Exhibit 10.5

                           VERMONT PURE HOLDINGS, LTD.
                                   P.O. Box C
                              Randolph, Vermont 05060
                                  802-728-3600
                                Fax: 802-728-4614


                            As of September 12, 1997







Dear Option Holder:

     On  September  12, 1997,  the Board of Directors of Vermont Pure  Holdings,
Ltd.  ("the  Company")  voted to grant you one or more new options (each, a "New
Option") to purchase shares of the Company's  common stock,  $.001 par value per
share (the "Common  Stock"),  at an exercise price of $2.50 per share,  the fair
market  value of the  Common  Stock on the date of grant,  in  exchange  for the
surrender of one or more of your existing options (each, an "Old Option").  Each
New Option is for at least as many shares as were  covered by the  corresponding
Old Option;  most New Options  are for more  shares,  as  described  below.  The
purpose  for  this  transaction  was to  ensure  that a  significant  number  of
five-year  options  expiring in 1999 and 2000 are effectively  extended for five
additional years.

     Eligible option holders are those officers,  directors and employees of the
Company who hold stock options  expiring  before  January 1, 2001.  Only options
expiring before that time are covered.  The number of New Options was determined
as follows: Subtract your Old Option exercise price per share from $2.50. If the
answer is zero or less than zero (in other words, your Old Option exercise price
is equal to or greater  than $2.50 per  share),  your New Option will be for the
same  number of shares as your Old  Option.  If the answer is greater  than zero
(your Old Option  exercise  price per share is less than  $2.50),  multiply  the
number of shares  subject to the Old Option by the  difference in price,  divide
that amount by $2.50,  and add the  resulting  number of shares to the number of
shares previously covered by the Old Option.  Information about your Old Options
is at the end of this letter.



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     If your Old Option was granted  under a stock  option plan of the  Company,
your New Option is likewise  granted under a plan. If and to the extent that you
are eligible under the tax laws for an incentive stock option (available only to
employees),  your New Option is structured as an incentive stock option. If your
Old Option was a non-plan option, your New Option is likewise a non-plan option.
You will be  immediately  vested under the New Option in the same  percentage of
shares as you were vested under the Old Option;  the remaining  shares,  if any,
will  continue  to vest under the same  vesting  schedule  as in the Old Option.
Except for the extended term, the option price and, in most cases, the number of
shares,  the other  terms of the New Option are  identical  to the terms of your
surrendered Old Option.

     Information  about your options is set forth below. By signing the enclosed
extra copy of this letter and  returning it to Bruce  MacDonald at the Company's
offices in Randolph,  you are terminating your Old Option(s) listed below.  Your
New  Option(s)  will be sent to you  after we have  received  your  letter.  The
deadline for  receiving  your letter is October 31,  1997.  If you do not return
your letter to us by then, your New Option(s) will be null and void.

         If you have any questions, feel free to contact me or Bruce MacDonald.

                                                      Very truly yours,

                                                      VERMONT PURE SPRINGS, LTD.
                                                      By:  Timothy G. Fallon
                                                           President






ATTACHMENT A - OPTION SCHEDULE










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                         ATTACHMENT A - OPTION SCHEDULE

                              Name of Option Holder

                                 Timothy Fallon

    Number of Shares, Exercise Price and Expiration Date under OLD Option(s)

           Option #1 - 133,332 shares\$2.25 per share\1 December 1999

           Option #2 - 266,668 shares\$2.25 per share\1 December 1999

                                Plan or Non-Plan
                                ----------------

                                Option #1 - Plan

                              Option #2 - Non-Plan

 Number of Shares (at the new Exercise Price of $2.50 per Share) and Expiration
                             Date of NEW Option(s)


           Option #1 - 146,665 shares\$2.50 per share\1 December 2004

           Option #2 - 293,335 shares\$2.50 per share\1 December 2004



                                   Signature

     In  consideration  for the New Option(s)  described above and in the letter
from  Vermont  Pure  Holdings,  Ltd. to me dated as of  September  12, 1997 that
accompanies this Option Schedule, I hereby agree that my Old Option(s) described
above are  terminated as of September 12, 1997 and that I have no further rights
pursuant to the Old Option(s).



                                            Signature:       /s/ Timothy Fallon
                                                       -------------------------
                                            Name:                Timothy Fallon