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<SEC-DOCUMENT>0000950137-07-000026.txt : 20070103
<SEC-HEADER>0000950137-07-000026.hdr.sgml : 20070101
<ACCEPTANCE-DATETIME>20070103105935
ACCESSION NUMBER:		0000950137-07-000026
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20070103
ITEM INFORMATION:		Entry into a Material Definitive Agreement
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20070103
DATE AS OF CHANGE:		20070103

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			LIFEWAY FOODS INC
		CENTRAL INDEX KEY:			0000814586
		STANDARD INDUSTRIAL CLASSIFICATION:	DAIRY PRODUCTS [2020]
		IRS NUMBER:				363442829
		STATE OF INCORPORATION:			IL
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-17363
		FILM NUMBER:		07501671

	BUSINESS ADDRESS:	
		STREET 1:		6431 W OAKTON
		CITY:			MORTON GROVE
		STATE:			IL
		ZIP:			60053
		BUSINESS PHONE:		7089671010

	MAIL ADDRESS:	
		STREET 1:		6431 W OAKTON
		CITY:			MORTON GROVE
		STATE:			IL
		ZIP:			60053
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>c11161e8vk.htm
<DESCRIPTION>CURRENT REPORT
<TEXT>
<HTML>
<HEAD>
<TITLE>e8vk</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 1pt solid black; font-size: 1pt">&nbsp;</DIV>




<DIV align="center" style="font-size: 14pt; margin-top: 12pt"><B>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION</B>
</DIV>

<DIV align="center" style="font-size: 12pt"><B>WASHINGTON D.C. 20549</B>
</DIV>

<DIV align="center" style="font-size: 18pt; margin-top: 12pt"><B>FORM 8-K</B>
</DIV>


<DIV align="center" style="font-size: 12pt; margin-top: 12pt"><B>CURRENT REPORT<BR>
Pursuant to Section&nbsp;13 or 15(d) of the Securities Exchange Act of 1934</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Date of
Report (Date of earliest event reported): January&nbsp;3, 2007
</DIV>

<DIV align="center" style="font-size: 24pt; margin-top: 12pt"><B>LIFEWAY FOODS, INC.</B>
</DIV>

<DIV align="center"><DIV style="font-size: 3pt; margin-top: 1pt; width: 100%; border-top: 1px solid #000000">&nbsp;</DIV></DIV>

<DIV align="center" style="font-size: 10pt">(Exact name of registrant as specified in its charter)</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="31%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="31%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="31%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top">ILLINOIS
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">0-17363
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">36-3442829</TD>
</TR>
<TR style="font-size: 1px">
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">(State or other jurisdiction of <BR>
incorporation)
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">(Commission File Number)
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">(I.R.S. Employer Identification No.)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top" colspan="3">6431 West Oakton St. Morton Grove, IL
</TD>
        <TD>&nbsp;</TD>
    <TD align="center" valign="top">60053</TD>
</TR>
<TR style="font-size: 1px">
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top" colspan="3">(Address of principal executive offices)
</TD>
        <TD>&nbsp;</TD>
    <TD align="center" valign="top">(Zip code)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Registrant&#146;s telephone number, including area code: (847)&nbsp;967-1010
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">N/A<BR></DIV>
<DIV align="center"><DIV style="font-size: 3pt; margin-top: 1pt; width: 100%; border-top: 1px solid #000000">&nbsp;</DIV></DIV>
<DIV align="center" style="font-size: 10pt">(Former name or former address, if changed since last report)</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt">Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-family: Wingdings">&#111;</FONT> Written communications pursuant to Rule&nbsp;425 under the Securities Act (17 CFR 230.425)
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-family: Wingdings">&#111;</FONT> Soliciting material pursuant to Rule&nbsp;14a-12 under the Exchange Act (17 CFR 240.14a-12)
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-family: Wingdings">&#111;</FONT> Pre-commencement communications pursuant to Rule&nbsp;14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-family: Wingdings">&#111;</FONT> Pre-commencement communications pursuant to Rule&nbsp;13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
</DIV>


<DIV style="width: 100%; border-bottom: 1pt solid black; margin-top: 10pt; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">








<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>TABLE OF CONTENTS</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="10%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="86%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Item&nbsp;1.01<BR>
Item&nbsp;9.01<BR>
SIGNATURE<BR>
Exhibit&nbsp;Index</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Entry into a Material Definitive Agreement<BR>
Financial Statements and Exhibits</B></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;1.01 Entry into a Material Definitive Agreement</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On December&nbsp;26, 2006, Lifeway Foods, Inc. (&#147;Lifeway&#148;) and DS Waters, L.P. (&#147;DSW&#148;), an
affiliate of Danone Foods, Inc., entered into a Fifth Extension of the Stockholders&#146; Agreement,
which was originally entered into on October&nbsp;1, 1999 by and among Danone Foods, Inc., Lifeway and
certain other parties (the &#147;Fifth Extension&#148;). The Stockholders&#146; Agreement was previously amended
on December&nbsp;24, 1999 by that certain First Extension to Stockholders&#146; Agreement dated September&nbsp;28,
2004 (&#147;First Extension&#148;), by that certain Second Extension to Stockholders&#146; Agreement dated October
29, 2004 (&#147;Second Extension&#148;), by that certain Third Extension to Stockholders&#146; Agreement dated
December&nbsp;30, 2004 (the &#147;Third Extension&#148;), and by the certain Fourth Extension to Stockholders&#146;
Agreement dated May&nbsp;3, 2006 (the &#147;Fourth Extension&#148;). All Lifeway shares held by Danone Foods,
Inc. which are the subject to certain provisions of the Stockholders&#146; Agreement were transferred to
DSW on November&nbsp;10, 2005. DSW accepted these shares subject to the covenants and restrictions
contained in the Stockholders&#146; Agreement.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Stockholders&#146; Agreement as assigned to DSW, DSW has the right to nominate one
Lifeway director, anti-dilutive rights relating to future offerings of securities by Lifeway and
limited registration rights. The Stockholders&#146; Agreement originally provided that neither Lifeway
nor Danone Foods, Inc. would compete with each other with respect to certain dairy products for a
period of five years from the original execution (&#147;Non-Compete Period&#148;) and Danone Foods, Inc.
would not own more than 20% of the issued and outstanding common stock of Lifeway as a result of
direct or indirect acquisition of shares for a period of five years from the original execution
(the &#147;Standstill Period&#148;). The First Extension, Second Extension, Third Extension, and Fourth
Extension extended the Non-Compete Period and Standstill Period to December&nbsp;31, 2006. Pursuant to
the Fourth Extension, Lifeway and DSW also agreed to exclude Stonyfield Farms, Inc., an affiliate
of Danone Foods, Inc. and DSW, from the Non-Compete obligations of the Stockholders&#146; Agreement.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 6pt">Under the Fifth Extension, the terms of the Non-Compete Period and Standstill Period of the
Stockholders&#146; Agreement will now expire on December&nbsp;31, 2007.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;9.01</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Financial Statements and Exhibits</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="9%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="67%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><U><B>Exhibit&nbsp;No.</B></U>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B><U>Description of Exhibit</U></B></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Exhibit&nbsp;10.1</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Fifth Extension to Stockholders&#146; Agreement by and
between Lifeway Foods, Inc., an Illinois corporation and
DS Waters, L.P., a Delaware limited partnership, dated
December, 26, 2006</B></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SIGNATURE</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned hereunto duly authorized.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Dated:
January&nbsp;3, 2007
</DIV>


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">LIFEWAY FOODS, INC.<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">By:&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">/s/ Julie Smolyansky
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">Julie Smolyansky&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">Chief Executive Officer, President,<BR>
and Director&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>

</TABLE>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Exhibit&nbsp;Index</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="93%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>10.1</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Fifth Extension to Stockholders&#146; Agreement by and between Lifeway Foods, Inc., an Illinois corporation and<BR>
DS Waters, L.P., a Delaware limited partnership, dated December, 26, 2006.</B></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>c11161exv10w1.htm
<DESCRIPTION>FIFTH EXTENSION TO STOCKHOLDERS' AGREEMENT
<TEXT>
<HTML>
<HEAD>
<TITLE>exv10w1</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>Exhibit
10.1</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>FIFTH EXTENSION<BR>
TO<BR>
STOCKHOLDERS&#146; AGREEMENT</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This FIFTH EXTENSION TO STOCKHOLDERS&#146; AGREEMENT (the &#147;Fifth Extension&#148;) is hereby entered into
as of the 26<SUP style="font-size: 85%; vertical-align: text-top">th</SUP> day of December, 2006, by and between Lifeway Foods, Inc., an Illinois
corporation (the &#147;Company&#148;) and DS Waters, L.P., a Delaware limited partnership (&#147;DSW&#148;)
(&#147;Stockholder&#148;). Unless otherwise defined herein, all capitalized terms used herein shall have the
same meaning ascribed to those terms in the Stockholders&#146; Agreement.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, Danone Foods, Inc., a Delaware corporation (&#147;DFI&#148;) executed that certain Stock Power
dated November&nbsp;10, 2005, transferring all the shares of the Company which were held by DFI as of
such date that are the subject of that certain Stockholders&#146; Agreement by and among DFI and the
Company and certain other parties dated as of October&nbsp;1, 1999, as amended on December&nbsp;24, 1999 (as
amended and extended, the &#147;Stockholders&#146; Agreement&#148;) and as extended by that certain First
Extension to Stockholders&#146; Agreement dated September&nbsp;28, 2004 (the &#147;First Extension&#148;) and by that
certain Second Extension to Stockholders&#146; Agreement dated October&nbsp;29, 2004 (&#147;Second Extension&#148;) and
by that certain Third Extension to Stockholders&#146; Agreement dated December&nbsp;30, 2004 (the &#147;Third
Extension&#148;), and by that certain Fourth Extension to Stockholders&#146; Agreement dated April
28<SUP style="font-size: 85%; vertical-align: text-top">th</SUP> of 2006 (the &#147;Fourth Extension&#148;) are the subject of the Stockholders&#146; Agreement to
DSW;
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, DSW accepted such shares subject to the covenants and restrictions contained in the
Stockholders&#146; Agreement and DSW hereby agrees to be bound by its terms contained therein;
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, under the Fourth Extension, the Standstill Period and the operative period of Section
6.02 of the Stockholders&#146; Agreement (&#147;Non-Compete Period&#148;) expired on December&nbsp;30, 2005; and
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, each of the Company and the Stockholders desires to further amend the Stockholders&#146;
Agreement to extend the Standstill Period and the Non-Compete Period, with the specific exclusion
of the company, Stonyfield Farms, Inc. from any such obligation, of the Stockholders&#146; Agreement as
more fully provided in this Fifth Extension.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NOW, THEREFORE, in consideration of the entry of the parties into this Fifth Extension and for
other good and valuable consideration, the receipt of which is acknowledged herein, the parties
hereto agree as follows:
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;<U>Acceptance of Terms of Stockholders&#146; Agreement; Acknowledgment</U>. DSW represents to
Company that DSW is an Affiliate of DFI and that DSW has been assigned the Stockholders&#146; Agreement
and the shares of Company from DFI and, DSW further agrees to be bound by, and receive all the
benefits of, the terms and conditions of the Stockholders&#146; Agreement.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;<U>Extension of Standstill Period</U>. The Standstill Period shall be extended to include
any time during the period beginning on October&nbsp;1, 1999 and ending at the close of business on
December&nbsp;31, 2007 and during which the Stockholders Beneficially Owns 10% or more of the
outstanding shares of Common Stock on a Fully Diluted Basis.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;<U>Extension of Non-Compete Period</U>. The Non-Compete Period shall be extended to
include the period beginning on October&nbsp;1, 1999 and ending at the close of business on December&nbsp;31,
2007, with the exception that the Stonyfield Farms, Inc. entity shall be specifically excluded from
any and all non-compete obligations. The non-compete obligations shall apply only to kefir,
fromage frais and Greek Yogurt.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;<U>Governing Law</U>. This Fifth Extension shall be governed by and construed in
accordance with the laws of the State of Illinois.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;<U>No Waiver of Other Rights</U>. The execution, delivery and effectiveness of this Fifth
Extension shall not, except as expressly provided herein, operate as a waiver of any right, power
or remedy of any of the parties to the Stockholders&#146; Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.&nbsp;<U>Counterparts</U>. This Fifth Extension may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which counterparts
together shall constitute one and the same instrument.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt">&#091;Signature Page Follows&#093;
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN WITNESS WHEREOF, this Fifth Extension is hereby executed as of the date first above
written.
</DIV>
<DIV align="left">
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    <TD align="left" valign="top">LIFEWAY FOODS, INC.,<BR>
an Illinois corporation</TD>
    <TD>&nbsp;</TD>
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DS WATERS, L.P.,<BR>
a Delaware limited partnership</TD>
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    <TD>&nbsp;</TD>
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By: DS Waters General Partner, LLC, its<BR>
general partner
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    <TD align="left" nowrap valign="top">By:&nbsp;&nbsp;<FONT style="font-size: 10pt; border-bottom: 1px solid #000000; width: 80%">/s/ Julie Smolyansky</FONT><BR>
Name: Julie Smolyansky<BR>
Its: President</TD>
    <TD>&nbsp;</TD>
    <TD align="left" nowrap valign="top">By:&nbsp;&nbsp;<FONT style="font-size: 10pt; border-bottom: 1px solid #000000; width: 80%">/s/ Anthony Cicio</FONT><BR>
Name: Anthony Cicio<BR>
Its: Assistant Secretary</TD>
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