exchangeable securities of the Company that are outstanding as of the
date of this Agreement and (ii) options issued pursuant to an Employee
Plan and exercisable for capital stock of the Company other than Common
Stock, provided that the term "New Securities" does include the
underlying capital stock other than Common Stock, issued upon the
exercise of any such option."
<PAGE>
2
In addition, you hereby agree to amend the Stockholders'
Agreement by deleting Section 6.04 in full and substituting therefor a new
Section 6.04 to read in its entirety as follows:
"SECTION 6.04. Articles of Incorporation. (a) At or
prior to the Company's next annual meeting of its shareholders, which
the Company shall hold as promptly as reasonably practicable, the
Holders shall take all necessary action to amend the Company's Articles
of Incorporation to add thereto, immediately following the existing
provision relating to preemptive rights, the following sentence:
'Notwithstanding anything contained herein to the contrary,
the Corporation shall have the power to grant preemptive
rights to any of its shareholders by contract.'
(b) Until such time as the Company's Articles
of Incorporation shall have been amended in accordance with Section
6.04(a) above, the Company shall not issue, sell or transfer any shares
of capital stock or securities convertible into, or exercisable for,
shares of capital stock."
In addition, you hereby agree to amend the Stockholders'
Agreement by adding a new Section 6.05 to read in its entirety as follows:
"SECTION 6.05. Right to Purchase New Securities. (a)
In the event the Company proposes to issue any New Securities to any
Person (other than the Stockholder), the Company hereby grants to the
Stockholder the right to purchase a number of shares or other amount of
any New Securities which the Company proposes to issue equal to the
product of (i) the total number of shares or other amount of such New
Securities which the Company proposes to issue at such time and (ii) a
fraction, the numerator of which shall be the total number of issued
and outstanding shares of Common Stock owned by the Stockholder on a
Fully Diluted Basis, and the denominator of which shall be the total
number of issued and outstanding shares of Common Stock on a Fully
Diluted Basis. The rights given by the Company under this Section 6.05
shall terminate if unexercised within 15 Business Days after the Notice
of Issuance referred to in Section 6.05(b).
(b) In the event that the Company proposes to
undertake an issuance of New Securities to any Person (other than the
Stockholder), it shall give the Stockholder written notice (a "Notice
of Issuance") of its intention, describing all material terms of the
New Securities, the price and all material terms upon which the Company
proposes to issue such New Securities. The Stockholder shall have 15
Business Days from the date of the Notice of Issuance to agree to
purchase all or any portion of such Stockholder's pro rata share of
such New Securities (as determined pursuant to Section 6.05(a)) for the
same pro rata consideration payable by such other Person at the time of
payment and
<PAGE>
3
otherwise upon the terms specified in the Notice of Issuance, by giving
written notice to the Company and stating therein the quantity of New
Securities to be purchased by such Stockholder.
(c) The parties hereto agree that the rights
conferred and the obligations imposed by Section 4.01 and Section 4.02
of this Agreement upon the Stockholder and Mr. S, respectively, and the
procedures set forth therein, shall apply mutatis mutandis to the
Transfer of any New Securities by the Stockholder or any other Holder,
as the case may be."
(d) All New Securities acquired by any of the
parties hereto pursuant to or in compliance with this Article IV or as
a result of a recapitalization of the Company, or stock dividends or
any other action taken by the Company, shall be subject to all of the
terms, covenants and conditions of this Agreement.
In addition, you hereby agree to amend the Stockholders'
Agreement by adding a new Section 6.06 to read in its entirety as follows:
"SECTION 6.06. Non-Pro Rata Recapitalizations; Stock
Repurchases: Dividends and Distributions. The Company shall not, and
the Holders shall not permit the Company to, engage in any stock split,
dividend or combination, or any recapitalization, merger,
consolidation, exchange or other similar reorganization, unless in
connection therewith, the Stockholder receives such Stockholder's pro
rata share of the same type or types of consideration or securities as
all other stockholders of the Company receive in such transaction."
In addition, you hereby agree that the addresses set forth
above for Ludmila Smolyansky, Julie Smolyansky and Edward Smolyansky shall be
the address for each such Holder to receive notice in accordance with Section
7.03(c) of the Stockholders' Agreement.
This letter agreement shall be effective upon its execution by
the parties hereto. Please execute this letter agreement in the appropriate
spaces below. Upon execution, please return a copy of each signature page to
George Karafotias at Shearman & Sterling by facsimile at: (212) 893-9441.
This letter agreement may be executed manually or by facsimile
and in one or more counterparts, which, when taken together, shall constitute
one and the same agreement.
<PAGE>
4
This letter agreement is governed by the laws of the State of
Illinois.
Very truly yours,
DANONE FOODS, INC.
By /s/ Michael Harrison
------------------------------
Name: Michael Harrison
Title: a Vice President
Acknowledged and agreed as of
the date first above written:
LIFEWAY FOODS, INC.
By /s/ Michael Smolyansky
----------------------------------
Name:
Title:
/s/ Michael Smolyansky
----------------------------------
MICHAEL SMOLYANSKY
/s/ Ludmila Smolyansky
----------------------------------
LUDMILA SMOLYANSKY
/s/ Julie Smolyansky
----------------------------------
JULIE SMOLYANSKY
/s/ Edward Smolyansky
----------------------------------
EDWARD SMOLYANSKY
