ASSET PURCHASE AGREEMENT

   THIS ASSET PURCHASE  AGREEMENT (the "Agreement") is entered into on this 19th
day of December  1997,  by and between  VERMONT PURE  HOLDINGS,  LTD.  ("VPH") a
Delaware  corporation with its principal place of business in Randolph,  Vermont
("Buyer") and VERMONT COFFEE TIME, INC. ("VCT"), a Vermont  corporation with its
principal place of business at P.O. Box 876, 29A Avenue C,  Williston,  VT 05495
("Seller").

                                    RECITALS

         WHEREAS,  VPH is a company  engaged in the bottling and sale of natural
spring water with its manufacturing  facility and principal place of business in
Randolph Center, VT, and

         WHEREAS,  VCT is a company,  engaged  in the  business  of selling  and
distributing  coffee,  water  and  related  products,  and  renting  cooler  and
dispenser  equipment for home and office  customers (the  "Business"),  with its
principal place of business in Williston, VT, and

         WHEREAS,  both  parties  desire to enter into  agreements  by which VPH
shall  purchase  substantially  all of the  assets  and  assume  certain  of the
liabilities of the Business.

         NOW  THEREFORE,  in  consideration  of the  mutual  promises  contained
herein, the parties agree as follows:

                                    I. ASSETS

         A.  Asset  Purchase  and Sale.  Upon the terms and  conditions  of this
Agreement, at the Closing (defined below), Seller shall sell, convey,  transfer,
assign and deliver to Buyer, and Buyer shall purchase,  substantially all of the
property of Seller  (except  the  Excluded  Assets  described  below),  wherever
located,  tangible and intangible,  consisting of the following assets: coolers,
coffee equipment,  accounts  receivable,  vehicles,  purchase orders,  telephone
number,  customer  lists,  and goodwill (the "Assets"),  but excluding  personal
items, mementos and an office chair ("Excluded Assets"),  which shall remain the
property of Seller.

         B. Liabilities. At the Closing, the Buyer shall assume by instrument of
assumption  reasonably  satisfactory  to  Seller's  counsel,  and  shall pay and
discharge as they become due, all of the  obligations  and liabilities of Seller
identified   and  described  in  Exhibit  "A"  attached   hereto  (the  "Assumed
Liabilities")  and no others.  Buyer shall defend,  indemnify and hold harm-less
Seller and its successors and assigns from any claim, cost, expense or liability
arising from or pertaining to any of the Assumed Liabilities after the Closing.

         C.       Bill of Sale.  Title to the Assets will be conveyed to Buyer
by Seller pursuant to 

<PAGE>



a Bill of Sale, free and clear of all liens and encumbrances except those which 
secure any: of the Assumed Liabilities.  The form of the Bill of Sale shall be
approved by Buyer's counsel prior to Closing.

         D.       Lease.  At Closing, Seller shall assign to Buyer its right 
title and interest under the Lease Agreement, dated March 1, 1996 (the "Lease")
between The Miller Group, as Lessor and the Seller, as Lessee, and Buyer will 
assume all obligations of Seller under the Lease.

                               II. PURCHASE PRICE

         In  consideration  of the  transfer of the  Assets,  the Buyer will (I)
assume all of the Assumed  Liabilities  in  accordance  with Section I.B of this
Agreement,  (ii)  execute  and  deliver  the  Consulting  Agreement  in the form
attached as Exhibit "B" attached hereto and pay the fees required  thereby,  and
(iii)  pay to  Seller  the  total  purchase  price  (the  "Purchase  Price")  of
$1,431,564. The Purchase Price shall be paid as follows:

         A. Deposit.  A $50,000 cash deposit (the "Deposit")  shall be delivered
in escrow to Seller's counsel,  Dinse,  Knapp & McAndrew,  P.C., as escrow agent
(the "Escrow  Agent") upon the signing of this  Agreement.  The Deposit shall be
held  in  escrow  and  applied  to  the  Purchase  Price  at the  Closing.  Upon
termination  of this  Agreement  by Buyer for  failure of any one or more of the
conditions precedent to Buyer's obligations, or upon breach of this Agreement by
Seller,  the Deposit shall be delivered by the Escrow Agent to Buyer,  and Buyer
shall be entitled to retain the Deposit as agreed and liquidated  damages.  Upon
termination  of this  Agreement  by Seller for failure of any one or more of the
conditions precedent to Seller's  obligations,  or upon breach of this Agreement
by Buyer,  the Deposit  shall be delivered  by the Escrow  Agent to Seller,  and
Seller shall be entitled to retain the Deposit as agreed and liquidated damages

         B.       Cash Payment at Closing $950,000 in cash or other immediately
available funds which shall be paid at Closing.

         C. Common Stock. Buyer shall issue to Seller at Closing,  pursuant to a
Stock  Issuance  Agreement in a form  reasonably  satisfactory  to Buyer,  to be
executed and delivered by Buyer to Seller at Closing, shares of unregistered and
restricted  common stock of VPH (the "Common Stock") with a fair market value on
the Closing Date of $181,564.  The "fair market value" of the Common Stock shall
be  determined  by the closing  price on the date prior to the Closing  Date, as
reported on NASDAQ.

         D.       Promissory Note.  Buyer shall execute and deliver to Seller at
Closing a promissory note (the "Note") in the form of Exhibit "C" attached
hereto in the principal amount of $250,000. The Note shall have a ten (10) year 
amortization schedule, shall be repaid with interest at the New York Prime Rate,
shall mature five years after the Closing

                                        2




<PAGE>



Date with a balloon payment at the end of the term, and shall be payable monthly
after closing.  The Note shall be guaranteed by Vermont Pure Springs,  Inc,. and
shall be secured by a security  interest in all of the Assets,  subject  only to
prior liens and security  interests of Buyers lender,  Chittenden  Bank, and the
Vermont Industrial Development Authority securing indebtedness financing Buyer's
purchase of the Assets.

         The Purchase Price shall be allocated  among the Assets by agreement of
the parties at the  Closing.  The parties  agree that  $100,000 of the  Purchase
Price shall be allocated to vehicles and equipment.

                    III. EXCLUDED SECURITIES AND LIABILITIES

         The  securities  of  the  Seller  are  expressly   excluded  from  this
transaction.  The Buyer  shall not  assume any  liabilities  or  obligations  of
Seller,  other  than  the  Assumed  Liabilities  set  forth  in  Exhibit  A.  In
particular, but without limitation, the Buyer does not assume any liabilities of
Seller for income  taxes,  for any  liability or payable to Seller's  pension or
profit sharing plan,  employment claims, or for any note payable to shareholders
of Seller.

                IV. CONDUCT OF BUSINESS AND CONDITION OF PREMISES
                               PENDING SETTLEMENT

Prior to the Closing:

         A. The  Business  of  Seller  will be  conducted  only in the  ordinary
course, in accordance with all laws and regulations of the township,  state, and
federal  governments,  and Seller  shall not violate  the terms of any  existing
leases or contracts.

      B. Seller will continue to operate the business in the manner heretofore
operated by Seller.
      C. Seller will maintain in effect its existing insurance on the Assets and
the Business.
      D. VCT will use their reasonable efforts to preserve VCT's organization,
to keep

available the services of employees, and to preserve friendly relations with its
customers and trade creditors.  Seller shall make no  representation or promises
with  employees  about  future  employment,  but Buyer  will  consider  existing
employees for resumption of duties as appropriate.

         E. In the event that prior to the date of Closing,  the Assets shall be
totally or  substantially  lost or damaged  by fire or any other  casualty,  the
Buyer shall have the option to terminate  this Agreement or waive the diminution
in value and close  under this  Agreement  buying  the Assets "as is",  in which
latter event it shall be entitled to treat the proceeds of any insurance paid to
Seller by reason of such loss or damage (excepting insurance for lost profits,
                                        3


<PAGE>



if any), as a payment on the Purchase Price or the Buyer shall have the right to
all insurance  proceeds to apply the funds to repair and/or to  reconstruct  the
Assets.

                                   V. CLOSING

A. The  closing  of the  transactions  contemplated  hereby  shall take place on
January  5, 1998 at 10:00 a.m.  (the  "Closing  Date") at the  offices of Dinse,
Knapp & McAndrew, P.C., 209 Battery Street, Burlington, Vermont 05401.

                  B.       Time shall be of the essence of this Agreement.

                  C.       Any closing adjustments shall be apportioned pro rata
                           as of the Closing Date.

                  D.       At the Closing, Seller shall deliver each of the 
                           following in proper form:

                           1.       The bill of sale required by Section I.C. of
                                    this Agreement.

                           2.       Certificates of Title to any motor vehicles
                                    included in the Assets, endorsed to Buyer.

                           3.       The opinion of Seller's counsel required    
                                    by Section VIII.C.

                           4.       An executed Assignment and Assumption
                                    Agreement with respect to the Lease.

                           5.       Authorizing Resolutions of Seller's Board of
                                    Directors and Shareholder, certified by the
                                    Secretary of Seller, approving this 
                                    Agreement and the transactions contemplated
                                    hereby.

                           6.       The executed Non-competition and Consulting
                                    Agreement in the form of Exhibit B.

                  E.       At the Closing, Buyer shall deliver each of the 
                           following in proper form:

                    1. The Deposit.

                    2. The cash portion of the Purchase Price required by 
                       Section II.B.

                    3. The Note, together with the guaranty of Vermont Pure 
                       Springs, Inc.

                    4. An executed security agreement and executed financing 
                       statements as necessary to perfect a security interest in
                       favor of Seller, securing the Note.

                                        4



<PAGE>



                           5.  The Common Stock, together with the execute
                           Stock Issuance Agreement.

                           6.  The opinion of Buyer's counsel, as required
                           by Section IX.C.

                           7.  Authorizing   resolutions  of  Buyer's  Board  of
                           Directors,  certified  by  the  Secretary  of  Buyer,
                           approving  this   Agreement,   the  Note,  the  Stock
                           Issuance Agreement, and the transactions contemplated
                           hereby and thereby.

                           8.  The executed assumption agreement with respect to
                           the Assumed Liabilities, and evidence of payment of 
                           the accounts payable included in the Assumed 
                           Liabilities. 

                           9.  The executed assignment and Assumption Agreement 
                           with respect to the Lease.

                           10.   The executed Non-Competition and Consulting 
                           Agreement in the form of Exhibit B.

                             VI. SELLER'S WARRANTIES

A.       The Seller represents and warrants to Buyer that as of the date of this
Agreement and as of the Closing Date, that:

                  1. The Seller is a corporation  duly organized and existing in
good standing under the laws of the State of Vermont,  with the corporate  power
to own its assets and carry on its business as is now being conducted.

                  2. Seller has good and marketable  title and the right of sole
possession and control of the Assets being sold pursuant to this Agreement,  and
the Assets at the time of Closing will not be subject to any mortgages, pledges,
liens,  encumbrances,  security  interest,  or charges,  except as  permitted by
Section I.C.

B.       The Seller represents that to the best of the Seller's knowledge, after
reasonable inquiry:

                  1. The Seller is in substantial compliance with all applicable
laws,  ordinances,  rules,  regulations,  and  requirements of all  governmental
authorities  having  jurisdiction  thereof,  and that  Seller has  substantially
complied  with  all  laws,   municipal   ordinances,   and  regulations  of  all
governmental authorities having jurisdiction thereof.

                  2. There are no actions, suits, or proceedings pending or 
threatened against

                                        5




<PAGE>



Sellers, either at law or in equity, brought by any federal, state, or municipal
or   other   governmental   agency,   department,   board,   bureau,   or  other
instrumentality.

                  3. All federal,  state,  and local tax returns  required to be
filed have been  filed,  all  deficiencies  proposed  have  either  been paid or
settled or are  included  in an account  for  accrued  taxes;  all  withholding,
unemployment, social security, excise interest have been paid or will be paid by
Seller after Settlement from funds set aside at Settlement.

                  4. Seller has provided to Buyer  copies of its federal  income
tax returns and related  schedules for the years 1994,  1995,  and 1996, and its
internally prepared profit/loss and balance sheets for the periods ending August
31, 1997 and October 31 1997. All such financial  information is accurate and in
accordance with the books and records of the Company,  and fairly represents the
financial condition,  assets and liabilities of the Company for the periods, and
as of the dates indicated.

                  5.  Neither  Seller  nor its  sole  shareholder  has  made any
agreement or taken any action  which might cause anyone to become  entitled to a
broker's fee or commission.

         C. If Seller  obtains any  knowledge  or  information  between the date
hereof and Closing, Making or indicating that any of the aforesaid warranties or
representations   are  no  longer   true,   or   indication   that  any  of  the
representations  and conditions set forth in this Section VI hereof are not true
and cannot be made true by the Seller by the time of Closing,  or will no longer
be true as of the date of Closing,  Seller will  promptly  notify  Buyer of such
change in circumstances.

                                       VII. BUYER'S WARRANTIES

         The  Buyer  represents  and  warrants  to Seller as of the date of this
Agreement and the Closing Date that:

         A. Buyer is a corporation  duly organized and existing in good standing
under  the laws of the  State of  Delaware  with the full  corporate  power  and
authority to own its assets,  carry on its  business as is now being  conducted,
and to consummate the transactions contemplated by this Agreement.

         B. This  Agreement  has been,  and each and every other  agreement  and
document to be  executed,  delivered  and  performed by Buyer  pursuant  hereto,
including the Note, the Stock Issuance Agreement,  and the other documents to be
delivered by Buyer at Closing,  when executed and delivered by Buyer,  will have
been duly authorized, executed and delivered by Buyer, and constitutes, or, when
executed  and  delivered  by Buyer will  constitute,  legal,  valid and  binding
obligations of Buyer enforceable against Buyer in accordance with their terms.



                                        6



<PAGE>



               VIII. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER

         All  obligations  of the Buyer  under  this  Agreement  are  subject to
fulfillment, prior to or at Closing, of each of the following conditions:


         A.       Representation and Warranties.  The representations and
warranties of Seller contained in this Agreement being true at the time of 
Closing as though such representations and warrantees were made at such time.

         B.       Compliance With Agreement.  Seller shall have performed and 
                  complied with all agreements and conditions required by this
                  Agreement to be performed or complied with by, prior to, or 
                  at, closing.

         C.       Opinion of Counsel.  Seller shall have delivered to Buyer, in 
                  form and content satisfactory to Buyer's counsel, an opinion 
                  of its counsel issued to Buyer to the effect that:

                  (i)      Seller has been duly incorporated and is existing as
 a corporation in good standing under the laws of the State of Vermont;

                  (ii)     This transaction and its terms do not violate any
provisions of Seller's Articles of Incorporation or Bylaws;

                  (iii)    Seller has taken all shareholder, director and other 
actions necessary to authorize the transactions contemplated by the parties 
hereto;

                  (iv)     Seller has the authority to carry on the business 
presently being conducted by Company;

                  (v)      Seller has full power and authority to sell, assign 
and transfer the Assets sold pursuant to this Agreement.

         E.       Seller's Shareholder Approval.  Seller shall have obtained the
necessary Shareholder approval for this transaction.

         F.       Non-Compete and Consulting Agreement.  Buyer and Ms. Amy 
Berger shall execute and deliver at Closing the Consulting and Non-Compete 
Agreement attached as Exhibit "B".

                IX. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER


                                       7

<PAGE>



         All  obligations  of the Seller  under this  Agreement  are  subject to
         fulfillment,  prior  to  or  at  Closing,  of  each  of  the  following
         conditions:


         A.       Representation and Warranties.  The representations and 
         warranties of Buyer contained in this Agreement being true at the time
         of Closing as though such representations and warrantees were made at
         such time.

         B.       Compliance With Agreement.  Buyer shall have performed and 
         complied with all agreements and conditions required by this Agreement
         to be performed or complied with by, prior to, or at, Closing.

         C.       Opinion of Counsel.  Buyer shall have delivered to Seller, in 
         form and content satisfactory to Buyer's counsel, an opinion of its 
         counsel issued to Seller to the effect that:

                  (1)      Buyer has been duly incorporated and is existing as a
                  corporation in good standing under the laws of the State of
                  Delaware;

                  (ii)  This  transaction  and  performance  of its terms do not
                  violate any provisions of Seller's  Articles of  Incorporation
                  or Bylaws or any contract or agreement to which the Buyer is a
                  party or by which it is bound;

                  (iii)    Buyer has taken-.all corporate actions necessary to 
                  authorize the transactions contemplated by the parties hereto.

         D.       Buyer shall have delivered all of the matters required to be 
delivered by Buyer  under Section V.E of this Agreement.

                  X. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION

         A.  Seller  and its  directors,  shall  not,  during  the  term of this
         Agreement  or at any  time for a period  of five  (5)  years  following
         closing,  unless authorized to do so in writing by the Buyer,  directly
         or  indirectly  disclose  or  permit  to be known  to,  or used for the
         benefit of, any person,  corporation,  or other entity  (outside of the
         employ of the Company),  or itself, any confidential  information.  For
         the purposes of this Section,  the term confidential  information shall
         include,  but not be limited to, confidential or proprietary  knowledge
         or  information  with respect to the conduct or details of the Seller's
         business  including,  but not limited  to,  lists of  customers  of the
         Buyer's   business,   pricing   strategies,   or   marketing   methods.
         Confidential  information  does not include matters which are generally
         known outside of the Buyer, public knowledge or in the public domain.

         B.        All confidential information described in this Section shall
be the exclusive property of the Buyer.

                                                         8



<PAGE>



         C.       The provisions of this Section shall survive the closing and 
shall continue for a period of five (5) years.



                            XI. RESTRICTIVE COVENANT

         In order to protect the Buyer in its full  beneficial use and enjoyment
of the goodwill, assets, business relationships,  marketing techniques and other
know-how acquired as a result of this Agreement,  for a period of five (5) years
after  the  closing  of this  Agreement,  Seller,  including  its  officers  and
directors, will not, within the United States of America, directly or indirectly
compete  with the Buyer in the  home/office  distribution  of  distilled  water,
spring or carbonated water, or coffee/tea products and will not either:

                  (i)      solicit any persons or entities known to be customers
of the Buyer to purchase any of the aforementioned products; or

                  (ii) solicit or induce any employee of the buyer to leave such
employment  to take a position  with  Seller or with any  company  for which any
officer or director then works.

                               XII. GOVERNING LAW

  This Agreement shall be construed, interpreted and enforced in accordance with
the laws of the State of Vermont.


                       XIII. TERMS TO SURVIVE: SEVERABILITY

         The  terms  of  this  Agreement,  including  but  not  limited  to  the
warranties,  representations  and covenants  made by the parties  hereto,  shall
survive  for a period of one (1) year from the Closing  Date.  In the event that
any  term  or  provision  hereof  or  the  application  thereof  to  persons  or
circumstances  shall  to any  extent  be  invalid  or  unenforceable,  then  the
remainder  of this  Agreement  shall not be  affected  thereby  and each term or
provision  hereof shall be valid and enforced to the fullest extent permitted by
law.

                              XIV. ENTIRE AGREEMENT

         This  Agreement,  including the Preambles,  and any other  documents or
exhibit  incorporated herein by reference sets forth the entire understanding of
the parties. It shall not be changed or terminated orally. This Agreement may be
executed in one or more counterparts,  each of which shall be deemed an original
but all of which together, shall constitute one and the same document.

                                   XV. NOTICE
                                        9





<PAGE>



                    Notices required under this  Agreement  shall be in writing,
                            sent  by  certified   mail  and   facsimile  to  the
                            representatives of the parties as follows:

                   Vermont Pure Holdings, Ltd.
                    Route 66
                    Randolph Center, VT 005061
                    Att.: Timothy G. Fallon
                    Facsimile (802) 728-4814

With copy to:       Kevin F. Berry, Esquire Ledgewood Law Firm
 1521 Locust Street Philadelphia, PA 19102 Facsimile (215)-735-2513

                    To Seller: Vermont Coffee Time, Inc. 
                    Att..  Amy Berger, President
                    4 Maeck Farm rd.. Shelburne, Vermont 05482
                    
IN WITNESS whereof, the parties hereto have executed  this  Agreement as of the 
day, month and year first above written.

WITNESS                         VERMONT PURE HOLDINGS, LTD.
                  By: /S/Timothy G. Fallon
                  Name: Timothy G. Fallon
                  Title: President and CEO

WITNESS                       VERMONT COFFEE TIME, INC.
                  By: /S/Amy Berger
                  Name: Amy Berger
                  Title: President

                                       10

<PAGE>

                      Exhibit A to Asset Purchase Agreement
                         Schedule of Assumed Liabilities


         For purposes of this Agreement,  the term "Assumed  Liabilities" shall
mean and include (i) all liabilities and obligations of Seller  reflected on the
Balance Sheet of Seller as of October 31, 1997 (the "Balance  Sheet') , attached
hereto as Schedule A-1, except the liability  identified on the Balance Sheet as
"Note Payable to Amy Berger", and (ii) all unpaid liabilities and obligations of
Seller  incurred in its  operations  in the  ordinary  course of  business  from
October 31, 1997 to the Closing Date which would  appear as current  liabilities
on a balance sheet  prepared in accordance  with generally  accepted  accounting
principles, consistently applied.

<PAGE>
<TABLE>
<CAPTION>

Date                                              Vermont Coffee Time, Inc.
Oct 31, 1997                                            Balance Sheet
                                                      For All Locations
                                                    As of October 31,1997

                                                                     Current                      Last
                                                                        Year                      Year
LIABILITIES AND EQUITY
<S>                                                               <C>                      <C>   
Taxes Payable
Sales Tax                                                                  0.00                  1,023.64

Total Taxes Payable                                                        0.00                  1,023.64


OTHER PAYABLES
Cooler Deposit Liability - Adjust                                        (30.00)                     0.00
Cafeteria/Healthcare #47                                               1,105.98                     14.00
Accounts Payable                                                     103,285.55                      0.00
Bottle Depostis payable                                               46,648.00                 51,041.47
Bottle Deposits payable - Adjust                                      (5,191.39)                     0.00

Total Other Payables                                                 145,818.14                 51,055.47

Notes Payable
Chittenden Bank Van  (538.23)                                         11,313.05                 16,468.31
Chittenden Bank Van  (494.21)                                         10,805.71                 15,459.88
Chittenden Bank  (887.42)                                             27,499.33                      0.00
Chittenden Bank Line of Credit                                             0.00                  1,934.91
Ford Credit  (528.48)                                                  2,597.54                  8,536.35
Chittenden Bank  (577.13)                                              6,888.35                 12,609.98
N/P Amy Berger                                                       158,230.56                162,688.44
Ebco Finance  (130.85)                                                   720.25                      0.00
Ebco Finance  (476.79)                                                 4,409.22                      0.00
Ebco Finance  (399.32)                                                 4,059.14                      0.00
Ebco Finance  (401.65)                                                 4,451.32                      0.00
Ebco Finance  (419.91)                                                     0.00                    801.39
Ebco Finance  (225.35)                                                     0.00                    636.70
Ebco Finance  (938.95)                                                     0.00                  9,519.27
Ebco Finance  (212.93)                                                   781.35                      0.00
Ebco Finance  (212.93)                                                   976.70                      0.00
Ebco Finance  (191.73)                                                   876.50                      0.00

Total Notes Payable                                                  233,612.02                228,736.23

Equity
Retained Earnings                                                   (200,386.17)              (167,356.83)
Common Stock                                                         138,163.32                138,163.32


</TABLE>
<PAGE>


                    Exhibit C to Purchase and Sale Agreement



                                 PROMISSORY NOTE


$250,000                                                    January _, 1998


         FOR VALUE RECEIVED, Vermont Pure Holdings, Ltd. (the "Borrower") hereby
promises to pay to the order of Vermont Coffee Time,  Inc. (the  "Lender"),  the
principal sum of Two Hundred Fifty  Thousand  Dollars  ($250,000)  (the "Loan"),
together with interest on the unpaid  principal  balance payable at the rate and
in the manner specified herein.


         1 . Interest Rate.  Commencing on the date hereof, interest shall 
accrue on the unpaid principal balance of the Loan outstanding from time to time
at a fixed rate of [the New York Prime Rate on the date of the Note].

         2.       Interest Calculation.  The interest required to be paid 
pursuant to this Note shall be computed daily on the basis of 360 days per year
for the actual number of days elapsed on the actual outstanding balance.

                  3.       Principal and Interest Payments.  The Borrower shall 
repay this Note in consecutive installments of principal and interest in the 
amount of $ per month beginning 199 and payable on the same day of each month 
thereafter. [Monthly payments based on 10 year amortization schedule]

         4. Term;  Maturity Date.  Unless earlier payable in accordance with the
terms of this Note,  the  entire  unpaid  principal  balance of the Loan and all
accrued and unpaid interest thereon  (including  interest on accrued interest as
described  in  paragraph 3 above) shall be due and payable in full on [date five
years after note date].

         5.       Method and Place of Payment. All payments of principal and 
interest shall be payable in lawful money of the United States of America to the
Lender at [specify place and address for payment] or at such other place as the 
Lender may designate in writing to the 

<PAGE>



Borrower.

         6.       Prepayment. The Borrower shall have the right to prepay all or
any portion of the outstanding principal balance of this Note without prepayment
premium 

         7.       Late Charge  The Borrower shall pay to the Lender a late 
charge of five percent (5 %) of any payment not received by the Lender within 
fifteen (15) days after such payment is due.  Charges will be assessed on day
sixteen (16). 

         8. Default:  Acceleration:  At the option of the Lender,  this Note and
the  indebtedness  evidenced  hereby  shall become  immediately  due and payable
without further notice or demand,  and  notwithstanding  any prior waiver of any
breach or default or other  indulgence,  upon the  occurrence at any time of any
one or more of the  following  events:  (I)  default,  in making any  payment of
principal,  interest,  or any other  charges due  hereunder;  and (ii) any other
violation,  breach,  or default of or under this Note,  and  continuing  uncured
beyond the applicable grace period, or, if no grace period is specified,  beyond
30 days from the date the Lender gives written notice to the Borrower specifying
the breach, violation, or default.

         9. Remedies Upon Default: Upon any default by the Borrower,  the Lender
may pursue any and all remedies  provided at law, and in equity,  including  but
not limited to pursuing the Lenders' rights in any collateral which secures this
note.  The  Lender's  remedies  set forth above are not  exclusive  of any other
available  remedy or remedies,  but each remedy shall be cumulative and shall be
in addition to any other remedy  given in this Note.  The exercise of any remedy
or remedies shall not be an election of remedies. The remedies and rights of the
Lender may be exercised concurrently, alone, in any combination, or in any order
that the Lender deems appropriate.

         10.      Obligations Joint and Several: If there is more than one maker
of this Note, the obligations of each maker shall be joint and several.


         11. Payment of Costs of Collection: The Borrower further agrees that if
this Note is placed in the hands of an attorney for collection,  or if this debt
or any part thereof is collected by any attorney or by legal  proceedings of any
kind,  reasonable  attorneys' fees and all costs and expenses incident upon such
collection shall be added to the amount due upon this Note and be collectible as
a part hereof.


         12.      Security: This Note, and the interest and all other 
indebtedness evidenced by this Note, are secured by a security interest in 
certain assets under a Security Agreement of even date from Borrower to Lender.

         13.       Governing Law: This Note is to be governed by and construed
in accordance with the laws of the State of Vermont.

    


<PAGE>

IN THE PRESENCE OF THE FOLLOWING WITNESSES:


    (witness only)

                                                        

                                   "BORROWER"

                                       By:
                                                  Its:Duly Authorized Agent








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