TERM NOTE

$31,000,000.00                                             Hartford, Connecticut
                                                                 October 5, 2000


FOR VALUE RECEIVED, THE UNDERSIGNED, VERMONT PURE HOLDINGS, LTD., (f/k/a VP
Merger Parent, Inc.), a Delaware corporation with an office located at Catamount
Industrial Park, ROUTE 66, RANDOLPH,  VERMONT 05060  ("HOLDINGS"),  CRYSTAL ROCK
SPRING  WATER  COMPANY,  a  Connecticut  corporation  with  an  office  at  1050
Buckingham  Street,  Watertown,  CONNECTICUT  06795 ("CRYSTAL  ROCK"),  PLATINUM
ACQUISITION CORP., (f/k/a Vermont Pure Holdings,  Ltd.), a Delaware  corporation
with an office at Catamount  Industrial Park, Route 66, RANDOLPH,  VERMONT 05060
("PLATINUM")  and VERMONT PURE  SPRINGS,  INC., a Delaware  corporation  with an
office at Catamount  Industrial Park, Route 66, Randolph,  Vermont 05060 ("VPS",
and  collectively  with holdings,  CRYSTAL ROCK AND PLATINUM,  the "OBLIGORS "),
hereby  jointly and  severally  promise to pay to the order of WEBSTER  BANK,  a
federally  chartered  savings  bank (the  "Lender"),  at its  office at 145 Bank
Street, Waterbury, Connecticut 06702 or at such other place as the holder hereof
may  designate,  the principal  amount of thirty-one  million and 00/100 DOLLARS
($31,000,000.00)  (the "Principal Amount") in lawful money of the United States,
together with interest on the  Principal  Amount,  beginning on the date hereof,
before  and after  maturity  or  judgment,  at a per annum  rate  determined  as
provided below.  All payments shall be made in lawful money of the United States
in immediately available funds.

         1. INTEREST  RATE:  The  Principal  Amount shall bear interest at a per
annum rate equal to a fixed rate equal to the LIBOR Rate (as determined for each
Interest Period  applicable  thereto) for Interest Periods of one (1) month plus
the Applicable  Margin.  All computations of interest hereunder shall be made on
the basis of a three  hundred sixty (360) day year and the actual number of days
elapsed.

         2.  CONTINUATION  OF  INTEREST  PERIODS.  Any LIBOR  Rate Loan shall be
continued as such (less the amount of  principal  that is due and payable at the
end of such expiring Interest Period) for an Interest Period of one (1) month on
the first  business day of each month,  provided  that no LIBOR Rate Loan may be
continued  as  such:  (i) at a time  when  any  Event of  Default  (or  event or
condition  which  would  constitute  an Event of  Default  but for the giving of
notice or passage of time or both) has occurred and is continuing and (ii) after
the date that is one (1) month prior to the Termination Date, in which event the
Principal Amount shall bear interest as a Prime Rate Loan.



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<PAGE>



         3. PAYMENTS OF INTEREST.  Monthly payments of interest shall be due and
payable in  arrears  on  the  fifth  day  of each month (or if such day is not a
Business Day,  on the first Business Day  thereafter) until this Note is paid in
full.

         4.   PAYMENTS OF PRINCIPAL.  Obligors shall pay monthly installments of
principal on the  fifth day of each month (or if such day is not a Business Day,
on the first Business Day thereafter)in the amounts of:

            a.  $208,333 for each month from November 2000 through October 2001;

            b.  $291,666 for each month from November 2001 through October 2002;

            c.  $333,333 for each month from November 2002 through October 2003;

            d.  $333,333 for each month from November 2003 through October 2004;

            e.  $375,000 for each month from November 2004 through October 2005;

            f.  $458,333 for each month from November 2005 through October 2006;
                and

            g.  $583,335 for each month from November 2006 through October 2007.

If not sooner paid,  the aggregate  outstanding  Principal  Amount of this Note,
together  with all  accrued  and unpaid  interest  thereon and any other fees or
charges then due, shall be due and payable on the Termination Date.

         5. DEFINITIONS.  As used in this Note and not defined elsewhere in this
Note, the following terms shall have the following meanings:

                  a.       "Applicable Margin" means:

                           i. 2.25% if the ratio of Senior Funded Debt to EBITDA
                              is greater than 3.0 to 1.0;

                           ii. 1.75%  if  the  ratio  of  Senior  Funded Debt to
                               EBITDA is greater  than 2.5 to 1.0 and  less than
                               or equal to 3.0 to 1.0;

                           iii. 1.50%  if  the  ratio  of  Senior Funded Debt to
                                EBITDA is greater  than 2.0 to 1.0 and less than
                                or equal to 2.5 to 1.0;

                           iv.  1.25%  if  the  ratio  of  Senior Funded Debt to
                                EBITDA is greater  than 1.5 to 1.0 and less than
                                or equal to 2.0 to 1.0; and




                                       -2-


<PAGE>



                           v.       1.00% if the ratio of Senior  Funded Debt to
                                    EBITDA is less than or  equal to 1.5 to 1.0;
                                    as  that  ratio  is calculated in accordance
                                    with the   Loan and Security Agreement.  The
                                    Applicable Margin on the date  of  this Note
                                    is  1.75%  and  shall  continue  to  be  the
                                    Applicable  Margin  until  a  new Applicable
                                    Margin  is  determined  and  is  to  go into
                                    effect  as  hereinafter  set  forth.   A new
                                    Applicable  Margin  shall  be determined 120
                                    days  after  the  end of each fiscal year of
                                    Holdings, commencing  with  the  fiscal year
                                    ending  October 31, 2001,  based  upon   the
                                    audited fiscal year end financial statements
                                    for  that  fiscal  year  provided  to Lender
                                    within 90 days after the end  of that fiscal
                                    year  as  required  in the Loan and Security
                                    Agreement.   Such  Applicable  Margin   will
                                    automatically   go   into   effect  for  the
                                    Interest Period commencing after the date of
                                    determination and   shall continue in effect
                                    until  a new Applicable Margin is determined
                                    and is to go into effect; provided, however,
                                    that   if  the   audited   fiscal  year  end
                                    financial  statements  required  in the Loan
                                    and Security   Agreement are not provided to
                                    Lender within 120 days after the  end of any
                                    fiscal   year,   the  Lender  shall  not  be
                                    required to adjust the Applicable Margin and
                                    the  Applicable Margin to go into effect for
                                    THE  INTEREST  PERIOD  COMMENCING AFTER THAT
                                    120TH   day  shall  be  2.25%   until  a new
                                    Applicable Margin is determined and is to go
                                    into  effect  unless  otherwise agreed to by
                                    Lender.

                  b. "Business Day" means any day other than a Saturday,  Sunday
or day which  shall be in the State of  Connecticut  a legal  holiday  or day on
which  commercial  banks in Hartford,  Connecticut are required or authorized by
law to close.

                  c.   "EBITDA" means EBITDA as defined in the Loan and Security
Agreement.

                  d.  "Interest  Period"  means with  respect  to the  Principal
Amount bearing interest at the LIBOR Rate, an available period of one (1) month,
provided that:

                           i.       if any Interest Period would  otherwise  end
                                    on a day that is not a    Business Day, such
                                    Interest Period shall end on the immediately
                                    following Business Day; and

                           ii.      any Interest  Period that begins on the last
                                    Business  Day of a  calendar  month (or on a
                                    day  for  which  there  is  no   numerically
                                    corresponding  day in the calendar  month at
                                    the end of such  Interest  Period) shall end
                                    on  the  last  Business  Day  of a  calendar
                                    month.



                                       -3-


<PAGE>



                  e. "LIBOR Rate" means, with respect to any LIBOR Rate Loan for
each applicable  Interest Period, the rate per annum determined by the Lender to
be equal to the quotient of (a) the London Interbank Offered Rate for such LIBOR
Rate Loan for such  Interest  Period,  divided by (b) one (1) minus the  Reserve
Percentage for such Interest Period, expressed as follows:

                  LIBOR RATE = LONDON INTERBANK OFFERED RATE

                             1 - Reserve Percentage

                  f.     "LIBOR Rate Loan" means that the Principal Amount bears
interest at a rate equal to the LIBOR Rate plus the Applicable Margin.

                  g.   "Loan and Security Agreement" means the Loan and Security
Agreement  dated  today  by  and  among the Obligors and Lender relating to this
Note.

                  h. "London  Interbank Offered Rate" means, with respect to any
applicable Interest Period, the rate per annum (rounded upward, if necessary, to
the nearest 1/32 of one percent) as determined on the basis of the offered rates
for deposits in U.S.  dollars,  for a period of time comparable to such Interest
Period which appears on the Telerate  page 3750 as of 11:00 a.m.  London time on
the day that is two London Banking Days preceding the first day of such Interest
Period;  provided,  however,  if the rate described above does not appear on the
Telerate  System on any  applicable  interest  determination  date,  the  London
Interbank Offered Rate shall be the rate (rounded upwards as described above, if
necessary)  for  deposits  in dollars  for a period  substantially  equal to the
interest  period on the  Reuters  Page "LIBO" (or such other page as may replace
the LIBO Page on that service for the purpose of displaying  such rates),  as of
11:00 a.m.  (London Time),  on the day that is two (2) London Banking Days prior
to the beginning of such interest  period.  "Banking Day" shall mean, in respect
of any city,  any date on which  commercial  banks are open for business in that
city. If both the Telerate and Reuters system are unavailable, then the rate for
that date will be  determined  on the basis of the offered rates for deposits in
U.S.  dollars for a period of time  comparable to such Interest Period which are
offered by four  major  banks in the London  interbank  market at  approximately
11:00 a.m. London time, on the day that is two (2) London Banking Days preceding
the first day of such Interest  Period as selected by the Lender.  The principal
London  office of each of the four  major  London  banks  will be  requested  to
provide a quotation of its U.S.  dollar  deposit  offered  rate. If at least two
such quotations are provided, the rate for that date will be the arithmetic mean
of the quotations.  If fewer than two quotations are provided as requested,  the
rate for that date will be determined on the basis of the rates quoted for loans
in U.S.  dollars to leading  European  banks for a period of time  comparable to
such Interest  Period  offered by major banks in New York City at  approximately
11:00  a.m.  New York City  time,  on the day that is two  London  Banking  Days
preceding  the first day of such  Interest  Period.  In the event that Lender is
unable to obtain any such  quotation as provided  above,  it will be deemed that
the LIBOR Rate pursuant to an Interest Period cannot be determined.



                                       -4-


<PAGE>




                  i. "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.

                  j.  "Prime Rate Loan" means that the  Principal  Amount  bears
interest at a rate equal to Lender's Prime Rate. The interest rate on each Prime
Rate Loan  shall  change  immediately,  without  notice or demand of any kind to
Obligors,  each  time  that  Lender's  Prime  Rate  changes  so that the rate of
interest on a Prime Rate Loan is at all times equal to Lender's Prime Rate.

                  k. "Reserve  Percentage"  means the maximum  aggregate reserve
requirement  (including all basic,  supplemental,  marginal and other  reserves)
which  is  imposed  on  member  banks  of the  Federal  Reserve  System  against
"Euro-currency  Liabilities"  as defined in  Regulation  D. With  respect to the
LIBOR Rate,  any change in the interest  rate because of a change in the Reserve
Percentage shall become effective,  without notice or demand of any kind, on the
date on which such change in the Reserve Percentage becomes effective.

                  l. "Senior Funded Debt" means Senior Funded Debt as defined in
the Loan and Security Agreement.

                  m.       "Termination Date" means October 5, 2007.

         6.  ILLEGALITY.  Notwithstanding  any other provisions  hereof,  if any
applicable law or governmental regulation, guideline, order or directive, or any
change  therein  or  in  the  interpretation  or  application   thereof  by  any
governmental  authority charged with the  interpretation  or the  administration
thereof  (whether or not having the force of law) shall make it unlawful for the
Lender to make or maintain  LIBOR Rate Loans as  contemplated  by this Note: (i)
the  obligation  of the Lender to continue  LIBOR Rate Loans shall  forthwith be
canceled,  and  (ii)  such  amounts  then  outstanding  shall  be  automatically
converted,  without  notice,  to  Prime  Rate  Loans on the last day of the then
current  Interest  Period or within such earlier time as required by law. If any
such  conversion  of  LIBOR  Rate  Loans  is made on a day  that is not the last
Business Day of the then current Interest Period  applicable  thereto,  Obligors
shall pay the Lender  such  amount or amounts  required  pursuant  to Section 11
below.

         7. BASIS FOR DETERMINING  LIBOR INADEQUATE OR UNFAIR. In the event that
the Lender shall have determined  (which  determination,  absent manifest error,
shall  be  conclusive   and  binding  upon  Obligors)  that  (i)  by  reason  of
circumstances  affecting the Interbank  LIBOR  market,  adequate and  reasonable
means do not exist for  determining  the LIBOR Rate, or (ii) Dollar  deposits in
the relevant amount and for the relevant maturity are no longer available to the
Lender in the Interbank  LIBOR market,  or (iii) the  continuation of LIBOR Rate
Loans has been made  impractical  or unlawful by the occurrence of a contingency
that materially and adversely  affects the Interbank  LIBOR market,  or (iv) the
LIBOR Rate will not adequately and fairly reflect the



                                       -5-


<PAGE>



cost to the Lender of maintaining  LIBOR Rate Loans, or (v) the LIBOR Rate shall
no longer  represent the effective cost to the Lender of U.S. Dollar deposits in
the relevant market for deposits in which it regularly participates,  the Lender
shall give the Obligors notice of such determination as soon as practicable.  If
such notice is given all LIBOR Rate Loans  shall  be  automatically  converted,



                                       -6-


<PAGE>



without  notice,  to Prime Rate Loans  effective on the last Business Day of the
then current  Interest  Period  applicable  thereto.  Until such notice has been
withdrawn, the LIBOR Rate shall not be continued.

         8.  COSTS AND  EXPENSES.  The  Obligors  shall pay all taxes  levied or
assessed on this Note or the debt evidenced hereby against the Lender,  together
with all costs,  expenses and attorneys' and other professional fees incurred in
any  action to  collect  and/or  enforce  this Note or to  enforce  the Loan and
Security  Agreement or any other agreement relating to this Note or the Loan and
Security  Agreement or any other  agreement or in any  litigation or controversy
arising  from or  connected  with the Loan and  Security  Agreement or any other
agreement, or this Note.

         9.  INCREASED  COSTS.  In the  event  that  applicable  law,  treaty or
regulation or directive from any government,  governmental  agency or regulatory
authority,  or any  change  therein  or in  the  interpretation  or  application
thereof,  or compliance by the Lender with any request or directive  (whether or
not having the force of law) from any central bank or  government,  governmental
agency or regulatory authority, shall:

                  a.  subject  the  Lender  to any  tax of any  kind  whatsoever
(except  taxes on the overall net income of the Lender) with respect to the Loan
and Security Agreement,  this Note or any of the loans made by it, or change the
basis of  taxation  of  payments  to the Lender in respect  thereof  (except for
changes in the rate of tax on the overall net income of the Lender);

                  b. impose,  modify or hold  applicable  any  reserve,  special
deposit,  compulsory  loan or  similar  requirements  against  assets  held  by,
deposits or other liabilities in or for the account of, advances, loans or other
extensions of credit by, or any other acquisition of funds by, any office of the
Lender,  including (without  limitation) pursuant to Regulations of the Board of
Governors of the Federal Reserve System; or

                  c.     in the opinion of the Lender, cause this Note, any loan
made under this  Note or under the Loan and Security Agreement to be included in
any calculations used in the computation of regulatory capital standards; or

                  d.       impose on the Bank any other condition;

and the result of any of the foregoing is to increase the cost to the Lender, by
an amount that the Lender  deems to be  material,  of making,  converting  into,
continuing and/or maintaining the loans made pursuant to this Note (the "Loans")
or to reduce  the amount of any  payment  (whether  of  principal,  interest  or
otherwise)  in respect of any of such Loans,  then,  in any case,  the  Obligors
shall  promptly  pay the  Lender,  upon  its  demand,  such  additional  amounts
necessary to compensate the Lender for such  additional  costs or such reduction
in payment, as the case may be (collectively the "Additional Costs"). The Lender
shall  certify the amount of such  Additional  Costs to the  Obligors,  and such
certification, absent manifest error, shall be deemed conclusive.



                                       -7-


<PAGE>



         10. CAPITAL ADEQUACY PROTECTION.  If, after the date hereof, the Lender
shall have  determined  that the adoption of any  applicable  law,  governmental
rule,  regulation or order regarding  capital  adequacy of banks or bank holding
companies,  or any  change  therein,  or any  change  in the  interpretation  or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration  thereof, or compliance
by the Lender with any request or directive  regarding capital adequacy (whether
or not having the force of law and  whether or not  failure to comply  therewith
would be  unlawful,  so long as the Lender  believes in good faith that such has
the force of law or that the failure to so comply would be unlawful) of any such
authority,  central bank or comparable  agency,  has or would have the effect of
reducing the rate of return on any of the Lender's  capital as a consequence  of
the Lender's obligations  hereunder to a level below that which the Lender could
have  achieved  but  for  such  adoption,  change  or  compliance  (taking  into
consideration the Lender's policies with respect to capital adequacy immediately
before such  adoption,  change or  compliance  and  assuming  that the  Lender's
capital was fully utilized  prior to such adoption,  change or compliance) by an
amount deemed by the Lender in its judgment to be material,  then, promptly upon
demand,  the Obligors shall immediately pay to the Lender,  from time to time as
specified  by the Lender,  such  additional  amounts as shall be  sufficient  to
compensate  the Lender for such reduced  return,  together with interest on each
such amount from the date of such  specification  by the Lender until payment in
full  thereof at the highest  rate of interest  (other than the default  rate of
interest) due on the Loans. A certificate of the Lender setting forth the amount
to be paid to the Lender  shall,  in the  absence of manifest  error,  be deemed
conclusive.  In  determining  such amount,  the Lender shall use any  reasonable
averaging and attribution methods.

         11.  INDEMNITY.  The Obligors agree to indemnify the Lender and to hold
the  Lender  harmless  from  any loss  (including  any of the  additional  costs
referred to above and any lost  profits) or expense that it may sustain or incur
as a consequence of (i) a default by any Obligor in the payment of the principal
of or  interest  due on this  Note,  or (ii) the making of a  prepayment  of the
Principal  Amount  bearing  interest based upon the LIBOR Rate on a day which is
not the  last  day of the  then  current  Interest  Period  applicable  thereto,
including,  but not  limited  to, in each case any such loss or expense  arising
from the  reemployment  of funds obtained by it or from fees,  interest or other
amounts  payable to terminate the deposits from which such funds were  obtained.
The Lender shall prepare a certificate as to any additional  amounts  payable to
it pursuant to this  Section 11,  which  certificate  shall be  submitted by the
Lender to the Obligors and shall, absent manifest error, be deemed conclusive.

         12. LAWFUL  INTEREST.  All agreements  between  Obligors and Lender are
hereby expressly  limited so that in no event  whatsoever,  whether by reason of
acceleration  of maturity of the  indebtedness  evidenced  hereby or  otherwise,
shall  the  amount  paid  or  agreed  to be paid  to  Lender  for the use or the
forbearance of the indebtedness  evidenced hereby exceed the maximum permissible
under  applicable law. As used herein,  the term "applicable law" shall mean the
law in effect as of the date hereof provided,  however,  that in the event there
is a change in the law which results in a higher  permissible  rate of interest,
then this Note shall be governed by such new law as of its  effective  date.  In
this regard, it is expressly  agreed  that  it  is  the  intent  of Obligors and



                                       -8-


<PAGE>



Lender in the  execution,  delivery and  acceptance  of this Note to contract in
strict compliance with the laws of the State of Connecticut from time to time in
effect.  If,  under or from any  circumstances  whatsoever,  fulfillment  of any
provision  hereof or of any of the Loan  Documents  (as  defined in the Loan and
Security  Agreement) at the time of performance of such provision  shall be due,
shall involve  transcending the limit of such validity  prescribed by applicable
law, then the obligation to be fulfilled shall  automatically  be reduced to the
limits  of such  validity,  and if under or from  any  circumstances  whatsoever
Lender  should ever receive as interest an amount which would exceed the highest
lawful rate,  such amount which would be excessive  interest shall be applied to
the reduction of the principal  balance  evidenced hereby and not to the payment
of  interest.  This  provision  shall  control  every  other  provision  of  all
agreements between Obligors and Lender.

         13.  DUE  DATE;  LATE  CHARGE.  If this Note or any  payment  hereunder
becomes due on a day which is not a Business  Day,  the due date of this Note or
payment shall be extended to the next succeeding Business Day and such extension
of time shall be included in computing interest and fees in connection with such
payment.  Without  limiting the Lender's rights and remedies with respect to the
Event of Default that will have  occurred,  if the entire amount of any required
principal  and/or interest  payment is not paid in full within fifteen (15) days
after the same is due,  Obligors shall pay to the Lender a late fee equal to the
greater  of five  percent  (5%)  of the  required  payment  or  fifteen  dollars
($15.00).

         14.      PREPAYMENTS.

                  a.  Obligors may prepay the Principal  Amount,  or any portion
thereof,  only upon at least three (3)  Business  Days prior  written  notice to
Lender  (which  notice  shall be  irrevocable  and shall  state the amount to be
prepaid).  If Obligors refinance this Term Note with any other entity,  Obligors
shall pay to Lender a prepayment premium equal to

                           i.    three percent (3%) of the amount prepaid if the
                                 prepayment is made   from the date of this Note
                                 through October 4, 2001;

                           ii.   two percent (2%) of the  amount  prepaid if the
                                 prepayment is made from October 5, 2001 through
                                 October 4, 2002; and

                           iii.  one  percent (1%) of the amount  prepaid if the
                                 prepayment is made from October 5, 2002 through
                                 October 4, 2003. Notwithstanding the foregoing,
                                 in the event the Obligors acquire  a company or
                                 business  for  a  purchase  price  in  cash  of
                                 $10,000,000 or  more  which requires  financing
                                 and  Lender   is   unwilling   or   unable   to
                                 accommodate  or  arrange  such   financing, the
                                 foregoing prepayment premiums  shall be reduced
                                 by fifty percent (50%).



                                       -9-


<PAGE>



                  b. If any prepayment occur on a day other than the last day of
the Interest Period, Obligors shall pay to Lender, upon request of Lender and in
addition to any amount  which may be due and payable  pursuant to the  preceding
paragraph,  such  amount or amounts as shall be  sufficient  (in the  reasonable
opinion of Lender) to compensate it for any loss, cost, or expense incurred as a
result  of: (i) any  payment  on a date other than the last day of the  Interest
Period; and (ii) any failure by any Obligor to make a prepayment on the date for
payment specified in any Obligor's written notice.

                  c. If by  reason  of an Event of  Default,  Lender  elects  to
declare the Note to be immediately due and payable, then any prepayment premiums
and other  amounts  which would have been due if a prepayment  been made at that
time shall  become due and payable in the same manner as though the Obligors had
exercised  such  right  of  prepayment.  In the  event of any  prepayments,  the
Obligors  shall pay all accrued  interest on the Principal  Amount being paid to
the date of the  prepayment  and, in the case of  prepayments in full, all fees,
charges, costs, expenses and other amounts then due hereunder.

                  d. Any partial  prepayment shall be applied against  principal
payments  in the  inverse  order of  maturity  and shall not reduce the  monthly
payments of principal due hereunder.

         15.  EVENTS OF DEFAULT.  The Obligors  agree that the  occurrence of an
Event of Default under the Loan and Security Agreement shall constitute an Event
of Default  under this Note.  Reference  is hereby made to the Loan and Security
Agreement for the other terms and  conditions  relating to the Loan evidenced by
this Note which are incorporated in this Note by reference.  Upon the occurrence
of any Event of  Default,  the Lender,  at its  option,  may declare all amounts
outstanding hereunder, together with accrued interest thereon and all applicable
late charges,  other amounts due under this Note and all other  liabilities  and
obligations  of the  Obligors to the Lender to be  immediately  due and payable,
whereupon  the  same  shall  become  immediately  due  and  payable;  all of the
foregoing  without  demand,  presentment,  protest or notice or any kind, all of
which are hereby  expressly  waived by the  Obligors.  Failure to exercise  such
option  shall not  constitute  a waiver of the right to exercise the same in the
event  of any  subsequent  default.  Notwithstanding  the  foregoing,  upon  the
occurrence  of an Event of Default  relating to the  bankruptcy or insolvency of
any Obligor or any guarantor,  all amounts outstanding hereunder,  together with
accrued  interest  thereon and all  applicable  late charges,  other amounts due
under this Note and all other liabilities and obligations of the Obligors to the
Lender shall be immediately due and payable. Upon the occurrence of any Event of
Default, without in any way affecting the Lender's other rights and remedies, or
after  maturity or judgment,  the interest rate  applicable  to the  outstanding
principal  balance of this Note shall,  at the option of Lender,  change without
notice to a floating per annum rate equal to four percentage points (4.0%) above
the otherwise  applicable  rate and Obligors'  right to select  pricing  options
shall cease.

         16.    LIEN AND RIGHT OF SETOFF.  Each Obligor hereby grants to Lender,
Manufacturers and Traders Trust Company and any other Participant (as defined in
the Loan and Security  Agreement, a lien, security interest  and right of setoff
as security for all liabilities and obligations



                                      -10-


<PAGE>



to Lender,  Manufacturers  and Traders Trust  Company or any other  Participant,
whether  now  existing or  hereafter  arising,  upon and  against all  deposits,
credits,  collateral and property, now or hereafter in the possession,  custody,
safekeeping or control of Lender, Manufacturers and Traders Trust Company or any
other  Participant  or any entity  under common  control with such party,  or in
transit  to  any of  them.  At any  time,  without  demand  or  notice,  Lender,
Manufacturers  and Traders  Trust  Company or any other  Participant  may, if an
event which  constitutes  or which with notice or lapse of time, or both,  would
constitute an Event of Default under this Note, the Loan and Security  Agreement
or any of the  other  Loan  Documents  (as  defined  in the  Loan  and  Security
Agreement) has occurred, set off the same or any part thereof and apply the same
to any  liability  or  obligation  of any  Obligor  even  though  unmatured  and
regardless of the adequacy of any other  collateral  securing the Loan.  ANY AND
ALL RIGHTS TO REQUIRE  LENDER,  MANUFACTURERS  AND TRADERS  TRUST COMPANY OR ANY
OTHER  PARTICIPANT  TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER
COLLATERAL  WHICH SECURES THE LOAN, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH
RESPECT TO SUCH DEPOSITS,  CREDITS OR OTHER PROPERTY OF ANY OBLIGOR,  ARE HEREBY
KNOWINGLY,  VOLUNTARILY AND IRREVOCABLY  WAIVED.  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.

         17.  NO  WAIVER.  Failure  by the  Lender  to  insist  upon the  strict
performance by Obligors of any terms and  provisions  herein shall not be deemed
to be a waiver of any terms and provisions  herein,  and the Lender shall retain
the right  thereafter to insist upon strict  performance  by the Obligors of any
and all  terms  and  provisions  of  this  Note or any  agreement  securing  the
repayment of this Note.

         18. GOVERNING LAW. This Note shall be governed by the laws of the State
of Connecticut.

         19.  REPLACEMENT  NOTE.  Upon  receipt of an affidavit of an officer of
Lender as to the loss,  theft,  destruction  or  mutilation  of this Note or any
other Loan Document which is not of public record,  and, in the case of any such
mutilation, upon cancellation of this Note or other Loan Document, Obligors will
issue,  in lieu thereof,  a replacement  Note or other Loan Document in the same
principal amount thereof and otherwise of like tenor.

         20.      JOINT AND SEVERAL LIABILITY.    All obligations, covenants and
agreements of the Obligors  pursuant  to  this  Note  or  any  of the other Loan
Documents shall be the joint and several obligations,  covenants  and agreements
of each of the Obligors.

         21.    PREJUDGMENT REMEDY AND OTHER WAIVERS.  EACH OBLIGOR ACKNOWLEDGES
THAT THE LOAN EVIDENCED BY THIS NOTE IS A COMMERCIAL TRANSACTION  AND WAIVES ITS
RIGHT TO NOTICE  AND  HEARING UNDER  CHAPTER  903a  OF  THE  CONNECTICUT GENERAL




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STATUTES,  OR AS  OTHERWISE  ALLOWED BY ANY STATE OR FEDERAL LAW WITH RESPECT TO
ANY  PREJUDGMENT  REMEDY WHICH  LENDER MAY DESIRE TO USE,  AND  FURTHER,  WAIVES
DILIGENCE,  DEMAND,  PRESENTMENT FOR PAYMENT, NOTICE OF NONPAYMENT,  PROTEST AND
NOTICE OF PROTEST,  AND NOTICE OF ANY RENEWALS OR EXTENSIONS  OF THIS NOTE,  ALL
SURETYSHIP DEFENSES AND ALL RIGHTS UNDER ANY STATUTE OF LIMITATION. EACH OBLIGOR
ACKNOWLEDGES  THAT IT MAKES THIS WAIVER KNOWINGLY,  VOLUNTARILY,  WITHOUT DURESS
AND ONLY  AFTER  CONSIDERATION  OF THE  RAMIFICATIONS  OF THIS  WAIVER  WITH ITS
ATTORNEYS.

         22. JURY WAIVER.  EACH OBLIGOR AND LENDER  MUTUALLY  HEREBY  KNOWINGLY,
VOLUNTARILY AND  INTENTIONALLY  WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF
ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE OR
ANY OTHER LOAN DOCUMENTS  CONTEMPLATED TO BE EXECUTED IN CONNECTION  HEREWITH OR
ANY  COURSE  OF  CONDUCT,  COURSE OF  DEALINGS,  STATEMENTS  (WHETHER  VERBAL OR
WRITTEN) OR ACTIONS OF ANY PARTY. THIS WAIVER CONSTITUTES A MATERIAL  INDUCEMENT
FOR LENDER TO ACCEPT THIS NOTE AND MAKE THE LOAN. EACH OBLIGOR ACKNOWLEDGES THAT
IT MAKES  THIS  WAIVER  KNOWINGLY,  VOLUNTARILY,  WITHOUT  DURESS AND ONLY AFTER
CONSIDERATION OF THE RAMIFICATIONS OF THIS WAIVER WITH ITS ATTORNEYS.



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<PAGE>



         IN WITNESS  WHEREOF,  the  Obligors  have  caused  this Note to be duly
executed as of THE 5TH day of October, 2000.

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


                                             By________________________
                                               Name: Timothy G. Fallon
                                               Title: President

                                             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



                                      -13-