VERMONT PURE HOLDINGS LTD/DE
LOAN AND SECURITY AGREEMENT
<DOCUMENT>
<TYPE>EX-10.14
<SEQUENCE>2
<FILENAME>0002.txt
<DESCRIPTION>LOAN AND SECURITY AGREEMENT
<TEXT>



         This agreement made as of the 5th day of October,  2000, 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 ").

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   (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.




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                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.

                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.




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                m.  "Date of Closing" means the date on which this Agreement and
                    the Notes are 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  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,



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                    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.

                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 same
                    date as this  Agreement  executed by the Guarantors in favor
                    of Lender.

                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



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                    payable arising in the ordinary course of Obligors' 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 (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 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 on the date of this  Agreement) 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 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.

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

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



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               ff.  "Mortgages"  means the Open-End  Mortgage Deeds and Security
                    Agreements   from  the  Obligors  to  Lender   covering  the
                    Premises.

               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 and the Revolving Line of Credit
                    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.

               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.




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               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.


               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, (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  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



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                    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  same  date  as this  Agreement  in the
                    original principal amount of up to $5,000,000.

               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



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                    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 same date as this  Agreement 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.

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

              iii.  "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.

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




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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.

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.

2.3            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



                                      -10-


<PAGE>



               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  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.



                                      -11-


<PAGE>




                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 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



                                      -12-


<PAGE>



                    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  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



                                      -13-


<PAGE>



               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 shall pay to Lender on the Date of Closing an
               underwriting  fee in the amount of One  Hundred  Eighty  Thousand
               Dollars ($180,000).  The Obligors shall pay to Lender on the Date
               of  Closing  a  commitment  fee in  the  amount  of  Eighty-Seven
               Thousand Dollars ($87,000).  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).

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



                                      -14-


<PAGE>



               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 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



                                      -15-


<PAGE>



                  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.


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:

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,



                                      -16-


<PAGE>



                  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.

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,
                  1999, and represent that all of  such financial information is


                                                       -17-


<PAGE>



               true and correct; that such financial information fairly presents
               the financial condition and results of 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 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,



                                      -18-


<PAGE>



               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 EXHIBIT 4.22.


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.



                                      -19-


<PAGE>



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.

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.

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,



                                      -20-


<PAGE>



               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;

               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



                                      -21-


<PAGE>



               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 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



                                      -22-


<PAGE>



               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  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.



                                      -23-


<PAGE>




               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.

               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;



                                      -24-


<PAGE>



               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;

               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,



                                      -25-


<PAGE>



                    decree,  judgment,   injunction,  notice  or  demand  letter
                    issued, entered, promulgated or approved thereunder.

               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  facility as that term is defined in 40
                    CFR 264 and 265,



                                      -26-


<PAGE>



                    (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              NEW YORK  MORTGAGE.  In the event that the real property owned
                  by any of the Obligors in Sharon  Springs,  New York (the "New
                  York Real Property") is not sold within nine (9) months of the
                  date of this Agreement,  the Obligors shall  immediately grant
                  to Lender a mortgage on the New York Real Property in form and
                  substance  satisfactory  to Lender and at such time shall also
                  provide to Lender such title insurance policies, environmental
                  site  assessments,  surveys  and other  items as Lender  shall
                  require in  connection  with the mortgage of the New York Real
                  Estate.

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 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.



                                      -27-


<PAGE>




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.

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 are no longer  actively
                  involved in the management of the Obligors.



                                      -28-


<PAGE>



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.

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.



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<PAGE>




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  July 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 July
                  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 April 30, 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.

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 for the period from the Date of Closing through January
                  31,  2001,  for the period  from the Date of  Closing  through
                  April  30,  2001  and as of the  end of  each  fiscal  quarter
                  thereafter for the fiscal quarter then ended.

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.  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.




                                      -30-


<PAGE>



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.

                  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



                                      -31-


<PAGE>



                    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 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



                                      -32-


<PAGE>



                  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  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



                                      -33-


<PAGE>



                  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 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")



                                      -34-


<PAGE>



                  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.

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.



                                      -35-


<PAGE>



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.

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.



                                      -36-


<PAGE>



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  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.   All exhibits 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.



                                      -37-


<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              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.



                                      -38-


<PAGE>



8.21              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  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.

8.22              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.



                                      -39-


<PAGE>




         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.
                                             (f/ka VP Merger Parent, Inc.)


__________________________                   By:____________________________
                                                Name: Timothy G. Fallon
                                                Title: President


__________________________                   CRYSTAL ROCK SPRING WATER COMPANY


__________________________                   By:____________________________
                                                Name: John B. Baker
                                                Title: President


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


__________________________                   By:____________________________
                                                Name: Timothy G. Fallon
                                                Title: President


__________________________                   VERMONT PURE SPRINGS, INC.


__________________________                   By:____________________________
                                                Name: Timothy G. Fallon
                                                Title: President





                                      -40-


<PAGE>



__________________________                           WEBSTER BANK


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



                                      -41-


<PAGE>



                                   EXHIBIT 2.1

                                    Term Note




<PAGE>



                                   EXHIBIT 2.2

                          Revolving Line of Credit Note




<PAGE>



                                  EXHIBIT 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

2000 Int'l , Buffalo, NY

VIN 1HTSCAANOYH233179

Baler, Pet Plant




<PAGE>




Gateway Computers, RT66 Randolph, VT

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

DeliveryVehicles 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 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
                                                     SCHOOLHOUSE WAREHOUSING
313 LONG RIDGE ROAD                                  PO DRAWER O
STAMFORD, CT                                         MAYFIELD, NY 12117
(860) 945-0661                                        (518) 725-6960

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

840 AERO DRIVE
BUFFALO, NY 14225

210 TERMINAL ROAD
LIVERPOOL, NY 13088
(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 th premises at Chase
Road in Randolph, Vermont maturing December 1, 2006. Secured by the property.


2.  Lease with CIT Group in connection with the lease of two trucks.  The amount
    due through  October 24, 2000 is $48,386.12.   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 Lesing, Inc. The amount outstanding on
    October 4, 2000 is $53,940.15. Secured by a UCC-1 Financing  Statement filed
    with the Vermont Secretary of State as filing number 99-110951.


4.  Lease  with  Wells Fargo Leasing Inc., successor  to  Norwest Leasing.   The
    amount outstanding on October 4, 2000 is approximately  $10,000.  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 July 31, 2000 was $295,154.

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








<PAGE>



                                  SCHEDULE 4.6

                                   Litigation

1.       Lancelot Gordon, Jr. vs. Vermont Pure Holdings, Ltd.
         3:99 CV 2193 AHN (D. Conn.)

2.       Michelle L. Brackett v. Vermont Pure Springs, Inc. and James W. Roat
         Supreme Court of New York, Index No. 9902642, filed September 21, 1999

3.       Julie Schroeder v. Excelsior Springs Water Company
         Case No. 4-#-S-89-134974-E, New York Division of Human Rights

4.       Ogden Entertainment Services, Inc. v. Vermont Pure Springs, Inc.
         Index No. 00-01699 filed February 8, 2000
         Supreme Court of the State of New York, County of Westchester

5.       Vermont Department of Taxes, Case ID 00001-12724 (Vermont Pure Springs,
         Inc.) relates  to  a  sales  tax  audit  and  subsequent appeals on the
         classification of taxable v. nontaxable manufacturing equipment. Amount
         of the dispute as of the  interim  financial  date  was  in  excess  of
         $250,000.  There is a current settlement proposal from the   Department
         for approximately $53,000.

6.       Judith Kissane v. Vermont Pure Springs, Inc.
         File No. 98-147-cr, State of Vermont, Office of Attorney General

7.       New York State Department of Finance and Taxation
         Routine  audit  related  to  sales  tax for the period  3/1/97-2/28/00,
         pending

8.       Vermont  Pure  Holdings, Ltd. v. DesCartes  Systems  Group,  Inc.   and
         Endgame Solutions, Inc.,  United States District Court, Burlington, VT




<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. Convertible  Debenture issued to Marcon Capital  Corporation as of 9/30/99 in
the principal  amount of $975,000,  convertible  at 85% of the average per share
price of Holding's  common  stock for the 20 days  immediately  proceeding  such
conversion.

3.  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.

4.  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.

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

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

7. Stock options  issued under the  Employment  Agreements  dated May 5, 2000 in
conjunction  with the Merger Agreement of the same date between Vermont Pure and
Crystal Rock. Pursuant to these agreements, the employees will have the right to
purchase (as an incentive  stock option under the Company's  1998  Incentive and
Non-Statutory Stock Option Plan) the following amounts of Vermont Pure Holdings,
Ltd.  Common  Stock  at  the  closing  price  on the  date  the  transaction  is
consummated,  subject to the vesting  provisions in the agreements.  Issuance of
these options is contingent on shareholder  approval on October 5, 2000 to amend
the 1998 plan to increase the number of shares.

                 Tim Fallon                                              500,000
                 Bruce MacDonald                                         100,000
                 David Jurasek                                            75,000
                 Eugene Monte                                             25,000





<PAGE>



                                  SCHEDULE 5.10

                              Plans of the Obligors

 1.              Vermont Pure Springs, Inc. Employee Benefit Plan

 2.              Vermont Pure Springs, Inc. Retirement Plan

 3.              Vermont Pure Springs, Inc. Profit Sharing Plan

 4.              1998 Incentive and Non-Statutory Stock Option Plan

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

 6.              1993 Performance Equity Plan




<PAGE>



                                  SCHEDULE 6.1

                             Existing Capital Leases

 1.              Lease  with The CIT Group in  connection  with the lease of two
                 trucks.  The amount due through October 24, 2000 is $48,386.12.
                 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.  The amount
                 outstanding  on  October 4, 2000 is $53,940.15.    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 4, 2000 is
                 approximately $10,000.  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. Note to Elizabeth  Lacivita dated  December  17,1999,  maturing  December 17,
2000,  in  conjunction   with  the  acquisition  of  Coffee  Magic.  The  amount
outstanding on July 31, 2000 was $50,000. Unsecured.

6. Note to Richard Marcotte dated February 17, 2000, maturing February 17, 2001,
in conjunction with the acquisition of Sunrise Coffee..  The amount  outstanding
on July 31, 2000 was $58,000. Unsecured.

7. Notes to Henry,  Joan,  John,  Peter Baker and a Baker family trust  totaling
22,600,000,  maturing  seven  years  from  the date of the  transaction  herein.
Subordinated to Webster Bank.

8. 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 July 31, 2000 was $295,154.

9. Note to All Natural  Products of Vermont,  Inc. d/b/a Vermont  Naturals dated
May ___, 1998,  maturing May 5, 2001, in conjunction with the acquisition of All
Natural  Products of Vermont,  Inc. The amount  outstanding on July 31, 2000 was
$3,438.29. Unsecured.





<PAGE>


10.  Lease with The CIT Group in  connection  with the lease of two trucks.  The
amount due through October 24, 2000 is $48,386.12.  Secured by a UCC-1 Financing
Statement filed with the Vermont Secretary of State as filing number 98-99831.

11. Truck Lease Agreement with Associates  Leasing,  Inc. The amount outstanding
on October 4, 2000 is $53,940.15.  Secured by a UCC-1 Financing  Statement filed
with the Vermont Secretary of State as filing number 99-110951.

12. Lease with Wells Fargo Financial Leasing Inc., successor to Norwest Leasing.
The amount outstanding on October 4, 2000 is approximately $10,000. Secured by a
UCC-1 Financing  Statement  filed with the Vermont  Secretary of State as filing
number 99-115271.

</TEXT>
</DOCUMENT>
