Document:

<PAGE>

                       PAYMENT IN LIEW OF TAX AGREEMENT
                       --------------------------------

     THIS AGREEMENT made as of the 6th day of October, 1999, is by and between
the COUNTY OF MONROE INDUSTRIAL DEVELOPMENT AGENCY, a public benefit corporation
of the State of New York, having its offices at 8100 City Place, 50 West Main
Street, Rochester, New York 14614 ("the Agency"), and THE CHILDREN'S BEVERAGE
GROUP, INC., a Delaware Corporation duly organized and existing under the laws
of the State of Delaware, qualified to do business in the State of New York and
having an office at 330 Melvin Drive #1, Northbrook, Illinois 60062 (the
"Company").

                                  WITNESSETH:

     WHEREAS, the Agency was created by Chapter 55 of the Law of 1972 of the
State of New York pursuant to Title I of the Article 18A of the General
Municipal Law of the State of New York (collectively, the "Act") as a body
corporate and politic and as a public benefit corporation of the State of New
York; and

     WHEREAS, the Agency has agreed to acquire a leasehold interest in an
approximately 100,000 square foot portion of the approximately 400,000 square
foot Lincoln Facility Building located on Lincoln Avenue, City of Rochester,
County of Monroe, State of New York (the "Land" and as more particularly
described in Exhibit "A"), and (ii) the acquisition and installation of certain
equipment and machinery (the "Equipment") consisting primarily of eight (8)
lines of manufacturing equipment (the Land and Equipment are hereinafter
collectively referred to as the "Facility"); and

     WHEREAS, the Agency has agreed to sublease the Facility to the Company and
to grant to the Company an option which requires the Company to purchase the
Equipment; and

     WHEREAS, pursuant to Section 874(1) of the Act, the Agency is exempt from
the payment of taxes and assessments imposed upon real property and improvements
owned by it; and

     WHEREAS, the Agency, the Company and the County of Monroe deem it necessary
and proper to enter into an agreement making provisions for payments in lieu of
taxes by the Company to the Court of Monroe, the City of Rochester and the
Rochester City School District (collectively, the "Taxing Jurisdictions"); and

     NOW, THEREFORE, in consideration of the Agency providing the Facility and
in consideration of the covenants herein contained, it is mutually agreed as
follow:

     1(a).  As long as the Agency leased the Facility and subleases it to the
Company, the Company agrees to pay annually to the Taxing Jurisdictions as
payment in lieu of taxes, an amount equal to 100% of the taxes, service charges,
special ad valorem levies, special assessments and improvements district charges
or similar tax equivalents, less the percentages of exemption set forth in
subdivisions 1(a) and 1(b) of Section 485 e of the New York Real
<PAGE>

Property Tax Law, as shown on the schedule below, with respect to taxes, special
ad valorem levies and service charges on that portion of the Facility within the
description contained in paragraph 2(a), 2(a)(i), 2(a)(ii) of Section 485e
(notwithstanding that the procedural steps to obtain an exemption may not have
been complied with) which would be levied upon or with respect to the Facility
by the Taxing Jurisdictions if the Facility were owned by The Company and not by
the Agency, following next applicable tax status date:

<TABLE>
<CAPTION>
      YEARS OF EXEMPTION                        PERCENTAGE OF EXEMPTION
--------------------------------------------------------------------------------
<S>                                             <C>
               1                                          100%
               2                                          100%
               3                                          100%
               4                                          100%
               5                                          100%
               6                                          100%
               7                                          100%
               8                                           75%
               9                                           50%
               10                                          25%
</TABLE>

provided, however, that the Company need not comply with the procedures to
obtain such exemption as provided in Section 485e of the New York Real Property
Tax Law, and provided further that the Company and/or the Agency, at the request
of the Company, shall do all things necessary and shall make application and
follow such procedures to obtain such exemption to the extent that the Company
shall determine.

     The tax benefits provided for herein shall be deemed to commence in the
first year in which the Company received any tax benefits relative to the
Facility, whether under this Agreement, another Agreement, or any statutory
exemption. In no event shall the Company be entitled to received tax benefits
relative to the Facility for more than ten (10) consecutive years. The Company
agrees that it will not seek any tax exemption for the Facility which would
provided benefits for more than ten (10) consecutive years.

     1(b). Special district charges, unless otherwise exempt, and Monroe County
Pure Waters charges are to be paid in full in accordance with normal billing
practices.

     1(c)  The Company shall pay, within the applicable grace period and without
penalty, the amounts set forth in Paragraphs 1(a), 1(b), and 1(c), hereof
applicable taxes, service charges, special ad valorem levies, special
assessments or similar tax equivalents, less the percentages of exemption on
similar property subject to taxation by the Taxing Jurisdictions, as
appropriate.

     1(d)  The Company acknowledges and agrees that if payments are not made
within the applicable grace period each Taxing Jurisdiction any commence legal
action directly against the Company and shall be entitled to recover the amount
due, a late penalty of 5% of the amount due, interest of 1% per month, expenses,
costs and disbursements and attorneys' fees to prosecute the action, all
pursuant to General Municipal Section 874.

                                       2
<PAGE>

     2.   In the event that the Facility is transferred from the Agency to the
Company, and the Company is ineligible for a continued tax exemption under some
other tax incentive program, the Company agrees to pay at the next tax lien date
(plus any applicable grace period) to each of the Taxing Jurisdictions an amount
equal to the taxes and assessments which would have been levied on the Facility
if the Facility had been classified as fully taxable, pro rata for the unexpired
portion of the year of transfer, less any amounts paid hereunder, for such
unexpired portion of the year of transfer.

     3.   The Company shall have all of the rights and remedies of a taxpayer
with respect to any tax, service charge, special benefit, ad valorem levy,
assessment, or special assessment or service charge in lieu of which the company
is obligated to make a payment pursuant to this Agreement, as if and to the same
extent as if the Company were the owner of the Facility.

     4.   The Company shall have all of the rights and remedies of a taxpayer as
if and to the same extent as if the Company were the owner of the Facility, with
respect to any proposed assessment or charge in assessment with respect to the
Facility by any of the Taxing Jurisdictions and likewise shall be entitled to
protest before and be heard by the appropriate assessors or Board of Assessment
Review, and shall be entitled to take any and all appropriate appeals or
initiate any proceedings to review the validity or amount of any assessment or
the validity or amount of any tax equivalent provided for herein.

     5.   To the extent the facility is declared to be subject to taxation or
assessments by an amendment to the Act, other legislative change, or by final
judgment of a Court of competent jurisdiction, the obligations of the company
hereunder shall, to such extent, be null and void.

     6.   If the Company enters into any written agreement with any taxing
Jurisdictions providing for payments in lieu of taxes by The Company to any or
all of them, so much of this Agreement as relates to the Taxing Jurisdiction
with which the Company has entered into said written agreement, and any such
written agreement shall be deemed to be incorporated herein by reference and
made a part hereof as an amendment or modification hereof. Should the Company
receive any exemption from any of the Taxing Jurisdictions this Agreement shall
be automatically modified to reflect the extent of such exemption.

     7.   If payments are not made as provided for herein, the Taxing
Jurisdictions, individually or collectively, shall be entitled to pursue any and
all remedies afforded them at law or in equity.

     8.   To the extent the Facility is declared to be subject to taxation or
assessment by an amendment to the Act, other legislative change, or by final
judgment of a Court of competent jurisdiction, the obligations of the Company
hereunder shall, to such extent, be null and void.

     9.   It is understood and agreed that, should the Company be obligated to
pay to any Taxing Jurisdiction any amounts in the nature of general taxes,
general assessments, service charges, or governmental charges of a similar
nature, with respect to the interest of the Agency or the Company, or their
respective successors and assigns, in the Facility, or the occupancy of

                                       3
<PAGE>

the Facility by the Company but not including, by way of example, (i) special
assessments, special ad valorem levies or governmental charges in the nature of
utility charges, including but not limited to, water, solid waste, sewage
treatment, or sewer or other rents, rates and charges; (ii) sales taxes and
recording taxes; (iii) income taxes of the Company; the Company's obligation to
such Taxing Jurisdiction hereunder shall be reduced by the amount of such
amounts in the nature of general taxes, general assessments, service charges, or
other governmental charges of a similar nature which the Company shall be so
obligated to pay. The Company shall give the respective Taxing Jurisdictions
thirty (30) days prior written notice of its intention to claim any credit
pursuant to the provisions of this Section 9, if practicable.

     10.  If the Company enters into any written agreement with any Taxing
Jurisdiction providing for payments in lieu of taxes by the Company to any or
all of them, so much of this Agreement as relates to the Taxing Jurisdiction
with which the Company has entered into said written agreement, and any such
written agreement shall be deemed to be incorporated herein by reference and
made a part hereof as an amendment or modification hereof. Should the Company
receive any exemption from any of the Taxing Jurisdictions, this Agreement shall
automatically be modified to reflect the extent of such exemption.

     11.  If payments are not made as provided for herein, the Taxing
Jurisdictions, individually or collectively, shall be entitled to pursue any and
all remedies afforded them at law or in equity.

     12.  This Agreement shall be binding upon the parties hereto and their
respective successors, assigns, representatives and/or agents and shall inure to
the benefit of their respective successors, assigns, representatives and/or
agents.

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

                                        COUNTY OF MONROE INDUSTRIAL
                                        DEVELOPMENT AGENCY

                                        By:  /s/ Joseph Rubicon
                                           -------------------------------
                                           Joseph Rubicon, Chairman

                                        THE CHILDREN'S BEVERAGE
                                        GROUP, INC.

                                        By:  /s/ Jon Darmstadter,
                                           -------------------------------
                                           Jon Darmstadter, CEO

                                       4<PAGE>

                              SECURITY AGREEMENT
                              ------------------

     THE CHILDREN'S BEVERAGE GROUP, INC. ("Debtor"), a business corporation
organized and existing under the laws of the State of Delaware with offices at
330 Melvin Drive, Suite 1, Northbrook, Illinois  60062, for valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
hereby grants to UNITED STATES TRUST COMPANY OF NEW YORK, as Trustee (the
"Secured Party"), a New York corporation with trust powers with its corporate
trust offices at 114 West 47th Street, New York, New York 10036, a first
priority security interest in and to the Debtor's rights to U.S. Department of
Commerce United States Patent No. 5,941,642 (self-contained fluid dispensing
system) (the "Patent"), and all collateral rights, benefits, products, goods and
revenues generated therefrom as further specified on Schedule A hereof
                                                     ----------
(collectively, The "Collateral') and the Debtor hereby mortgages, sets over,
assigns, pledges and hypothecates to the Secured Party all the Debtor's interest
in the proceeds and properties of the Collateral including, without limitation,
the following:

(i)    All proceeds and general intangibles (as defined in the Uniform
       Commercial Code of the State of New York (the "UCC")), arising from the
       Patent, and any product or mass into which any inventory shall be
       manufactured, processed assembled or commingled and the proceeds and
       general intangible arising therefrom (the "Inventory");

(ii)   All accounts (as defined in the UCC) generated by utilization of the
       Patent, now existing or hereafter acquired, and the proceeds thereof (the
       "Accounts");

(iii)  All chattel paper (as defined in the UCC) generated by utilization of the
       Patent, now owned or hereafter acquired, and the proceeds thereof
       ("Chattel Paper");

(iv)   All instruments (as defined in the UCC), now owned or hereafter acquired,
       and the proceeds thereof (the "Instruments");

(v)    All insurance covering the Collateral and Inventory against any risk of
       damage, or loss whatsoever, now owned or hereafter acquired, together
       with any and all claims of Debtor with respect thereto, and the proceeds
       thereof;

(vi)   All negotiable documents of title (as defined in the UCC) covering any
       Inventory wherever located now owned or hereafter acquired, and the
       proceeds thereof (the "Documents");

(vii)  All of Debtor's right, title and interest in all of its books, records,
       ledger sheets, files and other data and documents, now or hereafter
       existing, relating to the Collateral, the Inventory, general intangibles
       and Accounts;

(viii) All of Debtor's rights as a seller of goods under Chapter 2 of the UCC or
       otherwise with respect to Inventory, and all goods represented by or
       securing any of the Accounts, all of Debtor's rights therein, including,
       without limitation, rights as an unpaid vendor or lienor and including
       rights of stoppage in transit, replevin and reclamation, and the proceeds
       thereof;
<PAGE>

(ix)   All of Debtor's right, title and interest in and to any licenses,
       permits, approvals and other certificates now or hereafter related to the
       Patent and the Collateral including, without limitation, the Agreement,
       as defined in the Consent and Collateral Assignment attached hereto;

(x)    All of Debtor's right, title and interest in and to any contract, now or
       hereafter in existence, together with any and all claims of Debtor with
       respect thereto, and the proceeds and products thereof relating to the
       Collateral;

(xi)   All of the right, title and interest of Debtor in and to all leases,
       tenancies, subleases, subtenancies and occupancies now or hereafter
       affecting, the Collateral and all amendments, modifications, extensions
       and renewals thereof (collectively, the "Assigned Leases") together with
       all of the rents, issues and profits which may be or become due, or to
       which Debtor may now or hereafter become entitled, arising, or issuing
       out of the Assigned Leases;

(xii)  All insurance proceeds heretofore and hereafter paid or to be paid by
       reason of any loss or damage to the Collateral or any part thereof by
       fire, flood or other casualty, which proceeds, together with any and all
       claims of Debtor with respect thereto, are hereby assigned to and pledged
       with Secured Party;

(xiii) All insurance proceeds heretofore and hereafter paid or to be paid by
       reason of any loss of income from the operation of the Collateral, which
       proceeds, together, with any and all claims of Debtor with respect
       thereto, are hereby assigned to and pledged with Secured Party;

(xiv)  All exclusive technological uses and applications rightfully within
       Debtor's control by reason of registration of the Patent with the
       Department of Commerce; and

(xv)   All of the foregoing whether now owned or hereafter acquired and all
       extensions, additions, attachments, accessories, accretions,
       improvements, betterments, renewals, substitutions and replacements of
       any of the foregoing collateral.

       Notice is hereby given that the Debtor shall, at its sole cost and
expense, file from time to time Continuation Statements and such other
instruments as will continue the effectiveness of the filing of the financing
statements filed with respect to this Security Agreement.

1.     This security interest is granted to secure payment of all obligations
(the "Obligations") due under that certain Installment Sale Agreement, dated as
of September 1, 1999 (the "Installment Sale Agreement"), by and between the
County of Monroe Industrial Development Agency (the "Issuer") and the Debtor.

       Incident thereto; the Debtor agrees, covenants, represents and warrants
with and to the Secured Party as follows:

                                       2
<PAGE>

     A.   The security interest granted to the Secured Party in the Collateral
          shall constitute a first lien, and the Debtor is the lawful assignee
          of the Patent and the owner of the balance of Collateral and has good
          right to pledge, sell, consign, assign, transfer and create a security
          interest in the same.

     B.   The Collateral shall continue to be free from all pledges, liens,
          encumbrances and security interests or other claims in favor of
          others, and that the Debtor will warrant and, at the Secured Party's
          request, defend the same from all claims and demands of all persons.

     C.   Except in the ordinary course of business, or as otherwise specified
          herein or with the Secured Party's prior written consent, Debtor will
          not sell, assign, or otherwise transfer the Patent or any document,
          instrument, or chattel paper related to the Collateral and will
          neither create nor suffer to be created any security interests, liens,
          encumbrances or claims in favor of others with respect thereto.

2.   The Debtor agrees to comply with the requirements of all applicable state
and federal laws in order to grant to the Secured Party a valid perfected first
lien upon, and a security interest in, the Collateral described herein, or which
may be described in any amendment supplemental hereto.

3.   The Debtor will pay, when due, all taxes, assessments and other charges
levied or assessed upon the Collateral or any part thereof.

4.   The Debtor will have and maintain insurance at all times with respect to
the insurable Collateral against risks of fire (including so-called extended
coverage), theft, and such other risks (including war damage, if available) as
the Secured Party may require, in such form, for such periods, and written by
such companies as may be satisfactory to the Secured Party, such insurance to be
first payable, in case of loss, to the Secured Party; all policies of insurance
shall provide that the same shall not be canceled or amended without at least
(30) days' prior written notice to the Secured Party, and the Debtor shall
continually furnish the Secured Party with evidence satisfactory to the Secured
Party of compliance with the foregoing insurance provisions.

5.   At its option, the Secured Party may discharge taxes, liens, or security
interests or other encumbrances at any time levied or placed on any of the
Collateral, may pay for insurance on the Collateral and may pay for the
maintenance and preservation of the Collateral. Debtor agrees to reimburse the
Secured Party on demand for any payment made, or any expense incurred by the
Secured Party pursuant to the foregoing authorization. Until default, the Debtor
may have possession of the Collateral and use it in any lawful manner not
inconsistent with this Security Agreement and not inconsistent with any policy
of insurance thereon.

6.   Debtor shall be in default under this Security Agreement upon the happening
of any of the following events or conditions:

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<PAGE>

     A.   Default in the payment or performance of any condition, obligation,
          agreement covenant or liability secured hereby or contained or
          referred to herein or in any agreement (including the Installment Sale
          Agreement) continuing beyond applicable periods of grace, if any; or

     B.   Any warranty. representation or statement made or furnished to the
          Secured Party or contained in the Installment Sale Agreement by or on
          behalf of the Debtor proves to have been false in any material respect
          when made or furnished; or

     C.   A default or event of default under or other failure to observe or
          perform any condition, obligation, covenant or agreement contained
          herein, or contained in or referred to in the Installment Sale
          Agreement; or

     D.   Dissolution, termination of existence, insolvency, business failure,
          appointment of a receiver of any part of the property of, assignment
          for the benefit of creditors by, or the commencement of any proceeding
          under any bankruptcy or insolvency laws by or against the Debtor or
          any guarantor or surety for the Debtor.

7.   (a)  Upon the occurrence of such default, the Secured Party shall have all
of the rights, powers and remedies set forth in the Installment Sale Agreement,
this Security Agreement and any and all other documents or instruments
evidencing, securing an/or entered into with respect to the Installment Sale
Agreement, together with the rights and remedies of a secured party under the
Uniform Commercial Code of New York, including without limitation, the right to
sell, lease, or otherwise dispose of any or all of the Collateral, including the
Patent, and to take possession of the Collateral or any part thereof wherever
the same may be situated and remove the same therefrom and the Debtor will not
resist or interfere with such action. The Secured Party shall have full right
and authority to utilize the Patent technology and, without limitation, create,
sell, lease, assign and receive the proceeds of the Inventory, Accounts, Chattel
Paper, Instruments and Documents.

     (b)  Upon the occurrence of such default, the Secured Party shall have the
right to notify the account debtors obligated on any or all of the Debtor's
Accounts, Chattel Paper, Instruments or general intangibles to make payment
thereof directly to the Secured Party, and the Secured Party may take control of
all proceeds of any Accounts, Chattel Paper, Instruments or general intangibles.
The costs of collection and enforcement of Accounts, Chattel Paper, Instruments
or general intangibles including attorney's fees and out-of-pocket expense,
shall be borne solely by the Debtor, whether the same are not thereafter without
the Secured Party's written consent extend compromise, compound or settle any
Accounts, Chattel Paper, Instruments or general intangibles, or release, wholly
or partly, any person liable for payment thereof, or allow any credit or
discount thereon which is not customarily allowed by the Debtor in the ordinary
conduct of its business.

     (c)  Upon demand by the Secured Party after a default hereunder, the Debtor
will immediately deliver to the Secured Party all proceeds of Collateral, and
all original evidences of Accounts, Chattel Paper, Instruments, Documents or
general intangibles including, without limitation all checks, drafts, cash and
other remittances, notes, trade acceptances or other

                                       4
<PAGE>

instruments or contracts for the payment of money, appropriately endorsed to the
Secured Party's order and, regardless of the form of such endorsement, the
Debtor hereby waives presentment, demand, notice of dishonor, protest and notice
of protest and all other notices with respect thereto; and the Debtor hereby
appoints the Secured Party to be the Debtor's agent and attorney-in-fact to make
such endorsement on behalf of and in the name of the Debtor. Pending such
deposit, the Debtor agrees that it will not commingle any such checks, drafts,
cash and other remittances with any of the Debtor's funds or property, but will
hold them separate and apart therefrom and upon an express trust for the Secured
Party until delivery thereof is made to the Secured Party.

     (d)   Effective immediately upon the occurrence of such default, the Debtor
hereby appoints the Secured Party to be the Debtor's true and lawful attorney,
with full power of substitution, in the Secured Party's name or the Debtor's
name or otherwise, for the Secured Party's sole use and benefit, but at the
Debtor's cost and expense, to exercise at any time all or any of the following
powers with respect to the Patent and all or any of the Accounts, Chattel Paper,
Instruments, Documents or general intangibles.

     (i)    to demand, sue for, collect, receive and give acquittance for any
            and all moneys due or to become due upon or by virtue thereof,

     (ii)   to receive, take, endorse, assign and deliver any and all checks,
            notes, drafts and other negotiable and non-negotiable instruments
            taken or received by the Secured Party in connection therewith, and
            the Debtor waives notice of presentment, protest and non-payment of
            any instrument so endorsed or assigned;

     (iii)  to settle, compromise, compound, prosecute or defend any action or
            proceeding with respect thereto;

     (iv)   to sell transfer, assign or otherwise deal in or with the same or
            the proceeds or avails thereof or the relevant goods, as fully and
            effectually as if the Secured Party were the absolute owner thereof;

     (v)    to make any reasonable allowance and other reasonable adjustments
            with reference thereto;

     (vi)   to sign the Debtor's name on any Document, on invoices relating to
            any Account, on drafts against customers, on schedules of
            assignments of Accounts, on notices of assignment, financing
            statements under the UCC and other public records, on verifications
            of Accounts, and on notices to customers;

     (vii)  to file or record in any public office notices of assignment or any
            other public notice required to effect this Security Agreement;

     (viii) to notify the post office authorities to change the address for
            delivery of the Debtor's mail to an address designated by the
            Secured Party;

                                       5
<PAGE>

     (ix) to receive, open and dispose of all mail addressed to the Debtor, and

     (x)  to send requests for verification of Accounts to the Debtor's
          customers.

     The Debtor hereby ratifies and approves all acts of the attorney pursuant
to this Section 7(d), and neither the Secured Party nor the attorney will be
liable for any acts of commission or omission, 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 of the Obligations remain outstanding.

     (e)  Any proceeds of collection or sale of the Collateral shall be applied
to the payment of principal, interest or other Obligations and charges
comprising the Obligations in such order as the Secured Party may determine, and
any excess shall be returned to the Debtor. The Secured Parry shall so apply the
proceeds of collection or sale of the Collateral, if any, at least once during
each calendar month, and until so applied, shall retain such proceeds in a
special, non-interest bearing account maintained by the Secured Party and over
which the Secured Party alone shall have the power of withdrawal.

     (f)  The Secured Party may exercise its rights with respect to Collateral
without resorting to or regard to other Collateral or sources of reimbursement
for the Obligations.

     (g)  The exercise by the Secured Party or a failure to so exercise any
authority granted under this Section 7 shall in no manner affect the Debtor's
liability to the Secured Party, and provided, further, that the Secured Party
shall be under no obligation or duty to exercise any of the powers hereby
conferred upon it and it shall be without liability for any act or failure to
act in connection with the collection of, or the preservation of any rights
under any of the Collateral.

8.   No waiver by the Secured Party of any default shall operate as a waiver of
any other default or of the same default on a future occasion.  All rights of
the Secured Party hereunder shall inure to the benefit of its legal
representative, successors and assigns; and all Obligations of the Debtor shall
bind its successors, legal representatives and assigns.

9.   In any exercise of rights of the Secured Party under this or any other
instrument, any combination or all of the property, rights or security given to
secure the Debtor's indebtedness to the Secured Party may be offered for sale
for one total price, and the proceeds of any such sale amounted for in one
amount without distinction between the items of security or without assignment
to them of any proportion of such proceeds, the Debtor hereby waiving the
application of any doctrine of marshaling.

10.  Debtor agrees to take such action as Secured Party may require to
establish, perfect and maintain the security interest granted pursuant to
establish this Security Agreement, including, without limitation, the
preparation, execution and filing in all appropriate offices of financing
statements. At any time and from time to time, upon request of the Secured
Party, the Debtor will give, execute, file and/or record any notice, financing
statement, continuation statement, instrument, document or agreement that the
Secured Party may consider necessary or desirable to create, preserve, continue,
perfect or validate any security interest granted hereunder or which

                                       6
<PAGE>

the Secured Party may consider necessary or desirable to exercise or enforce its
rights hereunder with respect to such security interest. Without limiting the
generality of the foregoing, the Secured Party is authorized: to file with
respect to the Collateral one or more financing statements, continuation
statements or other documents without the signature of the Debtor and to name
therein the Debtor as Debtor and the Secured Party as Secured Party; and correct
or complete, or cause to be corrected or completed, any financing statements,
continuation statements or other such documents as have been filed naming the
Debtor as Debtor and the Secured Party, on behalf of the Debtor, is hereby
appointed by the Debtor as its lawful attorney and agent to execute,
acknowledge, deliver, file and/or record any and all documents requiring
execution by the Debtor and necessary or desirable to effectuate or facilitate
the purposes of this Security Agreement and/or the Obligations or covenants of
Debtor hereunder. The power of attorney granted hereby is coupled with an
interest and is irrevocable. The Secured Party shall not be liable for its
failure to file, prepare or execute any financing statements, continuation
statements or other documents.

11.  In addition to the financial assistance provided by the Issuer, as
evidenced by the Obligations, the City of Rochester, New York (the "City") has
agreed to provide financial assistance to the Debtor. The City's total financial
assistance is presently estimated to be approximately $2,566,000 (the "City
Loan"). The City Loan, through one or more sources, shall be secured essentially
by a first lien security interest in the assets financed with the proceeds of
the City Loan. The City Loan shall be additionally collaterally secured by a
proportionate co-equal security interest in the Patent. The Secured Party hereby
acknowledges and agrees that it shall consent to and execute a security
agreement (and ancillary documentation) spreading the security interest in the
Patent to or at the direction of the City to secure the City Loan. Proceeds of
the consolidated Patent security interest shall be shared between the Secured
Party and the City in a proportion which reflects the respective principal
balances outstanding between the Obligations and the City Loan against the total
secured indebtedness. Rights, remedies and options shall be exercised, between
the Secured Party and the City, by the entity whose secured indebtedness exceeds
fifty percent (50%) of the total secured indebtedness. The Secured Party shall
not execute any consent or agreement to a City Loan security agreement unless
such agreement shall contain the substance of the above requirements.

12.  As used herein, the term "Secured Party" shall refer not only to the entity
referred to at the beginning of this instrument, but also to the obligor under
the Installment Sale Agreement secured hereby.

13.  This Security Agreement is in addition to and without limitation of any
right of the Secured Party under the Installment Sale Agreement or any other
security agreement, mortgage or guaranty granted by the Debtor or any other
person to the Secured Party.

14.  The Secured Party shall not be liable in any manner for exercising or
refusing or failing to exercise any such rights hereunder or any other rights or
remedies granted to it hereunder.

15.  The Debtor agrees to stamp all books and records pertaining to the
Accounts, Chattel Paper, Instruments, general intangibles and Documents to
evidence the Secured Party's security

                                       7
<PAGE>

interest therein in form satisfactory to the Secured Party immediately upon the
Secured Party's demand.

16.  The Debtor waives demand, notice, protest, notice of acceptance of this
Security Agreement, notice of loans made, credit extended, collateral received
or delivered or other action taken in reliance hereto and all other demands and
notices of any description except as hereinbefore provided. The Debtor assents
to any extension or postponement of the time of payment or any other indulgence,
to any substitution, exchange or lease of 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 time or times as the Secured Party may deem advisable. The
Secured Party shall have no duty as to the collection or protection of
Collateral not in the Secured Party's Possession, and the Secured Party's duty
with reference to Collateral in its possession shall be to use reasonable care
in the custody and preservation of such Collateral but such duty shall not
require the Secured Party to engage in:

     (i)   the collection of income thereon;

     (ii)  the collection of debt; or

     (iii) the taking of steps necessary to preserve rights against prior
           parties, although the Secured Party is authorized to reasonably
           undertake any such action if it deems appropriate.

17.  No delay or omission by the Secured Party in exercising any of its rights
hereunder shall be deemed to constitute a waiver thereof. All rights and
remedies of the Secured Party hereunder and under the Bond Documents shall be
cumulative and may be exercised singularly or concurrently.

18.  The Secured Party shall not be required to marshal any present or future
security for (including but not limited to this Security Agreement and the
Collateral pledged hereunder) or guarantees of payment of the Obligations or any
of them, or to resort to such security or guarantees in any particular order,
and all of its rights hereunder and in respect of such securities and guarantees
shall be cumulative and in addition to all other rights, however existing or
arising.

19.  This Security Agreement may not be amended, changed, modified, altered or
terminated except by a written instrument executed and delivered by the parties
hereto.

20.  This Security Agreement may be executed in several counterparts, each of
which shall be an original and all of which shall constitute but one and the
same instrument.

21.  This Security Agreement shall be governed by and construed in accordance
with the laws of the State of New York.

                                       8
<PAGE>

22.  In the event any provision of this Security Agreement shall be held invalid
or unenforceable by any court of competent jurisdiction, such holding shall not
invalidate or render unenforceable any other provision hereof.

23.  This Security Agreement shall become effective when it is signed by the
Debtor.

     IN WITNESS WHEREOF, the Debtor has caused this instrument to be dully
executed this ____ day of October, 1999.

                              DEBTOR:
WITNESS:                      THE CHILDREN'S BEVERAGE GROUP, INC.

/s/ unknown                   By:  /s/ Jon A. Darmstadter, pres.
-----------------------          -----------------------------------------
                                   Jon A. Darmstadter
                              Its: President

                              SECURED PARTY
WITNESS:                      UNITED STATES TRUST COMPANY
                              OF NEW YORK, as Trustee

/s/ Lisa A. Geary             By:  /s/ H. William Webber
-----------------------          -----------------------------------------
                                   H. William Weber
                              Its: Vice President

                       CONSENT AND COLLATERAL ASSIGNMENT

     1, Jon A. Darmstadter, am the registered owner of the herein described
Patent. I have granted an exclusive license to utilize my Patent to The
Children's Beverage Group, Inc. pursuant to a certain Agreement made September
14, 1999 (the "Agreement"). I hereby consent to the granting of a security
interest in such Patent by The Children's Beverage Group, Inc. to United States
Trust Company of New York, as Trustee. Further, I execute this certificate to
grant the Trustee a collateral assignment of the Patent and the balance of the
Collateral described herein in the event, for any reason, the term of the
Agreement expires or is terminated prior to the stated expiration date of the
Installment Sale Agreement. In such event, this Consent and Collateral
Assignment shall become a direct assignment of my rights in and to the Patent
and my interest in the balance of the Collateral directly to the Trustee.

Dated:     10/07/99                            /s/ Jon  Darmstadter
      -----------------                 ----------------------------------------
                                               JON A. DARMSTADTER

                                       9

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