Document:

Exhibit 10.14

                AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

     This  Agreement  made as of the 1st day of November,  2001,  by and between
WEBSTER  BANK,  a federally  chartered  savings  bank with an office at 145 Bank
Street,  Waterbury,  Connecticut 06702 (the "Lender") and VERMONT PURE HOLDINGS,
LTD, (f/k/a VP Merger Parent,  Inc.), a Delaware  corporation  with an office at
Catamount  Industrial  Park,  Route 66,  Randolph,  Vermont 05060  ("Holdings"),
CRYSTAL ROCK SPRING WATER COMPANY,  a Connecticut  corporation with an office at
1050 Buckingham Street, Watertown,  Connecticut 06795 ("Crystal Rock"), PLATINUM
ACQUISITION  CORP. (f/k/a Vermont Pure Holdings,  Ltd.), a Delaware  corporation
with an office at Catamount  Industrial Park, Route 66, Randolph,  Vermont 05060
("Platinum")  and VERMONT PURE  SPRINGS,  INC., a Delaware  corporation  with an
office at Catamount  Industrial Park, Route 66, Randolph,  Vermont 05060 ("VPS",
and collectively with Holdings, Crystal Rock and Platinum, the "Obligors").

     WHEREAS,  the  Lender and the  Obligors  entered  into a Loan and  Security
Agreement  dated as of October 5, 2000,  as modified by  Modification  Agreement
dated as of June 27,  2001 (as so  modified,  the  "Original  Loan and  Security
Agreement") pursuant to which the Lender made loans or otherwise extended credit
to the  Obligors  and the  Obligors  granted  a  security  interest  in  certain
collateral described therein to the Lender; and

     WHEREAS,  the Obligors have requested that the Lender provide an additional
term loan in the amount of  $4,200,000  to fund the  acquisition  of assets from
Iceberg Springs Water, Inc.; and

     WHEREAS,  the Lender is willing to provide such an additional  term loan on
the terms and conditions contained herein.

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

SECTION 1. Definitions, Accounting Terms and Financial Covenants.
           -----------------------------------------------------

1.1       Definitions.     For  purposes of this Agreement,  the following terms
          shall have the meanings specified below:

          a.  "Additional   Collateral"  means  (i)  all  General   Intangibles,
          including   Payment   Intangibles  and  Software  and  all  Supporting
          Obligations related thereto, (as such terms are defined in the Uniform

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          Commercial  Code as in  effect  in  Connecticut  from time to time) of
          every  kind  and  description  of  the  Obligors,   including  without
          limitation  federal,  state and local tax refund  claims of all kinds,
          whether  now  existing or  hereafter  arising;  (ii) all of  Obligors'
          Deposit   Accounts,   Letter  of  Credit  Rights  and  all  Supporting
          Obligations  related thereto (as such terms are defined in the Uniform
          Commercial  Code as in  effect  in  Connecticut  from  time to  time),
          whether now owned or hereafter  created,  wherever  located,  together
          with the  rights to  withdraw  from  said  Deposit  Accounts  and make
          deposits  to the same and the right to draw  under  Letters of Credit;
          (iii) all monies, securities,  instruments, cash and other property of
          Obligors and the proceeds  thereof,  now or hereafter held or received
          by,  or in  transit  to,  Lender  from or for  Obligors,  whether  for
          safekeeping,  pledge, custody, transmission,  collection or otherwise,
          and all of Obligors'  deposits  (general or special,  balances,  sums,
          proceeds  and credits of Obligors  with Lender at any time  existing);
          (iv)  all  interests  in real  property  held or  owned  by  Obligors,
          including all leasehold interests;  (v) all rights under contracts and
          license agreements for water; (vi) all books, records, customer lists,
          ledger cards, computer programs,  computer tapes, disks, printouts and
          records,  and  other  property  and  general  intangibles  at any time
          evidencing  or  relating  to  any  of the  foregoing,  whether  now in
          existence or hereafter created;  (vii) all other personal property and
          fixtures of the Obligors, whether now existing or hereafter arising or
          created;  and all  proceeds of the  foregoing  and all proceeds of any
          insurance on the foregoing.

          b.  "Adirondack"  means  Adirondack  Coffee Service,  Inc., a New York
          corporation.

          c.  "Affiliate"  means (i) any person or entity directly or indirectly
          controlling  or  controlled  by or under  direct  or  indirect  common
          control with any Obligor or any other obligor of the  Obligations,  as
          the  case  may  be  (including,  without  limitation,  any  respective
          director  or  officer  of any  Obligor  or any  other  obligor  of the
          Obligations,  as the case may be), (ii) any spouse,  immediate  family
          member or other relative who has the same  principal  residence of any
          person  described  in clause (i)  above,  (iii) any trust in which any
          such  person or entity  described  in clauses  (i) or (ii) above has a
          beneficial  interest and (iv) any corporation or other organization of
          which any such  persons or entities  described  in clauses (i) or (ii)
          above  collectively  own more  than ten  percent  (10%) of the  voting
          securities of such entity.

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          d. "Capital  Assets" means assets that, in accordance  with GAAP,  are
          required or  permitted  to be  depreciated  or  amortized on Holdings'
          consolidated balance sheet.

          e. "Capital Expenditures" mean expenditures for purchase,  acquisition
          or lease of Capital Assets.

          f. "Capital Leases" means capital leases,  conditional sales contracts
          and other  title  retention  agreements  relating  to the  purchase or
          acquisition of Capital Assets.

          g. "Code" means the Internal Revenue Code of 1986, as amended,  or any
          successor  federal tax code, and any reference to any provision  shall
          be deemed  to  include  a  reference  to any  successor  provision  or
          provisions.

          h. "Collateral"  means  Receivables,  Inventory,  Equipment,  Patents,
          Trademarks,   Investment  Property,  Additional  Collateral,  and  the
          Premises.

          i. "Current Assets" means current assets determined in accordance with
          GAAP.

          j.  "Current  Liabilities"  means  current  liabilities  determined in
          accordance with GAAP.

          k. "Current  Maturities of Long Term Debt" means the current  maturity
          of long  term  Indebtedness  paid or  payable  during  the  applicable
          period.

          l.  "Current  Ratio"  means the  ratio of  Current  Assets to  Current
          Liabilities.

          m. "Date of  Closing"  means  October  5, 2000,  the date on which the
          Original Loan and Security  Agreement,  the Term Note and the original
          revolving line of credit note were executed by the Obligors.

          n. "Debt Service Coverage Ratio" means,  for the relevant period,  the
          ratio of (i) (A) net  income  from  continuing  operations  (excluding
          extraordinary   items  of  income),   plus  (B)  interest  expense  on

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          Subordinated  Debt,  minus (C) interest  expense paid on  Subordinated
          Debt, plus (D) depreciation,  plus (E) amortization, plus or minus (F)
          the net change in customer deposits, to (ii) (A) Current Maturities of
          Long  Term  Debt,  plus  (B) the  current  portion  of  Capital  Lease
          payments,  plus (C) Unfinanced Capital Expenditures plus (D) principal
          payments of Subordinated Debt.

          o. "Dividends" means the payment of any dividend or other distribution
          in  respect  of the  capital  stock  of any  Obligor  in cash or other
          property  (excepting  distributions  in the form of such stock) or the
          redemption or acquisition of any such stock.

          p. "EBITDA"  means,  for the relevant  period,  income from continuing
          operations (excluding  extraordinary items of income) before deduction
          for interest and taxes, depreciation and amortization.

          q. "Environmental  Laws" means any and all applicable  federal,  state
          and local environmental, health or safety statutes, laws, regulations,
          rules,  ordinances,  guidances,  policies  and  rules  or  common  law
          (whether  now existing or hereafter  enacted or  promulgated),  of all
          governmental  agencies,  bureaus  or  departments  which  may  now  or
          hereafter  have  jurisdiction  over any of the  Obligors or any of the
          Obligors' property and all applicable  judicial and administrative and
          regulatory decrees, judgments and orders, including common law rulings
          and determinations,  relating to injury to, or the protection of, real
          or personal  property or human health or the  environment,  including,
          without   limitation,   all  requirements   pertaining  to  reporting,
          licensing,  permitting,  investigation,  remediation  and  removal  of
          emissions,  discharges,  releases or threatened  releases of Hazardous
          Materials,  chemical  substances,  pollutants or contaminants  whether
          solid,  liquid or gaseous in nature,  into the environment or relating
          to the manufacture, processing, distribution, use, treatment, storage,
          disposal, transport or handling of such Hazardous Materials,  chemical
          substances, pollutants or contaminants.

          r.  "Equipment"  means all  Equipment,  Farm Products and Fixtures (as
          such terms are defined in the Uniform  Commercial Code as in effect in
          Connecticut on the date of this  Agreement),  including all machinery,
          equipment,  furniture,  fixtures,  tools,  parts,  supplies  and motor
          vehicles,  now owned and hereafter acquired, by Obligors of whatsoever
          name, nature, kind or description, wherever located, and all additions
          and accessions thereto and replacements or substitutions therefor, and
          all proceeds thereof and all proceeds of any insurance thereon.

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          s. "ERISA" means the Employee  Retirement  Income Security Act of 1974
          and all rules and regulations  promulgated  pursuant  thereto,  as the
          same may from time to time be supplemented or amended.

          t.  "Event of Default"  shall have the  meaning  assigned in Section 7
          hereof.

          u. "Excelsior" means Excelsior Spring Water Company,  Inc., a New York
          corporation.

          v. "GAAP" means generally accepted accounting principles in the United
          States of America, as from time to time in effect.

          w.  "Guaranties"  means  the  Guaranty  Agreements  dated  the Date of
          Closing executed by the Guarantors in favor of Lender, as the same may
          be amended, amended and restated or reaffirmed from time to time.

          x. "Guarantors" means Adirondack and Excelsior.

          y. "Hazardous Material" means any substance: (i) the presence of which
          requires  or  may  hereafter  require   notification,   investigation,
          monitoring or remediation under any  Environmental  Law; (ii) which is
          or becomes  defined as a "hazardous  waste",  "hazardous  material" or
          "hazardous   substance"  or  "toxic   substance"  or   "pollutant"  or
          "contaminant"  under  any  present  or  future  Environmental  Law  or
          amendments thereto including,  without  limitation,  the Comprehensive
          Environmental  Response,  Compensation  and  Liability  Act (42 U.S.C.
          Section 9601 et seq.) and any applicable local statutes -- --- and the
          regulations promulgated  thereunder;  (iii) which is toxic, explosive,
          corrosive, reactive, ignitable, infectious, radioactive, carcinogenic,
          mutagenic or otherwise  hazardous  and is or becomes  regulated by any
          governmental authority, agency, department,  commission, board, agency
          or  instrumentality  of any foreign  country,  the United States,  any
          state of the United States,  or any political  subdivision  thereof to
          the  extent  any of the  foregoing  has or had  jurisdiction  over any
          Obligor or any Obligor's property;  or (iv) without limitation,  which
          contains gasoline,  diesel fuel or other petroleum products,  asbestos
          or polychlorinated biphenyls.

          z.  "Indebtedness"  means (i)  obligations  for borrowed  money,  (ii)
          obligations representing the deferred purchase price of property other
          than  accounts  payable  arising in the  ordinary  course of Obligors'

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          business on terms customary in the trade, (iii)  obligations,  whether
          or not  assumed,  secured by a lien on, or payable out of the proceeds
          or  production  from,  property now or hereafter  owned or acquired by
          Obligors,  (iv) obligations which are evidenced by bonds,  debentures,
          notes,   acceptances,   or  other   instruments,   (v)  Capital  Lease
          obligations,  (vi)  guaranties of the  obligations  of other  parties,
          other  than  in  connection   with  the   endorsement   of  negotiable
          instruments  in the  ordinary  course of business,  (vii)  obligations
          under letters of credit and reimbursement  agreements,  and (viii) any
          other contingent liabilities of Obligors.

          aa.  "Inventory"  means all  Inventory  and  Goods and all  Supporting
          Obligations  related thereto (as such terms are defined in the Uniform
          Commercial  Code as in  effect  in  Connecticut  from time to time) of
          whatsoever name,  nature,  kind or description now owned and hereafter
          acquired by Obligors,  wherever located,  including without limitation
          all contract  rights with respect  thereto and documents  representing
          the same,  all goods held for sale or lease or to be  furnished  under
          contracts of service, finished goods, raw materials, materials used or
          consumed by Obligors,  parts, supplies,  and all wrapping,  packaging,
          advertising and shipping materials and any documents relating thereto,
          and all labels  and other  devices,  names and marks  affixed or to be
          affixed  thereto for purposes of selling or of identifying the same or
          the seller or manufacturer  thereof, and all right, title and interest
          of Obligors therein and thereto, and all proceeds of the foregoing and
          all proceeds of any insurance on the foregoing.

          bb. "Investment  Property" means all investment property (as such term
          is defined in the Uniform  Commercial  Code as adopted in  Connecticut
          from time to time) of whatever  type or nature now owned or  hereafter
          acquired  by  the  Obligors,   including   without   limitation,   all
          certificated securities,  all uncertificated  securities, all security
          entitlements,  all security  accounts,  all commodity  contracts,  all
          commodity  accounts and all financial  assets of every type and nature
          and all rights thereto or therein, and all financial accounts of every
          type and nature and all rights thereto or therein,  and all Supporting
          Obligations (as such term is defined in the Uniform Commercial Code as
          adopted in  Connecticut  from time to time)  related  thereto  and all
          proceeds and  products  thereof,  including  without  limitation,  all
          insurance proceeds and fidelity bond proceeds related thereto.

          cc. "IRS" means the United States Internal Revenue Service.

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          dd.  "Loans" means the Term Loan, the Revolving Line of Credit and the
          2001 Term Loan.

          ee. "Loan  Documents"  means this  Agreement,  the Notes and all other
          documents evidencing, securing and guarantying the Loans.

          ff.  "Mortgages"  means  the  Open-End  Mortgage  Deeds  and  Security
          Agreements  dated  the Date of  Closing  from the  Obligors  to Lender
          covering  the  Premises,  as the same may be amended  or  amended  and
          restated from time to time.

          gg. "Net Income" means net income as  determined  in  accordance  with
          GAAP.

          hh. "Net Loss" means net loss as determined in accordance with GAAP.

          ii. "Notes" means the Term Note, the Revolving Line of Credit Note and
          the 2001 Term Note.

          jj.  "Obligations" means and includes all loans,  advances,  interest,
          indebtedness,  liabilities,  obligations,  guaranties,  covenants  and
          duties at any time  owing by  Obligors  to  Lender  of every  kind and
          description, whether or not evidenced by any note or other instrument,
          whether or not for the payment of money,  whether  direct or indirect,
          absolute  or  contingent,  due  or to  become  due,  now  existing  or
          hereafter  arising,  including,  but not limited to, the Loans and all
          other  indebtedness,  liabilities and  obligations  arising under this
          Agreement and the other Loan  Documents,  all swap  agreements and all
          costs,  expenses,  fees,  charges  and  attorneys',   paralegals'  and
          professional fees incurred in connection with any of the foregoing, or
          in any way connected with,  involving or relating to the preservation,
          enforcement,  protection  or  defense  of, or  realization  under this
          Agreement,  the Notes,  any of the other Loan  Documents,  any related
          agreement,  document or instrument,  the Collateral and the rights and
          remedies hereunder or thereunder,  including without  limitation,  all
          costs and expenses  incurred in  inspecting or surveying the Premises,
          or conducting  environmental  studies or tests, and in connection with
          any  "workout"  or default  resolution  negotiations  involving  legal
          counsel or other professionals and any re-negotiation or restructuring
          of any of the Obligations.

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          kk.  "Patents"  means all of  Obligors'  right,  title  and  interest,
          present  and future,  in and to (a) all  letters  patent of the United
          States or any other country, all right, title and interest therein and
          thereto,  and all  registrations  and  recordings  thereof,  including
          without limitation  applications,  registrations and recordings in the
          United States Patent and Trademark  Office or in any similar office or
          agency of the United  States or any state thereof or any other country
          or any  political  subdivision  thereof,  all  whether  now  owned  or
          hereafter acquired by Obligors;  and (b) all reissues,  continuations,
          continuations-in-part  or extensions thereof and all licenses thereof;
          and all proceeds of the foregoing and all proceeds of any insurance on
          the foregoing.

          ll. "PBGC" means the Pension Benefit Guaranty Corporation.

          mm. "Permitted  Encumbrances"  means the liens and encumbrances listed
          on  Schedule  4.5;  provided,  however,  that  none  of the  Permitted
          Encumbrances shall be amended or modified in any way without the prior
          written consent of Lender.

          nn.  "Plan" means any employee  benefit plan or other plan  maintained
          for employees of any of the Obligors or any related  entity covered by
          Title I of ERISA.

          oo.  "Pre-tax  Earnings"  means  pre-tax  earnings  as  determined  in
          accordance with GAAP.

          pp. "Pre-tax  Losses" means pre-tax losses as determined in accordance
          with GAAP.

          qq. "Premises" means the following real property owned by Obligors:

          Hedding Drive, Randolph, VT
          Route 66 Factory, Randolph, VT
          Chase Road, Randolph, VT
          North Randolph Road, Randolph, VT
          Alice E. LaFrance, Route 66, Randolph, VT (approximately 20 acres)
          Gary LaFrance, Route 66, Randolph, VT (approximately 5 acres)

          rr. "Prior  Encumbrances"  means the  mortgages,  security  interests,
          pledges,  liens,  encumbrances or other charges listed in Section A of
          Schedule 4.5.
          -------------

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          ss.  Prime  Rate"  means the  variable  per annum rate of  interest so
          designated  from time to time by Lender as its prime  rate.  The Prime
          Rate is a reference rate and does not necessarily represent the lowest
          or best rate being charged to any customer.

          tt. "Property" means all property and assets of Obligors.

          uu.  "Receivables"  means (i) all of Obligors' now owned and hereafter
          acquired,  present and future,  Accounts,  Chattel  Paper,  Documents,
          Instruments and Supporting Obligations related thereto, (as such terms
          are defined in the Uniform Commercial Code as in effect in Connecticut
          from time to time) and contract rights,  including without  limitation
          all obligations to Obligors for the payment of money,  whether arising
          out of  Obligors'  sale of goods or rendition of services or otherwise
          (all hereinafter  called "Accounts") and all proceeds of the foregoing
          and all  proceeds  of any  insurance  on the  foregoing;  (ii)  all of
          Obligors' rights, remedies,  security and liens, in, to and in respect
          of the Accounts,  present and future,  including  without  limitation,
          rights of stoppage in transit, replevin,  repossession and reclamation
          and other rights and remedies of an unpaid  vendor,  lienor or secured
          party, guaranties or other contracts of suretyship with respect to the
          Accounts,  deposits or other security for the obligation of any debtor
          or obligor in any way obligated on or in connection with any Accounts,
          and credit and other insurance,  and all proceeds of the foregoing and
          all  proceeds  of any  insurance  on the  foregoing;  and (iii) all of
          Obligors' right, title and interest, present and future, in, to and in
          respect of all goods  relating to, or which by sale have  resulted in,
          Accounts, including without limitation all goods described in invoices
          or other  documents  or  instruments  with  respect  to, or  otherwise
          representing or evidencing any Accounts,  and all returned,  reclaimed
          or  repossessed  goods,  and all  proceeds  of the  foregoing  and all
          proceeds of any insurance on the foregoing.

          vv.  "Revolving  Line of Credit" means the $5,000,000  credit facility
          evidenced by the Revolving Line of Credit Note.

          ww.  "Revolving  Line of Credit  Note"  means the  promissory  note of
          Obligors dated the Date of Closing in the original principal amount of
          up to  $5,000,000,  as the same may be amended or amended and restated
          from time to time.

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          xx. "Senior Funded Debt" means all Indebtedness of Obligors other than
          Subordinated  Debt and the  Convertible  Debenture  issued  to  Marcon
          Capital Corporation as of September 30, 1999 in the original principal
          amount of $975,000.

          yy. "Standby Letter of Credit" means a standby letter of credit issued
          by the Lender for the  account of any Obligor in  accordance  with the
          terms of this Agreement.

          zz.  "Subordinated  Debt" means debt of any of the Obligors  which has
          been  subordinated  in  payment  to  the  Obligations  pursuant  to  a
          subordination agreement which is satisfactory in form and substance to
          the Lender.

          aaa.  "Subordinated   Encumbrances"  means  the  mortgages,   security
          interests,  pledges,  liens,  encumbrances  or other charges listed in
          Section B of Schedule 4.5.

          bbb.  "Subordinated  Lenders"  means (i) Henry E. Baker,  (ii) Joan A.
          Baker,  (iii)  John B.  Baker,  (iv)  Peter K.  Baker  and (v) Ross S.
          Rapaport,  not  individually but as Trustee of the Peter K. Baker Life
          Insurance  Trust,  the John B. Baker  Insurance Trust and U/T/A/ dated
          December 16, 1991 F/B/O Joan Baker et al (the "Trustee").

          ccc.  "Subsidiary"  means any corporation,  limited liability company,
          partnership or other entity,  a majority of whose  outstanding  stock,
          membership   interests,   partnership  interests  or  other  ownership
          interests having voting power to elect the board of directors or other
          governing  body or person of such entity shall at any time be owned or
          controlled by the Obligors.

          ddd.  "Term Loan" means the  $31,000,000  loan  evidenced  by the Term
          Note.

          eee. "Term Note" means the  promissory  note of the Obligors dated the
          Date of Closing in the original principal amount of $31,000,000.

          fff.  "Termination  Date" means, with respect to any Loan or any Note,
          the "Termination Date" as defined in the applicable Note.

          ggg.  "Total Assets" means total assets  determined in accordance with
          GAAP.

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          hhh.  "Total  Liabilities"  means  total  liabilities   determined  in
          accordance with GAAP.

          iii. "2001 Term Loan means the  $4,200,000  Loan evidenced by the 2001
          Term Note.

          jjj. "2001 Term Note" means  promissory note of the Obligors dated the
          same  date as this  Agreement  in the  original  principal  amount  of
          $4,200,000.

          kkk.  "Trademarks"  means all of Obligors' right,  title and interest,
          present and future, in and to (i) all trademarks,  trade names,  trade
          styles,  service  marks,  prints and labels on which said  trademarks,
          trade names,  trade styles and service  marks have appeared or appear,
          designs  and  general  intangibles  of like  nature,  now  existing or
          hereafter adopted or acquired,  all right,  title and interest therein
          and thereto,  and all registrations and recordings thereof,  including
          without limitation  applications,  registrations and recordings in the
          United States Patent and Trademark  Office or in any similar office or
          agency of the United States,  any State thereof,  or any other country
          or any  political  subdivision  thereof,  all  whether  now  owned  or
          hereafter  acquired by  Obligors;  (ii) all  reissues,  extensions  or
          renewals thereof and all licenses  thereof;  and (iii) the goodwill of
          the business  symbolized by each of the  Trademarks,  and all customer
          lists and other records of Obligors  relating to the  distribution  of
          products bearing the Trademarks; and all proceeds of the foregoing and
          all proceeds of any insurance on the foregoing.

          lll.  "Unfinanced  Capital  Expenditures"  means Capital  Expenditures
          financed with a party other than Lender.

1.2       Accounting Terms. Unless otherwise defined, all accounting terms shall
          be construed,  and all computations or  classifications  of assets and
          liabilities  and of income and expenses shall be made or determined in
          accordance with GAAP.

1.3       Financial  Covenants.  All financial covenants in this Agreement shall
          apply with respect to, and shall be measured in accordance  with,  the
          consolidated  financial  statements of Holdings and Platinum,  VPS and
          Crystal Rock.

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SECTION 2. The Loan Transactions.
           ---------------------

2.1       The Term Loan.  Lender  shall loan to  Obligors  the sum of THIRTY ONE
          MILLION DOLLARS ($31,000,000). Obligors' obligations to repay the Term
          Note and the terms and conditions of the Term Loan are as contained in
          this  Agreement and the Term Note, a copy of which is attached to this
          Agreement  as EXHIBIT 2.1. The proceeds of the Term Loan shall be used
          to fund the  acquisition  of Crystal Rock Spring Water  Company and to
          consolidate the existing debt of the Obligors.

2.2       The Revolving Line of Credit.  Lender may loan to any of the Obligors,
          and  any  Obligor  may  borrow  from  Lender,  from  time  to  time in
          accordance  with  the  terms  of this  Agreement,  up to FIVE  MILLION
          DOLLARS ($5,000,000) less (a) the maximum amount available to be drawn
          under all issued and outstanding  Standby Letters of Credit  (assuming
          all  conditions  for drawing have been  satisfied) at the time of such
          borrowing  under the  Revolving  Line of Credit,  and (b) all  amounts
          drawn under issued Standby  Letters of Credit for which the Lender has
          not been  reimbursed  by the  Obligors  at the time of such  borrowing
          under the Revolving Letter of Credit.  Obligors'  obligations to repay
          the Revolving  Line of Credit Note and the terms and conditions of the
          Revolving  Line of Credit are as contained in this  Agreement  and the
          Revolving  Line of Credit  Note,  a copy of which is  attached to this
          Agreement as EXHIBIT 2.2. The proceeds of the Revolving Line of Credit
          shall be used for general working capital purposes.

2.2A      The 2001 Term  Loan.  Lender  shall loan to  Obligors  the sum of FOUR
          MILLION  TWO  HUNDRED   THOUSAND   DOLLARS   ($4,200,000).   Obligors'
          obligations  to repay the 2001 Term Note and the terms and  conditions
          of the 2001 Term Loan are as contained in this  Agreement and the 2001
          Term Note,  a copy of which is attached to this  Agreement  as EXHIBIT
          2.2A-1.  The  proceeds  of the 2001 Term Loan shall be used to finance
          the  acquisition of assets of Iceberg Springs Water,  Inc.  Subject to
          the provisions of Section 8.20, on the Effective Date, the Lender will
          issue a Standby  Letter of Credit in the  amount of the  $4,588,093.00
          (the  "Iceberg  Letter of  Credit"),  the form of which is attached to
          this Agreement as EXHIBIT  2.2A-2.  The Standby Letter of Credit shall
          be effective until January 30, 2002 (the "Letter of Credit Term").  At
          or prior to the expiration of the Letter of Credit Term, upon delivery
          of the  Iceberg  Letter of Credit to Lender for  cancellation,  Lender
          shall fund the 2001 Term Loan.  In the event of a draw on the  Iceberg
          Letter  of  Credit,   any  payments   thereon  made  by  Lender  shall
          automatically  constitute advances by Lender to the Obligors under the
          2001 Term Loan.  Obligors  shall pay Lender a Standby Letter of Credit
          fee based on an annual fee of 2% of the amount of the  Iceberg  Letter
          of Credit,  prorated for the Letter of Credit Term. The Iceberg Letter
          of  Credit  shall be  governed  by the  terms of  Section  2.3 of this

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<PAGE>

          Agreement  with  respect to  Standby  Letters  of Credit  except  that
          $4,200,000  of the sum of the amount  available  to be drawn under the
          Iceberg  Letter of Credit  and the  amounts  drawn  under the  Iceberg
          Letter  of Credit  shall not be  included  in the  calculation  of the
          amount  available under the Revolving Line of Credit under Section 2.2
          of this  Agreement or for Standby  Letters of Credit under Section 2.3
          of this Agreement.

2.3       Standby  Letters  of  Credit.  Subject  to the  terms  and  conditions
          contained in this Agreement, Lender agrees to issue Standby Letters of
          Credit for drawing in Dollars for the account of  Obligors,  from time
          to time during the term of the  Revolving  Line of Credit in an amount
          not to exceed the  lesser of (i)  $5,000,000,  less (a) the  aggregate
          principal amount  outstanding  under the Revolving Line of Credit Note
          at the time of  issuance  of the  Standby  Letter of  Credit,  (b) the
          maximum amount  available to be drawn under all previously  issued and
          outstanding  Standby  Letters of Credit  (assuming all  conditions for
          drawing  have been  satisfied)  at the time of issuance of the Standby
          Letter of Credit,  and (c) all amounts drawn under  previously  issued
          Standby Letters of Credit for which the Lender has not been reimbursed
          by the  Obligors  at the time of  issuance  of the  Standby  Letter of
          Credit, or (ii) $750,000.

          a.   Notices of Issuance. Requests for the issuance of Standby Letters
               of Credit (or to amend,  renew or extend an  outstanding  Standby
               Letter of  Credit)  may be made only  once per  business  day and
               shall  be made  on  notice,  given  not  later  than  11:00  a.m.
               (Hartford,  Connecticut  time) two (2) business days prior to the
               date of the proposed issuance or amendment, renewal or extension,
               by any Obligor to Lender. Each such notice (which notice shall be
               irrevocable and binding on the Obligors) of issuance,  amendment,
               renewal or extension shall be by telephone, confirmed immediately
               in writing, or by telex or telecopier, specifying therein the (i)
               requested date of such issuance,  amendment, renewal or extension
               (which shall be a business day), (ii) requested  principal amount
               of such  Standby  Letter of Credit in  Dollars,  (iii)  requested
               expiration  date of such  Standby  Letter of Credit  (which shall
               comply with  subsection  (c) below),  (iv)  whether  such Standby
               Letter of Credit is renewable, and (v) names and addresses of the
               intended account party and the beneficiary of such Standby Letter
               of  Credit,   and  shall  be  accompanied  by  a  fully  executed
               application  and  agreement  for  letter of credit as Lender  may
               require of Obligors  for use in  connection  with such  requested
               Standby Letter of Credit (each a  "Reimbursement  Agreement") and
               such  Obligor's  payment of the  Lender's  then  current  Standby
               Letter of  Credit  fee.  If the  requested  form of such  Standby

                                       13
<PAGE>

               Letter of Credit is acceptable  to Lender,  Lender will make such
               Standby Letter of Credit  available to such Obligor at its office
               referred  to in the  first  paragraph  of  this  Agreement  or as
               otherwise  agreed  with  such  Obligor  in  connection  with such
               issuance.  In the event and to the extent that the  provisions of
               any  Reimbursement  Agreement shall conflict with this Agreement,
               the provisions of this Agreement shall govern.

           b.  Form of Letter of Credit.  Each Standby  Letter of Credit  shall,
               among other things,  (i) be in a form  acceptable to Lender,  and
               (ii) be governed by, and shall be construed in  accordance  with,
               the laws or rules designated in such Standby Letter of Credit, or
               if no such laws or rules are designated, the Uniform Customs and,
               as to matters not  governed by the Uniform  Customs,  the laws of
               the State of Connecticut  (without regard to its conflict of laws
               rules).

           c.  Expiry Dates. Each Standby Letter of Credit shall provide that it
               expires no later than the close of  business  seven days prior to
               the expiration date for the Revolving Line of Credit, unless such
               Standby Letter of Credit expires by its terms on an earlier date.

           d.  Payment for Standby Letter of Credit Draws. Lender shall have the
               right  (but  not  the  obligation),  in  its  sole  and  absolute
               discretion,  to effect reimbursement by Obligors to Lender of any
               payment made by Lender in connection  with a drawing made under a
               Standby Letter of Credit which is not reimbursed to Lender within
               the  time   specified  for   reimbursement   in  the   applicable
               Reimbursement  Agreement  by making an advance  on the  Revolving
               Line of Credit for the account of the Obligors. Each such advance
               shall bear  interest at the  Lender's  Prime Rate.  Lender  shall
               endeavor to give  Obligors  forty-eight  (48) hours prior  notice
               before making such an advance pursuant to this Section 2.3 d. but
               failure to provide such notice shall not effect Lender's right to
               make such an advance.

           e.  No Liability of Lender.  Obligors assume all risks of the acts or
               omissions of any  beneficiary or transferee of any Standby Letter
               of  Credit  with  respect  to the use of such  Standby  Letter of
               Credit,  and Obligors'  obligations with respect to payments made
               by Lender  under any Standby  Letter of Credit shall be absolute,
               unconditional  and irrevocable,  irrespective of: (i) any lack of

                                       14
<PAGE>

               validity or  enforceability  of any Standby Letter of Credit,  or
               any term or  provision  therein,  alleged  by a party  other than
               Lender; (ii) the existence of any dispute, claim, setoff, defense
               or other right that Obligors or any other person may have against
               the beneficiary under any Standby Letter of Credit, Lender or any
               other person,  whether in  connection  with this  Agreement,  any
               other Loan Document or any other  related or unrelated  agreement
               or transaction; (iii) any draft or other document presented under
               a Standby  Letter of Credit  proving  to be  forged,  fraudulent,
               invalid or insufficient  in any respect or any statement  therein
               being untrue or  inaccurate  in any  respect;  or (iv) any error,
               omission, interruption or delay in any transmission,  dispatch or
               delivery  of any  message  or  advice,  however  transmitted,  in
               connection with any Standby Letter of Credit.

               Without limiting the generality of the foregoing, it is expressly
               understood  and  agreed  that  the  absolute  and   unconditional
               obligation of Obligors  hereunder to reimburse  Standby Letter of
               Credit  drawings will not be excused by the negligence of Lender.
               However,  the  foregoing  shall not be construed to excuse Lender
               from  liability  to Obligors to the extent of any direct  damages
               (as opposed to consequential damages,  claims in respect of which
               are hereby waived by Obligors to the fullest extent  permitted by
               law) suffered by Obligors that are caused by (x) Lender's willful
               misconduct  or  negligence  in  determining   whether   documents
               presented  under any  Standby  Letter of Credit  comply  with the
               terms of the Standby  Letter of Credit,  or (y) Lender's  willful
               failure to make lawful  payment under a Standby  Letter of Credit
               after  presentation  to  it  of a  draft  or  documents  strictly
               complying with the terms and conditions of such Standby Letter of
               Credit. It is understood that Lender may, subject to the standard
               of negligence or willful misconduct, accept documents that appear
               on their face to be in order, without  responsibility for further
               investigation,  regardless  of any notice or  information  to the
               contrary and, in making any payment  under any Standby  Letter of
               Credit (1) Lender's exclusive reliance on the documents presented
               to it under  such  Standby  Letter  of  Credit  as to any and all
               matters set forth  therein,  including  reliance on the amount of
               any draft presented under such Standby Letter of Credit,  whether
               or not the amount due to the  beneficiary  thereunder  equals the
               amount of such draft and  whether or not any  document  presented
               pursuant  to  such  Standby   Letter  of  Credit   proves  to  be
               insufficient in any respect, if such document on its face appears
               to be in order,  and  whether or not any other  statement  or any
               other  document  presented  pursuant  to such  Standby  Letter of
               Credit  proves to be forged or invalid or any  statement  therein

                                       15
<PAGE>

               proves to be inaccurate or untrue in any respect whatsoever,  and
               (2) any noncompliance in any immaterial  respect of the documents
               presented  under  such  Standby  Letter of Credit  with the terms
               thereof shall, in each case, be deemed not to constitute  willful
               misconduct or negligence of Lender.

           f.  Interim Interest.  If Lender shall make any payment in respect of
               a Standby Letter of Credit, then, unless Obligors shall reimburse
               such payment in full on the date specified for  reimbursement  in
               the applicable Reimbursement Agreement, the unpaid amount thereof
               shall bear  interest for each day from and  including the date of
               such  payment  to but  excluding  the  date  of  payment,  at the
               Lender's Prime Rate.

2.4       Additional   Payments.   If  Lender  shall  deem  applicable  to  this
          Agreement,  the  Loans or the  Notes  (including,  in each  case,  the
          borrowed and the unused portion thereof) any requirement of any law of
          the United States of America, any regulation,  order,  interpretation,
          ruling or official  directive or guideline  (whether or not having the
          force of law) of the Board of Governors of the Federal Reserve System,
          the  Comptroller  of  the  Currency,  the  Federal  Deposit  Insurance
          Corporation  or any  other  board or  governmental  or  administrative
          agency of the United States of America  which shall impose,  increase,
          modify or make  applicable  thereto  or cause to be  included  in, any
          reserve,  special  deposit,  calculation  used in the  computation  of
          regulatory  capital  standards,  assessment or other requirement which
          imposes on Lender  any cost that is  attributable  to the  maintenance
          thereof,  then,  and in each such event,  Obligors  shall promptly pay
          Lender, upon its demand, such amount as will compensate Lender for any
          such cost, which  determination may be based upon Lender's  reasonable
          allocation of the aggregate of such costs  resulting from such events.
          In the event any such cost is a  continuing  cost,  a fee  payable  to
          Lender may be imposed upon  Obligors  periodically  for so long as any
          such cost is deemed  applicable by Lender,  in an amount determined by
          Lender to be necessary  to  compensate  Lender for any such cost.  The
          determination  by Lender of the  existence and amount of any such cost
          shall, in the absence of manifest error, be conclusive.

2.5       Direct Debit of Principal and Interest. Obligors agree that Lender may
          directly debit any Obligor's accounts held by Lender for any principal
          or interest payment on any Obligation when such Obligation becomes due
          and payable.

2.6       Fees.  The  Obligors  paid  to  Lender  on  the  Date  of  Closing  an
          underwriting  fee in the amount of One Hundred Eighty Thousand Dollars
          ($180,000), receipt of which is hereby acknowledged. The Obligors paid

                                       16
<PAGE>

          to Lender on the Date of  Closing a  commitment  fee in the  amount of
          Eighty-Seven  Thousand Dollars  ($87,000),  receipt of which is hereby
          acknowledged.  The  Obligors  shall  pay to the  Lender on the Date of
          Closing and on each  anniversary  thereof an annual  agency fee in the
          amount of Five Thousand  Dollars  ($5,000).  The Obligors shall pay to
          the Lender on the Effective Date (as hereinafter defined) a commitment
          fee in the amount of Forty-Two Thousand Dollars ($42,000).

2.7       Interest  Rate  Hedge.  The  Obligors  may hedge their  interest  rate
          exposure  on all or a  portion  of the Term Loan by  entering  into an
          interest  rate hedge  agreement  with  Lender or another  counterparty
          acceptable to Lender.  Any documentation  relating to such hedge shall
          contain  standard   provisions,   including  make  whole   provisions,
          acceptable to Lender.

SECTION 3.                 Collateral.
                           ----------

3.1       As  security  for the  payment  and  performance  of all  Obligations,
          Obligors hereby grant to Lender:

          a.   A first  priority  security  interest  in all of the  Collateral,
               subject only to the Prior Encumbrances.

          b.   A first priority security interest in all proceeds of any and all
               insurance on the Collateral.

          c.   A first priority  security  interest in all proceeds and products
               of any item or type of the Collateral.

3.2       Grant of Mortgages.   Obligors shall grant to Lender the Mortgages.

3.3       Location  of  Collateral.  All  Collateral  is and  will be  owned  by
          Obligors,  free  of  all  other  liens  and  encumbrances  other  than
          Permitted  Encumbrances  and shall be kept by Obligors at the Premises
          and at the  locations  listed on Schedule 3.3 and  Obligors  will not,
          without  Lender's  prior  written  approval,   remove  the  Collateral
          therefrom,  except for the purposes of sale in the ordinary  course of
          business.

3.4       Defend  Collateral.  Obligors shall defend the Collateral  against all
          claims and demands of all persons at any time claiming the same or any
          interest therein and, in the event the Lender's  security  interest in
          the Collateral,  or any part thereof,  would be impaired by an adverse

                                       17
<PAGE>

          decision,  allow the  Lender to  contest  or defend  any such claim or
          demand in the Obligors'  names and Obligors agree to pay, upon demand,
          the  Lender's  reasonable  costs,  charges  and  expenses,  including,
          without limitation, attorney's fees, in connection therewith.

3.5       Financing Statements. From time to time, at the request of the Lender,
          Obligors  shall  execute,  deliver  and  file  one or  more  financing
          statements  on Form  UCC-1  or  other  instruments,  and do all  other
          reasonable  acts as the Lender deems necessary or desirable to perfect
          fully or to keep perfected its security interest in the Collateral and
          pay,  upon  demand,  all  reasonable  expenses,   including,   without
          limitation,  attorney's  fees,  incurred  by the Lender in  connection
          therewith.  The Obligors hereby  irrevocably  appoint the Lender their
          attorney-in-fact  to execute  and file all such  UCC-1  forms or other
          instruments,  documents or agreements deemed necessary or desirable to
          fully perfect or keep perfected the Lender's  security interest in the
          Collateral.

3.6       Further  Assurances Re Inventory.  Obligors  shall perform any and all
          reasonable  steps  requested  by Lender to perfect  Lender's  security
          interest in the  Inventory,  such as leasing  warehouses  to Lender or
          Lender's   assignee,   placing  and  maintaining   signs,   appointing
          custodians,  executing and filing financing, amendment or continuation
          statements in form and substance  satisfactory to Lender,  maintaining
          stock  records  and  transferring  Inventory  to  warehouses.  If  any
          Inventory is in the  possession or control of any of Obligors'  agents
          or  processors,  Obligors  shall notify such agents or  processors  of
          Lender's security interest therein,  and, upon request,  instruct them
          to hold all  such  Inventory  for  Lender's  account  and  subject  to
          Lender's instructions.  A physical listing of all Inventory,  wherever
          located,  shall be taken by Obligors at least  annually  and  whenever
          requested by Lender, and a copy of each such physical listing shall be
          provided to Lender.  Lender may examine and inspect the Inventory upon
          reasonable notice during business hours.

3.7       Further Assurance Re Receivables.  Obligors shall place notations upon
          Obligors'   books  of  account  to  disclose  the  assignment  of  all
          Receivables to Lender or Lender's  security interest therein and shall
          perform all other  reasonable  steps requested by Lender to create and
          maintain in Lender's favor a valid first priority  security  interest,
          assignment or lien in, of or on all Receivables and all other security
          held by or for Lender.

3.8       Guaranties.   The   Obligations   shall  be  jointly   and   severally
          unconditionally  guarantied  by  the  Guarantors  as  provided  in the
          Guaranties executed by each of them.

                                       18
<PAGE>

3.9       Revised  Article 9. In  connection  with the revised  Article 9 of the
          Uniform  Commercial Code substantially in the form approved in 1998 by
          the  American  Law   Institute   and  the   National   Conference   of
          Commissioners on Uniform State Law ("Revised Article 9"), the Obligors
          hereby acknowledge and agree with the Lender as follows:

          a.   In applying the law of any  jurisdiction in which Revised Article
               9 is in effect,  the  Collateral  is all assets of the  Obligors,
               whether  or not  within  the  scope  of  Revised  Article  9. The
               Collateral shall also include, without limitation,  the following
               categories  of assets as  defined  in  Revised  Article  9: goods
               (including  inventory,  equipment  and any  accessions  thereto),
               instruments  (including  promissory notes),  documents,  accounts
               (including  health-care-insurance   receivables),  chattel  paper
               (whether    tangible   or    electronic),    deposit    accounts,
               letter-of-credit  rights  (whether or not the letter of credit is
               evidenced by a writing),  commercial tort claims,  securities and
               all other investment  property,  general  intangibles  (including
               payment intangibles and software), supporting obligations and any
               and all proceeds of any thereof,  wherever  located,  whether now
               owned and  hereafter  acquired.  If the Obligors (or any of them)
               shall at any time,  whether or not Revised Article 9 is in effect
               in any particular jurisdiction,  acquire a commercial tort claim,
               as defined in Revised  Article 9, the Obligors shall  immediately
               notify  the  Lender in a writing  signed by the  Obligors  of the
               brief  details  thereof and grant to the Lender in such writing a
               security interest therein and in the proceeds  thereof,  all upon
               the terms of this Agreement,  with such writing to be in form and
               substance  satisfactory to the Lender. The Lender may at any time
               and  from  time  to  time,  pursuant  to the  provisions  of this
               Agreement, file financing statements, continuation statements and
               amendments thereto that describe the Collateral as "all assets of
               the  Obligors" or words of similar  effect and which  contain any
               other information required by Part 5 of Revised Article 9 for the
               sufficiency   or  filing  office   acceptance  of  any  financing
               statement, continuation statement or amendment, including whether
               each Obligor is an organization, the type of organization and any
               organization   identification   number  issued  to  each  of  the
               Obligors.  The Obligors shall furnish any such information to the
               Lender  promptly upon  request.  Any such  financing  statements,
               continuation statements or amendments may be signed by the Lender
               on behalf of the Obligors  (or any of them),  as provided in this
               Agreement,  and may be  filed  at any  time  in any  jurisdiction
               whether  or not  Revised  Article  9 is  then in  effect  in that
               jurisdiction.

                                       19
<PAGE>

           b.  The Obligors shall at any time and from time to time,  whether or
               not   Revised   Article  9  is  in   effect  in  any   particular
               jurisdiction,  take  such  steps  as the  Lender  may  reasonably
               request for the Lender (a) to obtain an acknowledgement,  in form
               and substance  satisfactory  to the Lender,  of any bailee having
               possession  of any of the  Collateral  that the bailee holds such
               Collateral  for  the  Lender,  (b)  to  obtain  "control"  of any
               investment property, deposit accounts, letter-of-credit rights or
               electronic  chattel  paper (as such terms are  defined in Revised
               Article 9 with  corresponding  provisions  inss.ss.9-104,  9-105,
               9-106 and 9-107 relating to what  constitutes  "control" for such
               items of Collateral), with any agreements establishing control to
               be in form and  substance  satisfactory  to the  Lender,  and (c)
               otherwise to insure the continued  perfection and priority of the
               Lender's  security  interest in any of the  Collateral and of the
               preservation of its rights therein,  whether in anticipation  and
               following  the   effectiveness   of  Revised  Article  9  in  any
               jurisdiction.

           c.  Nothing  contained  herein shall be construed to narrow the scope
               of the security  interest granted hereby in any of the Collateral
               or the  perfection or priority  thereof or to impair or otherwise
               limit any of the rights,  powers,  privileges  or remedies of the
               Lender  hereunder  except  as  (and  then  only  to  the  extent)
               specifically  mandated  by Revised  Article 9 to the extent  then
               applicable.

3.10           Security Interest and License re Intangibles. The Obligors hereby
               grant to the Lender a security  interest  in and a  non-exclusive
               license  and  right  to use  any  and  all  patents,  copyrights,
               tradenames,   trademarks  and  all  applications   therefor,  and
               licenses to any patent,  copyright,  tradename or trademark  that
               the Obligors now owns,  has the right to use or may hereafter own
               or acquire the right to use. The Lender's  security  interest and
               non-exclusive  license, as set forth in this subparagraph,  shall
               specifically  include  all  rights of the  Obligors  which may be
               necessary  in order for the  Lender to  exercise  or get the full
               benefit and value from the  security  interest  set forth in this
               Agreement.

SECTION 4. Representations, Warranties and General Covenants. On the date hereof
and in order to induce Lender to enter into this Agreement,  Obligors represent,
warrant and covenant the following:

                                       20
<PAGE>

4.1       Organization and  Qualification.  Each Obligor is and will continue to
          be a corporation duly organized, validly existing and in good standing
          under  the  laws of the  state  of its  incorporation  and is and will
          continue  to be duly  qualified  and  licensed  to do business in each
          other  state  in  which  the  nature  of  its   business   makes  such
          qualification  necessary.  Each  Obligor  has all  requisite  permits,
          authorizations   and  licenses,   without   unusual   restrictions  or
          limitations,  to own,  operate and lease its properties and to conduct
          the  business in which it is  presently  engaged,  all of which are in
          full force and effect.

4.2       Corporate Records. The Certificate of Incorporation and all amendments
          thereto of each Obligor have been duly filed and are in proper  order.
          All capital  stock  issued by each  Obligor and  outstanding  has been
          properly  issued and is fully paid and  non-assessable,  and all books
          and records of each  Obligor,  including but not limited to its minute
          books,  bylaws, and books of account,  are accurate and up to date and
          will be so maintained.

4.3       Power and  Authority.  Each Obligor has the power to execute,  deliver
          and  carry  out the  terms of the  Loan  Documents  and to  incur  the
          Obligations  and has  taken all  necessary  action  to  authorize  the
          execution, delivery and performance by it of the Loan Documents.

4.4       No Legal Bar. The  execution  and delivery of the Loan  Documents  and
          compliance by Obligors with the terms and  provisions  thereof do not,
          on the date  hereof,  violate any  provision  of any  existing  law or
          regulation  or any  writ  or  decree  of  any  court  or  governmental
          instrumentality,  or any  agreement or  instrument to which any of the
          Obligors  is a party  or which  is  binding  upon any of them or their
          assets, and will not result in the creation or imposition of any lien,
          security interest, charge or encumbrance of any nature whatsoever upon
          or in any  of  their  assets,  except  as  contemplated  by  the  Loan
          Documents;  no consent of any other  party,  and no consent,  license,
          approval or  authorization  of or registration or declaration with any
          governmental  bureau or agency,  is  required in  connection  with the
          execution, delivery,  performance,  validity and enforceability of any
          of the Loan Documents; and the Loan Documents,  upon the execution and
          delivery  thereof  and the  execution  or  acceptance  thereof  by the
          Lender, will be legal, valid,  binding and enforceable  obligations of
          the Obligors in accordance with their respective terms.

                                       21
<PAGE>

4.5       Title;  No Liens.  Except as set forth on  Schedule  4.5,  each of the
          Obligors has good and marketable title to all of its Property, subject
          to no mortgage,  security interest, pledge, lien, encumbrance or other
          charge.

4.6       No  Litigation.  Except  as set  forth on  Schedule  4.6,  there is no
          litigation,  administrative proceeding, hearing or investigation of or
          before any governmental body presently pending or, to the knowledge of
          any of the Obligors,  threatened against it or any of its Property and
          if all of the  matters  set  forth on  Schedule  4.6  were  determined
          adversely  to  the  Obligors,  such  adverse  determinations,   either
          individually  or in the aggregate,  would not have a material  adverse
          effect on the Obligors,  their businesses or their Property taken as a
          whole.

4.7       No Default.  None of the Obligors are, on the date hereof,  in default
          with respect to the payment or performance of any of their Obligations
          or  other  Indebtedness  or in the  performance  of any  covenants  or
          conditions  to be performed  by any of them  pursuant to the terms and
          provisions of any  indenture,  agreement or instrument to which any of
          them are a party or by which any of them are bound, including the Loan
          Documents,  and none of the  Obligors has received a notice of default
          thereunder.

4.8       Compliance with Laws. Each Obligor has complied with and will continue
          to comply with all applicable laws, ordinances,  rules and regulations
          of  the  United   States  of  America,   and  all  states,   counties,
          municipalities and agencies of any governmental authority thereof.

4.9       Taxes.  Each  Obligor  has  filed or  caused  to be filed or  obtained
          extensions  for the filing of, and will  continue to file and cause to
          be filed, all federal,  state and local tax returns required by law to
          be filed,  and has paid and will continue to pay all taxes shown to be
          due and payable on such returns or on any assessment  made against it,
          except if being  contested in good faith,  if adequate  provision  has
          been made therefor on its books of account and if requested by Lender,
          a reserve satisfactory to Lender has been set aside to pay such taxes,
          interest,  penalties  and costs  associated  therewith.  No claims are
          being  asserted  with respect to such taxes which are not reflected in
          the  financial  statements  which have been  furnished  by Obligors to
          Lender.

4.10      Financial  Condition.  The Obligors have  submitted to Lender  various
          financial  statements  and  information  as of  October  31,  2000 and
          subsequent Form 10-Qs through the date hereof,  and represent that all
          of such financial information is true and correct; that such financial
          information  fairly  presents the  financial  condition and results of

                                       22
<PAGE>

          operations of each Obligor as of the dates thereof and for the periods
          indicated therein;  that such financial  statements have been prepared
          in  accordance  with  GAAP  and  practices   consistently   maintained
          throughout  the  periods  involved;  and that,  as of the date of such
          financial   information,   there  were  no  material   unrealized   or
          anticipated  losses  from any  unfavorable  commitments  of any of the
          Obligors  and that there has been no  material  adverse  change in the
          business or Property or in the condition,  financial or otherwise,  of
          any of the Obligors from that set forth in such financial statements.

4.11      Accuracy of Representations.  To the best of the Obligors'  knowledge,
          after  due  inquiry,  no  representation  or  warranty  by  any of the
          Obligors  contained in any certificate or other document  furnished or
          to be furnished by it pursuant to this Agreement or in connection with
          the transactions  contemplated under this Agreement,  contains,  or at
          the time of delivery  will contain,  any untrue  statement of material
          fact or omits or will omit to state a material fact  necessary to make
          it not misleading.

4.12      Trade Names and Chief Executive Offices. Each of the Obligors operates
          its business  under the trade names set forth for it on Schedule  4.12
          and has not used within the last five years and does not currently use
          any other trade names.  The chief executive office of each Obligor and
          its  principal  place of business is at the address set forth for that
          Obligor at the beginning of this Agreement.

4.13      Parents,   Affiliates   or   Subsidiaries.   Holdings  has  no  parent
          corporation   and  none  of  the  Obligors  have  any   Affiliates  or
          Subsidiaries  other  than each  other and  Adirondack  and  Excelsior.
          Platinum and Crystal Rock are wholly owned  Subsidiaries  of Holdings.
          VPS is a wholly owned Subsidiary of Platinum. Adirondack and Excelsior
          are wholly owned Subsidiaries of VPS.

4.14      Agreements  Regarding  Stock.  None of the Obligors has any agreements
          pertaining  to the  issuance,  purchase or sale of its capital  stock,
          except as set forth on Schedule 4.14.

4.15      Collective Bargaining  Agreements.  None of the Obligors is a party to
          any collective bargaining agreements.

4.16      Subsequent  Advances Under the Loans.  Each request by any Obligor for
          an advance under the Revolving Line of Credit or for the issuance of a
          Standby  Letter of Credit shall  constitute a  representation  by such
          Obligor to Lender that (a) all of the  representations  and warranties
          contained  in this  Agreement  shall  have  continued  to be true  and

                                       23
<PAGE>

          accurate to and including the date of such borrowing as though made on
          and as of such date; (b) no event has occurred and is  continuing,  or
          would exist as a result of the proposed  borrowing,  which constitutes
          an Event of Default  hereunder  or would  constitute  such an Event of
          Default  but for the  giving of notice or  passage  of time;  (c) each
          Obligor has performed all of the  agreements on its part  contained in
          the Loan  Documents  and required to be performed by it on or prior to
          the  date  of  such  borrowing;  and  (d)  the  corporate  resolutions
          authorizing the Loan Documents and the underlying  transactions remain
          in full force and effect and have not been  modified or amended in any
          respect.

4.17      Saleable  Value of Assets.  The fair  saleable  value of the assets of
          each Obligor, after giving effect to the transactions  contemplated by
          the  Loan  Documents,  will  be in  excess  of  its  debts  (including
          contingent, subordinated, unmatured and unliquidated liabilities).

4.18      Sufficient Cash Flow. Each Obligor has, and after giving effect to the
          transactions  contemplated  by the Loan  Documents  each  Obligor will
          have,  sufficient cash flow to continue to operate its business in the
          ordinary course as heretofore conducted,  make the payments called for
          by the Loan  Documents  and pay all  other  debts,  including  but not
          limited to payments under the Notes,  supplier  payments,  pension and
          other employee benefit plan liabilities,  business expenses and taxes,
          as the same shall become due.

4.19      No Hindrance.  None of the Obligors has any intent to hinder, delay or
          defraud any entity to which it is or will become indebted.

4.20      Capitalization.  None of the  Obligors,  after  giving  effect  to the
          transactions  contemplated by the Loan  Documents,  will be engaged in
          any business or  transaction  or is about to engage in any business or
          transaction for which it has unreasonably small capital.

4.21      Ability to Pay Debts. None of the Obligors, after giving effect to the
          transactions contemplated by the Loan Documents,  intends to incur nor
          does it believe  that it will incur debts beyond its ability to pay as
          they become due.

4.22      Ownership of Property.  None of the Obligors has in its possession any
          personal  property  of which it is not the  actual  owner,  except  as
          described on Schedule 4.22.

                                       24
<PAGE>

4.23      Benefit of Loans.  Each  Obligor  shall  receive  material  direct and
          indirect  benefits  from the making of any portion of the Loans to any
          of the Obligors and a satisfactory  financial condition and successful
          business operations of each Obligor benefits, directly and indirectly,
          each of the other Obligors.

4.24      Adirondack  and  Excelsior.  Neither  Adirondack  nor  Excelsior is an
          operating entity or has any assets, liabilities or revenues.

4.25      Compliance  with  Land  Use  Permits.  The  Obligors  are in  material
          compliance with all land use permits relating to the Premises.

4.26      Revised  Article  9  Information.  The  type of  organization  of each
          Obligor, the state of organization of each Obligor, the organizational
          identification  number of each Obligor for Revised  Article 9 purposes
          in  each  such  state  of  organization   and  the  Federal   Employer
          Identification  number of each Obligor is set forth on Schedule  4.26.

4.27      New York Real  Property.  The Obligors  sold for fair market value the
          real property owned by any of them in Sharon  Springs,  New York prior
          to July 5, 2001.

SECTION 5. Affirmative  Covenants.  Obligors covenant and agree that, so long as
any of the Obligations shall remain  outstanding,  they will perform and observe
each and all of the covenants and agreements herein set forth.

5.1       Payments  Under  this  Agreement  and the other Loan  Documents.  Each
          Obligor will make punctual  payment of all monies and will  faithfully
          and fully keep and perform all of the terms, conditions, covenants and
          agreements on its part to be paid,  kept or performed  hereunder,  and
          will be bound in all respects as obligor under this  Agreement and the
          other Loan  Documents.  All  Obligations  shall be direct and  primary
          obligations  of each  Obligor  and each  Obligor  shall be jointly and
          severally liable for all Obligations.

5.2       Information,  Access to  Books,  and  Inspection.  Each  Obligor  will
          furnish to Lender such information  regarding the business affairs and
          financial  condition of the Obligors as Lender may reasonably  request
          and give any  representative  of Lender access during normal  business
          hours to, and permit him/her to examine and copy,  make extracts from,
          and audit any and all books,  records and documents in the  possession
          of  Obligors  relating  to their  affairs  and to  inspect  any of the
          Property.

                                       25
<PAGE>

5.3       Payment of  Liabilities.  Each  Obligor  will pay and  discharge at or
          before their maturity all taxes, assessments, rents, claims, debts and
          charges,  except where the same may be  contested in good faith,  will
          maintain,  in  accordance  with  GAAP,  appropriate  reserves  for the
          accrual of any of the same and if requested by Lender,  will set aside
          a reserve satisfactory to Lender to pay such contested amounts and all
          taxes, interest, penalties and costs associated therewith.

5.4       Corporate Existence, Properties. Each Obligor will continue to conduct
          its business as presently  conducted;  will do or cause to be done all
          things  necessary  to  preserve  and keep in full force and effect its
          corporate existence,  rights and franchises,  and will comply with all
          laws applicable thereto; will maintain all licenses, patents and other
          rights necessary for the operation of its business;  will at all times
          maintain,  preserve and protect all franchises,  patents,  trademarks,
          trade names and water rights and will preserve all of the remainder of
          its  Property  used or useful in the conduct of its  business and will
          keep the same in good  condition and repair  (normal wear and tear and
          obsolescence excepted), and from time to time will reasonably make, or
          cause  to  be  made,  all  needful  and  proper   repairs,   renewals,
          replacements,  betterments and improvements  thereto,  and will pay or
          cause to be paid, except when the same may be contested in good faith,
          all rent due on premises where any Property is held or may be held, so
          that  the  business   carried  on  in  connection   therewith  may  be
          continuously conducted.

5.5       Insurance.  Each Obligor will have and maintain insurance at all times
          with respect to all Property and all Collateral  against risks of fire
          (including  so-called  extended  coverage),  theft  and such  risks as
          Lender may reasonably  require containing such terms, in such form, in
          such amounts (including 100% of the full insurable value of buildings,
          improvements and personal property with respect to casualty insurance)
          and for such periods,  and written by such companies as may reasonably
          be satisfactory to Lender,  such insurance to be payable to Lender and
          Obligors as their interests may appear. Each policy of insurance shall
          have a mortgagee and loss payee endorsement providing:

          a.   That loss or damage, if any under the policy, shall be payable to
               Lender, as secured party, as its interests may appear;

          b.   That the  insurance  as to the  interest  of Lender  shall not be
               invalidated  by any act or neglect of the insured or owner of the
               property  described in said policy,  nor by any  foreclosure,  or
               other proceeding,  nor by any change in the title of ownership of
               said  property,  nor by the  occupation of the premises where the
               property  is  located  for  purposes  more   hazardous  than  are
               permitted by said policy;

                                       26
<PAGE>

          c.   That,  if the  policy is  canceled  at any time by the  insurance
               carrier,  in such case the policy shall continue in force for the
               benefit  of Lender  for not less  than  thirty  (30)  days  after
               written  notice  of  cancellation  to Lender  from the  insurance
               carrier; and

          d.   That the policy will not be reduced or canceled at the request of
               the  insured nor will said loss payee  endorsement  be amended or
               deleted  without thirty (30) days' prior written notice to Lender
               from the insurance carrier.

          Upon  the  occurrence  of any  Event  of  Default,  Lender  may act as
          attorney  for the  Obligors in  obtaining,  adjusting,  settling,  and
          canceling such insurance and receiving and endorsing any drafts.  Each
          Obligor  hereby  assigns to Lender any and all monies which may become
          due and payable under any policy  insuring the  Collateral  covered by
          this  Agreement,  including  return of unearned  premiums,  and hereby
          directs any insurance  company issuing any such policy to make payment
          directly to Lender and authorizes  Lender, at its option: (i) to apply
          such monies in payment on account of any Obligation hereunder, whether
          or not due, and remit any surplus to Obligors;  or (ii) to return said
          funds to Obligors for the purpose of  replacement  of the  Collateral.
          Notwithstanding the foregoing, upon the damage, destruction or loss of
          any personal  property  which  constitutes  Collateral in an aggregate
          amount of  $250,000  or less,  Lender  agrees that it will return said
          funds to Obligors  for the purpose of  replacement  of the  Collateral
          with new  Collateral  of the same value and  utility if no event which
          constitutes  or which  with  notice or lapse of time,  or both,  would
          constitute   an  Event  of  Default  has   occurred  and  the  damage,
          destruction  or  loss  has  not   materially   impaired  the  business
          operations of any of the Obligors. If the damage,  destruction or loss
          of any  personal  property  which  constitutes  Collateral  exceeds an
          aggregate  amount of $250,000,  Lender agrees that it will return said
          funds to Obligors  for the purpose of  replacement  of the  Collateral
          with new  Collateral  of the same  value and  utility  but only on the
          following  conditions:  (i) no event which  constitutes  or which with
          notice or lapse of time, or both, would constitute an Event of Default
          has occurred, (ii) the damage,  destruction or loss has not materially
          impaired the business operations of any of the Obligors,  (iii) Lender
          has  approved  the  plans  and   specifications  for  the  replacement
          Collateral, (iv) funds are released to the Obligors as the replacement
          progresses  in  accordance  with  Lender's  customary  procedures  for
          financings  of  property  such  as the  replacement  Collateral.  Each

                                       27
<PAGE>

          Obligor   will  also  at  all  times   maintain   necessary   workers'
          compensation  insurance and such other insurance as may be required by
          law or as may be reasonably required in writing by Lender.

          Obligors  will  furnish  Lender with  certificates  or other  evidence
          satisfactory  to Lender of  compliance  with the  foregoing  insurance
          provisions  on the Date of Closing  and thirty (30) days prior to each
          anniversary of the Date of Closing.

5.6       Compliance  with  Laws.  Each  Obligor  shall  comply  with all  laws,
          ordinances,  rules or  regulations,  applicable to it, of all federal,
          state or  municipal  governmental  authorities,  instrumentalities  or
          agencies  including,  without  limitation,  ERISA,  the United  States
          Occupational  Safety  and  Health  Act of 1970,  as  amended,  and all
          federal,  state,  county and  municipal  laws,  ordinances,  rules and
          regulations relating to the environment or the employment of labor, as
          such may be amended.

5.7       Notices.  Obligors  will promptly give notice in writing to Lender of:
          (a) the occurrence of any event which constitutes or which with notice
          or lapse of time, or both,  would constitute an Event of Default under
          this Agreement or any of the other Loan Documents;  (b) the occurrence
          of any material  adverse  change in any  business,  properties  or the
          condition  or  operations,  financial  or  otherwise,  of  any  of the
          Obligors, or the occurrence of any event which is reasonably likely to
          result in such a material adverse change, in each case specifying such
          change  or  event;  (c) any  court or  governmental  orders,  notices,
          claims,  investigations,  litigation  and  proceedings  received by or
          involving any of the Obligors in which the aggregate  amount  involved
          is  $100,000  or more and not  covered by  insurance;  (d) any dispute
          which may  exist  between  any of the  Obligors  and any  governmental
          regulatory  body or any other  party;  and (e) any  proposed or actual
          change in the names,  identities or corporate  structure of any of the
          Obligors.

5.8       Financial  Statements;  Notice of Default.  Obligors  shall deliver or
          cause to be delivered to Lender:

          a.   As soon as  available  and in any event  within  ninety (90) days
               after  the  close  of  each  fiscal  year  of  Holdings,  audited
               consolidated and consolidating  financial  statements including a
               balance sheet as of the close of such fiscal year and  statements
               of income and  retained  earnings and source and  application  of
               funds for the year then ended,  all on a  comparative  basis with
               corresponding  statements  for  the  preceding  fiscal  year  and
               prepared in conformity with GAAP,  applied on a basis  consistent

                                       28
<PAGE>

               with that of the  preceding  year,  and  accompanied  by a report
               thereon,  containing an opinion,  unqualified  as to scope,  of a
               firm of  independent  certified  public  accountants  selected by
               Holdings and  acceptable  to Lender,  stating that the  financial
               statements fairly present the financial  condition and results of
               operation  of Holdings and  Platinum,  VPS and Crystal Rock as of
               their  date  and for the  period  then  ended,  and by a  written
               statement from such  accountants  stating that they have reviewed
               such financial  statements and the financial  covenants set forth
               herein and have found no evidence  of an Event of Default  having
               occurred or of an event which with passage of time and/or  giving
               of notice would constitute an Event of Default having occurred.

          b.   As soon as available and in any event within forty-five (45) days
               after  the end of  each  fiscal  quarter  in  each  fiscal  year,
               Holdings'  Form  10Q  as  filed  with  the  Securities   Exchange
               Commission and a balance sheet of Holdings and Platinum,  VPS and
               Crystal  Rock  as  of  the  close  of  such  fiscal  quarter  and
               statements  of income and  retained  earnings for that portion of
               the fiscal  year-to-date  then ended, all on a comparative  basis
               with the budget and prepared in conformity with GAAP,  applied on
               a basis consistent with that of the preceding  period,  and which
               shall be certified by the President or Chief Financial Officer of
               Holdings as being  accurate and fairly  presenting  the financial
               condition of Holdings and Platinum, VPS and Crystal Rock.

          c.   Together  with  the  statements   and  reports   referred  to  in
               sub-paragraphs  a. and b.  above,  a written  statement  from the
               President,  Chief Executive Officer or Chief Financial Officer of
               Holdings  certifying  compliance with all financial covenants and
               reflecting   all   computations   in  connection   therewith  and
               certifying  that there  exists no Event of Default,  or any event
               but for  the  giving  of  notice  or the  passage  of time  would
               constitute an Event of Default.

          d.   As soon as  available  and in any event at least thirty (30) days
               prior to the  commencement of any fiscal year,  detailed  budgets
               and  projections  for  the  upcoming  fiscal  year  of  Holdings,
               Platinum, VPS and Crystal Rock approved by the Board of Directors
               of Holdings.

          e.   From time to time,  promptly upon Lender's written request,  such
               other information about the financial condition and operations of
               Obligors  as Lender may  reasonably  request,  in form and detail
               satisfactory to Lender.

                                       29
<PAGE>

          f.

               Promptly on becoming aware of any Event of Default,  or any event
               but for  the  giving  of  notice  or the  passage  of time  would
               constitute an Event of Default, notice thereof in writing.

5.9       Operating  Accounts.  Obligors shall maintain their primary  operating
          and  disbursement  accounts  with  Lender and shall  utilize  the cash
          management  services  provided  by the Lender or any  Participant  (as
          defined   below)  as  long  as  such  entity  remains  a  Participant,
          including,  at  Obligors'  option,  automated  "sweep" and  investment
          features.   VPS  may  retain  a  local  depository   relationship  for
          collection and payroll purposes.

5.10      Pension Plans.
          -------------

          a.   No event, including but not limited to any "reportable event", as
               that  term is  defined  in  Section  4043  of  ERISA,  exists  in
               connection  with any of its Plans and any entities  related to it
               under  Section  414(b),  (c),  (m),  (n) or (o) of the  Code  has
               occurred which might  constitute  grounds for  termination of any
               such Plan by the PBGC, or for the  appointment by the appropriate
               United States  District Court of a trustee to administer any such
               Plan. A list of all of the Obligors' Plans are attached hereto on
               Schedule 5.10;

          b.   No "prohibited  transaction" within the meaning of Section 406 of
               ERISA or Section  4975 of the Code  exists or will exist upon the
               execution  and  delivery  of this  Agreement  and the other  Loan
               Documents, or the performance by the parties hereto or thereto of
               their respective duties and obligations hereunder and thereunder;

          c.   Each Obligor  shall do all acts,  including,  but not limited to,
               making all  contributions  necessary to maintain  compliance with
               ERISA and the Code,  and  agrees not to  terminate  any Plan in a
               manner  or do or fail to do any act  which  could  result  in the
               imposition of a lien on any of its properties pursuant to Section
               4068 of ERISA;

          d.   None  of the  Obligors  sponsors  or  maintains,  and  has  never
               contributed  to, and has not  incurred any  withdrawal  liability
               under a "multi  employer  plan" as  defined in Section 3 of ERISA
               and none has any  written  or  verbal  commitment  of any kind to
               establish,  maintain or contribute to any "multi  employer  plan"
               under the Multi Employer Pension Plan Amendments Act of 1980;

                                       30
<PAGE>

          e.   None of the Obligors has any unfunded  liability in contravention
               of ERISA and the Code;

          f.   Each of the Plans  complies  currently,  and has  complied in the
               past, both as to form and operation,  with its terms and with the
               provisions of the Code and ERISA, and all applicable  regulations
               thereunder  and  all  applicable  rules  issued  by the  Internal
               Revenue  Service,  U.S.  Department  of Labor and the PBGC and as
               such, is and remains a "qualified" plan under the Code;

          g.   No  actions,  suits or claims are  pending  (other  than  routine
               claims for benefits) against any Plan or the assets of any Plan;

          h.   Each  Obligor  has  performed  all  obligations  required  to  be
               performed by it under any Plan set forth in Schedule  5.10 and it
               is  not in  default  or in  violation  of any  Plan,  and  has no
               knowledge  of any such default or violation by any other party to
               any such Plans;

          i.   No liability  has been  incurred by any Obligor to the PBGC or to
               participants or  beneficiaries on account of any termination of a
               Plan  subject  to Title IV of  ERISA,  no  notice  of  intent  to
               terminate  a Plan has been filed by (or on behalf of) it pursuant
               to Section 4041 of ERISA and no proceeding  has been commenced by
               the PBGC pursuant to Section 4042 of ERISA;

          j.   The reporting and disclosure  provisions of the Securities Act of
               1933 and Securities  Exchange Act of 1934 have been complied with
               for all Plans.

5.11      Environmental Matters.
          ---------------------

          a.   Each  Obligor  has  obtained  all  permits,  licenses  and  other
               authorizations  which are required under all Environmental  Laws.
               Each Obligor is in  compliance  with the terms and  conditions of
               all such  permits,  licenses and  authorizations,  and is, to the
               best  of  its  knowledge,  also  in  compliance  with  all  other
               limitations,  restrictions,  conditions, standards, prohibitions,
               requirements,  obligations, schedules and timetables contained in
               any  applicable  Environmental  Law or in any  regulation,  code,
               plan,  order,  decree,  judgment,  injunction,  notice  or demand
               letter issued, entered, promulgated or approved thereunder.

                                       31
<PAGE>

          b.   No  notice,   notification,   demand,  request  for  information,
               citation, summons or order has been issued, no complaint has been
               filed,  no penalty  has been  assessed  and no  investigation  or
               review is  pending or  threatened  by any  governmental  or other
               entity with respect to any alleged failure by any Obligor to have
               any permit,  license or authorization required in connection with
               the conduct of its business or with respect to any  Environmental
               Laws,  including without limitation,  Environmental Laws relating
               to the generation, treatment, storage, recycling, transportation,
               disposal or release of any Hazardous Materials.

          c.   No oral or  written  notification  of a  release  of a  Hazardous
               Material has been filed by or against any Obligor and to the best
               of each Obligor's knowledge, no property now or previously owned,
               leased or used by it is listed or  proposed  for  listing  on the
               Comprehensive Environmental Response,  Compensation and Liability
               Inventory  of  Sites  or  National   Priorities  List  under  the
               Comprehensive Environmental Response,  Compensation and Liability
               Act of 1980, as amended,  or on any similar state or federal list
               of sites requiring investigation or clean-up.

          d.   There are no liens or  encumbrances  arising under or pursuant to
               any Environmental Laws on any of the property or properties owned
               by any Obligor,  and no  governmental  actions have been taken or
               are in process which could subject any of such properties to such
               liens or encumbrances  or, as a result of which any Obligor would
               be  required to place any notice or  restriction  relating to the
               presence of Hazardous  Materials  at any property  owned by it in
               any deed to such property.

          e.   Neither  Obligors  nor,  to the  best  of  their  knowledge,  any
               previous owner, tenant, occupant or user of any property owned by
               any of them,  has (i) engaged in or permitted  any  operations or
               activities upon or any use or occupancy of such property,  or any
               portion  thereof,  for the purpose of or in any way involving the
               release, discharge,  refining, dumping or disposal (whether legal
               or illegal, accidental or intentional) of any Hazardous Materials
               on, under, in or about such property,  or (ii) transported or had
               transported  any Hazardous  Materials to such property  except to
               the extent such  Hazardous  Materials  are raw products  commonly
               used in day-to-day operations of such property and, in such case,
               in compliance with, all  Environmental  Laws; (iii) engaged in or
               permitted  any  operations  or  activities  which would allow the
               facility  to be  considered  a  treatment,  storage  or  disposal

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<PAGE>

               facility  as that  term is  defined  in 40 CFR 264 and 265,  (iv)
               engaged in or permitted any operations or activities  which would
               cause  any  property  now  owned,  leased or used by it to become
               subject to any state transfer act, or (v) constructed,  stored or
               otherwise located Hazardous  Materials on, under, in or about any
               property  now  owned,  leased or used by it except to the  extent
               commonly used in day-to-day operations of such properties and, in
               such case, in compliance with all Environmental Laws. Further, to
               the best of  Obligors'  knowledge,  no Hazardous  Materials  have
               migrated  from  other  properties  upon,  about  or  beneath  any
               property now owned, leased or used by any of them.

5.12      South  Norwalk  Property.  One of the Obligors is assuming a lease for
          property  located at 205 Wilson Avenue in South  Norwalk,  Connecticut
          (the "South  Norwalk  Property").  The  Obligors  agree that they will
          remove all Collateral from the South Norwalk  Property by November 15,
          2001, they will not keep any Collateral at the South Norwalk  Property
          at any time after  November  15,  2001,  and they will not conduct any
          business operations at the South Norwalk Property at any time.

SECTION 6. Negative Covenants. So long as any Obligations remain outstanding and
unpaid,  Obligors  covenant  and agree that they will not  without  the  express
written consent of Lender:

6.1       Limitation  on Liens.  Incur or  permit  to exist any lien,  mortgage,
          security  interest,  pledge,  charge or other encumbrance  against the
          Property, whether now owned or hereafter acquired (including,  without
          limitation,  any lien or encumbrance relating to any response, removal
          or clean-up of any toxic substances or hazardous wastes),  except: (a)
          liens, mortgages, security interests, charges or other encumbrances in
          favor of Lender or  specifically  permitted in writing by Lender;  (b)
          pledges  or  deposits  in  connection   with  or  to  secure  workers'
          compensation or unemployment insurance;  (c) tax liens which are being
          contested in good faith with the prior  written  consent of Lender and
          against  which,  if  requested  by  Lender,  Obligors  shall  maintain
          reserves  in  amounts  and in form  (book,  cash,  bond or  otherwise)
          satisfactory to Lender;  (d) the liens existing on the Date of Closing
          which are listed on  Schedule  4.5;  and (e)  purchase  money  capital
          leases  pursuant to which the amount financed does not exceed $250,000
          (less all amounts outstanding under the leases on Schedule 6.1) in any
          one fiscal year.

6.2       Limitation  on Other  Borrowing.  Incur,  create,  assume or permit to
          exist any Indebtedness  other than (a) Indebtedness to Lender pursuant
          to this Agreement,  (b)  Indebtedness  existing on the Date of Closing
          which is listed on Schedule 6.2, (c) purchase money indebtedness under

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<PAGE>

          capital leases  pursuant to which the amount  financed does not exceed
          $250,000  (less all amounts  outstanding  under the leases on Schedule
          6.1) in any one  fiscal  year,  and (d)  purchase  money  indebtedness
          permitted pursuant to Section 6.4.

6.3       Limitation  on  Contingent  Liabilities.  Become  liable as guarantor,
          surety, endorser or otherwise for, or agree to purchase, repurchase or
          assume, any obligation of any person, firm or corporation,  except for
          endorsement of commercial paper for deposit,  collection,  or discount
          in the ordinary course of business.

6.4       Limitation  on Advances and  Investments.  Make or suffer to exist any
          advances or loans to, or any investments in (by transfers of property,
          contributions to capital,  purchase of stock or securities or evidence
          of  indebtedness,  acquisition of assets or business or otherwise) any
          person,  firm or  corporation,  including  officers  or  employees  of
          Obligors,  other than capital  expenditures  permitted by Section 6.20
          and acquisitions of all the stock or all or  substantially  all of the
          assets of any  entity  (each an  "Acquisition")  funded by  internally
          generated cash, stock of Holdings or purchase money  indebtedness owed
          to the seller of the stock or assets of such entity being acquired for
          which the total purchase price in any one Acquisition  does not exceed
          $500,000 and the total purchase price for all  Acquisitions in any one
          fiscal  year does not exceed  $1,000,000  and after  giving  effect to
          which no Event of Default, or event which with the giving of notice or
          the passage of time would  constitute an Event of Default,  shall have
          occurred.

6.5       Limitation on Fundamental  Changes.  Merge or consolidate with or into
          any  other  firm  or  corporation;   dissolve  or  liquidate;   change
          substantially  their lines of business;  change  their names;  convey,
          sell, lease or otherwise  dispose of all or substantially all of their
          property, assets or business.

6.6       Limitation on Affiliates and Subsidiaries. Acquire, form or dispose of
          any  Subsidiary or Affiliate or acquire all, or  substantially  all or
          any material portion of the stock or assets of any other person, firm,
          corporation,  corporate  division  or business  entity  other than (i)
          Acquisitions  permitted  by  Section  6.4,  provided,   however,  that
          Obligors  have given prior written  notice  thereof to Lender and have
          taken,  at  Obligors'  sole cost and  expense,  all  steps  reasonably
          required  by Lender to perfect a  Lender's  security  interest  in the
          stock or  assets  acquired,  (ii) the  dissolution  of  Adirondack  or
          Excelsior,  and  (iii) the  merger  of  Platinum  into  Holdings  with
          Holdings being the surviving entity; provided,  however, that Obligors
          have given prior written notice thereof to Lender.

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<PAGE>

6.7       Limitation  on  Changes in  Management.  Make or consent to a material
          change  in the  manner  in  which  the  business  of the  Obligors  is
          conducted or make or consent to a change in  management so that any of
          Timothy G. Fallon, Bruce S. MacDonald,  John Baker or Peter Baker (the
          "Managers") are no longer  actively  involved in the management of the
          Obligors. Each Manager shall be a party to an employment contract that
          is satisfactory to Lender.

6.8       Limitation  on  Disposition  of Assets.  Sell,  exchange or  otherwise
          dispose of any Property,  other than  finished  goods and inventory in
          the ordinary course of business and obsolete  equipment no longer used
          or useful in the conduct of business which is replaced by equipment of
          at least  equivalent value which is subject to a valid perfected first
          priority  security  interest in the Lender;  provided,  however,  that
          Obligors need not replace any such  equipment if it is  unnecessary to
          do so in the  business  judgment  of the  Obligors  and  the  proceeds
          thereof are applied to the outstanding  principal  balance on the Term
          Loan.

6.9       Limitation on Dividends and Distributions. Declare or pay any dividend
          (unless payable in capital stock of Holdings) or authorize or make any
          other  distribution  on or with respect to any shares of capital stock
          of Holdings, whether now or hereafter outstanding.

6.10      Limitation on  Acquisition  of Stock of Holdings.  Purchase,  acquire,
          redeem or retire, or make any commitment to purchase,  acquire, redeem
          or  retire  any of the  capital  stock  of  Holdings,  whether  now or
          hereafter outstanding.

6.11      Limitation   on  Officer   Compensation.   Pay   direct  or   indirect
          compensation  to any  officer  or  director,  whether  salary,  bonus,
          commission,  stock distribution,  stock dividend, or otherwise,  which
          would,  after giving  effect  thereto,  constitute an Event of Default
          hereunder.

                                       35
<PAGE>

6.12      Limitation   on   Transactions   with   Affiliates.   Other  than  the
          Subordinated  Debt with the Subordinated  Lenders and the Subordinated
          Encumbrances  related  thereto,  enter  into,  or be a party  to,  any
          transaction  with  any  Affiliate   (including,   without  limitation,
          transactions involving the purchase, sale or exchange of property, the
          rendering  of  services or the sale of stock)  except in the  ordinary
          course of business  pursuant  to the  reasonable  requirements  of the
          Obligors and upon fair and  reasonable  terms no less favorable to the
          Obligors  than  Obligors  would  obtain in a  comparable  arm's-length
          transaction with a person other than an Affiliate.

6.13      Limitation on Change of Name or Location. Change their corporate names
          or conduct any of their  business  under any trade name or style other
          than as set forth on Schedule  4.12 or change  their  chief  executive
          offices,  principal  places of business or other places of business or
          the locations of the Collateral or records  relating to the Collateral
          from  those  locations  set forth in  Section  3.3 and  Section  4.12;
          provided,  however,  that Obligors may do any of the foregoing,  other
          than  change  their chief  executive  offices or  principal  places of
          business,  if Obligors  give at least  thirty (30) days prior  written
          notice  thereof  to Lender  and  take,  prior to any such  change,  at
          Obligors'  sole cost and  expense,  all steps  reasonably  required by
          Lender to maintain Lender's  perfection of its first priority security
          interest in the Collateral.

6.14      Mandatory  Prepayment.  Permit the outstanding principal amount of the
          Revolving  Line of Credit Note to exceed,  at any time,  five  million
          dollars ($5,000,000) less (a) the maximum amount available to be drawn
          under all issued and outstanding  Standby Letters of Credit  (assuming
          all conditions for drawing have been  satisfied),  and (b) all amounts
          drawn under issued Standby  Letters of Credit for which the Lender has
          not been reimbursed by the Obligors and, in the event any advances are
          outstanding in excess of such amount, prepay on any day so much of the
          outstanding principal amount which is in excess thereof.

6.15      Limitation  on Changes  in  Accounting  Methods.  Make or consent to a
          material change in their method of accounting.

6.16      Senior  Funded Debt to EBITDA.  Permit the ratio of Senior Funded Debt
          to EBITDA to be greater  than 3.50 to 1.00 as of the end of the fiscal
          quarter  ending October 31, 2001 or to be greater than 3.00 to 1.00 as
          of the end of any  fiscal  quarter  thereafter.  This  ratio  shall be
          tested  as of the end of each  fiscal  quarter,  commencing  with  the
          fiscal  quarter  ending  October 31, 2001, for the fiscal quarter then
          ended and the immediately preceding three fiscal quarters.

6.17      Debt Service Coverage Ratio. Permit its Debt Service Coverage Ratio to
          be less than 1.2 to 1.0.  This ratio  shall be tested as of the end of
          each fiscal quarter, commencing with the fiscal quarter ending October
          31,  2001,  for the  fiscal  quarter  then  ended and the  immediately
          preceding three fiscal quarters.

6.18      Current  Ratio.  Permit its Current  Ratio to be less than 1.0 to 1.0.
          This ratio shall be tested as of the end of each fiscal quarter.

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<PAGE>

6.19      Net  Losses.  Permit any Net Loss,  excluding  extraordinary  expenses
          incurred  in  conjunction  with the  acquisition  of  Crystal  Rock by
          Holdings and the Loans. This covenant shall be tested as of the end of
          the second,  third and fourth fiscal quarters,  for the fiscal quarter
          then ended, of each fiscal year.

6.20      Capital Expenditures.  Permit Capital Expenditures in any fiscal year,
          on a non cumulative basis, to exceed the lesser of (i) $3,000,000 plus
          Net  Income  or  (ii)  $5,000,000;  provided,  however,  that  Capital
          Expenditures  incurred  in the  acquisition  of the  assets of Iceberg
          Springs  Water,  Inc.  shall be excluded from such  calculation.  This
          covenant shall be tested as of the end of each fiscal year, commencing
          with the fiscal year ending October 31, 2001.

6.21      Adirondack and Excelsior.  Permit either of Adirondack or Excelsior to
          conduct any business, acquire any assets or incur any liabilities.

SECTION 7.    Default.
              -------

7.1       The occurrence of any of the following events will constitute an Event
          of Default under this Agreement:

          a.   The  failure by  Obligors  to pay any  installment  of  principal
               and/or interest due under either of the Loans or any of the other
               Obligations when due and payable.

          b.   The  failure  by  Obligors  to  pay  taxes,  if  any,  due on any
               indebtedness  under the Loans or any tax or  assessment  upon any
               collateral securing the Obligations,  on or before the same shall
               become due and payable.

          c.   The failure of Obligors (i) to observe or perform any affirmative
               covenant  contained  in  Section 5 of this  Agreement  other than
               sections 5.5 and 5.7 and such failure  continues  for a period of
               thirty (30) days,  provided that Obligors at all times diligently
               pursue the cure of such failure or (ii) to observe or perform any
               other covenant  contained in this Agreement,  including  sections
               5.5 and 5.7, or in any of the other Loan Documents.

          d.   The occurrence of an Event of Default under any of the other Loan
               Documents.

          e.   The  filing  by  or  against   any   Obligor  of  any   petition,
               arrangement,  reorganization, or the like under any insolvency or
               bankruptcy law, or the  adjudication of any Obligor as a bankrupt
               (and if such  filing is  involuntary,  the  failure  to have same
               dismissed within sixty (60) days from the date of filing), or the
               making of an  assignment  for the  benefit of  creditors,  or the
               appointment of a receiver for any part of Obligors' properties or
               the  admission in writing by any Obligor of its  inability to pay
               debts as they become due.

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<PAGE>

          f.   The breach of any material  warranty or the untruth or inaccuracy
               of any material  representation  of any Obligor  contained in the
               Loan Documents.

          g.   The occurrence of a default  beyond any applicable  grace or cure
               period  under,  or demand for the  payment  of, any other note or
               obligation of any Obligor to Lender.

          h.   The  failure by any Obligor to make  payment on any  Indebtedness
               with an outstanding principal balance in excess of $25,000 due to
               any party other than  Lender,  beyond any grace  period  provided
               with respect thereto,  or upon demand,  or the failure to perform
               any other term, condition, or covenant contained in any agreement
               under which any such Indebtedness is created, the effect of which
               failure is to cause such  Indebtedness  to become due and payable
               prior to its date of maturity.

          i.   The  dissolution,  liquidation or termination of existence of any
               Obligor.

          j.   The passage or enforcement of any federal, state, or local law or
               the rendition of a final  decision of any court (other than a law
               or decision  with  respect to a tax upon the general  revenues of
               Lender) in any way directly  changing or affecting  either of the
               Loans or lessening  the net income  thereon in a fashion which is
               not corrected or reimbursed by Obligors.

          k.   The passage or enforcement of any federal, state, or local law or
               the  rendition  of a  final  decision  of any  court  in any  way
               impairing  Lender's  ability to charge and collect  the  interest
               stated in the Notes, including without limitation, the ability to
               vary the interest payable under the Notes in accordance with this
               term.

          l.   A  judgment  or  judgments  for the  payment  of  money  shall be
               rendered  against any  Obligor,  any such  judgment or  judgments
               shall  remain  unsatisfied  and in effect  for a period of thirty
               (30)  consecutive days without a stay of execution and either the

                                       38
<PAGE>

               amount of such  judgment or  judgments is in excess of $25,000 or
               any attachment or execution  occurs on any property of any of the
               Obligors with respect to such judgment or judgments..

          m.   The occurrence of a material  adverse change to the Collateral or
               in any business, properties,  condition or operations,  financial
               or otherwise, of any Obligor.

7.2       No  Further  Advances.  Upon the  happening  of any  Event of  Default
          specified  above,  Obligors  shall  not be  entitled  to  any  further
          advances  under the  Revolving  Line of Credit or the  issuance of any
          Standby Letters of Credit and, at the option of the Lender, the entire
          unpaid balance owed under the Loans,  the Notes and the Loan Documents
          and under any other note or other documents  evidencing the same, plus
          any other sums owed  hereunder,  shall become and shall  thereafter be
          immediately  due and payable  without  presentment,  demand,  protest,
          notice of protest,  or other  notice of  dishonor of any kind,  all of
          which are hereby  expressly  waived by Obligors.  Notwithstanding  the
          foregoing,  upon an Event of Default  pursuant to Section  7.1e.,  the
          entire  unpaid  balance  owed under the Loans,  the Notes and the Loan
          Documents and under any other note or other  documents  evidencing the
          same, plus any other sums owed hereunder,  shall automatically  become
          and shall  thereafter  be  immediately  due and  payable.  Failure  to
          exercise  such option  shall not  constitute  a waiver of the right to
          exercise  the same in the event of any  subsequent  default.  Upon the
          occurrence  of any  Event of  Default,  without  in any way  affecting
          Lender's other rights and remedies, or after maturity or judgment, the
          interest  rate  applicable  to each of the Loans  shall  automatically
          change  without  notice to a  floating  rate per  annum  equal to four
          percentage points (4%) above the otherwise then applicable rate.

7.3       Rights  of  Lender.  In the  event  of the  occurrence  of an Event of
          Default  (a)  Lender  will  have the right to take  possession  of the
          Collateral and to maintain such possession on Obligors' premises or to
          remove the Collateral or any part thereof to such places as Lender may
          desire.  If  Lender  exercises  its  right to take  possession  of the
          Collateral,   Obligors  will,  upon  Lender's  demand,   assemble  the
          Collateral  and make it  available  to  Lender  at a place  reasonably
          convenient to both parties;  (b) Lender shall have, in addition to all
          other  rights  provided  herein,  the rights and remedies of a secured
          party  under the  Uniform  Commercial  Code;  (c)  Lender may sell and
          deliver  any or all  Receivables  and any or all  other  security  and
          Collateral held by Lender or for Lender at public or private sale, for
          cash, upon credit or otherwise,  at such prices and upon such terms as
          Lender  deems  advisable,  at  Lender's  sole  discretion;  and (d) in

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<PAGE>

          addition to all other sums due Lender, Obligors will pay to Lender all
          costs and expenses incurred by Lender,  including  attorneys' fees, to
          obtain or enforce payment of Receivables or the Obligations, or in the
          prosecution  or  defense of any action or  proceeding  either  against
          Lender or against any Obligor  concerning any matter arising out of or
          connected  with this Agreement or the Collateral or the Loan Documents
          or  otherwise  due  pursuant  to the  terms  of  this  Agreement.  Any
          requirement of reasonable notice shall be met if such notice is mailed
          postage prepaid to each Obligor at each Obligor's address as set forth
          herein  at  least  five  (5)  days  before  the  time of sale or other
          disposition.  Lender may be the  purchaser at any such sale,  if it is
          public,  and, in the event Lender is the purchaser,  Lender shall have
          all the rights of a good faith,  bona fide  purchaser for value from a
          secured  party after  default.  The  proceeds of sale shall be applied
          first to all costs and expenses of sale,  including  attorneys'  fees,
          and second to the payment (in  whatever  order  Lender  elects) of all
          Obligations, and any remaining proceeds shall be applied in accordance
          with the  provisions  of  Article 9 of the  Uniform  Commercial  Code.
          Obligors shall remain liable to Lender for any deficiency.  Failure by
          Lender to exercise any right, remedy or option under this Agreement or
          any of the other Loan Documents or in any other agreement  between any
          Obligor and Lender, or delay by Lender in exercising the same will not
          operate as a waiver by Lender  unless it is in  writing  and signed by
          Lender and then only to the extent specifically stated. Neither Lender
          nor any party acting as Lender's  attorney  pursuant to this Agreement
          shall be liable for any error of  judgment  or mistake of fact or law.
          Lender's  rights and remedies  under this Agreement will be cumulative
          and not  exclusive of any other right or remedy which Lender may have.
          Nothing in this  Agreement  shall be  construed to modify or limit the
          unconditional right of Lender in its sole discretion to demand full or
          partial  payment  of the  principal  of, and  interest  on, any demand
          Obligation.  The right to make  demand on any such  demand  Obligation
          shall  exist  whether  or not  Obligors  are in  compliance  with  the
          covenants or  conditions  contained in this  Agreement or in any other
          agreements between Obligors and Lender.

7.4       Collection of Receivables. Upon the occurrence of an Event of Default,
          Lender or its  designee  may notify  customers  or account  debtors of
          Obligors at any time, that Receivables have been assigned to Lender or
          of Lender's  security  interest  therein and collect them directly and
          charge the collection costs and expenses to Obligors' account.

7.5       Power of Attorney.  Obligors appoint Lender,  or any other person whom
          Lender  may  designate  as its  attorney,  with  power  following  the
          occurrence of an Event of Default:  to endorse  Obligors' names on any
          checks,  notes,  acceptances,  money orders,  drafts or other forms of

                                       40
<PAGE>

          payment or security  that may come into Lender's  possession;  to sign
          Obligors'  names on any  invoice  or bill of  lading  relating  to any
          Receivables, on notices of assignment, financing statements, and other
          public  records,  on  verifications  of  accounts  and on  notices  to
          customers; to notify the post office authorities to change the address
          for delivery of Obligors' mail to an address  designated by Lender; to
          send requests for  verification of Receivables to customers or account
          debtors;  and to do all things  necessary to carry out this Agreement.
          Obligors  ratify and approve all acts of the attorney.  Neither Lender
          nor the attorney  will be liable for any acts or omissions nor for any
          error of judgment or mistake of fact or law. This power, being coupled
          with an interest,  is irrevocable so long as any Receivables  assigned
          to Lender or in which Lender has a security  interest remain unpaid or
          until the Obligations have been fully  satisfied.  Lender may file one
          or more financing  statements  disclosing  Lender's  security interest
          without Obligors' signatures appearing thereon.

SECTION 8.  Miscellaneous.
            -------------

8.1       Indemnification.  In consideration of Lender's  execution and delivery
          of this  Agreement and Lender's  making of the Loans  hereunder and in
          addition to all other  obligations of Obligors  under this  Agreement,
          each Obligor  hereby  agrees to defend,  protect,  indemnify  and hold
          harmless  Lender,  its  successors,   assigns,  officers,   directors,
          employees and agents (including, without limitation, those retained in
          connection  with  the  transactions  contemplated  by this  Agreement)
          (collectively,  the  "Indemnitees")  from  and  against  any  and  all
          actions,  causes of action, suits, claims,  losses, costs,  penalties,
          fees,  liabilities  and damages and expenses in  connection  therewith
          (irrespective  of  whether  any  such  Indemnitees  are a party to any
          action for which  indemnification  hereunder is sought), and including
          reasonable  attorneys'  fees  and  disbursements  (the  "Indemnifiable
          Liabilities")  incurred by the  Indemnitees or any of them as a result
          of, or arising  out of, or relating  to (a) the  execution,  delivery,
          performance  or  enforcement  of this  Agreement  and the  other  Loan
          Documents and any instrument,  document or agreement executed pursuant
          hereto to any of the Indemnitees; (b) Lender's status as lender to, or
          creditor of, any of the  Obligors;  or (c) the  operation of Obligors'
          business from and after the date hereof,  provided that Obligors shall
          not  be  required  to  indemnify  any  of  the   Indemnitees  for  any
          Indemnifiable  Liabilities  resulting  from the  gross  negligence  or
          willful misconduct of Lender or any of the other  Indemnitees.  To the
          extent that the foregoing undertaking by Obligors may be unenforceable
          for any reason,  each Obligor shall make the maximum  contribution  to
          the payment and satisfaction of each of the Indemnifiable  Liabilities
          which is permissible under applicable law.

                                       41
<PAGE>

8.2       Setoff. All sums at any time standing to Obligors' credit on the books
          of Lender,  Manufacturers  and  Traders  Trust  Company,  or any other
          Participant   (as  defined   below)  or  upon  or  in  which   Lender,
          Manufacturers and Traders Trust Company or any other Participant has a
          lien  or  security   interest   shall  be  security  for  all  of  the
          Obligations.  In addition to and not in limitation of the above,  with
          respect to any  deposits or Property of any Obligor in the  possession
          or control of Lender,  Manufacturers  and Traders Trust Company or any
          other  Participant,  now or in the  future,  such party shall have the
          right, if an event which  constitutes or which with notice or lapse of
          time,  or  both,  would  constitute  an Event of  Default  under  this
          Agreement or any of the other Loan  Documents has occurred,  to setoff
          all or any  portion  thereof,  at any time,  against  any  Obligations
          hereunder,  even though  unmatured,  without prior notice or demand to
          any Obligor.  The Obligors  acknowledge that Manufacturers and Traders
          Trust Company is purchasing a participation  interest in the Loans and
          the provisions of this paragraph are for the benefit of  Manufacturers
          and Traders Trust Company,  and as an inducement to Manufacturers  and
          Traders Trust Company to purchase such participation interest.

8.3       Sale of  Participation  Interests.  Lender shall have the unrestricted
          right at any time and from time to time, and without the consent of or
          notice to Obligors,  to grant to one or more banks or other  financial
          institutions  (each,  a  "Participant")   participating  interests  in
          Lender's  obligation to lend hereunder and/or any or all of the Loans.
          In the event of any such grant by Lender of a  participating  interest
          to a Participant, whether or not upon notice to Obligors, Lender shall
          remain  responsible for the  performance of its obligations  hereunder
          and Obligors shall continue to deal solely and directly with Lender in
          connection with Lender's  rights and obligations  under this Agreement
          and the other Loan  Documents.  Lender  may  furnish  any  information
          concerning Obligors in its possession from time to time to prospective
          Participants, providing that Lender shall require any such prospective
          Participant  to agree in writing to maintain  the  confidentiality  of
          such information.

8.4       No Waiver.  No course of dealing  between  Obligors  and Lender and no
          failure to exercise or delay in  exercising  on the part of Lender any
          right,  power or  privilege  under the terms of this  Agreement or the
          other Loan Documents shall operate as a waiver thereof;  nor shall any
          single or partial exercise of any right, power or privilege  hereunder
          or  thereunder  preclude  any other or further  privilege.  The Lender
          shall not be deemed to have  waived  any of its  rights  upon or under
          Obligations  or the  Collateral  unless  such waiver be in writing and
          signed by the Lender.  The rights and remedies  provided  herein or in
          any other  agreement are cumulative and not exclusive or in derogation
          of  any  rights  or  remedies  provided  in  and  thereof,  by  law or
          otherwise.

                                       42
<PAGE>

8.5       Cross-Collateralization.  All collateral  which Lender may at any time
          acquire from Obligors or from any other source in connection  with the
          Obligations  arising under this Agreement and the other Loan Documents
          shall  constitute  collateral for each and every  Obligation,  without
          apportionment  or  designation  as to particular  Obligations  and all
          Obligations,  however and whenever  incurred,  shall be secured by all
          collateral  however and whenever  acquired,  and Lender shall have the
          right,  in its  sole  discretion,  to  determine  the  order  in which
          Lender's  rights  in or  remedies  against  any  collateral  are to be
          exercised and which type of collateral or which portions of collateral
          are to be proceeded  against and the order of  application of proceeds
          of collateral as against particular Obligations.

8.6       Cross-Default. Obligors acknowledge and agree that a default under any
          one of the Loan Documents shall constitute a default under each of the
          other Loan Documents.

8.7       Survival of Agreements. All agreements, representations and warranties
          made  herein,  in  any  agreement  and  in  any  statements,  notices,
          invoices,  certificates,  schedules,  documents  or other  instruments
          delivered  to Lender in  connection  with this  Agreement or any other
          agreement   shall  survive  the  making  of  the  Loans  and  advances
          hereunder.

8.8       Further  Documents.  Obligors  agree that, at any time or from time to
          time upon written request of Lender, Obligors will execute and deliver
          such further documents and do such other acts and things as Lender may
          reasonably  request  in order to fully  effect  the  purposes  of this
          Agreement and the other Loan Documents.

8.9       Entire  Agreement;  Governing  Law.  This  Agreement and the documents
          referred to herein  constitute the entire agreement of the parties and
          may not be amended orally and they shall be construed and  interpreted
          in accordance with the laws of the State of Connecticut, including its
          conflict of laws principles.

8.10      Consent to  Jurisdiction.  Each Obligor hereby  acknowledges  that the
          underlying  transactions  to which this  Agreement  and the other Loan
          Documents  relate concern the making,  now or in the future,  of loans
          and advances to the Obligors and that said obligations of the Obligors
          are  primarily  to be  performed  in the  State  of  Connecticut.  The
          Obligors agree that the execution of this Agreement and the other Loan

                                       43
<PAGE>

          Documents and the rights and obligations of the parties  hereunder and
          thereunder  shall  be  deemed  to have a  Connecticut  situs  and each
          Obligor shall be subject to the personal jurisdiction of the courts of
          the State of  Connecticut  with respect to any action the Lender,  its
          successors  or assigns,  may  commence  hereunder.  Accordingly,  each
          Obligor  hereby   specifically   and   irrevocably   consents  to  the
          jurisdiction of the courts of the State of Connecticut with respect to
          all matters concerning this Agreement,  the other Loan Documents,  the
          Notes or the enforcement of any of the foregoing.

8.11      Joint and Several Liability. All obligations, covenants and agreements
          of the  Obligors  pursuant to this  Agreement or any of the other Loan
          Documents  shall be the joint and several  obligations,  covenants and
          agreements of each of the Obligors.

8.12      Successors.  All rights of Lender hereunder shall inure to the benefit
          of its successors and assigns,  and all  Obligations of Obligors shall
          bind their successors and assigns.

8.13      Expenses.   Obligors  will  pay  all  expenses   arising  out  of  the
          preparation, administration,  amendment, protection, collection and/or
          other  enforcement of this Agreement,  the other Loan  Documents,  the
          Collateral or security  interest  granted  hereunder or thereunder and
          the Notes (including, without limitation, reasonable counsels' fees).

8.14      Payments.  The acceptance of any check,  draft or money order tendered
          in full or partial payment of any Obligation  hereunder is conditioned
          upon and subject to the receipt of final payment in cash.

8.15      Exhibits and Schedules.  All exhibits and schedules referred to herein
          and annexed  hereto are hereby  incorporated  into this  Agreement and
          made a part hereof.

8.16      Acknowledgment of Copy, Use of Proceeds.  Obligors acknowledge receipt
          of copies  of the  Notes and  Guaranties  and  attest,  represent  and
          warrant to Lender  that  advances  made under the Loans are to be used
          for general commercial purposes and that no part of such proceeds will
          be used, in whole or in part, directly or indirectly,  for the purpose
          of purchasing or carrying any "margin  security" or "margin  stock" as
          such terms are defined in  Regulation  U of the Board of  Governors of
          the Federal Reserve System.

                                       44
<PAGE>

8.17      Descriptive Headings. The descriptive headings of the several sections
          of this Agreement are inserted for  convenience  only and shall not be
          deemed to affect the meaning or  construction of any of the provisions
          hereof.

8.18      Notices.  Any written  notice  required or permitted by this Agreement
          may be delivered by depositing it in the U.S. mail, postage prepaid or
          with a nationally recognized overnight courier service or by facsimile
          addressed to the Obligors or Lender at the  addresses set forth at the
          beginning of this Agreement.  If any notice is sent to Lender pursuant
          to this  paragraph,  it should be sent to the  attention of: Robert E.
          Teittinen,  Vice President,  Webster Bank, 145 Bank Street, Waterbury,
          Connecticut  06702 and a copy thereof should be sent to  Manufacturers
          and Traders  Trust  Company,  135 Main Street,  Nyack,  New York 10960
          Attn: Michael Weinstock, Vice President.

8.19      Severability.  If any  provision  of  this  Agreement  or  application
          thereof to any person or circumstance  shall to any extent be invalid,
          the remainder of this  Agreement or the  application of such provision
          to persons,  entities or circumstances other than those as to which it
          is held invalid,  shall not be affected  thereby and each provision of
          this  Agreement  shall be valid and  enforceable to the fullest extent
          permitted by law.

8.20      Amendment and Restatement;  Effective Date. This Agreement is executed
          in substitution for, and not in satisfaction of, the Original Loan and
          Security  Agreement  and amends and restates the  provisions  thereof.
          Nothing contained herein shall operate to release any Obligor from its
          liability  to pay all of the  Obligations  and to keep and perform the
          terms, conditions,  obligations and agreements contained herein and in
          the Loan Documents.  Each Obligor hereby  acknowledges and agrees that
          it has no defense, offset,  recoupment or counterclaim with respect to
          any of the  indebtedness  owing  to  Lender  and each  Obligor  hereby
          releases  Lender  from  any  and all  liability  arising  directly  or
          indirectly  with  respect  to any  and all  actions  taken  by  Lender
          relating  to  the  Original  Loan  and  Security   Agreement  and  the
          transactions   contemplated  therein.  This  Agreement  is  to  become
          effective as of the date in the first paragraph of this Agreement (the
          "Effective  Date") but only upon the simultaneous  consummation of the
          acquisition  of the  assets of  Iceberg  Springs  Water,  Inc.  by the
          Obligors.  Notwithstanding  anything herein to the contrary, if on the
          Effective  Date (i) for any  reason the  acquisition  of the assets of
          Iceberg Springs Water,  Inc. by the Obligors does not take place, (ii)
          any of the representations, warranties and general covenants contained
          in this Agreement are no longer true and accurate,  or (iii) any Event

                                       45
<PAGE>

          of Default or event,  which with the  passage of time or the giving of
          notice,  or both,  would  constitute  an Event of  Default  shall have
          occurred,  then this  Agreement  shall not  become  effective  for any
          purpose and the Original Loan and Security Agreement shall continue in
          full force and effect without amendment.

8.21      WAIVER OF RIGHT TO  PREJUDGMENT  REMEDY  NOTICE AND HEARING.  OBLIGORS
          ACKNOWLEDGE  THAT LENDER MAY HAVE RIGHTS  AGAINST THEM,  NOW OR IN THE
          FUTURE,  IN ITS  CAPACITY AS CREDITOR OR IN ANY OTHER  CAPACITY.  SUCH
          RIGHTS MAY INCLUDE THE RIGHT TO DEPRIVE  OBLIGORS OF OR AFFECT THE USE
          OF OR  POSSESSION  OR  ENJOYMENT OF THEIR  PROPERTY;  AND IN THE EVENT
          LENDER  DEEMS IT NECESSARY TO EXERCISE ANY OF SUCH RIGHTS PRIOR TO THE
          RENDITION OF A FINAL JUDGMENT AGAINST ANY OBLIGOR, OR OTHERWISE,  SUCH
          OBLIGOR  MAY  BE  ENTITLED  TO  NOTICE   AND/OR   HEARING   UNDER  THE
          CONSTITUTION  OF  THE  UNITED  STATES  AND/OR  STATE  OF  CONNECTICUT,
          CONNECTICUT  STATUTES (TO DETERMINE WHETHER OR NOT LENDER HAS PROBABLE
          CAUSE TO SUSTAIN  THE  VALIDITY OF  LENDER'S  CLAIM),  OR THE RIGHT TO
          NOTICE  AND/OR  HEARING UNDER OTHER  APPLICABLE  STATE OR FEDERAL LAWS
          PERTAINING TO PREJUDGMENT REMEDIES, PRIOR TO THE EXERCISE BY LENDER OF
          ANY  SUCH  RIGHTS.   OBLIGORS   EXPRESSLY  WAIVE  ANY  SUCH  RIGHT  TO
          PREJUDGMENT  REMEDY  NOTICE  OR  HEARING  TO  WHICH  OBLIGORS  MAY  BE
          ENTITLED.  THIS SHALL BE A CONTINUING  WAIVER AND REMAIN IN FULL FORCE
          AND EFFECT SO LONG AS OBLIGORS ARE OBLIGATED TO LENDER.

8.22      Waivers.  Each Obligor  hereby  waives  presentment,  demand,  notice,
          protest, notice of acceptance of this Agreement, notice of loans made,
          credit  extended,  collateral  received or  delivered  or other action
          taken in  reliance  hereon and all other  demands  and  notices of any
          description. With respect to this Agreement, the other Loan Documents,
          the  Obligations  and the  Collateral,  each  Obligor  assents  to any
          extension  or  postponement  of the  time  of  payment  or  any  other
          indulgence,   to  any   substitution,   exchange  or  release  of  the
          Collateral,  to the  addition  or  release  of  any  party  or  person
          primarily or secondarily liable, to the acceptance of partial payments
          thereon and the settlement,  compromising or adjusting of any thereof,
          all in such  manner  and at such time or times as the  Lender may deem
          advisable.  The  Lender  shall  have no duty as to the  collection  or
          protection  of the  Collateral  or any income  thereon,  nor as to the
          preservation   of  rights  against  prior  parties,   nor  as  to  the
          preservation of any rights pertaining  thereto beyond the safe custody
          thereof.  The  Lender may  exercise  its  rights  with  respect to the

                                       46
<PAGE>

          Collateral  without resorting or regard to other collateral or sources
          of  reimbursement  for  liability.  Each Obligor waives all suretyship
          defenses with respect to the Notes, the Loans, the Obligations and all
          other  matters  arising  from or  relating  to the  Loans and the Loan
          Documents.

8.23      WAIVER OF RIGHT TO JURY TRIAL.  EACH  OBLIGOR AND LENDER  HEREBY WAIVE
          TRIAL  BY JURY  AND THE  RIGHT  TO  TRIAL  BY JURY IN ALL  ACTIONS  OR
          PROCEEDINGS  BETWEEN  THEM IN ANY COURT  ARISING OUT OF OR RELATING TO
          THIS  AGREEMENT,  ITS  VALIDITY  OR  INTERPRETATION.  THIS  SHALL BE A
          CONTINUING  WAIVER  AND  REMAIN IN FULL  FORCE  AND  EFFECT SO LONG AS
          OBLIGORS ARE OBLIGATED TO LENDER.

     In Witness  Whereof,  the parties  have caused  this  Agreement  to be duly
executed and delivered by the proper and duly authorized officers as of the date
and year first above written.

WITNESS:

__________________________                     VERMONT PURE HOLDINGS, LTD.

__________________________                     By:____________________________
                                                  Name: Peter K. Baker
                                                  Title: President

__________________________                     CRYSTAL ROCK SPRING WATER COMPANY

__________________________                     By:____________________________
                                                  Name: Peter K. Baker
                                                  Title: President

                                       47
<PAGE>

__________________________                     PLATINUM ACQUISITION CORP.

__________________________                     By:____________________________
                                                  Name: Peter K. Baker
                                                  Title: President

__________________________                     VERMONT PURE SPRINGS, INC.

__________________________                     By:____________________________
                                                  Name: Peter K. Baker
                                                  Title: President

__________________________                     WEBSTER BANK

__________________________                     By:____________________________
                                                  Name: Robert E. Teittinen
                                                  Title: Vice President

                                       48
<PAGE>

                                   EXHIBIT 2.1

                                    Term Note

<PAGE>

                                   EXHIBIT 2.2

                          Revolving Line of Credit Note

<PAGE>

                                 EXHIBIT 2.2A-1

                                 2001 Term Note

<PAGE>

                                 EXHIBIT 2.2A-2

                            Iceberg Letter of Credit

<PAGE>

                                  Schedule 3.3
                   Locations of Collateral other than Premises

70 WEST RED OAK LANE                        200 COMMERCIAL STREET
WHITE PLAINS, NY 10604-3602                 WATERTOWN, CT 06795
(914) 697-4727

22 VETERAN'S LANE, SUITE 102
PLATTSBURGH, NY 12901
(518) 566-8113

87 HOLLY COURT
WILLISTON, VT 05495
(800) 639-3047

1344 UNIVERSITY AVE                         PUBLIC WAREHOUSE LOCATIONS
SUITE 8000
ROCHESTER, NY 14607                         RSD WAREHOUSE SERVICES, INC
(716) 244-5220                              601 OLD RIVER ROAD
                                            WHITE RIVER JCT, VT 05001
14 JEWEL DRIVE, UNIT E                      (802) 291-7272
WILMINGTON, MA 01887
(800) 564-0125                              JCT ASSOCIATES, INC
                                            95 LEGGETT STREET
1050 BUCKINGHAM ST                          EAST HARTFORD, CT 06108
WATERTOWN, CT 06795                         (860) 282-7555
(860) 945-0661

313 LONG RIDGE ROAD
STAMFORD, CT
(860) 945-0661

11 CORPORATE DRIVE
HALFMOON, NY 12065
(518) 373-2972

840 AERO DRIVE
BUFFALO, NY 14225
(716) 683-2365

6486 RIDINGS ROAD
SYRACUSE, NY 13206
(315) 471-9057

<PAGE>

                                  Schedule 4.5

Section A

The following mortgages, security interests, pledges, liens, encumbrances, or
other charges listed in this Section A (the "Prior Encumbrances") are prior in
right and priority to the mortgages and security interests of the Bank:

1.   Mortgage given to Janet Messier on October 8, 1991 on the premises at Chase
     Road in  Randolph,  Vermont  maturing  December  1,  2006.  Secured  by the
     property.

2.   Lease with The CIT Group n/k/a Lease Plan in  connection  with the lease of
     two trucks. The amount due through October 18, 2001 is $11,296.  Secured by
     a UCC-1 Financing  Statement  filed with the Vermont  Secretary of State as
     filing number 98-99831.

3.   Truck Lease Agreement with Associates Leasing, Inc. n/k/a CitiCapital.  The
     amount  outstanding  on October  18,  2001 is  $46,604.  Secured by a UCC-1
     Financing  Statement  filed with the Vermont  Secretary  of State as filing
     number 99-110951.

4.   Lease  with  Wells  Fargo  Financial  Leasing  Inc.,  successor  to Norwest
     Leasing.  The amount  outstanding  on  October  18,  2001 is  approximately
     $5,094.  Secured by a UCC-1  Financing  Statement  filed  with the  Vermont
     Secretary of State as filing number 99-115271.

Section B

     The following mortgages,  security interests, pledges, liens, encumbrances,
     or other charges listed in this Section B (the "Subordinated Encumbrances")
     are  subordinate  in right  and  priority  to the  mortgages  and  security
     interests of the Bank:

     Loan from the Town of Randolph through a Community  Development Block Grant
     in October, 1993 secured by real and personal property in Randolph, Vermont
     and  subordinated to the Bank in an agreement agreed to on October 3, 2000.
     The amount outstanding as of September 30, 2001 was $257,498.

     The  security  interests  granted  to  the  Subordinated   Lenders  in  the
     Subordinated Lenders' Collateral, as defined in those certain Subordination
     and  Pledge  Agreements  dated  October  5,  2000  among  the  Bank and the
     Subordinated Lenders.

<PAGE>

                                  Schedule 4.6

                                   Litigation

1.   Michelle L.  Brackett  v.  Vermont  Pure  Springs,  Inc.  and James W. Roat
     Supreme  Court of New York,  Index No.  9902642,  filed  September 21, 1999
     Judgment in the amount of $325,000  against  Vermont Pure Springs,  Inc. is
     insured and is under appeal.

2.   New York State  Department of Finance and Taxation Routine audit related to
     sales tax for the period 3/1/97-2/28/00,  pending Crystal Rock Spring Water
     Company franchise tax audit for period 11/97 through 10/00

3.   Vermont Pure Holdings,  Ltd. v. DesCartes  Systems Group,  Inc. and Endgame
     Solutions,  Inc., United States District Court, Burlington,  VT There is an
     agreement  to enter  binding  arbitration  which is to be  conducted in the
     Winter of 2002

4.   Connecticut  Department  of  Revenue  Services  Routine  sales  tax audit -
     Vermont Pure Springs, Inc.

5.   Connecticut   Department  of  Labor  Discrimination  Claim,  Complaint  No.
     FM2001-38

<PAGE>

                                  Schedule 4.12

                          Trade names for each Obligor

                                      None

<PAGE>

                                  Schedule 4.14

               Agreements pertaining to purchase or sale of stock

1.   See attached list of outstanding Options and Warrants.

2.   Common  Stock  Warrant  issued  to  CoreStates  Bank as of April 8, 1998 to
purchase  a  variable  number of shares at a variable  purchase  price,  each as
determined by the formula set forth therein.

3.   Non-Incentive  Stock Option  Agreement  between Holdings and The Greatwater
Company dated March 10, 1997 to purchase 42,187 shares of Holding's Common Stock
at $2.8125/ea.

4.   Registration  Rights Agreement  between Holdings and CoreStates Bank, dated
April 8, 1998.

5.   Stock  Issuance and  Registration  Rights  Agreement  between  Holdings and
Vermont Coffee Time, Inc. dated January 5, 1998.

<PAGE>

                                  Schedule 4.22

                         Property not owned by Obligors

Vermont Pure:
1999 Chevy Suburban, Smartlease by GMAC
VIN 3GNFK16R4XG218875

1999 Chevy Blazer, Smartlease by GMAC
VIN 1GNDT13W7X2122164

1999 Chevy Lumina, Smartlease by GMAC

VIN 2G1WL52M0X9266030

2000 Chevy Blazer, Smartlease by GMAC
VIN 1GNDT13W1Y2131301

1999 Chevy Blazer, Smartlease by GMAC
VIN 1GNDT13W3X2160202

1999 Chevy Lumina, Smartlease
VIN 2G1WL52M6X9136589

1999 Chevy Blazer, Smartlease by GMAC
VIN 1GNDT13W7X2159831

1999 Chevy Blazer, Smartlease by GMAC
VIN 1GNDT13W6X2125590

1999 Chevy Lumina, Smartlease by GMAC
VIN 1G1WL52M1X9254873

1999 Chevy Malibu, Smartlease
VIN 1G1ND52JXX6276571

2000 Chevy Malibu, Smartlease
VIN 1G1ND52J6Y6143744

<PAGE>

2000 Int'l , Buffalo, NY
VIN 1HTSCAANOYH233179

Baler, Pet Plant

Gateway Computers, RT66 Randolph, VT

Software, Hardware, & Svcs, Descartes
Softech Financial, various locations

Delivery Vehicles Acquired from Perrier

Citicorp Leasing, Inc. - Ryder trucks (12)

DeCarolis Truck Rental, vehicle #4760

Crystal Rock:

--------------------------------------------------------------------------------

Pitney Bowes                                 Postage Machine & Scale
--------------------------------------------------------------------------------

Pitney Bowes                                 Copier
--------------------------------------------------------------------------------

InPaco/Liqui-Box                             1000 SL Filler
--------------------------------------------------------------------------------

InPaco/Liqui-Box                             350 HT Filler
--------------------------------------------------------------------------------

Archives Mgmt                                Warehouse Space
--------------------------------------------------------------------------------

Chase                                        Lincoln Navigator
--------------------------------------------------------------------------------

Ford                                         Ford Contour LX
--------------------------------------------------------------------------------

GMAC                                         Cadillac DeVille
--------------------------------------------------------------------------------

Ford                                         Lincoln Continental
--------------------------------------------------------------------------------

<PAGE>

                                  Schedule 4.26

VERMONT PURE HOLDINGS, LTD
Type of organization:  corporation
State of organization: Delaware
Organizational identification number: 3215737
Federal Employer Identification number: 03-0366218

CRYSTAL ROCK SPRING WATER COMPANY
Type of organization:  corporation
State of organization: Connecticut
Organizational identification number: 0011840
Federal Employer Identification number: 06-0798121

PLATINUM ACQUISITION CORP.
Type of organization:  corporation
State of organization: Delaware
Organizational identification number:  2219226
Federal Employer Identification number: 06-1325376

VERMONT PURE SPRINGS, INC.
Type of organization:  corporation
State of organization: Delaware
Organizational identification number: 2268977
Federal Employer Identification number: 03-0330521

<PAGE>

                                  Schedule 5.10

                              Plans of the Obligors

1.       Vermont Pure Holdings Health and Welfare Plan

2.       Vermont Pure Holdings Retirement and Profit Sharing Plan

3.       1998 Incentive and Non-Statutory Stock Option Plan

4.       Vermont Pure Holdings, Ltd. 1999 Employee Stock Purchase Plan

5.       1993 Performance Equity Plan

<PAGE>

                                  Schedule 6.1

                             Existing Capital Leases

 1.       Lease with The CIT Group n/k/a Lease Plan in connection with the lease
          of two  trucks.  The amount due  through  October 18, 2001 is $11,296.
          Secured  by  a  UCC-1  Financing  Statement  filed  with  the  Vermont
          Secretary of State as filing number 98-99831.

          See attached documentation.

 2        Truck Lease Agreement with Associates Leasing, Inc. n/k/a CitiCapital.
          The amount  outstanding  on October 18, 2001 is $46,604.  Secured by a
          UCC-1 Financing Statement filed with the Vermont Secretary of State as
          filing number 99-110951.

          See attached documentation.

 3        Lease with Wells Fargo  Financial  Leasing Inc.,  successor to Norwest
          Leasing.  The amount  outstanding on October 18, 2001 is approximately
          $5,094.  Secured by a UCC-1 Financing Statement filed with the Vermont
          Secretary of State as filing number 99-115271.

          See attached documentation.

<PAGE>

                                  Schedule 6.2

                             Permitted Indebtedness

1. Mortgage to Janet Messier dated October 8, 1991 on the premises at Chase Road
in Randolph,  Vermont maturing December 1, 2006. The amount  outstanding on July
31, 2000 was $42,621. Secured by the property.

2. Note to Bradford  Keene dated August  27,1997,  maturing  August 31, 2002, in
conjunction  with the  acquisition  of Excelsior  Springs  Water Co.. The amount
outstanding on July 31, 2000 was $3,949. Unsecured.

3. Note to Roger Dunham  dated  August  27,1997,  maturing  August 31, 2002,  in
conjunction  with the  acquisition  of  Excelsior  Springs  Water Co. The amount
outstanding on July 31, 2000 was $11,846. Unsecured.

4. Note to Drew Abrams  dated  August  27,1997,  maturing  August 31,  2002,  in
conjunction  with the  acquisition  of  Excelsior  Springs  Water Co. The amount
outstanding on July 31, 2000 was $7,897. Unsecured.

5. Notes to Henry,  Joan,  John,  Peter Baker and a Baker family trust  totaling
$22,600,000, maturing October 5, 2007. Subordinated to Webster Bank.

6. Loan from the Town of Randolph through a Community Development Block Grant in
October,  1993  secured by real and personal  property in Randolph,  Vermont and
subordinated  to the Bank in an  agreement  agreed to on October  3,  2000.  The
amount outstanding as of September 30, 2001 was $257,498.

7. Lease with The CIT Group n/k/a Lease Plan in connection with the lease of two
trucks.  The amount due through October 18, 2001 is $11,296.  Secured by a UCC-1
Financing  Statement filed with the Vermont  Secretary of State as filing number
98-99831.

8. Truck Lease Agreement with Associates  Leasing,  Inc. n/k/a CitiCapital.  The
amount outstanding on October 18, 2001 is $46,604.  Secured by a UCC-1 Financing
Statement filed with the Vermont Secretary of State as filing number 99-110951.

9. Lease with Wells Fargo Financial Leasing Inc.,  successor to Norwest Leasing.
The amount outstanding on October 18, 2001 is approximately $5,094. Secured by a
UCC-1 Financing  Statement  filed with the Vermont  Secretary of State as filing
number 99-115271.[GRAPHIC OMITTED][GRAPHIC OMITTED]

                                                                   Exhibit 10.21

                      SUBORDINATION AND PLEDGE AGREEMENT

                                                                 October 5, 2000

WHEREAS, VERMONT PURE HOLDINGS, LTD., (f/k/a VP Merger Parent, Inc.), a Delaware
corporation  formerly  named "VP  Merger  Parent,  Inc.",  and  whose  principal
executive  office is located at Catamount  Industrial  Park, Route 66, Randolph,
Vermont 05060  ("HOLDINGS"),  CRYSTAL ROCK SPRING WATER  COMPANY,  a Connecticut
corporation  with an office AT 1050 Buckingham  Street,  Watertown,  Connecticut
06795  ("CRYSTAL  ROCK"),   PLATINUM  ACQUISITION  CORP.,  (f/k/a  Vermont  Pure
Holdings,  Ltd.), a Delaware  corporation with an office at Catamount Industrial
Park, Route 66, Randolph,  Vermont 05060  ("PLATINUM") and VERMONT PURE SPRINGS,
INC., a Delaware  corporation with an office at CATAMOUNT INDUSTRIAL PARK, Route
66, Randolph, Vermont 05060 ("VPS", and collectively with Holdings, Crystal Rock
and  PLATINUM,  the  "OBLIGORS  ") are now  indebted  to  HENRY  E.  BAKER  (the
"Subordinate Lender") and may from time to time hereafter become indebted to the
Subordinate Lender in further amounts; and

WHEREAS, Ross S. Rapaport, not individually but as Trustee of the Peter K. Baker
Life Insurance Trust, The John B. Baker Insurance Trust and u/t/a dated December
16,  1991  f/b/o  Joan  Baker  et.  al. is acting  as agent  (the  "Agent")  for
Subordinate Lender pursuant to certain of the Subordinated Loan Documents; and

WHEREAS,  the  Obligors  have  requested,  and may from  time to time  hereafter
request, WEBSTER BANK (the "BANK") to make or agree to make loans, extensions of
credit or other financial accommodations to the Obligors (the "Loans"); and

WHEREAS,  the Bank, as a condition to the making or  continuation  of the Loans,
has required the  Subordinate  Lender to execute and deliver this  Subordination
and Pledge  Agreement  (together  with all schedules  and any exhibits  attached
hereto and amendments or  modifications  hereto in effect from time to time, the
"AGREEMENT").

NOW,  THEREFORE,  in order to induce the Bank to make,  or  continue to make the
Loans and in consideration thereof, the Subordinate Lender agrees as follows:

A.  DEFINITIONS.    As used herein, the following terms shall have the following
    meanings:

1.      AFFILIATE. THE TERM "AFFILIATE" means Webster Financial  Corporation and
        any of its direct and indirect affiliates and subsidiaries.

                                       1
<PAGE>

2.      BANK COLLATERAL.  The term "BANK COLLATERAL" means the personal property
        of the  Obligors  described in Schedule A and any other real or personal
        property of any of the  Obligors in which the Bank or an  Affiliate  may
        hereafter  be granted a security  interest,  mortgage  interest or other
        similar interest.

3.

        COLLECTION ACTION.   The term "COLLECTION  ACTION" means to (i) exercise
        or enforce  any  rights or  remedies  or assert  any claims  against the
        Bank  Collateral or  Subordinated  Lenders'  Collateral;   (ii) make any
        claim  or commence or initiate  any action,  lawsuit, case or proceeding
        against  any of the  Obligors or  join  together   or with any  creditor
        other than, with its consent, the  Bank in any action,  lawsuit, case or
        proceeding against the Obligors  (including,  but not being limited to,
        proceedings under the Bankruptcy    Code);  (iii) contact any account of
        any  of the  Obligors  or  attach  or  take  possession  of    any  Bank
        Collateral or  Subordinated  Lenders'   Collateral or exercise any right
        of  foreclosure  or  any right or  remedy  with  respect  to  any of the
        Obligors or  the Bank  Collateral or Subordinated  Lenders'  Collateral;
        or (iv) take  any other action  prejudicial  to or inconsistent with the
        Bank's rights and first priority  secured position   with respect to the
        Obligors or the Bank Collateral,  including,  without   limitation, that
        any action that will impede, interfere with, restrict,   or restrain the
        exercise  by the  Bank of its  rights  and  remedies    under  the  Loan
        Documents  or  contest  in any  manner  the    perfection,  priority  or
        validity of any lien held by the Bank in any of the Bank Collateral.

4.      EVENT OF  DEFAULT.  THE TERM "EVENT OF DEFAULT"   shall mean an Event of
        Default  under the Loan  Agreement  beyond any applicable grace and cure
        period.

5.      FINANCIAL COVENANT DEFAULT.  THE TERM "FINANCIAL COVENANT DEFAULT" shall
        mean an Event of Default which results  solely from the violation of any
        now existing or hereafter  arising financial  covenant  contained in the
        Loan  Agreement,  including,  by way  of  illustration,  those  specific
        financial  covenants set forth in Sections 6.16,  6.17,  6.18, 6.19, and
        6.20 of the Loan Agreement and any supplement, addition, modification or
        amendment to those specific financial covenants.

6.      LIABILITIES.  THE TERM  "LIABILITIES"  means any and all obligations and
        indebtedness of every kind and description,  now or hereafter  existing,
        whether such debts or  obligations  are primary or secondary,  direct or
        indirect,  absolute or contingent,  sole,  joint or several,  secured or
        unsecured,  due or to become due,  contractual  or tortious,  arising by
        operation  of  law,  by  overdraft,  or  otherwise,  including,  without
        limitation,  principal,  interest, fees, late fees, expenses, attorneys'
        fees and costs,  and/or  allocated fees and costs of the Bank's in-house
        legal  counsel,  that  have  been  or may  hereafter  be  contracted  or
        incurred.

7.      LOAN  AGREEMENT. THE TERM "LOAN  AGREEMENT"  means that certain Loan and
        Security  Agreement  among the Obligors  and Bank dated the date hereof,
        and any subsequent supplement,  modification,  renewal,  extension    or
        amendment thereto.

                                        2
<PAGE>
8.       LOAN DOCUMENTS.  The term "LOAN DOCUMENTS" means the Loan Agreement and
         all other credit accommodations, notes,  loan agreements, and any other
         agreements  and  documents,   now  or  hereafter   existing,  creating,
         evidencing,  guarantying,  securing  or relating  to  any or all of the
         Senior  Liabilities,   together  with  all amendments,   modifications,
         renewals, or extensions thereof.

9.       NON-COVENANT  DEFAULT.  The term "NON-COVENANT  DEFAULT" means an Event
         of Default other than a Financial Covenant Default.

10.      OBLIGOR. the term "OBLIGOR" means the Holdings, Crystal Rock, Platinum,
         VPS and each and every other maker,  endorser, guarantor,  or surety of
         or for the Senior Liabilities.

11.      SENIOR LIABILITIES. The term "SENIOR LIABILITIES" means all Liabilities
         of the Obligors to the Bank and/or to any of the Affiliates  including,
         without limitation, any and all interest accruing on Senior Liabilities
         after the commencement of any proceedings referred to in paragraph B.5.
         hereof,  notwithstanding  any  provision  or  rule  of  law which might
         restrict the rights of the Bank, as against the Obligors and/or  anyone
         else,  to  collect such  interest.  For  purposes  of  this  Agreement,
         Senior Liabilities shall include all Liabilities of the Obligors to the
         Bank,  notwithstanding any right or power of any of the Obligors and/or
         anyone else to assert any  claim or  defense  as to the  invalidity  or
         unenforceability of any such Senior Liabilities.

12.      SUBORDINATED  LENDERS'  COLLATERAL.  The  term  "SUBORDINATED  LENDERS'
         COLLATERAL"  means  the  personal   property of the Obligors more fully
         described in Schedule B attached hereto.

13.     SUBORDINATED LIABILITIES. The term "SUBORDINATED  LIABILITIES" means all
        Liabilities of  the  Obligors  to  the  Subordinate  Lender,  including,
        without limitation,   all payments of principal and interest pursuant to
        that  Subordinated Promissory Note dated the date of this Agreement from
        Holdings payable to the order of the Subordinated Lender in the original
        principal amount of $3,488,888.89  (the  "SUBORDINATED  NOTE") and  that
        Guaranty  dated the date of this  Agreement  from  Platinum  and  VPS to
        Subordinate  Lender  guarantying payments  due  under  the  Subordinated
        Note (the  "SUBORDINATE  GUARANTY") but specifically excluding therefrom
        compensation  from  the  Obligors  to  the  Subordinate Lender presently
        contemplated pursuant to the existing  employment  agreement between any
        of the Obligors and the Subordinate Lender, as the compensation  clauses
        thereof may  be amended  from time to time with the consent of the Bank,
        the normal reimbursement of expenses in the ordinary  course of business
        and  indemnification  of  claims  arising  solely  from  the Subordinate
        Lender's actions as an officer or director of any of the Obligors.

14.     SUBORDINATED  LOAN  DOCUMENTS.  The term  "SUBORDINATED  LOAN DOCUMENTS"
        means all credit  accommodations,  notes,  loan agreements and any other
        agreements  and  documents,   now  or  hereafter   existing,   creating,
        evidencing,  guarantying,  securing  or  relating  to  any or all of the
        Subordinated Liabilities,  together with all amendments,  modifications,
        renewals or extensions thereof.

                                       3
<PAGE>

B.  SUBORDINATION AND PLEDGE.

1.       SUBORDINATION TO SENIOR LIABILITIES.

               (a)  Except as hereinafter  expressly set forth in this Agreement
                    or as the Bank may hereafter  otherwise expressly consent in
                    writing,  the payment of all Subordinated  Liabilities shall
                    be postponed and subordinated to the indefeasible payment in
                    full of all Senior  Liabilities,  and no  payments  or other
                    distributions  whatsoever,  including,  without  limitation,
                    payments  of   interest  in  respect  of  any   Subordinated
                    Liabilities  shall be made, nor shall any property or assets
                    of the Borrower or other  Obligor be applied to the purchase
                    or  other  acquisition  or  retirement  of any  Subordinated
                    Liabilities,  nor  given as  collateral  security  to secure
                    repayment of same.

               (b)  NOTWITHSTANDING  THE  PROVISIONS IN PARAGRAPH  B.1(A) above,
                    and  subject  to the  other  terms  of this  Agreement,  the
                    Subordinate Lender may be granted a security interest in the
                    Subordinated  Lenders'  Collateral to secure the payments of
                    principal and interest and other amounts due pursuant to the
                    Subordinated Note.

               (c)  NOTWITHSTANDING THE PROVISIONS OF PARAGRAPH B.1(A) above, so
                    long as no Event of Default exists and is continuing, and so
                    long as no event exists and is  continuing  which,  with the
                    giving  of  notice  or the  passage  of time or both,  would
                    constitute  a Event of Default,  the  Obligors  may make the
                    following payments (including partial payments thereof), but
                    only to the extent  that the making of such  payments  would
                    not result in a Financial  Covenant  Default:  (i) regularly
                    scheduled   quarterly   payments  of   interest   under  the
                    Subordinated  Note,  at a rate not in excess  of twelve  per
                    cent  (12%)  per  annum,  and past due  regularly  scheduled
                    quarterly  payments of interest under the Subordinated  Note
                    which were not paid when scheduled to be paid because of the
                    terms of this Agreement, including interest at a rate not in
                    excess of twelve  per cent  (12%) per annum on such past due
                    amounts;  and (ii) regularly  scheduled  principal payments,
                    together  with accrued but unpaid  interest at a rate not in
                    excess of twelve  per cent (12%) per  annum,  in  accordance
                    with the terms of the Subordinated Note, commencing with the
                    first regularly  scheduled principal payment more than three
                    years  after  the  date  of  this  Agreement  and  past  due
                    regularly    scheduled    principal   payments   under   the
                    Subordinated  Note which were not paid when  scheduled to be
                    paid  because  of the  terms  of this  Agreement,  including
                    interest  at a rate not in excess of twelve  per cent  (12%)
                    per annum on such past due amounts.

2.   PLEDGE OF  SUBORDINATED  LOAN  DOCUMENTS.  In order to  secure  the due and
     punctual payment and performance of the Senior Liabilities, the Subordinate
     Lender  hereby  pledges,  transfers,  assigns,  and  grants  to the  Bank a
     continuing  security  interest  in and  lien  upon  the  Subordinated  Loan
     Documents.  The  Subordinate  Lender has endorsed and delivered to the Bank
     physical  possession of any of the  Subordinated  Loan Documents  which are
     instruments,  including  the  Subordinated  Note and has  executed  Uniform
     Commercial  Code  financing  statements  and such  other  documents  and/or

                                       4
<PAGE>

     instruments  as may be  necessary  or  convenient  to perfect the  security
     interests  granted herein.  Bank shall hold the  Subordinated  Note and any
     other  Subordinated  Loan Documents which are instruments  delivered to the
     Bank as security for the due and punctual  payment and  performance  of the
     Senior Liabilities and  notwithstanding  the possession of the Subordinated
     Note or such other Subordinated Loan Documents by the Bank, the Subordinate
     Lender  shall be  entitled  to receive  payments  thereunder  to the extent
     expressly permitted by the terms of this Agreement. Upon payment in full of
     the Senior Liabilities,  the Bank will deliver to the Subordinate Lender in
     care of Peter K.  Baker the  Subordinated  Note and any other  Subordinated
     Loan Documents in its possession.

3.   SUBORDINATION  OF  SECURITY  INTEREST  OF  SUBORDINATED  LIABILITIES.   Any
     security  interest  now or  hereafter  held by the  Subordinate  Lender and
     granted  by  any  of  the  Obligors  to  secure  any  of  the  Subordinated
     Liabilities, including the security interest described in paragraph B.1(B),
     is hereby  immediately made  subordinate,  junior and postponed in priority
     and effect to the priority and effect of the security interest purported to
     be created  by any of the Loan  Documents,  as if (and  whether or not) the
     Bank's security interest had been perfected by possession, by timely filing
     of  financing  statements,  or by any  other  means  prior  to the time the
     security   interest  with  respect  to  the  Subordinated   Liabilities  is
     perfected,  and  prior  to  the  filing  of  any  financing  statements  in
     connection with the Subordinated Liabilities. The Subordinate Lender agrees
     to execute  and  deliver to the Bank all  instruments,  including,  without
     limitation,  Forms UCC-3,  subordinations  of lien, and  subordinations  of
     mortgage  which,  in the  reasonable  opinion of the Bank, are necessary or
     convenient to effectuate the purposes of this paragraph and this Agreement.

4.   FURTHER ASSURANCES OF PLEDGE OF SUBORDINATED  LIABILITIES.  The Subordinate
     Lender  will  (i)  promptly   notify  the  Bank  of  the  creation  of  any
     Subordinated  Liabilities  and of the  issuance of any  promissory  note or
     other instrument to evidence any Subordinated  Liabilities;  (ii) cause any
     Subordinated  Liabilities  which are not already  evidenced by a promissory
     note or other  instrument  of the  Obligors  to be so  evidenced;  (iii) as
     collateral security for the Senior Liabilities, endorse, deliver and pledge
     to  the  Bank  any  and  all  promissory  notes  and/or  other  instruments
     evidencing Subordinated Liabilities,  and otherwise assign and/or pledge to
     the Bank any or all  Subordinated  Liabilities  and the  Subordinated  Loan
     Documents, all in a manner satisfactory to the Bank in its sole discretion,
     and (iv)  promptly  give the Bank  written  notice  of any  default  by any
     Obligor under the  Subordinated  Note or any agreement  securing  Obligors'
     obligations under any of the other Subordinated Loan Documents.

     FURTHER   ASSURANCES  OF  BANK.  Bank  will  endeavor  to  deliver  to  the
     Subordinate  Lender in care of Peter K. Baker prompt notice of any Event of
     Default or Financial  Covenant  Default under the Loan  Agreement or any of
     the other Loan Documents of which the Bank becomes aware but the failure of
     the Bank to  promptly  deliver  any such  notice will not affect any of the
     rights or obligations of the parties under this Agreement.

5.   RIGHTS OF BANK TO COLLECT  SUBORDINATED  LIABILITIES.  In the event of, and
     commencing with the date thereof, any dissolution, winding up, liquidation,

                                       5
<PAGE>

     reorganization or other similar  proceedings  relating to any Obligor or to
     any of their creditors,  or to any of their property (whether  voluntary or
     involuntary, partial or complete, and whether in bankruptcy,  insolvency or
     receivership,  or upon an assignment  for the benefit of creditors,  or any
     other marshalling of the assets and liabilities of any Obligor, or any sale
     of all or  substantially  all of the assets of any Obligor,  or otherwise),
     the Senior  Liabilities  shall first be paid in full before the Subordinate
     Lender  shall be  entitled  to  receive  and/or to retain  any  payment  or
     distribution in respect of the Subordinated Liabilities;  provided that the
     Subordinate  Lender shall be entitled to receive and retain any  securities
     issued in connection with  reorganization  proceedings  which are junior in
     right of  repayment  to the  Senior  Liabilities  to the  extent  set forth
     herein, are treated as Subordinated  Liabilities  hereunder and are subject
     to all the  provisions  of this  Agreement,  and, in order to implement the
     foregoing  (i) all payments and  distributions  of any kind or character in
     respect of the  Subordinated  Liabilities  to which any of the  Subordinate
     Lender would be entitled but for the  provisions of this  Agreement  (other
     than such junior  securities)  will be made directly to the Bank;  (ii) the
     Subordinate  Lender  shall  promptly  file a claim or  claims,  in the form
     required  in such  proceedings,  for the  full  outstanding  amount  of the
     Subordinated  Liabilities,  and  shall  cause  said  claim or  claims to be
     approved and all payments and other distributions in respect thereof (other
     than such junior  securities)  to be made  directly to the Bank;  (iii) the
     Subordinate Lender hereby irrevocably agrees that the Bank may, in its sole
     discretion, in the name of the Subordinate Lender or otherwise, demand, sue
     for,  collect,  receive,  and  receipt  for any and all  such  payments  or
     distributions, and file, prove, and vote or consent in any such proceedings
     with respect to, any and all claims of the  Subordinate  Lender relating to
     the  Subordinated  Liabilities;  and (iv)  the  Subordinate  Lender  hereby
     ratifies  all of the  foregoing  acts or  omissions  on the Bank's  part or
     behalf and waives any  claim,  counterclaim  or defense of the  Subordinate
     Lender which may be alleged to arise from such acts or omissions.

6.   PROTECTION OF BANK'S RIGHTS IN SUBORDINATED LIABILITIES.  In the event that
     the Subordinate  Lender  receives any payment or other  distribution of any
     kind or  character  from any  Obligor  or any other  source  whatsoever  in
     respect of any of the  Subordinated  Liabilities,  other than as  expressly
     permitted  by  the  terms  of  this   Agreement,   such  payment  or  other
     distribution  shall be received in trust for the Bank and  promptly  turned
     over by the  Subordinate  Lender to the Bank. The  Subordinate  Lender will
     mark its books and records,  and cause the Obligors to mark their books and
     records,  so as to clearly indicate that the  Subordinated  Liabilities are
     subordinated in accordance with the terms of this Agreement, and will cause
     to be clearly  inserted in any promissory note or other instrument which at
     any time evidences any of the  Subordinated  Liabilities a statement to the
     effect that the payment  thereof is  subordinated  in  accordance  with the
     terms of this Agreement.  The Subordinate  Lender will execute such further
     documents and instruments and take such further action as the Bank may from
     time to time reasonably  request to carry out the intent of this Agreement.
     The Subordinate Lender hereby irrevocably appoints the Bank its attorney in
     fact,  said  appointment  being  coupled with an interest,  to execute such
     further documents and instruments and take such further action on behalf of
     the Subordinate Lender as the Bank may from time to time deem reasonable to
     carry out the intent of this Agreement,  including, without limitation, the
     actions set forth in paragraph B.4. hereof.

                                       6
<PAGE>

7.   TREATMENT  OF  PAYMENT  OF  SUBORDINATED  LIABILITIES.   All  payments  and
     distributions   received  by  the  Bank  in  respect  of  the  Subordinated
     Liabilities,  to the extent  received  in or  converted  into cash,  may be
     applied by the Bank first to the payment of any and all expenses (including
     attorneys' fees and disbursements and the allocated fees, expenses and cost
     of  in-house  counsel)  paid or  incurred  by the  Bank in  enforcing  this
     Agreement  or in  endeavoring  to  collect  or  realize  upon  any  of  the
     Subordinated Liabilities,  and any balance thereof shall, solely as between
     the Subordinate  Lender and the Bank, be applied by the Bank, in such order
     of application as the Bank may from time to time select, toward the payment
     of any of the Senior Liabilities  remaining unpaid. As between the Obligors
     and any of their  creditors,  no such payments or distributions of any kind
     or character shall be deemed to be payments or  distributions in respect of
     the  Senior  Liabilities;   and,   notwithstanding  any  such  payments  or
     distributions   received  by  the  Bank  in  respect  of  the  Subordinated
     Liabilities  and so  applied by the Bank  toward the  payment of the Senior
     Liabilities,  the  Subordinate  Lender  shall  be  subrogated  to the  then
     existing rights of the Bank, if any, in respect of the Senior  Liabilities,
     only at such time as the Bank shall have received  indefeasible  payment of
     the full amount of the Senior Liabilities.

8.   WAIVERS. The Subordinate Lender hereby waives (i) any and all notice of the
     receipt and  acceptance by the Bank of this  Agreement;  (ii) except as set
     forth in paragraph B.4, notice of the existence, incurrence, or non-payment
     of all or any of the Senior Liabilities;  (iii) all diligence in collection
     or protection of or realization  upon any of the Senior  Liabilities or any
     security therefor;  and (iv) any obligation with respect to the marshalling
     of assets by the Bank.

9.   PROHIBITION ON CHANGES IN SUBORDINATED LIABILITIES.

    (a)   Except as herein set forth in paragraph B.9(B), the Subordinate Lender
          will not  without  the prior  written  consent of the Bank (i) cancel,
          waive,  forgive,  amend,  modify,  transfer  or assign,  or attempt to
          enforce or collect,  or subordinate to any Liabilities  other than the
          Senior  Liabilities,  any  Subordinated  Liabilities  or any rights in
          respect thereof; (ii) convert any Subordinated  Liabilities into stock
          or other securities in any of the Obligors;  (iii) take any Collection
          Action; (iv) commence,  or join with any other creditor in commencing,
          any bankruptcy,  reorganization or insolvency proceedings with respect
          to any of the Obligors, or (v) take any other action prejudicial to or
          inconsistent  with  the  Bank's  rights  and  first  priority  secured
          position  with  respect  to the  Obligors,  the  Bank  Collateral  and
          collateral for the Senior Liabilities.

(b)       Notwithstanding the provisions of paragraph B.9(A), if any default has
          occurred under any of the Subordinated Loan Documents and such default
          has  continued in existence  for a period of one hundred  eighty (180)
          consecutive days after the Subordinated  Lenders have provided written
          notice of the  existence of such default to the Bank (the  "STANDSTILL
          PERIOD"),  the  Subordinated  Lender may proceed to take legal  action
          against  the  Obligors  for the sole  purpose of  obtaining a judgment

                                       7
<PAGE>

          against the Obligors;  provided,  however, at no time either before or
          after the expiration of the Standstill  Period,  may any  Subordinated
          Lender  take any  action or  Collection  Action to  enforce a security
          interest  in,   liquidate  or  otherwise   receive  payment  from  any
          collateral for the Senior  Liabilities,  including the Bank Collateral
          or  Subordinated  Lenders'  Collateral,  unless and until the Bank has
          been indefeasibly paid in full for all Senior Liabilities.

10.       CONTINUING  AGREEMENT.  This  Agreement  shall  in all  respects  be a
          continuing  agreement  and  shall  remain  in full  force  and  effect
          notwithstanding,   without  limitation,  the  death,  incompetency  or
          dissolution of the Subordinate Lender or that at any time or from time
          to time all  Senior  Liabilities  may have been paid in full if any of
          the Loan Documents have not been terminated.

11.       PERMITTED  CHANGES IN SENIOR  LIABILITIES.  The Bank may, from time to
          time, whether before or after any discontinuance of this Agreement, at
          its sole discretion and without notice to the Subordinate Lender, take
          any or all of the following  actions:  (i) retain or obtain a security
          interest in any property to secure any of the Senior Liabilities; (ii)
          retain or obtain the  primary  or  secondary  obligation  of any other
          Obligor or  Obligors  with  respect to any of the Senior  Liabilities;
          (iii) extend,  renew (whether or not longer than the original period),
          alter or  exchange  any of the  Senior  Liabilities;  (iv)  release or
          compromise any obligation of any nature of any Obligor with respect to
          any of the Senior Liabilities;  and, (v) release its security interest
          or lien in,  allows its security  interest or lien to be  unperfected,
          surrender,  release or permit any substitution or exchange for, all or
          any part of any property  securing any of the Senior  Liabilities,  or
          extend or renew for one or more  periods  (whether  or not longer than
          the  original  period) or release,  compromise,  alter or exchange any
          obligations  of any  nature of any  Obligor  with  respect to any such
          property.

12.       DISPOSITION  OF  ASSETS.   The  Subordinate   Lender  agree  that  any
          disposition by the Bank of any collateral for the Senior  Liabilities,
          whether by collection, sale, or other manner of liquidation,  after an
          Event  of  Default  under  the  Loan  Documents,  if  conducted  in  a
          commercially  reasonable manner, may not be challenged or contested by
          the Subordinate Lender on the grounds of commercial  unreasonableness.
          The  Subordinate  Lender  agrees  that the Bank may use such  means of
          collection  and exercise such  diligence  with respect  thereto as the
          Bank,   in  its  sole   discretion,   deems   appropriate   under  the
          circumstances  and may enter into such  compromise  with and give such
          releases and  acquittances to account debtors or other obligors of the
          Obligors' receivables as it determines in its sole discretion, without
          obtaining  the  agreement or  concurrence  of or giving  notice to the
          Subordinate  Lender and the Subordinate  Lender hereby waive all right
          to require  that its  agreement  or consent be  obtained or that it be
          given  notice.  The  Subordinate  Lender  further  agrees that it will
          release  its  security  interest  on  any  collateral  (including  the
          Subordinated  Lenders' Collateral) for the Senior Liabilities upon the
          sale or other disposition  thereof at the request of the Bank, whether
          or not  any  proceeds  therefrom  will  pay  any  of the  Subordinated
          Liabilities.

C.        REPRESENTATIONS   AND  WARRANTIES.   The  Subordinate   Lender  hereby
          represents  and  warrants  that  (i) the  Subordinate  Lender  has the
          necessary  power and capacity to make and perform this  Agreement  and

                                       8
<PAGE>

          such making and performance have been duly authorized by all necessary
          actions  on the part of the  Subordinate  Lender;  (ii) the making and
          performance by the  Subordinate  Lender of this Agreement does not and
          will not violate any  provision of law or  regulation or result in the
          breach of, or constitute a default or require any consent  under,  any
          indenture or other  agreement or  instrument to which it is a party or
          by which any of its properties may be bound;  and (iii) this Agreement
          is the legal, valid and binding obligation of the Subordinate  Lender,
          enforceable  against the  Subordinate  Lender in  accordance  with its
          terms.

D.        REMEDIES.  Upon the  occurrence  of any Event of Default,  or upon the
          breach of any representation,  covenant or agreement in this Agreement
          by any  Obligor  or the  Subordinate  Lender,  or in the  event of the
          termination of this Agreement,  all of the Senior  Liabilities  shall,
          without notice or demand,  become  immediately  due and payable at the
          option  of the  Bank and the Bank  may  immediately,  without  further
          notice,  resort  to all of its  rights  and  remedies  herein,  in any
          document  (including the Loan Agreement and any of the Loan Documents)
          by and between the Bank and any Obligor,  or in any in any  instrument
          evidencing  any  obligation  under  any  such  document,  at law or in
          equity.  The  Bank  agrees  that  it  shall  proceed,  to  the  extent
          commercially reasonable, against all the assets of the Obligors before
          liquidating the Subordinated Note.

E.        MISCELLANEOUS.

       1. REMEDIES CUMULATIVE; NO WAIVER. The rights, powers and remedies of the
          Bank  provided in this  Agreement  and any of the Loan  Documents  are
          cumulative and not exclusive of any right, power or remedy provided by
          law or  equity.  No  failure  or  delay on the part of the Bank in the
          exercise  of any  right,  power or remedy  shall  operate  as a waiver
          thereof,  nor shall any single or partial exercise  preclude any other
          or further exercise thereof, or the exercise of any other right, power
          or remedy.

       2. NOTICES.  Notices and communications  under this Agreement shall be in
          writing and shall be given by (i) hand-delivery, (ii) first class mail
          (postage  prepaid),  or (iii) reliable  overnight  commercial  courier
          (charges prepaid) to the addresses listed in this Agreement. Notice by
          overnight  courier  shall be deemed to have been given and received on
          the date  scheduled  for  delivery.  Notice by mail shall be deemed to
          have been given and received  three (3)  calendar  days after the date
          first  deposited in the United  States Mail.  Notice by  hand-delivery
          shall be deemed to have been given and received upon delivery. A party
          may change its address by giving  written notice to the other party as
          specified herein.

    3.    COSTS AND EXPENSES.  Whether or not the  transactions  contemplated by
          this  Agreement  or the Loan  Documents  are  fully  consummated,  the
          Obligors shall promptly pay (or reimburse,  as the Bank may elect) all
          costs and expenses which the Bank has incurred or may hereafter  incur
          in  connection  with  the  negotiation,   preparation,   reproduction,
          interpretation,  perfection, protection of collateral,  administration
          and  enforcement of this Agreement and the other Loan  Documents,  the
          collection of all amounts due under this  Agreement and the other Loan
          Documents, and all amendments,  modifications, consents or waivers, if

                                       9
<PAGE>

          any, to the Loan Documents.  The Obligors'  reimbursement  obligations
          under this Paragraph  shall survive any  termination of this Agreement
          or any  other  Loan  Document  and  are  deemed  part  of  the  Senior
          Liabilities.

    4.    GOVERNING LAW.  This Agreement shall be construed in  accordance  with
          and  governed  by  the  substantive  laws  of the State of Connecticut
          without reference to conflict of laws principles.

    5.    INTEGRATION;  AMENDMENT.  This  Agreement and the other Loan Documents
          constitute  the sole  agreement  of the  parties  with  respect to the
          subject matter hereof and thereof and supersede all oral  negotiations
          and prior  writings  with  respect to the  subject  matter  hereof and
          thereof.  No amendment of this Agreement,  and no waiver of any one or
          more of the provisions  hereof shall be effective  unless set forth in
          writing and signed by the parties hereto.

    6.    SUCCESSORS  AND ASSIGNS.  This Agreement (i) shall be binding upon the
          Subordinate Lender, the Obligors executing this Agreement and the Bank
          and,   where   applicable,    their   respective   heirs,   executors,
          administrators,  successors  and assigns,  and (ii) shall inure to the
          benefit of the  Subordinate  Lender,  the  Obligors  and the Bank and,
          where applicable,  their respective heirs, executors,  administrators,
          successors  and  permitted  assigns;   provided,   however,  that  the
          Subordinate  Lender and the  Obligors  may not assign  their rights or
          obligations hereunder or any interest herein without the prior written
          consent of the Bank, and any such  assignment or attempted  assignment
          by the Subordinate Lender and/or any of the Obligors shall be void and
          of no effect with respect to the Bank.  The Bank may from time to time
          sell or assign,  in whole or in part, or grant  participations  in the
          Loans and/or the Agreement and/or the obligations  evidenced  thereby.
          The  Subordinate  Lender  authorizes  the Bank to provide  information
          concerning the Subordinate  Lender and the Obligors to any prospective
          purchaser, assignee or participant.

    7.    SEVERABILITY  AND  CONSISTENCY.  The illegality,  unenforceability  or
          inconsistency  of any provision of this Agreement or any instrument or
          agreement required hereunder shall not in any way affect or impair the
          legality, enforceability or consistency of the remaining provisions of
          this Agreement or any instrument or agreement required hereunder.  The
          Loan  Documents  and this  Agreement  are  intended to be  consistent.
          However, in the event of any inconsistencies between and/or among this
          Agreement and any of the Loan Documents,  such inconsistency shall not
          affect the validity or  enforceability of this Agreement or any of the
          Loan Documents. In the event of any inconsistency or ambiguity in this
          Agreement or any of the Loan  Documents,  this  Agreement and the Loan
          Documents  shall not be  construed  against any one party but shall be
          interpreted consistent with the Bank's policies and procedures.

    8.    CONSENT TO JURISDICTION AND SERVICE OF PROCESS. The Subordinate Lender
          irrevocably  appoints  Rapaport & Ellenthal,  P.C., 750 Summer Street,
          Stamford,  CT 06901 as its  attorneys  upon  whom  may be  served  any
          notice,  process or  pleading in any action or  proceeding  against it

                                       10
<PAGE>

          arising out of or in  connection  with this  Agreement.  If service of
          process cannot be delivered to the Subordinate  Lender as specified by
          statute,  the Subordinate Lender agrees that, with court approval,  it
          may be served by regular or  certified  mail at the  address set forth
          herein. The Subordinate Lender hereby consents and agrees that (i) any
          action or proceeding against it may be commenced and maintained in any
          court within the State of Connecticut or in the United States District
          Court for the  District  of  Connecticut  by  service  of  process  on
          Rapaport & Ellenthal  and (ii) the courts of the State of  Connecticut
          and the United States  District  Court for the District of Connecticut
          shall have  jurisdiction with respect to the subject matter hereof and
          the person of the Subordinate Lender and the Subordinated Liabilities.
          The  Subordinate   Lender  agrees  that  any  action  brought  by  the
          Subordinate Lender on account of this Agreement shall be commenced and
          maintained only in a court in the federal judicial  district or county
          in which the Bank has its principal place of business in Connecticut.

9.        PREJUDGMENT REMEDIES.

          The  Subordinate  Lender  hereby  acknowledges  that the  transactions
          contemplated herein constitute  commercial  transactions.  Pursuant to
          Section 52-278f of the Connecticut  General Statutes,  the Subordinate
          Lender hereby waives and relinquishes all rights to notice and hearing
          as provided in Sections  52-278a through  52-278g of said  Connecticut
          General  Statutes  prior to the  securing  of any  prejudgment  remedy
          against the  Subordinate  Lender in connection with the Liabilities or
          any of the instruments or documents executed in connection herewith.

10.       PROVISIONS SOLELY FOR THE BENEFIT OF THE BANK.

          The  provisions  of this  Agreement  are solely to define the relative
          rights and obligations of the Bank and the Subordinate  Lender, and no
          other  person or entity,  including,  without  limitation,  any of the
          Obligors,  shall  have any  rights  hereunder  or as a  result  of the
          provisions hereof.

11.       AGENT FOR SUBORDINATE LENDER.

          The Agent  hereby  agrees to be bound by the terms and  provisions  of
          this Agreement and agrees not to make any payment or  distribution  or
          to otherwise  take any action which is contrary to the  provisions  of
          this Agreement.

12.      JUDICIAL PROCEEDINGS; WAIVERS.

        THE SUBORDINATE  LENDER AND THE BANK  ACKNOWLEDGE AND AGREE THAT (i) ANY
        SUIT,  ACTION OR PROCEEDING,  WHETHER CLAIM OR COUNTERCLAIM,  BROUGHT OR
        INSTITUTED  BY THE BANK,  THE  SUBORDINATE  LENDER OR ANY  SUCCESSOR  OR
        ASSIGN OF THE BANK OR THE SUBORDINATE LENDER, ON OR WITH RESPECT TO THIS
        AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE DEALINGS OF THE PARTIES WITH
        RESPECT HERETO, OR THERETO,  SHALL BE TRIED ONLY BY A COURT AND NOT BY A

                                       11
<PAGE>

        JURY AND EACH PARTY WAIVES THE RIGHT TO TRIAL BY JURY;  (ii) EACH WAIVES
        ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER,  IN ANY SUCH SUIT,  ACTION OR
        PROCEEDING, ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR
        ANY DAMAGES  OTHER THAN, OR IN ADDITION TO,  ACTUAL  DAMAGES;  AND (iii)
        THIS SECTION IS A SPECIFIC AND MATERIAL ASPECT OF THIS AGREEMENT AND THE
        BANK WOULD NOT EXTEND  CREDIT IF THE WAIVERS  SET FORTH IN THIS  SECTION
        WERE NOT A PART OF THIS AGREEMENT.

    IN WITNESS WHEREOF, the Subordinate Lender has executed and delivered to the
Bank this Agreement, as of the day and year first above written.

WITNESSED BY:

----------------------------                ------------------------------------
                                            Name:      Henry E. Baker
                                            Address: 1050 Buckingham Street
----------------------------                Watertown, CT 06795

----------------------------

----------------------------                ------------------------------------
                                            Ross S. Rapaport,   not individually
                                            but as Trustee of the Peter K. Baker
----------------------------                Life Insurance Trust,   The  John B.
                                            Baker  Insurance  Trust  and   u/t/a
                                            dated December 16,   1991 f/b/o Joan
----------------------------                Baker et. al., as Agent
                                            Address: 1050 Buckingham Street
                                                     Watertown, CT 06795

                                            WEBSTER BANK

----------------------------                By:---------------------------------
                                               Robert E. Teittinen
                                               Its Vice President
----------------------------                   Address: 174 Bank Street
                                               Waterbury, CT 06702

----------------------------

<PAGE>

STATE OF CONNECTICUT                                  )
                          ) ss: Hartford                         October _, 2000
COUNTY OF HARTFORD        )

Personally  appeared  Henry  E.  Baker,  signer  and  sealer  of  the  foregoing
instrument and acknowledged the same to be his free act and deed, before me.

                                              Commissioner of the Superior Court

                                              Notary Public
                                              My Commission expires:

STATE OF CONNECTICUT       )
                                    ) ss: Hartford               October _, 2000
COUNTY OF HARTFORD         )

Personally  appeared Ross S. Rapaport,  not  individually  but as Trustee of the
Peter K. Baker Life Insurance Trust, the John B. Baker Insurance Trust and U/T/A
dated December 16, 1991 F/B/O Joan Baker et. al, as Agent,  signer and sealer of
the foregoing  instrument and  acknowledged the same to be his free act and deed
as Trustee and Agent, before me.

                                              Commissioner of the Superior Court

                                              Notary Public
                                              My Commission expires:

                                       13
<PAGE>

STATE OF CONNECTICUT       )
                                    ) ss: Hartford               October _, 2000
COUNTY OF HARTFORD         )

Personally appeared Robert E. Teittinen,  Vice President of Webster Bank, signer
and sealer of the foregoing  instrument and acknowledged the same to be his free
act and deed as such officer and the free act and deed of Webster  Bank,  before
me.

                                              Commissioner of the Superior Court

                                              Notary Public
                                              My Commission expires:

                                       14
<PAGE>

The Obligors signing below hereby acknowledge receipt of a copy of the foregoing
Agreement, waive notice of acceptance thereof by the Bank, and agree to be bound
by the terms and provisions thereof. The Obligors signing below further agree to
make no payments or distributions,  or grant any security interest,  contrary to
the terms and  provisions of this  Agreement and to do every other act and thing
necessary  or  appropriate  to carry  out such  terms and  provisions.  Upon the
occurrence  of any Event of Default,  or upon the breach of any  representation,
covenant  or  agreement  in  this  Agreement  by  any  of  the  Obligors  or the
Subordinated  Lender, or in the event of the termination of this Agreement,  all
of the Senior  Liabilities shall,  without notice or demand,  become immediately
due and payable at the option of the Bank and the Bank may immediately,  without
further notice, resort to all of its rights and remedies herein, in any document
(including the Loan Agreement and any of the Loan  Documents) by and between the
Bank and any Obligor,  or in any in any  instrument  evidencing  any  obligation
under any such document, at law or in equity.

DATED: As of the 5th day of October, 2000

                                              VERMONT PURE HOLDINGS, LTD.
                                              (f/k/a VP Merger Parent, Inc.)

                                              By:-------------------------------
                                              Name:    Timothy G. Fallon
                                              Title:   President
                                              Address: Catamount Industrial Park
                                                       Route 66
                                                       Randolph, VT 05060

                                              CRYSTAL ROCK SPRING WATER COMPANY

                                              By:-------------------------------
                                              Name:     John B. Baker
                                              Title:    President
                                              Address:  1050 Buckingham Street
                                                        Watertown, CT 06795

                                      15
<PAGE>

                                              PLATINUM ACQUISITION CORP.
                                             (f/k/a Vermont Pure Holdings, Ltd.)

                                              By:-------------------------------
                                              Name:    Timothy G. Fallon
                                              Title:   President
                                              Address: Catamount Industrial Park
                                                       Route 66
                                                       Randolph, VT 05060

                                              VERMONT PURE SPRINGS, INC.

                                              By:-------------------------------
                                              Name:    Timothy G. Fallon
                                              Title:   President
                                              Address: Catamount Industrial Park
                                                       Route 66
                                                       Randolph, VT 05060

                                       16
<PAGE>

                                   SCHEDULE A

                                 Bank Collateral

"Collateral"  means  Receivables,  Inventory,  Equipment,  Patents,  Trademarks,
Investment Property, Additional Collateral, and the Premises.

"Additional  Collateral"  means  (i) all  General  Intangibles  (as such term is
defined in the Uniform  Commercial  Code as in effect in Connecticut on the date
of this  Agreement) of every kind and  description  of the  Obligors,  including
without  limitation  federal,  state and local tax  refund  claims of all kinds,
whether  now  existing  or  hereafter  arising;  (ii) all of  Obligors'  deposit
accounts,  whether now owned or hereafter created,  wherever located;  (iii) all
monies,  securities,  instruments,  cash and other  property of Obligors and the
proceeds thereof, now or hereafter held or received by, or in transit to, Lender
from or for Obligors,  whether for safekeeping,  pledge, custody,  transmission,
collection  or  otherwise,  and all of Obligors'  deposits  (general or special,
balances,  sums,  proceeds  and  credits  of  Obligors  with  Lender at any time
existing);  (iv) all  interests  in real  property  held or  owned by  Obligors,
including all leasehold  interests;  (v) all rights under  contracts and license
agreements for water;  (vi) all books,  records,  customer lists,  ledger cards,
computer  programs,  computer  tapes,  disks,  printouts and records,  and other
property and general  intangibles  at any time  evidencing or relating to any of
the foregoing,  whether now in existence or hereafter  created;  (vii) all other
personal  property  and  fixtures  of the  Obligors,  whether  now  existing  or
hereafter arising or created; and all proceeds of the foregoing and all proceeds
of any insurance on the foregoing.

"Equipment"  means all Equipment,  Farm Products and Fixtures (as such terms are
defined in the Uniform  Commercial  Code as in effect in Connecticut on the date
of this Agreement),  including all machinery,  equipment,  furniture,  fixtures,
tools, parts, supplies and motor vehicles,  now owned and hereafter acquired, by
Debtor of whatsoever name, nature,  kind or description,  wherever located,  and
all additions and accessions thereto and replacements or substitutions therefor,
and all proceeds thereof and all proceeds of any insurance thereon.

"Inventory"  means all  Inventory  and Goods (as such  terms are  defined in the
Uniform  Commercial  Code  as in  effect  in  Connecticut  on the  date  of this
Agreement)  of  whatsoever  name,  nature,  kind or  description  now  owned and
hereafter acquired by Debtor, wherever located, including without limitation all
contract  rights with respect thereto and documents  representing  the same, all
goods held for sale or lease or to be  furnished  under  contracts  of  service,
finished  goods,  raw materials,  materials  used or consumed by Debtor,  parts,
supplies,  and all wrapping,  packaging,  advertising and shipping materials and
any documents  relating  thereto,  and all labels and other  devices,  names and
marks affixed or to be affixed thereto for purposes of selling or of identifying
the same or the  seller  or  manufacturer  thereof,  and all  right,  title  and
interest of Debtor  therein and thereto,  and all proceeds of the  foregoing and
all proceeds of any insurance on the foregoing.

<PAGE>

"Investment  Property" means all investment property (as such term is defined in
the  Uniform  Commercial  Code as  adopted  in  Connecticut  on the date of this
Agreement)  of whatever  type or nature now owned or  hereafter  acquired by the
Debtor,  including  without  limitation,   all  certificated   securities,   all
uncertificated securities, all security entitlements, all security accounts, all
commodity  contracts,  all commodity  accounts and all financial assets of every
type and nature and all rights thereto or therein, and all financial accounts of
every type and nature and all rights  thereto or therein,  and all  proceeds and
products  thereof,  including  without  limitation,  all insurance  proceeds and
fidelity bond proceeds related thereto.

"Patents" means all of Debtor's right,  title and interest,  present and future,
in and to (a) all letters patent of the United States or any other country,  all
right,  title and  interest  therein  and  thereto,  and all  registrations  and
recordings thereof, including without limitation applications, registrations and
recordings in the United  States  Patent and Trademark  Office or in any similar
office or agency of the United  States or any state thereof or any other country
or any  political  subdivision  thereof,  all  whether  now  owned or  hereafter
acquired by Debtor; and (b) all reissues,  continuations,  continuations-in-part
or  extensions  thereof  and  all  licenses  thereof;  and all  proceeds  of the
foregoing and all proceeds of any insurance on the foregoing.

"Premises" means the following  real property  owned by Debtor:
       Hedding  Drive, Randolph,  Vermont
       Chase  Road,  Randolph,  Vermont
       Route 66 Factory, Randolph,  Vermont
       North Randolph Road,  Randolph,  Vermont
       20.0 acres, Route 66, Randolph, Vermont
       5.0 acres, Route 66, Randolph, Vermont

"Receivables"  means  (i) all of  Debtor's  now owned  and  hereafter  acquired,
present and future, Accounts,  Chattel Paper, Documents,  Instruments,  (as such
terms are defined in the Uniform  Commercial Code as in effect in Connecticut on
the date of this Agreement) and contract rights,  including  without  limitation
all  obligations  to Debtor for the  payment of money,  whether  arising  out of
Debtor's  sale of goods or rendition of services or otherwise  (all  hereinafter
called  "Accounts")  and all proceeds of the  foregoing  and all proceeds of any
insurance on the foregoing; (ii) all of Debtor's rights, remedies,  security and
liens,  in, to and in respect of the  Accounts,  present and  future,  including
without limitation,  rights of stoppage in transit,  replevin,  repossession and
reclamation  and other rights and remedies of an unpaid vendor,  lien or secured
party, guaranties or other contracts of suretyship with respect to the Accounts,
deposits or other security for the obligation of any debtor or Debtor in any way
obligated on or in connection with any Accounts, and credit and other insurance,
and all  proceeds of the  foregoing  and all  proceeds of any  insurance  on the
foregoing;  and (iii) all of Debtor's  right,  title and  interest,  present and
future,  in, to and in respect of all goods  relating  to, or which by sale have
resulted in,  Accounts,  including  without  limitation  all goods  described in
invoices  or other  documents  or  instruments  with  respect  to, or  otherwise
representing  or  evidencing  any  Accounts,  and  all  returned,  reclaimed  or
repossessed  goods,  and all proceeds of the  foregoing  and all proceeds of any
insurance on the foregoing.

<PAGE>

                                   SCHEDULE B

                         Subordinated Lender Collateral

         The following property,  whether now existing or subsequently acquired,
and  all  additions,  substitutions,  accessions,  replacements,  proceeds,  and
products thereof or thereto:  all tangible and intangible  assets and properties
of each of Vermont Pure Holdings,  Ltd., a Delaware  corporation  formerly named
"VP Merger Parent,  Inc.", Vermont Pure Springs,  Inc., a Delaware  corporation,
Platinum  Acquisition  Corp.,  f/k/a Vermont Pure  Holdings  (each a "Company"),
including without limitation all furniture,  fixtures, equipment, raw materials,
inventory,  other goods,  accounts,  contract  rights,  rights to the payment of
money, insurance refund claims and all other insurance claims and proceeds, tort
claims, chattel paper, documents,  instruments,  securities and other investment
property,  deposit  accounts,  rights to  proceeds  of letters of credit and all
general  intangibles  including,  without  limitation,  all tax  refund  claims,
license fees, patents, patent applications,  trademarks, trademark applications,
trade names, copyrights,  copyright applications,  rights to sue and recover for
past  infringement  of patents,  trademarks and copyrights,  computer  programs,
computer  software,   engineering  drawings,   service  marks,  customer  lists,
goodwill, and all licenses,  permits,  agreements of any kind or nature pursuant
to which any Company possesses, uses or has authority to possess or use property
(whether  tangible  or  intangible)  of others or  others  possess,  use or have
authority to possess or use property  (whether  tangible or  intangible) of such
Company,  and all recorded data of any kind or nature,  regardless of the medium
of recording  including,  without  limitation,  all software,  writings,  plans,
specifications  and schematics  (each of which terms has the meaning ascribed to
in the  Uniform  Commercial  Code,  as in effect  in the  State of  Connecticut)
(collectively,  the "COLLATERAL");  PROVIDED THAT notwithstanding the foregoing,
such grant of security  interest shall not extend to, and the term  "Collateral"
shall  not  include  any  cash  and cash  equivalents  at any time  owned by any
Company.

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