NOTE AND SECURED REVOLVING LINE OF
                  CREDIT AGREEMENT MODIFICATION AGREEMENT NO. 5



         THIS AGREEMENT,  made this 17th day of June, 1996, by and between FLEET
BANK f/k/a FLEET BANK OF NEW YORK, a bank  organized and existing under the laws
of the State of New York,  and having its principal  banking house located at 69
State  Street,   Albany,   New  York  12201  (herein   called  the  "Bank")  and
ENVIRONMENT-ONE  CORPORATION, a New York corporation with its principal place of
business  at P.O.  Box 773,  2773  Balltown  Road,  Schenectady,  New York 12309
(herein called the "Borrower").


                              W I T N E S S E T H:

         WHEREAS,  the  Borrower  did execute and deliver to the Bank a Business
Purpose  Promissory  Note  (Demand - Line of Credit)  in the face  amount of Two
Million Five  Hundred  Thousand and no/100  Dollar  ($2,500,000.00)  dated as of
October 2, 1992 (herein called the "Prior Note"); and

         WHEREAS,  the Prior Note was subject to the terms and  conditions  of a
Secured  Revolving Line of Credit  Agreement also dated as of October 2, 1992 by
and between the Bank and the Borrower (the "Line of Credit Agreement"); and

         WHEREAS,  the Prior Note and the Line of Credit Agreement were modified
by the  parties  pursuant  to the terms of a Note and Line of  Credit  Agreement
Modification  Agreement  by and between the Borrower and the Bank dated the 23rd
day of March,  1994 and a Letter Agreement dated May 10, 1994  (collectively the
"Modification Agreement"); and

         WHEREAS,  the Prior Note and the Line of Credit  Agreement were further
modified  by the  parties  pursuant  to the  terms of a Note and Line of  Credit
Agreement  Modification Agreement No. 2 by and between the Borrower and the Bank
dated the 20th day of March, 1995 (the "Modification Agreement No. 2"); and

         WHEREAS,  the Prior Note and the Line of Credit  Agreement were further
modified  by the  parties  pursuant  to the  terms of a Note and Line of  Credit
Agreement  Modification Agreement No. 3 by and between the Borrower and the Bank
dated the 30th day of March, 1995 (the "Modification Agreement No. 3"); and

         WHEREAS,  the Prior Note and the Line of Credit  Agreement were further
modified  by the  parties  pursuant  to the  terms of a Note and Line of  Credit
Agreement  Modification Agreement No. 4 by and between the Borrower and the Bank
dated  the 18th day of  October,  1995 (the  "Modification  Agreement  No.  4").
Pursuant  to the terms of  Modification  Agreement  No.  4, the  Prior  Note was
modified,  replaced and restated in its entirety by a Line of Credit Note in the
face amount of $2,500,000.00 dated October 18, 1995, executed by the Borrower in
favor of the Bank (the "Note"); and

         WHEREAS,  the  Borrower and the Bank desire to further  modify  certain
terms of the Note and the Line of Credit  Agreement,  but only  pursuant  to the
terms and  conditions  of this Note and Line of  Credit  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 Bank mutually agree and covenant as follows:
<PAGE>
         1. The  definition of "Maturity  Date" in the Note is hereby amended to
read April 30, 1997.

         2. The  definition  of "Floating  Rate" on page 1 of the Note is hereby
modified to read in its entirety as follows:

                  "Floating  Rate - The  Fleet  Bank  Prime  Rate,  as such rate
                  changes from time to time."


         3. The definition of "Libor Fixed Rate" on page 3 of the Note is hereby
modified to read in its entirety as follows:

                  "Libor Fixed Rate - A per annum rate fixed at the Libor
                  Rate, plus two percent (2.00%)."

         4. The in the Line of Credit Agreement,  as modified, that the Borrower
pay to the Bank a  one-quarter  of one percent fee on the unused  portion of the
Note is hereby eliminated.

         5.  All the  other  terms  and  conditions  of the Note and the Line of
Credit  Agreement,   as  previously  modified  pursuant  to  the  terms  of  the
Modification  Agreement,  the  Modification  Agreement  No. 2, the  Modification
Agreement No. 3 and the  Modification  Agreement No. 4, remain in full force and
effect,  with the  exception  of the  modifications  set forth in  paragraphs  1
through 4 above.

         6. The Borrower  hereby  warrants and  covenants to the Bank that as of
the  date  of  this  Agreement,  there  are  no  disputes,  offsets,  claims  or
counterclaims  of any kind or nature  whatsoever under the Prior Note, the Note,
the Line of Credit  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.
<PAGE>



         IN WITNESS WHEREOF, the parties hereto have executed this Note and Line
of Credit  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 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 720 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.

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

<PAGE>

         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