Document:

SUPPLY AGREEMENT

      THIS SUPPLY AGREEMENT (the "Agreement") is made effective this 30th day of
June, 2005, by and between GALAXY NUTRITIONAL FOODS, INC., a corporation
organized and existing under the laws of the State of Delaware (hereinafter
referred to as "Galaxy"), and SCHREIBER FOODS, INC., a Wisconsin corporation
(hereinafter referred to as "SFI"). SFI and Galaxy may be referred to
individually as a "Party" or collectively as the "Parties".

                                    RECITALS:

      WHEREAS, the Parties have entered into that certain Asset Purchase
Agreement, dated as of the date hereof (the "Purchase Agreement"), pursuant to
which SFI shall acquire from Galaxy certain assets used in connection with the
manufacture and sale of imitation cheese and related food products; and

      WHEREAS, Galaxy has agreed to market and promote to its customers the
Products (as defined below), and SFI has agreed to manufacture and sell Products
to Galaxy and to deliver Products to Galaxy's customers under the terms and
conditions set forth in this Agreement; and

      WHEREAS, Galaxy shall deliver purchase orders for Products to SFI, which
purchase orders shall include "ship to" information, and SFI shall fill such
purchase orders, all under the terms and conditions set forth in this Agreement.

      NOW THEREFORE, in consideration of the above recitals, and the mutual
promises, covenants, terms and conditions set forth herein, the Parties agree as
follows:

I.    DEFINITIONS. Unless expressly provided otherwise, the terms in this
      Agreement shall have the meanings set forth below:

      A.    "Affiliates" of a Person shall mean (i) with respect to an entity,
            any officer, director, stockholder, partner, member or investor in
            such entity or of or in any affiliate of such entity; and (ii) with
            respect to a Person or entity, any Person or entity which directly
            or indirectly Controls, is Controlled by, or is under common Control
            with such Person or entity.

      B.    "Change of Control" means a sale of such Party's business (whether
            by sale of a majority of its capital stock, all or substantially all
            of its assets, merger, or otherwise), excluding, for purposes
            hereof, the transactions contemplated by the Purchase Agreement.

      C.    "Control" (including the terms "Controlled by" and "under common
            Control with") means the possession, directly or indirectly, or as
            trustee or executor, of the power to direct or cause the direction
            of the management policies of a Person, whether through the
            ownership of stock, as trustee or executor, by contract or credit
            arrangement or otherwise

      D.    "Effective Date" means September 1, 2005.

***    Indicates material omitted pursuant to a confidential treatment request
       and filed separately with the Securities and Exchange Commission.

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      E.    "Event of Default" shall be as defined in Section VII(B) below.

      F.    "Force Majeure" shall mean a (i) fire, (ii) flood, (iii) storm, (iv)
            strike, lockout, or other labor trouble, excluding, however, any
            strike, lockout or other labor trouble that is initiated within or
            limited to the labor force of the affected party, (v) riot, (vi)
            war, (vii) terrorism, (viii) rebellion, or (ix) act of God.

      G.    "Galaxy Inventory" means all of the following owned by Galaxy on the
            Effective Date and dedicated to alternative cheese products
            production at the Facility: merchantable and saleable (i) raw
            materials, (ii) ingredients (e.g., spices and seasonings), and (iii)
            operating supplies and packaging supplies.

      H.    "Intellectual Property" means all rights held by Galaxy in the
            Products and in its Confidential Information (as defined in Section
            XII) and other intellectual property owned by Galaxy, including,
            without limitation, patents, copyrights, author's rights,
            trademarks, tradenames, know-how, trade secrets, recipes, food
            preparation methods and production techniques, irrespective of
            whether such rights arise under U.S. or international intellectual
            property, unfair competition or trade secret laws or otherwise.

      I.    "Non-Material Product" means any Product or Products which,
            individually or in the aggregate, do not represent a material amount
            of Galaxy's aggregate production as of the date hereof; provided,
            however, that any Product that is categorized under the Slices or
            Shreds Product Lines shall not be a Non-Material Product.

      J.    "Product" or "Products" refers to and is limited to those items
            manufactured pursuant to this Agreement and that are more fully
            described on attached Exhibit A, as modified from time to time by
            written agreement signed by SFI and Galaxy.

      K.    "Product Line" means the grouping of the Products into each of the
            following classes: (i) Slices; (ii) Shreds; (iii) Block, (iv) Soft
            Cheese, (v) Grated Parmesan and (vi) Chunk, all as initially
            reflected on attached Exhibit A.

      L.    "Specifications" refers to and includes the Product specifications,
            quality standards and requirements presently in effect with respect
            to the Products and as determined mutually by the Parties in writing
            from time to time.

      M.    "Standard Costing Protocol" means, with respect to ingredients,
            packaging and raw materials, SFI's actual costs from ordinary
            purchasing activities.

      N.    "Term" shall be as set forth in Section III.

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II.   SUPPLY OF PRODUCTS.

      A.    Existing Products; Transition. Subject to the provisions set forth
            herein, Galaxy agrees that (i) as of the Effective Date, SFI shall
            be the sole third-party source of supply of the Products for the
            Term of this Agreement, (ii) as of November 1, 2005, SFI shall be
            the sole source of supply of the Products for the Term of this
            Agreement, and (iii) that Galaxy shall purchase its requirements of
            Products exclusively from SFI, and SFI hereby agrees to sell to
            Galaxy, all of its requirements of Products. The Parties agree to
            meet on a quarterly basis, at a time and place mutually agreeable to
            both Parties, to forecast the estimated quantities of Products
            required by Galaxy and its customers by Product Line, for the next
            two quarters. SFI and Galaxy will agree to a specific timetable to
            efficiently transition the manufacturing of the Products to SFI's
            facilities, and will implement such transition so that the
            manufacturing of the Products is transitioned to SFI's facilities
            prior to the Effective Date. If, prior to the Effective Date, SFI
            notifies Galaxy in writing that it is unable to produce any
            Non-Material Product in accordance with the Specifications or
            otherwise in compliance with SFI's representations, warranties,
            guaranties, covenants or other obligations under Section IV hereof,
            then such Product shall not be a Product under this Agreement.

      B.    Future Products.

            1.    Same Product Line. In the event Galaxy develops any item
                  within any of the Product Lines which is not then a Product
                  under this Agreement and Galaxy elects to market such item,
                  such item shall be a Product under this Agreement, unless SFI
                  is unable to manufacture such item with the equipment and
                  technology SFI then has in accordance with Galaxy's
                  specifications with respect thereto. The parties agree to
                  price any such items consistent with the pricing described for
                  Products on Exhibit B.

            2.    Different Product Line. In the event Galaxy develops any
                  cheese or cheese alternative item that is not within any of
                  the Product Lines and Galaxy elects to market such item, such
                  item shall be a Product under this Agreement, unless SFI is
                  unable to manufacture such item with the equipment and
                  technology SFI then has in accordance with Galaxy's
                  specifications with respect thereto. The parties agree to
                  price any such items in a manner that is as consistent with
                  the pricing described for Products on Exhibit B as is
                  practicable, provided, however, that if the proposed price
                  exceeds the price at which Galaxy can obtain such item (either
                  on its own or through another private labeling source) by ***,
                  then Galaxy may select such alternative with respect to such
                  item and such item will not be a Product under this Agreement.

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      C.    List of Suppliers. On or prior to the Effective Date, Galaxy shall
            furnish a list of Galaxy's top ten suppliers and vendors of raw
            materials, products and services for Galaxy's operations, with a
            listing of the approximate total amount of purchases made from each
            during the period from January 1, 2004 through May 31, 2005;
            provided, however, that Galaxy shall not be required to furnish any
            such information to SFI to the extent that the same would result in
            a breach of any confidentiality obligations applicable to such
            information.

III.  TERM AND PRICE.

      A.    Term. The "Term" of this Agreement shall be for a period of five (5)
            years from the Effective Date of this Agreement (the "Initial Term")
            plus, at Galaxy's option by written notice to SFI at least 180 days
            prior to the end of the then current Term (the "Notice Date"), up to
            two additional consecutive five (5) year terms; provided, however,
            that (i) if the Closing (as defined in the Purchase Agreement) has
            occurred and Galaxy does not exercise its option to extend the Term
            for the first additional five year period, then Galaxy shall pay SFI
            $1,500,000 at the expiration of the then current Term, and (ii) if
            the Closing (as defined in the Purchase Agreement) has occurred and
            Galaxy has exercised its option with respect to the first additional
            five year period, but does not exercise its right to extend the Term
            for the second additional five year period, then Galaxy shall pay
            SFI $750,000 upon the expiration of the then current Term (each such
            payment, a "Termination Payment").

      B.    Price. The price for Products during the Initial Term shall be as
            determined in accordance with the attached Exhibit B. Prior to the
            Notice Date, Galaxy and SFI shall, in good faith, consider
            adjustments to the "conversion" component with respect to each
            Product Line to reflect any changes in SFI's actual cost of
            conversion with respect to each Product Line for the next five year
            Term; provided, however, that the conversion costs with respect to
            any Product Line shall not be increased or decreased as a result of
            this Section III.B by more than *** of the conversion costs in
            effect for the then applicable Term. The Parties shall provide each
            other with necessary and appropriate information and documentation
            to provide a basis with which to determine such adjustment. In the
            event that the Parties are unable to agree to the amount of any such
            adjustment, then the adjustment amount proposed by SFI in good faith
            shall apply.

      C.    Special Payments.

            1.    If, during the one-year period beginning on the first
                  anniversary of the Effective Date and ending on the second
                  anniversary of the Effective Date, SFI's actual shipments of
                  Products under this Agreement are less than ***, then Galaxy
                  shall pay SFI an amount determined as follows (the "Shortfall
                  Payment"):
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                  ***;

                  where X represents the number of pounds shipped by SFI during
                  such one-year period. Such Shortfall Payment shall be payable
                  in accordance with Section III.C(2) below.

            2.    If Galaxy was obligated to make a Shortfall Payment pursuant
                  to Section III.C(1) above, and during the one-year period
                  beginning on the second anniversary of the Effective Date and
                  ending on the third anniversary of the Effective Date, SFI's
                  actual shipments of Products under this Agreement exceed ***,
                  then SFI shall pay Galaxy an amount determined as follows (the
                  "Catch-up Payment"):

                  ***;

                  where X represents the number of pounds shipped by SFI during
                  such one-year period; provided that the amount of such
                  Catch-up Payment shall not exceed the amount of such Shortfall
                  Payment. Within 30 days of the date that the amount of such
                  Catch-up Payment is determined by the Parties, Galaxy shall
                  pay SFI an amount equal to the Shortfall Payment minus the
                  Catch-up Payment. Notwithstanding anything in this Section
                  III.C to the contrary, Galaxy shall not be required to make
                  any Shortfall Payment if (i) SFI has breached any of its
                  representations, warranties, guaranties or covenants hereunder
                  in any material respect, (ii) at any time during such
                  applicable two-year period SFI's obligations hereunder have
                  been suspended or otherwise reduced pursuant to Section XIII
                  (Force Majeure), or (iii) if the Closing (as defined in the
                  Purchase Agreement) has not occurred.

            3.    The amounts of the Shortfall Payment and the Catch-up Payment
                  shall each be reduced by *** if a Change of Control of either
                  Party occurs prior to the date that any amount becomes due and
                  payable pursuant to Section III.C(2).

      D.    Sale of Galaxy Inventory to SFI.

            1.    On October 31, 2005, SFI and Galaxy shall mutually conduct a
                  physical inventory of the Galaxy Inventory and shall prepare a
                  schedule setting forth the description of each category of
                  Galaxy Inventory together with the quantity of each such
                  category (the "Galaxy Inventory Count Schedule"). Such
                  physical count shall be conducted and the Galaxy Inventory
                  Count Schedule shall be prepared, pursuant to the procedures
                  and principles set forth in Schedule III.D(1) attached hereto.
                  Galaxy's actual out-of-pocket costs to purchase such Galaxy
                  Inventory (the "Inventory Cost") shall be set forth in the
                  Galaxy Inventory Count Schedule.

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            2.    On November 1, 2005, Galaxy shall ship the Galaxy Inventory to
                  SFI, and SFI shall pay Galaxy the Inventory Cost, by wire
                  transfer in immediately available funds.

            3.    At any time prior to November 1, 2005, SFI may request that
                  Galaxy ship any Galaxy Inventory that Galaxy has in inventory
                  and that is no longer being used in production by Galaxy,
                  provided that SFI shall use such Galaxy Inventory only in the
                  manufacture of Products produced by SFI under this Agreement.
                  The purchase price for such Galaxy Inventory shall be equal to
                  Galaxy's actual out-of-pocket costs to purchase such Galaxy
                  Inventory.

            4.    If this Agreement is terminated prior to SFI's use of all such
                  Galaxy Inventory, then SFI shall return such excess Galaxy
                  Inventory and Galaxy shall pay SFI the Inventory Cost
                  attributable to such returned Galaxy Inventory.

IV.   QUALITY OF PRODUCTS.

      A.    Warranty of Quality. SFI warrants, represents and covenants that, at
            the time of delivery by SFI to Galaxy or its customers, all Products
            supplied by SFI to Galaxy or to Galaxy's customers pursuant to this
            Agreement shall comply with the Specifications and all state and
            federal laws, rules, and regulations, as applicable to Products.
            Further, SFI guarantees, as of the time of such delivery to Galaxy
            or its customers, that the Products will not be adulterated or
            misbranded within the meaning of the Federal Food, Drug and Cosmetic
            Act (the "Act").

      B.    Rights to Inspect Facilities and Products. Upon reasonable prior
            notice by Galaxy to SFI, Galaxy shall have the right to inspect,
            during regular business hours, that portion of any SFI facility that
            manufactures or stores Products (or inventory related thereto)
            pursuant to this Agreement. Upon Galaxy's request, SFI shall make
            available various production samples of the Products for the purpose
            of permitting Galaxy to confirm that SFI is producing the Products
            in accordance with the Specifications. Nothing contained herein
            shall obviate, limit, or otherwise relieve SFI from complying with,
            its obligations, representations, warranties, covenants and
            guaranties set forth herein, and all obligations, representations,
            warranties, covenants and guaranties shall survive any monitoring
            and inspection by or on behalf of Galaxy. Galaxy will sign the
            standard confidentiality agreement (in the form attached hereto as
            Exhibit C) prior to the inspection of any of SFI's facilities
            pursuant to this Section IV.B.

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      C.    Product Guarantee and Return Procedure. All Products manufactured or
            packaged by SFI are guaranteed from the date of packaging until the
            expiration date on the package to be free from defects. SFI shall
            give credits pursuant to this Product guarantee upon receipt of
            notice from Galaxy or Galaxy's customers that such Product did not
            conform with the guarantee. To the extent that Galaxy receives any
            returned Product from its customers, Galaxy shall return the same to
            SFI. Notwithstanding the foregoing, SFI shall not be responsible to
            replace or reimburse Galaxy for Products to the extent that the
            unacceptability of such Products resulted from the negligence or
            misconduct of Galaxy (and/or its customers) in the handling or
            storage of the Products. All Products returned to SFI, and all
            Products Galaxy receives credit for, regardless of reasons or
            credits sought, must be preceded by a communication which includes
            the Product identification, number of cases or weight involved,
            reason for the return, anticipated return date and the method of
            return; provided, however, that neither Galaxy nor its customers
            shall be obligated to return any Product in order to receive such
            credit if such Product was destroyed pursuant to any applicable law,
            rule or regulation. Without prior agreement to the contrary, SFI
            must approve (which approval will not be unreasonably delayed or
            withheld) all return Product transport arrangements or the cost of
            such transportation shall be borne by Galaxy.

      D.    Labels and Packaging. All Products shall be packaged by SFI into
            appropriate packaging containing all label information identifying
            the Products as Galaxy branded products and ready for resale by
            Galaxy to its customers, all in accordance with the Specifications.
            Galaxy may, from time to time, make modifications to the packaging
            and the corresponding Specifications, provided that (i) Galaxy will
            pay for any increase in packaging costs as a result thereof and (ii)
            such modified packaging runs properly on SFI's equipment.

V.    DELIVERY OF PRODUCTS; TITLE & RISK OF LOSS.

      A.    Product Order & Delivery. At such time as Galaxy desires Product for
            any of its customers, Galaxy shall submit a purchase order to SFI by
            mail, facsimile, or e-mail which sets forth the type and quantity of
            Products required, the delivery date and the "ship to" information.
            All Products shall be delivered F.O.B. destination. SFI agrees to
            ship all orders for Product within ten (10) business days of the
            effective date of such order. The Parties agree that the effective
            date for orders of Product shall be one (1) business day following
            the date SFI receives such purchase order. No purchase order or
            confirmation with respect thereto shall conflict with or supplement
            the terms or conditions of this Agreement unless SFI and Galaxy
            shall have specifically agreed in writing to any condition, term or
            agreement contained herein.

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      B.    Title. Title to all Products SFI provides pursuant to this Agreement
            shall pass to Galaxy (or Galaxy's customer, as the case may be) upon
            completion of delivery of the Products to the destination designated
            by Galaxy. Should Galaxy's customer reject tender or revoke its
            acceptance of any Products, title to such Products shall pass to SFI
            at such time as the Products are loaded for delivery to SFI, F.O.B.
            at such customer's facility.

VI.   PAYMENT. SFI shall invoice Galaxy for all Products sold and delivered
      under this Agreement on date of shipment, at the price established in
      Section III, above. For all invoices received on or prior to the first
      anniversary of the Effective Date, Galaxy shall pay such invoices by
      electronic funds transfer on or before the twentieth (20th) day after
      receipt of such invoice. For all invoices received after the first
      anniversary of the Effective Date, Galaxy shall pay such invoices by
      electronic funds transfer on or before the fifteenth (15th) day after
      receipt of such invoice.

VII.  TERM; TERMINATION; EVENT OF DEFAULT.

      A.    Term. This Agreement shall be for the Term.

      B.    Event of Default. Either Party may, in addition to other remedies
            available at law or equity, at any time during the continuation of
            an Event of Default terminate this Agreement upon written notice to
            the other if any of the following events occur (the occurrence of
            which is referred to as an "Event of Default"):

            1.    Material Breach. The other Party breaches a material
                  obligation under this Agreement, other than a payment
                  obligation which is the subject of Section VII(B)(3) below,
                  and, if susceptible to cure, such breach continues without
                  cure for a period of fifteen (15) days after written notice
                  thereof; provided, however, if the breach is susceptible to
                  cure but is not one which is capable of being cured within
                  such 15 day period and the breaching Party has substantially
                  commenced to cure the breach within such time and continues to
                  do so diligently and in good faith, then the breaching Party
                  shall be granted an extension for a reasonable period of time,
                  not to exceed 45 days (including the initial fifteen (15)
                  days) in any event.

            2.    Cessation of Business. The other Party ceases to conduct
                  business in the normal course, becomes insolvent, enters into
                  suspension of payments, moratorium, reorganization or
                  bankruptcy, makes a general assignment for the benefit of
                  creditors, admits its inability to pay debts as they mature,
                  suffers or permits the appointment of a receiver for its
                  business or assets, or avails itself of or becomes subject
                  (for more than 60 days if not voluntary) to any other judicial
                  or administrative proceeding that relates to its insolvency or
                  to the protection of the rights of its creditors.

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            3.    Failure to Pay Amounts Due. Galaxy fails to pay any amount due
                  hereunder, which failure is not remedied within fifteen (15)
                  days following receipt by Galaxy of a written demand for
                  payment by SFI unless such payment is being withheld by Galaxy
                  in good faith in connection with a bona fide dispute between
                  SFI and Galaxy relating to a specific shipment(s) of Product,
                  with such withholding to only apply to the specific
                  shipment(s) of Product to which Galaxy has asserted a dispute
                  with reasonable particularity.

      C.    Early Termination.

            1.    Galaxy shall use its reasonable efforts to submit to, and
                  obtain the approval of, its stockholders a vote for the
                  purpose of approving the transactions contemplated by the
                  Purchase Agreement at or prior to the next annual meeting of
                  its stockholders. If Galaxy's stockholders fail to approve
                  such transactions at the meeting held for such purpose, then
                  Galaxy may terminate this Agreement by providing written
                  notice thereof to SFI within 30 days of the date of such
                  stockholder meeting, which notice shall state an effective
                  date for such termination that shall not be more than 180 days
                  after the date of such notice.

            2.    If Galaxy's stockholders fail to approve the transactions
                  contemplated by the Purchase Agreement at the meeting held for
                  such purpose, and Galaxy and SFI are unable to consummate an
                  Alternative Transaction as contemplated by the Purchase
                  Agreement prior to January 1, 2006, then SFI may terminate
                  this Agreement by providing written notice thereof to Galaxy
                  prior to February 1, 2006, which notice shall state an
                  effective date for such termination which date shall not be
                  less than 180 days after the date of such notice; provided,
                  however, that Galaxy may shorten such period by written notice
                  to SFI.

      D.    Survival. The following provisions shall survive any termination or
            expiration of this Agreement: Section IV, Section VIII, Section X,
            Section XII, Section XIV and Section XXVII.

VIII. INDEMNIFICATION; INSURANCE AND REMEDIES.

      A.    Indemnification of Galaxy. SFI agrees to protect, defend, indemnify
            and hold Galaxy, its customers and Affiliates and their officers,
            directors, shareholders, agents and employees (all of which shall be
            included within any reference to Galaxy in this Section VIII)
            harmless from and against any and all causes of action, suits,
            losses, liabilities, claims, demands,

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            judgments, penalties, fines, proceedings, costs, expenses (including
            reasonable attorney's fees and costs as they are incurred), and
            damages and whether based upon law or equity, contract or tort, or
            whether judicial or administrative in nature, and whether based upon
            bodily injury, property damage or otherwise, related to or arising
            out of or in any manner connected with any breach of guaranty,
            warranty, representations, duty, covenant or obligation assumed or
            to be performed by SFI herein, or any claims, actions or suits
            brought by any person or entity against Galaxy for the recovery of
            damages for the injury, emotional distress, illness and/or death of
            any person or damage to property arising out of the purchase,
            consumption or exposure to Product manufactured by SFI under this
            Agreement.

            The foregoing shall be collectively referred to as "Claims
            Indemnified by SFI".

            SFI shall, at its own expense and with counsel reasonably acceptable
            to Galaxy, defend any Claim Indemnified by SFI that is the subject
            of this duty of indemnity and SFI shall pay all reasonable
            attorney's fees, costs and other expenses (including expenses of
            investigation and witnesses as they are incurred) arising therefrom.
            Galaxy agrees to provide SFI with prompt notice following receipt of
            notice of any claim, legal proceeding or other action against Galaxy
            that is the subject of this indemnification but any failure to do so
            will not reduce or otherwise affect SFI's indemnification
            obligations except to the extent SFI is materially prejudiced
            thereby. In the event Galaxy tenders the defense of a Claim
            Indemnified by SFI to SFI and SFI agrees in writing that such Claim
            is a Claim Indemnified by SFI, then SFI shall have sole and
            exclusive control over the defense and Galaxy agrees to cooperate
            and/or provide such information or documents as may be necessary to
            defend the Claim; provided, however, that Galaxy will have the sole
            and exclusive right, but not the obligation, to control the defense,
            at SFI's expense, if either (i) SFI fails to timely defend, contest
            or otherwise protect against any such Claim Indemnified by SFI, or
            (ii) Galaxy's attorneys conclude that the interests of SFI are in
            conflict with the interests of Galaxy with respect to such Claim
            Indemnified by SFI. Nothing in this Section shall prevent Galaxy
            from retaining, at its own expense, separate counsel to participate
            in the defense of such Claim. SFI agrees that it will not settle,
            consent to the entry of any judgment, or otherwise compromise any
            Claim without obtaining the prior written consent of Galaxy, which
            Galaxy agrees it shall not unreasonably withhold or delay. In no
            event shall consent be needed from Galaxy for any exclusively
            monetary settlement not involving the payment of money by Galaxy or
            any of its Affiliates, provided, however, that such settlement (i)
            shall not include any admission of wrong doing by or on behalf of
            Galaxy and (ii) shall contain an unconditional release in favor of
            Galaxy with respect to such Claim. Galaxy shall not be required to
            consent to any settlement involving the imposition of equitable
            remedies on Galaxy or any of its Affiliates or the imposition of any
            other obligation on it other than financial obligations for which
            Galaxy will be indemnified hereunder.

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      B.    Indemnification of SFI. Galaxy agrees to protect, defend, indemnify
            and hold SFI and its Affiliates, officers, directors, shareholders,
            agents and employees (all of which shall be included within any
            reference to SFI in this paragraph), harmless from and against any
            and all causes of action, suits, losses, liabilities, claims,
            demands, judgments, penalties, fines, proceedings, costs, expenses
            (including reasonable attorney's fees and costs), and damages and
            whether based upon law or equity, contract or tort, or whether
            judicial or administrative in nature, and whether based upon bodily
            injury, property damage or otherwise, related to or arising out of
            or in any manner connected with the mishandling of Product or breach
            of any duty, covenant, representation, warranty or obligation
            assumed or to be performed by Galaxy under the terms of this
            Agreement. The foregoing shall be collectively referred to as
            "Galaxy Indemnified Claims."

            Galaxy shall, at its own expense and with counsel reasonably
            acceptable to SFI, defend any Galaxy Indemnified Claim that is not
            subject to indemnification under Section VIII(A) and Galaxy shall
            pay all reasonable attorneys' fees, costs and other expenses arising
            therefrom. SFI agrees to provide Galaxy with prompt notice following
            receipt of notice of any legal proceeding or other action against
            SFI that is the subject of this indemnification, but any failure to
            do so will not reduce or otherwise affect Galaxy's indemnification
            obligations except to the extent Galaxy is materially prejudiced
            thereby. In the event SFI tenders the defense of a Galaxy
            Indemnified Claim to Galaxy and Galaxy agrees in writing that such
            Claim is a Galaxy Indemnified Claim, Galaxy shall have sole and
            exclusive control over the defense and SFI agrees to cooperate
            and/or provide such information or documents as may be necessary to
            defend the Galaxy Indemnified Claim; provided, however, that SFI
            will have the sole and exclusive right, but not the obligation, to
            control the defense, at Galaxy's expense, if either (i) Galaxy fails
            to timely defend, contest or otherwise protect against any such
            Galaxy Indemnified Claim, or (ii) SFI's attorneys conclude that the
            interests of Galaxy are in conflict with the interests of SFI with
            respect to such Galaxy Indemnified Claim. Nothing in this Section
            shall prevent SFI from retaining, at its own expense, separate
            counsel to participate in the defense of such Galaxy Indemnified
            Claim. Galaxy agrees that it will not settle, consent to the entry
            of any judgment, or otherwise compromise any Galaxy Indemnified
            Claim without obtaining the prior written consent of SFI, which SFI
            agrees it shall not unreasonably withhold. In no event shall consent
            be needed from SFI for any exclusively monetary settlement not
            involving the payment of money by SFI, provided, however, that such
            settlement (i) shall not include any admission of wrong doing by or
            on behalf of SFI and (ii) shall contain an unconditional release in
            favor of SFI with respect to such Claim. SFI shall not be required
            to consent to any settlement involving the imposition of equitable
            remedies on SFI or the imposition of any other obligation on it
            other than financial obligations for which SFI will be indemnified
            hereunder.

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      C.    Right to Contribution. Notwithstanding anything in this Agreement to
            the contrary, SFI (and/or its insurers) shall have the right to
            pursue a claim for contribution or indemnity against Galaxy to the
            extent of the proportion of damages found to be attributable to
            Galaxy's negligence for any Claim Indemnified by SFI following a
            judicial determination and exhaustion of all appeals.
            Notwithstanding anything in this Agreement to the contrary, Galaxy
            (and/or its insurers) shall have the right to pursue a claim for
            contribution or indemnity against SFI to the extent of the
            proportion of damages found to be attributable to SFI's negligence
            for any Galaxy Indemnified Claim following a judicial determination
            and exhaustion of all appeals.

      D.    Insurance. Each Party agrees that it will obtain and maintain in
            force during the Term and for one (1) year thereafter, with insurers
            reasonably acceptable to the other Party, comprehensive general
            liability insurance coverage, providing usual and customary
            coverages of such insurance and including product
            liability/completed operations, contractual liabilities and vendors
            coverage, in coverage amounts of not less than (i) $10,000,000.00
            each occurrence and $20,000,000.00 general aggregate in the case of
            SFI, and (ii) $3,000,000 each occurrence and $5,000,000 general
            aggregate in the case of Galaxy, in each case subject to any
            customary deductibles or self-insurance amounts.

      E.    Remedies. The remedies of the Parties as set forth in this Agreement
            are cumulative.

      F.    Survival. Notwithstanding anything contained herein to the contrary,
            the rights and obligations of the parties under this Section VIII
            shall survive the termination or cancellation of this Agreement for
            any reason whatsoever.

IX.   COVENANT NOT TO MANUFACTURE PRODUCTS.

      A.    Covenant. Galaxy covenants and agrees that during the Term, it will
            not, whether directly or indirectly, and whether as owner, manager,
            operator, consultant, contractor or otherwise, manufacture the
            Products in the United States to or for the benefit of itself or for
            the benefit of any other person or entity other than SFI.

      B.    Remedies. Galaxy recognizes that irreparable injury may result to
            SFI in the event of a breach by Galaxy of any of the covenants
            contained in this Section IX and acknowledges that Galaxy's
            agreement to be bound by the provisions of this Section IX is a
            significant reason for SFI's decision to enter into this Agreement
            and the Purchase Agreement. In the event that Galaxy shall engage in
            any act or behavior in violation of these covenants, Galaxy agrees
            that SFI shall be entitled, in addition to such other remedies and

                                       12
<PAGE>

            damages as may be available to it by law or under this Agreement, to
            preliminary and/or permanent injunctive relief, without the
            necessity of posting a bond, prohibiting Galaxy from engaging in
            such act or behavior; provided, however, that if any court of record
            shall finally adjudicate that the involved restraint, as provided
            herein, is too broad as to the area or time covered, Galaxy agrees
            that said area or time may be reduced to whatever extent the court
            deems reasonable and the restraint may be enforced as to such
            reduced area or time. The provisions of this paragraph shall survive
            the termination of this Agreement.

X.    LICENSE; COVENANT NOT TO MANUFACTURE PRODUCTS.

      A.    License; Intellectual Property. During the Term, Galaxy grants SFI a
            non-exclusive, nontransferable, royalty-free license, without right
            to sub-license, to use Galaxy's Intellectual Property (i) that is
            necessary for manufacturing, assembling and distributing Products
            for Galaxy pursuant to this Agreement and (ii) for the sole purpose
            of manufacturing, assembling and distributing Products for Galaxy
            pursuant to this Agreement. Galaxy shall retain sole ownership of,
            and all rights to, all Intellectual Property. SFI covenants to
            refrain from, and to use commercially reasonable efforts to prevent
            any disclosure of any part or aspect of said Intellectual Property
            to any other person in any manner which could impair its secrecy and
            confidentiality, and the commercial value of said Intellectual
            Property. Without restricting the generality of the foregoing, SFI
            shall:

            1.    limit any disclosure of said Intellectual Property to only
                  those of its employees and or consultants who have an actual
                  need to know such Intellectual Property in the performance of
                  their duties in connection with this Agreement and who have
                  executed a secrecy agreement that covers such Intellectual
                  Property. SFI shall promptly inform Galaxy of any breach of
                  such secrecy agreement of which it becomes aware.

            2.    keep all data and records concerning said Intellectual
                  Property secure against access by unauthorized personnel or
                  third persons.

            3.    return to Galaxy all data and records concerning said
                  Intellectual Property in such a manner as to preserve their
                  secrecy upon termination of this Agreement.

      B.    Covenant. SFI covenants and agrees that it will not, other than
            pursuant to the terms of this Agreement, whether directly or
            indirectly, and whether as owner, manager, operator, consultant,
            contractor or otherwise, manufacture the Products or use any
            Intellectual Property for the benefit of itself or for the benefit
            of any other person or entity.

                                       13
<PAGE>

      C.    Remedies. SFI recognizes that irreparable injury will result to
            Galaxy in the event of a breach by SFI of any of the covenants
            contained in this Section X and acknowledges that SFI's agreement to
            be bound by the provisions of this Section X is a significant reason
            for Galaxy's decision to enter into this Agreement and the Purchase
            Agreement. In the event that SFI shall engage in any act or behavior
            in violation of these covenants, SFI agrees that Galaxy shall be
            entitled, in addition to such other remedies and damages as may be
            available to it by law or under this Agreement, to preliminary
            and/or permanent injunctive relief, without the necessity of posting
            a bond, prohibiting SFI from engaging in such act or behavior. The
            provisions of this paragraph shall survive the termination of this
            Agreement.

XI.   NOTICES. Notices hereunder shall be in writing signed by the Party serving
      the same and shall be sent, if mailed, by Registered or Certified U.S.
      Mail, Return Receipt Requested, postage prepaid; by a nationally
      recognized overnight courier; by telefax; or by e-mail; and

              If intended for Galaxy, shall be addressed to:

                           Galaxy Nutritional Foods, Inc.
                           2441 Viscount Row
                           Orlando, FL  32809-6217
                           Attention: Michael Broll
                           Phone: (407) 854-0463
                           Telefax: (407) 854-0491
                           e-mail: mebroll@galaxyfoods.com

                           with a copy (which shall not constitute notice)to:

                           Proskauer Rose LLP
                           1585 Broadway
                           New York, New York 10036
                           Attention: Arnold J. Levine, Esquire
                           Telephone: (212) 969-3310
                           Telefax: (212) 969-2900
                           e-mail: alevine@proskauer.com

                                       14
<PAGE>

              If intended for SFI, shall be addressed to:

                           Schreiber Foods, Inc.
                           425 Pine Street
                           P.O. Box 19010
                           Green Bay, Wisconsin 54307-9010
                           Attention:       Ron Dunford
                           Phone:           (920) 455-6249
                           Telefax:         (920) 455-2226
                           e-mail:          Ron.Dunford@schreiberfoods.com

      Or to such other address as either Party may have furnished in a notice to
      the other from time to time as a place for the service of notice. All such
      notices, shall, when mailed or sent, respectively, be effective (i) three
      days after being deposited in the mails, (ii) one business day after being
      deposited with the express overnight courier service or sent by electronic
      facsimile transmission (with receipt confirmed), or (iii) upon sender's
      receipt of a confirmation of receipt from the recipient if sent by e-mail,
      respectively, addressed as aforesaid.

XII.  CONFIDENTIAL INFORMATION. Each Party acknowledges that in conducting its
      operations, each employs certain trade secrets and other confidential and
      proprietary information and know-how which are valuable, special, unique,
      and proprietary assets of their respective businesses, and which each
      takes reasonable steps to protect from disclosure to third parties
      (hereinafter "Confidential Information"). Each Party acknowledges that as
      a result of the relationship between them, certain Confidential
      Information (including, without limitation, volume, delivery, customer and
      pricing information under this Agreement), may come into the possession of
      the other and/or its key employees. Each Party agrees that it will not,
      except as may in good faith be believed to be required by law or
      regulation, directly or indirectly make use of or knowingly disclose to
      any third-parties, including guests or invitees, such Confidential
      Information without first obtaining the prior written consent of the other
      or until such Party can establish that the same shall have lawfully become
      a matter of public knowledge through no fault of the recipient Party;
      provided, however, that any Intellectual Property that is a trade secret
      under the Uniform Trade Secrets Act, or is statutorily protected by any
      act or issuance of the United States Patent and Trademark Office or any
      state equivalent thereof, shall remain subject to the requirements
      contained in Section X and this Section XII notwithstanding the fact that
      the same has become a matter of public knowledge. Notwithstanding the
      foregoing, each Party may provide such Confidential Information to any
      third party who has expressed an interest in acquiring such Party's
      business (whether by sale of all of its capital stock, all or
      substantially all of its assets, merger, or otherwise), provided, however,
      that such third party shall have executed a confidentiality agreement in
      the form attached hereto as Exhibit D. All plant visits made by Galaxy
      personnel or their representative(s) to an SFI facility will require the
      signing of the standard SFI confidentiality agreement (in the form
      attached hereto as Exhibit C) at the time of the visit.

                                       15
<PAGE>

      Each Party agrees that a breach of this covenant on Confidential
      Information will result in irreparable and continuing damage to the
      non-breaching Party for which money damages may not provide adequate
      relief. Each Party therefore agrees that breach of this covenant
      concerning Confidential Information shall entitle the other to both
      preliminary and permanent injunctive relief, without the necessity of
      posting a bond, as well as money damages insofar as they can be determined
      under the circumstances, together with such other legal and equitable
      remedies as may be available. This Section concerning Confidential
      Information shall survive the expiration or termination of this Agreement.

      SFI acknowledges that Galaxy has certain public reporting obligations
      under the U.S. securities regulations, and that, as a result thereof, a
      copy of this agreement may need to be publicly filed with the Securities
      and Exchange Commission. If Galaxy and its counsel determine that this
      Agreement must be publicly filed with the Securities and Exchange
      Commission, Galaxy shall request confidential treatment in accordance with
      the procedures set forth under Rule 24b-2 of the Securities Exchange Act
      of 1934 under the provisions of 5 USCS ss. 552(b)(4) and corresponding
      regulation 17 C.F.R. ss. 200.80(b)(4) with respect to Exhibit A and
      Exhibit B of this Agreement and any other provision (or portion thereof)
      as SFI may reasonably request.

XIII. FORCE MAJEURE. Excluding any payment obligations herein, if either Party
      hereto is prevented from complying either totally or in part, with any of
      the terms or provisions of this Agreement by reason of Force Majeure that
      is demonstrably beyond its control, then upon written notice to the other
      Party that based on such cause, the requirements of this Agreement, or
      such of its provisions as may be affected, to the extent affected, will be
      suspended and the performance of this Agreement by the Party affected by
      the Force Majeure may be suspended without causing a breach or default of
      this Agreement during the period of such disability (without, however, any
      concomitant extension of the Term); provided, however, that any Party
      prevented from complying shall make all reasonable good faith efforts to
      remove such disability as soon as practicable. Failure to make such
      reasonable good faith efforts shall constitute grounds for the termination
      of this Agreement by the other Party. Notwithstanding any provision of
      this Agreement to the contrary, should an event of Force Majeure prevent
      SFI from supplying Galaxy's requirements of Product, SFI agrees to
      allocate and supply to Galaxy its then available supply of Product on a
      basis that is substantially proportional to the volume of Product SFI
      allocates and supplies to its other retail customers. Such allocation
      shall be based on the then current volumes of Products purchased by Galaxy
      and SFI's other retail customers. Should the occurrence of an event of
      Force Majeure prevent SFI, or be reasonably expected to prevent SFI, from
      supplying Galaxy with its requirements of Product, Galaxy shall have the
      right to enter into a purchasing arrangement for such Products (and only
      such Product as SFI shall not be able to supply Galaxy) during the term of
      such suspension.

                                       16
<PAGE>

XIV.  INTELLECTUAL PROPERTY RIGHTS. Galaxy may not use, without prior written
      consent of SFI, any patents, trademarks, trade names, trade secrets,
      copyright materials, trade dress or other similar intellectual property of
      SFI.

XV.   ASSIGNMENT. This Agreement shall not be assignable by either Party except
      upon the written consent of the other Party, which such consent may be
      withheld for any reason whatsoever; provided, however, that each Party
      shall assign this Agreement in connection with a sale of such Party's
      business (whether by sale of a majority of its capital stock, all or
      substantially all of its assets, merger, or otherwise), the purchaser must
      accept the assignment, and the prior written consent of such other Party
      shall not be required in connection therewith.

XVI.  SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to
      the benefit of each of the Parties hereto and their respective successors
      and assigns (as such are permitted).

XVII. NON-WAIVER. The failure of Galaxy or SFI to enforce any of the rights
      given to either of them under this Agreement, shall not be construed as a
      waiver of the right of Galaxy or SFI to exercise any such rights as to any
      subsequent violations of such covenants, or as a waiver of any of the
      rights given to Galaxy or SFI by reason of any of the other covenants of
      this Agreement.

XVIII. CONSTRUCTION OF AGREEMENT. Words of any gender used in this Agreement
      shall be held to include any other gender, and word in the singular number
      shall be held to include the plural, when the sense requires. Wherever
      used herein the words "Galaxy" or "SFI" shall be deemed to include the
      heirs, personal representatives, successors, and permitted assignees of
      such Parties, unless the context excludes such construction. All exhibits
      attached to this Agreement are a part of and are incorporated into this
      Agreement. This Agreement has been drafted jointly by the Parties and
      shall not be construed against either Party.

XIX.  INVALIDITY OF PROVISIONS. If any term or provision of this Agreement or
      the application thereof to any person, entity or circumstance shall, to
      any extent, be invalid or unenforceable, the remainder of this Agreement,
      or the application of such term or provision to any person, entity or
      circumstance other than those to which it is held invalid or
      unenforceable, shall not be affected thereby.

XX.   HEADINGS. It is understood and agreed that the headings are inserted only
      as a matter of convenience and for reference, and in no way define, limit,
      or describe the scope or intent of this Agreement, nor in any way affect
      this Agreement.

                                       17
<PAGE>

XXI.          GOVERNING LAW. This Agreement shall be construed in accordance
              with the substantive laws of the State of Wisconsin, without
              regard to the application of any conflict of law principles.

XXII.         NO RELATIONSHIP. This Agreement shall not constitute or be
              construed so as to give rise to a partnership or joint venture
              between the Parties. All operations by either Party under the
              terms of this Agreement shall be carried on by such Party
              independently and not as agent of the other. It is intended that
              Galaxy and SFI shall at all times be independent of each other in
              all operations and actions under this Agreement.

XXIII.        INTEGRATION. This Agreement contains the entire agreement and
              understanding concerning the subject matter hereof between Galaxy
              and SFI, and supersedes and replaces any and all prior
              negotiations, proposed agreements and agreements, written or oral.
              Except as otherwise provided herein, this Agreement shall not be
              modified, amended or supplemented, and no provision of this
              Agreement shall be waived by purchase orders, acknowledgments of
              purchase orders, invoices or other documents exchanged between the
              Parties, except by an agreement in writing signed by both Parties.

XXIV.         COUNTERPARTS. This Agreement may be executed simultaneously in two
              or more counterparts, each of which shall be deemed an original
              but all of which together shall constitute one and the same
              agreement.

XXV.          RIGHT OF SET OFF. Neither Party may set off or declare an offset
              against any payment obligation to the other without the written
              agreement of the other Party.

XXVI.         COUNTERPARTS. This Agreement may be executed in one or more
              counterparts , each of which shall be deemed an original, but all
              of which together shall constitute one and the same instrument.

XXVII.        THIRD PARTY BENEFICIARIES. The warranties, guaranties, covenants,
              obligations and duties (including, without limitation,
              indemnification obligations) of SFI hereunder shall be made for
              the benefit of Galaxy and its customers, and all customers of
              Galaxy are and shall be intended third party beneficiaries
              thereof.

                            [Signature page follows]

                                       18
<PAGE>

      IN WITNESS WHEREOF, the Parties hereto have caused this Supply Agreement
to be executed by their duly and lawfully authorized officers.

                                    GALAXY NUTRITIONAL FOODS, INC.

                                    By: /s/ David H. Lipka
                                        -----------------------------------
                                        Name: David H. Lipka
                                        Its:  Chairman

                                    SCHREIBER FOODS, INC.

                                    By: /s/ Ron Dunford
                                        ----------------------------------
                                        Name: Ron Dunford
                                        Its: President and COO of
                                        Schreiber Chain Sales

<PAGE>

                                    EXHIBIT A

                                    PRODUCTS

ITEM NO.           DESCRIPTION
--------           ---------------

                   IWS SLICES

00077              NERY'S SANDWICH SLICES 48/10 2/3OZ
00110              SUNFLOWER FARMS 48/10 2/3OZ
00111              SUNFLOWER FARMS 12/10 2/3OZ
00117              STARFIRE FARMS 48/10 2/3OZ
00138              NERY'S SANDWICH SLICES 12/8OZ
01922              EEZY BRAND CHEDDAR SLICES 48/10 2/3OZ
13191              LITTLE ANGEL'S SANDWICH SLICE 48/10 2/3OZ
20003              DAYCO SANDWICH SLICE 48/10 2/3OZ
20004              DAYCO WHITE SANDWICH SL 48/10 2/3OZ
34020              SOYA SLICE MOZZ 12/6OZ
34025              SOYA SLICE CHED 12/6OZ
34117              BREW VEG SL MOZZ 12/6OZ
34118              BREW VEG SL CHEDDAR 12/6OZ
34125              BREW VEG SL SWISS 12/6OZ
34140              BREW RICE SLICE MOZZ 12/6OZ
34142              BREW RICE SLICE CHED 12/6OZ
34736              AM CHOICE SAND SL 48/10 2/3oz
40005              FIESTA SANDWICH SLICE 36/16OZ
40006              FIESTA SANDWICH SLICE 48/10 2/3OZ
40212              BLUE ROCK SANDWICH SLICES 48/10 2/3OZ
45005              GAL SANDWICH SL 12/8OZ
45010              GAL SANDWICH SL 48/10 2/3OZ
45017              GAL WHIT SAND SLICE 48/ 10 2/3 OZ
45033              GAL PEP JACK SAND SLICE 48/10 2/3OZ
48000              GAL ORG CHEESE FD 12/8OZ
48002              GAL ORG MOZZ CH FD 12/8OZ
49001              GAL MEXICAN SAND SL 48/10 2/3OZ
56020              SUPER A SAND SL 48/10 2/3OZ
64020              SOYMAGE MOZZ SOYSINGLES 12/6OZ
64025              SOYMAGE Y AM SOYSINGLES 12/6OZ
64117              SOYCO MOZZ VEGGY SNGL 12/6OZ
64118              SOYCO YEL AM VEGGY SINGL 12/6OZ
64121              SOY PEP JACK VEG SINGLE 12/6OZ
64125              SOYCO SWISS VEGGY SNGL 12/6OZ
64129              SOYCO CHED VEGGY SNGL 12/6OZ
64137              SOYCO PROV VEG SINGLES 12/6OZ
64140              SOYCO MOZZ RICE SLICE 12/6OZ
64142              SOYCO YEL AM RICE SLICE 12/6OZ
64154              SOYCO PEP JACK RICE SL 12/6OZ
64155              SOYCO SWISS RICE SLICE 12/6OZ
64156              SOYCO CHED RICE SLICE 12/6OZ

<PAGE>

ITEM NO.           DESCRIPTION
--------           ---------------

66000              FARMS CREAMERY SANWICH SL 48/10 2/3OZ
66717              GAL YEL AM VEGGIE SLICE 12/8OZ
66718              GAL PEP JACK VEG SLICE 12/8OZ
66719              GAL PROV VEGGIE SLICE 12/8OZ
66720              GAL MOZZ VEGGIE SLICE 12/8 OZ
66721              GAL SWISS VIEGGIE SLICES 12/8 OZ
66722              GAL CHED VEGGIE SLICE 12/8 OZ
66753              GAL JAL CHED VEGGIE SL 12/8OZ
71125              DEL PORTAL CHED SL 48/10 2/3OZ
71126              DEL PORTAL MOZZ SL 48/10 2/3OZ
80201              DON FRANSISCO SAND SLICE 48/10 2/3OZ
85004              GALAXY SAND SL 12/10 2/3OZ
85010              GAL SANDWICH SL 48/10 2/3OZ-CANADIAN
86717              GAL CAN FL VEG SL 12/10 2/3OZ
86720              GAL MOZZ VEG SL 12/10 2/3OZ-CANADIAN
86722              GAL CHED VEG SL 12/10 2/3OZ-CANADIAN
00195              WILSON AMERICAN 48/10 2/3
00199              WILSON SWISS 48/10 2/3OZ
00703              GMT SUN VALLEY 48/10 2/3
45010-99           GAL SANDWICH SL 48/10 2/3OZ
45017-99           GAL WHIT SAND SLICE 48/ 10 2/3 OZ
49001-99           GAL MEXICAN SAND SL 48/10 2/3OZ
91945-30023        4030 BV SANDWICH SLICE 48/10 2/3OZ
CAN-64117          SOYCO ITALIAN/MOZZ VEGGY SINGLE 12/6OZ
CAN-64118          SOYCO YEL AM VEGGY SINGL 12/6OZ
CAN-64140          SOYCO MOZZ RICE SLICE 12/6OZ
CAN-64142          SOYCO YEL AM RICE SLICE 12/6OZ
ISR-64117          SOYCO MOZZ VEGGY SNGL 12/6OZ
ISR-64120          SOYCO WHITE CHED VEG SNGLS 12/6OZ
ISR-64125          SOYCO SWISS VEGGY SNGL 12/6OZ
ISR-64127          SOYCO GARLIC & HERB 12/6OZ
ISR-64128          SOYCO EDAM SLICES 12/6OZ
ISR-64136          SOYCO FETA VEG SNGL 12/6OZ
ISR-64137          SOYCO PROV VEG SNGL 12/6OZ
ISR-64140          SOYCO MOZZ RICE SLICE 12/6OZ

                   BLOCK
                   -----
24164              GAL SALAD BAR CHED 40#
30062              GALAXY MOZZ SUB 20#
30072              GALAXY IMIT MOZZ 20#
30082              GAL IMIT MOZZ 900404 20#
30102              CHEDDAR IMITATION 20#
30122              SWISS IMITATION 20#
30142              PROVOLONE IMITATION 20#
66272              GALAXY VEGGIE CHED BLOCK 20#

<PAGE>

ITEM NO.           DESCRIPTION
--------           ---------------

66452              GAL MOZZ VEG BLOCK
CH2416AA           SALAD BAR CHED
CH2650EE           IMITATION CHED SHRED BLOCK
CH3010EE           IMITATION CHEDDAR BLOCK
CH3011EE           IMITATION CHEDDAR BLOCK
CH3012EE           IMITATION CHEDDAR BLOCK
CH5904EE           CHEDDAR CHEESE PRODUCT BLOCK
CH6627EE           VEGGIE CHED CHUNK BLOCK
CH6635EE           VEGGIE CHEDDAR SHRED BLOCK
CH7901EE           ORGANIC CHED SHRED/CHUNK BLOCK
CH7951EE           ORGANIC CHEDDDAR SHRED/CHUNK BLOCK
CH8707EE           RICE CHEDDAR BLOCK FOR SHREDS
CH8713EE           RICE CHEDDAR CHUNK BLOCK
CH8803EE           VEGAN CHEDDAR CHUNK BLOCK
CP6623EE           VEGGIE CHIPOTLE CHUNK BLOCK
MJ2652EE           IMITATION MONT JACK SHRED BLOCK
MZ2418EE           SALAD BAR MOZZ BLOCK
MZ3007EE           IMITATION MOZZ BLOCK
MZ3008EE           IMITATION MOZZ BLOCK
MZ3009EE           IMITATION MOZZ BLOCK
MZ6625EE           VEGGIE MOZZ CHUNK BLOCK
MZ6634EE           VEGGIE MOZZ SHRED BLOCK
MZ6650EE           GALAXY VEGGIE MOZZ BLK 20# - ISR
MZ7902EE           ORGANIC MOZZ SHRED/CHUNK BLOCK
MZ7952EE           ORGANIC MOZZ SHRED/CHUNK BLOCK
MZ8708EE           RICE MOZZ SHRED BLOCK
MZ8716EE           RICE MOZZ CHUNK BLOCK
MZ8804EE           VEGAN MOZZ CHUNK BLOCK
PJ2654EE           IMITATION PEPPER JACK SHRED BLOCK
PJ6629EE           VEGGIE PEPPER JACK CHUNK BLOCK
PJ6636EE           VEGGIE PEPPER JACK SHRED BLOCK
PM7100EE           IMITATION PARM BLOCK
PM8706EE           VEGGIE PARM BLOCK 20#
PM8723EE           RICE PARM BLOCK
PM9602EE           VEGGIE PARM/MOZZ/ROMANO BLEND BLOCK

                   SOFT CHEESE
                   ---------------
66728              GAL VEGGIE SOUR CREAM 12/8OZ
64017              SOYMAGE SOUR CREAM 12/8OZ
64138              SOYCO RICE SOUR CREAM 12/8OZ
66729              GAL VEGGIE CREAM CHEESE 12/8OZ
66723              GAL VEGGIE BUTTER 12/8OZ
64141              SOYCO RICE BUT SPREAD 12/8OZ
66783              GALAXY VEGGIE QUESO CHEESE SAUCE 12/8OZ
66784              GALAXY VEGGIE GARLIC/HERB DIP 12/8OZ
64139              SOYCO RICE CREAM CHEESE 12/8OZ
64018              SOYMAGE CREAM CHEESE 12/8OZ

<PAGE>

ITEM NO.           DESCRIPTION
--------           ---------------

                   PULLMAN SLICES
00701              TWOGETHER SANDWICH SLICE-120S 4/5#
11100              GAL INST SAND SLICE-160S 6/5#
89050              GMT COUNTRY LEGEND 160S 4/5#
89100              BLUE RIBBON SNAD SL 160S 4/5#
90100              GAL GOODVALUE SAND SLICE-160S 4/5#
90200              GAL GOODVALUE WH SAND SL-160S 4/5#
04012              EARLY DAWN WHITE 160S 4/5#
18460              BELCA PAST PROCESS SAND SL-160S 4/5#
05076              SOMMERMAID SAND SLICE-126S 4/5#
05078              SOMMERMAID SAND SLICE-160S 4/5#
04016              EARLY DAWN YELLOW 160S 4/5#
99120              GALAXY PP YELLOW SS 160S 4/5#

                   GRATED PARM
66724              GAL PARM VEGGIE TOPPING 12/8OZ
86724              GAL PARM VEGGIE TOPPING 12/8oz-CANADIAN
64149              SOYCO GRATED RICE PARM 12/4OZ
CAN-64149          SOYCO GRATED RICE PARM 12/4OZ
64123              SOYCO GRATED PARM 12/4OZ
64000              SOYMAGE GRATED PARM 12/4OZ
78005              IMITATION PARMESAN 25#
A45080             SUPREME PARMESAN 12/8OZ

                   SHREDS
00114              STARFIRE FARMS TACO SHRED 12/8OZ
00201              SUNFLOWER FARMS JACK SHRED 12/2#
00203              SUNFLOWER FARMS CO-JACK CHED SHRED 12/2#
20001              DAYCO SHRED MOZZ 24/8OZ
20002              DAYCO SHRED CHED 24/8OZ
24161              GALAXY SALAD BAR 4/5#
26500              GALAXY SHRED CHED 12/2#
26520              GALAXY SHRED GOLD/JACK 12/2#
26540              GALAXY SHRED SOUTH OF THE BORDER 12/2#
30071              GALAXY IMIT MOZZ SHRED 4/5#
30081              GAL IMIT MOZZ SHRED 4/5#
30101              CHEDDAR IMITATION 4/5#
30111              GALAXY IMIT CHED SHRED 4/5#
42408              AMERICAN CHOICE CHED SHRED 6/2#
48020              GAL ORG CHED SHRED 12/6OZ
48022              GAL ORG MOZZ SHRED 12/6OZ

<PAGE>

ITEM NO.           DESCRIPTION
--------           ---------------

49000              GAL PIZZA TOPPING 12/8OZ
49004              GAL TACO TOPPING 12/8 OZ
59043              GAL FINE SHRED 6/5#
64244              SOYCO MOZZ RICE SHREDS 12/8OZ
64245              SOYCO CHED RICE SHREDS 12/8OZ
66451              GAL MOZZ VEG SHRED 4/5#
66770              GAL MOZZ VEGGIE SHREDS 12/8OZ
66771              GAL CHED VEGGIE SHREDS 12/8OZ
66772              GAL VEG CHED/PEP JACK SHRED 12/8OZ
66773              GAL VEG PARM/MOZZ/ROM FS 12/6OZ
66774              GAL VEG MJ/CHED SHRED 12/8OZ
80975              AMERICAN CHOICE COLBY JACK SHRED 6/2#
86770              GAL MOZZ VEGGIE SHREDS 12/8OZ-CANADIAN
86771              GAL CHED VEGGIE SHREDS 12/8OZ-CANADIAN
92648              AMERICAN CHOICE MOZZ SHRED 6/2#
96021              GAL VEG PARM/MOZZ/ROM BLEND 4/5#
00280              GMT SUN VALLEY IMITATION CHED. 12/8OZ
00281              GMT SUN VALLEY IMITATION MOZZ. 12/8OZ

                   CHUNKS

48010              GAL ORG CHED CHUNK 12/8OZ
48012              GAL ORG MOZZ CHUNK 12/8OZ
64007              GALAXY VEGAN CHED CHUNK 12/8OZ
64008              GALAXY VEGAN MOZZ CHUNK 12/8OZ
64178              SOYCO RICE CHED CHUNK 12/8OZ
64179              SOYCO RICE MOZZ CHUNK 12/8OZ
66737              GAL CHED VEG CHEF'S AWD CHK 12/8OZ
66754              GAL MOZZ VEG CHEF'S AWD CHK 12/8OZ
66785              GAL PEP JACK VEG CHEF'S AWD CHK 12/8OZ
66786              GALAXY VEGGIE CHIPOTLE CHUNK 12/8OZ
84178              SOYCO RICE CHED CHUNK 12/8OZ-CAN
84179              SOYCO RICE MOZZ CHUNK 12/8OZ-CAN
86737              GAL CHED VEG CHEF'S AWD CHK 12/8OZ-CANADIAN
86754              GAL MOZZ VEG CHEF'S AWD CHK 12/8OZ-CANADIAN

<PAGE>

                                    EXHIBIT B

                                      PRICE

--------------------------------------------------------------------------------
Item      Ingredients, Packaging      +   Distribution     +   Conversion
          and Raw Materials
--------------------------------------------------------------------------------
Cost      ***                         +   ***              +   Fixed per Product
                                                               as set forth on
                                                               the Product
                                                               Matrix, and as
                                                               adjusted pursuant
                                                               to Section
                                                               III.B. hereof.
--------------------------------------------------------------------------------

                                 PRODUCT MATRIX

           Product                           Conversion
                                             Per Pound
------------------------------ ----------------------------------------
IWS Slices                                       ***
Pullman 5 lb. Slices                             ***
Block                                            ***
8 oz. Shred Imitation                            ***
8 oz. Shred Veggie                               ***
2 lb. Shreds                                     ***
Soft Cheese(a)                                   ***
Grated Parmesan(a)                               ***
Chunk(a)                                         ***

(a) Conversion pricing for Soft Cheese, Grated Parmesan and Chunk shall be
subject to adjustment after six months from the Effective Date, as negotiated in
good faith by the parties and, to the extent applicable, in a manner that is as
consistent with the pricing described for the other Product Lines as is
practicable.
<PAGE>

***    Indicates material omitted pursuant to a confidential treatment request
       and filed separately with the Securities and Exchange Commission.LOAN MODIFICATION AGREEMENT

      THIS LOAN MODIFICATION AGREEMENT (this "Agreement") is made and entered
into as of the 30th day of June, 2005, by and between WACHOVIA BANK, NATIONAL
ASSOCIATION, successor by merger to SouthTrust Bank (hereinafter referred to as
"Wachovia" or "SouthTrust") and GALAXY NUTRITIONAL FOODS, INC., a Delaware
corporation, f/k/a Galaxy Foods Company, a Delaware corporation ("Galaxy
Foods").

                              W I T N E S S E T H:

      WHEREAS, Wachovia Loan Number 0955249991/59190 ($10,131,984.85 Renewal
Promissory Note - Galaxy Foods - Wachovia) includes, but is not limited to, the
following loan documents:

      a.    Promissory Note dated March 10, 2000, in the principal amount of
            $8,500,000.00, from Galaxy Foods to SouthTrust;

      b.    Renewal Promissory Note dated September 15, 2000, in the original
            principal amount of $10,000,000.00, from Galaxy Foods to SouthTrust;

      c.    Loan Agreement dated March 10, 2000, between Galaxy Foods and
            SouthTrust;

      d.    Security Agreement dated March 10, 2000, from Galaxy Foods to
            SouthTrust;

      e.    Uniform Commercial Code Financing Statement from Galaxy Foods to
            SouthTrust (recorded on March 28, 2000, in Official Records Book
            5969, Page 1869, Public Records of Orange County, Florida);

      f.    Uniform Commercial Code Financing Statement from Galaxy Foods to
            SouthTrust (filed on March 30, 2000 with the Florida Secretary of
            State, File #200000074062);

      g.    Uniform Commercial Code Financing Statement of Change from Galaxy
            Foods to SouthTrust (filed on November 19, 2001 with the Florida
            Secretary of State, File #200190380894);

      h.    Uniform Commercial Code Financing Statement Amendment (filed on
            January 7, 2005 with the Florida Secretary of State, File
            #200508698098);

      i.    Amendment of Loan Agreement dated August 14, 2000, from Galaxy Foods
            to SouthTrust;

      j.    Amendment to Security Agreement dated October, 2000, from Galaxy
            Foods to SouthTrust;

<PAGE>

      k.    Renewal Promissory Note dated May 28, 2003, in the original
            principal amount of $10,131,984.85, from Galaxy Foods to SouthTrust;

      l.    Amendment of Security Agreement dated May 28, 2003, from Galaxy
            Foods to SouthTrust; and

      m.    Amendment of Loan Agreement dated May 28, 2003, from Galaxy Foods to
            SouthTrust.

The documents described above and all additional loan documents relating to the
above described documents or the Loan shall be referred to herein collectively
as the "Loan Documents". For purposes of this Agreement the term "Loan" shall
mean Wachovia Loan Number 0955249991/59190, represented by the Loan Documents.
For purposes of this Agreement, the term "Loan Agreement" shall mean,
collectively, the documents described in subsections c., i., and m. above, as
the same have been, or are deemed to have been, amended from time to time.

      WHEREAS, the parties to this Agreement desire to modify the
above-referenced Loan Documents, which are the subject of the Loan, according to
the following terms and conditions.

      NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:

      1. REMAINING PRINCIPAL BALANCE AND PAYMENTS UNDER $10,131,984.85 RENEWAL
PROMISSORY NOTE AND RELATED LOAN DOCUMENTS (LOAN NUMBER 0955249991/59190). The
parties hereto agree that the Loan will mature on July 31, 2006. The current
principal balance due under the Loan is $7,911,984.85 (as of June 29, 2005). In
connection with this Agreement, Galaxy Foods shall pay to Wachovia a total sum
of $60,000.00 (consisting of: (a) $50,000.00 representing the loan modification
fee; and (b) $10,000.00 representing Wachovia's attorneys' fees and costs),
which sum shall be payable in two installments of $30,000. The first installment
shall be payable upon the closing of this loan modification and the second shall
be payable on August 1, 2005. Commencing on July 1, 2005, and continuing on the
first day of each month thereafter until July 31, 2006 at which time the Loan
shall mature and be due and all sums due thereunder, including all principal,
interest, late charges, costs and attorneys' fees shall be payable in full,
Galaxy Foods shall make a monthly payment in the amount of $110,000 in
principal, together with accrued but unpaid interest (Wachovia's Base Rate + 1%)
to Wachovia. Should Galaxy Foods fail to pay when due, subject to any applicable
grace or cure periods, any of the sums or monthly payments described above, or
to satisfy the Loan in full by July 31, 2006, time being expressly of the
essence, then Wachovia shall be entitled to the remedies set forth in the Loan
Documents.

      2. WAIVER OF LOAN COVENANTS, Notwithstanding any provision in the Loan
Documents to the contrary, Wachovia hereby waives the application of, and
compliance by Galaxy Foods with, the three (3) covenants in the Loan Documents
related to Galaxy Foods' Tangible Net Worth (Section 5.01(j) of the Loan
Agreement as amended), Total Liabilities to Tangible Net Worth (Section 5.01(k)
of the Loan Agreement as amended) and Maximum Funded Debt to EBITDA (Section
5.01(l) of the Loan Agreement as amended) (as each such term is defined and
referenced in the Loan Documents), such waiver to be effective from the original
date of the Loan through July 31, 2006.

                                       2
<PAGE>

      3. SUBORDINATION AGREEMENT. Simultaneously with the execution and delivery
of this Agreement, Galaxy Foods has delivered or caused to be delivered to
Wachovia, a subordination agreement from Textron Financial Corporation and any
other parties relating to all of the collateral securing the Loan, in a form
acceptable to Wachovia in its sole discretion.

      4. DUE ON SALE OR REFINANCING CLAUSE. In addition to all other rights or
restrictions conferred or imposed upon the parties under the Loan Documents, in
the event of a sale, refinancing or other conveyance of all or substantially all
of the property encumbered by the Loan Documents for the Loan, all sums owed to
Wachovia under the Loan Documents for the Loan shall become due and payable
immediately and in full upon any such sale, refinancing or other conveyance.

      5. RATIFICATION OF LOAN DOCUMENTS. The aforesaid original Loan Documents,
and all of their terms, covenants, conditions, agreements and stipulations,
shall remain in full force and effect, except as specifically herein modified.

      6. RELEASE BY GALAXY FOODS. Galaxy Foods acknowledges that there are no
defenses, claims, offsets and/or setoffs against Wachovia or any of the amounts
due under the Loan Documents, including this Agreement. Except for its rights
under this Agreement, Galaxy Foods fully, wholly, absolutely and unconditionally
releases, waives, relinquishes and gives up forever, all claims, demands,
setoffs, defenses, counterclaims and causes of action of any kind against
Wachovia.

      7. WAIVER OF JURY TRIAL. Wachovia and Galaxy Foods waives trial by jury in
any proceeding which refers or relates to the Loan Documents, including this
Agreement.

      8. ATTORNEYS' FEES AND COSTS CONCERNING AGREEMENT. The prevailing party
shall be entitled to recover its reasonable costs and attorneys' fees, at both
the trial and appellate levels, in any litigation concerning this Agreement or
the other Loan Documents.

      9. AGREEMENT TO BE INTERPRETED BY LAWS OF FLORIDA. This Agreement shall be
interpreted, construed and enforced in accordance with the laws of the State of
Florida without regard to conflicts of laws principles.

      10. EFFECTIVE DATE/CLOSING. The effective date of this Agreement shall be
July 1, 2005.

                                       3
<PAGE>

      11. DELIVERY OF PAYMENTS TO WACHOVIA. All payments hereunder are to be
delivered to Wachovia/SouthTrust Bank as directed on the monthly invoices.

      12. AGREEMENT TO EXECUTE AND DELIVER DOCUMENTS AND COOPERATE. The parties
agree that they respectively shall, upon being requested by the other party to
do so, execute and deliver promptly any and all such notes, agreements,
guaranties, deeds, assignments, authorizations, instruments, papers or documents
of any and every kind and character as may be reasonably required, necessary or
proper for the purpose of giving full force and effect to this Agreement and to
the covenants, conditions, and agreements contained herein. Furthermore, the
parties agree to cooperate and to do all things reasonably necessary to
accomplish the terms of this Agreement.

      13. COPIES. Any true executed copy of this Agreement shall be deemed to
constitute an original of the same.

      14. CONSTRUCTION OF AGREEMENT AND INTERPRETATION OF AMBIGUITIES OR
DOUBTFUL LANGUAGE. No provision in this Agreement shall be interpreted for or
against either party because that party's attorney drafted such provision.

      15. ENTIRE AGREEMENT. This Agreement represents the full, complete and
entire agreement between the parties concerning the modification of the Loan.
This Agreement may only be modified in writing, signed by all parties.
Notwithstanding the foregoing, all Loan Documents shall remain in full force and
effect until fully satisfied according to the terms and conditions of the Loan
Documents, as modified by this Agreement.

       [remainder of page intentionally left blank - signatures to follow]

                                       4
<PAGE>

      IN WITNESS WHEREOF, this Loan Modification Agreement has been agreed to
and executed by the undersigned as of this 30th day of June, 2005.

                                   GALAXY NUTRITIONAL FOODS, INC., a Delaware
                                   corporation,
                                   f/k/a Galaxy Foods Company, a Delaware
                                   corporation

---------------------------        By: /s/ Salvatore Furnari
                                       --------------------------------
PRINTED:                               SALVATORE FURNARI
        -------------------            As Its Chief Financial Officer

---------------------------
PRINTED:
        -------------------

                                   WACHOVIA BANK, NATIONAL ASSOCIATION,
                                   successor by merger to
                                   SouthTrust Bank

---------------------------      By: /s/ Kathi M. Gilbert
                                      -----------------------------------------
PRINTED:                              KATHI M. GILBERT
         ------------------           As Its Senior Vice President
---------------------------
PRINTED:
        -------------------

                                       5

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