Document:

FIRST AMENDMENT TO LOAN AGREEMENT AND STOCK PLEDGE AGREEMENT

     THIS FIRST  AMENDMENT TO LOAN  AGREEMENT AND STOCK PLEDGE  AGREEMENT  (this
"Amendment") is made as of this 16TH day of December, 2002 by and between Galaxy
Nutritional  Foods,  Inc.,  f/n/a Galaxy Foods Company,  a Delaware  corporation
(together  with  any  successor   thereto,   the  "SECURED  PARTY")  and  Morini
Investments Limited Partnership, a Delaware limited partnership (the "PLEDGOR").
Terms not expressly  defined in this Amendment shall have the meanings  ascribed
to them in the Pledge Agreement (as defined below).

     WHEREAS,  Angelo S. Morini  ("MORINI")  beneficially  owns and controls the
Pledgor; and

     WHEREAS,  the  Secured  Party and Morini  entered  into that  certain  Loan
Agreement  dated  as of June  15,  1999  (the  "LOAN  AGREEMENT"),  whereby  two
promissory  notes  previously  delivered  to the  Secured  Party by Morini  were
modified and  consolidated  into a new promissory  note delivered to the Secured
Party by Morini in the principal amount of $12,772,200 (the "NOTE"); and

     WHEREAS,  pursuant to the terms of the Loan  Agreement  and as security for
the indebtedness evidenced by the Note (the "INDEBTEDNESS"), the Pledgor and the
Secured Party entered into that certain Stock Pledge Agreement dated as June 15,
1999 (the "PLEDGE AGREEMENT"), whereby the Pledgor pledged certain of its shares
of the Secured Party's common stock to the Secured Party; and

     WHEREAS,  as a result of a scrivener's  error,  the Loan  Agreement and the
Pledge  Agreement  stated an incorrect  number of shares of the Secured  Party's
common stock that secured the Indebtedness; and

     WHEREAS, the Secured Party, Morini and the Pledgor desire to amend the Loan
Agreement and the Pledge  Agreement to state the correct number of shares of the
Secured  Party's  common  stock  pledged  to the  Secured  Party to  secure  the
Indebtedness.

     NOW THEREFORE,  in  consideration of the foregoing and the mutual covenants
and agreement hereinafter set forth, the parties agree as follows:

1. RECITALS. The above recitals are true and correct and are incorporated herein
by this reference.

2. AMENDMENTS TO LOAN AGREEMENT AND PLEDGE AGREEMENT.

     (a) Section 2. of the Loan  Agreement  entitled  "SECURITY FOR THE LOAN" is
hereby amended by deleting "2,571,429" and inserting in lieu thereof "2,914,286"
and by deleting  the phrase  "the  outstanding  principal  balance of" from such
Section.

<PAGE>

     (b)  Paragraph  3.  of  the  section  in  the  Pledge  Agreement   entitled
"BACKGROUND",  is hereby amended by deleting  "2,571,429"  and inserting in lieu
thereof "2,914,286".

3. FULL FORCE AND EFFECT.  All other  provisions of the Pledge  Agreement  shall
remain in full force and effect,  unaltered except as expressly  provided above,
and this Amendment shall not be deemed a novation.

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

     IN WITNESS WHEREOF,  the undersigned have executed this Amendment as of the
day and year written above.

                                        GALAXY  NUTRITIONAL FOODS, INC.,
                                        a Delaware corporation

                                        By: /s/ Angelo S. Morini
                                            -----------------------------
                                        Name: Angelo S. Morini
                                              ---------------------------
                                        Title: Chair., Pres. & CEO
                                               --------------------------

                                        MORINI INVESTMENTS LIMITED
                                        PARTNERSHIP, a Delaware limited
                                        partnership

                                        By: Morini Investments, LLC, a
                                            Delaware limited liability company,
                                            its General Partner

                                        By: /s/ Angelo S. Morini
                                            -----------------------------
                                            Angelo S. Morini
                                            President

                                       2
<PAGE>GALAXY FOODS COMPANY

                      NON-QUALIFIED STOCK OPTION AGREEMENT

     Galaxy Foods Company, a Delaware corporation (the"Company"),  hereby grants
as of the 15th of June, 1999, to ANGELO S. MORINI,  (the "Optionee"),  an option
to purchase a maximum of 1,357,000  shares of its Common Stock,  $.01 par value,
at the price of $3.3125 per share (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 IF EMPLOYMENT CONTINUES.  If the Optionee has continued
to be employed by the Company on the following  dates, the Optionee may exercise
the Option for the number of shares set opposite the applicable date:

     As of the date hereof          -      1,357,000

     The foregoing rights are cumulative and, while the Optionee continues to be
employed by the Company, all vested options may be exercised up to and including
the date which is ten years from the date hereof.  All of the  foregoing  rights
are subject to Articles 4 and 5, as  appropriate,  if the Optionee  ceases to be
employed by the Company or dies or becomes  disabled  while in the employ of the
Company.

     3. TERMINATION OF EMPLOYMENT.  If the Optionee ceases to be employed by the
Company, other than by reason of death or disability as defined in Article 5, no
further  installments  of the Option  shall  become  exercisable  and the vested
portion of the Option shall terminate at the earlier of sixty (60) days from the
date  employment  ceases or the scheduled  expiration  date.  In such case,  the
Optionee's  only rights  hereunder  shall be those which are properly  exercised
before the termination of the Option.

     4.  DEATH;  DISABILITY.  If the  Optionee  dies  while in the employ of the
Company,  the  Option  may be  exercised,  to the extent of the number of shares
vested as of the date of his death, by his estate,  personal  representative  or
beneficiary  to whom the Option has been assigned  pursuant to Article 9, at any
time within 180 days after the date of death,  but not later than the  scheduled
expiration  date. If the Optionee ceases to be employed by the Company by reason
of his disability  (as defined in the Plan),  the Option may be exercised to the
extent exercisable on the date of the termination of his employment, at any time
within  180 days  after  such  termination,  but not  later  than the  scheduled
expiration  date.  At the  expiration  of such 180 day  period or the  scheduled
expiration date,  whichever is the earlier, the Option shall terminate and be of
no further force and effect.

<PAGE>

     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.

     6. PAYMENT OF 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 person  exercising  the Option
(or,  if the Option  shall be  exercised  by the  Optionee  and  another  person
jointly,  with right and  survivorship) and shall be delivered as provided above
to or upon the written order of the person or persons exercising 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 have no
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 in the Plan 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.  It is the purpose of the
Option to encourage  the Optionee to work for the best  interests of the Company
and its stockholders.  Since, for example,  that might require the issuance of a
stock dividend or a merger with another  corporation,  the purpose of the Option
would not be served if such stock dividend,  merger or similar  occurrence would
cause the  Optionee's  rights  hereunder to be diluted or terminated and thus be
contrary to the  Optionee's  interest.  The 1996 Stock Plan  contains  extensive
provisions   designed  to  preserve  options  at  full  value  in  a  number  of
contingencies.  Therefore, provisions in the Plan for adjustment with respect to
stock subject to options and the related  provisions  with respect to successors
to the business of the Company are hereby made applicable

<PAGE>

hereunder and are  incorporated  herein by  reference.  In  particular,  without
affecting  the  generality  of the  foregoing,  it is  understood  that  for the
purposes  of  Articles 3 through 5 hereof,  both  inclusive,  employment  by the
Company includes employment by a Related Corporation as defined in the Plan.

     12. PROVISION OF  DOCUMENTATION OF OPTIONEE.  By signing this Agreement the
Optionee acknowledges receipt of a copy of this Agreement.

     13. EARLY DISPOSITION. The Employee agrees to notify the Company in writing
immediately  after the Employee makes a Disqualifying  Disposition of any Common
Stock  received  pursuant  to the  exercise  of  this  option.  A  Disqualifying
Disposition is any disposition  (including any sale) of such Common Stock before
the later of (a) two years after the date the  Employee  was granted this option
or (b) one year after the date the Employee  acquired Common Stock be exercising
this option.  If the Employee has died before such stock is sold,  these holding
period  requirements  do not apply and no  Disqualifying  Disposition  can occur
thereafter. The Employee also agrees to provide the Company with any information
which  it  shall  request   concerning  any  such   disposition.   The  Employee
acknowledges  that he or she will  forfeit the  favorable  income tax  treatment
otherwise  available with respect to the exercise of this incentive stock option
if he or she makes a  Disqualifying  Disposition  of the stock  received  on the
exercise of this option.

     14.  GOVERNING LAW. This Agreement  shall be governed by and interpreted in
accordance with the internal laws of the State of Delaware.

     15. EXPIRATION.  This Option shall expire at 5:00 p.m. Orlando time on June
15, 2009.  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,  and the Optionee  whose  signature  appears below  acknowledges
receipt and acceptance of an original copy of this Agreement.

OPTIONEE                                GALAXY FOODS COMPANY

/s/ Angelo S. Morini                    By: /s/ Cynthia L. Hunter
----------------------------------          -------------------------------

Title: Chairman, President & CEO
       ---------------------------

<PAGE>

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