AMENDMENT NO. 1
                                       TO
                            ASSET PURCHASE AGREEMENT

     PEABODYS  COFFEE,  INC.,  a Nevada  corporation  ("Peabodys"),  and ARROSTO
COFFEE  COMPANY,  LLC,  a  California  limited  liability  Company  ("Arrosto"),
effective as of September 1, 2000, agree as follows:

1.   BACKGROUND  AND PURPOSE.  The parties  have entered into an Asset  Purchase
Agreement,  dated June 19, 2000 ("Asset  Purchase  Agreement").  The parties now
desire to amend the  Asset  Purchase  Agreement  as set forth  below.  Except as
otherwise set forth or as otherwise required by context, capitalized terms shall
have the meanings set forth in the Asset Purchase Agreement.

2.   AMENDMENT.  The  following  sections  are amended as set forth  below.  Any
provision  of the Asset  Purchase  Agreement  which is not amended  hereby shall
remain in full force and effect as set forth in the Asset Purchase Agreement.

     (a)  Section 3.2 shall be amended to read as follows:

          3.2. PURCHASE OF SHARES.  As further  inducement for Peabodys to enter
          into this  Agreement,  Arrosto,  or other  parties  as  designated  by
          Arrosto,  and  Peabodys  shall  enter into a  subscription  agreement,
          substantially  in the form attached hereto as Exhibit A ("Subscription
          Agreement"),  as amended, pursuant to which Arrosto (or its assignees)
          shall purchase from Peabodys,  and Peabodys shall issue to Arrosto (or
          its assignees),  Five Hundred and Fifty Thousand  (550,000)  shares of
          Peabodys' common stock  ("Shares").  The Shares shall be purchased for
          Twenty  Cents  ($0.20) per Share,  for a total  purchase  price of One
          Hundred and Ten Thousand Dollars ($110,000.00).

     (b)  Section 9.1(c) shall be amended to read as follows:

          9.1. ARROSTO'S  OBLIGATIONS AT CLOSING. At the closing,  Arrosto shall
          deliver or cause to be delivered to Peabodys: . . .

               (c)  Arrosto or its  assigns  shall  deliver  One Hundred and Ten
          Thousand  Dollars   ($110,000.00)  as  consideration  for  the  Shares
          described  in  Section  3.2,  to be wire  transferred  into an account
          designated by Peabodys, in accordance with instructions to be supplied
          by Peabodys, all in accordance with the Subscription Agreement.

     (c)  Section 9.2(a) shall be amended to read as follows:

          9.2. PEABODYS'  OBLIGATIONS  AT CLOSING.  At the Closing or as soon as
          practicable thereafter, Peabodys shall deliver the following:

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               (a)  A share  certificate(s)  representing  the Five  Hundred and
          Fifty  Thousand  (550,000)  Shares made in the name of Arrosto (or its
          assignees)  which shall be delivered to Arrosto (or its  assignees) in
          connection with the Subscription Agreement(s).

                                        ARROSTO COFFEE COMPANY, LLC,
                                        A California Limited Liability Company

                                        By:_____________________________________
                                               (Joe Konis, Member/Manager)


                                        PEABODYS COFFEE, INC.
                                        a Nevada Corporation

                                        By:_____________________________________
                                               (Todd N.Tkachuk, President)

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