PROMISSORY NOTE


$250,000                                                        January 5, 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 8.5% per annum.

         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 $3099.65
per month  beginning  February 5, 1998 and payable on the same day of each month
thereafter.

         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,  with a final
payment of $154,179.30 on January 5, 2003.

         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 c/o Amy Berger 4 Maeck Farm rd.,  Shelburne,  Vermont 05482 or at such other
place as the Lender may designate in writing to the 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 


<PAGE>



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.

    IN THE PRESENCE OF THE FOLLOWING.
                                 "BORROWER"
                           Vermont Pure Holdings, Ltd.

              
                  By:      Timothy.  Fallon
                           President




                                                         2



<PAGE>

Principal: $250,000.00 amortized over 10 Years at 8.5 %  (Ordinary Intrest)
Issued:     1/01/1998 with first payment on 2/01/1998
Payment: $3,099.65 Monthly  (Principal + Interest)


<TABLE>
<CAPTION>
<S>             <C>                <C>                <C>             <C>                 <C>
   Payment                            Principal          Interest         Principal
   Number            Date              Payment            Payment          Balance            Memo
      0            01/01/98                                              $250,000.00
      1            02/01/98           $1,328.82          $1,770.83       $248,671.18
      2            03/01/98           $1,338.23          $1,761.42       $247,332.95
      3            04/01/98           $1,347.71          $1,751.94       $245,985.24
      4            05/01/98           $1,357.25          $1,742.40       $244,627.99
      5            06/01/98           $1,366.87          $1,732.78       $243,261.12
      6            07/01/98           $1,376.55          $1,723.10       $241,884.57
      7            08/01/98           $1,386.30          $1,713.35       $240,498.27
      8            09/01/98           $1,396.12          $1,703.53       $239,102.15
      9            10/01/98           $1,406.01          $1,693.64       $237,696.14
     10            11/01/98           $1,415.97          $1,683.68       $236,280.17
     11            12/01/98           $1,426.00          $1,673.65       $234,854.17

                  1998 Total          $15,145.83        $18,950.32

     12            01/01/99           $1,436.10          $1,663.55       $233,418.07
     13            02/01/99           $1,446.27          $1,653.38       $231,971.80
     14            03/01/99           $1,456.52          $1,643.13       $230,515.28
     15            04/01/99           $1,466.83          $1,632.82       $229,048.45
     16            05/01/99           $1,477.22          $1,622.43       $227,571.23
     17            06/01/99           $1,487.69          $1,611.96       $226,083.54
     18            07/01/99           $1,498.22          $1,601.43       $224,585.32
     19            08/01/99           $1,508.84          $1,590.81       $223,076.48
     20            09/01/99           $1,519.52          $1,580.13       $221,556.96
     21            10/01/99           $1,530.29          $1,569.36       $220,026.67
     22            11/01/99           $1,541.13          $1,558.52       $218,485.54
     23            12/01/99           $1,552.04          $1,547.61       $216,933.50

                  1999 Total          $17,920.67        $19,275.13

     24           01/01/2000          $1,563.04          $1,536.61       $215,370.46
     25           02/01/2000          $1,574.11          $1,525.54       $213,796.35
     26           03/01/2000          $1,585.26          $1,514.39       $212,211.09
     27           04/01/2000          $1,596.49          $1,503.16       $210,614.60
     28           05/01/2000          $1,607.80          $1,491.85       $209,006.80
     29           06/01/2000          $1,619.19          $1,480.46       $207,387.61
     30           07/01/2000          $1,630.65          $1,469.00       $205,756.96
     31           08/01/2000          $1,642.20          $1,457.45       $204,114.76
     32           09/01/2000          $1,653.84          $1,445.81       $202,460.92
     33           10/01/2000          $1,665.55          $1,434.10       $200,795.37
     34           11/01/2000          $1,677.35          $1,422.30       $199,118.02
     35           12/01/2000          $1,689.23          $1,410.42       $197,428.79

                  2000 Total          $19,504.71        $17,691.09

     36           01/01/2001          $1,701.20          $1,398.45       $195,727.59
     37           02/01/2001          $1,713.25          $1,386.40       $194,014.34
     38           03/01/2001          $1,725.38          $1,374.27       $192,288.96
     39           04/01/2001          $1,737.60          $1,362.05       $190,551.36
     40           05/01/2001          $1,749.91          $1,349.74       $188,801.45
     41           06/01/2001          $1,762.31          $1,337.34       $187,039.14
     42           07/01/2001          $1,774.79          $1,324.86       $185,264.35
     43           08/01/2001          $1,787.36          $1,312.29       $183,476.99
     44           09/01/2001          $1,800.02          $1,299.63       $181,676.97
     45           10/01/2001          $1,812.77          $1,286.88       $179,864.20
     46           11/01/2001          $1,825.61          $1,274.04       $178,038.59
     47           12/01/2001          $1,838.54          $1,261.11       $176,200.05

                  2001 Total          $21,228.74        $15,967.06

     48           01/01/2002          $1,851.57          $1,248.08       $174,348.48
     49           02/01/2002          $1,864.68          $1,234.97       $172,483.80
     50           03/01/2002          $1,877.89          $1,221.76       $170,605.91
     51           04/01/2002          $1,891.19          $1,208.46       $168,714.72
     52           05/01/2002          $1,904.59          $1,195.06       $166,810.13
     53           06/01/2002          $1,918.08          $1,181.57       $164,892.05
     54           07/01/2002          $1,931.66          $1,167.99       $162,960.39
     55           08/01/2002          $1,945.35          $1,154.30       $161,015.04
     56           09/01/2002          $1,959.13          $1,140.52       $159,055.91
     57           10/01/2002          $1,973.00          $1,126.65       $157,082.91
     58           11/01/2002          $1,986.98          $1,112.67       $155,095.93
     59           12/01/2002          $2,001.05          $1,098.60       $153,094.88

                  2002 Total          $23,105.17        $14,090.63

     60           01/01/2003         $153,094.88         $1,084.42          $0.00

                  2003 Total         $153,094.88         $1,084.42          $0.00



Last payment was $154,179.30
Total Payments made: 60
Total Interest: $87,058.65

</TABLE>