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USA: Vermont Pure And Crystal Rock Sign Merger Agreement

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Vermont Pure Holdings, Ltd. (Amex: VPS) and Crystal Rock Spring Water Company, which is privately held by the Baker family, announced today that they have entered into a merger agreement. The agreement provides for the formation of a new publicly held holding company, also to be known as Vermont Pure Holdings, Ltd., that will own the two businesses. Existing shareholders of Vermont Pure will receive stock of the new holding company on a 1-for-1 basis.

The consideration to be paid to the Baker family is approximately $64.9 million, consisting of $9.5 million in cash, stock of Vermont Pure valued at $31.1 million, 12% subordinated notes due 2007 of Vermont Pure in the original principal amount of $22.6 million, and the assumption of Vermont Pure of $1.7 million in debt. The stock price of Vermont Pure for purposes of the merger will be determined prior to the closing and has a collar of from $2.80 per share to $3.15 per share. As a result, the number of shares that will be issued to the Baker family will be from approximately 11.1 million to approximately 9.9 million shares, depending on the price.

Timothy Fallon, the Chairman and CEO of Vermont Pure, will be the Chairman and CEO of the combined companies. Henry Baker will be Chairman Emeritus, Peter Baker will be President, and Jack Baker will be Executive Vice President of the combined companies.

The transaction requires the approval of the stockholders of Vermont Pure and is subject to bank financing, a commitment for which has been obtained, as well as other customary closing conditions. The parties expect to close in July, following a special meeting of Vermont Pure's stockholders.

Vermont Pure was founded as spring water company in 1989. Its sales are about evenly divided between retail distribution and home and office delivery in northern New England and New York State. Crystal Rock has been a family owned business for 85 years, focusing on the delivery of purified water and other products to the home and office markets in Connecticut, southwestern Massachusetts and Westchester and Putnam counties in New York State.

This announcement does not constitute an offer of securities to any person.

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