THIS WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT
          HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
          EXCEPT AS  OTHERWISE  SET FORTH  HEREIN  OR IN A  SECURITIES  PURCHASE
          AGREEMENT DATED AS OF DECEMBER 20, 2002,  NEITHER THIS WARRANT NOR ANY
          OF SUCH SHARES MAY BE SOLD,  TRANSFERRED OR ASSIGNED IN THE ABSENCE OF
          AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER SAID ACT
          OR, AN OPINION OF COUNSEL, IN FORM, SUBSTANCE AND SCOPE, CUSTOMARY FOR
          OPINIONS OF COUNSEL IN COMPARABLE  TRANSACTIONS,  THAT REGISTRATION IS
          NOT  REQUIRED  UNDER SUCH ACT OR UNLESS  SOLD  PURSUANT TO RULE 144 OR
          REGULATION S UNDER SUCH ACT.

                                                                 Right to
                                                                 Purchase
                                                                 208,332
                                                                 Shares of
                                                                 Common
                                                                 Stock, $.001
                                                                 par value per
                                                                 share

                             STOCK PURCHASE WARRANT

     THIS  CERTIFIES  THAT,  for  value  received,  AJW  OFFSHORE,  LTD  or  its
registered assigns, is entitled to purchase from Peabodys Coffee, Inc., a Nevada
corporation (d/b/a Black Rhino Coffee) (the "Company"), at any time or from time
to time during the period  specified  in Paragraph 2 hereof,  Two Hundred  Eight
Thousand, Three Hundred Thirty-Two (208,332) fully paid and nonassessable shares
of the Company's  Common Stock,  $.001 par value per share (the "Common Stock"),
at an exercise price per share equal to $0.25 (the "Exercise  Price").  The term
"Warrant  Shares,"  as  used  herein,  refers  to the  shares  of  Common  Stock
purchasable hereunder.  The Warrant Shares and the Exercise Price are subject to
adjustment  as provided in Paragraph 4 hereof.  The term  "Warrants"  means this
Warrant  and the other  warrants  issued  pursuant  to that  certain  Securities
Purchase  Agreement,  dated  December 20, 2002, by and among the Company and the
Buyers  listed  on  the  execution  page  thereof  (the   "Securities   Purchase
Agreement"), including any additional warrants issuable pursuant to Section 4(l)
thereof.

     This Warrant is subject to the following terms, provisions, and conditions:

     1.   MANNER OF EXERCISE; ISSUANCE OF CERTIFICATES; PAYMENT FOR SHARES.

          (A)  EXERCISE  OF  WARRANT.  Subject to the  provisions  hereof,  this
Warrant  may be  exercised  by the holder  hereof,  in whole or in part,  by the
surrender of this Warrant, together

<PAGE>

with a completed  exercise  agreement in the form attached hereto (the "Exercise
Agreement"),  to the Company during normal business hours on any business day at
the Company's principal executive offices (or such other office or agency of the
Company  as it may  designate  by notice  to the  holder  hereof),  and upon (i)
payment to the Company in cash,  by certified or official  bank check or by wire
transfer  for the account of the Company of the  Exercise  Price for the Warrant
Shares specified in the Exercise  Agreement or (ii) if the resale of the Warrant
Shares  by  the  holder  is  not  then  registered   pursuant  to  an  effective
registration  statement  under  the  Securities  Act of 1933,  as  amended  (the
"Securities Act"), delivery to the Company of a written notice of an election to
effect a "Cashless Exercise" (as defined in Section 11(c) below) for the Warrant
Shares  specified in the  Exercise  Agreement.  The Warrant  Shares so purchased
shall be deemed to be issued to the holder hereof or such holder's designee,  as
the record  owner of such  shares,  as of the close of  business  on the date on
which this Warrant shall have been surrendered, the completed Exercise Agreement
shall have been  delivered,  and payment shall have been made for such shares as
set forth above. Certificates for the Warrant Shares so purchased,  representing
the aggregate  number of shares  specified in the Exercise  Agreement,  shall be
delivered to the holder hereof within a reasonable time, not exceeding three (3)
business days, after this Warrant shall have been so exercised. The certificates
so delivered  shall be in such  denominations  as may be requested by the holder
hereof and shall be  registered in the name of such holder or such other name as
shall be  designated by such holder.  If this Warrant shall have been  exercised
only in part, then,  unless this Warrant has expired,  the Company shall, at its
expense,  at the time of delivery of such certificates,  deliver to the holder a
new Warrant representing the number of shares with respect to which this Warrant
shall not then have been exercised.  In addition to all other available remedies
at law or in  equity,  if the  Company  fails to  deliver  certificates  for the
Warrant  Shares  within three (3) business days after this Warrant is exercised,
then the Company shall pay to the holder in cash a penalty (the "Penalty") equal
to 2% of the number of Warrant  Shares that the holder is entitled to multiplied
by the Market Price (as hereinafter defined) for each day that the Company fails
to deliver  certificates for the Warrant Shares.  For example,  if the holder is
entitled  to 100,000  Warrant  Shares and the  Market  Price is $2.00,  then the
Company  shall pay to the holder  $4,000 for each day that the Company  fails to
deliver  certificates  for the Warrant Shares.  The Penalty shall be paid to the
holder  by the  fifth  day of the  month  following  the  month  in which it has
accrued.

          Notwithstanding  anything in this Warrant to the contrary, in no event
shall the holder of this  Warrant be  entitled  to exercise a number of Warrants
(or portions  thereof) in excess of the number of Warrants (or portions thereof)
upon  exercise  of which the sum of (i) the  number  of  shares of Common  Stock
beneficially owned by the holder and its affiliates (other than shares of Common
Stock  which may be deemed  beneficially  owned  through  the  ownership  of the
unexercised  Warrants and the  unexercised or  unconverted  portion of any other
securities  of  the  Company  (including  the  Debentures  (as  defined  in  the
Securities  Purchase  Agreement))  subject  to a  limitation  on  conversion  or
exercise  analogous to the limitation  contained  herein) and (ii) the number of
shares of Common  Stock  issuable  upon  exercise of the  Warrants  (or portions
thereof) with respect to which the determination described herein is being made,
would result in  beneficial  ownership by the holder and its  affiliates of more
than 4.9% of the  outstanding  shares  of  Common  Stock.  For  purposes  of the
immediately  preceding  sentence,  beneficial  ownership  shall be determined in
accordance  with  Section  13(d) of the  Securities  Exchange  Act of  1934,  as
amended, and Regulation 13D-G thereunder, except as otherwise provided in clause
(i) of the preceding sentence. The holder of this Warrant may waive the

                                      -2-
<PAGE>

limitations  set forth  herein by  sixty-one  (61)  days  written  notice to the
Company.   Notwithstanding  anything  to  the  contrary  contained  herein,  the
limitation  on  exercise  of this  Warrant  set forth  herein may not be amended
without  (i) the written  consent of the holder  hereof and the Company and (ii)
the approval of a majority of shareholders of the Company.

          (B) MANDATORY  EXERCISE RIGHT.  The Company shall be entitled,  on any
day (the  "Calculation  Date") on which the Closing Price (as defined  below) of
the Common Stock for thirty (30) consecutive  Trading Days (as defined below) is
equal to or greater  than $3.00,  to deliver a written  notice  (the  "Mandatory
Exercise  Notice") to the Holder  requiring such Holder to exercise this Warrant
in accordance with Section 1 hereof at any time during a thirty (30) Trading Day
period  following  the date of such  Mandatory  Exercise  Notice (the  "Exercise
Date"); provided, however, that the Company shall have such right if and only if
(x)  for a  period  of  thirty  (30)  consecutive  Trading  Days  prior  to  the
Calculation  Date and (y) at all  times  during  such  thirty  (30)  consecutive
Trading Day period and continuing  through the Exercise Date, the Warrant Shares
issuable  upon  exercise of the  Warrants  are (i)  authorized  and reserved for
issuance,  (ii)  registered  for resale  under the  Securities  Act of 1933,  as
amended,  by the holder of this  Warrant (or may  otherwise  be resold  publicly
without  restriction)  and sales of the Warrant Shares may be made  continuously
thereunder  during  such time  periods,  and (iii)  listed  for  trading on each
principal  exchange or market on which the shares of Common Stock of the Company
were then traded;  and provided,  further,  that the Holder shall be required to
exercise only that portion of this Warrant that is equal to ten percent (10%) of
the average trading volume of the Common Stock over the thirty (30)  consecutive
Trading Days  immediately  preceding the  Calculation  Date. The Company may not
deliver more than one Mandatory  Exercise  Notice during any thirty (30) Trading
Day period.  Nothing in this Section 2(b) shall prohibit exercise of the Warrant
otherwise permitted pursuant to the terms of this Warrant during the pendency of
any  Mandatory  Exercise  Notice.  "Trading Day" shall mean any day on which the
Common  Stock is traded for any period on the  Over-the-Counter  Bulletin  Board
(the  "OTCBB"),  or on the  principal  securities  exchange or other  securities
market on which the Common Stock is then being  traded.  "Closing  Price," as of
any date,  (i) means the last reported sale price for the shares of Common Stock
on the  OTCBB as  reported  by  Bloomberg  Financial  Markets  or other  similar
reliable reporting service as designated by the Holder ("Bloomberg"), or (ii) if
the OTCBB is not the  principal  trading  market for the shares of Common Stock,
the last  reported  sale price on the  principal  trading  market for the Common
Stock as reported by Bloomberg,  or (iii) if the last reported sale price cannot
be determined as of such date on any of the foregoing  bases,  the Closing Price
shall be the fair market  value as  reasonably  determined  in good faith by the
Board of Directors of the Company or, at the option of a majority-in-interest of
the holders of the outstanding  Warrants,  by an independent  investment bank of
nationally  recognized  standing in the valuation of  businesses  similar to the
business of the corporation.

     2. PERIOD OF EXERCISE. This Warrant is exercisable at any time or from time
to time on or after  the date on which  this  Warrant  is issued  and  delivered
pursuant to the terms of the Securities Purchase Agreement and before 6:00 p.m.,
New York,  New York time on the fifth (5th)  anniversary of the date of issuance
(the "Exercise Period").

     3. CERTAIN  AGREEMENTS  OF THE COMPANY.  The Company  hereby  covenants and
agrees as follows:

                                      -3-
<PAGE>

          (A) SHARES TO BE FULLY PAID. All Warrant Shares will, upon issuance in
accordance with the terms of this Warrant,  be validly  issued,  fully paid, and
nonassessable  and free from all taxes,  liens,  and charges with respect to the
issue thereof.

          (B)  RESERVATION OF SHARES.  During the Exercise  Period,  the Company
shall at all times have  authorized,  and  reserved  for the purpose of issuance
upon exercise of this Warrant,  a sufficient number of shares of Common Stock to
provide for the exercise of this Warrant.

          (C)  LISTING.  The Company  shall  promptly  secure the listing of the
shares of Common Stock  issuable upon exercise of the Warrant upon each national
securities  exchange or automated quotation system, if any, upon which shares of
Common  Stock are then  listed  (subject to  official  notice of  issuance  upon
exercise of this  Warrant)  and shall  maintain,  so long as any other shares of
Common Stock shall be so listed, such listing of all shares of Common Stock from
time to time issuable  upon the exercise of this Warrant;  and the Company shall
so list on each national  securities  exchange or automated quotation system, as
the case may be, and shall maintain such listing of, any other shares of capital
stock of the Company  issuable  upon the exercise of this Warrant if and so long
as any  shares of the same  class  shall be listed on such  national  securities
exchange or automated quotation system.

          (D) CERTAIN ACTIONS PROHIBITED.  The Company will not, by amendment of
its charter or through any  reorganization,  transfer of assets,  consolidation,
merger, dissolution, issue or sale of securities, or any other voluntary action,
avoid or seek to avoid the  observance or  performance of any of the terms to be
observed  or  performed  by it  hereunder,  but will at all times in good  faith
assist in the  carrying  out of all the  provisions  of this  Warrant and in the
taking of all such action as may  reasonably  be requested by the holder of this
Warrant in order to protect the exercise privilege of the holder of this Warrant
against dilution or other  impairment,  consistent with the tenor and purpose of
this Warrant.  Without limiting the generality of the foregoing, the Company (i)
will not increase the par value of any shares of Common  Stock  receivable  upon
the exercise of this Warrant above the Exercise  Price then in effect,  and (ii)
will take all such actions as may be necessary or  appropriate in order that the
Company may validly and  legally  issue fully paid and  nonassessable  shares of
Common Stock upon the exercise of this Warrant.

          (E)  SUCCESSORS  AND  ASSIGNS.  This  Warrant will be binding upon any
entity succeeding to the Company by merger, consolidation, or acquisition of all
or substantially all the Company's assets.

     4. ANTIDILUTION  PROVISIONS.  During the Exercise Period, so long as any of
the  Debentures  (as  defined  in  the   Securities   Purchase   Agreement)  are
outstanding,  the  Exercise  Price and the  number of  Warrant  Shares  shall be
subject to adjustment from time to time as provided in this Paragraph 4.

     In the event that any adjustment of the Exercise  Price as required  herein
results in a fraction of a cent,  such Exercise Price shall be rounded up to the
nearest cent.

          (A) ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES UPON ISSUANCE OF
COMMON STOCK.  Except as otherwise  provided in Paragraphs 4(c) and 4(e) hereof,
if and  whenever on or after the date of issuance of this  Warrant,  the Company
issues or sells,  or in accordance  with Paragraph 4(b) hereof is deemed to have
issued or sold, any shares of Common

                                      -4-
<PAGE>

Stock for no consideration or for a consideration per share (before deduction of
reasonable  expenses or commissions or  underwriting  discounts or allowances in
connection  therewith)  less than the Market  Price on the date of  issuance  (a
"Dilutive Issuance"),  then immediately upon the Dilutive Issuance, the Exercise
Price will be reduced to a price determined by multiplying the Exercise Price in
effect  immediately  prior  to the  Dilutive  Issuance  by a  fraction,  (i) the
numerator  of which is an amount equal to the sum of (x) the number of shares of
Common Stock actually  outstanding  immediately prior to the Dilutive  Issuance,
plus (y) the quotient of the aggregate consideration, calculated as set forth in
Paragraph  4(b)  hereof,  received by the Company  upon such  Dilutive  Issuance
divided  by the  Market  Price  in  effect  immediately  prior  to the  Dilutive
Issuance,  and (ii) the  denominator  of which is the total  number of shares of
Common  Stock  Deemed  Outstanding  (as  defined  below)  immediately  after the
Dilutive Issuance.

          (B)  EFFECT ON  EXERCISE  PRICE OF CERTAIN  EVENTS.  For  purposes  of
determining  the  adjusted  Exercise  Price under  Paragraph  4(a)  hereof,  the
following will be applicable:

               (i)  ISSUANCE OF RIGHTS OR OPTIONS.  If the Company in any manner
issues or grants any  warrants,  rights or options,  whether or not  immediately
exercisable,  to subscribe for or to purchase  Common Stock or other  securities
convertible  into or exchangeable  for Common Stock  ("Convertible  Securities")
(such  warrants,  rights and options to  purchase  Common  Stock or  Convertible
Securities are hereinafter referred to as "Options") and the price per share for
which  Common  Stock is issuable  upon the exercise of such Options is less than
the Market  Price on the date of  issuance  or grant of such  Options,  then the
maximum total number of shares of Common Stock issuable upon the exercise of all
such Options will,  as of the date of the issuance or grant of such Options,  be
deemed to be  outstanding  and to have been  issued and sold by the  Company for
such price per share.  For purposes of the  preceding  sentence,  the "price per
share for which Common Stock is issuable  upon the exercise of such  Options" is
determined by dividing (i) the total amount,  if any,  received or receivable by
the Company as  consideration  for the issuance or granting of all such Options,
plus the minimum aggregate amount of additional  consideration,  if any, payable
to the Company  upon the  exercise  of all such  Options,  plus,  in the case of
Convertible  Securities issuable upon the exercise of such Options,  the minimum
aggregate  amount of  additional  consideration  payable upon the  conversion or
exchange  thereof  at  the  time  such   Convertible   Securities  first  become
convertible  or  exchangeable,  by (ii) the  maximum  total  number of shares of
Common  Stock  issuable  upon the exercise of all such  Options  (assuming  full
conversion of Convertible Securities,  if applicable).  No further adjustment to
the  Exercise  Price will be made upon the actual  issuance of such Common Stock
upon  the  exercise  of such  Options  or upon the  conversion  or  exchange  of
Convertible Securities issuable upon exercise of such Options.

               (ii) ISSUANCE OF  CONVERTIBLE  SECURITIES.  If the Company in any
manner issues or sells any  Convertible  Securities,  whether or not immediately
convertible  (other  than  where  the same are  issuable  upon the  exercise  of
Options) and the price per share for which  Common  Stock is issuable  upon such
conversion  or exchange is less than the Market  Price on the date of  issuance,
then the  maximum  total  number of shares of  Common  Stock  issuable  upon the
conversion or exchange of all such  Convertible  Securities will, as of the date
of the issuance of such Convertible Securities,  be deemed to be outstanding and
to have been issued and sold by the  Company  for such price per share.  For the
purposes of the preceding sentence, the "price per

                                      -5-
<PAGE>

share for which Common Stock is issuable  upon such  conversion  or exchange" is
determined by dividing (i) the total amount,  if any,  received or receivable by
the Company as  consideration  for the issuance or sale of all such  Convertible
Securities,  plus the minimum aggregate amount of additional  consideration,  if
any,  payable to the Company upon the conversion or exchange thereof at the time
such Convertible  Securities first become  convertible or exchangeable,  by (ii)
the maximum total number of shares of Common Stock  issuable upon the conversion
or exchange of all such  Convertible  Securities.  No further  adjustment to the
Exercise  Price will be made upon the actual  issuance of such Common Stock upon
conversion or exchange of such Convertible Securities.

               (iii) CHANGE IN OPTION PRICE OR  CONVERSION  RATE.  If there is a
change at any time in (i) the amount of additional  consideration payable to the
Company  upon the  exercise  of any  Options;  (ii)  the  amount  of  additional
consideration, if any, payable to the Company upon the conversion or exchange of
any  Convertible  Securities;  or  (iii)  the  rate  at  which  any  Convertible
Securities are  convertible  into or  exchangeable  for Common Stock (other than
under or by reason of  provisions  designed to protect  against  dilution),  the
Exercise  Price in effect at the time of such change will be  readjusted  to the
Exercise  Price which would have been in effect at such time had such Options or
Convertible  Securities still outstanding  provided for such changed  additional
consideration  or  changed  conversion  rate,  as the case  may be,  at the time
initially granted, issued or sold.

               (iv)  TREATMENT OF EXPIRED  OPTIONS AND  UNEXERCISED  CONVERTIBLE
SECURITIES. If, in any case, the total number of shares of Common Stock issuable
upon exercise of any Option or upon  conversion  or exchange of any  Convertible
Securities is not, in fact,  issued and the rights to exercise such Option or to
convert  or  exchange  such   Convertible   Securities  shall  have  expired  or
terminated, the Exercise Price then in effect will be readjusted to the Exercise
Price  which  would  have  been in  effect  at the  time of such  expiration  or
termination had such Option or Convertible Securities, to the extent outstanding
immediately  prior to such  expiration or termination  (other than in respect of
the actual  number of shares of Common Stock issued upon  exercise or conversion
thereof), never been issued.

               (v) CALCULATION OF CONSIDERATION  RECEIVED.  If any Common Stock,
Options or  Convertible  Securities  are issued,  granted or sold for cash,  the
consideration  received therefor for purposes of this Warrant will be the amount
received by the Company  therefor,  before deduction of reasonable  commissions,
underwriting  discounts  or  allowances  or other  reasonable  expenses  paid or
incurred by the Company in connection with such issuance, grant or sale. In case
any Common Stock,  Options or  Convertible  Securities  are issued or sold for a
consideration  part or all of which shall be other than cash,  the amount of the
consideration  other than cash received by the Company will be the fair value of
such consideration,  except where such consideration consists of securities,  in
which case the  amount of  consideration  received  by the  Company  will be the
Market  Price  thereof  as of the date of  receipt.  In case any  Common  Stock,
Options or Convertible Securities are issued in connection with any acquisition,
merger or consolidation in which the Company is the surviving  corporation,  the
amount of  consideration  therefor  will be deemed to be the fair  value of such
portion of the net assets and business of the  non-surviving  corporation  as is
attributable  to such Common Stock,  Options or Convertible  Securities,  as the
case may be. The fair value of any  consideration  other than cash or securities
will be determined in good faith by the Board of Directors of the Company.

                                      -6-
<PAGE>

               (vi) EXCEPTIONS TO ADJUSTMENT OF EXERCISE PRICE. No adjustment to
the Exercise  Price will be made (i) upon the exercise of any warrants,  options
or  convertible  securities  granted,  issued  and  outstanding  on the  date of
issuance  of this  Warrant;  (ii)  upon the  grant or  exercise  of any stock or
options which may hereafter be granted or exercised  under any employee  benefit
plan,  stock option plan or restricted stock plan of the Company now existing or
to be  implemented  in the  future,  so long as the  issuance  of such  stock or
options is  approved by a majority  of the  independent  members of the Board of
Directors  of the  Company  or a  majority  of the  members  of a  committee  of
independent  directors  established for such purpose; or (iii) upon the exercise
of the Warrants.

          (C)  SUBDIVISION OR COMBINATION OF COMMON STOCK. If the Company at any
time  subdivides  (by  any  stock  split,   stock  dividend,   recapitalization,
reorganization,  reclassification  or  otherwise)  the  shares of  Common  Stock
acquirable  hereunder into a greater number of shares,  then,  after the date of
record for effecting such subdivision,  the Exercise Price in effect immediately
prior to such subdivision will be proportionately reduced. If the Company at any
time  combines  (by  reverse  stock  split,  recapitalization,   reorganization,
reclassification  or otherwise) the shares of Common Stock acquirable  hereunder
into a smaller  number of shares,  then,  after the date of record for effecting
such  combination,  the  Exercise  Price  in  effect  immediately  prior to such
combination will be proportionately increased.

          (D)  ADJUSTMENT  IN NUMBER OF  SHARES.  Upon  each  adjustment  of the
Exercise  Price  pursuant to the  provisions of this  Paragraph 4, the number of
shares of Common Stock  issuable upon exercise of this Warrant shall be adjusted
by multiplying a number equal to the Exercise Price in effect  immediately prior
to such  adjustment  by the  number  of shares of  Common  Stock  issuable  upon
exercise of this Warrant  immediately  prior to such adjustment and dividing the
product so obtained by the adjusted Exercise Price.

          (E) CONSOLIDATION, MERGER OR SALE. In case of any consolidation of the
Company with, or merger of the Company into any other corporation, or in case of
any sale or conveyance of all or substantially  all of the assets of the Company
other than in  connection  with a plan of complete  liquidation  of the Company,
then  as a  condition  of such  consolidation,  merger  or  sale or  conveyance,
adequate provision will be made whereby the holder of this Warrant will have the
right to acquire and receive upon exercise of this Warrant in lieu of the shares
of Common Stock  immediately  theretofore  acquirable  upon the exercise of this
Warrant, such shares of stock,  securities or assets as may be issued or payable
with  respect  to or in  exchange  for the  number of  shares  of  Common  Stock
immediately  theretofore acquirable and receivable upon exercise of this Warrant
had such  consolidation,  merger or sale or conveyance  not taken place.  In any
such case,  the  Company  will make  appropriate  provision  to insure  that the
provisions of this Paragraph 4 hereof will thereafter be applicable as nearly as
may be in relation to any shares of stock or securities  thereafter  deliverable
upon  the   exercise  of  this   Warrant.   The  Company  will  not  effect  any
consolidation,  merger or sale or  conveyance  unless prior to the  consummation
thereof,  the  successor  corporation  (if other  than the  Company)  assumes by
written instrument the obligations under this Paragraph 4 and the obligations to
deliver to the holder of this Warrant such shares of stock, securities or assets
as, in accordance with the foregoing  provisions,  the holder may be entitled to
acquire.

          (F) DISTRIBUTION OF ASSETS.  In case the Company shall declare or make
any distribution of its assets  (including cash) to holders of Common Stock as a
partial liquidating

                                      -7-
<PAGE>

dividend,  by way of return of capital  or  otherwise,  then,  after the date of
record for determining shareholders entitled to such distribution,  but prior to
the date of  distribution,  the holder of this  Warrant  shall be entitled  upon
exercise of this  Warrant for the purchase of any or all of the shares of Common
Stock subject hereto, to receive the amount of such assets which would have been
payable to the holder had such  holder  been the holder of such shares of Common
Stock on the record date for the determination of shareholders  entitled to such
distribution.

          (G)  NOTICE OF  ADJUSTMENT.  Upon the  occurrence  of any event  which
requires any adjustment of the Exercise Price,  then, and in each such case, the
Company shall give notice  thereof to the holder of this  Warrant,  which notice
shall state the Exercise Price  resulting from such  adjustment and the increase
or  decrease  in the number of  Warrant  Shares  purchasable  at such price upon
exercise,  setting forth in reasonable  detail the method of calculation and the
facts upon which such calculation is based.  Such calculation shall be certified
by the Chief Financial Officer of the Company.

          (H)  MINIMUM  ADJUSTMENT  OF  EXERCISE  PRICE.  No  adjustment  of the
Exercise  Price shall be made in an amount of less than 1% of the Exercise Price
in effect at the time such adjustment is otherwise  required to be made, but any
such lesser  adjustment  shall be carried  forward and shall be made at the time
and  together  with the next  subsequent  adjustment  which,  together  with any
adjustments  so  carried  forward,  shall  amount  to not  less  than 1% of such
Exercise Price.

          (I) NO FRACTIONAL  SHARES. No fractional shares of Common Stock are to
be issued upon the exercise of this  Warrant,  but the Company  shall pay a cash
adjustment in respect of any fractional  share which would otherwise be issuable
in an amount equal to the same fraction of the Market Price of a share of Common
Stock on the date of such exercise.

          (J) OTHER NOTICES. In case at any time:

               (i) the Company  shall declare any dividend upon the Common Stock
payable  in  shares  of  stock  of any  class  or make  any  other  distribution
(including dividends or distributions  payable in cash out of retained earnings)
to the holders of the Common Stock;

               (ii) the  Company  shall offer for  subscription  pro rata to the
holders of the Common Stock any additional shares of stock of any class or other
rights;

               (iii) there shall be any capital  reorganization  of the Company,
or  reclassification  of the Common  Stock,  or  consolidation  or merger of the
Company with or into, or sale of all or substantially all its assets to, another
corporation or entity; or

               (iv)  there  shall be a  voluntary  or  involuntary  dissolution,
liquidation or winding up of the Company;

then,  in each such case,  the Company  shall give to the holder of this Warrant
(a) notice of the date on which the books of the Company shall close or a record
shall be taken for  determining  the holders of Common Stock entitled to receive
any such dividend,  distribution,  or subscription rights or for determining the
holders of Common Stock entitled to vote in respect of any such  reorganization,
reclassification,  consolidation,  merger,  sale,  dissolution,  liquidation  or
winding-

                                      -8-
<PAGE>

up  and  (b)  in  the  case  of  any  such   reorganization,   reclassification,
consolidation,  merger, sale, dissolution,  liquidation or winding-up, notice of
the date (or,  if not then  known,  a  reasonable  approximation  thereof by the
Company) when the same shall take place. Such notice shall also specify the date
on which the holders of Common Stock shall be entitled to receive such dividend,
distribution, or subscription rights or to exchange their Common Stock for stock
or  other  securities  or  property   deliverable   upon  such   reorganization,
reclassification,  consolidation,  merger, sale,  dissolution,  liquidation,  or
winding-up,  as the case  may be.  Such  notice  shall be given at least 30 days
prior to the record date or the date on which the Company's  books are closed in
respect thereto. Failure to give any such notice or any defect therein shall not
affect the validity of the proceedings  referred to in clauses (i), (ii),  (iii)
and (iv) above.

          (K) CERTAIN  EVENTS.  If any event occurs of the type  contemplated by
the adjustment  provisions of this Paragraph 4 but not expressly provided for by
such  provisions,  the  Company  will give  notice of such event as  provided in
Paragraph  4(g)  hereof,  and the  Company's  Board of  Directors  will  make an
appropriate  adjustment in the Exercise Price and the number of shares of Common
Stock  acquirable upon exercise of this Warrant so that the rights of the holder
shall be neither enhanced nor diminished by such event.

          (L) CERTAIN DEFINITIONS.

               (i) "COMMON  STOCK DEEMED  OUTSTANDING"  shall mean the number of
shares of Common Stock  actually  outstanding  (not  including  shares of Common
Stock held in the  treasury of the  Company),  plus (x)  pursuant  to  Paragraph
4(b)(i) hereof, the maximum total number of shares of Common Stock issuable upon
the  exercise  of  Options,  as of the  date of such  issuance  or grant of such
Options,  if any,  and (y) pursuant to Paragraph  4(b)(ii)  hereof,  the maximum
total number of shares of Common Stock  issuable upon  conversion or exchange of
Convertible  Securities,  as  of  the  date  of  issuance  of  such  Convertible
Securities, if any.

               (ii) "MARKET PRICE," as of any date, (i) means the average of the
last  reported  sale prices for the shares of Common  Stock on the OTCBB for the
five (5) Trading Days immediately  preceding such date as reported by Bloomberg,
or (ii) if the  OTCBB is not the  principal  trading  market  for the  shares of
Common  Stock,  the average of the last  reported  sale prices on the  principal
trading  market  for the Common  Stock  during the same  period as  reported  by
Bloomberg,  or (iii) if market value cannot be calculated as of such date on any
of the  foregoing  bases,  the Market  Price shall be the fair  market  value as
reasonably determined in good faith by (a) the Board of Directors of the Company
or, at the option of a  majority-in-interest  of the holders of the  outstanding
Warrants by (b) an independent investment bank of nationally recognized standing
in the valuation of businesses  similar to the business of the corporation.  The
manner of  determining  the Market  Price of the  Common  Stock set forth in the
foregoing  definition  shall apply with respect to any other security in respect
of which a determination as to market value must be made hereunder.

               (iii) "COMMON  STOCK," for purposes of this Paragraph 4, includes
the Common Stock,  par value $.001 per share,  and any additional class of stock
of the  Company  having  no  preference  as to  dividends  or  distributions  on
liquidation, provided that the shares purchasable pursuant to this Warrant shall
include only shares of Common  Stock,  par value $.001 per share,  in respect of
which this Warrant is exercisable,  or shares  resulting from any subdivision or
combination of such Common Stock, or in the case of any reorganization,

                                      -9-
<PAGE>

reclassification, consolidation, merger, or sale of the character referred to in
Paragraph 4(e) hereof, the stock or other securities or property provided for in
such Paragraph.

     5. ISSUE TAX.  The  issuance of  certificates  for Warrant  Shares upon the
exercise  of this  Warrant  shall be made  without  charge to the holder of this
Warrant or such shares for any issuance  tax or other costs in respect  thereof,
provided  that the  Company  shall not be  required  to pay any tax which may be
payable in respect of any transfer  involved in the issuance and delivery of any
certificate in a name other than the holder of this Warrant.

     6. NO  RIGHTS OR  LIABILITIES  AS A  SHAREHOLDER.  This  Warrant  shall not
entitle the holder  hereof to any voting rights or other rights as a shareholder
of the  Company.  No provision of this  Warrant,  in the absence of  affirmative
action by the holder hereof to purchase Warrant Shares,  and no mere enumeration
herein of the rights or privileges of the holder hereof,  shall give rise to any
liability  of such  holder for the  Exercise  Price or as a  shareholder  of the
Company,  whether  such  liability is asserted by the Company or by creditors of
the Company.

     7.   TRANSFER, EXCHANGE, AND REPLACEMENT OF WARRANT.

          (A)  RESTRICTION  ON TRANSFER.  This Warrant and the rights granted to
the holder hereof are transferable,  in whole or in part, upon surrender of this
Warrant,  together  with a properly  executed  assignment  in the form  attached
hereto,  at the office or agency of the Company  referred to in  Paragraph  7(e)
below,  provided,  however,  that any transfer or assignment shall be subject to
the  conditions  set  forth  in  Paragraph  7(f)  hereof  and to the  applicable
provisions of the  Securities  Purchase  Agreement.  Until due  presentment  for
registration of transfer on the books of the Company,  the Company may treat the
registered  holder hereof as the owner and holder  hereof for all purposes,  and
the Company shall not be affected by any notice to the contrary. Notwithstanding
anything to the contrary contained herein, the registration  rights described in
Paragraph  8 are  assignable  only in  accordance  with the  provisions  of that
certain  Registration  Rights  Agreement of even date  herewith by and among the
Company and the other signatories thereto (the "Registration Rights Agreement").

          (B) WARRANT EXCHANGEABLE FOR DIFFERENT DENOMINATIONS.  This Warrant is
exchangeable,  upon the  surrender  hereof by the holder hereof at the office or
agency of the Company  referred to in Paragraph 7(e) below,  for new Warrants of
like tenor  representing  in the  aggregate  the right to purchase the number of
shares  of  Common  Stock  which may be  purchased  hereunder,  each of such new
Warrants to  represent  the right to purchase  such number of shares as shall be
designated by the holder hereof at the time of such surrender.

          (C)  REPLACEMENT  OF  WARRANT.  Upon  receipt of  evidence  reasonably
satisfactory to the Company of the loss,  theft,  destruction,  or mutilation of
this  Warrant and, in the case of any such loss,  theft,  or  destruction,  upon
delivery of an indemnity agreement reasonably satisfactory in form and amount to
the  Company,  or,  in the  case of any  such  mutilation,  upon  surrender  and
cancellation  of this  Warrant,  the Company,  at its expense,  will execute and
deliver, in lieu thereof, a new Warrant of like tenor.

          (D)  CANCELLATION;  PAYMENT OF  EXPENSES.  Upon the  surrender of this
Warrant in connection with any transfer, exchange, or replacement as provided in
this  Paragraph 7, this Warrant shall be promptly  canceled by the Company.  The
Company shall pay all taxes (other

                                      -10-
<PAGE>

than  securities  transfer  taxes)  and all other  expenses  (other  than  legal
expenses,  if any, incurred by the holder or transferees) and charges payable in
connection with the preparation, execution, and delivery of Warrants pursuant to
this Paragraph 7.

          (E) REGISTER.  The Company shall maintain,  at its principal executive
offices (or such other  office or agency of the Company as it may  designate  by
notice to the holder hereof), a register for this Warrant,  in which the Company
shall  record the name and address of the person in whose name this  Warrant has
been issued,  as well as the name and address of each  transferee and each prior
owner of this Warrant.

          (F) EXERCISE OR TRANSFER WITHOUT REGISTRATION.  If, at the time of the
surrender of this Warrant in connection with any exercise, transfer, or exchange
of this  Warrant,  this  Warrant (or, in the case of any  exercise,  the Warrant
Shares issuable hereunder),  shall not be registered under the Securities Act of
1933, as amended (the "Securities Act") and under applicable state securities or
blue sky laws,  the  Company  may  require,  as a  condition  of  allowing  such
exercise,  transfer,  or  exchange,  (i) that the holder or  transferee  of this
Warrant,  as the case may be,  furnish  to the  Company  a  written  opinion  of
counsel,  which opinion and counsel are acceptable to the Company, to the effect
that such exercise, transfer, or exchange may be made without registration under
said Act and under  applicable  state securities or blue sky laws, (ii) that the
holder or transferee  execute and deliver to the Company an investment letter in
form and substance acceptable to the Company and (iii) that the transferee be an
"accredited investor" as defined in Rule 501(a) promulgated under the Securities
Act; provided that no such opinion, letter or status as an "accredited investor"
shall be required in connection  with a transfer  pursuant to Rule 144 under the
Securities  Act.  The first  holder of this  Warrant,  by taking and holding the
same,  represents to the Company that such holder is acquiring  this Warrant for
investment and not with a view to the distribution thereof.

     8.  REGISTRATION  RIGHTS.  The initial  holder of this Warrant (and certain
assignees  thereof) is entitled  to the benefit of such  registration  rights in
respect of the Warrant Shares as are set forth in Section 2 of the  Registration
Rights Agreement.

     9. NOTICES. All notices,  requests,  and other  communications  required or
permitted to be given or delivered hereunder to the holder of this Warrant shall
be in writing, and shall be personally delivered,  or shall be sent by certified
or registered mail or by recognized overnight mail courier,  postage prepaid and
addressed,  to such holder at the address  shown for such holder on the books of
the  Company,  or at such  other  address as shall  have been  furnished  to the
Company  by  notice  from  such  holder.  All  notices,   requests,   and  other
communications  required or permitted to be given or delivered  hereunder to the
Company shall be in writing, and shall be personally delivered, or shall be sent
by certified or registered mail or by recognized overnight mail courier, postage
prepaid and addressed, to the office of the Company at 3845 Atherton Road, Suite
9, Rocklin, CA 95765,  Attention:  President,  or at such other address as shall
have been  furnished  to the holder of this  Warrant by notice from the Company.
Any such notice,  request, or other communication may be sent by facsimile,  but
shall in such case be subsequently  confirmed by a writing personally  delivered
or sent by certified or registered mail or by recognized overnight mail

                                      -11-
<PAGE>

courier as provided above. All notices, requests, and other communications shall
be deemed to have been given  either at the time of the  receipt  thereof by the
person  entitled  to  receive  such  notice at the  address  of such  person for
purposes of this  Paragraph 9, or, if mailed by registered or certified  mail or
with a recognized  overnight  mail  courier upon deposit with the United  States
Post  Office or such  overnight  mail  courier,  if postage  is prepaid  and the
mailing is properly addressed, as the case may be.

     10.  GOVERNING  LAW.  THIS  WARRANT  SHALL  BE  ENFORCED,  GOVERNED  BY AND
CONSTRUED IN  ACCORDANCE  WITH THE LAWS OF THE STATE OF NEW YORK  APPLICABLE  TO
AGREEMENTS MADE AND TO BE PERFORMED  ENTIRELY WITHIN SUCH STATE,  WITHOUT REGARD
TO THE  PRINCIPLES OF CONFLICT OF LAWS.  THE PARTIES HERETO HEREBY SUBMIT TO THE
EXCLUSIVE  JURISDICTION OF THE UNITED STATES FEDERAL COURTS LOCATED IN NEW YORK,
NEW YORK WITH RESPECT TO ANY DISPUTE ARISING UNDER THIS WARRANT,  THE AGREEMENTS
ENTERED INTO IN CONNECTION  HEREWITH OR THE TRANSACTIONS  CONTEMPLATED HEREBY OR
THEREBY.  BOTH PARTIES IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT FORUM TO
THE  MAINTENANCE  OF SUCH SUIT OR  PROCEEDING.  BOTH PARTIES  FURTHER AGREE THAT
SERVICE OF PROCESS  UPON A PARTY  MAILED BY FIRST  CLASS MAIL SHALL BE DEEMED IN
EVERY  RESPECT  EFFECTIVE  SERVICE OF PROCESS UPON THE PARTY IN ANY SUCH SUIT OR
PROCEEDING. NOTHING HEREIN SHALL AFFECT EITHER PARTY'S RIGHT TO SERVE PROCESS IN
ANY  OTHER  MANNER   PERMITTED  BY  LAW.   BOTH  PARTIES   AGREE  THAT  A  FINAL
NON-APPEALABLE  JUDGMENT IN ANY SUCH SUIT OR PROCEEDING  SHALL BE CONCLUSIVE AND
MAY BE ENFORCED IN OTHER  JURISDICTIONS BY SUIT ON SUCH JUDGMENT OR IN ANY OTHER
LAWFUL  MANNER.  THE PARTY WHICH DOES NOT PREVAIL IN ANY DISPUTE  ARISING  UNDER
THIS  WARRANT  SHALL  BE  RESPONSIBLE  FOR  ALL  FEES  AND  EXPENSES,  INCLUDING
ATTORNEYS'  FEES,  INCURRED  BY THE  PREVAILING  PARTY IN  CONNECTION  WITH SUCH
DISPUTE.

     11.  MISCELLANEOUS.

          (A)  AMENDMENTS.  This  Warrant and any  provision  hereof may only be
amended by an instrument in writing signed by the Company and the holder hereof.

          (B)  DESCRIPTIVE  HEADINGS.  The  descriptive  headings of the several
paragraphs  of this Warrant are inserted  for  purposes of reference  only,  and
shall not affect the meaning or construction of any of the provisions hereof.

          (C)  CASHLESS  EXERCISE.  Notwithstanding  anything  to  the  contrary
contained in this Warrant,  if the resale of the Warrant Shares by the holder is
not then registered  pursuant to an effective  registration  statement under the
Securities  Act and upon the  expiration of one hundred five (105) days from the
date of  issuance  (unless the  Company  fails to timely  file the  Registration
Statement  (as  defined in the  Registration  Rights  Agreement  (as  defined in
Section 7(a) hereof)) in accordance with Section 2(a) of the Registration Rights
Agreement),  this Warrant may be exercised by presentation and surrender of this
Warrant to the Company at its principal  executive offices with a written notice
of the holder's intention to effect a cashless exercise, including a calculation
of the  number  of shares of Common  Stock to be issued  upon such  exercise  in
accordance  with the terms  hereof (a  "Cashless  Exercise").  In the event of a
Cashless  Exercise,  in lieu of paying the  Exercise  Price in cash,  the holder
shall  surrender  this  Warrant  for that  number  of  shares  of  Common  Stock
determined  by  multiplying  the  number  of  Warrant  Shares  to which it would
otherwise be entitled by a fraction, the numerator of which

                                      -12-
<PAGE>

shall be the  difference  between the then current Market Price per share of the
Common Stock and the Exercise  Price,  and the denominator of which shall be the
then current Market Price per share of Common Stock. For example,  if the holder
is exercising  100,000  Warrants with a per Warrant  exercise price of $0.75 per
share through a cashless  exercise when the Common Stock's  current Market Price
per share is $2.00 per share,  then upon such Cashless  Exercise the holder will
receive 62,500 shares of Common Stock.

          (D)  REMEDIES.  The  Company  acknowledges  that a breach by it of its
obligations  hereunder will cause  irreparable harm to the holder,  by vitiating
the intent and purpose of the transaction contemplated hereby. Accordingly,  the
Company  acknowledges  that the  remedy at law for a breach  of its  obligations
under this Warrant will be  inadequate  and agrees,  in the event of a breach or
threatened  breach by the Company of the  provisions of this  Warrant,  that the
holder shall be entitled,  in addition to all other available remedies at law or
in equity, and in addition to the penalties  assessable herein, to an injunction
or injunctions restraining,  preventing or curing any breach of this Warrant and
to enforce specifically the terms and provisions thereof,  without the necessity
of showing economic loss and without any bond or other security being required.


                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


                                      -13-
<PAGE>

     IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its
duly authorized officer.

                                   PEABODYS COFFEE, INC.


                                   By: _______________________________
                                       Todd N. Tkachuk
                                       President

Dated as of December 20, 2002

<PAGE>

                           FORM OF EXERCISE AGREEMENT

                                                      Dated:  ________ __, 200_


To:  Peabodys Coffee, Inc.


     The  undersigned,  pursuant  to the  provisions  set  forth  in the  within
Warrant,  hereby agrees to purchase  ________  shares of Common Stock covered by
such Warrant, and makes payment herewith in full therefor at the price per share
provided by such Warrant in cash or by  certified or official  bank check in the
amount of,  or, if the resale of such  Common  Stock by the  undersigned  is not
currently registered pursuant to an effective  registration  statement under the
Securities  Act of 1933, as amended,  by surrender of  securities  issued by the
Company  (including a portion of the Warrant) having a market value (in the case
of a portion of this Warrant, determined in accordance with Section 11(c) of the
Warrant) equal to $_________.  Please issue a certificate  or  certificates  for
such shares of Common  Stock in the name of and pay any cash for any  fractional
share to:


                                        Name:    _____________________________

                                        Signature:
                                        Address:______________________________
                                                 _____________________________

                                        Note:     The  above  signature   should
                                                  correspond  exactly  with  the
                                                  name on the face of the within
                                                  Warrant, if applicable.

and,  if said  number  of shares of  Common  Stock  shall not be all the  shares
purchasable under the within Warrant,  a new Warrant is to be issued in the name
of said undersigned  covering the balance of the shares  purchasable  thereunder
less any fraction of a share paid in cash.

<PAGE>

                               FORM OF ASSIGNMENT


     FOR VALUE RECEIVED,  the undersigned hereby sells,  assigns,  and transfers
all the rights of the undersigned under the within Warrant,  with respect to the
number of shares of Common Stock covered thereby set forth hereinbelow, to:


Name of Assignee                 Address                         No of Shares
----------------                 -------                         ------------




_______________________________, and hereby irrevocably constitutes and appoints
___________________________________  as agent and  attorney-in-fact  to transfer
said Warrant on the books of the  within-named  corporation,  with full power of
substitution in the premises.

Dated:   ________ __, 200_

In the presence of:                          ______________________________

                                        Name:______________________________


                                        Signature:_________________________
                                        Title of Signing Officer or Agent
                                        (if any):
                                                 ______________________________
                                        Address: ______________________________
                                                 ______________________________


                                        Note:     The  above  signature   should
                                                  correspond  exactly  with  the
                                                  name on the face of the within
                                                  Warrant, if applicable.

<PAGE>