NOTE AND LOAN AND SECURITY
                     AGREEMENT MODIFICATION AGREEMENT NO. 5

         This   Agreement   dated   this  17th  day  of  June,   1996,   between
ENVIRONMENT-ONE  CORPORATION, a New York corporation with its principal place of
business  at P. O. Box 773,  2773  Balltown  Road,  Schenectady,  New York 12301
(hereinafter  called the  "Borrower"),  and FLEET  BANK f/k/a  FLEET BANK OF NEW
YORK,  a bank  organized  and  existing  under the laws of the State of New York
having its principal banking house located at 69 State Street,  Albany, New York
12207 (hereinafter called the "Lender").

                              W I T N E S S E T H: 

         WHEREAS,  the  Borrower  did  execute and deliver to the Lender a Three
Million  and  no/100  Dollar  ($3,000,000.00)  Business  Promissory  Note  dated
December 30, 1992 (hereinafter called the "Note"); and

         WHEREAS, the Note was subject to the terms and conditions in a Loan and
Security  Agreement  also  dated  the 30th day of  December,  1992  between  the
Borrower and the Lender (hereinafter called the "Loan and Security  Agreement");
and

         WHEREAS,  the Note and the Loan and Security Agreement were modified by
the  parties  pursuant  to the terms of a Note and Loan and  Security  Agreement
Modification Agreement by and between the Borrower and the Lender dated the 23rd
day of March, 1994 (the "Modification Agreement"); and

         WHEREAS,  the Note and the Loan and Security Agreement were modified by
the  parties  pursuant  to the terms of a Note and Loan and  Security  Agreement
Modification  Agreement  No. 2 by and between the  Borrower and the Lender dated
the 20th day of March, 1995 (the "Modification Agreement No. 2"); and

         WHEREAS,  the Note and the Loan and Security Agreement were modified by
the  parties  pursuant  to the terms of a Note and Loan and  Security  Agreement
Modification  Agreement  No. 3 by and between the  Borrower and the Lender dated
the 30th day of March, 1995 (the "Modification Agreement No. 3"); and

         WHEREAS,  the Note and the Loan and Security Agreement were modified by
the  parties  pursuant  to the terms of a Note and Loan and  Security  Agreement
Modification  Agreement  No. 4 by and between the  Borrower and the Lender dated
the 18th day of October, 1995 (the "Modification Agreement No. 4"); and

         WHEREAS,  the Borrower and the Lender desire to further  modify certain
terms of the Note and the Loan and Security Agreement,  but only pursuant to the
terms and conditions of this Note and Loan and Security  Agreement  Modification
Agreement No. 5.

         NOW, THEREFORE,  in pursuance of said agreement and in consideration of
the mutual  promises,  covenants and agreements  herein contained and other good
and  valuable  consideration,  receipt of which is  acknowledged  by the parties
hereto, the Borrower and the Lender mutually agree and covenant as follows:

         1. The  interest  rate set forth in the first  paragraph of the Note is
hereby modified as follows:
<PAGE>
                  "The Borrower agrees to pay interest on the disbursed,  unpaid
         principal  from the  date  hereof,  computed  on a 360 day  basis,  but
         chargeable  on actual days, at a per annum rate equal to .50% above the
         "Fleet Bank Prime Rate", adjusted as of the date said "Fleet Bank Prime
         Rate" is changed at the  Lender.  The "Fleet  Bank Prime  Rate" is that
         rate announced from time to time by the Lender as a reference point for
         determining  interest  rates  charged  on  certain  loans  and  is  not
         necessarily the lowest rate at which the Lender lends."

         2. Except as expressly modified hereunder, all the terms and conditions
of the Note, as previously  modified  pursuant to the terms of the  Modification
Agreement,  the Modification  Agreement No. 2, Modification  Agreement No. 3 and
Modification  Agreement  No.  4,  remain  in full  force  and  effect,  with the
exception of the modifications set forth in paragraph 1 above. All the terms and
conditions of the Loan and Security  Agreement,  as previously modified pursuant
to the terms of the Modification  Agreement,  the Modification  Agreement No. 2,
Modification Agreement No. 3 and Modification Agreement No. 4, shall continue to
apply to the Note as further modified hereunder.

         4. The Borrower  hereby warrants and covenants to the Lender that as of
the  date  of  this  Agreement,  there  are  no  disputes,  offsets,  claims  or
counterclaims  of any kind or nature  whatsoever  under  the Note,  the Loan and
Security Agreement,  the Modification Agreement,  the Modification Agreement No.
2, the Modification  Agreement No. 3, the Modification Agreement No. 4 or any of
the documents  executed in connection  therewith or herewith or the  obligations
represented or evidenced thereby or hereby.

         IN WITNESS WHEREOF, the parties hereto have executed this Note and Loan
and Security Agreement  Modification Agreement No. 5 as of the 17th day of June,
1996.

FLEET BANK                                  ENVIRONMENT-ONE CORPORATION


By:/s/Kevin P. Harrigan                     By: /s/Angelo Dounoucos
-----------------------                         -------------------
Kevin P. Harrigan,                              Angelo Dounoucos, President
Vice President                                  and Chief Executive Officer


                                            By: /s/Philip W. Welsh  
                                                ------------------
                                                Philip Welsh, Treasurer

STATE OF NEW YORK          )
                           ) ss.:
COUNTY OF Schenectady      )

         On this 17th day of June,  1996,  before me personally  appeared Angelo
Dounoucos,  to me known,  who being by me duly sworn, did depose and say that he
resides at 729 St.  Davids  Lane,  Schenectady,  New York 12309,  that he is the
President  and Chief  Executive  Officer  of  ENVIRONMENT-ONE  CORPORATION,  the
corporation  described in and which executed the above  instrument;  and that he
signed his name thereto by order of the Board of Directors of said corporation.
<PAGE>

                                             /s/ Carol J. Hicks
                                             ------------------ 
                                             Carol J. Hicks
                                             Notary Public State of New York
                                             No. 5022470
STATE OF NEW YORK          )                 Qualified in Schenectady County
                           ) ss.:            Commission Expires January 10, 1998
COUNTY OF Schenectady      )

         On this 17th day of June,  1996,  before me personally  appeared Philip
Welsh,  to me known,  who being by me duly  sworn,  did  depose  and say that he
resides at 13 Nottingham Way S.,  Clifton Park,  New York 12065,  that he is the
Treasurer of ENVIRONMENT-ONE CORPORATION, the corporation described in and which
executed the above  instrument;  and that he signed his name thereto by order of
the Board of Directors of said corporation.

                                             /s/ Carol J. Hicks
                                             ------------------ 
                                             Carol J. Hicks
                                             Notary Public State of New York
                                             No. 5022470
STATE OF NEW YORK          )                 Qualified in Schenectady County
                           ) ss.:            Commission Expires January 10, 1998
COUNTY OF Albany           )

         On this 17th day of May, 1996,  before me personally  appeared Kevin P.
Harrigan,  to me known,  who being by me duly sworn,  did depose and say that he
resides  at 201  Autumn  Run,  Schenectady,  New York  12309,  that he is a Vice
President of FLEET BANK,  the  corporation  described in and which  executed the
above  instrument;  and that he signed his name thereto by order of the Board of
Directors of said corporation.

                                          /s/Paul A. Schwarz
                                          ------------------ 
                                          Paul A. Schwarz
                                          Notary Public in the State of New York
                                          Residing in Schenectady County
                                          My Commission Expires 5/31/96