Document:

STOCK REPURCHASE AGREEMENT

      THIS STOCK REPURCHASE AGREEMENT (this "AGREEMENT"), dated as of October 6,
2004, by and among GALAXY NUTRITIONAL FOODS, INC., a Delaware corporation, with
its principal place of business at 2441 Viscount Row, Orlando, FL 32809 (the
"BUYER" or "COMPANY"), BH CAPITAL INVESTMENTS, LP, a Ontario limited partnership
("BH") whose address is 175 Bloor Street East, South Tower, 7th Floor, Toronto,
Ontario, Canada M4W 3R8 and EXCALIBUR LIMITED PARTNERSHIP, a Manitoba limited
partnership ("EXCALIBUR"), whose address is 33 Prince Arthur Avenue, Toronto,
Ontario, Canada M5R IB2 (BH and Excalibur are referred to individually as a
"SELLER" and together as "SELLERS").

                             PRELIMINARY STATEMENTS

      A. The Sellers are the owners of all of the Company's issued and
outstanding Series A Preferred Stock as more fully described on Schedule I
attached hereto (the "STOCK");

      B. Sellers wish to convert a portion of the Stock to a number of shares of
the Company's Common Stock, par value $.01 per share (the "Common Stock") in
accordance with the conversion rights associated with the Stock and to sell to
the Company the remainder of the Stock and all rights and benefits associated
therewith on the terms and subject to the conditions set forth in this
Agreement;

      C. The Company has authorized the payment of consideration as herein
provided in exchange for the assignment of all remaining rights and benefits
associated with the Stock, subject to the terms and conditions set forth in this
Agreement; and

      D. Upon the closing of the transactions contemplated hereby, Company will
issue and deliver a Warrant to each of Sellers on the terms herein provided and
substantially in the respective forms attached hereto as Exhibit "A" (the
"Warrant") and the parties hereto will execute and deliver a Registration Rights
Agreement in substantially the form attached hereto as Exhibit "B" (the
"REGISTRATION RIGHTS AGREEMENT") pursuant to which the Company agrees to provide
certain registration rights (with respect to the securities issuable pursuant to
the Warrant) under the Securities Act of 1933, as amended (the "1933 Act") and
the rules and regulations promulgated thereunder, and applicable state
Securities laws.

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

      1. PREAMBLES; PURCHASE AND SALE OF SECURITIES; CLOSING

            a. Preliminary Statements. The above preliminary statements,
recitals, definitions, preamble and provisions are true and correct and are
incorporated herein as fully as if set forth herein.

            b. Conversion and Purchase of Stock. Subject to the terms and
conditions set forth in this Agreement, the Sellers and the Company agree to
convert a portion of the shares of Stock outstanding (the "Conversion Stock" as
so indicated on Schedule I hereto) to approximately 600,000 shares of Common
Stock in accordance with the conversion rights presently associated with the
Stock and the Sellers agree to sell the remainder of the Stock and all rights
and benefits associated therewith (the "Remaining Stock") as further indicated
on Schedule I, free and clear of all liens, claims and encumbrances whatsoever,
and Buyer agrees to purchase the Remaining Stock from the Sellers for an
aggregate purchase price of one hundred twenty percent (120%) of the sum of the
Series A Preference Amount thereof plus accrued, but unpaid dividends as of the
Closing Date (the "PURCHASE PRICE"), allocated between Sellers as indicated
under each Seller on Schedule I, together with the issuance and delivery to each
Seller a Warrant relating to 250,000 shares of Common Stock.
<PAGE>

            c. The Closing. The closing ("CLOSING") of the issuance of the
Conversion Stock and sale and purchase of the Remaining Stock (including the
issuance of the Warrants) shall take place at the offices of Baker & Hostetler
LLP, 200 South Orange Avenue, Suite 2300, SunTrust Center, Orlando, Florida
32801, no later than October 20, 2004. The consummation of the transaction and
the payment of the Purchase Price shall occur at Closing, as follows:

                  (i) Conversion Stock. The Sellers shall deliver, by the close
of business the day after closing appropriately completed and executed
conversion notices under the rights presently associated with the Stock and
providing for a conversion of the appropriate portion thereof into the
Conversion Stock and Company shall direct its Stock Transfer Agent to deliver
such Conversion Stock to Sellers in accordance with the rights, designations and
preferences associated with the Stock.

                  (ii) Delivery of Stock Certificate(s). The Sellers shall
deliver to the Company the original certificates representing the Stock free and
clear of all liens, claims and encumbrances whatsoever and endorsed in blank or
executed Assignments Separate from Certificate in a form attached hereto as
Exhibit "C".

                  (iii) Execution and Delivery of Registration Rights Agreement.
The parties will execute and deliver each to the other the Registration Rights
Agreement.

                  (iv) Delivery of Warrant. The Company shall deliver to each
Seller a Warrant providing for the right of the holder thereof to purchase up to
250,000 shares of the Common Stock of the Company at a purchase price equal to
$2.00 per share, subject to adjustment as provided in the Warrant.

                  (v) Delivery of Purchase Price. The Company shall deliver the
Purchase Price in immediately available U.S. funds to each Seller, by the close
of business the day after closing, as allocated pursuant to Schedule I.

      2. SELLER'S REPRESENTATIONS AND WARRANTIES

            Each Seller represents and warrants to the Company that:

            a. Investment Purpose. The shares of Common Stock issued upon
exercise of the Warrant ("Warrant Stock") and the Warrant itself (collectively,
referred to hereafter as the "Securities") to be delivered to such Seller are
being acquired by Seller in good faith solely for its own account, for
investment purposes only, and are not being purchased for resale, resyndication,
distribution, subdivision or fractionalization thereof; such Seller has no
contract or arrangement with any person to sell, transfer or pledge to any
person the Securities or any part thereof, any interest therein or any rights
thereto; such Seller has no present plans to enter into any such contract or
arrangement; and such Seller understands that as a result it must bear the
economic risk of the investment for an indefinite period of time because the
Securities have not been registered under the 1933 Act, and, therefore, cannot
be sold unless they are subsequently registered under the 1933 Act.

                                       2
<PAGE>

            b. Accredited Investor Status. Such Seller is an "accredited
investor" as that term is defined in Rule 501(a) of Regulation D.

            c. Reliance on Exemptions. Such Seller understands that the
Securities are being offered and sold to it under the exemption from the
registration requirements of the United States federal and state Securities laws
and that the Company is relying upon the truth and accuracy of, and such
Seller's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of such Seller
to acquire the Securities.

            d. Information. Such Seller understands and acknowledges that it is
purchasing the Securities without being furnished any offering literature,
prospectus or other materials other than copies of the SEC Documents (as defined
hereinbelow), that this transaction has not been scrutinized by the SEC or by
any administrative agency charged with the administration of the Securities laws
of any state, that all documents, records and books, pertaining to the Company,
its business, finances and operations, and the Securities have been made
available to such Seller, and its advisors and representatives, including its
attorney, its accountant and/or its purchaser representative, and that the books
and records of the Company will be available upon reasonable notice for
inspection by such Seller during reasonable business hours at the Company's
principal place of business. Such Seller and its advisors and representatives,
including its attorney, its accountant and/or its purchaser representative, if
any, have reviewed the SEC Documents and been afforded the opportunity to ask
questions of the Company and have received complete and satisfactory answers to
any such inquiries. Such Seller understands that its investment in the
Securities is speculative and involves a high degree of risk of loss and that
such Seller must be prepared to lose its entire investment in the Company. Such
Seller has sought such accounting, legal and tax advice, as it has considered
necessary to an informed investment decision with respect to its acquisition of
the Securities. Such Seller, or such Seller together with its purchaser
representative, if any, have such knowledge and experience in financial and
business matters that it and such representative are capable of evaluating the
merits and risks of an investment in the Securities and of making an informed
investment decision.

            e. Governmental Review. Such Seller understands that no United
States federal or state agency or any other government or governmental agency
has approved or disapproved or passed on or made any recommendation or
endorsement of the Securities or the fairness or suitability of the investment
in the Securities, nor have such authorities passed upon or endorsed the merits
of the offering of the Securities or the accuracy or adequacy of any of the
information provided by the Company to such Seller regarding the Company, the
Securities or any other matter, and that the Company is relying on the truth and
accuracy of the representations, declarations and warranties herein made by such
Seller in offering the Securities for sale to it without having first registered
the same under the 1933 Act.

            f. Transfer or Resale. Such Seller understands that, except as
provided in the Registration Rights Agreement, (i) the Securities have not been
and are not being registered under the 1933 Act or any state Securities laws,
and may not be transferred unless (a) subsequently registered thereunder, or (b)
such Seller shall have provided the Company with a statement of the
circumstances surrounding the proposed disposition and shall have delivered to
the Company an opinion of counsel, reasonably satisfactory in form, scope and
substance to the Company, to the effect (1) that the Securities to be sold or
transferred may be sold or transferred pursuant to an exemption from such
registration and (2) that appropriate action necessary for compliance with the
1933 Act has been taken; (ii) any sale of such Securities made in reliance on
Rule 144 promulgated under the 1933 Act may be made only in accordance with the
terms of said Rule and further, if said Rule is not applicable, any resale of
such Securities under circumstances in which the seller (or the person through
whom the sale is made) may be deemed to be an underwriter (as that term is
defined in the 1933 Act) may require compliance with some other exemption under
the 1933 Act or the rules and regulations of the SEC thereunder; and (iii)
neither the Company nor any other person is under any obligation to register
such Securities under the 1933 Act or any state Securities laws or to comply
with the terms and conditions of any exemption thereunder.

                                       3
<PAGE>

            g. Legends. Such Seller understands that the Stock certificates
representing the Securities shall bear a restrictive legend in substantially the
following form (and a stop-transfer order shall be placed against transfer of
such stock certificates):

            THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
            SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES HAVE BEEN
            ACQUIRED FOR INVESTMENT AND MAY NOT BE REOFFERED, SOLD, TRANSFERRED,
            PLEDGED, OR ASSIGNED IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION
            STATEMENT FOR THE SECURITIES UNDER SAID ACT AND THE STATE SECURITIES
            ACT OR BLUE SKY ACT OF ANY STATE HAVING JURISDICTION THEREOF, OR (B)
            AN OPINION OF COUNSEL, REASONABLY SATISFACTORY IN FORM, SCOPE AND
            SUBSTANCE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER
            SAID ACT OR THE SECURITIES ACT OR BLUE SKY ACT OF ANY STATE HAVING
            JURISDICTION WITH RESPECT THERETO.

            h. Authorization; Enforcement. This Agreement and the Registration
Rights Agreement have been duly and validly authorized, executed and delivered
on behalf of such Seller and are valid and binding agreements of such Seller
enforceable in accordance with their terms, subject as to enforceability to
general principles of equity and to bankruptcy, insolvency, moratorium, and
other similar laws affecting the enforcement of creditors' rights generally.

            i. Domicile. Such Seller's principal place of business is located as
indicated in the address of such Seller on the signature page to this Agreement.

            j. Short Position and Market Purchases. Such Seller is not acquiring
the Securities or the Conversion Stock for the purpose of covering any short
position in the Securities as of Closing.

            k. Stock Free of Claims. The Stock to be delivered at Closing by
such Seller hereunder is and will be so delivered free and clear of all liens,
claims, encumbrances, pledges, orders or restrictions whatsoever.

                                       4
<PAGE>

            l. No Conflicts. The execution, delivery and performance of this
Agreement by such Seller and the consummation by such Seller of the transactions
contemplated hereby will not (i) result in any violation of such Seller's
Certificate of Limited Partnership, as amended, as in effect on the date hereof
or such Seller's Limited Partnership Agreement, as in effect on the date hereof
or (ii) conflict with, or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which such Seller is a party, or result in
a violation of any law, rule, regulation, order, judgment or decree (including
federal and state securities laws and regulations) applicable to such Seller or
by which any property or asset of such Seller is bound or affected (except for
such conflicts, defaults, terminations, amendments, accelerations, cancellations
and violations as would not, individually or in the aggregate, have a material
adverse effect on such Seller's ability to perform its obligations hereunder).
Except as required under the 1933 Act and any applicable state securities laws,
such Seller is not required to obtain any consent, authorization or order of, or
make any filing or registration with, any court or governmental agency in order
for it to execute, deliver or perform any of its obligations under this
Agreement in accordance with the terms hereof.

            m. Indemnification. Such Seller acknowledges that such Seller
understands the meaning and legal consequences of the representations and
warranties in this Section 2, and that the Company has relied upon such
representations and warranties, and such Seller hereby agrees to indemnify and
hold harmless the Company and its officers, directors, shareholders, agents and
representatives from and against any and all claims, demands, losses, damages,
expenses or liabilities (including attorneys' fees) due to or arising out of,
directly or indirectly, a breach of any such representations or warranties, as
well as any breach of such Seller's covenant provided in Section 4 d. hereof.

      3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY

            The Company represents and warrants to each Seller that:

            a. Organization and Qualification. The Company is a corporation duly
organized and existing in good standing under the laws of the State of Delaware,
and has the requisite corporate power to own its properties and to carry on its
business as now being conducted. The Company is duly qualified as a foreign
corporation to do business and is in good standing in every jurisdiction in
which the nature of the business conducted by it makes such qualification
necessary and where the failure so to qualify would have a material adverse
effect on the operations, properties or financial condition of the Company taken
as a whole (a "MATERIAL ADVERSE EFFECT").

            b. Authorization; Enforcement. (i) The Company has the requisite
corporate power and authority to enter into and perform this Agreement and the
Registration Rights Agreement and to issue the Securities in accordance with the
terms hereof and thereof, (ii) the execution and delivery of this Agreement and
the Registration Rights Agreement by the Company and the consummation by it of
the transactions contemplated hereby have been duly authorized by the Company's
Board of Directors and no further consent or authorization of the Company, its
Board of Directors, or its stockholders is required, (iii) this Agreement and
the Registration Rights Agreement have been duly executed and delivered by the
Company, and (iv) this Agreement and the Registration Rights Agreement
constitute the valid and binding obligations of the Company enforceable against
the Company in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally, the enforcement
of creditors' rights and remedies or by other equitable principles of general
application.

                                       5
<PAGE>

            c. Issuance of Securities. The Warrant is and the Warrant Stock to
be issued pursuant to the Warrant upon exercise and issuance thereof will be
duly authorized and, upon issuance in accordance with the terms hereof or
thereof, shall be validly issued, fully paid and non-assessable, and free from
all taxes, liens and charges with respect to the issue thereof.

            d. No Conflicts. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby will not (i) result in any violation of the Company's
Certificate of Incorporation, as amended, as in effect on the date hereof or the
Company's Bylaws, as in effect on the date hereof or (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Company is a party, or result in a violation of any law,
rule, regulation, order, judgment or decree (including federal and state
securities laws and regulations) applicable to the Company or by which any
property or asset of the Company is bound or affected (except for such
conflicts, defaults, terminations, amendments, accelerations, cancellations and
violations as would not, individually or in the aggregate, have a Material
Adverse Effect). Except as required under the 1933 Act and any applicable state
securities laws, the Company is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental agency in order for it to execute, deliver or perform any of its
obligations under this Agreement in accordance with the terms hereof.

            e. Common Stock. The Company has registered its Common Stock
pursuant to Section 12(b) or (g) of the 1934 Act (as defined below) and is in
full compliance with all reporting requirements of the 1934 Act, and the Company
is in compliance with all requirements for the continued listing or quotation of
its Common Stock, and such Common Stock is currently listed or quoted on, the
Principal Market. As of the date hereof, the Principal Market is the American
Stock Exchange, and except as set forth in the SEC Documents, the Company has
not received any notice regarding, and to its knowledge there is no threat of,
the termination or discontinuance of the eligibility of the Common Stock for
such posting or listing.

            f. SEC Documents, Financial Statements. During the Company's last
two (2) fiscal years, the Company has filed all reports, schedules, forms,
statements and other documents required to be filed by it with the SEC pursuant
to the reporting requirements of the Securities Exchange Act of 1934, as amended
(the "1934 ACT") (all of the foregoing filed prior to the date hereof and all
exhibits included therein and financial statements and schedules thereto and
documents (other than exhibits) incorporated by reference therein, being
hereinafter referred to herein as the "SEC DOCUMENTS"). As of their respective
dates, subject to, with respect to certain SEC Documents, the filing of an
amendment to such SEC Documents, the SEC Documents complied in all material
respects with the requirements of the 1934 Act and the rules and regulations of
the SEC promulgated thereunder applicable to the SEC Documents, and none of the
SEC Documents, at the time they were filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. As of their
respective dates, the financial statements of the Company included in the SEC
Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto. Such financial statements have been prepared in accordance with
generally accepted accounting principles, consistently applied, during the
periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they may exclude footnotes or may be condensed or
summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments).

                                       6
<PAGE>

            g. No Material Adverse Change. Since June 30, 2004, there has not
been any material adverse change in the Company's business, results of
operations, or financial condition, other than changes resulting from general
economic conditions or general economic trends, except as reflected in the SEC
Documents filed at least five (5) days prior to the date hereof.

            h. Absence of Litigation. Except as disclosed in the SEC Documents,
there is no action, suit, proceeding, inquiry or investigation before or by any
court, public board or body pending or, to the knowledge of the Company,
threatened against the Company, wherein an unfavorable decision, ruling or
finding would have a Material Adverse Effect or which would adversely affect the
validity or enforceability of, or the authority or ability of the Company to
perform its obligations under, this Agreement or any of the documents
contemplated herein.

      4. COVENANTS

            a. Form D. The Company agrees to file a Form D with respect to the
Securities as required under Regulation D and to provide a copy thereof to Buyer
promptly after such filing.

            b. Reporting Status. Until the earlier of (i) the date as of which
Buyer may sell all the Warrant Stock without restriction pursuant to Rule 144(k)
promulgated under the 1933 Act, or (ii) the date on which Buyer has sold all of
the Warrant Stock, the Company shall file all reports required to be filed with
the SEC pursuant to the 1934 Act, and the Company shall not terminate its status
as an issuer required to file reports under the 1934 Act even if the 1934 Act or
the rules and regulations thereunder would permit such termination.

            c. Original Stock Certificates. In the event either Seller delivered
an Assignment Separate from Certificate in lieu of an original stock certificate
or certificates under Section 1c(ii) hereof, such Seller covenants to deliver
the original certificate free and clear, from and after the Closing Date, of all
liens, claims and encumbrances whatsoever (and appropriately endorsed in favor
of the Company and relating to all Remaining Stock), within twenty (20) days of
the Closing Date.

      5. TRANSFER AGENT INSTRUCTIONS

            Each Seller acknowledges that the Securities shall be "restricted"
Securities, that the Stock Certificates and Warrant shall bear the restrictive
legend specified in Section 2(g) of this Agreement, and that stop-transfer
instructions have been given by the Company to its transfer agent with respect
to the Securities. If a Seller provides the Company with an opinion of counsel,
reasonably satisfactory in form, scope and substance to the Company, that
registration of a resale by such Seller of any of the Securities is not required
under the 1933 Act or any applicable state securities or blue sky laws, the
Company shall permit the transfer and promptly instruct its transfer agent to
electronically issue such Securities in such name and in such denominations as
specified by such Seller.

                                       7
<PAGE>

      6. TERMINATION

            a. Termination. This Agreement may be terminated as follows:

                  (i) at any time prior to Closing, by mutual written consent of
all of the parties to this Agreement;

                  (ii) at any time after October 20, 2004, by Sellers, if the
Closing has not been effected on or prior to such date and if such Seller is not
then in breach of any term of this Agreement, pursuant to written notice by
Sellers to the Company; or

                  (iii) at any time after October 20, 2004, by the Company, if
the Closing has not been effected on or prior to such date, if the Company is
not then in breach of any term of this Agreement, pursuant to written notice by
the Company to Sellers.

            b. Effect of Termination. All obligations of the parties hereunder
shall cease upon any termination pursuant to Section 6.a., provided, however,
that the provisions of Section 7 hereof shall survive any termination of this
Agreement.

      7. GOVERNING LAW; MISCELLANEOUS

            a. Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Delaware without regard
to the principles of conflict of laws.

            b. Counterparts. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party. In the event any signature page is
delivered by facsimile transmission, the party using such means of delivery
shall cause three (3) additional original executed signature pages to be
physically delivered to the other party within five (5) days of the execution
and delivery hereof.

            c. Headings. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.

            d. Severability. If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Agreement or
the validity or enforceability of this Agreement in any other jurisdiction.

            e. Entire Agreement; Amendments. This Agreement and the instruments
referenced herein contain the entire understanding of the parties with respect
to the matters covered herein and therein and, except as specifically set forth
herein or therein, neither the Company nor any Seller makes any representation,
warranty, covenant or undertaking with respect to such matters. No provision of
this Agreement may be waived or amended other than by an instrument in writing
signed by the party to be charged with enforcement.

                                       8
<PAGE>

            f. Notices. Any notices required or permitted to be given under the
terms of this Agreement shall be sent by mail or delivered personally or by
courier and shall be effective five days after being placed in the mail, if
mailed, certified or registered, return receipt requested, or upon receipt, if
delivered personally or by courier, in each case addressed to a party. The
addresses for such communications shall be:

If to the Company:         Galaxy Nutritional Foods, Inc.
                           2441 Viscount Row
                           Orlando, FL 32809
                           Telephone:  (407) 855-5500
                           Telecopy:  (407) 855-1099
                           Attention:  Mr. Michael E. Broll

With a copy to:            Baker & Hostetler LLP
                           200 South Orange Avenue
                           Orlando, FL 32801
                           Telephone:  (407) 649-4000
                           Telecopy:  (407) 841-0168
                           Attention:  Kenneth C. Wright, Esq.

If to BH:                  BH Capital Investments, L.P.
                           175 Bloor Street East
                           South Tower, 7th Floor
                           Toronto, Ontario, Canada M4W 3R8
                           Telecopy:  (416) 929-5314

If to Excalibur:           Excalibur Limited Partnership
                           33 Prince Arthur Avenue
                           Toronto, Ontario, Canada M5R IB2
                           Telecopy:  (416) 964-8868

Each party shall provide notice to the other party of any change in address.

            g. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and assigns. No party
shall assign this Agreement or any rights or obligations hereunder without the
prior written consent of the other (which consent may be withheld for any reason
in the sole discretion of the party from whom consent is sought).

            h. Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.

            i. Publicity. The Company and each Seller shall have the right to
approve before issuance any press releases or any other public statements with
respect to the transactions contemplated hereby; provided, however, that the
Company shall be entitled, without the prior approval of each Seller, to make
any press release with respect to such transactions as the Company determines is
required by applicable law and regulations.

                                       9
<PAGE>

            j. Further Assurances. Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

                    [SIGNATURES APPEAR ON THE FOLLOWING PAGE]

                                       10
<PAGE>

            IN WITNESS WHEREOF, Buyer and the Company have caused this
Securities Purchase Agreement to be duly executed as of the date first written
above.

                                "Company"

                                GALAXY NUTRITIONAL FOODS, INC.

                                By:  /s / Michael E. Broll
                                     -------------------------------------------
                                     Michael E. Broll
                                     Chief Executive Officer

                                "Seller"

                                BH CAPITAL INVESTMENTS, LP

                                By:  HB and Co., its General Partner

                                     By: /s/ Henry Brachfeld
                                        ----------------------------------------

                                     Print Name: Henry Brachfeld
                                                --------------------------------

                                     As its: President of General Partner
                                            ------------------------------------

                                     Address: 175 Bloor Street East
                                              South Tower, 7th Floor
                                              Toronto, Ontario, Canada M4W 3R8

                                "Seller"

                                EXCALIBUR LIMITED PARTNERSHIP

                                By:  Excalibur Capital Management, Inc.

                                     By: /s/ Will Hechter
                                        ----------------------------------------

                                     Print Name: Will Hechter
                                                --------------------------------

                                     As its: President of General Partner
                                            ------------------------------------

                                Address: 33 Prince Arthur Avenue
                                         Toronto, Ontario, Canada M5R IB2

                                       11
<PAGE>

                                   SCHEDULE I

                         GALAXY NUTRITIONAL FOODS, INC.
                                   SCHEDULE I
                           STOCK REPURCHASE AGREEMENT

PURCHASE CALCULATION AS OF OCTOBER 6, 2004
------------------------------------------

<TABLE>
<CAPTION>
                                                              Total BH          Capital          Excalibur
                                                          ---------------------------------------------------
<S>                                                       <C>               <C>               <C>
Series A original value                                   $         48.18   $         48.18   $         48.18
10% Dividends fiscal 2002                                            4.82              4.82              4.82
8% Dividends fiscal 2003                                             3.85              3.85              3.85
8% Dividends fiscal 2004                                             3.85              3.85              3.85
8% Dividends fiscal 2005 (accrued dividends to 10/5/04)              1.96              1.96              1.96
                                                          ---------------------------------------------------
  Total Value per Conversion Share                        $         62.66   $         62.66   $         62.66
Conversion price                                                   1.0735            1.0735            1.0735
                                                          ---------------------------------------------------
No. of common shares per share of Conversion Stock                  58.37             58.37             58.37
                                                          ===================================================

Conversion Stock                                                   10,278             5,139             5,139
                                                          ---------------------------------------------------
Common Stock Issued for Conversion Stock                          599,970           299,985           299,985
                                                          ---------------------------------------------------

Remaining Stock                                                    30,316            14,591            15,725

Preference Amount of Remaining Stock - principal          $  1,460,589.71   $    702,977.45   $    757,612.26
Preference Amount of Remaining Stock - dividend           $    439,150.64   $    211,361.89   $    227,788.75
                                                          ---------------------------------------------------
  Total Base Value                                        $  1,899,740.35   $    914,339.34   $    985,401.01
                                                          ===================================================

                                                          ---------------------------------------------------
Purchase Price of Remaining Stock/Accrued Dividends       $  2,279,688.42   $  1,097,207.21   $  1,182,481.21
                                                          ---------------------------------------------------
</TABLE>

                                       12REGISTRATION RIGHTS AGREEMENT

            REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of
October 6, 2004, by and between GALAXY NUTRITIONAL FOODS, INC., a Delaware
corporation, with headquarters located at 2441 Viscount Road, Orlando, Florida
32809 (the "COMPANY"), BH CAPITAL INVESTMENTS, LP, an Ontario limited
partnership ("BH") whose address is 175 Bloor Street East, South Tower, 7th
Floor, Toronto, Ontario, Canada M4W 3R8 and EXCALIBUR LIMITED Partnership, a
Manitoba limited partnership ("EXCALIBUR"), whose address is 33 Prince Arthur
Avenue, Toronto, Ontario, Canada M5R IB2 (BH and Excalibur are referred to
individually as a "INVESTOR" and together as "Investors").

                             PRELIMINARY STATEMENTS

      A. In connection with the Stock Repurchase Agreement by and between the
parties of even date herewith (the "STOCK REPURCHASE AGREEMENT"), the Company
has agreed, upon the terms and subject to the conditions of the Stock Repurchase
Agreement, to issue to each Investor a certain Warrant described therein
relating to 250,000 shares (subject to certain adjustments as provided in the
Warrant) of the Company's common stock, par value $0.01 per share (the "COMMON
STOCK"); and

      B. To induce the Investor to execute and deliver the Stock Repurchase
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, the "1933 ACT"), and
applicable state securities laws.

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

      1. DEFINITIONS.

            a. As used in this Agreement, the following terms shall have the
following meanings:

                  (i) "INVESTOR" means the Investor and any transferee or
assignee thereof who agrees to become bound by the provisions of this Agreement
in accordance with Section 9 hereof.

                  (ii) "REGISTER," "REGISTERED," and "REGISTRATION" refer to a
registration effected by preparing and filing a Registration Statement or
Statements in compliance with the 1933 Act and pursuant to Rule 415 under the
1933 Act or any successor rule providing for offering securities on a continuous
basis ("RULE 415"), and the declaration or ordering of effectiveness of such
Registration Statement by the United States Securities and Exchange Commission
(the "SEC").

                  (iii) "REGISTRABLE SECURITIES" means the Warrant Stock (as
defined in the Warrant).

                  (iv) "REGISTRATION PERIOD" means the period commencing on the
date hereof and expiring on the date that (A) the Investor may sell all of the
Registrable Securities without restriction pursuant to Rule 144(k) promulgated
under the 1933 Act, or (B) the Investor has sold all of the Registrable
Securities.
<PAGE>

                  (v) "REGISTRATION STATEMENT" means a registration statement of
the Company under the 1933 Act.

            b. Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings set forth in the Stock Repurchase Agreement.

      2. REGISTRATION RIGHTS.

            Piggy-Back Registrations. If at any time during the Registration
Period, the Company shall file with the SEC a Registration Statement relating to
an offering for its own account or the account of others under the 1933 Act of
any of its equity securities (other than on Form S-4 or Form S-8 or their then
equivalents relating to equity securities to be issued solely in connection with
any acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans), the Company shall
send to the Investor who is entitled to registration rights under this Section 2
written notice of the intended filing of such Registration Statement and, if
within twenty (20) days after receipt of such notice, the Investor shall so
request in writing, the Company shall include in such Registration Statement all
or any part of the Registrable Securities the Investor requests to be
registered, except that if, in connection with any underwritten public offering
for the account of the Company the managing underwriter(s) thereof shall impose
a limitation on the number of shares of Common Stock which may be included in
the Registration Statement because, in such underwriter(s)' judgment, marketing
or other factors dictate such limitation is necessary to facilitate public
distribution, then the Company shall be obligated to include in such
Registration Statement only a limited portion of the Registrable Securities with
respect to which the Investor has requested inclusion hereunder, such portion to
be determined as hereinafter provided; provided that no portion of the equity
securities which the Company is offering for its own account shall be excluded;
provided, further that the Company shall be entitled to exclude Registrable
Securities to the extent necessary to avoid breaching obligations existing prior
to the date hereof to other stockholders of the Company. Subject to the
foregoing, the Company shall not exclude any Registrable Securities unless the
Company has first excluded all outstanding securities, the holders of which are
not entitled to inclusion of such securities in such Registration Statement or
are not entitled to pro rata inclusion with the Registrable Securities, and,
after giving effect to the immediately preceding clause, any exclusion of
Registrable Securities shall be made pro rata with holders of other securities
having the right to include such securities in the Registration Statement other
than holders of securities entitled to inclusion of their securities in such
Registration Statement by reason of demand registration rights as of date
hereof. The obligations of the Company under this Section 2 may be waived by the
Investor. If an offering in connection with which the Investor is entitled to
registration under this Section 2 is an underwritten offering, then if the
Investor's Registrable Securities are included in such Registration Statement
the Investor shall, unless otherwise agreed by the Company, offer and sell such
Registrable Securities in an underwritten offering using the same underwriter or
underwriters and, subject to the provisions of this Agreement, on the same terms
and conditions as other shares of Common Stock included in such underwritten
offering.

      3. OBLIGATIONS OF THE COMPANY.

      In connection with the registration of the Registrable Securities, the
Company shall have the following obligations:

            a. A Registration Statement filed pursuant to this Agreement
(including any amendments or supplements thereto and prospectuses contained
therein) shall not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein, or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading.

                                       2
<PAGE>

            b. The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to the Registration
Statement and the prospectus used in connection with the Registration Statement
as may be necessary to keep the Registration Statement effective at all times
during the Registration Period, and, during the Registration Period, comply with
the provisions of the 1933 Act with respect to the disposition of all
Registrable Securities of the Company covered by the Registration Statement
until such time as all of such Registrable Securities have been disposed of in
accordance with the intended methods of disposition by the seller or sellers
thereof as set forth in the Registration Statement.

            c. The Company shall furnish to the Investor if its Registrable
Securities are included in the Registration Statement and its legal counsel (i)
promptly after the same is prepared and publicly distributed, filed with the
SEC, or received by the Company, one copy of the Registration Statement and any
amendment thereto, each preliminary prospectus and prospectus and each amendment
or supplement thereto, and (ii) such number of copies of a prospectus, including
a preliminary prospectus, and all amendments and supplements thereto and such
other documents as the Investor may reasonably request in order to facilitate
the disposition of the Registrable Securities owned by the Investor.

            d. As promptly as practicable after becoming aware of such event,
the Company shall notify the Investor of the happening of any event, of which
the Company has knowledge, as a result of which the prospectus included in the
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omission to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, and use its best efforts promptly to
prepare a supplement or amendment to the Registration Statement to correct such
untrue statement or omission, and deliver such number of copies of such
supplement or amendment to the Investor as the Investor may reasonably request.

            e. The Company shall use its best efforts to prevent the issuance of
any stop order or other suspension of effectiveness of a Registration Statement,
and, if such an order is issued, to obtain the withdrawal of such order at the
earliest possible moment and to notify the Investor if the Investor holds
Registrable Securities being sold (or, in the event of an underwritten offering,
the managing underwriters) of the issuance of such order and the resolution
thereof.

            f. The Company shall hold in confidence and not make any disclosure
of information concerning the Investor provided to the Company unless (i) the
Company determines disclosure of such information is necessary to comply with
federal or state securities laws, (ii) the disclosure of such information is
necessary to avoid or correct a misstatement or omission in any Registration
Statement, (iii) the release of such information is ordered pursuant to a
subpoena or other final, non-appealable order from a court or governmental body
of competent jurisdiction, or (iv) such information has been made generally
available to the public other than by disclosure in violation of this or any
other agreement. The Company agrees that it shall, upon learning that disclosure
of such information concerning the Investor is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
notice to the Investor and allow the Investor, at the Investor's expense, to
undertake appropriate action to prevent disclosure of, or to obtain a protective
order for, such information.

            g. The Company shall use its best efforts to cause all the
Registrable Securities covered by the Registration Statement to be listed on the
American Stock Exchange and on each additional national securities exchange on
which securities of the same class or series issued by the Company are then
listed, if any, if the listing of such Registrable Securities is then permitted
under the rules of such exchange.

                                       3
<PAGE>

            h. The Company shall cooperate with the Investor if it holds
Registrable Securities and the managing underwriter or underwriters, if any, to
facilitate the timely preparation and delivery of certificates representing the
Registrable Securities to be offered pursuant to the Registration Statement and
enable such certificates to be in such denominations or amounts, as the case may
be, as the managing underwriter or underwriters, if any, or the Investor may
reasonably request and registered in such names as the managing underwriter or
underwriters, if any, or the Investor may request.

            i. Subject to Section 5 hereof, the Investors holding a majority of
Registrable Securities shall have the right to select one legal counsel to
review and oversee as their counsel. The Company shall reasonably cooperate with
Investor's legal counsel in performing the Company's obligations under this
Agreement. The Company shall permit such counsel to review and comment upon (i)
the Registration Statement at least seven (7) days prior to its filing with the
SEC and (ii) all amendments and supplements to Registration Statement within
reasonable number of days prior to their filing with the SEC and (iii) not file
any document to which investor's legal counsel reasonably objects. The Company
shall furnish Investor's legal counsel, without charge, any correspondence from
the SEC or the staff of the SEC to the Company or its representatives relating
to any Registration Statement.

      4. OBLIGATIONS OF THE INVESTOR.

      In connection with the registration of the Registrable Securities, the
Investor shall have the following obligations:

            a. It shall be a condition precedent to the obligations of the
Company to complete the registration of Registrable Securities pursuant to this
Agreement that the Investor shall furnish to the Company such information
regarding itself, the Registrable Securities held by it and the intended method
of disposition of the Registrable Securities held by it as shall be reasonably
required to effect the registration of such Registrable Securities and shall
execute such documents in connection with such registration as the Company may
reasonably request. At least twenty (20) days prior to the first anticipated
filing date of the Registration Statement, the Company shall notify the Investor
of the information the Company requires from the Investor if the Investor elects
to have any of the Investor's Registrable Securities included in the
Registration Statement.

            b. The Investor by the Investor's acceptance of the Registrable
Securities agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of the Registration
Statement hereunder, unless the Investor has notified the Company in writing of
the Investor's election to exclude all of the Investor's Registrable Securities
from the Registration Statement.

            c. The Investor agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3(d) or
3(e), the Investor will immediately discontinue disposition of Registrable
Securities pursuant to the Registration Statement covering such Registrable
Securities until the Investor's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 3(d) or 3(e) and, if so directed by
the Company, the Investor shall deliver to the Company (at the expense of the
Company) or destroy (and deliver to the Company a certificate of destruction)
all copies in the Investor's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice.

            d. The Investor may not participate in any underwritten registration
hereunder unless the Investor (i) agrees to sell the Investor's Registrable
Securities on the basis provided in any underwriting arrangements, (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements (provided that all such agreements and
documents shall be in substantially the same form as those executed by the
Company and the other selling stockholders participating in such distribution),
and (iii) agrees to pay its pro rata share of all underwriting discounts and
commissions.

                                       4
<PAGE>

            e. The Investor shall give notice to the Company when it has sold
all of the Registrable Securities.

      5. EXPENSES OF REGISTRATION.

      All reasonable expenses, other than underwriting discounts and
commissions, incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including, without limitation, all
registration, listing and qualifications fees, printers and accounting fees, the
fees and disbursements of counsel for the Company, shall be borne by the
Company.

      6. INDEMNIFICATION.

      In the event any Registrable Securities are included in a Registration
Statement under this Agreement:

            a. To the extent permitted by law, the Company will indemnify, hold
harmless and defend (i) the Investor who holds such Registrable Securities, and
(ii) the directors, officers and each person who controls the Investor within
the meaning of the 1933 Act or the Securities Exchange Act of 1934, as amended
(the "1934 ACT"), if any, (each, an "INDEMNIFIED PERSON"), against any losses,
claims, damages, liabilities or expenses (joint or several) (collectively,
"CLAIMS") to which any of them may become subject insofar as such Claims (or
actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon: (i) any untrue statement or alleged untrue
statement of a material fact in a Registration Statement or the omission or
alleged omission to state a material fact therein required to be stated or
necessary to make the statements therein not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact in any preliminary
prospectus if used prior to the effective date of such Registration Statement,
or contained in the final prospectus (as amended or supplemented, if the Company
files any amendment thereof or supplement thereto with the SEC) or the omission
or alleged omission to state therein any material fact necessary to make the
statements made therein, in light of the circumstances under which the
statements therein were made, not misleading, or (iii) any violation or alleged
violation by the Company of the 1933 Act, the 1934 Act, any other law,
including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registrable
Securities pursuant to a Registration Statement (the matters in the foregoing
clauses (i) through (iii) being, collectively, "VIOLATIONS"). Subject to the
restrictions set forth in Section 6(d) with respect to the number of legal
counsel, the Company shall reimburse the Investor or controlling person,
promptly as such expenses are incurred and are due and payable, for any legal
fees or other reasonable expenses incurred by them in connection with
investigating or defending any such Claim. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this
Section 6(a): (i) shall not apply to a Claim arising out of or based upon a
Violation which occurs in reliance upon and in conformity with information
furnished in writing to the Company by any Indemnified Person expressly for use
in connection with the preparation of the Registration Statement or any such
amendment thereof or supplement thereto, if such prospectus was timely made
available by the Company pursuant to Section 3(c) hereof; (ii) with respect to
any preliminary prospectus, shall not inure to the benefit of any such person
from whom the person asserting any such Claim purchased the Registrable
Securities that are the subject thereof (or to the benefit of any person
controlling such person) if the untrue statement or omission of material fact
contained in the preliminary prospectus was corrected in the prospectus, as then
amended or supplemented, if such prospectus was timely made available by the
Company pursuant to Section 3(c) hereof; (iii) shall not be available to the
extent such Claim is based on a failure of the Investor to deliver or to cause
to be delivered the prospectus made available by the Company; and (iv) shall not
apply to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of the Company, which consent shall not be
unreasonably withheld. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Indemnified Person
and shall survive the transfer of the Registrable Securities by the Investor
pursuant to Section 9.

                                       5
<PAGE>

            b. In connection with any Registration Statement in which the
Investor is participating, the Investor agrees to indemnify, hold harmless and
defend, to the same extent and in the same manner set forth in Section 6(a), the
Company, each of its directors, each of its officers who signs the Registration
Statement, each person, if any, who controls the Company within the meaning of
the 1933 Act or the 1934 Act, any underwriter and any other stockholder selling
securities pursuant to the Registration Statement or any of its directors or
officers or any person who controls such stockholder or underwriter within the
meaning of the 1933 Act or the 1934 Act (collectively and together with an
indemnified Person, an "INDEMNIFIED PARTY"), against any Claim to which any of
them may become subject, under the 1933 Act, the 1934 Act or otherwise, insofar
as such Claim arises out of or is based upon any Violation, in each case to the
extent (and only to the extent) that such violation occurs in reliance upon and
in conformity with written information furnished to the Company by the Investor
expressly for use in connection with such Registration Statement or to the
extent such Claim is based upon any violation or alleged violation by the
Investor of the 1933 Act, 1934 Act or any other law; and the Investor will
reimburse any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such Claim; provided, however, that the
indemnity agreement contained in this Section 6(b) shall not apply to amounts
paid in settlement of any Claim if such settlement is effected without the prior
written consent of the Investor, which consent shall not be unreasonably
withheld; provided, further, however, that the Investor shall be liable under
this Section 6(b) for only that amount of a Claim as does not exceed the net
proceeds to the Investor as a result of the sale of Registrable Securities
pursuant to such Registration Statement. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of such
Indemnified Party and shall survive the transfer of the Registrable Securities
by the Investor pursuant to Section 9. Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in this Section 6(b)
with respect to any preliminary prospectus shall not inure to the benefit of any
Indemnified Party if the untrue statement or omission of material fact contained
in the preliminary prospectus was corrected on a timely basis in the prospectus,
as then amended or supplemented.

            c. The Company shall be entitled to receive indemnities from
underwriters, selling brokers, dealer managers and similar securities industry
professionals participating in any distribution, to the same extent as provided
above, with respect to information such persons so furnished in writing by such
persons expressly for inclusion in the Registration Statement.

            d. Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 6 of notice of the commencement of any action
(including any governmental action), such Indemnified Person or Indemnified
Party shall, if a Claim in respect thereof is to made against any indemnifying
party under this Section 6, deliver to the indemnifying party a written notice
of the commencement thereof, and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume control of the
defense thereof with counsel mutually satisfactory to the indemnifying party and
the Indemnified Person or the Indemnified Party, as the case may be; provided,
however, that an Indemnified Person or Indemnified Party shall have the right to
retain its own counsel with the fees and expenses to be paid by the indemnifying
party, if, in the reasonable opinion of counsel retained by the indemnifying
party, the representation by such counsel of the Indemnified Person or
Indemnified Party and the indemnifying party would be inappropriate due to
actual or potential differing interests between such Indemnified Person or
Indemnified Party and any other party represented by such counsel in such
proceeding. The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action shall not
relieve such indemnifying party of any liability to the Indemnified Person or
Indemnified Party under this Section 6, except to the extent that the
indemnifying party is prejudiced in its ability to defend such action. The
indemnification required by this Section 6 shall be made by periodic payments of
the amount thereof during the course of the investigation or defense, as such
expense, loss, damage or liability is incurred and is due and payable.

                                       6
<PAGE>

      7. CONTRIBUTION.

      To the extent any indemnification by an indemnifying party is prohibited
or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Section 6 to the fullest extent permitted by law; provided, however, that
(i) no contribution shall be made under circumstances where the maker would not
have been liable for indemnification under the fault standards set forth in
Section 6, (ii) no seller of Registrable Securities guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any seller of Registrable Securities who was not
guilty of such fraudulent misrepresentation, and (iii) contribution by any
seller of Registrable Securities shall be limited in amount to the net amount of
proceeds received by such seller from the sale of such Registrable Securities.

      8. REPORTS UNDER THE 1934 ACT.

      With a view to making available to the Investor the benefits of Rule 144
promulgated under the 1933 Act or any other similar rule or regulation of the
SEC that may at any time permit the Investor to sell securities of the Company
to the public without registration ("RULE 144"), the Company agrees to:

            a. make and keep public information available, as those terms are
understood and defined in Rule 144;

            b. file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the 1934 Act so long as
the Company remains subject to such requirements (it being understood that
nothing herein shall limit the Company's obligations under Section 4(c) of the
Stock Repurchase Agreement) and the filing of such reports and other documents
is required for the applicable provisions of Rule 144; and

            c. furnish to the Investor so long as the Investor owns Registrable
Securities, promptly upon request, (i) a written statement by the Company that
it has complied with the reporting requirements of Rule 144, the 1933 Act and
the 1934 Act, (ii) a copy of the most recent annual or quarterly report of the
Company and such other reports and documents so filed by the Company, and (iii)
such other information as may be reasonably requested to permit the investors to
sell such securities pursuant to Rule 144 without registration.

      9. ASSIGNMENT OF REGISTRATION RIGHTS.

      The rights to have the Company register Registrable Securities pursuant to
this Agreement shall be automatically assignable by the Investors to any
transferee of all or any portion of Registrable Securities if: (i) the Investor
agrees in writing with the transferee or assignee to assign such rights, and a
copy of such agreement is furnished to the Company promptly after such
assignment, (ii) the Company is, promptly after such transfer or assignment,
furnished with written notice of (a) the name and address of such transferee or
assignee, and (b) the securities with respect to which such registration rights
are being transferred or assigned, (iii) immediately following such transfer or
assignment the further disposition of such securities by the transferee or
assignee is restricted under the 1933 Act and applicable state securities laws,
(iv) at or before the time the Company receives the written notice contemplated
by clause (ii) of this sentence the transferee or assignee agrees in writing
with the Company to be bound by all of the provisions contained herein, and (v)
such transfer shall have been made in accordance with the applicable
requirements of the Stock Repurchase Agreement, and applicable law, including
federal and state securities laws.

                                       7
<PAGE>

      10. AMENDMENT OF REGISTRATION RIGHTS.

      Provisions of this Agreement may be amended and the observance thereof may
be waived (either generally or in a particular instance and either retroactively
or prospectively), only with the written consent of the Company and the
Investor. Any amendment or waiver effected in accordance with this Section 10
shall be binding upon the Investor and the Company.

      11. MISCELLANEOUS.

            a. A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from the registered owner of such Registrable
Securities.

            b. Any notices required or permitted to be given under the terms of
this Agreement shall be sent by registered or certified mail, return receipt
requested, or delivered personally or by courier and shall be effective five
days after being placed in the mail, if mailed, or upon receipt, if delivered
personally or by courier, in each case addressed to a party. The addresses for
such communications shall be as set forth in the Stock Repurchase Agreement or,
in respect of any party, at such other address of which such party shall notify
the other parties in writing.

            c. Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.

            d. This Agreement shall be enforced, governed by and construed in
accordance with the laws of the State of Delaware applicable to agreements made
and to be performed entirely within such State. In the event that any provision
of this Agreement is invalid or unenforceable under any applicable statute or
rule of law, then such provision shall be deemed inoperative to the extent that
it may conflict therewith and shall be deemed modified to conform with such
statute or rule of law. Any provision hereof which may prove invalid or
unenforceable under any law shall not affect the validity or enforceability of
any other provision hereof.

            e. This Agreement, the Warrant and the Stock Repurchase Agreement
constitute the entire agreement among the parties hereto with respect to the
subject matter hereof and thereof. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein and
therein. This Agreement and the Stock Repurchase Agreement supersede all prior
agreements and understandings among the parties hereto with respect to the
subject matter hereof and thereof.

            f. Subject to the requirements of Section 9 hereof, this Agreement
shall inure to the benefit of and be binding upon the successors and assigns of
each of the parties hereto.

            g. The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.

                                       8
<PAGE>

            h. This Agreement may be executed in two or more identical
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same agreement. This Agreement, once executed by a party,
may be delivered to the other party hereto by facsimile transmission of a copy
of this Agreement bearing the signature of the party so delivering this
Agreement.

            i. Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.

                      [SIGNATURES APPEAR ON FOLLOWING PAGE]

                                       9
<PAGE>

      IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of day and year first above written.

                                 "Company"

                                 GALAXY NUTRITIONAL FOODS, INC.

                                 By: /s/ Michael E. Broll
                                    ---------------------------------------
                                    Michael E. Broll
                                    Chief Executive Officer

                                 "Investor"
                                 BH CAPITAL INVESTMENTS, LP

                                 By:  HB and Co., its General Partner

                                      By: /s/ Henry Brachfeld
                                         ---------------------------------------

                                      Print Name: Henry Brachfeld
                                                 -------------------------------

                                      As its: President of General Partner
                                             -----------------------------------

                                      Address:  175 Bloor Street East
                                                South Tower, 7th Floor
                                                Toronto, Ontario, Canada M4W 3R8

                                 "Investor"

                                 EXCALIBUR LIMITED PARTNERSHIP

                                 By:  Excalibur Capital Management, Inc.

                                      By: /s/ Will Hechter
                                         ---------------------------------------

                                      Print Name: Will Hechter
                                                 -------------------------------

                                      As its: President of General Partner
                                             -----------------------------------

                                 Address:  33 Prince Arthur Avenue
                                           Toronto, Ontario, Canada M5R IB2

                                       10

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