AGREEMENT AND COLLATERAL
                               ASSIGNMENT OF LEASE



                  This Agreement and Collateral Assignment is made this ____ day
of January,  1998, by and between  VERMONT PURE SPRINGS,  INC.  (VPS) a Delaware
corporation   with  its  principal  place  of  business  in  Randolph,   Vermont
("ASSIGNOR"  or "BUYER") and SAGAMON  SPRING  WATER OF VERMONT,  INC.  (SSW),  a
Vermont  corporation  with its  principal  place of  business  Rutland,  Vermont
("ASSIGNEE" or "SELLER").

                                   BACKGROUND
                  WHEREAS,  VPS 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, SSW is a company, engaged in the bottling and sale of
water with its principal place of business in Rutland, VT, and
                  WHEREAS,  both Parties  have  entered  into an Asset  Purchase
Agreement  by which VPS shall  purchased  the business of SSW related to bottled
water, bottling equipments and spring water development, spring water withdrawal
rights and other assets listed on Exhibit A of said Asset Purchase Agreement.
                  NOW,  THEREFORE,  in  consideration  of  the  foregoing,   the
promises made herein and for other good and valuable consideration received, the
parties hereto agree as follows:
                           Assignment.  To secure the payment of all sums due 
ASSIGNEE from ASSIGNOR pursuant to Paragraph 2.1(ii) and (iii) of the Asset 
Purchase Agreement, Assignor


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does hereby grant, transfer and assign to Assignee,  Assignor's interest in (but
not their  obligations  under)  Lease  Agreement  for Mineral  Rights  ("Lease")
attached hereto as Exhibit "A" to the extent provided in paragraph 

2.   Lease Rights.  Prior to receiving any notice of default under the Note
referenced in paragraph  2.1(iii) of the Asset Purchase  Agreement ("Note") from
Assignee,  Assignor  shall continue to enjoy its rights under the Lease pursuant
to its  terms.  In the event of a default  under the Note,  Assignee  shall send
notice of default setting forth the amount of the default (ignoring any right of
acceleration  contained  in the Note) to  Assignor  by  certified  mail,  return
receipt requested.  In the event the default is not cured by the Assignor within
thirty (30) days as of the date of the aforementioned notice,  Assignor's rights
in the Lease shall terminate and revert to the Assignee.

                  The Buyer  shall  not make any  material  modifications  to or
terminate the Lease without the prior, express written consent of the Seller. If
a  modification  is  made  to the  Lease,  the  modified  Lease  shall  also  be
collaterally  assigned pursuant to the terms of this Assignment herein.  Failure
of the Buyer to abide by the  provisions  of the paragraph  shall  constitute an
Event of Default.

                           Termination.  This Assignment shall be null and void
at such time as all amounts due to Assignee under the Note have been paid.
Other Agreements Unaffected.  No exercise of rights by the Assignee pursuant to 
the terms of this Agreement and Collateral Assignment shall affect its 
obligations to



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Assignor  pursuant  to that  certain  Asset  Purchase  Agreement  by and between
Assignor and Assignee.

                           Notices.  All notices required or permitted hereunder
shall be in writing and  shall be deemed  to be  properly  given  when  sent by
certified,  postage prepaid, properly  addressed to the party in time to receive
such notice at the address stated below:

                           Vermont Pure Springs, Inc.
                           Route 66
                           Randolph Center, VT 05061
                           Attn:  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:        Sagamon Spring Water of Vermont
                           P.O. Box 907
                           Rutland, VT 05701
                           Attention: Fred Beauchamp and Jim Creed

                  6.       GOVERNING LAW. This Agreement shall be construed,
interpreted and enforced in accordance with the laws of the State of Vermont 
without regard to its conflicts of law.







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                  IN WITNESS  WHEREOF,  the parties  hereto have  executed  this
Agreement and Collateral  Assignment as of the day, month and year first written
above.

WITNESS:                                             VERMONT PURE SPRINGS, INC.

______________________              By:
                                    Name:
                                    Title:


                                                          SAGAMON SPRING WATER
                                                             OF VERMONT, INC

WITNESS:
                                    By:
_______________________             Name:
                                    Title:



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