<PAGE>

EXHIBIT 10.7

                              EMPLOYMENT AGREEMENT

      This EMPLOYMENT AGREEMENT (this "Agreement") dated as of January 1, 2005
(the "Effective Date"), is by and between VERMONT PURE HOLDINGS, LTD., a
Delaware corporation (together with any subsidiaries, the "Company"), and JOHN
B. BAKER (the "Executive").

      The Company and the Executive agree as follows:

1. EMPLOYMENT.

      1.1 General. The Company shall employ the Executive, and the Executive
accepts employment, as Executive Vice President of the Company, upon the terms
and conditions described herein. The Executive's employment hereunder will
commence on the Effective Date and will continue for the Employment Term (as
defined in Section 2.1 hereof) unless terminated sooner as herein provided.
During the Employment Term, the Executive shall devote all of his business time,
attention and skills to the business and affairs of the Company, and will not
undertake any commitments that would interfere with or impair his performance of
his duties and responsibilities; it being understood, however, that the
Executive may serve as director of a company or companies that do not compete
with any business of the Company or its subsidiaries, or as a director or
trustee of a charitable organization or organizations, so long as such service
does not interfere with or impair his performance of his duties and
responsibilities to the Company.

      1.2 Duties. The Executive shall at all times render his services at the
direction of the Board of Directors (the "Board of Directors") and the Chief
Executive Officer of the Company, and shall report primarily to the President of
the Company. His duties generally will include those required for the day to day
and long term planning, development, operation and advancement of the
manufacturing, quality and operational areas of the Home and Office business of
the Company and its affiliates. The Company may assign to the Executive such
other executive and administrative duties for the Company or any affiliate of
the Company as may be determined by the Board of Directors, consistent with the
Executive's status as Executive Vice President. The Executive agrees to
diligently use his best efforts to promote and further the reputation and good
name of the Company and perform his services well and faithfully.

      1.3 Possible Reduction of Duties. The Company acknowledges that the
Executive may wish to reduce his duties and compensation at some time in the
future. In that event, the Executive and the Company will endeavor in good faith
to negotiate the terms and conditions of such reduced employment and
compensation. Any such renegotiated terms and conditions will be based on the
principle that a reduction by the Executive of the amount of time and attention
he devotes to the Company will be reflected in a proportionate reduction of his
compensation, including without limitation his base salary under Section 3.1
hereof and his guaranteed bonus under Section 3.2.3 hereof.

<PAGE>
                                      -2-

2. TERM AND TERMINATION.

      2.1 Term. The term of employment by the Company of the Executive pursuant
to this Agreement shall commence on the Effective Date and terminate at 11:59
p.m., East Coast time, on December 31, 2007 (the "Employment Term"), subject to
the provisions of Section 2.2.

      2.2 Early Termination. Notwithstanding anything to the contrary contained
in this Agreement, the Executive's employment may be terminated prior to the end
of the Employment Term only as set forth in this Section.

            2.2.1 Termination Upon Resignation or Death of Executive. The
Executive's employment shall terminate upon the resignation or death of the
Executive. In case of termination pursuant to this Section 2.2.1, the Company
shall pay to the Executive (or, in case of his death, to his estate or his
beneficiary designated in writing), the base salary earned by the Executive
pursuant to Section 3, prorated through the date of resignation or death.

            2.2.2 Termination Upon Disability of Executive. The Executive's
employment shall terminate by reason of the disability of the Executive. For
this purpose, "disability" shall mean the Executive's inability, by reason of
accident, illness or other physical or mental disability (determined in good
faith by the Board of Directors with the advice of a qualified and independent
physician), to perform satisfactorily the duties required by his employment
hereunder for any consecutive period of 120 calendar days. In case of
termination pursuant to this Section 2.2.2, the Executive shall continue to
receive his base salary prorated through the time of such termination, less any
amount the Executive receives during such period from any Company-sponsored or
Company-paid source of insurance, disability compensation or government program.

            2.2.3 Termination Upon Mutual Consent. The Executive's employment
may be terminated by the mutual consent of the Company and the Executive on such
terms as they may agree.

            2.2.4 Termination For Cause. The Executive's employment shall
terminate immediately on notice to the Executive upon a good faith finding of
the Board of Directors that the Executive has (i) willfully or repeatedly failed
in any material respect to perform his duties in accordance with the provisions
of this Agreement following 30 days' prior written notice to the Executive and
failure of the Executive to cure such deficiency, (ii) committed a breach of any
provision of Section 4 hereof, (iii) misappropriated assets or perpetrated fraud
against the Company, (iv) been convicted of a crime which constitutes a felony,
or (v) been engaged in the illegal use of controlled or habit forming
substances. The preceding clauses (i) - (v) shall constitute "Cause" for
termination of the Executive hereunder. In the event of termination for Cause
pursuant to this Section 2.2.4, the Company shall pay the Executive his base
salary prorated through the date of termination.

<PAGE>
                                      -3-

            Notwithstanding any other provision of this Agreement, the Executive
shall not be terminated for Cause unless and until the Executive has had an
opportunity to appear before the Board of Directors to hear and respond to the
allegations of Cause for his termination.

            2.2.5 Termination by Company Without Cause. The Company may
terminate the Executive's employment at any time and for any reason, without
Cause, upon written notice to the Executive. If the Company so elects, it may
give notice during the period beginning November 1, 2006 and ending December 31,
2006 that the Executive's employment shall terminate without Cause on December
31, 2007 (a "Notice of Planned Termination").

            In the event of termination pursuant to this Section 2.2.5, other
than pursuant to a Notice of Planned Termination, the Company shall, subject to
Section 2.2.6, pay or provide to the Executive the following termination
benefits: (i) an amount (the "Payout Amount") equal to the sum of (x) two times
the sum of (1) the Executive's annual base salary as of the termination date
plus (2) $50,000, plus (y) $100,000, payable as follows: 4.166666% of the Payout
Amount each month for 24 months in equal regular monthly installments, less
income taxes and other applicable withholdings, and (ii) the Executive's Fringe
Benefits (as defined below) for 24 months.

            In the event of termination pursuant to this Section 2.2.5 pursuant
to a Notice of Planned Termination, the Company shall, subject to Section 2.2.6,
pay or provide to the Executive the following termination benefits: (i) an
amount (the "Planned Termination Payout Amount") equal to the sum of (x) the
Executive's annual base salary as of the termination date, i.e., as of December
31, 2007, plus (y) $150,000, payable as follows: 8.333333% of the Planned
Termination Payout Amount each month for 12 months in equal regular monthly
installments, less income taxes and other applicable withholdings, and (ii) the
Executive's Fringe Benefits (as defined below) for 12 months.

            The obligation of the Company to provide "Fringe Benefits" following
any termination that is or is deemed to be without Cause shall mean that the
Executive's participation (including dependent coverage) in the life and health
insurance plans of the Company in effect immediately prior to the termination
shall be continued, or substantially equivalent benefits provided, by the
Company, at a cost to the Executive no greater than his cost at the date of such
termination, for the period in which the Company shall be obligated to pay the
Payout Amount (but not more than 24 months) or, if applicable, the Planned
Termination Payout Amount (but not more than 12 months). Notwithstanding the
foregoing, if the Company shall be unable to provide for the continuation of an
insurance benefit (such as life insurance) because such benefit was provided
pursuant to an insurance policy that does not provide for the extension of such
insurance benefit following termination of the employment of the Executive, then
the Executive may purchase insurance providing such insurance benefit and,
whether or not the Executive so elects to purchase insurance, the Company's only
obligation with respect to such insurance benefit shall be to reimburse the
Executive for his premium costs, up to a maximum aggregate amount for all
policies of insurance purchased by the

<PAGE>
                                      -4-

Executive pursuant to this sentence of $12,000 per annum, prorated for partial
years. If the Company is obligated pursuant to the so-called "COBRA" law to
offer the Executive the opportunity for a temporary extension of health coverage
("continuation coverage"), then the Executive shall elect continuation coverage,
and the premium cost of such coverage shall be borne by the Company and the
Executive as provided in the first sentence of this paragraph. Continuation
coverage provided pursuant to COBRA shall terminate in accordance with COBRA. To
the extent that any benefit required to be provided to the Executive by the
Company by reason of an actual or deemed termination for Cause shall be provided
to the Executive by any successor employer, the Company's obligation to provide
that benefit to the Executive shall be correspondingly offset or shall cease, as
the case may be. Except as expressly required by COBRA, in no event shall the
Company have any obligation to provide Fringe Benefits after the expiration of
the 24-month or 12-month period, as the case may be, provided in this Section
2.2.5. The Executive shall not be entitled to any expense allowance, automobile
allowance or relocation allowance following the termination of his employment
for any reason.

            2.2.6 Effect of the American Jobs Creation Act of 2004. Reference is
made to Section 409A of the Internal Revenue Code (the "Code"), as added to the
Code by the American Jobs Creation Act of 2004. If, following the issuance of
U.S. Treasury Department guidance and/or regulations under Section 409A, the
Company in good faith determines that amounts that are or may become payable to
the Executive upon termination of his employment hereunder are required to be
suspended or delayed for six months in order to satisfy the requirements of
Section 409A, then the Company will so advise the Executive, and any such
payments shall be suspended and accrued for six months, whereupon they shall be
paid to the Executive in a lump sum and regular monthly payments initiated or
resumed.

            2.2.7 Effect of Failure to Give Notice of Planned Termination. If
(i) the Company does not give the Executive a Notice of Planned Termination as
provided in Section 2.2.5, and (ii) the Executive continues in the employment of
the Company for the entire Employment Term, then the provisions of Section 2.2.5
with respect to termination of the Executive's employment by the Company without
Cause (and other than pursuant to a Notice of Planned Termination) shall survive
the expiration of this Agreement.

            2.2.8 Termination in Connection with Change of Control. If the
employment of the Executive terminates for any reason, including termination by
the Executive, within 30 days following the occurrence of a "Change of Control"
(as defined in this Section 2.2.8), then the Company shall, subject to Section
2.2.6, pay or provide to the Executive the following termination benefits: (i)
an amount (the "COC Payout Amount") equal to the sum of (x) the Executive's
annual base salary as of the termination date, plus (y) $150,000, payable as
follows: 4.166666% of the COC Payout Amount each month for 24 months in equal
regular monthly installments, less income taxes and other applicable
withholdings, and (ii) the Executive's Fringe Benefits (as defined below) for 24
months. A "Change of Control" shall mean a change in control of the Company (and
not any person or entity that hereafter becomes a successor to all or
substantially all of the business or assets of the Company by reason of a Change
of Control) and shall be

<PAGE>
                                      -5-

deemed to have taken place if: (i) a third person, including a "group" as
defined in Section 13(d)(3) of the Securities Exchange Act of 1934, becomes the
beneficial owner of shares of the capital stock of the Company having more than
50% of the total number of votes that may be cast for the election of directors
of the Company, (ii) the sale or other disposition (excluding mortgage or
pledge) of all or substantially all of the assets of the Company, or (iii) the
merger or other business combination of the Company with or into another
corporation or entity pursuant to which the Company will not survive or will
survive only as a subsidiary of another corporation or entity, in either case
with the stockholders of the Company prior to the merger or other business
combination holding less than 50% of the voting shares of the merged or combined
companies or entities after such merger or other business combination.
Notwithstanding the foregoing, the following shall not be deemed to be a Change
of Control for purposes hereof: (i) any transaction in which either (x) the
Executive, any "Stockholder," as defined in the Agreement and Plan of Merger and
Contribution dated as of May 5, 2000 (the "Merger Agreement") by and among the
Company, Crystal Rock Spring Water Company, a Connecticut corporation, and the
other parties listed therein, or any affiliate of any such Stockholder, is or
becomes, either alone or as a member of a "group" as defined in this Section, or
(y) the Stockholders, together with their affiliates and considered in the
aggregate as a single entity, are or become, the beneficial owner or owners of
shares of the capital stock of the Company having more than 50% of the total
number of votes that may be cast for the election of directors of the Company,
or (ii) any transaction described in SEC Rule 13e-3(a)(3)(i) in which the
Executive participates as an "affiliate" of the Company within the meaning of
that Rule, without regard to whether the test in Rule 13e-3(a)(3)(ii) would be
satisfied in the transaction. The rights and obligations created by this
Agreement with respect to a Change of Control shall apply only with respect to
the first Change of Control after the date of execution of this Agreement, and
not with respect to any subsequent transaction.

            2.2.9 No Other Termination Benefits; Release. The Executive
understands and agrees that the termination payments and benefits described in
Section 2.2 constitute all of the payments and benefits to which he (or his
estate or beneficiary) will be or become entitled to receive in case of
termination of his employment, and that such payments and benefits are in lieu
of any and all other payments and benefits of every kind or description to which
he may be entitled, including, without limitation, the right to receive a bonus
payment or any portion thereof. Any accrued but unpaid vacation compensation
shall be payable upon termination of employment. In addition, the Executive
understands and agrees that the Company's obligation to pay or provide the
termination payments and benefits described herein is conditioned upon and
subject to the execution and non-revocation by the Executive of a form of
release of claims against the Company, the principal terms and conditions of
which shall be as set forth in Exhibit A to this Agreement.

            2.2.10 No Duty to Mitigate; Termination of Benefits. The Executive
shall not be required to mitigate the amount of any compensation payable to him
pursuant to Section 2 hereof, whether by seeking other employment or otherwise,
nor shall any

<PAGE>
                                      -6-

compensation earned by the Executive during the period of continuance of any
payments under Section 2 hereof reduce the amount of compensation payable under
Section 2.

3. COMPENSATION. During the Employment Term, the Company shall pay, in full
payment for all of the Executive's services rendered hereunder, the following
compensation:

      3.1 Base Salary. The Company shall pay the Executive an annual base
salary, less income taxes and other applicable withholdings, of $200,000 in
accordance with the Company's standard payroll installments. The Compensation
Committee of the Board of Directors will review the annual base salary amount as
soon as practicable after the end of each fiscal year of Company to consider
whether or not it should be increased. Such determination shall be in the sole
discretion of the Committee using such criteria as they deem relevant,
including, but not limited to, the performance of the Company and the Executive.

      3.2 Bonuses.

            3.2.1 Bonuses for Achievement of Goals. While the Executive is
employed by the Company, the Executive will be eligible to receive the bonuses
described in this Section 3.2. With respect to any bonus that is based on
performance during a fiscal period, the Executive must be employed by the
Company on the last day of that fiscal period to qualify for such bonus. The
incentive goals set forth in this Section shall be based upon or derived from
the Company's audited consolidated financial statements prepared in accordance
with generally accepted accounting principles as reported on by the Company's
independent accountants.

            3.2.2 Fiscal Year 2005, 2006 and 2007 Budgeted EBITDA and Business
Goals Bonuses. With respect to the Company's fiscal years ending October 2005,
October 2006 and October 2007:

            (i) if the Company has actual annual earnings before interest,
taxes, depreciation and amortization ("EBITDA") which, expressed as a percentage
of target annual EBITDA approved in the budget for that fiscal year by the Board
of Directors, are at least 90% of such target annual EBITDA, then the Company
shall pay the Executive an annual bonus as set forth in the following table.

<TABLE>
<CAPTION>
Actual EBITDA Divided by Target EBITDA            Bonus
--------------------------------------            -----
<S>                                             <C>
less than 90% of target                    -    $   -0-
at least 90% but less than 91% of target   -        40,000
at least 91% but less than 92% of target   -        44,000
at least 92% but less than 93% of target   -        48,000
at least 93% but less than 94% of target   -        52,000
at least 94% but less than 95% of target   -        56,000
at least 95% but less than 96% of target   -        60,000
at least 96% but less than 97% of target   -        64,000
</TABLE>

<PAGE>

                                      -7-

<TABLE>
<S>                                                 <C>
at least 97% but less than 98% of target   -        68,000
at least 98% but less than 99% of target   -        72,000
at least 99% but less than 100% of target  -        76,000
at least 100% but less than 102% of target -        80,000
at least 102% but less than 104% of target -        81,600
at least 104% but less than 106% of target -        83,200
at least 106% but less than 108% of target -        84,800
at least 108% but less than 110% of target -        86,400
at least 110% but less than 112% of target -        88,000
at least 112% but less than 114% of target -        89,600
at least 114% but less than 116% of target -        91,200
at least 116% but less than 118% of target -        92,800
at least 118% but less than 120% of target -        94,400
at least 120% of target or greater         -        96,000
</TABLE>

            (ii) if the Executive attains specified business goals established
by the Board of Directors with respect to a fiscal year or fiscal quarter, then
the Executive shall be eligible for an additional bonus of up to $20,000 for
achievement of such business goals, the amount of such bonus, if any, to be
determined by the Compensation Committee of the Board of Directors. With respect
to the Company's fiscal year ending October 2005, the business goal under this
clause (ii) is the achievement by the Company of compliance with the financial
covenants set forth in the Company's loan agreement with its principal lender.
For each fiscal quarter in which such compliance is achieved, the Company shall
pay the Executive a bonus of $5,000. At the time it approves a budget for the
Company's fiscal years ending October 2006 and October 2007, the Board of
Directors shall advise the Executive of the business goals required to be
attained under this clause (ii) with respect to those fiscal years.

            3.2.3 Guaranteed Bonus. The Executive shall be entitled to a
guaranteed bonus each year during the Employment Term (pro-rated for partial
years) in an amount equal to the excess of $50,000 over the actual costs
reimbursed to the Executive by the Company pursuant to Section 3.7.

            3.2.4 Time of Bonus Payments. Each bonus required to be paid to the
Executive under this Section 3.2 shall be paid within 75 days after the fiscal
period in which it shall have been earned; provided, however, that before
payment, the Chief Financial Officer of the Company shall have certified in
writing to the Compensation Committee that the conditions to such bonus in
Section 3.2 have been satisfied.

      3.3 Stock Options and Restricted Stock. The Executive shall be eligible to
receive stock options and awards of restricted stock from time to time, as
determined by the Compensation Committee of the Board of the Directors of the
Company.

      3.4 Vacation. The Executive shall be entitled to four (4) weeks of
vacation in each 12-month period during the Employment Term, without carryover
of unused vacation time. No more than two (2) weeks may be taken consecutively.

<PAGE>
                                      -8-

      3.5 Executive Benefit Plans. The Executive shall be entitled to
participate in all plans or programs sponsored by the Company for employees in
general, including without limitation, participation in any group health,
medical reimbursement, or life insurance plans.

      3.6 Expense Allowance. The Company shall reimburse the Executive for all
reasonable and necessary expenses incurred by him from time to time in the
performance of his duties hereunder, against receipts therefor in accordance
with the then effective policies and requirements of the Company.

      3.7 Disability and Other Insurance; Automobile Allowance. The Company
shall have no obligation to provide disability insurance to the Executive. The
Company agrees to provide an allowance of up to $50,000 per year, in the
aggregate, to reimburse the Executive for (i) the actual cost of premiums
incurred by the Executive for disability insurance obtained by the Executive;
(ii) the actual cost of premiums incurred by the Executive for any other
insurance which would not be available to the Executive under the Company's
customary benefit plans; and (iii) the actual cost of leasing and operating an
automobile for use by the Executive during the Executive's employment with the
Company. The Executive may determine in his reasonable judgment how to allocate
the allowance between disability insurance premiums, other insurance premiums
and automobile leasing expense.

      3.8 Election as a Director. Subject only to the fiduciary duties of its
directors, the Company will use its best efforts to nominate and cause the
Executive to be elected as a member of the Board of Directors during the
Employment Term. If the Executive's employment is terminated for any reason,
then such termination shall not in any way affect Executive's right to be
elected to the Board of Directors as set forth in the preceding sentence so long
as the Executive and the Stockholders (as defined in the Merger Agreement)
and/or their respective affiliates continue to hold in the aggregated at least
40% of the shares of outstanding capital stock of the Company.

4. PROTECTION OF CONFIDENTIAL INFORMATION; NON-COMPETE.

      4.1 Acknowledgements. The Executive acknowledges that:

      (a) The Executive has obtained and, during his employment by the Company,
will obtain secret and confidential information concerning the business of the
Company and its affiliates, including, without limitation, customer lists and
sources of supply, their needs and requirements, the nature and extent of
contracts with them, and related cost, price and sales information.

      (b) The Company and its affiliates will suffer substantial and irreparable
damage which will be difficult to compute if, during the period of his
employment with the Company or thereafter, the Executive should enter a
competitive business or should divulge secret and confidential information
relating to the business of the Company and its affiliates heretofore or
hereafter acquired by him in the course of his employment with the Company.

<PAGE>
                                      -9-

      (c) The provisions of this Agreement are reasonable and necessary for the
protection of the business of the Company and its affiliates.

      4.2 Confidentiality. The Executive agrees that he will not at any time,
either during the Employment Term or thereafter, divulge to any person, firm or
corporation any information obtained or learned by him during the course of his
employment with the Company, with regard to the operational, financial, business
or other affairs of the Company and its affiliates, and their respective
officers and directors, including, without limitation, trade secrets, customer
lists, sources of supply, pricing policies, operational methods or technical
processes, except (i) in the course of performing his authorized duties
hereunder, (ii) with the Company's express written consent; (iii) to the extent
that any such information is lawfully in the public domain other than as a
result of the Executive's breach of any of his obligations hereunder; or (iv)
where required to be disclosed by court order, subpoena or other government
process. In the event that the Executive shall be required to make any
disclosure pursuant to the provisions of clause (iv) of the preceding sentence,
the Executive promptly, but in no event more than 48 hours after learning of
such subpoena, court order, or other government process, shall notify the
Company, by personal delivery or by fax, confirmed by mail, to the Company and,
if the Company so elects and at the Company's expense, the Executive shall: (a)
take all reasonably necessary steps requested by the Company to defend against
the enforcement of such subpoena, court order or other government process, and
(b) permit the Company to intervene and participate with counsel of its choice
in any proceeding relating to the enforcement thereof.

      4.3 Return of Property. Upon termination of his employment with the
Company, or at any time the Company may so request, the Executive will promptly
deliver to Company all memoranda, notes, records, reports, manuals, drawings,
blueprints and other documents (and all copies thereof) relating to the business
of the Company and its affiliates and all property associated therewith, which
he may then possess or have under this control.

      4.4 Non-Competition. During the Employment Term and for a period equal to
the time during which Executive receives severance payments for benefits
pursuant to Section 2 of this Agreement or for a period of 12 months in the
event the Executive is terminated without entitlement to severance benefits
herein, the Executive shall not, without the prior written permission of the
Company, in the United States, its territories and possessions, directly or
indirectly, (i) enter into the employ of or render any services to any person,
firm or corporation engaged in any Competitive Business (as defined below); (ii)
engage in any Competitive Business for his own account; (iii) become associated
with or interested in any Competitive Business as an individual, partner,
shareholder, creditor, director, officer, principal, agent, employee, trustee,
consultant, advisor or in any other relationship or capacity; (iv) employ or
retain, or have or cause any other person or entity to employ or retain, any
person who was employed or retained by the Company or its affiliates while the
Executive was employed by the Company; or (v) solicit, interfere with, or
endeavor to entice away from the Company or its affiliates any of their
customers or sources of supply. However, nothing in this Agreement shall

<PAGE>
                                      -10-

preclude the Executive from investing his personal assets in the securities of
any Competitive Business if such securities are traded on a national stock
exchange or in the over-the-counter market and if such investment does not
result in his beneficially owning, at any time, more than 4.9% of the
publicly-traded equity securities of such competitor. "Competitive Business"
shall mean any business or enterprise which (a) designs, sells, manufactures,
markets and/or distributes spring or purified water products or still spring or
purified water beverages in the home and office market, or (b) engages in any
other business in which Company or its affiliates is involved at any time during
the 12-month period immediately prior to the termination of the Executive's
employment.

      4.5 Enforcement. If the Executive commits a breach, or threatens to commit
a breach, of any of the provisions of Section 4, the Company shall have the
right and remedy to have the provisions of this Agreement specifically enforced
by any court having jurisdiction over the matter, it being acknowledged and
agreed by the Executive that the services being rendered hereunder to the
Company are of a special, unique and extraordinary character and that any such
breach or threatened breach will cause irreparable injury to the Company and
that money damages will not provide an adequate remedy to the Company. Such
right and remedy shall be in addition to, and not in lieu of, any other rights
and remedies available to the Company under law or equity.

      4.6 Blue Penciling. If any provision of Section 4 is held to be
unenforceable because of the scope, duration or area of its applicability, the
tribunal making such determination shall have the power to modify such scope,
duration or area, or all of them, and such provision or provisions shall then be
applicable in such modified form.

5. REPRESENTATIONS OF EXECUTIVE. The Executive represents and warrants to the
Company that the Executive is not a party to or bound by any agreement,
understanding or restriction that would or may be breached by the Executive's
execution and full performance of this Agreement. The Executive expressly
undertakes and agrees that none of his acts or duties hereunder that will
violate any obligations he may have to any prior employer (or will impose on the
Company any liability to any prior employer) and that he has complied with all
requirements of notice applicable to the termination of any prior employment
before he commenced his employment with the Company. The Executive further
represents and warrants that he has delivered to the Company complete copies of
all employment agreements, understanding and restrictions to which he has been
subject at any time during the last five years.

6. CONSTRUCTION OF THIS AGREEMENT.

      6.1 Choice of Law. This Agreement is to be construed pursuant to the laws
of the State of Delaware, without regard to the laws affecting choice of law.

      6.2 Invalid Agreement Provisions. Should any provision of this Agreement
become legally unenforceable, no other provision of this Agreement shall be
affected, and this Agreement shall continue as if the Agreement had been
executed absent the unenforceable provision.

<PAGE>
                                      -11-

      6.3 No Other Agreements. This Agreement represents the full agreement
between the Company and the Executive with respect to the subject matter hereof
and the Company and the Executive have made no agreements, representations or
warranties relating to the subject matter of this Agreement that are not set
forth herein. This Agreement supersedes any and all other agreements, oral or
written, that may define the employment relationship between the Executive and
the Company or any affiliate of the Company, and all of such other agreements
are hereby terminated, without liability to any party thereto. Nothing in this
Agreement confers any rights or remedies on any person or entity or than the
parties hereto.

      6.4 Notices. All notices provided for in this Agreement shall be in
writing and shall be deemed to be given when delivered personally to the party
to receive the same, when transmitted by electronic means or when mailed first
class, postage prepaid by certified mail, return receipt requested, addressed to
the party to receive the same at the applicable addresses set forth below or
such other address as the party to receive the same shall have specified by
written notice give in the manner provided for in this Section. All notices
shall be deemed to have been given as of the date of personal delivery,
transmittal or mailing thereof.

            If to the Executive: Mr. John B. Baker, c/o Crystal Rock, 1050
Buckingham Street, Watertown, Connecticut 06795, with a copy to: Brian Keeler,
Esq., Bingham McCutchen, 150 Federal Street, Boston, Massachusetts 02110.

            If to the Company: Vermont Pure Holdings, Ltd., 45 Krupp Drive, P.O.
Box 536, Williston, Vermont 05495, Attention: Chairman of the Board, with a copy
to: Dean Hanley, Esq., Foley Hoag LLP, 155 Seaport Boulevard, Boston,
Massachusetts 02210.

      6.5 Assignment. This Agreement shall be binding upon and inure to the
benefit of the Company's successors and assigns.

      6.6 Disputes and Controversies. The parties hereto agree that in case of
any dispute, controversy or claim arising out of or relating to this Agreement,
other than pursuant to Sections 4 and 6 hereof, the dispute, controversy or
claim shall be determined by arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association. The place of the
arbitration shall be Boston, Massachusetts. Any arbitration award shall be based
upon and accompanied by a written opinion containing findings of fact and
conclusions of law. The determination of the arbitrator(s) shall be conclusive
and binding on the parties hereto, and any judgment upon the award rendered by
the arbitrator(s) may be entered in any court having jurisdiction.

      6.7 Counterparts. This Agreement may be executed by the parties in
separate counterparts, each of which when so executed and delivered will be an
original, but all of which together will constitute one and the same agreement.
In pleading or proving this Agreement, it will not be necessary to produce or
account for more than one such counterpart.

<PAGE>
                                      -12-

      6.8 Waivers; Amendments. No waiver of any breach or default hereunder will
be valid unless in a writing signed by the waiving party. No failure or other
delay by any party exercising any right, power, or privilege hereunder will be
or operate as a waiver thereof, nor will any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power, or privilege. No amendment or modification of this Agreement will
be valid or binding unless in a writing signed by both the Executive and the
Company.

      IN WITNESS WHEREOF, the parties have executed this Agreement under seal as
of the date first written above.

                                   COMPANY: VERMONT PURE HOLDINGS, LTD.

                                             By: /s/ David R. Preston
                                                -------------------------------
                                                     Name: David R. Preston
                                                     Title: Chairman

                                   EXECUTIVE: /s/ John B. Baker
                                             ----------------------------------
                                             JOHN B. BAKER

<PAGE>
                                      -13-

                                    EXHIBIT A

                                Terms of Release

      As a condition to the Company's obligation to pay or provide termination
payments or benefits, the Executive irrevocably and unconditionally releases,
acquits and forever discharges the Company, its affiliated and related
corporations and entities, and each of their predecessors and successors, and
each of their agents, directors, officers, trustees, attorneys, present and
former employees, representatives, and related entities (collectively referred
to as the "Released Entities") from any and all charges, complaints, claims,
liabilities, obligations, promises, agreements, controversies, damages, actions,
causes of action, suits, rights, demands, costs, losses, damages and expenses
(including attorneys' fees and costs actually incurred) arising out of or in
connection with his employment with or termination from the Company, which the
Executive now has, owns or holds, or claims to have, own or hold, or which at
any time heretofore, had owned or held, or claimed to have owned or held, or
which the Executive at any time hereafter may have, own or hold, or claim to
have owned or held against the Released Entities, based upon, arising out of or
in connection with his employment with or termination from the Company up to the
date of this Release, including but not limited to, claims or rights under any
federal, state, or local statutory and/or common law in any way regulating or
affecting the employment relationship, including but not limited to Title VII of
the Civil Rights Act of 1964, the Americans with Disabilities Act, the Age
Discrimination in Employment Act and any other federal, state, local statutory
and/or common law regulating or affecting the employment relationship. The
Executive acknowledges and understands that the termination payment or benefits
to be provided to the Executive constitute a full, fair and complete payment for
the release and waiver of all of the Executive's possible claims arising out of
or in connection with his employment with or termination from the Company.

      The Executive acknowledges that he has been provided at least twenty-one
(21) days to consider whether to sign this Release, that he has been advised to
consult with an attorney of his choosing concerning this Release, and that he
has executed and delivered this Release and waived any claims knowingly and
willingly. The Executive may revoke this Release within seven (7) days after it
is signed, and it shall not become effective or enforceable until such seven (7)
day revocation period has expired.