Document:

NEITHER  THIS WARRANT NOR THE SHARES  ISSUABLE  UPON  EXERCISE  HEREOF HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE  "SECURITIES  ACT")
OR ANY OTHER  APPLICABLE  SECURITIES LAWS IN RELIANCE UPON AN EXEMPTION FROM THE
REGISTRATION  REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER SECURITIES LAWS.
NEITHER THIS WARRANT NOR THE SHARES  ISSUABLE UPON EXERCISE  HEREOF MAY BE SOLD,
PLEDGED,  TRANSFERRED,  ENCUMBERED OR OTHERWISE  DISPOSED OF EXCEPT  PURSUANT TO
REGULATION S OF THE SECURITIES  ACT, AN EFFECTIVE  REGISTRATION  STATEMENT UNDER
THE SECURITIES ACT OR IN A TRANSACTION WHICH IS EXEMPT FROM  REGISTRATION  UNDER
THE  PROVISIONS  OF THE  SECURITIES  ACT,  SUPPORTED  IN EACH CASE  (OTHER  THAN
PURSUANT TO A REGISTRATION STATEMENT) BY AN OPINION OF COUNSEL.

                             STOCK PURCHASE WARRANT

                  To Purchase 122,549 Shares of Common Stock of

                         GALAXY NUTRITIONAL FOODS, INC.

     THIS CERTIFIES that, for value received,  Stonestreet  Limited  Partnership
(the  "HOLDER"),  is  entitled,  upon the terms and  subject  to the  conditions
hereinafter  set forth,  at any time on or after the date hereof  (the  "INITIAL
EXERCISE DATE") and on or prior to the close of business on the date ending five
(5) years from the  Initial  Exercise  Date (the  "TERMINATION  DATE"),  but not
thereafter, to subscribe for and purchase from Galaxy Nutritional Foods, Inc., a
corporation  incorporated in Delaware (the  "COMPANY"),  one hundred  twenty-two
thousand five hundred  forty nine  (122,549)  shares (the  "WARRANT  SHARES") of
Common Stock, $0.01 par value, of the Company (the "COMMON STOCK").  The initial
per share purchase  price of the Warrant Shares (the "EXERCISE  PRICE") shall be
$5.52.

     Capitalized  terms used and not  otherwise  defined  herein  shall have the
meanings  set forth for such terms in the  Common  Stock and  Warrants  Purchase
Agreement  dated June 28, 2002,  between the Company and the Investor  signatory
thereto (the "Purchase Agreement").  The Exercise Price and the number of shares
for which the Warrant is exercisable  shall be subject to adjustment as provided
herein.  In the event of any conflict  between the terms of this Warrant and the
Purchase Agreement, the Purchase Agreement shall control.

     1.   TITLE  TO  WARRANT.  Prior to the  Termination  Date  and  subject  to
compliance  with  applicable  laws,  this Warrant and all rights  hereunder  are
transferable, in whole or in part, at the office or agency of the Company by the
Holder hereof in person or by duly authorized  attorney,  upon surrender of this
Warrant together with the Assignment Form annexed hereto properly endorsed.

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     2.   AUTHORIZATION  OF SHARES.  The  Company  covenants  that all shares of
Common Stock which may be issued upon the exercise of rights represented by this
Warrant will, upon exercise of the rights  represented by this Warrant,  be duly
authorized,  validly  issued,  fully  paid and  nonassessable  and free from all
taxes,  liens and charges in respect of the issue  thereof  (other than taxes in
respect of any transfer occurring contemporaneously with such issue).

     3.   EXERCISE OF WARRANT.  Except as provided in Section 4 herein, exercise
of the purchase  rights  represented  by this Warrant may be made at any time or
times on or after the Initial Exercise Date, and before the close of business on
the Termination Date by the surrender of this Warrant and the Notice of Exercise
Form annexed hereto duly  executed,  at the office of the Company (or such other
office or agency of the Company as it may  designate by notice in writing to the
registered Holder hereof at the address of such Holder appearing on the books of
the  Company)  and upon  payment of the  Exercise  Price of the  shares  thereby
purchased by wire transfer or cashier's check drawn on a United States bank, the
Holder of this Warrant shall be entitled to receive a certificate for the number
of shares of Common  Stock so  purchased.  This Warrant may also be exercised in
whole or in part by means of a "cashless  exercise" by tendering this Warrant to
the Company to receive a number of shares of Common  Stock equal in Market Value
to the  difference  between  the  Market  Value of the  shares of  Common  Stock
issuable upon such exercise of this Warrant and the total cash exercise price of
that part of the Warrant being exercised.  "Market Value" for this purpose shall
be the closing  price of the Common Stock as reported by  Bloomberg  L.P. on the
date of such cashless  exercise.  Certificates  for shares  purchased  hereunder
shall be delivered to the Holder  hereof  within four (4) Trading Days after the
date on which this Warrant shall have been exercised as aforesaid.  This Warrant
shall be deemed to have been  exercised  and such  certificate  or  certificates
shall be deemed  to have  been  issued,  and the  Holder or any other  person so
designated  to be named  therein  shall be deemed to have become a the Holder of
record of such  shares for all  purposes,  as of the date the  Warrant  has been
exercised by payment to the Company of the Exercise Price and all taxes required
to be paid by the Holder, if any, pursuant to Section 5 prior to the issuance of
such shares,  have been paid. If this Warrant shall have been exercised in part,
the Company shall,  at the time of delivery of the  certificate or  certificates
representing the Warrant Shares,  deliver to the Holder a new Warrant evidencing
the rights of the Holder to  purchase  the  unpurchased  shares of Common  Stock
called for by this  Warrant,  which new Warrant  shall in all other  respects be
identical with this Warrant.

     4.   NO  FRACTIONAL   SHARES  OR  SCRIP.  No  fractional  shares  or  scrip
representing  fractional  shares  shall  be  issued  upon the  exercise  of this
Warrant.  As to any  fraction of a share  which the Holder  would  otherwise  be
entitled to purchase upon such exercise, the Company shall pay a cash adjustment
in respect of such final fraction in an amount equal to the Exercise Price.

     5.   CHARGES,  TAXES AND EXPENSES.  Issuance of certificates  for shares of
Common Stock upon the exercise of this Warrant  shall be made without  charge to
the Holder hereof for any issue or transfer tax or other  incidental  expense in
respect of the  issuance of such  certificate,  all of which taxes and  expenses
shall be paid by the Company,  and such certificates shall be issued in the name
of the Holder of this Warrant or in such name or names as may be directed by the
Holder of this Warrant;  provided,  however,  that in the event certificates for
shares of Common  Stock  are to be issued in a name  other  than the name of the
Holder of this Warrant, this

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<PAGE>

Warrant when  surrendered  for exercise  shall be  accompanied by the Assignment
Form  attached  hereto duly executed by the Holder  hereof;  and the Company may
require, as a condition thereto, the payment of a sum sufficient to reimburse it
for any transfer tax incidental thereto.

     6.   FURTHER  ASSURANCES.  The  Company  will take all  action  that may be
necessary or appropriate in order that the Company may validly and legally issue
fully paid and  nonassessable  shares of stock,  free from all taxes,  liens and
charges with respect to the issue thereof, on the exercise of all or any portion
of this Warrant from time to time outstanding.

     7.   Transfer, Division and Combination.
          ----------------------------------

          (a)  Subject  to  compliance  with  any  applicable  securities  laws,
transfer of this Warrant and all rights hereunder, in whole or in part, shall be
registered on the books of the Company to be maintained  for such purpose,  upon
surrender of this Warrant at the principal office of the Company,  together with
a written  assignment of this Warrant  substantially in the form attached hereto
duly executed by the Holder or its agent or attorney and funds sufficient to pay
any transfer taxes payable upon the making of such transfer. Upon such surrender
and, if required,  such  payment,  the Company  shall  execute and deliver a new
Warrant  or  Warrants  in the  name  of the  assignee  or  assignees  and in the
denomination or  denominations  specified in such instrument of assignment,  and
shall issue to the assignor a new Warrant evidencing the portion of this Warrant
not so assigned,  and this Warrant shall  promptly be cancelled.  A Warrant,  if
properly  assigned,  may be exercised by a new Holder for the purchase of shares
of Common Stock without having a new Warrant issued.

          (b)  This Warrant may be divided or combined with other  Warrants upon
presentation  hereof at the  aforesaid  office of the Company,  together  with a
written notice  specifying the names and denominations in which new Warrants are
to be  issued,  signed  by the  Holder  or its  agent or  attorney.  Subject  to
compliance  with Section 7(a), as to any transfer  which may be involved in such
division or combination,  the Company shall execute and deliver a new Warrant or
Warrants  in  exchange  for the Warrant or Warrants to be divided or combined in
accordance with such notice.

          (c)  The Company shall  prepare,  issue and deliver at its own expense
(other than transfer taxes) the new Warrant or Warrants under this Section 7.

          (d)  The Company agrees to maintain,  at its aforesaid  office,  books
for the registration and the registration of transfer of the Warrants.

     8.   NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE. This Warrant does not entitle
the Holder hereof to any voting  rights or other rights as a stockholder  of the
Company prior to the exercise hereof. Upon the surrender of this Warrant and the
payment of the aggregate  Exercise Price,  the Warrant Shares so purchased shall
be and be deemed to be issued to such Holder as the record  owner of such shares
as of the  close of  business  on the  later of the  date of such  surrender  or
payment.

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<PAGE>

     9.   LOSS,  THEFT,  DESTRUCTION  OR  MUTILATION  OF  WARRANT.  The  Company
covenants that upon receipt by the Company of evidence  reasonably  satisfactory
to it of the loss, theft,  destruction or mutilation of this Warrant certificate
or any stock  certificate  relating to the Warrant Shares,  and in case of loss,
theft or destruction,  of indemnity or security  reasonably  satisfactory to it,
and upon surrender and  cancellation  of such Warrant or stock  certificate,  if
mutilated,  the Company will make and deliver a new Warrant or stock certificate
of like  tenor and dated as of such  cancellation,  in lieu of such  Warrant  or
stock certificate.

     10.  SATURDAYS,  SUNDAYS,  HOLIDAYS,  ETC. If the last or appointed day for
the  taking of any action or the  expiration  of any right  required  or granted
herein shall be a Saturday,  Sunday or a legal holiday,  then such action may be
taken or such right may be exercised on the next  succeeding day not a Saturday,
Sunday or legal holiday.

     11.  Adjustments of Exercise Price and Number of Warrant Shares.
          ----------------------------------------------------------

          (a)  STOCK SPLITS, ETC. The number and kind of securities  purchasable
upon the  exercise of this  Warrant and payment of the  Exercise  Price shall be
subject  to  adjustment  from  time to time  upon  the  happening  of any of the
following.  In case the  Company  shall (i) pay a  dividend  in shares of Common
Stock or make a  distribution  in shares of Common  Stock to the  Holders of its
outstanding  Common Stock, (ii) subdivide its outstanding shares of Common Stock
into a greater number of shares of Common Stock,  (iii) combine its  outstanding
shares of Common  Stock into a smaller  number of shares of Common Stock or (iv)
issue any shares of its capital stock in a reclassification of the Common Stock,
then the number of Warrant  Shares  purchasable  upon  exercise of this  Warrant
immediately  prior  thereto shall be adjusted so that the Holder of this Warrant
shall be  entitled  to receive  the kind and  number of Warrant  Shares or other
securities  of the  Company  which he would have owned or have been  entitled to
receive had such  Warrant  been  exercised  in advance  thereof.  Upon each such
adjustment of the kind and number of Warrant  Shares or other  securities of the
Company  which are  purchasable  hereunder,  the  Holder of this  Warrant  shall
thereafter  be  entitled  to  purchase  the  number of  Warrant  Shares or other
securities resulting from such adjustment at an Exercise Price per Warrant Share
or  other  security  obtained  by  multiplying  the  Exercise  Price  in  effect
immediately prior to such adjustment by the number of Warrant Shares purchasable
pursuant hereto  immediately prior to such adjustment and dividing by the number
of  Warrant  Shares  or other  securities  of the  Company  resulting  from such
adjustment. An adjustment made pursuant to this paragraph shall become effective
immediately  after the effective  date of such event  retroactive  to the record
date, if any, for such event.

          (b)  REORGANIZATION,   RECLASSIFICATION,   MERGER,   CONSOLIDATION  OR
DISPOSITION  OF  ASSETS.  In case the  Company  shall  reorganize  its  capital,
reclassify  its  capital  stock,  consolidate  or  merge  with or  into  another
corporation  (where the Company is not the surviving  corporation or where there
is a change in or distribution with respect to the Common Stock of the Company),
or sell, transfer or otherwise dispose of all or substantially all its property,
assets or business  to another  corporation  and,  pursuant to the terms of such
reorganization,   reclassification,  merger,  consolidation  or  disposition  of
assets, shares of common stock of the successor or acquiring corporation, or any
cash,  shares of stock or other securities or property of any nature  whatsoever
(including  warrants or other subscription or purchase rights) in addition to or
in lieu of common

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<PAGE>

stock of the successor or acquiring  corporation ("OTHER  PROPERTY"),  are to be
received by or distributed  to the holders of Common Stock of the Company,  then
the Holder shall have the right  thereafter  to receive,  upon  exercise of this
Warrant,  the number of shares of common  stock of the  successor  or  acquiring
corporation  or of the Company,  if it is the surviving  corporation,  and Other
Property   receivable   upon   or   as  a   result   of   such   reorganization,
reclassification,  merger, consolidation or disposition of assets by a holder of
the  number of shares of Common  Stock for which  this  Warrant  is  exercisable
immediately   prior  to  such  event.  In  case  of  any  such   reorganization,
reclassification,  merger, consolidation or disposition of assets, the successor
or acquiring  corporation (if other than the Company) shall expressly  assume in
writing or by operation of law the due and punctual  observance and  performance
of each and every  covenant and  condition  of this Warrant to be performed  and
observed by the  Company  and all the  obligations  and  liabilities  hereunder,
subject to such  modifications  as may be deemed  appropriate  (as determined in
good faith by  resolution  of the Board of Directors of the Company) in order to
provide  for  adjustments  of shares of Common  Stock for which this  Warrant is
exercisable   which  shall  be  as  nearly  equivalent  as  practicable  to  the
adjustments  provided  for in this  Section 11. For purposes of this Section 11,
"common stock of the successor or acquiring  corporation" shall include stock of
such  corporation  of any class which is not preferred as to dividends or assets
over any other  class of stock of such  corporation  and which is not subject to
redemption and shall also include any evidences of indebtedness, shares of stock
or other  securities  which are convertible  into or  exchangeable  for any such
stock,  either  immediately  or upon  the  arrival  of a  specified  date or the
happening of a specified event and any warrants or other rights to subscribe for
or purchase any such stock.  The  foregoing  provisions of this Section 11 shall
similarly  apply  to  successive  reorganizations,  reclassifications,  mergers,
consolidations or disposition of assets.

          (c)  RIGHTS  OF  HOLDERS  UPON  DILUTIVE  ISSUANCES.  Subject  to  the
exclusions  contained in subsection  11(d) below,  if, during the MFN Period (as
defined in the Purchase  Agreement),  the Company sells any shares of its Common
Stock in a capital raising  transaction at a Per Share Selling Price (as defined
in the  Purchase  Agreement)  that is lower than the  Exercise  Price,  then the
Exercise Price of the Warrants then  unexercised  shall be adjusted  downward to
equal such lower Per Share Selling Price.  The Company shall give to the Holders
written notice of any such sale within 24 hours of the closing of any such sale.

          (d)  EXCLUSIONS. Anything herein to the contrary notwithstanding,  the
Company shall not be required to make any  adjustment  of the Exercise  Price in
the case of (i) the issuance or sale of Stock Purchase Rights,  and Common Stock
issuable  upon the  exercise  thereof,  to  directors,  officers,  employees  or
consultants  of the Company  pursuant to stock option or stock purchase plans or
agreements in existence on the date of this filing,  whether "qualified" for tax
purposes or not, or pursuant to plans or  arrangements  approved by the Board of
Directors or  stockholders,  (ii) the issuance of Common Stock pursuant to Stock
Purchase  Rights and Convertible  Securities  outstanding as of the date of this
Agreement,  including  upon the  conversion of the Series A Preferred  Stock (so
long as effected pursuant to the conversion terms of the Series A Certificate of
Designation  as it exists on the date  hereof);  (iii) the  issuance  of Capital
Shares,  Stock Purchase  Rights or Convertible  Securities in the acquisition of
another company or in connection with any strategic  alliance,  joint venture or
partnership with another company,  so long as the primary purpose thereof is not
the raising of capital;  (iv) the  issuance of Capital  Shares,  Stock  Purchase
Rights or Convertible Securities to commercial lenders,

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equipment lessors,  vendors,  suppliers or providers of goods or services to the
Company (subject, in each case, to the good faith determination by the Company's
Board of Directors that any non-cash consideration received in exchange for such
securities  of the Company is at least  equal to the fair  market  value of such
securities), and (v) the issuance of Capital Shares and Stock Purchase Rights in
customary  amounts to  underwriters,  brokers,  or finders  in  connection  with
fundraising (debt or equity) activities. The issuances or sales described in the
preceding  clauses (i), (ii),  (iii), (iv) and (v) shall be ignored for purposes
of calculating any adjustment to the Exercise Price.

          (e)  NOMINAL ADJUSTMENT.  The Company shall not be required to make an
adjustment  in the Exercise  Price under this Section 11 if such  adjustment  is
less that $0.01.  However, the Company shall be required to carry forward on its
books all  adjustments  that would have been made but for this Section 11(e) and
shall take such adjustment into account when making subsequent adjustments under
this  Section 11. All  calculations  under this  Section 11 shall be made to the
nearest cent.

     12.  VOLUNTARY  ADJUSTMENT  BY THE  COMPANY.  The  Company  may at any time
during the term of this Warrant,  reduce the then current  Exercise Price to any
amount and for any period of time deemed  appropriate  by the Board of Directors
of the Company.

     13.  NOTICE OF ADJUSTMENT.  Whenever the number of Warrant Shares or number
or kind of securities or other  property  purchasable  upon the exercise of this
Warrant or the Exercise Price is adjusted, as herein provided, the Company shall
promptly mail by registered or certified mail, return receipt requested,  to the
Holder of this Warrant notice of such  adjustment or  adjustments  setting forth
the number of Warrant Shares (and Other Property)  purchasable upon the exercise
of this  Warrant  and the  Exercise  Price of such  Warrant  Shares  (and  Other
Property)  after such  adjustment,  setting forth a brief statement of the facts
requiring  such  adjustment  and  setting  forth the  computation  by which such
adjustment was made.  Such notice,  in the absence of manifest  error,  shall be
conclusive evidence of the correctness of such adjustment.

     14.  Notice of Corporate Action. If at any time:
          --------------------------

          (a)  the  Company  shall  take a record of the  holders  of its Common
Stock  for the  purpose  of  entitling  them to  receive  a  dividend  or  other
distribution,  or any right to subscribe  for or purchase  any  evidences of its
indebtedness,  any  shares  of stock of any  class or any  other  securities  or
property, or to receive any other right; or

          (b)  there shall be any capital  reorganization  of the  Company,  any
reclassification  or recapitalization of the capital stock of the Company or any
consolidation  or merger of the  Company  with,  or any sale,  transfer or other
disposition of all or substantially all the property,  assets or business of the
Company to, another corporation; or

          (c)  there  shall  be  a   voluntary   or   involuntary   dissolution,
liquidation or winding up of the Company;

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then, in any one or more of such cases, the Company shall give to the Holder (i)
at least 30 days' prior written  notice of the date on which a record date shall
be selected for such dividend,  distribution or right or for determining  rights
to  vote  in  respect  of any  such  reorganization,  reclassification,  merger,
consolidation, sale, transfer, disposition,  liquidation or winding up, and (ii)
in the case of any such reorganization, reclassification, merger, consolidation,
sale, transfer, disposition, dissolution, liquidation or winding up, at least 30
days'  prior  written  notice of the date when the same shall take  place.  Such
notice in accordance  with the foregoing  clause also shall specify (x) the date
on which  any such  record  is to be taken  for the  purpose  of such  dividend,
distribution  or right,  the date on which the holders of Common  Stock shall be
entitled  to any such  dividend,  distribution  or  right,  and the  amount  and
character  thereof,   and  (y)  the  date  on  which  any  such  reorganization,
reclassification,    merger,   consolidation,   sale,   transfer,   disposition,
dissolution,  liquidation  or winding  up is to take place and the time,  if any
such  time is to be fixed,  as of which the  holders  of Common  Stock  shall be
entitled  to  exchange  their  shares of Common  Stock for  securities  or Other
Property deliverable upon such disposition,  dissolution, liquidation or winding
up. Each such  written  notice shall be  sufficiently  given if addressed to the
Holder at the last  address of the Holder  appearing on the books of the Company
and delivered in accordance with Section 16(d).

     15.  Authorized Shares.
          -----------------

          (a)  The  Company  covenants  that  during the  period the  Warrant is
outstanding,  it will reserve from its  authorized  and unissued  Common Stock a
sufficient  number of shares to provide for the  issuance of the Warrant  Shares
upon the exercise of any purchase rights under this Warrant. The Company further
covenants that its issuance of this Warrant shall  constitute  full authority to
its officers who are charged with the duty of executing  stock  certificates  to
execute and issue the  necessary  certificates  for the Warrant  Shares upon the
exercise of the purchase  rights under this  Warrant.  The Company will take all
such  reasonable  action as may be necessary to assure that such Warrant  Shares
may be issued as provided  herein  without  violation of any  applicable  law or
regulation, or of any requirements of the Principal Market upon which the Common
Stock may be listed.

          (b)  The  Company  shall  not  by  any  action,   including,   without
limitation,   amending  its   certificate  of   incorporation   or  through  any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities  or any other  voluntary  action,  avoid or seek to avoid the
observance or performance  of any of the terms of this Warrant,  but will at all
times in good  faith  assist in the  carrying  out of all such  terms and in the
taking of all such  actions as may be necessary  or  appropriate  to protect the
rights of the Holder against impairment.  Without limiting the generality of the
foregoing,  the  Company  will (i) not  increase  the par value of any shares of
Common  Stock  receivable  upon the  exercise of this  Warrant  above the amount
payable  therefor upon such exercise  immediately  prior to such increase in par
value,  (ii) take all such action as may be  necessary or  appropriate  in order
that the Company may  validly  and  legally  issue fully paid and  nonassessable
shares of Common Stock upon the exercise of this Warrant, and (iii) use its best
efforts to obtain  all such  authorizations,  exemptions  or  consents  from any
public regulatory body having jurisdiction thereof as may be necessary to enable
the Company to perform its obligations under this Warrant.

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<PAGE>

          (c)  Upon the request of the the Holder,  the Company will at any time
during the period this Warrant is outstanding  acknowledge  in writing,  in form
reasonably  satisfactory to the Holder, the continuing  validity of this Warrant
and the obligations of the Company hereunder.

          (d)  Before taking any action which would cause an adjustment reducing
the current  Exercise  Price below the then par value,  if any, of the shares of
Common Stock issuable upon exercise of the Warrants,  the Company shall take any
corporate  action  which may be  necessary in order that the Company may validly
and legally issue fully paid and  non-assessable  shares of such Common Stock at
such adjusted Exercise Price.

          (e)  Before  taking any action which would result in an  adjustment in
the number of shares of Common Stock for which this Warrant is exercisable or in
the  Exercise  Price,  the  Company  shall  obtain  all such  authorizations  or
exemptions  thereof,  or consents  thereto,  as may be necessary from any public
regulatory body or bodies having jurisdiction thereof.

     16.  Miscellaneous.
          -------------

          (a)  JURISDICTION.  This Warrant shall be binding upon any  successors
or assigns of the Company.  This Warrant shall  constitute a contract  under the
laws of Delaware  without regard to its conflict of law principles or rules, and
be  subject  to  arbitration  pursuant  to the terms  set forth in the  Purchase
Agreement.

          (b)  RESTRICTIONS.  The Holder  hereof  acknowledges  that the Warrant
Shares acquired upon the exercise of this Warrant, if not registered,  will have
restrictions upon resale imposed by state and federal securities laws.

          (c)  NONWAIVER  AND  EXPENSES.  No course of  dealing  or any delay or
failure to exercise any right  hereunder on the part of the Holder shall operate
as a waiver of such right or otherwise prejudice the Holder's rights,  powers or
remedies,  notwithstanding  all rights  hereunder  terminate on the  Termination
Date. If the Company  fails to comply with any  provision of this  Warrant,  the
Company shall pay to the Holder such amounts as shall be sufficient to cover any
costs and expenses  including,  but not limited to, reasonable  attorneys' fees,
including those of appellate  proceedings,  incurred by the Holder in collecting
any amounts due  pursuant  hereto or in otherwise  enforcing  any of its rights,
powers or remedies hereunder.

          (d)  NOTICES.  Any  notice,  request  or other  document  required  or
permitted to be given or delivered to the Holder  hereof by the Company shall be
delivered in accordance with the notice provisions of the Purchase Agreement.

          (e)  LIMITATION OF LIABILITY.  No provision  hereof, in the absence of
affirmative  action by the Holder to  purchase  shares of Common  Stock,  and no
enumeration herein of the rights or privileges of the Holder hereof,  shall give
rise to any  liability of the Holder for the purchase  price of any Common Stock
or as a stockholder  of the Company,  whether such  liability is asserted by the
Company or by creditors of the Company.

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<PAGE>

          (f)  REMEDIES.  The Holder,  in addition to being entitled to exercise
all rights granted by law,  including  recovery of damages,  will be entitled to
specific  performance of its rights under this Warrant.  The Company agrees that
monetary  damages  would not be adequate  compensation  for any loss incurred by
reason of a breach by it of the  provisions of this Warrant and hereby agrees to
waive the defense in any action for  specific  performance  that a remedy at law
would be adequate.

          (g)  SUCCESSORS AND ASSIGNS.  Subject to applicable  securities  laws,
this Warrant and the rights and obligations  evidenced hereby shall inure to the
benefit of and be binding upon the  successors of the Company and the successors
and permitted assigns of the Holder. The provisions of this Warrant are intended
to be for the benefit of all holders from time to time of this Warrant and shall
be enforceable by any such Holder or holder of Warrant Shares.

          (h)  INDEMNIFICATION.   The  Company  agrees  to  indemnify  and  hold
harmless  the Holder  from and  against any  liabilities,  obligations,  losses,
damages,  penalties,   actions,  judgments,  suits,  claims,  costs,  reasonable
attorneys'  fees,  expenses and  disbursements  of any kind which may be imposed
upon,  incurred by or asserted  against the Holder in any manner  relating to or
arising out of any failure by the Company to perform or observe in any  material
respect any of its covenants, agreements,  undertakings or obligations set forth
in this  Warrant;  PROVIDED,  HOWEVER,  that  the  Company  will  not be  liable
hereunder  to the extent that any  liabilities,  obligations,  losses,  damages,
penalties,  actions,  judgments, suits, claims, costs, attorneys' fees, expenses
or disbursements are found in a final non-appealable judgment by a court to have
resulted from the Holder's bad faith or willful  misconduct in its capacity as a
stockholder or warrantholder of the Company.

          (i)  AMENDMENT.  This  Warrant  may  be  modified  or  amended  or the
provisions hereof waived with the written consent of the Company and the Holder.

          (j)  SEVERABILITY.  Wherever possible,  each provision of this Warrant
shall  be  interpreted  in  such  manner  as to be  effective  and  valid  under
applicable  law, but if any  provision of this Warrant shall be prohibited by or
invalid under  applicable law, such provision shall be ineffective to the extent
of such  prohibition or invalidity,  without  invalidating the remainder of such
provisions or the remaining provisions of this Warrant.

          (k)  HEADINGS.   The  headings  used  in  this  Warrant  are  for  the
convenience of reference  only and shall not, for any purpose,  be deemed a part
of this Warrant.

                     [THE NEXT PAGE IS THE SIGNATURE PAGE.]

                                       9
<PAGE>

     IN WITNESS  WHEREOF,  the Company has caused this Stock Purchase Warrant to
be executed by its officer thereunto duly authorized.

Dated:  June 28, 2002

                                        GALAXY NUTRITIONAL FOODS, INC.

                                        By:    /s/ Angelo S. Morini
                                               ---------------------------------
                                        Name:  Angelo S. Morini
                                               ---------------------------------
                                        Title: Chairman, President & CEO
                                               ---------------------------------

                                       10
<PAGE>

                               NOTICE OF EXERCISE

To:  [Transfer Agent]

          (1)  The  undersigned  hereby  elects to purchase  ________  shares of
Common  Stock (the "Common  Stock"),  of Galaxy  Nutritional  Foods,  Inc.  (the
"Company")  pursuant to the terms of the attached Warrant,  and (check one:) [ ]
tenders  herewith  payment  of the  exercise  price in full OR [ ]  tenders  the
Warrant for cashless exercise,  together with all applicable  transfer taxes, if
any.

          (2)  Calculation of cashless exercise value, if applicable:

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

          (3)  The  undersigned  hereby  restates  and  confirms  the  continued
accuracy of the  investment  representations  made by the Investor under Article
III of the Common Stock and Warrants Purchase  Agreement dated June ___, 2002 by
and between the Company and the Investor signatory thereto, as applicable to the
undersigned on the date hereof.

          (4)  Please issue a  certificate  or  certificates  representing  said
shares of Common Stock in the name of the  undersigned  or in such other name as
is specified below:

                         -------------------------------
                         (Name)

                         -------------------------------
                         (Address)

                         -------------------------------

Dated:                     ,
       --------------------  -----

                                        ----------------------------------------
                                        Signature

                                       1
<PAGE>

                                 ASSIGNMENT FORM

                    (To assign the foregoing Warrant, execute
                   this form and supply required information.
                 Do not use this form to exercise the Warrant.)

     FOR VALUE RECEIVED,  the foregoing Warrant and all rights evidenced thereby
are hereby assigned to

                                               whose address is
-----------------------------------------------

---------------------------------------------------------------

---------------------------------------------------------------

                                        Dated:              ,
                                               ------------   -------

               Holder's Signature:
                                  -----------------------------
               Holder's Address:
                                  -----------------------------

                                  -----------------------------

Signature Guaranteed:
                      -----------------------------------------

Any assignee  receiving this Warrant in a non-public resale  transaction must be
an accredited investor as that term is defined under the Securities act of 1933,
as amended, and the rules and regulations promulgated thereunder.

NOTE: The signature to this  Assignment Form must correspond with the name as it
appears on the face of the Warrant,  without  alteration or  enlargement  or any
change whatsoever,  and must be guaranteed by a bank or trust company.  Officers
of  corporations  and  those  acting  in an  fiduciary  or other  representative
capacity  should  file  proper  evidence of  authority  to assign the  foregoing
Warrant.

                                       1AMENDMENT AND LIMITED WAIVER
                              TO SECURITY AGREEMENT

     This  Amendment  and  Limited  Waiver  to  Security   Agreement   (Accounts
Receivable,  Inventory and Equipment)  (this  "Amendment")  dated as of June 26,
2002, is entered into by and between GALAXY NUTRITIONAL FOODS, INC. ("Borrower")
and FINOVA CAPITAL CORPORATION ("FINOVA"), in reference to that certain Security
Agreement  (Accounts  Receivable,  Inventory and  Equipment)  between them dated
November  1,  1996  (as  amended  from  time  to  time,  the  "Loan  Agreement";
capitalized terms used herein, unless otherwise defined, shall have the meanings
set forth in the Loan Agreement).

     A.   FINOVA  currently  provides   financial   accommodations  to  Borrower
pursuant to the terms of the Loan Agreement.

     B.   Borrower  has  notified  FINOVA that Events of Default  have  occurred
under the Loan  Agreement due to  Borrower's  failure to comply with the minimum
Total  Debt  Service  Coverage  Ratio  and the  Unfinanced  Capital  Expenditure
limitations set forth therein.

     C.   Borrower  has  requested  that FINOVA  grant a waiver of the Events of
Default and amend the Loan  Agreement  as provided  herein.  FINOVA  consents to
Borrower's requests on the terms and subject to the conditions set forth in this
Amendment.

     NOW THEREFORE, the parties hereto agree as follows:

     1.   WAIVER.  FINOVA  hereby  waives  Borrower's  duty to  comply  with the
minimum ratio of Operating Cash  Flow/Actual to Total  Contractual  Debt Service
set forth in Section 6.18 of the Loan  Agreement for the nine month period ended
March 31, 2002 and the twelve  month  period  ended June 30,  2002.  FINOVA also
hereby waives Borrower's duty to comply with the Unfinanced Capital  Expenditure
limitation  set forth in Section 6.19 of the Loan  Agreement for the fiscal year
ended March 31, 2002. The limited waivers  provided herein shall apply solely to
the covenant  violations  described above as of the periods referenced above. In
all other  respects,  Borrower shall comply with the terms of the Loan Agreement
and the instruments,  documents and agreements executed in connection therewith,
as amended hereby.

     2.   Amendments. The Loan Agreement is amended as follows:
          ----------

          (a)  Section  1 of  the  Loan  Agreement  is  amended  by  adding  the
     following definitions as Sections 1.17, 1.18, 1.19, 1.20, 1.21, 1.22, 1.23,
     1.24 and 1.25 respectively:

               1.17."Capital  Expenditures" shall mean all expenditures made and
          liabilities  incurred in accordance  with GAAP for the  acquisition of
          any fixed asset or improvement,  replacement, substitution or addition
          thereto  which has a useful life of more than one year and  including,
          without limitation, those arising in connection with capital leases.

                                      -1-
<PAGE>

               1.18."Indebtedness  for  Borrowed  Money"  shall  mean,   without
          duplication,  all  Indebtedness:  (i) in  respect  of  borrowed  money
          (including,  without limitation,  pursuant to the Loan Agreement,  the
          FINOVA Mezzanine Loan Documents or any capital leases), (ii) evidenced
          by a note,  debenture,  or other like written  obligation to pay money
          (including,  without  limitation,  all interest on the Obligations and
          the Obligations under the FINOVA Mezzanine Loan Documents),  (iii) for
          the deferred  purchase  price of property  (other than trade  payables
          arising in the  ordinary  course of  business),  or (iv) in respect of
          obligations   under   conditional   sales  or  other  title  retention
          agreements; and all guaranties of any or all of the foregoing.

               1.19 "Senior  Contractual  Debt  Service"  shall  mean,  for  any
                    period,  the sum of payments  made or required to be made by
          Borrower  during such period for (i) interest only payments due on the
          revolving  credit facility made available to Borrower  pursuant to the
          Loan Agreement, (ii) principal and interests payments due with respect
          to the FINOVA Mezzanine Loan,  (iii) all commitment  fees,  collateral
          monitoring fees, examination fees, unused line fees and all other fees
          payable by Borrower to FINOVA or FMC pursuant to the Loan Agreement or
          the FINOVA  Mezzanine  Loan  Documents and (iv) interest only payments
          due on the  Subordinated  Debt (with it being understood that payments
          due on the Indebtedness  owing by Borrower to South Trust shall not be
          considered in the calculation of Senior Contractual Debt Service).

               1.20 "Subordinated Debt" shall mean liabilities of Borrower,  the
          repayment of which is  subordinated  to the payment and performance of
          the Obligations and the  Obligations  under the FINOVA  Mezzanine Loan
          Documents,  pursuant to a written subordination  agreement in form and
          substance acceptable to FINOVA.

               1.21 "Total Contractual Debt Service" shall mean, for any period,
          the sum of  payments  made  (or,  as to clause  (i) of this  sentence,
          required  to be made) by  Borrower  during  such period for (i) Senior
          Contractual  Debt Service and (ii)  interest and  scheduled  principal
          payments due on any and all other  Indebtedness  for Borrowed Money of
          Borrower.

               1.22 "FMC" shall mean FINOVA Mezzanine Capital Inc.

               1.23 "FINOVA Mezzanine Loan" shall mean the term loan made by FMC
          to Borrower in the original principal amount of $4,000,000 pursuant to
          the FINOVA Mezzanine Loan Documents.

               1.24 "FINOVA  Mezzanine  Loan  Documents"  shall  mean  the  Loan
          Agreement  dated  September  30, 1999 between FMC and Borrower and all
          instruments,  documents and agreements related thereto, all as amended
          from time to time.

                                      -2-
<PAGE>

               1.25 "Indebtedness"  shall  mean of any  person or  entity  shall
          mean,  without  duplication:  (a) all indebtedness for borrowed money;
          (b) all  obligations  issued,  undertaken  or assumed as the  deferred
          purchase  price of  property or  services  (other than trade  payables
          entered into in the ordinary course of Borrower's  business);  (c) all
          non-contingent  reimbursement  or payment  obligations with respect to
          all letters of credit  (including  standby and  commercial),  banker's
          acceptances, bank guaranties, shipside bonds, surety bonds and similar
          instruments; (d) all obligations evidenced by notes, bonds, debentures
          or similar instruments, including obligations so evidenced or incurred
          in  connection   with  the   acquisition  of  property  or  assets  of
          businesses;   (e)  all  indebtedness  created  or  arising  under  any
          conditional  sale or other title retention  agreement,  or incurred as
          financing,  in either case with  respect to  property  acquired by the
          person or entity (even though the rights and remedies of the seller or
          bank  under such  agreement  in the event of  default  are  limited to
          repossession  or  sale  of  such  property);  (f)  all  capital  lease
          obligations;  (g) all net  obligations  with respect to interest  rate
          swap agreements or other similar  arrangements;  (h) all  indebtedness
          referred to in clauses (a) through (g) above  secured by (or for which
          the holder of such  Indebtedness has an existing right,  contingent or
          otherwise,  to be secured by) any lien upon or in property  (including
          accounts and  contract  rights)  owned by such person or entity,  even
          though such person or entity has not assumed or become  liable for the
          payment of such  Indebtedness;  and (i) all  guaranty  obligations  in
          respect of indebtedness or obligations of others of the kinds referred
          to in clauses (a) through (g) above.

          (b)  Section 2.1 of the Loan  Agreement is deleted in its entirety and
     replaced with the following:

               2.1. FINOVA  shall,  from time to time,  in its sole and absolute
          discretion, make loans, advances and other financial accommodations to
          or for the benefit of  Borrower of the lesser of (a) up to  $7,500,000
          (the  "Revolving  Line of  Credit");  or (b) the sum of 80% of the Net
          Amount of  Eligible  Accounts  (or such  greater or lesser  percentage
          thereof  as  FINOVA  shall,  in  its  sole  and  absolute  discretion,
          determine);  and (i) 50% (with such percentage  decreasing by 1.0% per
          month commencing July 1, 2002 and continuing on the first business day
          of each month  thereafter)  of eligible  inventory  (as  determined by
          FINOVA in its sole and absolute  discretion and priced at the lower of
          cost or market) in an amount not to exceed $3,000,000.

          (c)  Section 6.18 of the Loan Agreement is deleted in its entirety and
     replaced with the following:

               6.18 TOTAL DEBT SERVICE COVERAGE RATIO. Borrower's Operating Cash
          Flow/Actual  for the  consecutive 3 month period ended as of September
          30, 2002, the consecutive 6 month period ended as of December 31, 2002
          and the  consecutive 9 month period ended as of March 31, 2003 must be
          at least 0.8, 1.0 and 1.1 times, respectively, the amount necessary to
          meet Borrower's Total

                                      -3-
<PAGE>

          Contractual  Debt Service for the applicable  period,  calculated on a
          consolidated basis.

          (d)  Section 6.19 of the Loan Agreement is deleted in its entirety and
     replaced with the following:

               6.19 UNFINANCED CAPITAL EXPENDITURES.  Borrower shall not make or
          incur any  unfinanced  Capital  Expenditures  if, after giving  effect
          thereto,  the aggregate amount of all unfinanced Capital  Expenditures
          by Borrower in the applicable  calendar  quarter would exceed $25,000,
          provided,  however,  that  Borrower  may expend up to $180,000 for the
          installation of Batchmaster and Soloman software and such expenditures
          shall not be included in the  limitations  otherwise set forth in this
          subsection.

          (e)  New subsections  6.20,  6.21, 6.22 and 6.23 are added to the Loan
     Agreement as follows:

               6.20 SENIOR CONTRACTUAL DEBT SERVICE RATIO.  Borrower's Operating
          Cash  Flow/Actual  for the  consecutive  3 month  period  ended  as of
          September  30,  2002,  the  consecutive  6 month  period  ended  as of
          December 31, 2002 and the consecutive 9 month period ended as of March
          31, 2003 must be at least 3.0,  3.5 and 4.0 times,  respectively,  the
          amount  necessary to meet Borrower's  Senior  Contractual Debt Service
          for the applicable period, calculated on a consolidated basis.

               6.21 LIMITATION  ON  INDEBTEDNESS.   Without  the  prior  written
          consent of FINOVA,  Borrower shall not, directly or indirectly,  make,
          create,  incur, assume,  suffer to exist, or become or remain directly
          or indirectly liable with respect to, any Indebtedness, except:

                    (i)  Indebtedness  incurred  pursuant to this  Agreement and
                         the FINOVA Mezzanine Loan Documents;
                    (ii) Indebtedness  existing and disclosed to FINOVA prior to
                         June 26, 2002; and
                    (iii)Indebtedness  not to exceed  $500,000 in the  aggregate
                         outstanding  at any one time  consisting of new capital
                         lease  obligations,  unsecured  loans and secured loans
                         secured only by equipment  purchased  with the proceeds
                         thereof or stock.

               6.22.Limitation  on  Compensation.   Without  the  prior  written
          consent  of  FINOVA,   Borrower  shall  not  pay  total  compensation,
          including salaries,  withdrawals, fees, bonuses, commissions,  drawing
          accounts and other payments,  whether directly or indirectly, in money
          or otherwise,  during any fiscal year to all of Borrower's executives,
          officers  and  directors  (or any  relative  thereof)  in an amount in
          excess of 110% of that which was paid to all such personnel in the

                                      -4-
<PAGE>

          immediately  preceding fiscal year,  provided  however,  that deferred
          compensation paid in a year other than the fiscal year earned shall be
          treated  as  paid  in the  year  it was  earned  for  purposes  of all
          calculations hereunder.

               6.23.LIMITATION ON LOANS.  Without the prior  written  consent of
          FINOVA,  Borrower  shall not make  advances,  loans or  extensions  of
          credit to, or invest  in,  any  person or entity,  except for loans or
          cash  advances to employees  which are made in the ordinary  course of
          business and which do not cause the aggregate  balance of the employee
          advance account to exceed $50,000 at any one time.

          (f)  Section 9.1 of the Loan  Agreement is deleted in its entirety and
     replaced with the following:

               9.1. This Agreement  shall become  effective  upon  acceptance by
          FINOVA and shall  continue  in full force and effect for a term ending
          July 1, 2003. Notwithstanding the foregoing, FINOVA may terminate this
          Agreement  earlier  upon the  occurrence  of an Event of  Default.  No
          termination  of this  Agreement,  however,  shall relieve or discharge
          Borrower of Borrower's  duties,  obligations  and covenants  hereunder
          until all Obligations  have been paid in full and FINOVA's  continuing
          security in and to the  Collateral  shall  remain in effect  until all
          such Obligations have been fully discharged.

          (g)  Section 9.2 of the Loan  Agreement is deleted in its entirety and
     replaced with the following:

               9.2. Intentionally Omitted.

     3.   REAFFIRMATION.  Except  as  amended  by the  terms  herein,  the  Loan
Agreement and each of the other documents,  instruments and agreements  executed
and  delivered  in  connection  therewith  remain in full  force  and  effect in
accordance  with their  terms.  If there is any  conflict  between the terms and
conditions of the Loan Agreement and the terms and provisions of this Amendment,
the terms and provisions of this Amendment shall govern.

     4.   FEE. In  consideration  of the waiver and amendments  granted  herein,
Borrower shall pay to FINOVA a fee in the amount of $413,500.00,  which shall be
deemed fully earned on the date  hereof,  $172,500.00  of which shall be due and
payable on the earliest of (a) July 1, 2003,  (b) the  occurrence of an Event of
Default,  or (c) the date on which Borrower repays either all of the Obligations
to FINOVA under the Loan  Agreement or any portion of the principal  Obligations
of Borrower to FMC under the FINOVA Mezzanine Loan Documents; and $241,000.00 of
which shall be due and payable upon FMC's exercise of its warrants.

     5.   COUNTERPARTS. This Amendment may be executed in multiple counterparts,
each of which  shall be  deemed  an  original  but all of which  together  shall
constitute one and the same instrument.

                                      -5-
<PAGE>

     6.   GOVERNING  LAW.  This  Amendment  shall be governed  by and  construed
according to the laws of the State of New York.

     7.   ATTORNEYS'  FEES AND WAIVER OF JURY TRIAL.  Borrower agrees to pay, on
demand,   all  attorneys'  fees  and  costs  incurred  in  connection  with  the
preparation, negotiation,  documentation and execution of this Amendment. If any
legal action or  proceeding  shall be commenced at any time by any party to this
Amendment  in  connection  with its  interpretation,  enforcement  or  otherwise
concerning its terms, the prevailing party in such action or proceeding shall be
entitled  to  reimbursement  of its  reasonable  attorneys'  fees  and  costs in
connection  therewith,  in addition to all other relief to which the  prevailing
party may be  entitled.  Each of the parties  hereto  hereby  waives any and all
rights to a trial by jury in any such action or proceeding.

     8.   RELEASE.  Borrower  hereby  releases,  remises,  acquits  and  forever
discharges FINOVA and FINOVA's employees, agents, representatives,  consultants,
attorneys,  fiduciaries,  servants, officers, directors, partners, predecessors,
successors and assigns, subsidiary corporations, parent corporations and related
corporate  divisions  (all of the  foregoing  hereinafter  called the  "Released
Parties"), from any and all actions and causes of action, judgments, executions,
suits, debts, claims, demands, liabilities, obligations, damages and expenses of
any and every character,  known or unknown, direct and/or indirect, at law or in
equity, of whatsoever kind or nature,  whether  heretofore or hereafter arising,
for or because of any matter or things  done,  omitted or suffered to be done by
any of the  Released  Parties  prior to and  including  the  date and  execution
hereof,  and in any way  directly  or  indirectly  arising  out of or in any way
connected to this Amendment, the Loan Agreement and the other Loan Documents and
the transactions  related thereto (all of the foregoing  hereinafter  called the
"Released  Matters");  provided,  however,  that the foregoing release shall not
apply to discharge FINOVA from any obligations  which are expressly imposed upon
FINOVA  pursuant to the terms of this Amendment,  the Loan Agreement,  or any of
the other  instruments,  documents or agreements  related  thereto,  as modified
through the date  hereof.  Borrower  acknowledges  that the  agreements  in this
section are intended to be in full  satisfaction of all or any alleged  injuries
or damages arising in connection with the Released Matters.  Borrower represents
and  warrants  to  FINOVA  that it has not  purported  to  transfer,  assign  or
otherwise convey any right, title or interest of Borrower in any Released Matter
to any other  Person  and that the  foregoing  constitutes  a full and  complete
release of all Released Matters.

     9.   CONDITIONS TO  EFFECTIVENESS.  The  effectiveness of this Amendment is
expressly  conditioned  upon  the  following  (all  documents  to be in form and
substance satisfactory to FINOVA):

               a.   Borrower shall have executed and delivered this Amendment to
                    FINOVA;
               b.   Borrower  shall  have  executed  and  delivered  to  FMC  an
                    Amendment and Limited Waiver to the Loan  Agreement  between
                    Borrower and FMC and an allonge to the term note executed in
                    connection therewith;

                                      -6-
<PAGE>

                                   FINOVA CAPITAL CORPORATION,
                                   a Delaware corporation

                                   By: /s/ Mike McCaulley
                                   ----------------------------------------
                                   Print Name: Mike McCaulley
                                   Title/Capacity: Vice President

                                   GALAXY NUTRITIONAL FOODS, INC.
                                   a Delaware corporation

                                   By: /s/ Angelo S. Morini
                                   ----------------------------------------
                                   Print Name:  Angelo S. Morini
                                   Title/Capacity: Chairman, President & CEO

                                      -7-

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