Document:

SOFTWARE LICENSING AND SUPPORT AGREEMENT

between

XML TECHNOLOGIES, INC.

and

IWAYSOFTWARE COMPANY, AN INFORMATION BUILDERS COMPANY

        This Software Licensing and Support Agreement (this "Agreement") is entered into this 14th day of June 2002, by and between XML Technologies, Inc. ("Licensor"), with its principal office at 230 Park Avenue, Suite 1552, New York, New York 10169, and Information Builders, Inc., with its principal office at Two Penn Plaza, New York, N.Y. 10121-2898 ("IBI"), which conducts certain of its business under the name Iway Software Company.  (Both IBI and Iway are collectively referred to herein as "Iway.") 

W I T N E S S E T H:

        WHEREAS, Licensor is the sole and exclusive owner of a proprietary software product known as GoXML Transform ("Transform"), which is more fully described in Exhibit A hereto; and

        WHEREAS, Iway is the owner of certain proprietary software products which it licenses to its customers; and

        WHEREAS, Iway currently embeds a customized version of Transform known as GTI in software which Iway licenses to its customers; and

        WHEREAS, the parties intend that Transform and GTI shall have the same functionality; and

        WHEREAS, Iway desires to acquire certain additional rights in GTI and to provide for continuing maintenance of GTI by Licensor,

        NOW, THEREFORE, upon the terms and conditions hereinafter set forth, the parties hereby agree as follows:

        I.      Definitions

                A.        "Iway Products" means any current software programs marketed by Iway, and such other software products as may from time to time hereinafter be developed and marketed by it including, but not limited to, products for use on mainframes, midrange and personal computers, servers, and web applications.

                B.        "Transform" means each currently available commercial version of Licensor's proprietary software as described in Exhibit A, and any future enhancements, upgrades, updates, or new versions of such software created by Licensor during the term of this Agreement.

                C.        GTI means the version of Transform created by Licensor for use with Iway Products, and having the same functionability as Transform.

        II.         Delivery of GTI and Documentation; Use By IBI

                A.        Simultaneously with the execution and delivery of this Agreement and payment of the Royalty specified in Section IV(A), Licensor shall deliver to Iway (i) GTI in both source code and object code form, and (ii) all written documentation including, but not limited to, user manuals and programmer notes, as will describe GTI and its functions and use, and will permit Iway to use, upgrade, modify, or enhance GTI for use with Iway Products.

                B.        Any future derivative works (including, but not limited to, recoding in another language), enhancements, upgrades, updates and new versions of Transform that are subsequently made commercially available by Licensor shall be provided without charge to Iway in versions compatible with GTI simultaneously with their being made commercially available.

                C.        Licensor shall provide Iway with GTI and the associated documentation in such form, manner and quantity as may be reasonably required by Iway.

                D.        Iway shall embed GTI in its Iway Products.  Iway in its sole discretion, may determine (a) which Iway Products shall be embedded with GTI, (b) to add GTI to other or new Iway Products, (c) to remove GTI from any or all Iway Products, and (d) whether to provide maintenance on such Iway Products.  Iway will provide Licensor quarterly with a current list of Iway Products in which GTI is embedded.

                E.        Iway shall be responsible for the duplication and distribution of all programs and written materials, and may modify same as reasonably required.

               
F.        Iway may make revisions or modifications to the GTI Source Code in connection with the use of GTI with Iway Products.  During the Term of this Agreement, prior to implementing any such revision or modification IBI shall provide same to Licensor.  Within thirty (30) days of its receipt thereof, Licensor shall advise Iway of any changes required to be made to correct bugs, errors, or omissions therein.  Failure to advise Iway within such time shall be deemed to signify Licensor's approval.  Thereafter Iway may implement such revision or modification and it shall be deemed to constitute GTI licensed to Iway under the Agreement.  Iway shall have title to all such revisions or modifications prepared by it.  Licensor hereby is granted an irrevocable, perpetual, worldwide, nonexclusive license to all such revisions and modifications.

       III.       Grant of License; Terms; Duration

                A.        Licensor hereby grants to Iway a perpetual, non-exclusive, world wide license to use, sublicense and distribute GTI, including documentation, but only as an embedded component of Iway Products, and only for use by Iway's customers including, without limitation, end users, service bureaus, time-share operators, systems integrators and value added resellers.  This license specifically includes the source code to GTI and all patents, trademarks, copyrights, trade secrets and other intellectual property rights therein.

                B.        The terms upon which Iway provides GTI to its customers shall be the same as those terms upon which Iway licenses its own Iway Products in any particular transaction.

                C.        Iway may not market GTI as a standalone product, or other than as an embedded component of Iway Products.

       IV.       Royalties

                A.       Simultaneously with the execution and delivery of this Agreement and receipt by Iway of the deliverables described in Section II, Iway shall pay Licensor the sum of $500,000.

                B.       Upon issuance by Iway, at any time during the Term hereof as set forth in Section X, of a license for any Iway Product in which GTI is embedded, Iway shall pay Licensor a royalty of 15% of the license fee billed and received by Iway with respect to the licensed Iway Product in which GTI is embedded.

                C.       Iway may offer Iway Products in which GTI is embedded on a royalty free trial basis.  No payment shall be due to Licensor unless the trial license is converted to a paying license.

                D.       Iway shall set the fees at which it licenses the Iway Products in which GTI is embedded, and the maintenance charges thereon.  Iway agrees not to provide such Iway Products at unreasonably low prices or as a loss leader.

                E.       Subject to and conditioned upon Licensor's compliance with its obligations under this Agreement, Iway guaranties Licensor a payment of $250,000 during each of the first three years of the Term for royalties and maintenance fees (as provided for in
SectionV).

                F.       Within forty-five (45) days of the end of each calendar quarter Iway shall account for and pay-over to Licensor the royalties owed for the sublicenses issued by Iway during the prior quarter, or portion thereof for which royalties are due.

                G.       Royalties hereunder shall be paid to Licensor only when, as, and if received by Iway without claim of offset or defense; and any costs of collection shall be allocated ratably and deducted.

                H.       If the royalties paid by Iway to Licensor pursuant to this Section IV plus the maintenance fees paid by Iway to Licensor pursuant to Section V attributable to each of the first three years of the Term do not equal $250,000 for each such year, IBI shall pay the difference with the last royalty payment for such year.

                I.       If Iway should refund all or part of any license fees received by it upon Iway Software in which GTI was embedded, Iway shall be entitled to a pro rata refund or credit of the fee previously paid to Licensor.

                J.       Within sixty (60) days of receipt of each quarterly statement Licensor may designate, at its sole cost and expense, a certified public accountant, reasonably agreeable to Iway, to review the relevant records.  Such review shall be conducted at mutually agreeable times and places and without undue disturbance to Iway's operations.  Any agreed upon adjustments shall be paid by Iway with thirty (30) days.  Unless such a review is requested by Licensor, each quarterly statement shall be final and binding.

              
K.       All payments and computations of amounts due shall be net of all applicable sales and use taxes and any import duties.

       V.       Maintenance

              A.       Licensor covenants that during the Term it will, in consideration of the payments to it pursuant to Section IV and this Section V, maintain GTI provided to Iway under this Agreement (including modifications or revisions made by Iway).  Licensor shall use its best commercial efforts in providing such maintenance. 

              B.       Licensor shall provide designated Iway personnel with reasonable telephone support, and such additional support as may be reasonably required.

              C.       Maintenance shall be provided to Iway for its internal purposes and on behalf of any Iway customer who, under its license, maintenance, or other agreement with Iway, is entitled to receive such maintenance.

              D.       Licensor shall respond to all Iway requests for maintenance promptly and accurately and shall immediately correct any response which it determines to have been incorrect.

              E.       In consideration of Licensor's provision of such maintenance service, Iway shall pay to Licensor fifteen percent (15%) of the maintenance fees received by Iway on all Iway Products in which GTI is embedded.  The provisions of Section IV shall be applicable to such payments.

      VI.       Proprietary Rights; Confidentiality; Marketing; Competition

              A.       Except for the rights granted to Iway hereunder, title to, and ownership of GTI, including any improved versions which are prepared by Licensor, including all intellectual property rights thereto, shall at all times remain solely and exclusively with Licensor.  Iway agrees to provide the same level of diligence in protecting Licensor's proprietary rights as it does in protecting its own such rights.

              B.       Except as expressly set forth herein, neither party acquires any right, title or interest in the proprietary rights, trade secrets, trademarks, tradenames, intellectual property, marketing information or other confidential information of the other.  Each party shall protect such material of the other to the same degree its protects its own such material.

              C.       Iway shall take commercially reasonable steps to market GTI.  The parties shall cooperate in the marketing of GTI and shall render such assistance to each other as is reasonably required.  Neither party acquires any right to market the products of the other, or to act as its sales agent or representative.

              D.       Each party may use the name and logo of the other in advertising and promotion to the extent reasonably required to effectuate this Agreement and may state that Iway provides GTI under sublicense from Licensor.  Either party may distribute materials which accurately describe the functionality of GTI, Iway's Products, and Licensor's products.  All such materials shall be promptly exchanged and each party will discontinue the use of any material which the other reasonably finds to be objectionable, outdated, or inaccurate.

              E.       Upon execution and delivery of this Agreement, the parties shall issue a mutually agreed upon joint press release.

              F.       This is a nonexclusive arrangement.  Each of the parties is free to contract with others and to market competing products.  Licensor may market Transform to other software suppliers and to end-users.

              G.       Except as specifically set forth herein, neither party has any right to disclose, publish, disseminate or use (a) any source code belonging to the other party, (b) any financial statistical, or personnel data of the other party, or (c) the business or marketing plans of the other party.

       VII.       Licensor's Warranties of Functionality

              A.       Licensor warrants that GTI shall perform substantially the same functions as Transform and will function substantially as described in the applicable documentation, as modified from time to time.

              B.       GTI (and the tapes or other media in which it is embedded) shall not (a) contain any malicious code, backdoor, timebomb or other disabling device, or viruses; (b) alter, damage, or erase any data or software without the intent and control of person operating the computing equipment on which it resides; or (c) permit unauthorized access to data or data processing systems.

              C.       Licensor's obligation to Iway under the above warranties shall be to remedy or repair, as soon as reasonably practicable, all substantial and demonstrable errors and malfunctions in GTI.  Licensor may provide either an up-date of the affected item or an alternative method which has substantially the same functionality.

              D.       Licensor shall indemnify and hold Iway harmless from any loss, costs, damage or expense (including legal fees incurred) arising out of claims by third parties as to any malfunction, error or omission in GTI.

              E.       EXCEPT AS SPECIFIED HEREIN, NO OTHER WARRANTIES, WHETHER EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, ARE MADE BY LICENSOR.

       VIII.       Licensor's Warranties of Ownership

              A.       Licensor warrants that it owns all of the right, title, and interest in and to GTI licensed to Iway and agrees to defend or settle, at its option, any action brought against Iway or its sublicensees arising from any claim that use of the GTI under the terms of this Agreement infringes any patent, copyright, trademark, trade secret or other proprietary right belonging to a third party ("Third Party Claim"), and to hold Iway, its affiliates, and its sublicensees harmless from any and all liabilities, losses, costs, damages, expenses (including legal fees incurred) that result from any such Third Party Claim.

              B.       Licensor's obligations are conditioned upon: (1) Licensor being promptly notified in writing of any Third Party Claim; (2) Iway cooperating with Licensor in the conduct of the defense of any Third Party Claim and all negotiations of a settlement or compromise; and (3) the Third Party Claim shall not have arisen due to unauthorized acts or misconduct of Iway.

              C.       If GTI which is the subject of any sublicense becomes the subject of a Third Party Claim, Licensor may at its option and expense either (a) obtain an appropriate license for the end user from the party asserting the Third Party Claim, (b) replace or modify GTI (or parts thereof) that is the subject of the Third Party Claim so that it is functionally equivalent and no longer infringing, or (c) refund the license fees paid for the infringing items.  Upon such performance, except for its indemnification obligations set forth above, Licensor shall have no further liability to Iway.

       IX.       Limitation of Liability

                EXCEPT FOR LICENSOR'S LIABILITY PURSUANT TO SECTIONS VII AND VIII OF THIS AGREEMENT, OR FOR PERSONAL INJURY OR PHYSICAL LOSS OF, OR DAMAGE TO PROPERTY, IN NO EVENT SHALL EITHER PARTY HAVE ANY LIABILITY, WHETHER BASED ON CONTRACT, TORT (INCLUDING WITHOUT LIMITATION NEGLIGENCE), WARRANTY OR ANY OTHER LEGAL OR EQUITABLE THEORY, FOR CONSEQUENTIAL, INDIRECT, SPECIAL, PUNITIVE, OR EXEMPLARY DAMAGES SUFFERED BY THE OTHER PARTY INCLUDING, WITHOUT LIMITATION, LOSS OF PROFITS, REVENUE, DATA OR USE, ARISING FROM OR RELATING TO THIS AGREEMENT OR THE BREACH THEREOF, OR ANY CLAIM RELATING THERETO, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSSES OR DAMAGES. 

       X.       Term; Termination

              A.       This Agreement shall become effective immediately upon execution by the parties and shall remain in effect for a period of three years (the "Term"), unless terminated earlier in accordance with the default and termination provisions of this Agreement.  

              B.       This Agreement shall be automatically renewed for successive one year Terms unless either party gives notice of nonrenewal, in writing, at least ninety (90) days prior to expiration of the initial or any renewal Term.

              C.       This Agreement may be terminated by either party upon thirty (30) days written notice for breach of any material term of this Agreement which is not cured within thirty (30) days of receipt of written notification of such breach, or if not curable within such thirty (30) day period, the breaching party has diligently commenced to cure such breach during such cure period.  If this Agreement is terminated due to Licensor's uncured default, Iway's obligation to pay royalties immediately ceases and Iway shall have no obligation to pay the minimum guaranteed royalty due for the year in which such termination occurred.  

              D.       Notwithstanding any termination, Iway shall have the right to continue to exercise all of the rights granted to it including, without limitation, the perpetual, nonexclusive, worldwide rights to GTI granted to it pursuant to this Agreement.

              E.       All sublicenses granted by Iway pursuant to this Agreement shall remain in full force and effect notwithstanding any termination, and Iway may grant such sublicenses thereafter.

              F.       Within 45 of the end of the quarter in which termination of this Agreement has occurred, Iway shall pay all royalties and maintenance fees owed to Licensor.  The minimum fee provided for in Section IV(E) shall be pro-rated.

       XI.       Assignment; Change of Ownership

              A.       Licensor may not assign this Agreement without Iway's written permission, which shall not be unreasonably withheld, except that Iway may grant or withhold such consent in its sole discretion in the event of an attempted assignment to an entity which Iway determines to be a competitor.

              B.       Iway may not assign this Agreement without Licensor's written consent, which shall not be unreasonably withheld.  Iway may, however, without such consent, assign this Agreement to an entity which acquires all or a portion of its business and is reasonably able to perform its obligations.

              C.       A change of control of either party shall be deemed to be an assignment of this Agreement.

              D.       Notice of any assignment shall be given as promptly as possible and within thirty (30) days.  In the event of any assignment without such permission, the other party may terminate this Agreement.

       XII       General Provisions

              A.       All references in this Agreement to Iway shall be read as Iway Software Company or Information Builders, Inc. (including any present or future subsidiary or related entities), or both.  Licensor recognizes and agrees that the name Iway may be changed or discontinued, and that the Iway Products may be marketed under IBI's name or such other name as IBI or Iway determines.

              A.       Upon execution of this Agreement, the agreement dated _____________ between the parties shall terminate with respect to the provision of GTI by Licensor to Iway, but shall remain in full force and effect as to Iway's rights and obligations with respect to the marketing of other products of Licensor as set forth therein.

              B.       Iway shall provide Licensor with one contact to deal with all technical issues and one contact to deal with all sales issues.  The assigned personnel and their contact information shall be given upon execution of this Agreement.

              C.       The parties shall keep the terms of this Agreement confidential.

              D.       The parties to this Agreement are independent of one another.  This Agreement creates only the relationship of licensee and licensor, and not of franchisee or franchisor, joint venture, association, partnership, or any other form of business organization or relationship.  Neither party shall have any right, power or authority to bind the other or to assume, create, or incur any expenses, liability or obligation, express or implied, on behalf of the other.

              E.       Notices hereunder shall be given either by (i) hand delivery or Fax (with a hard copy sent by ordinary mail the same day) or (ii) overnight delivery service.  Hand delivery and Fax notice shall be effective the date of transmission (provided an electronic report of receipt of any fax notice is generated by the machine transmitting same); overnight delivery shall be effective the following business day (provided such Notice is delivered to the carrier prior to such carrier's deadline for next day delivery).  Notices shall be given to the following (unless changed by proper Notice hereunder):

	 	
To Licensor:

	
	
XML Technologies, Inc.

230 Park Avenue, Suite 1552

New York, New York  10121-2848

Attn:  Legal 

	 	
To Iway:

	
	
Iwaysoftware, an Information Builders company

Two Penn Plaza

New York, NY  10121-2898

Attn:  Vice President/Finance

              F.       No party has made any statement or representation to induce the entry of this Agreement except as specifically set forth.

              G.       This Agreement contains the entire Agreement of the parties and all prior discussions, negotiations, letters of intent and understandings are merged herein and shall not survive.

              H.       This Agreement may not be amended except by an instrument signed by the parties.  This Agreement may be signed in counterparts and by facsimile.

              J.       This Agreement shall bind the parties and their permitted successors and assigns.

              K.       The illegality or unenforceability of any provision hereof shall not effect or render illegal or unenforceable the remaining provisions hereof.

              L.       The waiver by either party of the breach of any provision hereof shall not constitute the waiver of the subsequent breach of the same or any other provision.

              M.       If, as a result of circumstances beyond the control of a party to this Agreement, including, without limitation, acts of war or civil commotion, industrial disputes or natural disaster, said party cannot perform its commitments arising under this Agreement, the principle of force majeure shall apply and the rights and obligations of the party, to the extent and for the time said circumstances prevent performance, will be temporarily suspended.

              N.       Each of the parties shall render its full cooperation to the other in fulfilling and performing the terms of this Agreement.  To that end, they shall each give to the other all consents and information and execute all documents which may be reasonably required to such end, including such agreements, information and documents which may be required by applicable laws or administrative regulations.

              O.       The headings in the Agreement are for purposes of reference only and shall not limited or affect any of the terms hereof.

              P.       This Agreement shall be governed and construed in accordance with the laws of the State of New York, except its choice of law rules.

              Q.       The execution and performance of this Agreement constitute the transaction of business within the State of New York.  The parties hereby submit to the exclusive jurisdiction of the federal and state courts located in New York and agree that any suit by either party concerning, arising out of or related to this Agreement, or the making or breach thereof, or to enforce same shall be brought only in the State of New York and in no other forum.

              IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the day first above written.

	
IWAY SOFTWARE COMPANY
	
XML TECHNOLOGIES, INC.

	
By:_____________________________
	
By:____________________________

	
Signature
	
Signature

	
Name/Title
	
Name/Title

	 	 
	
INFORMATION BUILDERS, INC.
	 
	
By:_____________________________
	 
	
Signature
	 
	
Name/Title
	 

EXHIBIT A

Transform core engine

   - rules engine

   - transformation runtime processor

   - runtime lookup and replace including JDBC lookup

   - built-in functions and custom functions

   - GoXML Registry support

APIs

   - Java APIs

   - HTTP APIs

   - Webservice client

Input/Output formatters

   - XML input/output formatter

   - EDI X12 input/output formatter

   - EDIFACT input/output formatter

   - EDI HIPAA input/output formatter

   - JDBC input/output formatter

   - SAP IDOC input/output formatter

   - CSV input/output formatter

   - SWIFT input/output formatter

   - CDF input/output formatter

   - HTML output formatter

   - DTD validation

   - EDI X12 dictionary support

   - EDIFACT dictionary support

   - EDI HIPAA dictionary support

   - SAP IDOC structure doc. support

   - SWIFT dictionary support

   - CDF structure doc. support

   - GoXML DB input/output support

   - Way XML request/embedded request/response document support

Transform Designer

   - ability to display in the GUI:  XML (DTD and W3C schema), EDI X12,

EDIFACT, EDI HIPAA, JDBC, SAP IDOC, CSV, SWIFT, CDF and HTML (output only)

   - ability to display the template

   - ability to display input and transformation file

   - project wizard

   - project summary view

Development environment is Windows 2000, using CVS as the code repository, using ANT for building, using either the Sun's Java SDK (Java Software Development Kit) or using Borland's JBuilder for developing code.EXHIBIT 4.3

                        Stock Purchase Warrant issued to
            Excalibur Limited Partnership, dated as of June 26, 2002

<PAGE>

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

                             STOCK PURCHASE WARRANT

                  To Purchase 30,000 Shares of Common Stock of

                         GALAXY NUTRITIONAL FOODS, INC.

     THIS CERTIFIES that, for value received, Excalibur Limited Partnership (the
"HOLDER"), is entitled, upon the terms and subject to the conditions hereinafter
set forth, at any time on or after the date hereof (the "INITIAL EXERCISE DATE")
and on or prior to the close of  business on the date ending five (5) years from
the Initial  Exercise Date (the  "TERMINATION  DATE"),  but not  thereafter,  to
subscribe for and purchase from Galaxy  Nutritional  Foods,  Inc., a corporation
incorporated in Delaware (the "COMPANY"),  Thirty Thousand  (30,000) shares (the
"WARRANT SHARES") of Common Stock,  $0.01 par value, of the Company (the "COMMON
STOCK").  The  initial  per share  purchase  price of the  Warrant  Shares  (the
"EXERCISE  PRICE") shall be $5.50.  The Exercise  Price and the number of shares
for which the Warrant is exercisable  shall be subject to adjustment as provided
herein.

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

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

<PAGE>

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

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

     5. CHARGES,  TAXES AND  EXPENSES.  Issuance of  certificates  for shares of
Common Stock upon the exercise of this Warrant  shall be made without  charge to
the Holder hereof for any issue or transfer tax or other  incidental  expense in
respect of the  issuance of such  certificate,  all of which taxes and  expenses
shall be paid by the Company,  and such certificates shall be issued in the name
of the Holder of this Warrant or in such name or names as may be directed by the
Holder of this Warrant;  provided,  however,  that in the event certificates for
shares of Common  Stock  are to be issued in a name  other  than the name of the
Holder of this  Warrant,  this Warrant when  surrendered  for exercise  shall be
accompanied by the Assignment  Form attached  hereto duly executed by the Holder
hereof; and the Company may require,  as a condition  thereto,  the payment of a
sum sufficient to reimburse it for any transfer tax incidental thereto.

<PAGE>

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

     7. TRANSFER, DIVISION AND COMBINATION.

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

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

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

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

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

     9. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT. The Company covenants
that upon receipt by the Company of evidence  reasonably  satisfactory  to it of
the loss,  theft,  destruction or mutilation of this Warrant  certificate or any
stock certificate  relating to the Warrant Shares, and in case of loss, theft or
destruction, of indemnity or security reasonably

<PAGE>

satisfactory to it, and upon surrender and cancellation of such Warrant or stock
certificate,  if  mutilated,  the Company will make and deliver a new Warrant or
stock  certificate of like tenor and dated as of such  cancellation,  in lieu of
such Warrant or stock certificate.

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

     11. ADJUSTMENTS OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES.

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

          (b)  REORGANIZATION,   RECLASSIFICATION,   MERGER,   CONSOLIDATION  OR
DISPOSITION  OF  ASSETS.  In case the  Company  shall  reorganize  its  capital,
reclassify  its  capital  stock,  consolidate  or  merge  with or  into  another
corporation  (where the Company is not the surviving  corporation or where there
is a change in or distribution with respect to the Common Stock of the Company),
or sell, transfer or otherwise dispose of all or substantially all its property,
assets or business  to another  corporation  and,  pursuant to the terms of such
reorganization,   reclassification,  merger,  consolidation  or  disposition  of
assets, shares of common stock of the successor or acquiring corporation, or any
cash,  shares of stock or other securities or property of any nature  whatsoever
(including  warrants or other subscription or purchase rights) in addition to or
in lieu of  common  stock of the  successor  or  acquiring  corporation  ("OTHER
PROPERTY"),  are to be received by or distributed to the holders of Common Stock
of the Company, then the Holder shall have the right thereafter to receive, upon
exercise of this Warrant, the number of shares of common stock of the

<PAGE>

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

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

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

     14. NOTICE OF CORPORATE ACTION. If at any time:

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

          (b) there  shall be any capital  reorganization  of the  Company,  any
reclassification  or recapitalization of the capital stock of the Company or any
consolidation or

<PAGE>

merger of the Company with, or any sale, transfer or other disposition of all or
substantially  all the property,  assets or business of the Company to,  another
corporation; or

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

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

     15. AUTHORIZED SHARES.

          (a) The  Company  covenants  that  during the  period  the  Warrant is
outstanding,  it will reserve from its  authorized  and unissued  Common Stock a
sufficient  number of shares to provide for the  issuance of the Warrant  Shares
upon the exercise of any purchase rights under this Warrant. The Company further
covenants that its issuance of this Warrant shall  constitute  full authority to
its officers who are charged with the duty of executing  stock  certificates  to
execute and issue the  necessary  certificates  for the Warrant  Shares upon the
exercise of the purchase  rights under this  Warrant.  The Company will take all
such  reasonable  action as may be necessary to assure that such Warrant  Shares
may be issued as provided  herein  without  violation of any  applicable  law or
regulation, or of any requirements of the Principal Market upon which the Common
Stock may be listed. For purposes of this Warrant, "PRINCIPAL MARKET" shall mean
the American Stock Exchange,  the New York Stock  Exchange,  the NASDAQ National
Market,  or the NASDAQ SmallCap  Market,  whichever is at the time the principal
trading exchange or market for the Common Stock,  based upon share volume, or if
the Common Stock is not traded on an exchange or market, the OTC Bulletin Board.

          (b)  The  Company  shall  not  by  any  action,   including,   without
limitation,   amending  its   certificate  of   incorporation   or  through  any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities  or any other  voluntary  action,  avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all

<PAGE>

times in good  faith  assist in the  carrying  out of all such  terms and in the
taking of all such  actions as may be necessary  or  appropriate  to protect the
rights of the Holder against impairment.  Without limiting the generality of the
foregoing,  the  Company  will (i) not  increase  the par value of any shares of
Common  Stock  receivable  upon the  exercise of this  Warrant  above the amount
payable  therefor upon such exercise  immediately  prior to such increase in par
value,  (ii) take all such action as may be  necessary or  appropriate  in order
that the Company may  validly  and  legally  issue fully paid and  nonassessable
shares of Common Stock upon the exercise of this Warrant, and (iii) use its best
efforts to obtain  all such  authorizations,  exemptions  or  consents  from any
public regulatory body having jurisdiction thereof as may be necessary to enable
the Company to perform its obligations under this Warrant.

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

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

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

     16. MISCELLANEOUS.

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

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

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

<PAGE>

appellate  proceedings,  incurred  by the Holder in  collecting  any amounts due
pursuant hereto or in otherwise enforcing any of its rights,  powers or remedies
hereunder.

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

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

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

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

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

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

          (j) SEVERABILITY.  Wherever  possible,  each provision of this Warrant
shall  be  interpreted  in  such  manner  as to be  effective  and  valid  under
applicable  law, but if any  provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be

<PAGE>

ineffective  to  the  extent  of  such   prohibition   or  invalidity,   without
invalidating  the remainder of such  provisions  or the remaining  provisions of
this Warrant.

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

                     [THE NEXT PAGE IS THE SIGNATURE PAGE.]

<PAGE>

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

Dated:  June 26, 2002

                                        GALAXY NUTRITIONAL FOODS, INC.

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

<PAGE>

                               NOTICE OF EXERCISE

                              To: [Transfer Agent]

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

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

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

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

                                    _______________________________
                                    (Name)

                                    _______________________________
                                    (Address)

                                    _______________________________

Dated: ____________________, _____

                                             __________________________________
                                             Signature

<PAGE>

                                 ASSIGNMENT FORM

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

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

_______________________________________________ whose address is

_______________________________________________________________

_______________________________________________________________

                                                Dated:  ______________, _______

                           Holder's Signature: _____________________________

                           Holder's Address: _______________________________

Signature Guaranteed:  ___________________________________________

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

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

<PAGE>

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