FIRST
      AMENDMENT

    TO
      RECEIVABLES PURCHASE AGREEMENT

     

    THIS
      FIRST AMENDMENT (this
      "Amendment") to the Receivables Purchase Agreement is
      entered into as of the 28th day of March, 2007, by and between Galaxy
      Nutritional Foods, Inc. ("Customer") and SYSTRAN Financial Services Corporation
      ("SYSTRAN").

    


    RECITALS:

    


    A. As
      of
      June 23, 2006, Customer and SYSTRAN executed a certain Receivables Purchase
      Agreement and Addendum to Receivables Purchase Agreement (the "Agreement"),
      setting forth the terms upon which SYSTRAN would purchase certain Bills from
      Customer; and

     

    B. In
      connection with the Agreement, Customer executed and delivered to SYSTRAN
      certain other documents, agreements, guarantees, deposit account control
      agreements, consents, certificates, assignments, and financing statements in
      connection with the obligations referred to in the Agreement (all of the
      foregoing, together with the Agreement, are hereinafter collectively referred
      to
      as the "Transaction Documents"); and

     

    C. Customer
      has requested that SYSTRAN amend and modify certain terms and covenants in
      the
      Agreement, and SYSTRAN is willing to do so upon the terms and conditions
      contained herein.

     

    NOW,
      THEREFORE,
      in
      consideration of the mutual covenants, agreements and promises contained herein,
      the receipt and sufficiency of which are hereby acknowledged, and intending
      to
      be legally bound, the parties hereto for themselves and their successors and
      assigns do hereby agree, represent and warrant as follows:

     

    
      1.
        Definitions.
        All
        capitalized terms not otherwise defined herein shall have the meanings ascribed
        to such terms in the Agreement.

    

     

    
      2.
        The
        modification to Section 20, “Expenses” of the Agreement, the insertion of a new
        Paragraph 20.6, set forth on page 9 of the Agreement in the Addendum, is
        hereby
        deleted and replaced with the following:

    

     

    One
      or
      more employees or agents of SYSTRAN may perform field examinations of the books,
      records and other assets of Customer. Absent an event of default, SYSTRAN shall
      provide Customer with at least 5 days prior notice of such field examinations
      and such field examinations shall be conducted during normal business hours
      and
      in a manner that does not unreasonably interfere with Customer’s business.
      SYSTRAN may perform such field examinations each quarter (up to 4 times each
      year but less frequently in SYSTRAN’s sole discretion), unless Customer shall
      default under the terms of the Agreement. After a default, no limit shall apply
      to the number of field examinations that SYSTRAN may perform. Customer shall
      pay
      to SYSTRAN a field examination fee (the “Field Examination Fee”) in an amount
      equal to $850 for each day spent by each such employee or agent in performing
      and/or summarizing the results of such examination (including all necessary
      travel time) plus all reasonable “out of pocket” expenses. Each Field
      Examination Fee shall be payable by Customer to SYSTRAN, in whole or in part,
      as
      appropriate, on the date(s) on which such field examination was
      performed. 

    


    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    The
      remainder of Section 20 shall remain as originally written.


     

    
      3.
        Exhibit
        A
        of the Agreement shall be deleted in its entirety and replaced with the
        following:

    

     

    "Exhibit
      A to Receivables Purchase Agreement dated June 23, 2006

     

    The
      terms
      used in this Exhibit A have the same definitions as those used in the
      Receivables Purchase Agreement. In case of conflict of definition, the
      definitions in this Exhibit "A" shall prevail.

    


    All
      fees
      referred to below shall collectively be referred to as “Service Fees.”


    


    Customer
      will pay a fee at an annual rate equal to Prime Rate (defined below) plus 1.5%
      per annum of all funds employed to purchase Bills (the "Prime Plus Fee"). The
      Prime Plus Fee shall be calculated on the basis of a 360-day year and the actual
      number of days elapsed in each month, provided however the Prime Plus Fee for
      any month shall not be less than $4,500.00 (“Minimum Prime Plus Fee”).
Funds
      employed shall be calculated by SYSTRAN on a daily basis based upon bills unpaid
      and outstanding, less the Deposit. A change in the Prime Plus Fee due to a
      Prime
      Rate change will be effective upon the date of the change, which will be
      indicated on the settlement statement. "Prime
      Rate" means the prime commercial rate of interest per annum as announced from
      time to time in the “Bonds, Rates & Yields” Section (or its equivalent) of
      the Wall Street Journal as the prevailing “Prime Rate,” from time to time in
      effect. SYSTRAN shall have the right, from time to time, to designate any other
      reference source as the reference for determining the Prime Rate under this
      Agreement.

    


    For
      all
      purposes and computations under this Agreement, Clearance Days will be based
      on
      the Prime Plus Fee and added to the date on which any payment is received by
      SYSTRAN.

    


    Customer
      shall pay a closing fee (the “Closing Fee”) in the amount of $35,000.00, to be
      deducted from funds due Customer on the first day of funding to Customer by
      SYSTRAN, which SYSTRAN acknowledges was paid on or about the Commencement Date,
      June 23, 2006.

    


    A
      managed
      account shall also be created for all Bills that SYSTRAN does not purchase
      and
      all Bills which Customer does not factor (the “Managed Account”). The Deposit on
      the Managed Account is 100%, provided that SYSTRAN shall promptly remit Managed
      Account collections to Customer pursuant to Sections 2.2 and Article 4 of the
      Receivables Purchase Agreement.

    


    The
      above
      Service Fees may be deducted from Customer’s funding pursuant to the Receivables
      Purchase Agreement or SYSTRAN may bill Customer.”


    


    
      4.
        Conditions
        of Effectiveness.
        This
        Amendment shall become effective as of March 28, 2007, upon satisfaction
        of all
        of the following conditions precedent:

    

     

    (a)
      SYSTRAN shall have received one (1) duly executed copies of this Amendment;
      and

     

    (b)
      The
      representations contained in this Amendment shall be true and
      accurate.

     

    
      5.
        Customer
        represents and warrants that after giving effect to this Amendment, and the
        updated litigation and trade names schedules that have been provided to Systran
        contemporaneous with this Amendment, (a) each and every one of the
        representations and warranties made by or on behalf of Customer in the Agreement
        is true and correct in all respects on and as of the date hereof, except
        to the
        extent that any of such representations and warranties related, by the expressed
        terms thereof, solely to a date prior hereto; (b) Customer has duly and properly
        performed, complied with and observed each of its covenants, agreements and
        obligations contained in the Agreement; and (c) no event has occurred or
        is
        continuing, and no condition exists which would constitute a default or an
        event
        of default. 

    

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    
      6.
        Amendment
        to Agreement.
        (a)
        Upon the effectiveness of this Amendment, each reference in the Agreement
        to
        "Receivables Purchase Agreement," "Agreement," the prefix "herein," "hereof,"
        or
        words of similar import, and each reference in the Transaction Documents
        to the
        Agreement, shall mean and be a reference to the Agreement as amended hereby.
        (b)
        Except as modified herein, all of the representations, warranties, terms,
        covenants and conditions of the Agreement, the Transaction Documents and
        all
        other agreements executed in connection therewith shall remain as written
        originally and in full force and effect in accordance with their respective
        terms, and nothing herein shall affect, modify, limit or impair any of the
        rights and powers which SYSTRAN may have thereunder. The amendment set forth
        herein shall be limited precisely as provided for herein, and shall not be
        deemed to be a waiver of, amendment of, consent to or modification of any
        of
        SYSTRAN'S rights under or of any other term or provisions of the Agreement,
        any
        Transaction Document, or other agreement executed in connection therewith,
        or of
        any term or provision of any other instrument referred to therein or herein
        or
        of any transaction or future action on the part of Customer which would require
        the consent of SYSTRAN, including, without limitation, waivers of events
        of
        default which may exist after giving effect hereto. Customer ratifies and
        confirms each term, provision, condition and covenant set forth in the Agreement
        and the Transaction Documents and acknowledges that the agreement set forth
        therein continue to be legal, valid and binding agreements, and enforceable
        in
        accordance with their respective terms.

    

    


    
      7.
        Authority.
        Customer hereby represents and warrants to SYSTRAN that (a) Customer has
        legal
        power and authority to execute and deliver this Amendment; (b) the officer
        executing this Amendment on behalf of Customer has been duly authorized to
        execute and deliver the same and bind Customer with respect to the provisions
        provided for herein; (c) the execution and delivery hereof by Customer and
        the
        performance and observance by Customer of the provisions hereof do not violate
        or conflict with the articles of incorporation, regulations or by-laws of
        Customer or any law applicable to Customer or result in the breach of any
        provision of or constitute a default under any agreement, instrument or document
        binding upon or enforceable against Customer; and (d) this Amendment constitutes
        a valid and legally binding obligation upon Customer in all material
        respects.

    

    


    
      8.
        Waiver
        of Claims.
        Customer waives any and all defenses, claims, counterclaims and offsets against
        SYSTRAN that may have arisen or accrued through the date of this Amendment.
        Customer acknowledges that SYSTRAN and its employees, agents and attorneys
        have
        made no representations or promises except as specifically reflected in this
        Amendment and in the written agreements that have been previously executed.
        

    

    


    
      9.
        Counterparts.
        This
        Amendment may be executed in two or more counterparts, each of which, when
        so
        executed and delivered, shall be an original, but all of which together shall
        constitute one and the same document. Separate counterparts may be executed
        with
        the same effect as if all parties had executed the same counterparts.


    

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    
      10.
        Costs
        and Expenses.
        Customer agrees to pay on demand in accordance with the terms of the Agreement
        all costs and expenses of SYSTRAN in connection with the preparation,
        reproduction, execution and delivery of this Amendment and all other Transaction
        Documents entered into in connection herewith, including the reasonable fees
        and
        out-of-pocket expenses of SYSTRAN'S counsel with respect
        thereto.

    

    


    
      11.
        Governing
        Law.
        This
        Amendment shall be governed by and construed in accordance with the law of
        Oregon. 

    

     

    IN
      WITNESS WHEREOF, Customer and SYSTRAN have hereunto set their hands as of the
      date first set forth above.

     

    
      	
              SYSTRAN
                FINANCIAL
                SERVICES CORPORATION

               

               

            	
               

            	 	 
	By: 	Kristina
              Kinyon	 	 	 
	 	
              
Title:Vice
              President	 	 	
            
	 	Dated:
              May 14,
              2007	 	 	 


    

     

    
       

      
        	
                GALAXY
                  NUTRITIONAL FOODS, INC.

                 

                 

              	 	 	 
	By: 	/s/
                 Salvatore J. Furnari	 	 	 
	 	
                
Title:Chief
                Financial Officer	 	 	
              
	 	
                Dated:
                  March 28, 2007

              	 	 	 


      

       

      
        
          
          

        

        
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