Document:

RESTRICTED ACCOUNT AGREEMENT

      This Restricted  Account Agreement (this "Agreement") is entered into this
16th day of August  2004,  by and among  NORTH  FORK  BANK,  a New York  banking
corporation  with  offices at 275  Broadhollow  Road,  Melville,  New York 11747
(together  with its  successors and assigns,  the "Bank"),  CONVERSION  SERVICES
INTERNATIONAL,  INC.,  a  Delaware  corporation  with  offices at 100 Eagle Rock
Avenue,  East Hanover,  NJ 07936 (together with its successors and assigns,  the
"Company"),  and LAURUS MASTER FUND,  LTD., a Cayman  Islands  corporation  with
offices at 825 Third Avenue, 14th Floor, New York, New York 10022 (together with
its  successors  and  assigns,   "Laurus").  Unless  otherwise  defined  herein,
capitalized  terms used herein shall have the meaning provided such terms in the
Purchase Agreement referred to below.

      WHEREAS,  Laurus has provided financing to the Company, which financing is
evidenced  by  a  Securities   Purchase  Agreement  (as  amended,   modified  or
supplemented  from  time to time,  the  "Purchase  Agreement")  and the  Related
Agreements referred to therein;

      WHEREAS,  the Company and Laurus have retained the Bank to provide certain
services with respect to the Restricted Account (as defined below); and

      WHERERAS,  the Company and Laurus have agreed that an amount of cash equal
to  $4,251,000  shall be  deposited  by Laurus on behalf of the  Company by wire
transfer of immediately available funds into the Restricted Account,  which cash
shall  be held by the  Bank for the  benefit  of  Laurus,  as  security  for the
Company's and its Subsidiaries' obligations under the Purchase Agreement and the
Related Agreements. For the purposes of this Agreement, the "Restricted Account"
shall mean that  certain  deposit  account (as  defined in Section  9-102 of the
Uniform  Commercial  Code as in  effect  in the  State  of New  York on the date
hereof)  described  on  Exhibit  B hereto,  which  Restricted  Account  shall be
maintained at the Bank and shall be in the sole dominion and control of Laurus;

      NOW THEREFORE,  in consideration  of the mutual promises  contained herein
and for other good and valuable consideration the sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:

      1. The Bank is hereby authorized to accept for deposit into the Restricted
Account  the sum of  $4,251,000.  The  Bank  hereby  agrees  to hold any and all
monies,  and other  amounts  from  time to time on  deposit  and/or  held in the
Restricted  Account  for the  benefit of the Laurus  and shall not  release  any
monies  held in the  Restricted  Account  until such time as the Bank shall have
received a notice  from  Laurus  substantially  in the form  attached  hereto as
Exhibit A (a "Release  Notice").  Following the receipt of a Release Notice from
Laurus,  the Bank agrees to promptly  disburse the amount of cash referred to in
such  Release  Notice to such  account  as Laurus  shall  determine  in its sole
discretion.  The Bank  hereby  agrees  that it will  only  comply  with  written
instructions  originated  by  Laurus  directing  disposition  of  funds  in  the
Restricted Account. The Company hereby irrevocably authorizes the Bank to comply
with any and all  instructions  given to the Bank by Laurus with  respect to the
Restricted Account without further consent by the Company. The Bank, the Company
and Laurus agree that the  Restricted  Account is in Laurus'  sole  dominion and
control.

<PAGE>

      2.  Each of the  Company,  Laurus  and the  Bank  hereby  agrees  that the
Restricted  Account shall not be closed, and the account name and account number
in respect thereof shall not be changed, in any case, without the consent of the
Laurus, except as specifically provided for in Section 9 below.

      3. The Bank hereby  subordinates any claims and security  interests it may
have against,  or with respect to, the Restricted Account (including any amounts
from  time to time on  deposit  therein)  to the  security  interests  of Laurus
therein,  and agrees  that no amounts  shall be charged by it to, or withheld or
set-off or otherwise  recouped by it from, the Restricted Account or any amounts
from time to time on deposit  therein;  provided  that, in  connection  with all
service  charges and any other  charges which the Bank is entitled to receive in
connection  with the servicing and  maintaining of the Restricted  Account (such
charges,  collectively, the "Charges"), each of the Company, Laurus and the Bank
hereby agrees that the Bank will collect such Charges in the  following  manner:
(i) first, the Bank will charge other deposit accounts maintained by the Company
with the Bank, (ii) second,  in the event that there are insufficient  collected
funds in such other deposit accounts to pay such Charges, the Bank will promptly
notify  the  Company  and Laurus  with  respect  to same and,  within  seven (7)
business days of the Company's receipt of such notice,  the Company shall pay to
the Bank the full  amount of such  Charges  then due,  and (iii)  third,  if the
Company  fails to pay to the Bank such  Charges  then due within the time period
set forth in the preceding clause (ii), the Bank will promptly provide a written
notice  to Laurus  of such  occurrence  and,  in such  case,  the Bank is hereby
authorized,  following a period of five (5)  business  days after the receipt of
such  written  notice  by  Laurus,  to  deduct  such  Charges  then due from the
Restricted  Account,  unless,  during such five (5) business day period,  Laurus
pays the amount of any such  Charges  then due to the Bank from its own account.
Except for the payment of the Charges as set forth in the immediately  preceding
proviso,  the Bank agrees that it shall not offset,  deduct or claim against the
Restricted Account unless and until Laurus has notified the Bank in writing that
all of the Company's  obligations  under the Purchase  Agreement and the Related
Agreements have been performed.

      4. The Company and the Bank agree that the  maintenance by the Bank of the
Restricted  Account shall be as agent for Laurus.  The Bank shall be responsible
for the  performance  of only such  duties as are set forth  herein.  The Bank's
duties hereunder,  however,  are merely ministerial,  and the Bank shall have no
liability or  obligation to the Company or Laurus or to any other person for any
act or omission of the Bank in  connection  with the  performance  of the Bank's
duties in servicing and/or maintaining the Restricted  Account,  except for acts
of gross negligence or willful misconduct by Bank. IN NO EVENT,  HOWEVER,  SHALL
THE  BANK  HAVE ANY  RESPONSIBILITY  FOR  CONSEQUENTIAL,  INDIRECT,  SPECIAL  OR
EXEMPLARY  DAMAGES OR LOST PROFITS,  WHETHER OR NOT IT HAS NOTICE  THEREOF,  AND
REGARDLESS OF THE BASIS,  THEORY OR NATURE OF THE ACTION UPON WHICH THE CLAIM IS
ASSERTED,  NOR SHALL IT HAVE ANY RESPONSIBILITY OR LIABILITY FOR THE VALIDITY OR
ENFORCEABILITY  OF ANY  SECURITY  INTEREST  OR OTHER  INTEREST  OF LAURUS OR THE
COMPANY IN THE RESTRICTED  ACCOUNT.  In furtherance of and without  limiting the
foregoing,  the Company  and Laurus  agree that the Bank shall not be liable for
any damage or loss to them for any delay or failure of  performance  arising out
of the acts or omissions of any third  parties,  including,  but not limited to,
various communication  services,  courier services,  the Federal Reserve system,
any other bank or any third  party who may be  affected  by funds  transactions,
fire,   mechanical,   computer  or  electrical   failures  or  other  unforeseen
contingencies,  strikes or any similar or dissimilar cause beyond the reasonable
control of the Bank.  This  paragraph  shall  survive  the  termination  of this
Agreement.

                                       2
<PAGE>

      5. Except  where the Bank has been  grossly  negligent or has acted in bad
faith,  each of Laurus  and the  Company  and their  respective  successors  and
assigns  will  release  the Bank  from  and  shall  indemnify  and hold the Bank
harmless  from and  against any and all losses,  claims,  damages,  liabilities,
costs and expenses  (including,  without  limitation,  reasonable  counsel fees,
whether  arising  in an  action  or  proceeding  among  the  parties  hereto  or
otherwise,  without  regard to the merit or lack of merit  thereof) to which the
Bank may  become  subject,  or which it may suffer or incur,  arising  out of or
based upon this  Agreement or the actions  contemplated  hereby.  This paragraph
shall survive termination of this Agreement.

      6. The Bank shall be fully  protected  in acting on any order or direction
by Laurus respecting the items received by the Bank or the monies or other items
in the Restricted  Account without making any independent  inquiry whatsoever as
to Laurus'  rights or  authority  to give such order or  direction  or as to the
application of any payments made pursuant thereto.

      7.  Nothing in this  Agreement  shall be deemed to prohibit  the Bank from
complying with its customary  procedures in the event that it is served with any
legal process with respect to the Restricted Account.

      8. The rights and powers  granted in this to Laurus  have been  granted in
order to protect and further  perfect its security  interests in the  Restricted
Account  (including  any amounts  from time to time on deposit  therein) and are
powers  coupled with an interest and will be affected  neither by any  purported
revocation  by the  Company of this  Agreement  or the rights  granted to Laurus
hereunder or by the bankruptcy,  insolvency,  conservatorship or receivership of
the Company or the Bank or by the lapse of time.

      9. This  Agreement may not be amended or waived except by an instrument in
writing signed by each of the parties  hereto.  This Agreement may be terminated
by the Bank upon giving the Company  and Laurus  thirty (30) days prior  written
notice.  Laurus shall  designate a successor  bank on or prior to the  effective
date  of  such  termination  and the  Bank  shall  deliver  the  balance  in the
Restricted  Account to such  successor  bank.  Any notice  required  to be given
hereunder may be given,  and shall be deemed given when delivered,  via telefax,
U.S. mail return receipt requested or nationally recognized overnight courier to
each of the  parties at the  address  set forth  above.  This  Agreement  may be
executed in any number of  counterparts,  each of which shall be an original and
all of which, when taken together,  shall constitute one agreement.  Delivery of
an executed signature page of this Agreement by facsimile  transmission shall be
effective as delivery of a manually executed  counterpart hereof or thereof,  as

                                       3
<PAGE>

the case  may be.  This  Agreement  shall  be  governed  by,  and  construed  in
accordance  with,  the laws of the  State of New  York,  without  regard  to its
conflict of laws  principles.  This  Agreement  sets forth the entire  agreement
between the parties  hereto as to the matters set forth herein and supersede all
prior communications,  written or oral, with respect to the matters herein. EACH
OF THE PARTIES  HERETO  HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO
ANY CLAIM,  ACTION,  SUIT OR PROCEEDING  ARISING OUT OF OR  CONTEMPLATED BY THIS
AGREEMENT.  THE BANK, THE COMPANY AND LAURUS EACH HEREBY SUBMIT TO THE EXCLUSIVE
JURISDICTION  OF THE FEDERAL AND NEW YORK STATE COURTS  LOCATED IN THE COUNTY OF
NEW YORK IN CONNECTION WITH ANY DISPUTE RELATED TO THIS AGREEMENT OR ANY MATTERS
CONTEMPLATED HEREBY OR THEREBY.

                                     * * * *

                                       4
<PAGE>

      Agreed and accepted this 16th day of August, 2004.

                                        NORTH FORK BANK

                                        By:
                                            ------------------------------------
                                        Name:
                                        Title:

                                        LAURUS MASTER FUND, LTD.

                                        By:
                                            ------------------------------------
                                            Name: David Grin
                                            Title: Director

                                        CONVERSION SERVICES INTERNATIONAL, INC.

                                        By:
                                            ------------------------------------
                                            Name: Scott Newman
                                            Title: President and CEO

                                       5
<PAGE>

                                    EXHIBIT A

                                 RELEASE NOTICE

To:   North Fork Bank
      404 Fifth Ave., Suite 1
      New York, NY 10018

Re:   Account Name: Conversion Services International, Inc.
      Account Number: XXXXXXXXXX

      Reference is made to that certain Restricted  Account Agreement,  dated as
of August __, 2004 (the "Restricted Account  Agreement"),  among North Fork Bank
(the  "Bank"),  [CORPORATION]  (the  "Company"),  and Laurus  Master Fund,  Ltd.
("Laurus").

      This is to notify you that Laurus authorizes the release of $_____________
(the "Release Amount") from the account  referenced above in accordance with the
terms of the Restricted Account Agreement. Within one business day following the
receipt of this  Release  Notice,  the Bank  hereby  agrees to wire the  Release
Amount (or, in the event that the amount in the Restricted  Account is less than
the Release Amount,  such lesser amount) to the following  account in accordance
with the wire instructions set forth below:

                           [Insert Wire Instructions]

                                        LAURUS MASTER FUND, LTD.

                                        By:
                                            ------------------------------------
                                        Name:
                                        Title:

      Agreed and accepted this __ day of ___________ 200__.

      NORTH FORK BANK

      By:
          ------------------------------------
      Name:
      Title:

                                       6
<PAGE>

                                    EXHIBIT B

                               Restricted Account

o     Bank:                     North Fork Bank

o     Bank Routing Number:      XXXXXXXXX

      Attn:                     XXXXXX XXXXXX
      Phone:                    XXX-XXX-XXXX

      Account Name:             Conversion Services International, Inc.

      Account #:                XXXXXXXXXX

                                       7Execution Copy
                                                                  --------------

                  TERMINATION, SETTLEMENT AND RELEASE AGREEMENT

      THIS TERMINATION, SETTLEMENT AND RELEASE AGREEMENT (this "Agreement") is
entered into as of this 20th day of July, 2005 but is effective as of February
15, 2005 (the "Effective Date") between Galaxy Nutritional Foods, Inc., a
Delaware corporation ("Galaxy"), and Fromageries Bel, S.A., a French corporation
("Distributor") (each of Galaxy and Distributor is hereinafter sometimes
referred to as a "Party" and both are sometimes hereinafter, collectively,
referred to herein as the "Parties"), as follows:

                                    Recitals

      WHEREAS, the Parties are party to that certain Master Distribution and
License Agreement entered into as of May 22, 2003 and certain other arrangements
and understandings, whether written or oral (collectively, the "Prior
Agreement"), wherein the parties set forth the terms of their distribution
relationship for Galaxy's healthy cheese and dairy related and dairy alternative
products in the Territory (the "Distribution Relationship").

      WHEREAS, the Parties have decided to terminate the Prior Agreement and the
Distribution Relationship.

      WHEREAS, the Parties desire to enter into this Agreement to set forth the
terms of the termination of the Prior Agreement and Distribution Relationship.

      NOW, THEREFORE, in consideration of the mutual promises and covenants
between the Parties contained herein, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Galaxy and
Distributor hereby agree as follows:

      1. Recitals; Defined Terms. All of the foregoing recitals are true and
correct and are incorporated herein. Capitalized terms used but not defined
herein shall have the same meaning ascribed thereto in the Prior Agreement.

      2. Termination of Prior Agreement.

      (a) The Parties acknowledge, agree and confirm that the Prior Agreement,
Galaxy's engagement of Distributor pursuant thereto and the Distribution
Relationship is terminated effective as of the Effective Date hereof, and that
Distributor shall not, and shall have no right or authority to, perform any
further services or undertake any actions for Galaxy or otherwise involving the
Products. Neither Party shall represent itself to third parties as a
representative or distributor of the other Party hereto or as otherwise having
any relationship with the other Party hereto with respect to the Products. Each
of the Parties hereby agrees to take such further actions and execute and
deliver such further documents and instruments as may be reasonably requested by
the other Party hereto in order to document the termination of Distribution
Relationship and to revoke any and all prior authorization or right that may
have been expressly or impliedly granted by such Party to the other Party
hereto.

                                                             ---------/---------
                                                                      (initials)

                                                             ---------/---------
                                                                      (initials)

<PAGE>

      (b) Distributor agrees to cease use of and avoid any reference to the
"Galaxy" name(s), trademark(s) or logo(s), including the Logo and to not keep
nor register the Logo and/or similar trademarks or names on Galaxy's behalf.
Galaxy agrees to cease use of and avoid any reference to the "Fromageries Bel"
name(s), trademark(s) or logo(s), including the Trademarks. Notwithstanding
anything to the contrary in this Agreement, Galaxy acknowledges that Distributor
has in the past and will continue in the future to engage in the cheese and
dairy products manufacturing and distribution business, including the
development of dairy-related and dairy alternative products and new cheese and
dairy products, and nothing stated herein shall preclude Distributor from
engaging in the development, implementation, marketing, manufacture,
distribution, sales and other activities involving healthy cheese and dairy
related and dairy alternative products, including vegetable fat-based products
(collectively, "Cheese and Dairy Business"), both within and outside of the
Territory to the extent Distributor's activities in such area do not involve (i)
the distribution or sale of the Products identified in the Prior Agreement and
(ii) use of the Know How or other confidential information of Galaxy provided to
Distributor in connection with the Prior Agreement. Galaxy hereby expressly
acknowledges and agrees that Distributor may engage in such activities both
within and outside of the Territory utilizing skills or knowledge acquired in
conducting its business and in the development of new products, including skills
and knowledge developed or acquired while the Prior Agreement was in effect, but
excluding the use of the Know How and other confidential information of Galaxy
provided to Distributor in connection with the Prior Agreement. Distributor
hereby expressly acknowledges and agrees that Galaxy may continue in the future
to engage in the Cheese and Dairy Business, distribute and sell the Product or
products similar to the Product both within and outside the Territory and to
engage other distributors to distribute and sell the Product or products similar
to the Product both within and outside the Territory. Distributor hereby
expressly acknowledges and agrees that Galaxy may engage in such activities
utilizing skills or knowledge acquired in connection with its business and in
the development of new products, including skills and knowledge developed or
acquired while the Prior Agreement was in effect.

      3. Settlement and Release; Payment.

      (a) Each Party acknowledges and agrees that all amounts due to it from the
other Party under the Prior Agreement have been paid in full, and that such
prior payments constitute complete satisfaction of any and all rights, claims
and/or causes of action that such Party may have against the other Party or any
of its agents, representatives, partners, officers, directors and/or employees.
In consideration for the execution by the Parties of this Agreement and other
good and valuable consideration, receipt of which is hereby acknowledged, each
Party hereby releases and forever discharges the other Party, any other persons
who directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such Party, and any and all
predecessor and successor entities and organizations, including their former and
current agents, representatives, shareholders, partners, officers, directors and
employees, and each of them, from any and all claims, demands, damages,
lawsuits, obligations, promises, administrative actions, charges and causes of
action, both known or unknown, in law or in equity, of any kind whatsoever,

                                                             ---------/---------
                                                                      (initials)

                                                             ---------/---------
                                                                      (initials)

                                       2
<PAGE>

which have arisen or may arise, which such Party ever had, now has, or may at
any time in the future have against any other Party, including specifically but
not by way of limitation, any and all claims for compensation payable by one
Party to the other from March 22, 2003 up to and including the date of this
Agreement, any and all claims arising out of Distributor's engaging in product
improvement, testing and reformulations of Galaxy's Products, both from Galaxy's
facilities in the United States and Distributor's facilities in France thru the
date of this Agreement, and all development costs, expenses and legal fees or
loss of business incurred by either party as a result of or in connection with
the transactions contemplated hereby. Each party hereto acknowledges and hereby
agrees that upon the termination of the Prior Agreement, the other party hereto
shall not be liable or obligated to such party with respect to any payments,
future profits, exemplary, special or consequential damages, indemnifications or
other compensation regarding such termination, irrespective of whether such
obligations or liabilities may be contemplated in the law of the Territory or
elsewhere, and such party hereby waives and relinquishes any rights, pursuant to
law or otherwise, to any such payments, indemnifications or compensation. Each
party also declares expressly that all its efforts have been duly and fully
satisfied and compensated, and that the termination of mentioned relationships
have been agreed mutually and for the benefit of each Party.

      (b) Notwithstanding anything stated herein to the contrary, as
consideration for the substantial expenditures of time, effort, and money Galaxy
has incurred in connection with the Distribution Relationship, as evidenced by
the Invoice attached hereto as Exhibit A, Distributor shall pay to Galaxy an
amount equal to One Hundred Fifty Thousand and 00/100 Dollars ($150,000) within
10 business days of the execution of this Agreement. Distributor and Galaxy
hereby acknowledge and agree that such payment is not required under any of the
terms of the Prior Agreement.

      4. Confidential Information. Distributor certifies and confirms that it
has returned to Galaxy or destroyed all tangible materials previously provided
by Galaxy constituting the Know How and other confidential information including
all copies thereof, and has permanently deleted from its internal computer
systems all e-mails or other electronic files containing the Know How, Galaxy
product formulas, or other Galaxy confidential information. Distributor further
undertakes to destroy any other materials that pertain to the Know How, Galaxy
product formulas, or other Galaxy confidential information in the event that
Distributor later finds any such materials in Distributor's possession or
control. Notwithstanding anything stated to the contrary, Distributor and Galaxy
hereby acknowledge and agree that one (1) copy of all such materials will be
held in escrow in accordance with the following provisions and shall not be
destroyed in accordance with the terms hereof, such copy to be retained for
evidentiary purposes in the event a dispute arises as to the use or lack of use
of such materials by Distributor. Such materials shall be deposited (along with
a listing of such materials) into an escrow account maintained by Distributor
and Galaxy with a bank of international reputation and standing with capital and
surplus in excess of one hundred million dollars and 00/100 cents ($100
million), which bank shall be reasonably acceptable to both Distributor or
Galaxy. The terms of any such escrow arrangement shall provide that such
materials will be released to the following parties upon the earliest to occur
of the below-described events: (i) to Distributor, if Distributor notifies the
escrow agent in writing of any claim involving such Know How being asserted or

                                                             ---------/---------
                                                                      (initials)

                                                             ---------/---------
                                                                      (initials)

                                       3
<PAGE>

threatened against Distributor or (ii) to Galaxy, six (6) years after the date
hereof but only if no claim involving the Know How has been asserted or
threatened during such period, in which event clause (i) shall govern.
Distributor and Galaxy hereby agree to execute and deliver joint written
instructions to the escrow agent upon the occurrence of any of the events
described above for purposes of instructing the escrow agent to release the
materials in accordance with this Section 4. All fees incurred as a consequence
of such escrow arrangement shall be paid by Distributor, except for legal fees
incurred by Galaxy in connection with the review of such arrangement. The escrow
agreement shall contain customary language concerning interpleader and other
dispute resolution avenues the escrow agent may pursue in the event the escrow
agent is uncertain of how to conduct its duties under the escrow arrangement.
Within ten (10) days of the delivery of the materials into escrow, Distributor
shall deliver an accurate and complete copy of such materials to Galaxy.

      5. Construction. The Parties acknowledge that each has reviewed and
revised this Agreement and that the normal rule of construction to the effect
that any ambiguities are to be resolved against the drafting Party shall not be
employed in the interpretation of this Agreement.

      6. Entire Agreement. This Agreement constitutes the entire agreement
between the Parties hereto with respect to the termination of the Prior
Agreement and the Distribution Relationship and supersedes in its entirety any
and all agreements or communications by and between the Parties, whether written
or oral, previously made with respect thereto.

      7. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard to principles
of conflicts of law except to the extent that another jurisdiction's laws
supercede this provision. Any proceeding arising between the Parties in any
manner pertaining to this Agreement shall be held in Miami-Dade County, Florida
and the Parties hereto hereby irrevocably consent to personal jurisdiction and
venue exclusively in such forum. In the event that legal action is brought by
either Party to enforce its rights hereunder, and such legal action results in a
final judgment in favor of one Party (the "Prevailing Party"), the
non-prevailing Party shall promptly pay all of the Prevailing Party's legal fees
and expenses incurred in connection with such legal action.

      8. Headings. The headings are for the convenience of the Parties and are
not to be construed as terms and conditions of this Agreement.

      9. Other Representations, Warranties and Covenants. Distributor and Galaxy
each hereby represents, warrants and covenants to the other that: (a) such Party
has not assigned or transferred, nor purported to assign or transfer, to any
person, firm, partnership, corporation or entity whatsoever, any rights, claims,
demands, damages, debts, liabilities, accounts, covenants, rights to
indemnification, liens, attorneys' fees, costs, expenses, actions or causes of
action released in this Agreement; (b) such Party has all requisite power and
authority to execute and deliver this Agreement, to consummate the transactions
contemplated hereby and to perform such Party's obligations hereunder; (c) this
Agreement has been duly executed and delivered by such Party and is the legal,
valid and binding obligation of such Party enforceable against such Party in
accordance with its terms; (d) the provisions of this Agreement and their legal
effect are fully understood by such Party; (e) such Party has voluntarily
entered into this Agreement; (f) such Party has received disclosure of the

                                                             ---------/---------
                                                                      (initials)

                                                             ---------/---------
                                                                      (initials)

                                       4
<PAGE>

arrangements and matters referenced herein to such Party's satisfaction; (g)
such Party has had an opportunity to discuss this Agreement with such Party's
counsel to the satisfaction of such Party; and (h) such Party has consented to
Distributor's product improvement, testing and reformulations of Galaxy's
Products both from Galaxy's facilities in the United States and Distributor's
facilities in France..

      10. Notices. All notices, advices and communications to be given or
otherwise made to any Party shall be deemed to be sufficient if contained in a
written instrument delivered in person or duly sent by first class registered or
certified mail, return receipt requested, postage prepaid, or by overnight
courier, addressed to such Party at the address provided for such Party in the
signature page of this Agreement or such other address as may be specified by
such Party by providing written notice thereof to the other Party in accordance
herewith.

      11. Assignment; Intended Beneficiaries. The Parties acknowledge and agree
that all of Galaxy's rights and obligations under this Agreement may be assigned
to the successor of Galaxy in the event that Galaxy, or substantially all of its
assets, is acquired by or merged into a third party(ies); provided, however,
that such successor-in-interest shall expressly assume all of Galaxy's
obligations hereunder and shall acknowledge, agree to and ratify the releases
set forth in Section 3 hereof. Except as stated in the preceding sentence,
neither this Agreement nor any of the rights hereunder shall be assigned by any
Party without the prior written consent of the other Party hereto, which consent
may not be unreasonably withheld. Any attempted assignment of this Agreement or
any such rights in violation of this provision shall be null and void. This
Agreement is intended to and shall benefit and be enforceable by and be binding
upon each Party hereto and its successors and permitted assigns.

      12. Counterparts. This Agreement may be executed in separate counterparts,
each of which is deemed to be an original and all of which taken together
constitute one and the same agreement. Any facsimile signature shall be deemed a
manually executed and delivered original.

      13. No Admission. In entering into this Agreement or otherwise acting
hereunder, neither Party acknowledges or admits anything whatsoever with respect
to any claim or assertion made by the other Party or any third party.

      14. Amendment. This Agreement may be amended or modified only by written
agreement by the Parties.

      15. Further Assurances. The Parties agree to execute and deliver such
further instruments and do such further acts and things as may be reasonably
requested by the other Party hereto and/or required to carry out the intent and
purposes of this Agreement.

                            [Signature Page Follows.]

                                                             ---------/---------
                                                                      (initials)

                                                             ---------/---------
                                                                      (initials)

                                       5
<PAGE>

      IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.

GALAXY:

GALAXY NUTRITIONAL FOODS, INC.

By:    /s/ Michael E. Broll
       -------------------------
Name:  Michael E. Broll                                      July 20, 2005
                                                             -----------------
Title: Chief Executive Officer                               Date

Address:

Galaxy Nutritional Foods, Inc.
2441 Viscount Row
Orlando, Florida 32809
USA
Facsimile No.: (407) 855-1099
Attention: Michael E. Broll
           ----------------

With a copy to:

Baker & Hostetler LLP
1900 East 9th Street
Suite 3200
Cleveland, Ohio 44114-3485
Facsimile No.: (216) 696-0740
Attention:  Stephen J. Petras, Jr. , Esq.

Distributor:

FROMAGERIES BEL, S.A.

By:    /s/ Gerard Boivin                                      July 22, 2005
       -------------------------                              ----------------
Name:  Gerard Boivin                                          Date
Title: Chairman and Chief Executive Officer

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                                                                      (initials)

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                                                                      (initials)

                                       6
<PAGE>

FROMAGERIES BEL, S.A.

By:    /s/ Eric de Poncins                                    July 22, 2005
       -------------------------                              ----------------
Name:  Eric de Poncins                                        Date
Title:

FROMAGERIES BEL, S.A.

By:    /s/ Sussheel K. Surpal                                 July 22, 2005
       -------------------------                              ----------------
Name:  Sussheel K. Surpal                                     Date
Title:

Address:

Fromageries Bel S.A.
16, Bd Malesherbes 75008
Paris, France
Facsimile No.: 00 33 1 40 07 75 17
Attention:  Eric de Poncins

And

Fromageries Bel S.A.
16, Bd Malesherbes 75008
Paris, France
Facsimile No.: 00 33 1 40 07 74 00
Attention:  Michel Troussier

With a copy to:

Greenberg Traurig, P.A.
1221 Brickell Avenue
Miami, Florida 33131
Facsimile No.: (305) 579-0717
Attention:  Robert L. Grossman, Esq.

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                                                                      (initials)

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                                                                      (initials)

                                       7
<PAGE>

                                    Exhibit A

                                     Invoice

C:\DOCUME~1\spetras\LOCALS~1\Temp\MetaSave\Galaxy Nutritional Foods -
Fromageries Bel - Termination Agreement 6-08-05.DOC

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                                                                      (initials)

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                                                                      (initials)

                                       8

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