Document:

GALAXY NUTRITIONAL FOODS COMPANY, INC.

                      Non-Qualified Stock Option Agreement

         Galaxy  Nutritional  Foods Company,  Inc., a Delaware  corporation (the
"Company"),  hereby grants as of the 17th day of August, 2006, to David H. Lipka
(the  "Optionee"),  an option to  purchase a maximum  of  100,000  shares of its
Common Stock,  $.01 par value (the "Common  Stock"),  at the price of $ 0.44 per
share,  which  is  110% of the  closing  market  price  (the  "Option"),  on the
following terms and conditions:

         1. Grant as Non-Qualified Stock Option; Other Options. The Option shall
be treated for federal income tax purposes as a  non-qualified  stock option and
NOT as an incentive stock option under Section 422A of the Internal Revenue Code
of 1986, as amended (the "Code"). The option is in addition to any other options
heretofore or hereafter granted to the Optionee by the Company,  but a duplicate
original of this instrument shall not affect the grant of another option.

         2. Extent of Option. The Option is vested immediately. The Option (or a
portion  hereof) may be  exercised  up to and  including  the date which is five
years from the date the Option is granted.

         3. Termination of Directorship. If the Optionee ceases to be a director
of the Company,  other than by reason of death at a time when the Optionee holds
the Option,  the Optionee may exercise  such Option  within the original term of
the Option, as to all or any of the shares fully vested at the time.

         4. Death.  If the  Optionee  dies  while serving as a  director  of the
Company, the Option may be exercised, to the extent of the number of shares with
respect to which the Optionee could have exercised it on the date of his  death,
by his estate, personal representative or beneficiary who acquires the Option by
will  or  by  the  laws of  descent and  distribution, at any time  prior to the
Option's expiration date specified in this Agreement.

         5.  Partial  Exercise.  Exercise  of the Option up to the extent  above
stated  may be made in part at any time and from time to time  within  the above
limits, except that the Option may not be exercised for a fraction of a share.

<PAGE>

         6. Payment Price. The option price is payable, upon exercise, in United
States  dollars and may be paid in cash or by check,  or any  combination of the
foregoing, equal in amount to the option price.

         7. Method of Exercising Option.  Subject to the terms and conditions of
this Agreement, the Option may be exercised by written notice to the Company, at
the principal  executive office of the Company, or to such transfer agent as the
Company  shall  designate.  Such notice shall state the election to exercise the
Option and the number of shares in  respect of which it is being  exercised  and
shall be signed by the person or persons so exercising  the Option.  Such notice
shall be accompanied  by payment of the full purchase price of such shares,  and
the Company shall deliver a certificate or certificates representing such shares
as soon as practicable  after the notice shall be received.  The  certificate or
certificates  for the shares as to which the Option shall have been so exercised
shall be registered in the name of the person or persons  exercising  the Option
and shall be  delivered  as provided  above to or upon the written  order of the
person or  persons  exercising  the  Option.  In the event the  Option  shall be
exercised, pursuant to Section 4 hereof, by any person or persons other than the
Optionee,  such notice shall be accompanied by appropriate proof of the right of
such person to exercise the Option.  All shares that shall be purchased upon the
exercise   of  the  Option  as   provided   herein   shall  be  fully  paid  and
non-assessable.

         8. Option  Not  Transferable.   The   Option  is  not  transferable  or
assignable except by will or by the laws of descent and distribution. During the
Optionee's lifetime, only the Optionee can exercise the Option.

         9. No Obligation to Exercise  Option.  The grant and  acceptance of the
Option imposes no obligation on the Optionee to exercise it.

         10. No Rights as  Stockholder  until  Exercise.  The Optionee shall not
have rights as a stockholder  with respect to shares  subject to this  Agreement
until a stock certificate  therefor has been issued to the Optionee and is fully
paid for. Except as is expressly  provided below with respect to certain changes
in the capitalization of the Company,  no adjustment shall be made for dividends
or  similar  rights  for which the  record  date is prior to the date such stock
certificate is issued.

         11. Capital Changes and Business Successions.

                  (a) The existence of the Option  granted  hereunder  shall not
affect in any way the right or power of the Board of  Directors  of the  Company
(the  "Board") or the  stockholders  of the Company to make or authorize (i) any
adjustment,  recapitalization,  reorganization  or other change in the Company's
capital  structure  or its  business,  (ii) any merger or  consolidation  of the
Company  or any of its  affiliates,  (iii) any  issuance  of bonds,  debentures,
preferred or prior preference stock ahead of or affecting the Common Stock, (iv)
the dissolution or liquidation of the Company or any of its affiliates,  (v) any
sale or  transfer of all or part of the assets or business of the Company or any
of its affiliates or (vi) any other corporate act or proceeding.

                                       2
<PAGE>

                  (b) Subject to the provisions of Section  11(d),  in the event
of any such change in the capital structure or business of the Company by reason
of any  stock  split,  reverse  stock  split,  stock  dividend,  combination  or
reclassification of shares, recapitalization,  merger, consolidation,  spin off,
reorganization,  partial or  complete  liquidation,  acquisition  of property or
shares, separation,  issuance of rights or warrants to purchase any Common Stock
or securities convertible into Common Stock, any sale or transfer of all or part
of the Company's assets or business,  disaffiliation,  any special cash dividend
or any other  corporate  transaction or event having an effect similar to any of
the foregoing and effected without receipt of consideration by the Company, then
the aggregate number and kind of shares that thereafter may be issued hereunder,
the  number and kind of shares to be issued  hereunder  and the  purchase  price
thereof  shall be  appropriately  adjusted  consistent  with such change in such
manner  as the Board may deem  equitable  to  prevent  substantial  dilution  or
enlargement of the rights  granted to, or available  for, the Optionee,  and any
such  adjustment  determined by the Board in good faith shall be final,  binding
and  conclusive  on the Company and the  Optionee  and their  respective  heirs,
executors, administrators,  successors and assigns. In connection with any event
described in this paragraph, the Board may provide, in its sole discretion,  (i)
for the  cancellation  of the Option and payment in cash and/or  other  property
having  an  aggregate  value  equal to the  value  of such  Option  in  exchange
therefor, (ii) the substitution of other property for the shares of Common Stock
subject  to the  Option;  and  (iii)  in  connection  with  any  disaffiliation,
arranging for the  assumption of the Option,  or  replacement of the Option with
new awards based on other property or other securities by the affected affiliate
or division or by the entity that controls such affiliate or division  following
such disaffiliation (as well as any corresponding adjustments to the Option that
remain  based  upon  Company  securities).  Except as  provided  hereunder,  the
Optionee  shall have no rights by reason of any  issuance  by the Company of any
class or securities  convertible  into stock of any class,  any  subdivision  or
consolidation  of  shares  of stock  of any  class,  the  payment  of any  stock
dividend, any other increase or decrease in the number of shares of stock of any
class,  any sale or transfer of all or part of the Company's  assets or business
or any other change affecting the Company's capital structure or business.

                  (c) Except as otherwise  determined  by the Board,  fractional
shares of Common Stock  resulting from any adjustment in the Option  pursuant to
Section 11(a) or Section 11(b) shall be aggregated until, and eliminated at, the
time of exercise by rounding-down and any remaining  fractional shares of Common
Stock shall be settled in cash.  Notice of any adjustment  shall be given by the
Board to the Optionee, and such adjustment (whether or not such notice is given)
shall be effective and binding for all purposes hereunder.

                                       3
<PAGE>

                  (d) In the event of (x) a merger or consolidation in which the
Company is not the surviving  entity,  (y) any  transaction  that results in the
acquisition of substantially all of the Company's  outstanding Common Stock by a
single  person or  entity or by a group of  persons  and/or  entities  acting in
concert,  or (z)  the  sale  or  transfer  of all  or  substantially  all of the
Company's  assets (all of the  foregoing  being  referred to as an  "Acquisition
Event"), then the Board, in its sole discretion,  may terminate the Option if it
is outstanding as of the date of the Acquisition  Event, by delivering notice of
termination  to  the  Optionee  at  least  20  days  prior  to the  date  of the
Acquisition  Event, in which case, during the period from the date on which such
notice of termination  is delivered to the date of the  Acquisition  Event,  the
Optionee  shall have the right to exercise in full the Option then  outstanding,
but any such exercise shall be contingent on the consummation of the Acquisition
Event,  and,  provided  that, if the  Acquisition  Event does not occur within a
specified period after giving such notice for any reason whatsoever,  the notice
and exercise  pursuant  thereto shall be null and void. If an Acquisition  Event
occurs but the Board does not terminate the outstanding  Awards pursuant to this
paragraph, then the provisions of Section 11(b) shall apply.

         12. Provision of Documentation to Optionee.  By signing this Agreement,
 the Optionee acknowledges receipt of a copy of this Agreement.

         13. Governing Law.  This Agreement shall be governed by and interpreted
in accordance with the internal laws of the State of Delaware.

         14. Expiration.   This Option shall expire at 5:00 p.m. Orlando time on
August 17, 2011.  Whether or not surrendered to the Company by the holder,  this
Option shall be deemed cancelled upon expiration hereof.

         IN WITNESS  WHEREOF  the  Company  and the  Optionee  have  caused this
instrument to be executed as of August 17, 2006.

OPTIONEE                                          GALAXY NUTRITIONAL FOODS, INC.

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

                                       4GALAXY NUTRITIONAL FOODS COMPANY, INC.

                      Non-Qualified Stock Option Agreement

         Galaxy  Nutritional  Foods Company,  Inc., a Delaware  corporation (the
"Company"),  hereby  grants as of the 17th day of  August,  2006,  to Michael E.
Broll (the "Optionee"), an option to purchase a maximum of 100,000 shares of its
Common Stock,  $.01 par value (the "Common  Stock"),  at the price of $ 0.44 per
share,  which  is  110% of the  closing  market  price  (the  "Option"),  on the
following terms and conditions:

         1. Grant as Non-Qualified Stock Option; Other Options. The Option shall
be treated for federal income tax purposes as a  non-qualified  stock option and
NOT as an incentive stock option under Section 422A of the Internal Revenue Code
of 1986, as amended (the "Code"). The option is in addition to any other options
heretofore or hereafter granted to the Optionee by the Company,  but a duplicate
original of this instrument shall not affect the grant of another option.

         2. Extent of Option. The Option is vested immediately. The Option (or a
portion  hereof) may be  exercised  up to and  including  the date which is five
years from the date the Option is granted.

         3. Termination of Directorship. If the Optionee ceases to be a director
of the Company,  other than by reason of death at a time when the Optionee holds
the Option,  the Optionee may exercise  such Option  within the original term of
the Option, as to all or any of the shares fully vested at the time.

         4. Death.   If the  Optionee  dies while  serving as a director  of the
Company, the Option may be exercised, to the extent of the number of shares with
respect to which the Optionee  could have exercised it on the date of his death,
by his estate, personal representative or beneficiary who acquires the Option by
will or by the  laws of  descent  and  distribution,  at any  time  prior to the
Option's expiration date specified in this Agreement.

         5. Partial  Exercise.  Exercise  of  the Option up to the extent  above
stated  may be made in part at any time and from time to time  within  the above
limits, except that the Option may not be exercised for a fraction of a share.

<PAGE>

         6. Payment Price. The option price is payable, upon exercise, in United
States  dollars and may be paid in cash or by check,  or any  combination of the
foregoing, equal in amount to the option price.

         7. Method of Exercising Option.  Subject to the terms and conditions of
this Agreement, the Option may be exercised by written notice to the Company, at
the principal  executive office of the Company, or to such transfer agent as the
Company  shall  designate.  Such notice shall state the election to exercise the
Option and the number of shares in  respect of which it is being  exercised  and
shall be signed by the person or persons so exercising  the Option.  Such notice
shall be accompanied  by payment of the full purchase price of such shares,  and
the Company shall deliver a certificate or certificates representing such shares
as soon as practicable  after the notice shall be received.  The  certificate or
certificates  for the shares as to which the Option shall have been so exercised
shall be registered in the name of the person or persons  exercising  the Option
and shall be  delivered  as provided  above to or upon the written  order of the
person or  persons  exercising  the  Option.  In the event the  Option  shall be
exercised, pursuant to Section 4 hereof, by any person or persons other than the
Optionee,  such notice shall be accompanied by appropriate proof of the right of
such person to exercise the Option.  All shares that shall be purchased upon the
exercise   of  the  Option  as   provided   herein   shall  be  fully  paid  and
non-assessable.

         8. Option  Not   Transferable.   The  Option  is  not  transferable  or
assignable except by will or by the laws of descent and distribution. During the
Optionee's lifetime, only the Optionee can exercise the Option.

         9. No Obligation to Exercise  Option.  The grant and  acceptance of the
Option imposes no obligation on the Optionee to exercise it.

         10. No Rights as  Stockholder  until  Exercise.  The Optionee shall not
have rights as a stockholder  with respect to shares  subject to this  Agreement
until a stock certificate  therefor has been issued to the Optionee and is fully
paid for. Except as is expressly  provided below with respect to certain changes
in the capitalization of the Company,  no adjustment shall be made for dividends
or  similar  rights  for which the  record  date is prior to the date such stock
certificate is issued.

         11. Capital Changes and Business Successions.

                  (a) The existence of the Option  granted  hereunder  shall not
affect in any way the right or power of the Board of  Directors  of the  Company
(the  "Board") or the  stockholders  of the Company to make or authorize (i) any
adjustment,  recapitalization,  reorganization  or other change in the Company's
capital  structure  or its  business,  (ii) any merger or  consolidation  of the
Company  or any of its  affiliates,  (iii) any  issuance  of bonds,  debentures,
preferred or prior preference stock ahead of or affecting the Common Stock, (iv)
the dissolution or liquidation of the Company or any of its affiliates,  (v) any
sale or  transfer of all or part of the assets or business of the Company or any
of its affiliates or (vi) any other corporate act or proceeding.

                                       2
<PAGE>

                  (b) Subject to the provisions of Section  11(d),  in the event
of any such change in the capital structure or business of the Company by reason
of any  stock  split,  reverse  stock  split,  stock  dividend,  combination  or
reclassification of shares, recapitalization,  merger, consolidation,  spin off,
reorganization,  partial or  complete  liquidation,  acquisition  of property or
shares, separation,  issuance of rights or warrants to purchase any Common Stock
or securities convertible into Common Stock, any sale or transfer of all or part
of the Company's assets or business,  disaffiliation,  any special cash dividend
or any other  corporate  transaction or event having an effect similar to any of
the foregoing and effected without receipt of consideration by the Company, then
the aggregate number and kind of shares that thereafter may be issued hereunder,
the  number and kind of shares to be issued  hereunder  and the  purchase  price
thereof  shall be  appropriately  adjusted  consistent  with such change in such
manner  as the Board may deem  equitable  to  prevent  substantial  dilution  or
enlargement of the rights  granted to, or available  for, the Optionee,  and any
such  adjustment  determined by the Board in good faith shall be final,  binding
and  conclusive  on the Company and the  Optionee  and their  respective  heirs,
executors, administrators,  successors and assigns. In connection with any event
described in this paragraph, the Board may provide, in its sole discretion,  (i)
for the  cancellation  of the Option and payment in cash and/or  other  property
having  an  aggregate  value  equal to the  value  of such  Option  in  exchange
therefor, (ii) the substitution of other property for the shares of Common Stock
subject  to the  Option;  and  (iii)  in  connection  with  any  disaffiliation,
arranging for the  assumption of the Option,  or  replacement of the Option with
new awards based on other property or other securities by the affected affiliate
or division or by the entity that controls such affiliate or division  following
such disaffiliation (as well as any corresponding adjustments to the Option that
remain  based  upon  Company  securities).  Except as  provided  hereunder,  the
Optionee  shall have no rights by reason of any  issuance  by the Company of any
class or securities  convertible  into stock of any class,  any  subdivision  or
consolidation  of  shares  of stock  of any  class,  the  payment  of any  stock
dividend, any other increase or decrease in the number of shares of stock of any
class,  any sale or transfer of all or part of the Company's  assets or business
or any other change affecting the Company's capital structure or business.

                  (c) Except as otherwise  determined  by the Board,  fractional
shares of Common Stock  resulting from any adjustment in the Option  pursuant to
Section 11(a) or Section 11(b) shall be aggregated until, and eliminated at, the
time of exercise by rounding-down and any remaining  fractional shares of Common
Stock shall be settled in cash.  Notice of any adjustment  shall be given by the
Board to the Optionee, and such adjustment (whether or not such notice is given)
shall be effective and binding for all purposes hereunder.

                                       3
<PAGE>

                  (d) In the event of (x) a merger or consolidation in which the
Company is not the surviving  entity,  (y) any  transaction  that results in the
acquisition of substantially all of the Company's  outstanding Common Stock by a
single  person or  entity or by a group of  persons  and/or  entities  acting in
concert,  or (z)  the  sale  or  transfer  of all  or  substantially  all of the
Company's  assets (all of the  foregoing  being  referred to as an  "Acquisition
Event"), then the Board, in its sole discretion,  may terminate the Option if it
is outstanding as of the date of the Acquisition  Event, by delivering notice of
termination  to  the  Optionee  at  least  20  days  prior  to the  date  of the
Acquisition  Event, in which case, during the period from the date on which such
notice of termination  is delivered to the date of the  Acquisition  Event,  the
Optionee  shall have the right to exercise in full the Option then  outstanding,
but any such exercise shall be contingent on the consummation of the Acquisition
Event,  and,  provided  that, if the  Acquisition  Event does not occur within a
specified period after giving such notice for any reason whatsoever,  the notice
and exercise  pursuant  thereto shall be null and void. If an Acquisition  Event
occurs but the Board does not terminate the outstanding  Awards pursuant to this
paragraph, then the provisions of Section 11(b) shall apply.

         12. Provision of Documentation to Optionee.  By signing this Agreement,
 the Optionee acknowledges receipt of a copy of this Agreement.

         13. Governing  Law. This Agreement shall be governed by and interpreted
in accordance with the internal laws of the State of Delaware.

         14. Expiration.   This Option shall expire at 5:00 p.m. Orlando time on
August 17, 2011.  Whether or not surrendered to the Company by the holder,  this
Option shall be deemed cancelled upon expiration hereof.

         IN WITNESS  WHEREOF  the  Company  and the  Optionee  have  caused this
instrument to be executed as of August 17, 2006.

OPTIONEE                                         GALAXY NUTRITIONAL FOODS, INC.

/s/Michael E. Broll                              By: /s/ David H. Lipka
-------------------------                            --------------------------
Michael E. Broll                                     David H. Lipka
                                                     Chairman

                                       4

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