SECOND AMENDMENT TO SUPPLY AGREEMENT

This Second Amendment to Supply Agreement (this “Second Amendment”) is made and
entered into this 17th day of March, 2008, by and between Galaxy Nutritional
Foods, Inc. (hereinafter “Galaxy”) and Schreiber Foods, Inc. (hereinafter
“SFI”).

WHEREAS, Galaxy and SFI entered into a Supply Agreement effective as of June 30,
2005, which agreement was amended by the letter agreement dated November 3, 2006
(the “Agreement”); and

WHEREAS, Galaxy and SFI desire to extend the term of the Agreement and to amend
certain other provisions of the Agreement.

NOW THEREFORE, in consideration of the premises and of the mutual covenants and
agreements contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:

  1.  Shortfall Payment. Notwithstanding any provisions of the Agreement to the
contrary, Galaxy and SFI hereby acknowledge and agree that the Shortfall Payment
to be made by Galaxy to SFI pursuant to the terms of the Agreement, including
without limitation Sections III(C)(1), (2) and (3), shall be as determined by
this Section 1.

a.
Subject to Sections 1(b), 1(c) and 1(d) below, the Shortfall Payment shall be
determined as follows:

 
i.  If Galaxy terminates the Agreement (other than pursuant to Section VII(B)(1)
of the Agreement) at any time prior to the first anniversary of this Second
Amendment, the Shortfall Payment shall be $5,100,000.

ii.  If Galaxy terminates the Agreement (other than pursuant to Section
VII(B)(1) of the Agreement) at any time on or after the first anniversary of
this Second Amendment and prior to the second anniversary of this Second
Amendment, the Shortfall Payment shall be $3,400,000.

iii. If Galaxy terminates the Agreement (other than pursuant to Section
VII(B)(1) of the Agreement) at any time on or after the second anniversary of
this Second Amendment and prior to the third anniversary of this Second
Amendment, the Shortfall Payment shall be $1,700,000.

iv.  At all times on or after the third anniversary of this Second Amendment,
the Shortfall Payment shall be $0.

 
 

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b.
In the event of either party’s Change of Control, Galaxy’s obligation (and, for
purposes of clarification, the obligation of such acquiring party) to remit the
Shortfall Payments to SFI shall terminate and be extinguished as of the date of
such Change of Control; provided, however, that if there is a Change of Control
of Galaxy in connection with the sale of Galaxy (including stock sale, merger or
sale of substantially all of Galaxy’s assets) for a purchase price exceeding $50
million, then the obligation to remit the Shortfall Payments to SFI shall not
terminate pursuant to this Section 1(b).

c.
If SFI terminates the Agreement, Galaxy’s obligations to remit the Shortfall
Payments to SFI shall terminate and be extinguished as of the termination date.

d.
If Galaxy terminates the Agreement pursuant to Section VII(B)(1) of the
Agreement, then Galaxy’s obligations to remit the Shortfall Payments to SFI
shall terminate and be extinguished as of the termination date.

  2.  Amendments. The Agreement is hereby amended as follows:

 
a.
Sections III(A) and (B) of the Agreement shall be deleted in their entireties,
and in their place, the following shall be inserted:

“TERM AND PRICE.

A.
Term.The “Term” of this Agreement shall be for a period of fifteen (15) years
from the Effective Date of this Agreement (the “Initial Term”).

SFI may terminate this Agreement prior to the end of the Initial Term, without
penalty, upon provision of written notice to Galaxy issued at least six (6)
months prior to such proposed termination date. In such an event, Galaxy shall
use its commercially reasonable efforts to transition production of the Products
to a new supplier. In the event Galaxy is unable to transition production for
one or more of the Products within such six (6) month period, upon Galaxy’s
request, SFI shall continue to provide such Products to Galaxy, under the terms
of this Agreement, for an additional six (6) months after the date that would
otherwise have been the effective date of such termination.

Galaxy may terminate this Agreement prior to the end of the Initial Term,
without penalty, upon provision of written notice to SFI issued at least six (6)
months prior to such proposed termination date, provided that the effective date
for such termination by Galaxy shall not be prior to December 31, 2012, unless a
Change of Control of Galaxy shall have occurred, in which case the effective
date for such termination by Galaxy shall not be prior to December 31, 2010.

B.
Price. The price for Products during the Initial Term shall be as determined in
accordance with the attached Exhibit B. SFI may increase the Conversion
component of the price described on Exhibit B once in any twelve-month period to
reflect changes in labor and benefits, materials, utilities and energy. Upon
request by Galaxy, SFI will provide Galaxy with reasonable back-up documentation
substantiating such price adjustments. If the proposed price exceeds the price
at which Galaxy can obtain such item (either on its own or through another
private labeling source), then Galaxy may elect such alternative source for such
item, and such item will be removed as a Product under this Agreement.”

 
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b.
Section III(C)(3) of the Agreement shall be deleted in its entirety.

c.
Section VII(B)(1) of the Agreement is hereby amended by inserting the following
sentence at the end thereof, so that the following sentence is the last sentence
of such section: “A material deterioration in the level of service or quality of
Products provided by or on behalf of SFI from the quality of Products or the
service levels provided by SFI under this Agreement as of March 17, 2008 shall
constitute breach of a material obligation under this Agreement for purposes of
this Section VII(B)(3).”

  3.  Mutual Release. SFI and Galaxy hereby fully and forever release the other
from any and all liability, claims, damages, causes of action, rights and
obligations arising out of or relating in any manner to either party’s
performance under the Agreement from June 30, 2005 through and including the
date of this Second Amendment.

  4.  Co-Pack Arrangements. Notwithstanding any provisions of the Agreement to
the contrary, Galaxy acknowledges and agrees that SFI may elect to retain a
third-party to provide the Products on the same terms as provided in the
Agreement, as amended, subject to receipt of Galaxy’s prior written approval of
such third party supplier, which approval shall not be unreasonably withheld (it
being understood and agreed that Galaxy may withhold its consent if (a) the
retention of such third party would result in an increase in pricing to Galaxy
or (b) such third party is one of the companies listed on Exhibit A hereto or an
affiliate thereof or successor thereto). SFI shall remain responsible to Galaxy
for all warranties and requirements under the Agreement as if SFI manufactured
the Products. SFI shall procure from any such third-party supplier a
confidentiality and non-use agreement in form and substance satisfactory to
Galaxy.

  5.  Definitions. All capitalized terms not otherwise defined herein, shall be
defined as set forth in the Agreement.

  6.  Remaining Terms and Conditions. SFI and Galaxy hereby acknowledge and
agree that, as of the date hereof, the Agreement is in full force and effect,
and that except as set forth herein, all remaining terms and conditions of the
Agreement shall remain unchanged, and the Agreement shall remain in full force
and effect.

  7.  Distribution of Products. At Galaxy’s request, Schreiber shall distribute
any Galaxy products which are manufactured by third party co-packers or Galaxy.
Schreiber will charge standard rates for such services.

[Signature Page Follows.]

 
 
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IN WITNESS WHEREOF, this Second Amendment to Supply Agreement has been duly
executed as of the date and year first set forth above. 
 

SCHREIBER FOODS, INC.   GALAXY NUTRITIONAL FOODS, INC.               By:
 /s/Ronald J. Dunford   By:  /s/ David H. Lipka   Name:  Ronald J. Dunford  
Name:   David H. Lipka   Title:  COO, Schreiber Operations   Title:  Chairman  

 
 
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Exhibit A

Whitehall Specialties, Inc.
 
 
 

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