EXHIBIT 4.23

                          REGISTRATION RIGHTS AGREEMENT

         Registration  Rights  Agreement  dated as of December  ___,  2003 (this
"Agreement") by and between Peabodys Coffee,  Inc., a Nevada  corporation,  with
principal  executive offices located at 3845 Atherton Road, Suite 9, Rocklin, CA
95765  (the  "Company"),  and  La  Jolla  Cove  Investors,  Inc.  (the  "Initial
Investor").

         WHEREAS, upon the terms and subject to the conditions of the Securities
Purchase  Agreement  dated as of December ___,  2003, by and between the Initial
Investor and the Company (the "Securities Purchase Agreement"),  the Company has
agreed to issue and sell to the Initial Investor a 7 3/4 % Convertible Debenture
(the  "Debenture") of the Company in the aggregate  principal amount of $250,000
which,  upon the terms of and subject to the conditions  contained  therein,  is
convertible into shares of the Company's Common Stock (the "Common Stock") ; and

         WHEREAS,  to induce the  Initial  Investor  to execute  and deliver the
Securities Purchase Agreement, the Company has agreed to provide with respect to
the Common Stock issued upon  conversion of the Debenture and the Warrant Shares
certain registration rights under the Securities Act;

         NOW,  THEREFORE,  in  consideration  of the  premises  and  the  mutual
covenants  contained herein, the parties hereto,  intending to be legally bound,
hereby  agree as follows:

         1. Definitions

         (A) As used in this  Agreement,  the  following  terms  shall  have the
meanings:

                  (1) "Affiliate" of any specified Person means any other Person
         who directly,  or indirectly through one or more intermediaries,  is in
         control of, is controlled  by, or is under common  control  with,  such
         specified Person. For purposes of this definition,  control of a Person
         means  the  power,  directly  or  indirectly,  to  direct  or cause the
         direction  of the  management  and  policies of such Person  whether by
         contract,   securities,   ownership   or   otherwise;   and  the  terms
         "controlling" and "controlled" have the respective meanings correlative
         to the foregoing.

                  (2) "Closing Date" means December ___, 2003.

                  (3) "Commission" means the Securities and Exchange Commission.

                  (4) "Exchange Act" means the Securities  Exchange Act of 1934,
         as amended, and the rules and regulations of the Commission thereunder,
         or any similar  successor  statute.

                  (5)  "Investor"  means each of the  Initial  Investor  and any
         transferee or assignee of Registrable Securities which agrees to become
         bound  by all  of  the  terms  and  provisions  of  this  Agreement  in
         accordance with Section 8 hereof.


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                  (6) "Person" means any individual,  partnership,  corporation,
         limited liability  company,  joint stock company,  association,  trust,
         unincorporated  organization,  or a  government  or agency or political
         subdivision thereof.

                  (7)  "Prospectus"  means the  prospectus  (including,  without
         limitation,  any preliminary  prospectus and any final prospectus filed
         pursuant  to Rule  424(b)  under  the  Securities  Act,  including  any
         prospectus  that  discloses  information   previously  omitted  from  a
         prospectus  filed as part of an  effective  registration  statement  in
         reliance  on Rule  430A  under  the  Securities  Act)  included  in the
         Registration  Statement,  as amended or  supplemented by any prospectus
         supplement  with respect to the terms of the offering of any portion of
         the Registrable Securities covered by the Registration Statement and by
         all other amendments and supplements to such prospectus,  including all
         material incorporated by reference in such prospectus and all documents
         filed  after  the date of such  prospectus  by the  Company  under  the
         Exchange Act and incorporated by reference therein.

                  (8)  "Public  Offering"  means  an offer  registered  with the
         Commission  and the  appropriate  state  securities  commissions by the
         Company of its Common Stock and made pursuant to the Securities Act.

                  (9) "Registrable  Securities" means the Common Stock issued or
         issuable (i) upon  conversion  or  redemption  of the  Debenture,  (ii)
         exercise of the  Conversion  Warrants  (iii)  pursuant to the terms and
         provisions of the Debenture or the Securities Purchase Agreement,  (iv)
         in connection  with any  distribution,  recapitalization,  stock-split,
         stock adjustment or reorganization of the Company; provided, however, a
         share of Common  Stock shall  cease to be a  Registrable  Security  for
         purposes of this Agreement when it no longer is a Restricted Security.

                  (10) "Registration  Statement" means a registration  statement
         of the Company filed on an  appropriate  form under the  Securities Act
         providing  for the  registration  of, and the sale on a  continuous  or
         delayed  basis by the  holders  of, all of the  Registrable  Securities
         pursuant to Rule 415 under the Securities Act, including the Prospectus
         contained  therein and forming a part thereof,  any  amendments to such
         registration  statement and  supplements  to such  Prospectus,  and all
         exhibits  to and  other  material  incorporated  by  reference  in such
         registration statement and Prospectus.

                  (11)  "Restricted  Security"  means any share of Common  Stock
         issued upon conversion or redemption of the Debenture or Warrant except
         any such share that (i) has been  registered  pursuant to an  effective
         registration  statement  under the  Securities Act and sold in a manner
         contemplated by the prospectus included in such registration statement,
         (ii) has been  transferred in compliance with the resale  provisions of
         Rule 144 under the Securities Act (or any successor  provision thereto)
         or is  transferable  pursuant  to  paragraph  (k) of Rule 144 under the
         Securities Act (or any successor  provision thereto) or (iii) otherwise
         has been  transferred  and a new share of Common  Stock not  subject to
         transfer restrictions under the Securities Act has been delivered by or
         on behalf of the Company.

                  (12)  "Securities  Act" means the  Securities  Act of 1933, as
         amended, and the rules and regulations of the Commission thereunder, or
         any similar successor statute.

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         (B)  All  capitalized  terms  used  and not  defined  herein  have  the
respective meaning assigned to them in the Securities  Purchase Agreement or the
Debenture.

         2. Registration

         (A) Filing and  Effectiveness  of Registration  Statement.  The Company
shall prepare and file with the Commission as soon as practicable a Registration
Statement relating to the offer and sale of the Registrable Securities and shall
use its  reasonable  best  efforts  to cause  the  Commission  to  declare  such
Registration  Statement  effective  under  the  Securities  Act as  promptly  as
practicable  but  in no  event  later  than  the  Deadline  (as  defined  in the
Debenture). The Company shall promptly (and, in any event, no more than 24 hours
after it receives comments from the Commission), notify the Buyer when and if it
receives any comments  from the  Commission  on the  Registration  Statement and
promptly forward a copy of such comments,  if they are in writing, to the Buyer.
At such time after the filing of the  Registration  Statement  pursuant  to this
Section 2(A) as the Commission  indicates,  either orally or in writing, that it
has no further comments with respect to such  Registration  Statement or that it
is willing to entertain  appropriate  requests for acceleration of effectiveness
of such  Registration  Statement,  the Company shall  promptly,  and in no event
later than two (2)  business  days after  receipt  of such  indication  from the
Commission,  request that the  effectiveness of such  Registration  Statement be
accelerated  within  forty-eight (48) hours of the Commission's  receipt of such
request.  The Company  shall  notify the  Investor  by written  notice that such
Registration  Statement has been declared  effective by the Commission within 24
hours of such declaration by the Commission.

         (B)  Eligibility  for Use of Form  SB-2.  The  Company  shall  file all
reports  and  information  required to be filed by it with the  Commission  in a
timely manner and take all such other action so as to maintain  eligibility  for
the use of a Securities Act Registration Statement on Form SB-2.

         (C) Additional  Registration Statement. In the event the Current Market
Price  declines  to a price per share  the  result of which is that the  Company
cannot satisfy its conversion  obligations to Initial  Investor  hereunder,  the
Company  shall,  to the extent  required  by the  Securities  Act  (because  the
additional shares were not covered by the Registration  Statement filed pursuant
to Section  2(a)),  as reasonably  determined by the Initial  Investor,  file an
additional Registration Statement with the Commission for such additional number
of Registrable  Securities as would be issuable upon conversion of the Debenture
(the  "Additional  Registrable  Securities")  in  addition  to those  previously
registered.  The Company shall, to the extent required by the Securities Act, as
reasonably  determined  by the  Initial  Investor,  prepare  and  file  with the
Commission  not later than the 30th day  thereafter,  a  Registration  Statement
relating to the offer and sale of such  Additional  Registrable  Securities  and
shall use its best efforts to cause the Commission to declare such  Registration
Statement  effective under the Securities Act as promptly as practicable but not
later than the Deadline.  The Company shall not include any other  securities in
the  Registration  Statement  relating to the offer and sale of such  Additional
Registrable Securities.

         (D) (i) If the Company proposes to register any of its warrants, Common
Stock or any other  shares of common stock of the Company  under the  Securities
Act  (other  than a  registration  (A) on Form  S-8 or S-4 or any  successor  or
similar forms,  (B) relating to Common Stock or any other shares of common stock
of the Company issuable upon exercise of employee share options or in connection


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with any employee  benefit or similar  plan of the Company or (C) in  connection
with a direct or indirect  acquisition  by the Company of another  Person or any
transaction  with respect to which Rule 145 (or any successor  provision)  under
the  Securities  Act applies),  whether or not for sale for its own account,  it
will each such time,  give prompt  written  notice at least 20 days prior to the
anticipated  filing  date  of  the  registration   statement  relating  to  such
registration  to each  Investor,  which notice  shall set forth such  Investor's
rights under this Section 2(D) and shall offer such Investor the  opportunity to
include in such registration  statement such number of Registrable Securities as
such Investor may request.  Upon the written request of any Investor made within
10 days after the  receipt  of notice  from the  Company  (which  request  shall
specify the number of Registrable  Securities intended to be disposed of by such
Investor),  the  Company  will use its best  efforts to effect the  registration
under the Securities Act of all Registrable Securities that the Company has been
so requested to register by each Investor, to the extent requisite to permit the
disposition  of  the  Registrable  Securities  so  to be  registered;  provided,
however, that (A) if such registration involves a Public Offering, each Investor
must sell its Registrable Securities to any underwriters selected by the Company
with the consent of such  Investor on the same terms and  conditions as apply to
the Company and (B) if, at any time after giving written notice of its intention
to register any Registrable  Securities  pursuant to this Section 2 and prior to
the effective date of the  registration  statement filed in connection with such
registration,  the Company  shall  determine for any reason not to register such
Registrable  Securities,  the Company shall give written notice to each Investor
and, thereupon,  shall be relieved of its obligation to register any Registrable
Securities in connection with such registration. The Company's obligations under
this Section 2(D) shall terminate on the date that the registration statement to
be  filed  in  accordance  with  Section  2(A)  is  declared  effective  by  the
Commission.

                  (ii) If a registration  pursuant to this Section 2(D) involves
         a Public  Offering and the  managing  underwriter  thereof  advises the
         Company  that,  in its view,  the number of shares of Common Stock that
         the Company and the  Investors  intend to include in such  registration
         exceeds the largest  number of shares of Common  Stock that can be sold
         without having an adverse effect on such Public  Offering (the "Maximum
         Offering  Size"),  the Company will include in such  registration  only
         such  number of shares of Common  Stock as does not exceed the  Maximum
         Offering  Size,  and the number of shares in the Maximum  Offering Size
         shall be  allocated  among the  Company,  the  Investors  and any other
         sellers  of  Common  Stock  in  such  Public   Offering   ("Third-Party
         Sellers"),  first, pro rata among the Investors until all the shares of
         Common  Stock  originally  proposed  to be  offered  for  sale  by  the
         Investors have been allocated,  and second,  pro rata among the Company
         and any Third-Party  Sellers, in each case on the basis of the relative
         number of shares of Common Stock originally  proposed to be offered for
         sale under such registration by each of the Investors,  the Company and
         the  Third-Party  Sellers,  as the case may be.  If as a result  of the
         proration  provisions  of this  Section  2(D)(ii),  any Investor is not
         entitled  to  include   all  such   Registrable   Securities   in  such
         registration,  such  Investor  may elect to  withdraw  its  request  to
         include any Registrable  Securities in such registration.  With respect
         to  registrations   pursuant  to  this  Section  2(D),  the  number  of
         securities required to satisfy any underwriters'  over-allotment option
         shall be allocated among the Company, the Investors and any Third Party
         Seller  pro rata on the  basis of the  relative  number  of  securities
         offered for sale under such registration by each of the Investors,  the
         Company and any such Third Party  Sellers  before the  exercise of such
         over-allotment option.


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         3. Obligations of the Company

         In connection with the registration of the Registrable Securities,  the
Company  shall:

         (A) Promptly (i) prepare and file with the Commission  such  amendments
(including   post-effective   amendments)  to  the  Registration  Statement  and
supplements  to the  Prospectus  as may be  necessary  to keep the  Registration
Statement  continuously  effective and in compliance  with the provisions of the
Securities  Act applicable  thereto so as to permit the Prospectus  forming part
thereof to be current and useable by  Investors  for resales of the  Registrable
Securities  for a  period  of  five  (5)  years  from  the  date  on  which  the
Registration  Statement  is first  declared  effective  by the  Commission  (the
"Effective  Time")  or such  shorter  period  that will  terminate  when all the
Registrable  Securities  covered by the  Registration  Statement  have been sold
pursuant, transferred pursuant to Rule 144 under the Securities Act or otherwise
transferred  in a manner  that  results in the  delivery of new  securities  not
subject to transfer  restrictions  under the Securities  Act (the  "Registration
Period") and (ii) take all lawful action such that each of (A) the  Registration
Statement and any amendment thereto does not, when it becomes effective, contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, not misleading
and

         (B) the Prospectus forming part of the Registration Statement,  and any
amendment or supplement  thereto,  does not at any time during the  Registration
Period  include  an  untrue  statement  of a  material  fact or omit to  state a
material fact required to be stated  therein or necessary to make the statements
therein,  in  light  of the  circumstances  under  which  they  were  made,  not
misleading;  (B) During the Registration  Period,  comply with the provisions of
the  Securities  Act with respect to the  Registrable  Securities of the Company
covered by the Registration Statement until such time as all of such Registrable
Securities have been disposed of by the Investor;

         (C) (i) Prior to the filing  with the  Commission  of any  Registration
Statement (including any amendments thereto) and the distribution or delivery of
any Prospectus  (including any  supplements  thereto),  provide (A) draft copies
thereof to the Investors and reflect in such  documents all such comments as the
Investors (and their counsel)  reasonably may propose and (B) to the Investors a
copy of the  accountant's  consent  letter to be included in the filing and (ii)
furnish to each  Investor  whose  Registrable  Securities  are  included  in the
Registration  Statement  and its legal counsel  identified  to the Company,  (A)
promptly  after the same is prepared  and publicly  distributed,  filed with the
Commission,  or received by the Company, one copy of the Registration Statement,
each Prospectus, and each amendment or supplement thereto and (B) such number of
copies of the Prospectus and all  amendments  and  supplements  thereto and such
other documents,  as such Investor may reasonably request in order to facilitate
the disposition of the Registrable Securities owned by such Investor;

         (D) (i) Register or qualify the Registrable  Securities  covered by the
Registration  Statement  under  such  securities  or  "blue  sky"  laws  of such
jurisdictions  as  the  Investors  who  hold  a   majority-in-interest   of  the
Registrable  Securities being offered reasonably request,  (ii) prepare and file
in such jurisdictions such amendments (including post-effective  amendments) and
supplements  to such  registrations  and  qualifications  as may be necessary to


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maintain the effectiveness  thereof at all times during the Registration Period,
(iii) take all such other lawful  actions as may be  necessary to maintain  such
registrations and  qualifications in effect at all times during the Registration
Period and (iv) take all such  other  lawful  actions  reasonably  necessary  or
advisable to qualify the Registrable  Securities for sale in such jurisdictions;
provided,  however,  that  the  Company  shall  not be  required  in  connection
therewith  or as a  condition  thereto  to (A)  qualify  to do  business  in any
jurisdiction  where it would not  otherwise  be required to qualify but for this
Section 3(D), (B) subject itself to general taxation in any such jurisdiction or
(C) file a general consent to service of process in any such  jurisdiction;

         (E) As  promptly as  practicable  after  becoming  aware of such event,
notify each Investor of the  occurrence  of any event,  as a result of which the
Prospectus included in the Registration  Statement,  as then in effect, includes
an  untrue  statement  of a  material  fact or omits to  state a  material  fact
required to be stated  therein or necessary to make the statements  therein,  in
light of the  circumstances  under  which they were made,  not  misleading,  and
promptly  prepare an amendment to the  Registration  Statement and supplement to
the  Prospectus  to correct such untrue  statement  or  omission,  and deliver a
number of copies of such  supplement  and  amendment  to each  Investor  as such
Investor may reasonably request;

         (F) As  promptly as  practicable  after  becoming  aware of such event,
notify each  Investor who holds  Registrable  Securities  being sold (or, in the
event of an underwritten offering, the managing underwriters) of the issuance by
the Commission of any stop order or other suspension of the effectiveness of the
Registration  Statement at the earliest possible time and take all lawful action
to effect  the  withdrawal,  recession  or  removal  of such stop order or other
suspension;

         (G) Cause all the Registrable  Securities  covered by the  Registration
Statement  to be listed  on the  principal  national  securities  exchange,  and
included in an inter-dealer quotation system of a registered national securities
association, on or in which securities of the same class or series issued by the
Company are then listed or included;

         (H)  Maintain a  transfer  agent and  registrar,  which may be a single
entity, for the Registrable  Securities not later than the effective date of the
Registration Statement;

         (I) Cooperate with the Investors who hold Registrable  Securities being
offered to facilitate the timely  preparation and delivery of  certificates  for
the Registrable  Securities to be offered pursuant to the registration statement
and  enable  such  certificates  for the  Registrable  Securities  to be in such
denominations  or amounts,  as the case may be, as the Investors  reasonably may
request and  registered in such names as the Investor may request;  and,  within
three  (3)  business  days  after  a  registration   statement   which  includes
Registrable  Securities  is declared  effective by the  Commission,  deliver and
cause legal counsel selected by the Company to deliver to the transfer agent for
the  Registrable  Securities  (with copies to the  Investors  whose  Registrable
Securities  are  included  in  such   registration   statement)  an  appropriate
instruction and, to the extent necessary, an opinion of such counsel;

         (J) Take all such other lawful actions reasonably necessary to expedite
and facilitate the disposition by the Investors of their Registrable  Securities
in accordance  with the intended  methods  therefor  provided in the  Prospectus
which are customary under the circumstances;


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         (K)  Make  generally  available  to its  security  holders  as  soon as
practicable,  but in any event not later  than  three (3)  months  after (i) the
effective  date (as  defined in Rule  158(c)  under the  Securities  Act) of the
Registration  Statement  and  (ii)  the  effective  date of each  post-effective
amendment  to the  Registration  Statement,  as the  case  may be,  an  earnings
statement of the Company and its  subsidiaries  complying with Section 11 (a) of
the  Securities Act and the rules and  regulations of the Commission  thereunder
(including, at the option of the Company, Rule 158);

         (L) In the  event of an  underwritten  offering,  promptly  include  or
incorporate  in a  Prospectus  supplement  or  post-effective  amendment  to the
Registration  Statement such information as the managers reasonably agree should
be included therein and to which the Company does not reasonably object and make
all required filings of such Prospectus  supplement or post-effective  amendment
as soon as  practicable  after it is  notified  of the matters to be included or
incorporated in such Prospectus supplement or post-effective amendment;

         (M) (i) Make  reasonably  available for  inspection  by Investors,  any
underwriter  participating  in any  disposition  pursuant  to  the  Registration
Statement,  and  any  attorney,  accountant  or  other  agent  retained  by such
Investors or any such  underwriter  all relevant  financial  and other  records,
pertinent   corporate   documents   and   properties  of  the  Company  and  its
subsidiaries,  and (ii) cause the Company's officers, directors and employees to
supply  all  information  reasonably  requested  by such  Investors  or any such
underwriter,  attorney,  accountant or agent in connection with the Registration
Statement, in each case, as is customary for similar due diligence examinations;
provided,  however,  that  all  records,  information  and  documents  that  are
designated  in  writing  by  the  Company,   in  good  faith,  as  confidential,
proprietary  or  containing  any material  nonpublic  information  shall be kept
confidential by such Investors and any such underwriter, attorney, accountant or
agent (pursuant to an appropriate  confidentiality  agreement in the case of any
such  holder or agent),  unless  such  disclosure  is made  pursuant to judicial
process in a court  proceeding  (after first  giving the Company an  opportunity
promptly  to seek a  protective  order  or  otherwise  limit  the  scope  of the
information  sought to be  disclosed)  or is required  by law, or such  records,
information or documents  become  available to the public generally or through a
third party not in violation of an accompanying  obligation of  confidentiality;
and  provided,  further,  that,  if the  foregoing  inspection  and  information
gathering would otherwise  disrupt the Company's  conduct of its business,  such
inspection and information  gathering shall, to the maximum extent possible,  be
coordinated on behalf of the Investors and the other parties entitled thereto by
one firm of counsel  designed  by and on behalf of the  majority  in interest of
Investors and other parties;

         (N)  In  connection   with  any   underwritten   offering,   make  such
representations   and  warranties  to  the  Investors   participating   in  such
underwritten  offering and to the managers,  in form, substance and scope as are
customarily  made by the  Company  to  underwriters  in  secondary  underwritten
offerings;

         (O) In connection with any  underwritten  offering,  obtain opinions of
counsel  to the  Company  (which  counsel  and  opinions  (in  form,  scope  and
substance)  shall be reasonably  satisfactory to the managers)  addressed to the
underwriters,  covering  such  matters as are  customarily  covered in  opinions
requested in secondary  underwritten offerings (it being agreed that the matters
to be covered by such opinions shall include, without limitation, as of the date
of the opinion and as of the  Effective  Time of the  Registration  Statement or
most recent  post-effective  amendment thereto,  as the case may be, the absence


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from the  Registration  Statement  and the  Prospectus,  including any documents
incorporated by reference therein,  of an untrue statement of a material fact or
the omission of a material  fact  required to be stated  therein or necessary to
make the  statements  therein  (in the case of the  Prospectus,  in light of the
circumstances  under which they were made) not misleading,  subject to customary
limitations);

         (P) In connection with any underwritten offering, obtain "cold comfort"
letters and updates  thereof  from the  independent  public  accountants  of the
Company (and, if  necessary,  from the  independent  public  accountants  of any
subsidiary  of the Company or of any business  acquired by the Company,  in each
case for which  financial  statements and financial data are, or are required to
be,  included in the  Registration  Statement),  addressed  to each  underwriter
participating  in such  underwritten  offering (if such underwriter has provided
such letter,  representations  or documentation,  if any, required for such cold
comfort  letter to be so addressed),  in customary form and covering  matters of
the type  customarily  covered  in "cold  comfort"  letters in  connection  with
secondary underwritten offerings;

         (Q)  In  connection  with  any  underwritten  offering,   deliver  such
documents and  certificates  as may be reasonably  required by the managers,  if
any, and

         (R) In the event that any  broker-dealer  registered under the Exchange
Act shall be an  "Affiliate"  (as  defined in Rule  2729(b)(1)  of the rules and
regulations of the National  Association of Securities Dealers,  Inc. (the "NASD
Rules") (or any successor  provision thereto)) of the Company or has a "conflict
of interest" (as defined in Rule  2720(b)(7) of the NASD Rules (or any successor
provision  thereto)) and such broker-dealer  shall underwrite,  participate as a
member  of  an  underwriting  syndicate  or  selling  group  or  assist  in  the
distribution  of  any  Registrable   Securities   covered  by  the  Registration
Statement,  whether  as a  holder  of  such  Registrable  Securities  or  as  an
underwriter,  a  placement  or sales  agent or a broker  or  dealer  in  respect
thereof, or otherwise,  the Company shall assist such broker-dealer in complying
with the requirements of the NASD Rules, including,  without limitation,  by (A)
engaging a "qualified  independent  underwriter" (as defined in Rule 2720(b)(15)
of the NASD Rules (or any successor  provision  thereto)) to  participate in the
preparation  of  the  Registration   Statement   relating  to  such  Registrable
Securities,  to exercise usual standards of due diligence in respect thereof and
to recommend  the public  offering  price of such  Registrable  Securities,  (B)
indemnifying  such  qualified  independent  underwriter  to  the  extent  of the
indemnification  of underwriters  provided in Section 6 hereof and (C) providing
such  information  to such  broker-dealer  as may be  required in order for such
broker-dealer  to comply with the requirements of the NASD Rules.

         4. Obligations of the Investors

         In connection with the registration of the Registrable Securities,  the
Investors shall have the following obligations:

         (A) It shall be a condition precedent to the obligations of the Company
to complete  the  registration  pursuant to this  Agreement  with respect to the
Registrable Securities of a particular Investor that such Investor shall furnish
to the Company such information  regarding  itself,  the Registrable  Securities
held by it and the intended method of disposition of the Registrable  Securities
held by it as shall be reasonably  required to effect the  registration  of such


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Initials                                8                               Initials

<PAGE>

Registrable  Securities and shall execute such documents in connection with such
registration as the Company may reasonably request;

         (B) Each  Investor  by its  acceptance  of the  Registrable  Securities
agrees to cooperate  with the Company in  connection  with the  preparation  and
filing  of the  Registration  Statement  hereunder,  unless  such  Investor  has
notified  the  Company  in  writing  of  its  election  to  exclude  all  of its
Registrable Securities from the Registration Statement; and

         (C) Each  Investor  agrees  that,  upon  receipt of any notice from the
Company of the  occurrence of any event of the kind described in Section 3(E) or
3(F), it shall immediately discontinue its disposition of Registrable Securities
pursuant to the  Registration  Statement  covering such  Registrable  Securities
until  such  Investor's  receipt of the  copies of the  supplemented  or amended
Prospectus contemplated by Section 3(E) and, if so directed by the Company, such
Investor shall deliver to the Company (at the expense of the Company) or destroy
(and deliver to the Company a  certificate  of  destruction)  all copies in such
Investor's  possession,  of the Prospectus covering such Registrable  Securities
current at the time of receipt of such notice.

         5. Expenses of Registration

         All  expenses,  other  than  underwriting  discounts  and  commissions,
incurred in connection with registrations, filings or qualifications pursuant to
Section 3, but including,  without limitation,  all registration,  listing,  and
qualifications fees, printing and engraving fees,  accounting fees, and the fees
and disbursements of counsel for the Company.

         6. Indemnification and Contribution

         (A)  Indemnification  by the Company.  The Company shall  indemnify and
hold harmless each Investor and each underwriter,  if any, which facilitates the
disposition of Registrable Securities, and each of their respective officers and
directors and each person who controls such Investor or  underwriter  within the
meaning of Section 15 of the  Securities  Act or Section 20 of the  Exchange Act
(each such person being  sometimes  hereinafter  referred to as an  "Indemnified
Person") from and against any losses, claims,  damages or liabilities,  joint or
several,  to  which  such  Indemnified  Person  may  become  subject  under  the
Securities  Act or  otherwise,  insofar  as  such  losses,  claims,  damages  or
liabilities  (or actions in respect  thereof)  arise out of or are based upon an
untrue statement of a material fact contained in any  Registration  Statement or
an omission or alleged  omission to state therein a material fact required to be
stated therein or necessary to make the statements therein,  not misleading,  or
arise out of or are based upon an untrue  statement of a material fact contained
in any Prospectus or an omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements  therein,
in the light of the  circumstances  under which they were made, not  misleading;
and the Company  hereby  agrees to  reimburse  such  Indemnified  Person for all
reasonable  legal  and  other  expenses  incurred  by  them in  connection  with
investigating  or defending  any such action or claim as and when such  expenses
are  incurred;  provided,  however,  that the Company shall not be liable to any
such  Indemnified  Person in any such  case to the  extent  that any such  loss,
claim,  damage  or  liability  arises  out of or is  based  upon  (i) an  untrue
statement  or  alleged  untrue  statement  made in, or an  omission  or  alleged
omission from, such Registration Statement or Prospectus in reliance upon and in
conformity with written information furnished to the Company by such Indemnified
Person  expressly  for use therein or (ii) in the case of the  occurrence  of an


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<PAGE>

event of the type specified in Section 3(E), the use by the  Indemnified  Person
of an outdated or  defective  Prospectus  after the Company has provided to such
Indemnified  Person an updated  Prospectus  correcting  the untrue  statement or
alleged  untrue  statement or omission or alleged  omission  giving rise to such
loss, claim, damage or liability.

         (B)  Indemnification by the Investor.  The Investor shall indemnify and
hold harmless the Company and each  underwriter,  if any, which  facilitates the
disposition of Registrable Securities, and each of their respective officers and
directors  and each person who  controls the Company or  underwriter  within the
meaning of Section 15 of the  Securities  Act or Section 20 of the  Exchange Act
from and against any losses, claims,  damages or liabilities,  joint or several,
to which such indemnified  person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect  thereof)  arise  out of or are  based  upon an  untrue  statement  of a
material fact contained in any Registration  Statement or an omission or alleged
omission  to state  therein a material  fact  required  to be stated  therein or
necessary to make the statements therein, not misleading, or arise out of or are
based upon an untrue statement of a material fact contained in any Prospectus or
an omission or alleged  omission to state therein a material fact required to be
stated therein or necessary to make the statements  therein, in the light of the
circumstances  under which they were made,  not  misleading  with respect to any
information  provided  by the  Investor;  and  the  Investor  hereby  agrees  to
reimburse such  indemnified  person for all reasonable  legal and other expenses
incurred by them in connection with  investigating  or defending any such action
or claim as and when such expenses are incurred.

         (C) Notice of Claims,  etc.  Promptly  after receipt by a party seeking
indemnification  pursuant to this Section 6 (an "Indemnified  Party") of written
notice of any  investigation,  claim,  proceeding  or other action in respect of
which  indemnification is being sought (each, a "Claim"),  the Indemnified Party
promptly  shall notify the party against whom  indemnification  pursuant to this
Section  6 is  being  sought  (the  "Indemnifying  Party")  of the  commencement
thereof;  but the omission to so notify the Indemnifying Party shall not relieve
it from any  liability  that it  otherwise  may have to the  Indemnified  Party,
except to the extent that the  Indemnifying  Party is materially  prejudiced and
forfeits  substantive  rights  and  defenses  by  reason  of  such  failure.  In
connection  with any  Claim as to which  both  the  Indemnifying  Party  and the
Indemnified  Party are  parties,  the  Indemnifying  Party  shall be entitled to
assume the defense thereof. Notwithstanding the assumption of the defense of any
Claim by the Indemnifying  Party, the Indemnified  Party shall have the right to
employ  separate  legal counsel and to participate in the defense of such Claim,
and the Indemnifying Party shall bear the reasonable fees,  out-of-pocket  costs
and expenses of such  separate  legal counsel to the  Indemnified  Party if (and
only if): (x) the  Indemnifying  Party shall have agreed to pay such fees, costs
and  expenses,  (y) the  Indemnified  Party  and the  Indemnifying  Party  shall
reasonably have concluded that  representation  of the Indemnified  Party by the
Indemnifying  Party by the same legal  counsel would not be  appropriate  due to
actual or, as reasonably  determined by legal counsel to the Indemnified  Party,
potentially  differing  interests  between  such  parties in the  conduct of the
defense  of such  Claim,  or if there  may be legal  defenses  available  to the
Indemnified  Party that are in addition to or disparate from those  available to
the Indemnifying Party or (z) the Indemnifying Party shall have failed to employ
legal  counsel  reasonably  satisfactory  to  the  Indemnified  Party  within  a
reasonable period of time after notice of the commencement of such Claim. If the
Indemnified Party employs separate legal counsel in circumstances  other than as
described in clauses (x), (y) or (z) above, the fees, costs and expenses of such


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Initials                               10                               Initials

<PAGE>

legal counsel shall be borne  exclusively by the  Indemnified  Party.  Except as
provided above, the  Indemnifying  Party shall not, in connection with any Claim
in the same  jurisdiction,  be liable for the fees and expenses of more than one
firm of counsel for the  Indemnified  Party  (together  with  appropriate  local
counsel).  The Indemnified Party shall not, without the prior written consent of
the  Indemnifying  Party (which  consent  shall not  unreasonably  be withheld),
settle or compromise any Claim or consent to the entry of any judgment that does
not  include  an  unconditional  release  of the  Indemnifying  Party  from  all
liabilities with respect to such Claim or judgment.

         (D) Contribution. If the indemnification provided for in this Section 6
is unavailable to or insufficient  to hold harmless an Indemnified  Person under
subsection  (A) above in respect of any losses,  claims,  damages or liabilities
(or actions in respect  thereof)  referred to  therein,  then each  Indemnifying
Party shall contribute to the amount paid or payable by such  Indemnified  Party
as a result of such  losses,  claims,  damages  or  liabilities  (or  actions in
respect  thereof) in such  proportion as is  appropriate to reflect the relative
fault of the Indemnifying Party and the Indemnified Party in connection with the
statements  or  omissions  which  resulted in such  losses,  claims,  damages or
liabilities  (or  actions in  respect  thereof),  as well as any other  relevant
equitable  considerations.  The relative  fault of such  Indemnifying  Party and
Indemnified  Party shall be  determined  by reference  to,  among other  things,
whether the untrue or alleged untrue statement of a material fact or omission or
alleged  omission to state a material  fact relates to  information  supplied by
such Indemnifying  Party or by such Indemnified Party, and the parties' relative
intent,  knowledge,  access to information and opportunity to correct or prevent
such  statement or omission.  The parties hereto agree that it would not be just
and equitable if  contribution  pursuant to this Section 6(D) were determined by
pro rata allocation (even if the Investors or any  underwriters  were treated as
one entity for such purpose) or by any other method of allocation which does not
take account of the equitable  considerations  referred to in this Section 6(D).
The amount  paid or payable by an  Indemnified  Party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to above
shall be  deemed  to  include  any legal or other  fees or  expenses  reasonably
incurred by such Indemnified Party in connection with investigating or defending
any such  action or  claim.  No person  guilty of  fraudulent  misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution   from  any  person   who  was  not   guilty  of  such   fraudulent
misrepresentation. The obligations of the Investors and any underwriters in this
Section 6(D) to contribute  shall be several in proportion to the  percentage of
Registrable  Securities registered or underwritten,  as the case may be, by them
and not joint.

         (E)  Notwithstanding any other provision of this Section 6, in no event
shall any (i)  Investor be required to  undertake  liability to any person under
this Section 6 for any amounts in excess of the dollar amount of the proceeds to
be  received  by such  Investor  from  the sale of such  Investor's  Registrable
Securities  (after  deducting  any fees,  discounts and  commissions  applicable
thereto)  pursuant to any  Registration  Statement under which such  Registrable
Securities are to be registered under the Securities Act and (ii) underwriter be
required  to  undertake  liability  to any Person  hereunder  for any amounts in
excess of the aggregate  discount,  commission or other compensation  payable to
such underwriter with respect to the Registrable  Securities  underwritten by it
and distributed pursuant to the Registration Statement.


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Initials                               11                               Initials

<PAGE>

         (F) The  obligations  of the Company  under this  Section 6 shall be in
addition  to  any  liability  which  the  Company  may  otherwise  have  to  any
Indemnified  Person and the  obligations  of any  Indemnified  Person under this
Section 6 shall be in addition to any liability  which such  Indemnified  Person
may otherwise have to the Company.  The remedies  provided in this Section 6 are
not exclusive and shall not limit any rights or remedies  which may otherwise be
available to an indemnified party at law or in equity.

         7. Rule 144

         With a view to making  available to the  Investors the benefits of Rule
144 under the  Securities  Act or any other  similar rule or  regulation  of the
Commission  that may at any time permit the Investors to sell  securities of the
Company to the public without  registration  ("Rule 144"), the Company agrees to
use its best efforts to:

         (1) comply with the provisions of paragraph (c) (1) of Rule 144 and

         (2) file with the  Commission  in a timely manner all reports and other
documents  required to be filed by the  Company  pursuant to Section 13 or 15(d)
under the  Exchange  Act;  and,  if at any time it is not  required to file such
reports but in the past had been required to or did file such reports,  it will,
upon the request of any Investor,  make available other  information as required
by, and so long as  necessary  to permit  sales of, its  Registrable  Securities
pursuant to Rule 144.

         8. Assignment

         The rights to have the Company register Registrable Securities pursuant
to this  Agreement  shall be  automatically  assigned  by the  Investors  to any
permitted  transferee of all or any portion of such  Registrable  Securities (or
all or any  portion  of the  Debenture  or  Warrant  of  the  Company  which  is
convertible  into such  securities)  only if (a) the Investor  agrees in writing
with the  transferee  or  assignee  to assign  such  rights,  and a copy of such
agreement  is  furnished  to the  Company  within a  reasonable  time after such
assignment,  (b) the Company is, within a reasonable time after such transfer or
assignment,  furnished  with written  notice of (i) the name and address of such
transferee  or  assignee  and (ii) the  securities  with  respect  to which such
registration rights are being transferred or assigned, (c) immediately following
such transfer or  assignment,  the  securities so transferred or assigned to the
transferee or assignee constitute Restricted Securities and (d) at or before the
time the Company received the written notice  contemplated by clause (b) of this
sentence  the  transferee  or assignee  agrees in writing with the Company to be
bound by all of the provisions contained herein.

         9. Amendment and Waiver

         Any  provision  of this  Agreement  may be amended  and the  observance
thereof may be waived (either  generally or in a particular  instance and either
retroactively  or  prospectively),  only with the written consent of the Company
and Investors who hold a majority-in-interest of the Registrable Securities. Any
amendment or waiver  effected in accordance with this Section 9 shall be binding
upon each Investor and the Company.


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Initials                               12                               Initials
<PAGE>

         10. Changes in Common Stock

         If, and as often as,  there are any changes in the Common  Stock by way
of stock split, stock dividend,  reverse split, combination or reclassification,
or through merger, consolidation,  reorganization or recapitalization, or by any
other means,  appropriate  adjustment shall be made in the provisions hereof, as
may be required, so that the rights and privileges granted hereby shall continue
with respect to the Common Stock as so changed.

         11. Miscellaneous

         (A) A person  or entity  shall be deemed to be a holder of  Registrable
Securities  whenever  such  person or entity  owns of  record  such  Registrable
Securities.  If  the  Company  receives  conflicting  instructions,  notices  or
elections  from  two or more  persons  or  entities  with  respect  to the  same
Registrable  Securities,  the Company shall act upon the basis of  instructions,
notice  or  election  received  from the  registered  owner of such  Registrable
Securities.

         (B) If, after the date hereof and prior to the Commission declaring the
Registration  Statement to be filed pursuant to Section 2(a) effective under the
Securities  Act, the Company grants to any Person any  registration  rights with
respect to any Company  securities which are more favorable to such other Person
than those provided in this  Agreement,  then the Company  forthwith shall grant
(by means of an amendment to this Agreement or otherwise) identical registration
rights to all Investors hereunder.

         (C) Except as may be  otherwise  provided  herein,  any notice or other
communication  or delivery  required or permitted  hereunder shall be in writing
and  shall  be  delivered  personally,  or sent by  telecopier  machine  or by a
nationally  recognized overnight courier service, and shall be deemed given when
so delivered  personally,  or by telecopier machine or overnight courier service
as follows:

                           (1) if to the Company, to:

                               Peabodys Coffee, Inc.
                               3845 Atherton Road, Suite 9
                               Rocklin, CA 95765
                               Telephone: 916-632-6090
                               Facsimile: 916-632-6099

                            (2) if to the Investor, to:

                                La Jolla Cove Investors, Inc.
                                7817 Herschel Avenue, Suite 200
                                La Jolla, California 92037
                                Telephone: 858-551-8789
                                Facsimile: 858-551-8779


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Initials                               13                               Initials

<PAGE>

The Company or the  Investor  may change the  foregoing  address by notice given
pursuant to this Section  11(C).

         (D)  Failure of any party to  exercise  any right or remedy  under this
Agreement or otherwise,  or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.

         (E) This Agreement  shall be governed by and  interpreted in accordance
with the laws of the State of  California.  Each of the parties  consents to the
jurisdiction  of the federal  courts whose  districts  encompass any part of the
City of San Diego or the state courts of the State of California  sitting in the
City of San Diego in connection  with any dispute  arising under this  Agreement
and hereby  waives,  to the  maximum  extent  permitted  by law,  any  objection
including any objection  based on forum non  conveniens,  to the bringing of any
such proceeding in such jurisdictions.

         (F) Should  any party  hereto  employ an  attorney  for the  purpose of
enforcing or construing this Agreement, or any judgment based on this Agreement,
in  any  legal  proceeding   whatsoever,   including   insolvency,   bankruptcy,
arbitration,  declaratory relief or other litigation, the prevailing party shall
be entitled to receive from the other party or parties thereto reimbursement for
all  reasonable  attorneys'  fees and all  reasonable  costs,  including but not
limited to service of process,  filing  fees,  court and court  reporter  costs,
investigative  costs,  expert witness fees,  and the cost of any bonds,  whether
taxable or not, and that such reimbursement shall be included in any judgment or
final order issued in that  proceeding.  The "prevailing  party" means the party
determined by the court to most nearly  prevail and not  necessarily  the one in
whose favor a judgment is rendered.

         (G) The remedies  provided in this  Agreement  are  cumulative  and not
exclusive of any remedies provided by law. If any term,  provision,  covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants  and  restrictions  set forth  herein  shall  remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an  alternative  means to
achieve the same or substantially  the same result as that  contemplated by such
term, provision,  covenant or restriction.  It is hereby stipulated and declared
to be the  intention of the parties that they would have  executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.

         (H) The Company shall not enter into any agreement  with respect to its
securities  that is  inconsistent  with the  rights  granted  to the  holders of
Registrable  Securities  in this  Agreement  or  otherwise  conflicts  with  the
provisions  hereof.  The  Company  is not  currently  a party  to any  agreement
granting any  registration  rights with respect to any of its  securities to any
person which  conflicts  with the Company's  obligations  hereunder or gives any
other party the right to include any  securities in any  Registration  Statement
filed  pursuant  hereto,  except  for such  rights  and  conflicts  as have been
irrevocably  waived.  Without limiting the generality of the foregoing,  without
the written  consent of the holders of a majority in interest of the Registrable
Securities, the Company shall not grant to any person the right to request it to
register any of its  securities  under the  Securities  Act unless the rights so
granted  are  subject  in all  respect  to the prior  rights of the  holders  of
Registrable  Securities  set forth herein,  and are not otherwise in conflict or


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Initials                               14                               Initials

<PAGE>

inconsistent  with the provisions of this  Agreement.  The  restrictions  on the
Company's  rights  to grant  registration  rights  under  this  paragraph  shall
terminate on the date the Registration Statement to be filed pursuant to Section
2(A) is declared effective by the Commission.

         (I) This  Agreement,  the letter  agreement dated as of the date hereof
between the Company and the Investor,  the Securities  Purchase  Agreement,  the
Debenture and the Conversion Warrants Agreement, of even date herewith among the
Company and the  Initial  Investor  constitute  the entire  agreement  among the
parties  hereto  with  respect  to  the  subject  matter  hereof.  There  are no
restrictions,  promises, warranties or undertakings,  other than those set forth
or referred to herein.  These  Agreements  supersede  all prior  agreements  and
undertakings among the parties hereto with respect to the subject matter hereof.

         (J) Subject to the  requirements  of Section 8 hereof,  this  Agreement
shall inure to the benefit of and be binding upon the  successors and assigns of
each of the parties hereto. (K) All pronouns and any variations thereof refer to
the  masculine,  feminine  or neuter,  singular  or plural,  as the  context may
require.

         (L) The headings in this  Agreement  are for  convenience  of reference
only and  shall not limit or  otherwise  affect  the  meaning  thereof.  (M) The
Company  acknowledges that any failure by the Company to perform its obligations
under  Section  3, or any  delay in such  performance,  could  result  in direct
damages to the Investors  and the Company  agrees that, in addition to any other
liability  the  Company  may have by reason of any such  failure  or delay,  the
Company shall be liable for all direct damages caused by such failure or delay.

         (N) This Agreement may be executed in counterparts, each of which shall
be  deemed  an  original  but both of which  shall  constitute  one and the same
agreement.  A facsimile transmission of this signed Agreement shall be legal and
binding on the parties hereto.

         IN WITNESS WHEREOF,  the parties hereto have duly caused this Agreement
to be executed and delivered on the date first above written.

                                             Peabodys Coffee, Inc.

                                             By:
                                                  ------------------------------
                                                   Name:
                                                   Title:

                                             La Jolla Cove Investors, Inc.

                                             By:
                                                  ------------------------------
                                                   Name:
                                                   Title:

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Initials                               15                               Initials