Document:

SECURITY AGREEMENT

     SECURITY  AGREEMENT (this  "Agreement"),  dated as of December 20, 2002, by
and among Peabodys Coffee, Inc., a Nevada corporation (d/b/a Black Rhino Coffee)
("Company"),  and the  secured  parties  signatory  hereto and their  respective
endorsees, transferees and assigns (collectively, the "Secured Party").

                              W I T N E S S E T H:

     WHEREAS, pursuant to a Securities Purchase Agreement, dated the date hereof
between  Company and the Secured Party (the "Purchase  Agreement"),  Company has
agreed  to issue to the  Secured  Party  and the  Secured  Party  has  agreed to
purchase from Company certain of Company's 10% Secured  Convertible  Debentures,
due one year from the date of issue (the  "Debentures"),  which are  convertible
into shares of Company's  Common  Stock,  par value $.001 per share (the "Common
Stock"). In connection therewith,  Company shall issue the Secured Party certain
Common  Stock  purchase  warrants  dated as of the date hereof to  purchase  the
number of shares of Common Stock  indicated  below each Secured  Party's name on
the Purchase Agreement (the "Warrants"); and

     WHEREAS,  in order to induce the Secured Party to purchase the  Debentures,
Company has agreed to execute and  deliver to the Secured  Party this  Agreement
for the  benefit  of the  Secured  Party  and to  grant  to it a first  priority
security  interest in certain  property of Company to secure the prompt payment,
performance  and  discharge  in full of all of Company's  obligations  under the
Debentures and exercise and discharge in full of Company's obligations under the
Warrants.

     NOW, THEREFORE, in consideration of the agreements herein contained and for
other good and valuable  consideration,  the receipt and sufficiency of which is
hereby acknowledged, the parties hereto hereby agree as follows:

     1. CERTAIN  DEFINITIONS.  As used in this  Agreement,  the following  terms
shall  have  the  meanings  set  forth in this  Section  1.  Terms  used but not
otherwise  defined in this  Agreement  that are  defined in Article 9 of the UCC
(such as  "general  intangibles"  and  "proceeds")  shall  have  the  respective
meanings given such terms in Article 9 of the UCC.

          (a)  "Collateral"  means the  collateral in which the Secured Party is
granted a security  interest  by this  Agreement  and which  shall  include  the
following,  whether presently owned or existing or hereafter  acquired or coming
into existence,  and all additions and accessions  thereto and all substitutions
and  replacements  thereof,  and all  proceeds,  products and accounts  thereof,
including,  without  limitation,  all proceeds  from the sale or transfer of the
Collateral  and of  insurance  covering  the  same  and of any  tort  claims  in
connection therewith:

               (i) All Goods of the Company, including, without limitations, all
          machinery, equipment, computers, motor vehicles, trucks, tanks, boats,
          ships,  appliances,  furniture,  special and general tools,  fixtures,
          test and quality control devices and other equipment of every kind and
          nature and wherever situated, together with all documents of title and
          documents representing the same, all

<PAGE>

          additions and accessions  thereto,  replacements  therefor,  all parts
          therefor,  and all  substitutes for any of the foregoing and all other
          items used and useful in connection with the Company's  businesses and
          all improvements thereto (collectively, the "Equipment"); and

               (ii) All Inventory of the Company; and

               (iii)  All  of  the   Company's   contract   rights  and  general
          intangibles, including, without limitation, all partnership interests,
          stock  or  other   securities,   licenses,   distribution   and  other
          agreements,  computer software development rights, leases, franchises,
          customer  lists,  quality  control  procedures,   grants  and  rights,
          goodwill,  trademarks,  service  marks,  trade  styles,  trade  names,
          patents, patent applications, copyrights, deposit accounts, and income
          tax refunds (collectively, the "General Intangibles"); and

               (iv) All  Receivables  of the  Company  including  all  insurance
          proceeds,  and rights to refunds or indemnification  whatsoever owing,
          together with all instruments, all documents of title representing any
          of the foregoing,  all rights in any merchandising,  goods, equipment,
          motor vehicles and trucks which any of the same may represent, and all
          right, title, security and guaranties with respect to each Receivable,
          including any right of stoppage in transit; and

               (v)  All of the  Company's  documents,  instruments  and  chattel
          paper, files,  records,  books of account,  business papers,  computer
          programs  and  the  products  and  proceeds  of all  of the  foregoing
          Collateral set forth in clauses (i)-(iv) above.

          (b)  "Company"  shall  mean,  collectively,  Company  and  all  of the
subsidiaries  of Company,  a list of which is contained in Schedule A,  attached
hereto.

          (c)  "Obligations"  means all of the Company's  obligations under this
Agreement and the Debentures,  in each case, whether now or hereafter  existing,
voluntary or involuntary, direct or indirect, absolute or contingent, liquidated
or  unliquidated,  whether or not jointly owed with  others,  and whether or not
from time to time  decreased or  extinguished  and later  decreased,  created or
incurred,  and all or any portion of such  obligations or  liabilities  that are
paid,  to the  extent all or any part of such  payment  is avoided or  recovered
directly  or  indirectly  from the  Secured  Party as a  preference,  fraudulent
transfer  or  otherwise  as  such  obligations  may  be  amended,  supplemented,
converted, extended or modified from time to time.

          (d) "UCC" means the Uniform Commercial Code, as currently in effect in
the State of New York.

     2. GRANT OF SECURITY  INTEREST.  As an inducement  for the Secured Party to
purchase  the  Debentures  and  to  secure  the  complete  and  timely  payment,
performance  and  discharge  in  full,  as  the  case  may  be,  of  all  of the
Obligations,  the Company  hereby,  unconditionally  and  irrevocably,  pledges,
grants and hypothecates to the Secured Party, a continuing security interest in,
a continuing first lien upon, an unqualified right to possession and disposition
of and a right

                                       2
<PAGE>

of set-off against,  in each case to the fullest extent permitted by law, all of
the Company's right,  title and interest of whatsoever kind and nature in and to
the Collateral (the "Security Interest").

     3.  REPRESENTATIONS,  WARRANTIES,  COVENANTS AND AGREEMENTS OF THE COMPANY.
The Company  represents  and warrants  to, and  covenants  and agrees with,  the
Secured Party as follows:

          (a) The Company has the  requisite  corporate  power and  authority to
enter into this Agreement and otherwise to carry out its obligations thereunder.
The execution, delivery and performance by the Company of this Agreement and the
filings  contemplated  therein have been duly authorized by all necessary action
on the part of the  Company and no further  action is  required by the  Company.
This Agreement  constitutes a legal, valid and binding obligation of the Company
enforceable  in  accordance  with its  terms,  except as  enforceability  may be
limited by bankruptcy,  insolvency,  reorganization,  moratorium or similar laws
affecting the enforcement of creditor's rights generally.

          (b) The  Company  represents  and  warrants  that it has no  place  of
business or offices where its  respective  books of account and records are kept
(other than  temporarily  at the offices of its  attorneys  or  accountants)  or
places where Collateral is stored or located,  except as set forth on Schedule A
attached hereto;

          (c) Except as provided on Schedule C, the Company is the sole owner of
the Collateral (except for non-exclusive  licenses granted by the Company in the
ordinary course of business),  free and clear of any liens,  security interests,
encumbrances,  rights or claims,  and is fully  authorized to grant the Security
Interest  in and to pledge the  Collateral.  Except as  provided  on Schedule C,
there is not on file in any  governmental  or  regulatory  authority,  agency or
recording office an effective financing statement,  security agreement,  license
or  transfer or any notice of any of the  foregoing  (other than those that have
been filed in favor of the Secured Party pursuant to this Agreement) covering or
affecting  any of the  Collateral.  Except as provided on Schedule C, so long as
this Agreement  shall be in effect,  the Company shall not execute and shall not
knowingly  permit to be on file in any such office or agency any such  financing
statement  or other  document  or  instrument  (except  to the  extent  filed or
recorded in favor of the Secured Party pursuant to the terms of this Agreement).

          (d) The Company  shall  promptly  take all steps  necessary  to pay or
discharge taxes, liens or any other encumbrances at any time levied on placed on
or threatened  against the  Collateral,  including but not limited to any taxes,
liens, security interests or encumbrances described in Schedule C.

          (e)  No  part  of  the   Collateral   has  been   judged   invalid  or
unenforceable.  No written claim has been  received  that any  Collateral or the
Company's use of any  Collateral  violates the rights of any third party.  There
has been no adverse  decision to the Company's  claim of ownership  rights in or
exclusive  rights to use the Collateral in any  jurisdiction or to the Company's
right to keep and maintain such  Collateral in full force and effect,  and there
is no proceeding  involving said rights pending or, to the best knowledge of the
Company,   threatened  before  any  court,  judicial  body,   administrative  or
regulatory agency, arbitrator or other governmental authority.

                                       3
<PAGE>

          (f) The Company  shall at all times  maintain its books of account and
records  relating to the  Collateral at its principal  place of business and its
Collateral at the locations set forth on Schedule A attached  hereto and may not
relocate  such books of account  and records or  tangible  Collateral  unless it
delivers  to the  Secured  Party at least 30 days prior to such  relocation  (i)
written notice of such  relocation  and the new location  thereof (which must be
within  the  United  States)  and  (ii)  evidence  that  appropriate   financing
statements and other necessary  documents have been filed and recorded and other
steps have been taken to perfect the Security Interest to create in favor of the
Secured  Party valid,  perfected  and  continuing  first  priority  liens in the
Collateral.

          (g) This  Agreement  creates  in favor  of the  Secured  Party a valid
security interest in the Collateral  securing the payment and performance of the
Obligations and, upon making the filings described in the immediately  following
sentence,  a perfected  first  priority  security  interest in such  Collateral.
Except for the filing of financing  statements  on Form-1 under the UCC with the
jurisdictions  indicated on Schedule B, attached  hereto,  no  authorization  or
approval of or filing with or notice to any governmental authority or regulatory
body  is  required  either  (i)  for  the  grant  by  the  Company  of,  or  the
effectiveness  of, the Security  Interest  granted  hereby or for the execution,
delivery  and  performance  of this  Agreement  by the  Company  or (ii) for the
perfection  of or  exercise  by the  Secured  Party of its rights  and  remedies
hereunder.

          (h) On the date of  execution  of this  Agreement,  the  Company  will
deliver to the Secured Party one or more  executed UCC  financing  statements on
Form-1 with respect to the Security  Interest for filing with the  jurisdictions
indicated on Schedule B, attached hereto and in such other  jurisdictions as may
be requested by the Secured Party.

          (i) The execution, delivery and performance of this Agreement does not
conflict with or cause a breach or default, or an event that with or without the
passage of time or  notice,  shall  constitute  a breach or  default,  under any
agreement  to which the Company is a party or by which the Company is bound.  No
consent (including,  without limitation,  from stock holders or creditors of the
Company) is required  for the Company to enter into and perform its  obligations
hereunder.

          (j) The Company  shall at all times  maintain  the liens and  Security
Interest  provided for hereunder as valid and perfected first priority liens and
security  interests in the  Collateral  in favor of the Secured Party until this
Agreement  and the  Security  Interest  hereunder  shall  terminate  pursuant to
Section 11. The  Company  hereby  agrees to defend the same  against any and all
persons.  The Company shall safeguard and protect all Collateral for the account
of the Secured Party. At the request of the Secured Party, the Company will sign
and  deliver to the  Secured  Party at any time or from time to time one or more
financing  statements  pursuant to the UCC (or any other applicable  statute) in
form  reasonably  satisfactory  to the  Secured  Party  and will pay the cost of
filing the same in all public  offices  wherever  filing is, or is deemed by the
Secured Party to be, necessary or desirable to effect the rights and obligations
provided for herein.  Without  limiting the  generality  of the  foregoing,  the
Company shall pay all fees,  taxes and other  amounts  necessary to maintain the
Collateral and the Security Interest hereunder, and the Company shall obtain and
furnish to the Secured Party from time to time, upon demand, such

                                       4
<PAGE>

releases  and/or  subordinations  of claims and liens  which may be  required to
maintain the priority of the Security Interest hereunder.

          (k) The Company  will not  transfer,  pledge,  hypothecate,  encumber,
license  (except  for  non-exclusive  licenses  granted  by the  Company  in the
ordinary course of business), sell or otherwise dispose of any of the Collateral
without the prior written consent of the Secured Party.

          (l) The Company shall keep and preserve its  Equipment,  Inventory and
other  tangible  Collateral  in good  condition,  repair and order and shall not
operate or locate any such  Collateral  (or cause to be  operated or located) in
any area excluded from insurance coverage.

          (m) The Company  shall,  within ten (10) days of  obtaining  knowledge
thereof,  advise the  Secured  Party  promptly,  in  sufficient  detail,  of any
substantial  change in the Collateral,  and of the occurrence of any event which
would have a material  adverse  effect on the value of the  Collateral or on the
Secured Party's security interest therein.

          (n) The  Company  shall  promptly  execute  and deliver to the Secured
Party such further deeds, mortgages, assignments, security agreements, financing
statements or other instruments, documents, certificates and assurances and take
such further  action as the Secured  Party may from time to time request and may
in its sole  discretion  deem  necessary  to  perfect,  protect or  enforce  its
security interest in the Collateral including, without limitation, the execution
and delivery of a separate  security  agreement  with  respect to the  Company's
intellectual property  ("Intellectual Property Security Agreement") in which the
Secured Party has been granted a security interest hereunder, substantially in a
form  acceptable to the Secured  Party,  which  Intellectual  Property  Security
Agreement,  other than as stated  therein,  shall be subject to all of the terms
and conditions hereof.

          (o) The Company shall permit the Secured Party and its representatives
and agents to inspect the  Collateral at any time, and to make copies of records
pertaining to the  Collateral as may be requested by the Secured Party from time
to time.

          (p) The Company will take all steps reasonably necessary to diligently
pursue and seek to preserve,  enforce and collect any rights,  claims, causes of
action and accounts receivable in respect of the Collateral.

          (q) The Company shall promptly  notify the Secured Party in sufficient
detail upon becoming aware of any  attachment,  garnishment,  execution or other
legal  process  levied  against  any  Collateral  and of any  other  information
received by the Company that may materially  affect the value of the Collateral,
the Security Interest or the rights and remedies of the Secured Party hereunder.

          (r) All information  heretofore,  herein or hereafter  supplied to the
Secured  Party by or on behalf of the Company with respect to the  Collateral is
accurate and complete in all material respects as of the date furnished.

          (s)  Schedule  A  attached  hereto  contains  a  list  of  all  of the
subsidiaries of Company.

                                       5
<PAGE>

     4. DEFAULTS. The following events shall be "Events of Default":

          (a)  The  occurrence  of an  Event  of  Default  (as  defined  in  the
Debentures) under the Debentures;

          (b) Any representation or warranty of the Company in this Agreement or
in the  Intellectual  Property  Security  Agreement  shall  prove  to have  been
incorrect in any material respect when made;

          (c) The  failure by the  Company  to  observe  or  perform  any of its
obligations hereunder or in the Intellectual Property Security Agreement for ten
(10) days  after  receipt  by the  Company  of notice of such  failure  from the
Secured Party; and

          (d) Any breach of, or default under, the Warrants.

     5. DUTY TO HOLD IN TRUST.  Upon the  occurrence of any Event of Default and
at any time  thereafter,  the Company shall,  upon receipt by it of any revenue,
income or other sums subject to the Security Interest,  whether payable pursuant
to the Debentures or otherwise,  or of any check,  draft, note, trade acceptance
or other instrument  evidencing an obligation to pay any such sum, hold the same
in trust for the Secured Party and shall forthwith endorse and transfer any such
sums or  instruments,  or both,  to the  Secured  Party for  application  to the
satisfaction of the Obligations.

     6.  RIGHTS AND  REMEDIES  UPON  DEFAULT.  Upon  occurrence  of any Event of
Default and at any time  thereafter,  the Secured  Party shall have the right to
exercise all of the remedies conferred  hereunder and under the Debentures,  and
the  Secured  Party shall have all the rights and  remedies  of a secured  party
under the UCC and/or any other applicable law (including the Uniform  Commercial
Code of any  jurisdiction  in which any  Collateral  is then  located).  Without
limitation, the Secured Party shall have the following rights and powers:

          (a) The Secured  Party shall have the right to take  possession of the
Collateral  and, for that  purpose,  enter,  with the aid and  assistance of any
person,  any premises where the  Collateral,  or any part thereof,  is or may be
placed and remove the same,  and the Company shall  assemble the  Collateral and
make it available to the Secured  Party at places which the Secured  Party shall
reasonably  select,  whether at the Company's  premises or  elsewhere,  and make
available to the Secured Party,  without rent,  all of the Company's  respective
premises and facilities  for the purpose of the Secured Party taking  possession
of, removing or putting the Collateral in saleable or disposable form.

          (b) The Secured  Party shall have the right to operate the business of
the Company using the Collateral and shall have the right to assign, sell, lease
or otherwise dispose of and deliver all or any part of the Collateral, at public
or private  sale or  otherwise,  either with or without  special  conditions  or
stipulations,  for cash or on credit or for future  delivery,  in such parcel or
parcels  and at such time or times and at such  place or  places,  and upon such
terms and conditions as the Secured Party may deem commercially reasonable,  all
without (except as shall be required by applicable statute and cannot be waived)
advertisement  or demand upon or notice to the Company or right of redemption of
the Company,  which are hereby  expressly  waived.  Upon each such sale,  lease,
assignment or other transfer of Collateral, the Secured Party may,

                                       6
<PAGE>

unless prohibited by applicable law which cannot be waived,  purchase all or any
part of the  Collateral  being  sold,  free from and  discharged  of all trusts,
claims, right of redemption and equities of the Company, which are hereby waived
and released.

     7. APPLICATIONS OF PROCEEDS.  The proceeds of any such sale, lease or other
disposition of the Collateral  hereunder shall be applied first, to the expenses
of retaking,  holding, storing,  processing and preparing for sale, selling, and
the like  (including,  without  limitation,  any  taxes,  fees and  other  costs
incurred  in  connection  therewith)  of  the  Collateral,   to  the  reasonable
attorneys'  fees and expenses  incurred by the Secured  Party in  enforcing  its
rights hereunder and in connection with collecting, storing and disposing of the
Collateral,  and then to satisfaction of the Obligations,  and to the payment of
any other  amounts  required by  applicable  law,  after which the Secured Party
shall pay to the  Company any surplus  proceeds.  If, upon the sale,  license or
other  disposition of the Collateral,  the proceeds  thereof are insufficient to
pay all amounts to which the Secured Party is legally entitled, the Company will
be liable for the deficiency, together with interest thereon, at the rate of 15%
per  annum  (the  "Default  Rate"),  and the  reasonable  fees of any  attorneys
employed  by the  Secured  Party  to  collect  such  deficiency.  To the  extent
permitted by applicable law, the Company waives all claims,  damages and demands
against the Secured Party arising out of the repossession, removal, retention or
sale of the Collateral, unless due to the gross negligence or willful misconduct
of the Secured Party.

     8. COSTS AND EXPENSES.  The Company agrees to pay all  out-of-pocket  fees,
costs and expenses  incurred in connection with any filing  required  hereunder,
including without limitation, any financing statements, continuation statements,
partial releases and/or  termination  statements related thereto or any expenses
of any searches reasonably required by the Secured Party. The Company shall also
pay all other claims and charges which in the reasonable  opinion of the Secured
Party  might  prejudice,  imperil  or  otherwise  affect the  Collateral  or the
Security  Interest  therein.  The Company  will also,  upon  demand,  pay to the
Secured  Party the  amount of any and all  reasonable  expenses,  including  the
reasonable fees and expenses of its counsel and of any experts and agents, which
the  Secured  Party may incur in  connection  with (i) the  enforcement  of this
Agreement, (ii) the custody or preservation of, or the sale of, collection from,
or other  realization  upon,  any of the  Collateral,  or (iii) the  exercise or
enforcement  of any of the rights of the  Secured  Party  under the  Debentures.
Until so paid, any fees payable hereunder shall be added to the principal amount
of the Debentures and shall bear interest at the Default Rate.

     9.  RESPONSIBILITY FOR COLLATERAL.  The Company assumes all liabilities and
responsibility  in connection  with all  Collateral,  and the obligations of the
Company  hereunder or under the  Debentures  and the Warrants shall in no way be
affected or  diminished by reason of the loss,  destruction,  damage or theft of
any of the Collateral or its unavailability for any reason.

     10.  SECURITY  INTEREST  ABSOLUTE.  All rights of the Secured Party and all
Obligations  of the  Company  hereunder,  shall be absolute  and  unconditional,
irrespective of: (a) any lack of validity or  enforceability  of this Agreement,
the  Debentures,  the Warrants or any agreement  entered into in connection with
the  foregoing,  or any portion  hereof or thereof;  (b) any change in the time,
manner or place of  payment or  performance  of, or in any other term of, all or
any of the  Obligations,  or any other  amendment or waiver of or any consent to
any departure from the Debentures,  the Warrants or any other agreement  entered
into  in  connection   with  the  foregoing;   (c)  any  exchange,   release  or
nonperfection of any of the Collateral, or any release or amendment

                                       7
<PAGE>

or waiver of or consent  to  departure  from any other  collateral  for,  or any
guaranty,  or any other  security,  for all or any of the  Obligations;  (d) any
action by the  Secured  Party to obtain,  adjust,  settle and cancel in its sole
discretion  any insurance  claims or matters made or arising in connection  with
the Collateral;  or (e) any other circumstance which might otherwise  constitute
any legal or equitable defense  available to the Company,  or a discharge of all
or any part of the Security Interest granted hereby. Until the Obligations shall
have been paid and  performed  in full,  the rights of the  Secured  Party shall
continue even if the Obligations are barred for any reason,  including,  without
limitation, the running of the statute of limitations or bankruptcy. The Company
expressly waives  presentment,  protest,  notice of protest,  demand,  notice of
nonpayment  and  demand  for  performance.  In the  event  that at any  time any
transfer  of any  Collateral  or any  payment  received  by  the  Secured  Party
hereunder shall be deemed by final order of a court of competent jurisdiction to
have been a voidable preference or fraudulent conveyance under the bankruptcy or
insolvency laws of the United States,  or shall be deemed to be otherwise due to
any party other than the Secured Party,  then, in any such event,  the Company's
obligations  hereunder shall survive  cancellation of this Agreement,  and shall
not be discharged or satisfied by any prior payment thereof and/or  cancellation
of this Agreement,  but shall remain a valid and binding obligation  enforceable
in accordance with the terms and provisions hereof. The Company waives all right
to require the Secured Party to proceed against any other person or to apply any
Collateral  which the Secured Party may hold at any time, or to marshal  assets,
or to pursue any other remedy.  The Company waives any defense arising by reason
of the  application  of the statute of  limitations  to any  obligation  secured
hereby.

     11. TERM OF  AGREEMENT.  This  Agreement  and the Security  Interest  shall
terminate on the date on which all payments under the Debentures  have been made
in full and all  other  Obligations  have  been  paid or  discharged.  Upon such
termination,  the  Secured  Party,  at the  request  and at the  expense  of the
Company,  will join in executing any  termination  statement with respect to any
financing statement executed and filed pursuant to this Agreement.

     12. POWER OF ATTORNEY; FURTHER ASSURANCES.

          (a) The Company  authorizes the Secured  Party,  and does hereby make,
constitute and appoint it, and its respective  officers,  agents,  successors or
assigns  with full  power of  substitution,  as the  Company's  true and  lawful
attorney-in-fact, with power, in its own name or in the name of the Company, to,
after the  occurrence  and during the  continuance  of an Event of Default,  (i)
endorse any notes, checks, drafts, money orders, or other instruments of payment
(including  payments  payable under or in respect of any policy of insurance) in
respect of the  Collateral  that may come into  possession of the Secured Party;
(ii) to sign and endorse any UCC financing statement or any invoice,  freight or
express bill,  bill of lading,  storage or warehouse  receipts,  drafts  against
debtors, assignments, verifications and notices in connection with accounts, and
other  documents  relating to the Collateral;  (iii) to pay or discharge  taxes,
liens,  security interests or other encumbrances at any time levied or placed on
or threatened  against the  Collateral;  (iv) to demand,  collect,  receipt for,
compromise,  settle and sue for monies due in respect of the Collateral; and (v)
generally,  to do, at the  option of the  Secured  Party,  and at the  Company's
expense,  at any  time,  or from  time to time,  all acts and  things  which the
Secured  Party  deems  necessary  to  protect,  preserve  and  realize  upon the
Collateral  and the  Security  Interest  granted  therein in order to effect the
intent of this  Agreement,  the  Debentures  and the Warrants,  all as fully and
effectually  as the Company might or could do; and the Company

                                       8
<PAGE>

hereby  ratifies all that said attorney shall lawfully do or cause to be done by
virtue  hereof.  This power of attorney is coupled with an interest and shall be
irrevocable  for the term of this Agreement and thereafter as long as any of the
Obligations shall be outstanding.

          (b)  On  a  continuing   basis,   the  Company  will  make,   execute,
acknowledge,  deliver, file and record, as the case may be, in the proper filing
and recording places in any jurisdiction,  including,  without  limitation,  the
jurisdictions  indicated on Schedule B, attached hereto,  all such  instruments,
and take all such action as may reasonably be deemed necessary or advisable,  or
as reasonably  requested by the Secured Party, to perfect the Security  Interest
granted  hereunder  and  otherwise  to carry out the intent and purposes of this
Agreement,  or for assuring  and  confirming  to the Secured  Party the grant or
perfection of a security interest in all the Collateral.

          (c) The Company hereby  irrevocably  appoints the Secured Party as the
Company's  attorney-in-fact,  with full  authority in the place and stead of the
Company and in the name of the Company, from time to time in the Secured Party's
discretion,  to take any action and to execute any instrument  which the Secured
Party may deem  necessary  or  advisable  to  accomplish  the  purposes  of this
Agreement,  including  the  filing,  in its  sole  discretion,  of  one or  more
financing or continuation statements and amendments thereto,  relative to any of
the Collateral without the signature of the Company where permitted by law.

     13.  NOTICES.  All  notices,  requests,  demands  and other  communications
hereunder shall be in writing,  with copies to all the other parties hereto, and
shall be deemed to have been duly  given  when (i) if  delivered  by hand,  upon
receipt,  (ii) if sent by facsimile,  upon receipt of proof of sending  thereof,
(iii) if sent by  nationally  recognized  overnight  delivery  service  (receipt
requested), the next business day or (iv) if mailed by first-class registered or
certified  mail,  return receipt  requested,  postage  prepaid,  four days after
posting in the U.S. mails, in each case if delivered to the following addresses:

     If to the Company:       Peabodys Coffee, Inc.
                              3845 Atherton Road
                              Suite 9
                              Rocklin, CA 95765
                              Attention:  Todd Tkachuk
                              Telephone:  916-632-6090
                              Facsimile:   916-632-6099

     With copies to:          Sichenzia Ross Friedman Ference LLP
                              1065 Avenue of the Americas, 21st Floor
                              New York, New York 10018
                              Attention:  Gregory Sichenzia, Esq.
                              Telephone:  (212) 930-9700
                              Facsimile:   (212) 930-9725

                                       9
<PAGE>

     If to the Secured Party: AJW Partners, LLC
                              AJW Offshore, Ltd.
                              AJW Qualified Partners, LLC
                              1044 Northern Boulevard
                              Suite 302
                              Roslyn, New York  11576
                              Attention:  Corey Ribotsky
                              Facsimile:  516-739-7115

                              With copies to:

                              Ballard Spahr Andrews & Ingersoll, LLP
                              1735 Market Street, 51st Floor
                              Philadelphia, Pennsylvania  19103
                              Attention:  Gerald J. Guarcini, Esq.
                              Facsimile: 215-864-8999

     14. OTHER SECURITY. To the extent that the Obligations are now or hereafter
secured by property other than the  Collateral or by the guarantee,  endorsement
or property of any other person,  firm,  corporation  or other entity,  then the
Secured  Party  shall  have  the  right,  in its  sole  discretion,  to  pursue,
relinquish,  subordinate,  modify or take any other action with respect thereto,
without in any way modifying or affecting any of the Secured  Party's rights and
remedies hereunder.

     15. MISCELLANEOUS.

          (a) No course of dealing  between the  Company and the Secured  Party,
nor any failure to  exercise,  nor any delay in  exercising,  on the part of the
Secured Party, any right,  power or privilege  hereunder or under the Debentures
shall operate as a waiver thereof;  nor shall any single or partial  exercise of
any right,  power or  privilege  hereunder or  thereunder  preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.

          (b) All of the rights and  remedies of the Secured  Party with respect
to the  Collateral,  whether  established  hereby or by the Debentures or by any
other agreements, instruments or documents or by law shall be cumulative and may
be exercised singly or concurrently.

          (c) This  Agreement  constitutes  the entire  agreement of the parties
with respect to the subject matter hereof and is intended to supersede all prior
negotiations,  understandings  and agreements  with respect  thereto.  Except as
specifically set forth in this Agreement,  no provision of this Agreement may be
modified or amended except by a written agreement specifically referring to this
Agreement and signed by the parties hereto.

          (d) In the event that any  provision  of this  Agreement is held to be
invalid,  prohibited or unenforceable in any jurisdiction for any reason, unless
such provision is narrowed by judicial construction, this Agreement shall, as to
such jurisdiction,  be construed as if such invalid, prohibited or unenforceable
provision  had been more narrowly  drawn so as not to be invalid,  prohibited or
unenforceable. If, notwithstanding the foregoing, any provision of this

                                       10
<PAGE>

Agreement  is  held  to  be  invalid,   prohibited  or   unenforceable   in  any
jurisdiction,  such provision, as to such jurisdiction,  shall be ineffective to
the  extent  of  such  invalidity,   prohibition  or  unenforceability   without
invalidating the remaining  portion of such provision or the other provisions of
this  Agreement  and without  affecting the validity or  enforceability  of such
provision or the other provisions of this Agreement in any other jurisdiction.

          (e) No  waiver of any  breach  or  default  or any  right  under  this
Agreement  shall be  considered  valid unless in writing and signed by the party
giving  such  waiver,  and no such  waiver  shall  be  deemed  a  waiver  of any
subsequent breach or default or right,  whether of the same or similar nature or
otherwise.

          (f) This  Agreement  shall be binding upon and inure to the benefit of
each party hereto and its successors and assigns.

          (g) Each party shall take such further  action and execute and deliver
such further  documents as may be necessary or appropriate in order to carry out
the provisions and purposes of this Agreement.

          (h) This Agreement  shall be construed in accordance  with the laws of
the  State of New  York,  except  to the  extent  the  validity,  perfection  or
enforcement  of a security  interest  hereunder  in  respect  of any  particular
Collateral which are governed by a jurisdiction other than the State of New York
in which case such law shall  govern.  Each of the  parties  hereto  irrevocably
submit to the  exclusive  jurisdiction  of any New York  State or United  States
Federal court sitting in Manhattan county over any action or proceeding  arising
out of or relating to this Agreement,  and the parties hereto hereby irrevocably
agree that all claims in respect of such action or  proceeding  may be heard and
determined  in such New York State or Federal  court.  The parties  hereto agree
that a final  judgment in any such action or proceeding  shall be conclusive and
may be enforced in other  jurisdictions  by suit on the judgment or in any other
manner  provided by law. The parties hereto further waive any objection to venue
in the State of New York and any  objection  to an action or  proceeding  in the
State of New York on the basis of forum non conveniens.

          (i) EACH PARTY HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE  RIGHTS TO
A JURY TRAIL OF ANY CLAIM OR CAUSE OF ACTION  BASED UPON OR ARISING  OUT OF THIS
AGREEMENT.  THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL  ENCOMPASSING  OF ANY
DISPUTES  THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATER OF
THIS AGREEMENT,  INCLUDING  WITHOUT  LIMITATION  CONTRACT  CLAIMS,  TORT CLAIMS,
BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.  EACH PARTY
HERETO  ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT FOR EACH PARTY TO
ENTER INTO A BUSINESS  RELATIONSHIP,  THAT EACH PARTY HAS ALREADY RELIED ON THIS
WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH PARTY WILL CONTINUE TO RELY
ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH PARTY FURTHER WARRANTS AND
REPRESENTS  THAT IT HAS REVIEWED  THIS WAIVER WITH ITS LEGAL  COUNSEL,  AND THAT
SUCH PARTY HAS KNOWINGLY AND VOLUNTARILY WAIVES ITS RIGHTS TO A JURY TRIAL

                                       11
<PAGE>

FOLLOWING  SUCH  CONSULTATION.   THIS  WAIVER  IS  IRREVOCABLE,   MEANING  THAT,
NOTWITHSTANDING  ANYTHING HEREIN TO THE CONTRARY,  IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT  AMENDMENTS,
RENEWALS AND SUPPLEMENTS OR MODIFICATIONS  TO THIS AGREEMENT.  IN THE EVENT OF A
LITIGATION,  THIS AGREEMENT MAY BE FILED AS A WRITTEN  CONSENT TO A TRIAL BY THE
COURT.

          (j) This Agreement may be executed in any number of counterparts, each
of which when so executed  shall be deemed to be an original  and,  all of which
taken together shall  constitute one and the same  Agreement.  In the event that
any  signature  is delivered by facsimile  transmission,  such  signature  shall
create a valid  binding  obligation  of the party  executing (or on whose behalf
such  signature is executed)  the same with the same force and effect as if such
facsimile signature were the original thereof.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       12
<PAGE>

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

                                        PEABODYS COFFEE, INC.

                                        By:  ___________________________________
                                             Todd N. Tkachuk
                                             President

                                        AJW PARTNERS, LLC
                                        By: SMS Group, LLC

                                        By:  ___________________________________
                                             Corey S. Ribotsky
                                             Manager

                                        AJW OFFSHORE, LTD.
                                        By:  First Street Manager II, LLC

                                        By:  ___________________________________
                                             Corey S. Ribotsky
                                             Manager

                                        AJW QUALIFIED PARTNERS, LLC
                                        By: AJW Manager, LLC

                                        By:  ___________________________________
                                             Corey S. Ribotsky
                                             Manager

                                      B-13
<PAGE>INTELLECTUAL PROPERTY SECURITY AGREEMENT

     Intellectual  Property  Security  Agreement (this  "Agreement"  dated as of
December 20, 2002,  by and among  Peabodys  Coffee,  Inc., a Nevada  corporation
(d/b/a Black Rhino Coffee) (the  "Company"),  and the secured parties  signatory
hereto and their respective  endorsees,  transferees and assigns  (collectively,
the "Secured Party").

                              W I T N E S S E T H :

     WHEREAS, pursuant to a Securities Purchase Agreement,  dated as of December
20,  2002  between  Company and the Secured  Party (the  "PURCHASE  AGREEMENT"),
Company  has  agreed to issue to the  Secured  Party and the  Secured  Party has
agreed to purchase  from Company  certain of Company's  10% Secured  Convertible
Debentures,  due one year from the date of issue (the  "DEBENTURES"),  which are
convertible  into shares of Company's  Common  Stock,  par value $.001 per share
(the "COMMON STOCK"). In connection  therewith,  Company shall issue the Secured
Party  certain  Common Stock  purchase  warrants  dated as of the date hereof to
purchase  the number of shares of Common  Stock  indicated  below  each  Secured
Party's name on the Purchase Agreement (the "WARRANTS"); and

     WHEREAS,  in order to induce the Secured Party to purchase the  Debentures,
Company has agreed to execute and  deliver to the Secured  Party this  Agreement
for the  benefit  of the  Secured  Party  and to  grant  to it a first  priority
security interest in certain Intellectual Property (defined below) of Company to
secure the prompt payment, performance and discharge in full of all of Company's
obligations under the Debentures and exercise and discharge in full of Company's
obligations under the Warrants; and

     NOW, THEREFORE, in consideration of the agreements herein contained and for
other good and valuable  consideration,  the receipt and sufficiency of which is
hereby acknowledged, the parties hereto hereby agree as follows:

     1. DEFINED TERMS. Unless otherwise defined herein,  terms which are defined
in the  Purchase  Agreement  and used herein are so used as so defined;  and the
following terms shall have the following meanings:

          "SOFTWARE INTELLECTUAL PROPERTY" shall mean:

          (a) all software programs  (including all source code, object code and
all related applications and data files), whether now owned, upgraded, enhanced,
licensed or leased or hereafter acquired by the Company, above;

          (b) all computers and electronic data processing hardware and firmware
associated therewith;

          (c) all documentation (including flow charts, logic diagrams, manuals,
guides and specifications) with respect to such software,  hardware and firmware
described in the preceding clauses (a) and (b); and

                                       13
<PAGE>

          (d)  all  rights  with  respect  to all of the  foregoing,  including,
without limitation, any and all upgrades,  modifications,  copyrights, licenses,
options,   warranties,   service  contracts,   program  services,  test  rights,
maintenance  rights,  support  rights,  improvement  rights,  renewal rights and
indemnifications   and   substitutions,   replacements,   additions,   or  model
conversions of any of the foregoing.

          "COPYRIGHTS"   shall  mean  (a)  all  copyrights,   registrations  and
applications  for  registration,   ISSUED  or  filed,  including  any  reissues,
extensions or renewals thereof, by or with the United States Copyright Office or
any similar  office or agency of the United States,  any state  thereof,  or any
other country or political  subdivision  thereof, or otherwise,  including,  all
rights  in  and  to  the  material  constituting  the  subject  matter  thereof,
including, without limitation, any referred to in SCHEDULE B hereto, and (b) any
rights in any material  which is  copyrightable  or which is protected by common
law,  United  States  copyright  laws or  similar  laws or any law of any State,
including, without limitation, any thereof referred to in SCHEDULE B hereto.

          "COPYRIGHT  LICENSE"  shall  mean  any  agreement,  written  or  oral,
providing for a grant by the Company of any right in any  Copyright,  including,
without limitation, any thereof referred to in SCHEDULE B hereto.

          "INTELLECTUAL  PROPERTY"  shall  means,  collectively,   the  Software
Intellectual Property, Copyrights, Copyright Licenses, Patents, Patent Licenses,
Trademarks, Trademark Licenses and Trade Secrets.

          "OBLIGATIONS"  means  all  of the  Company's  obligations  under  this
Agreement and the Debentures,  in each case, whether now or hereafter  existing,
voluntary or involuntary, direct or indirect, absolute or contingent, liquidated
or  unliquidated,  whether or not jointly owed with  others,  and whether or not
from time to time  decreased or  extinguished  and later  decreased,  created or
incurred,  and all or any portion of such  obligations or  liabilities  that are
paid,  to the  extent all or any part of such  payment  is avoided or  recovered
directly  or  indirectly  from the  Secured  Party as a  preference,  fraudulent
transfer  or  otherwise  as  such  obligations  may  be  amended,  supplemented,
converted, extended or modified from time to time.

          "PATENTS"  shall mean (a) all letters  patent of the United  States or
any other country or any  political  subdivision  thereof,  and all reissues and
extensions thereof,  including,  without limitation,  any thereof referred to in
SCHEDULE B hereto,  and (b) all  applications  for letters  patent of the United
States and all divisions, continuations and continuations-in-part thereof or any
other country or any political subdivision,  including,  without limitation, any
thereof referred to in SCHEDULE B hereto.

          "PATENT  LICENSE" shall mean all agreements,  whether written or oral,
providing for the grant by the Company of any right to manufacture,  use or sell
any invention covered by a Patent,  including,  without limitation,  any thereof
referred to in SCHEDULE B hereto.

          "SECURITY  AGREEMENT" shall mean the a Security  Agreement,  dated the
date hereof between Company and the Secured Party.

          "TRADEMARKS"  shall mean (a) all  trademarks,  trade names,  corporate
names, company names,  business names,  fictitious business names, trade styles,
service marks,

                                       2
<PAGE>

logos and other  source or business  identifiers,  and the  goodwill  associated
therewith,  now existing or hereafter adopted or acquired, all registrations and
recordings thereof, and all applications in connection therewith, whether in the
United States Patent and Trademark  Office or in any similar office or agency of
the  United  States,  any state  thereof or any other  country or any  political
subdivision thereof, or otherwise,  including,  without limitation,  any thereof
referred to in SCHEDULE B hereto,  and (b) all reissues,  extensions or renewals
thereof.

          "TRADEMARK  LICENSE"  shall  mean  any  agreement,  written  or  oral,
providing  for the  grant by the  Company  of any  right  to use any  Trademark,
including, without limitation, any thereof referred to in SCHEDULE B hereto.

          "TRADE  SECRETS" shall mean common law and statutory trade secrets and
all other  confidential  or proprietary or useful  information  and all know-how
obtained by or used in or  contemplated  at any time for use in the  business of
the Company (all of the foregoing being  collectively  called a "TRADE SECRET"),
whether or not such Trade Secret has been reduced to a writing or other tangible
form,  including all documents and things embodying,  incorporating or referring
in any way to such Trade Secret, all Trade Secret licenses, including each Trade
Secret license referred to in SCHEDULE B hereto,  and including the right to sue
for  and to  enjoin  and  to  collect  damages  for  the  actual  or  threatened
misappropriation  of any Trade Secret and for the breach or  enforcement  of any
such Trade Secret license.

     2. GRANT OF SECURITY  INTEREST.  In  accordance  with  Section  3(m) of the
Security Agreement,  to secure the complete and timely payment,  performance and
discharge in full,  as the case may be, of all of the  Obligations,  the Company
hereby, unconditionally and irrevocably, pledges, grants and hypothecates to the
Secured Party, a continuing  security interest in, a continuing first lien upon,
an  unqualified  right to possession  and  disposition of and a right of set-off
against,  in each  case  to the  fullest  extent  permitted  by law,  all of the
Company's right,  title and interest of whatsoever kind and nature in and to the
Intellectual Property (the "SECURITY INTEREST").

     3.  REPRESENTATIONS  AND  WARRANTIES.  The Company  hereby  represents  and
warrants, and covenants and agrees with, the Secured Party as follows:

          (a) The Company has the  requisite  corporate  power and  authority to
enter into this Agreement and otherwise to carry out its obligations thereunder.
The execution, delivery and performance by the Company of this Agreement and the
filings  contemplated  therein have been duly authorized by all necessary action
on the part of the  Company and no further  action is  required by the  Company.
This Agreement  constitutes a legal, valid and binding obligation of the Company
enforceable  in  accordance  with its  terms,  except as  enforceability  may be
limited by bankruptcy,  insolvency,  reorganization,  moratorium or similar laws
affecting the enforcement of creditor's rights generally.

          (b) The  Company  represents  and  warrants  that it has no  place  of
business or offices where its  respective  books of account and records are kept
(other than  temporarily  at the offices of its  attorneys  or  accountants)  or
places where the Intellectual Property is stored or located, except as set forth
on SCHEDULE A attached hereto;

                                       3
<PAGE>

          (c) Except as provided on SCHEDULE D, the Company is the sole owner of
the  Intellectual  Property  (except for  non-exclusive  licenses granted by the
Company  in the  ordinary  course of  business),  free and  clear of any  liens,
security interests,  encumbrances,  rights or claims, and is fully authorized to
grant the Security Interest in and to pledge the Intellectual  Property.  Except
as  provided  on  SCHEDULE  D,  there  is not on  file  in any  governmental  or
regulatory  authority,   agency  or  recording  office  an  effective  financing
statement,  security agreement,  license or transfer or any notice of any of the
foregoing  (other than those that have been filed in favor of the Secured  Party
pursuant  to this  Agreement)  covering  or  affecting  any of the  Intellectual
Property.  Except as provided on SCHEDULE D, so long as this Agreement  shall be
in effect, the Company shall not execute and shall not knowingly permit to be on
file in any such office or agency any such financing statement or other document
or  instrument  (except to the extent  filed or recorded in favor of the Secured
Party pursuant to the terms of this Agreement), except for a financing statement
covering assets acquired by the Company after the date hereof, provided that the
value of the  Intellectual  Property  covered by this  Agreement  along with the
Collateral  (as defined in the Security  Agreement) is equal to at least 150% of
the Obligations.

          (d) The Company  shall  promptly  take all steps  necessary  to pay or
discharge taxes, liens, security interests or any other encumbrances at any time
levied or placed on or threatened against the Intellectual  Property,  including
but not  limited  to only  taxes,  liens,  security  interests  or  encumbrances
described in SCHEDULE C.

          (e) The Company  shall at all times  maintain its books of account and
records relating to the Intellectual Property at its principal place of business
and its Intellectual  Property at the locations set forth on SCHEDULE A attached
hereto and may not relocate such books of account and records unless it delivers
to the  Secured  Party at least 30 days  prior to such  relocation  (i)  written
notice of such relocation and the new location thereof (which must be within the
United  States) and (ii) evidence that the necessary  documents  have been filed
and recorded and other steps have been taken to perfect the Security Interest to
create in favor of the Secured  Party  valid,  perfected  and  continuing  first
priority liens in the Intellectual  Property to the extent they can be perfected
through such filings.

          (f) This  Agreement  creates  in favor  of the  Secured  Party a valid
security  interest  in  the  Intellectual  Property  securing  the  payment  and
performance of the Obligations and, upon making the filings required  hereunder,
a perfected first priority security  interest in such  Intellectual  Property to
the extent that it can be perfected through such filings.

          (g) Upon request of the Secured  Party,  the Company shall execute and
deliver  any and all  agreements,  instruments,  documents,  and  papers  as the
Secured Party may request to evidence the Secured Party's  security  interest in
the  Intellectual  Property  and the  goodwill  and general  intangibles  of the
Company relating thereto or represented thereby, and the Company hereby appoints
the Secured Party its attorney-in-fact to execute and file all such writings for
the  foregoing  purposes,  all acts of such attorney  being hereby  ratified and
confirmed;  such power being coupled with an interest is  irrevocable  until the
Obligations have been fully satisfied and are paid in full.

          (h) The execution, delivery and performance of this Agreement does not
conflict with or cause a breach or default, or an event that with or without the
passage of time

                                       4
<PAGE>

or notice,  shall  constitute a breach or default,  under any agreement to which
the Company is a party or by which the Company is bound. No consent  (including,
without limitation,  from stock holders or creditors of the Company) is required
for the Company to enter into and perform its obligations hereunder.

          (i) The Company  shall at all times  maintain  the liens and  Security
Interest  provided for hereunder as valid and perfected first priority liens and
security  interests  in the  Intellectual  Property  to the  extent  they can be
perfected by filing in favor of the Secured  Party until this  Agreement and the
Security Interest  hereunder shall terminate pursuant to Section 11. The Company
hereby agrees to defend the same against any and all persons.  The Company shall
safeguard and protect all  Intellectual  Property for the account of the Secured
Party.  Without limiting the generality of the foregoing,  the Company shall pay
all  fees,  taxes and other  amounts  necessary  to  maintain  the  Intellectual
Property and the Security Interest  hereunder,  and the Company shall obtain and
furnish to the  Secured  Party from time to time,  upon  demand,  such  releases
and/or  subordinations of claims and liens which may be required to maintain the
priority of the Security Interest hereunder.

          (j) The Company  will not  transfer,  pledge,  hypothecate,  encumber,
license  (except  for  non-exclusive  licenses  granted  by the  Company  in the
ordinary  course  of  business),  sell  or  otherwise  dispose  of  any  of  the
Intellectual Property without the prior written consent of the Secured Party.

          (k) The Company  shall,  within ten (10) days of  obtaining  knowledge
thereof,  advise the  Secured  Party  promptly,  in  sufficient  detail,  of any
substantial  change in the Intellectual  Property,  and of the occurrence of any
event  which  would  have  a  material  adverse  effect  on  the  value  of  the
Intellectual Property or on the Secured Party's security interest therein.

          (l) The Company shall permit the Secured Party and its representatives
and agents to inspect the Intellectual  Property at any time, and to make copies
of records  pertaining to the  Intellectual  Property as may be requested by the
Secured Party from time to time.

          (m) The Company will take all steps reasonably necessary to diligently
pursue and seek to preserve,  enforce and collect any rights,  claims, causes of
action and accounts receivable in respect of the Intellectual Property.

          (n) The Company shall promptly  notify the Secured Party in sufficient
detail upon becoming aware of any  attachment,  garnishment,  execution or other
legal  process  levied  against  any  Intellectual  Property  and of  any  other
information  received by the Company that may materially affect the value of the
Intellectual  Property,  the Security Interest or the rights and remedies of the
Secured Party hereunder.

          (o) All information  heretofore,  herein or hereafter  supplied to the
Secured  Party by or on behalf of the Company with  respect to the  Intellectual
Property  is  accurate  and  complete  in all  material  respects as of the date
furnished.

          (p)  SCHEDULE  A  attached  hereto  contains  a  list  of  all  of the
subsidiaries of Company.

                                       5
<PAGE>

          (q) SCHEDULE B attached hereto includes all Licenses,  and all Patents
and Patent Licenses, if any, owned by the Company in its own name as of the date
hereof.  SCHEDULE B hereto also includes all Trademarks and Trademark  Licenses,
if any,  owned by the Company in its own name as of the date hereof.  SCHEDULE B
hereto  includes all  Copyrights  and Copyright  Licenses,  if any, owned by the
Company  in its own name as of the  date  hereof.  To the best of the  Company's
knowledge,  each License,  Patent, Trademark and Copyright is valid, subsisting,
unexpired,  enforceable  and has not  been  abandoned.  Except  as set  forth in
SCHEDULE B, none of such  Licenses,  Patents,  Trademarks  and Copyrights is the
subject of any  licensing or franchise  agreement.  To the best of the Company's
knowledge,   no  holding,   decision  or  judgment  has  been  rendered  by  any
Governmental  Body which would  limit,  cancel or question  the  validity of any
License,  Patent,  Trademark  or  Copyright.  Except as noted on  SCHEDULE B, no
action or  proceeding  is pending (i) seeking to limit,  cancel or question  the
validity of any License,  Patent,  Trademark  or  Copyright,  or (ii) which,  if
adversely  determined,  would have a material adverse effect on the value of any
License,  Patent, Trademark or Copyright. The Company has used and will continue
to use for the duration of this Agreement, proper statutory notice in connection
with its use of the Patents,  Trademarks and Copyrights and consistent standards
of  quality  in  products  leased or sold  under  the  Patents,  Trademarks  and
Copyrights.

          (r) With respect to any Intellectual Property:

               (i)  such  Intellectual  Property is subsisting  and has not been
                    adjudged invalid or unenforceable, in whole or in part;

               (ii) such Intellectual Property is valid and enforceable;

               (iii)the Company has made or will make all necessary  filings and
                    recordations  to protect its  interest in such  Intellectual
                    Property, including, without limitation, recordations of all
                    of its interests in the Patents, Patent Licenses, Trademarks
                    and  Trademark  Licenses  in the  United  States  Patent and
                    Trademark Office and in corresponding offices throughout the
                    world  and  its  claims  to  the  Copyrights  and  Copyright
                    Licenses  in  the  United  States  Copyright  Office  and in
                    corresponding offices throughout the world;

               (iv) other than as set forth in  SCHEDULE  B, the  Company is the
                    exclusive owner of the entire and unencumbered  right, title
                    and  interest in and to such  Intellectual  Property  and no
                    claim  has  been  made  that  the use of  such  Intellectual
                    Property  infringes  on the  asserted  rights  of any  third
                    party; and

               (v)  the Company has  performed  and will continue to perform all
                    acts and has paid all  required  fees and taxes to  maintain
                    each and every item of  Intellectual  Property in full force
                    and effect throughout the world, as applicable.

                                       6
<PAGE>

          (s) Except with respect to any Trademark or Copyright that the Company
shall reasonably  determine is of negligible economic value to the Company,  the
Company shall

               (i) maintain each Trademark and Copyright in full force free from
     any claim of abandonment  for non-use,  maintain as in the past the quality
     of products and services offered under such Trademark or Copyright;  employ
     such Trademark or Copyright with the  appropriate  notice of  registration;
     not  adopt or use any mark  which is  confusingly  similar  or a  colorable
     imitation of such  Trademark or  Copyright  unless the Secured  Party shall
     obtain  a  perfected  security  interest  in  such  mark  pursuant  to this
     Agreement;  and not (and not permit any licensee or sublicensee thereof to)
     do any act or  knowingly  omit  to do any  act  whereby  any  Trademark  or
     Copyright may become invalidated;

               (ii)  not,  except  with  respect  to any  Patent  that it  shall
     reasonably  determine is of negligible economic value to it, do any act, or
     omit to do any act,  whereby any Patent may become  abandoned or dedicated;
     and

               (iii) notify the Secured Party  immediately  if it knows,  or has
     reason  to know,  that any  application  or  registration  relating  to any
     Patent, Trademark or Copyright may become abandoned or dedicated, or of any
     adverse determination or development  (including,  without limitation,  the
     institution of, or any such determination or development in, any proceeding
     in the United States Patent and Trademark  Office,  United States Copyright
     Office or any court or tribunal in any country)  regarding its ownership of
     any Patent,  Trademark or Copyright or its right to register the same or to
     keep and maintain the same.

          (t)  Whenever  the  Company,  either by itself or  through  any agent,
employee,  licensee or designee,  shall file an application for the registration
of any  Patent,  Trademark  or  Copyright  with the  United  States  Patent  and
Trademark Office, United States Copyright Office or any similar office or agency
in any other country or any political  subdivision  thereof or acquire rights to
any new Patent,  Trademark or Copyright  whether or not registered,  report such
filing to the Secured  Party within five business days after the last day of the
fiscal quarter in which such filing occurs.

          (u) The  Company  shall  take  all  reasonable  and  necessary  steps,
including, without limitation, in any proceeding before the United States Patent
and Trademark  Office,  United States  Copyright Office or any similar office or
agency in any other country or any political  subdivision  thereof,  to maintain
and pursue each  application  (and to obtain the relevant  registration)  and to
maintain each registration of the Patents, Trademarks and Copyrights, including,
without  limitation,  filing of applications for renewal,  affidavits of use and
affidavits of incontestability.

          (v) In the event that any Patent,  Trademark or Copyright  included in
the Intellectual  Property is infringed,  misappropriated  or diluted by a third
party,  promptly  notify the Secured  Party  after it learns  thereof and shall,
unless it shall reasonably determine that such Patent, Trademark or Copyright is
of negligible economic value to it, which determination it

                                       7
<PAGE>

shall  promptly  report to the Secured  Party,  promptly  sue for  infringement,
misappropriation or dilution, to seek injunctive relief where appropriate and to
recover any and all damages for such infringement, misappropriation or dilution,
or take such other actions as it shall  reasonably  deem  appropriate  under the
circumstances  to protect such Patent,  Trademark or  Copyright.  If the Company
lacks the  financial  resources  to comply with this Section  3(t),  the Company
shall so notify the Secured Party and shall cooperate fully with any enforcement
action undertaken by the Secured Party on behalf of the Company.

     4.   DEFAULTS. The following events shall be "EVENTS OF DEFAULT":

          (a)  The  occurrence  of an  Event  of  Default  (as  defined  in  the
Debentures) under the Debentures;

          (b) Any representation or warranty of the Company in this Agreement or
in the  Security  Agreement  shall prove to have been  incorrect in any material
respect when made;

          (c) The  failure by the  Company  to  observe  or  perform  any of its
obligations  hereunder  or in the  Security  Agreement  for ten (10) days  after
receipt by the Company of notice of such failure from the Secured Party; and

          (d) Any breach of, or default under, the Warrants.

     5. DUTY TO HOLD IN TRUST.  Upon the  occurrence of any Event of Default and
at any time  thereafter,  the Company shall,  upon receipt by it of any revenue,
income or other sums subject to the Security Interest,  whether payable pursuant
to the Debentures or otherwise,  or of any check,  draft, note, trade acceptance
or other instrument  evidencing an obligation to pay any such sum, hold the same
in trust for the Secured Party and shall forthwith endorse and transfer any such
sums or  instruments,  or both,  to the  Secured  Party for  application  to the
satisfaction of the Obligations.

     6.  RIGHTS AND  REMEDIES  UPON  DEFAULT.  Upon  occurrence  of any Event of
Default and at any time  thereafter,  the Secured  Party shall have the right to
exercise all of the remedies conferred  hereunder and under the Debentures,  and
the  Secured  Party shall have all the rights and  remedies  of a secured  party
under the UCC and/or any other applicable law (including the Uniform  Commercial
Code of any  jurisdiction in which any  Intellectual  Property is then located).
Without  limitation,  the  Secured  Party  shall have the  following  rights and
powers:

          (a) The Secured  Party shall have the right to take  possession of the
Intellectual Property and, for that purpose,  enter, with the aid and assistance
of any  person,  any  premises  where  the  Intellectual  Property,  or any part
thereof, is or may be placed and remove the same, and the Company shall assemble
the  Intellectual  Property and make it available to the Secured Party at places
which the  Secured  Party  shall  reasonably  select,  whether at the  Company's
premises or elsewhere,  and make available to the Secured  Party,  without rent,
all of the Company's  respective  premises and facilities for the purpose of the
Secured  Party  taking  possession  of,  removing  or putting  the  Intellectual
Property in saleable or disposable form.

                                       8
<PAGE>

          (b) The Secured  Party shall have the right to operate the business of
the Company using the Intellectual  Property and shall have the right to assign,
sell,  lease  or  otherwise  dispose  of and  deliver  all or  any  part  of the
Intellectual  Property,  at public or private sale or otherwise,  either with or
without special conditions or stipulations,  for cash or on credit or for future
delivery,  in such parcel or parcels and at such time or times and at such place
or places,  and upon such terms and  conditions  as the  Secured  Party may deem
commercially reasonable,  all without (except as shall be required by applicable
statute  and cannot be  waived)  advertisement  or demand  upon or notice to the
Company  or right of  redemption  of the  Company,  which are  hereby  expressly
waived. Upon each such sale, lease, assignment or other transfer of Intellectual
Property,  the Secured Party may,  unless  prohibited  by  applicable  law which
cannot be waived,  purchase all or any part of the  Intellectual  Property being
sold,  free from and discharged of all trusts,  claims,  right of redemption and
equities of the Company, which are hereby waived and released.

     7. APPLICATIONS OF PROCEEDS.  The proceeds of any such sale, lease or other
disposition of the  Intellectual  Property  hereunder shall be applied first, to
the expenses of retaking,  holding, storing,  processing and preparing for sale,
selling, and the like (including,  without limitation, any taxes, fees and other
costs incurred in connection  therewith) of the  Intellectual  Property,  to the
reasonable  attorneys'  fees  and  expenses  incurred  by the  Secured  Party in
enforcing its rights  hereunder and in connection with  collecting,  storing and
disposing  of  the  Intellectual  Property,  and  then  to  satisfaction  of the
Obligations, and to the payment of any other amounts required by applicable law,
after which the Secured Party shall pay to the Company any surplus proceeds. If,
upon the sale,  license or other disposition of the Intellectual  Property,  the
proceeds  thereof are insufficient to pay all amounts to which the Secured Party
is legally  entitled,  the Company will be liable for the  deficiency,  together
with interest  thereon,  at the rate of 15% per annum (the "DEFAULT RATE"),  and
the  reasonable  fees of any attorneys  employed by the Secured Party to collect
such  deficiency.  To the extent permitted by applicable law, the Company waives
all claims,  damages and demands  against the Secured  Party  arising out of the
repossession,  removal,  retention or sale of the Intellectual Property,  unless
due to the gross negligence or willful misconduct of the Secured Party.

     8. COSTS AND EXPENSES.  The Company agrees to pay all  out-of-pocket  fees,
costs and expenses  incurred in connection with any filing  required  hereunder,
including without limitation, any financing statements, continuation statements,
partial releases and/or  termination  statements related thereto or any expenses
of any searches reasonably required by the Secured Party. The Company shall also
pay all other claims and charges which in the reasonable  opinion of the Secured
Party might prejudice,  imperil or otherwise affect the Intellectual Property or
the Security  Interest therein.  The Company will also, upon demand,  pay to the
Secured  Party the  amount of any and all  reasonable  expenses,  including  the
reasonable fees and expenses of its counsel and of any experts and agents, which
the  Secured  Party may incur in  connection  with (i) the  enforcement  of this
Agreement, (ii) the custody or preservation of, or the sale of, collection from,
or other  realization  upon,  any of the  Intellectual  Property,  or (iii)  the
exercise  or  enforcement  of any of the rights of the  Secured  Party under the
Debentures.  Until so paid,  any fees  payable  hereunder  shall be added to the
principal amount of the Debentures and shall bear interest at the Default Rate.

                                       9
<PAGE>

     9.  RESPONSIBILITY  FOR  INTELLECTUAL  PROPERTY.  The  Company  assumes all
liabilities and responsibility in connection with all Intellectual Property, and
the  obligations  of the  Company  hereunder  or under  the  Debentures  and the
Warrants  shall in no way be  affected  or  diminished  by  reason  of the loss,
destruction,  damage  or  theft  of  any  of the  Intellectual  Property  or its
unavailability for any reason.

     10.  SECURITY  INTEREST  ABSOLUTE.  All rights of the Secured Party and all
Obligations  of the  Company  hereunder,  shall be absolute  and  unconditional,
irrespective of: (a) any lack of validity or  enforceability  of this Agreement,
the  Debentures,  the Warrants or any agreement  entered into in connection with
the  foregoing,  or any portion  hereof or thereof;  (b) any change in the time,
manner or place of  payment or  performance  of, or in any other term of, all or
any of the  Obligations,  or any other  amendment or waiver of or any consent to
any departure from the Debentures,  the Warrants or any other agreement  entered
into  in  connection   with  the  foregoing;   (c)  any  exchange,   release  or
nonperfection of any of the Intellectual  Property,  or any release or amendment
or waiver of or consent to departure from any other  Intellectual  Property for,
or any guaranty, or any other security,  for all or any of the Obligations;  (d)
any action by the Secured Party to obtain, adjust, settle and cancel in its sole
discretion  any insurance  claims or matters made or arising in connection  with
the Intellectual  Property;  or (e) any other circumstance which might otherwise
constitute  any  legal or  equitable  defense  available  to the  Company,  or a
discharge of all or any part of the Security Interest granted hereby.  Until the
Obligations  shall  have  been paid and  performed  in full,  the  rights of the
Secured Party shall continue even if the  Obligations are barred for any reason,
including,  without  limitation,  the running of the statute of  limitations  or
bankruptcy.  The  Company  expressly  waives  presentment,  protest,  notice  of
protest,  demand, notice of nonpayment and demand for performance.  In the event
that at any  time any  transfer  of any  Intellectual  Property  or any  payment
received  by the  Secured  Party  hereunder  shall be deemed by final order of a
court of competent jurisdiction to have been a voidable preference or fraudulent
conveyance  under the  bankruptcy or insolvency  laws of the United  States,  or
shall be deemed to be otherwise  due to any party other than the Secured  Party,
then,  in any such event,  the  Company's  obligations  hereunder  shall survive
cancellation of this Agreement,  and shall not be discharged or satisfied by any
prior payment thereof and/or cancellation of this Agreement,  but shall remain a
valid  and  binding  obligation  enforceable  in  accordance  with the terms and
provisions  hereof. The Company waives all right to require the Secured Party to
proceed against any other person or to apply any Intellectual Property which the
Secured Party may hold at any time, or to marshal assets, or to pursue any other
remedy.  The Company waives any defense  arising by reason of the application of
the statute of limitations to any obligation secured hereby.

     11. TERM OF  AGREEMENT.  This  Agreement  and the Security  Interest  shall
terminate on the date on which all payments under the Debentures  have been made
in full and all  other  Obligations  have  been  paid or  discharged.  Upon such
termination,  the  Secured  Party,  at the  request  and at the  expense  of the
Company,  will join in executing any  termination  statement with respect to any
financing statement executed and filed pursuant to this Agreement.

     12.  POWER OF ATTORNEY; FURTHER ASSURANCES.

          (a) The Company  authorizes the Secured  Party,  and does hereby make,
constitute and appoint it, and its respective  officers,  agents,  successors or
assigns with full

                                       10
<PAGE>

power of substitution,  as the Company's true and lawful attorney-in-fact,  with
power,  in its own name or in the name of the Company,  to, after the occurrence
and  during the  continuance  of an Event of  Default,  (i)  endorse  any notes,
checks,  drafts,  money  orders,  or other  instruments  of  payment  (including
payments  payable  under or in respect of any policy of insurance) in respect of
the  Intellectual  Property that may come into  possession of the Secured Party;
(ii) to sign and endorse any UCC financing statement or any invoice,  freight or
express bill,  bill of lading,  storage or warehouse  receipts,  drafts  against
debtors, assignments, verifications and notices in connection with accounts, and
other documents relating to the Intellectual Property; (iii) to pay or discharge
taxes,  liens,  security  interests or other  encumbrances at any time levied or
placed on or  threatened  against  the  Intellectual  Property;  (iv) to demand,
collect,  receipt for,  compromise,  settle and sue for monies due in respect of
the  Intellectual  Property;  and (v)  generally,  to do,  at the  option of the
Secured Party, and at the Company's expense,  at any time, or from time to time,
all acts and things which the Secured Party deems necessary to protect, preserve
and realize upon the  Intellectual  Property and the Security  Interest  granted
therein in order to effect the intent of this Agreement,  the Debentures and the
Warrants, all as fully and effectually as the Company might or could do; and the
Company hereby  ratifies all that said attorney shall lawfully do or cause to be
done by virtue  hereof.  This power of attorney is coupled  with an interest and
shall be  irrevocable  for the term of this  Agreement and thereafter as long as
any of the Obligations shall be outstanding.

          (b)  On  a  continuing   basis,   the  Company  will  make,   execute,
acknowledge,  deliver, file and record, as the case may be, in the proper filing
and recording places in any jurisdiction,  including,  without  limitation,  the
jurisdictions  indicated on SCHEDULE C, attached hereto,  all such  instruments,
and take all such action as may reasonably be deemed necessary or advisable,  or
as reasonably  requested by the Secured Party, to perfect the Security  Interest
granted  hereunder  and  otherwise  to carry out the intent and purposes of this
Agreement,  or for assuring  and  confirming  to the Secured  Party the grant or
perfection of a security interest in all the Intellectual Property.

          (c) The Company hereby  irrevocably  appoints the Secured Party as the
Company's  attorney-in-fact,  with full  authority in the place and stead of the
Company and in the name of the Company, from time to time in the Secured Party's
discretion,  to take any action and to execute any instrument  which the Secured
Party may deem  necessary  or  advisable  to  accomplish  the  purposes  of this
Agreement,  including  the  filing,  in its  sole  discretion,  of  one or  more
financing or continuation statements and amendments thereto,  relative to any of
the  Intellectual  Property without the signature of the Company where permitted
by law.

     13.  NOTICES.  All  notices,  requests,  demands  and other  communications
hereunder shall be in writing,  with copies to all the other parties hereto, and
shall be deemed to have been duly  given  when (i) if  delivered  by hand,  upon
receipt,  (ii) if sent by facsimile,  upon receipt of proof of sending  thereof,
(iii) if sent by  nationally  recognized  overnight  delivery  service  (receipt
requested), the next business day or (iv) if mailed by first-class registered or
certified  mail,  return receipt  requested,  postage  prepaid,  four days after
posting in the U.S. mails, in each case if delivered to the following addresses:

                                       11
<PAGE>

     If to the Company:         Peabodys Coffee, Inc.
                                3845 Atherton Road
                                Suite 9
                                Rocklin, CA 95765
                                Attention:  Todd Tkachuk
                                Telephone:  916-632-6090
                                Facsimile:   916-632-6099

     With copies to:            Sichenzia Ross Friedman Ference LLP
                                1065 Avenue of the Americas, 21st Floor
                                New York, New York 10018
                                Attention:  Gregory Sichenzia, Esq.
                                Telephone:  212-930-9700
                                Facsimile:   212-930-9725

     If to the Secured Party:   AJW Partners, LLC

                                AJW Offshore, Ltd.
                                AJW Qualified Partners, LLC
                                1044 Northern Boulevard
                                Suite 302
                                Roslyn, New York  11576
                                Attention:  Corey Ribotsky
                                Facsimile:  516-739-7115

     With copies to:            Ballard Spahr Andrews & Ingersoll, LLP
                                1735 Market Street, 51st Floor
                                Philadelphia, Pennsylvania  19103
                                Attention:  Gerald J. Guarcini, Esquire
                                Facsimile: 215-864-8999

     14. OTHER SECURITY. To the extent that the Obligations are now or hereafter
secured by property  other than the  Intellectual  Property or by the guarantee,
endorsement or property of any other person, firm,  corporation or other entity,
then the Secured Party shall have the right, in its sole discretion,  to pursue,
relinquish,  subordinate,  modify or take any other action with respect thereto,
without in any way modifying or affecting any of the Secured  Party's rights and
remedies hereunder.

     15.  MISCELLANEOUS.

          (a) No course of dealing  between the  Company and the Secured  Party,
nor any failure to  exercise,  nor any delay in  exercising,  on the part of the
Secured Party, any right,  power or privilege  hereunder or under the Debentures
shall operate as a waiver thereof;  nor shall any single or partial  exercise of
any right,  power or  privilege  hereunder or  thereunder  preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.

                                       12
<PAGE>

          (b) All of the rights and  remedies of the Secured  Party with respect
to the Intellectual Property, whether established hereby or by the Debentures or
by any other agreements,  instruments or documents or by law shall be cumulative
and may be exercised singly or concurrently.

          (c) This  Agreement and the Security  Agreement  constitute the entire
agreement  of the  parties  with  respect to the  subject  matter  hereof and is
intended to supersede all prior negotiations, understandings and agreements with
respect  thereto.  Except  as  specifically  set  forth  in this  Agreement,  no
provision  of this  Agreement  may be  modified  or amended  except by a written
agreement  specifically  referring to this  Agreement  and signed by the parties
hereto.

          (d) In the event that any  provision  of this  Agreement is held to be
invalid,  prohibited or unenforceable in any jurisdiction for any reason, unless
such provision is narrowed by judicial construction, this Agreement shall, as to
such jurisdiction,  be construed as if such invalid, prohibited or unenforceable
provision  had been more narrowly  drawn so as not to be invalid,  prohibited or
unenforceable.   If,  notwithstanding  the  foregoing,  any  provision  of  this
Agreement  is  held  to  be  invalid,   prohibited  or   unenforceable   in  any
jurisdiction,  such provision, as to such jurisdiction,  shall be ineffective to
the  extent  of  such  invalidity,   prohibition  or  unenforceability   without
invalidating the remaining  portion of such provision or the other provisions of
this  Agreement  and without  affecting the validity or  enforceability  of such
provision or the other provisions of this Agreement in any other jurisdiction.

          (e) No  waiver of any  breach  or  default  or any  right  under  this
Agreement  shall be  considered  valid unless in writing and signed by the party
giving  such  waiver,  and no such  waiver  shall  be  deemed  a  waiver  of any
subsequent breach or default or right,  whether of the same or similar nature or
otherwise.

          (f) This  Agreement  shall be binding upon and inure to the benefit of
each party hereto and its successors and assigns.

          (g) Each party shall take such further  action and execute and deliver
such further  documents as may be necessary or appropriate in order to carry out
the provisions and purposes of this Agreement.

          (h) This Agreement  shall be construed in accordance  with the laws of
the  State of New  York,  except  to the  extent  the  validity,  perfection  or
enforcement  of a security  interest  hereunder  in  respect  of any  particular
Intellectual  Property which are governed by a jurisdiction other than the State
of New York in which  case such law shall  govern.  Each of the  parties  hereto
irrevocably submit to the exclusive jurisdiction of any New York State or United
States  Federal court sitting in Manhattan  county over any action or proceeding
arising out of or  relating to this  Agreement,  and the parties  hereto  hereby
irrevocably agree that all claims in respect of such action or proceeding may be
heard and determined in such New York State or Federal court. The parties hereto
agree that a final judgment in any such action or proceeding shall be conclusive
and may be enforced  in other  jurisdictions  by suit on the  judgment or in any
other manner  provided by law. The parties hereto further waive any objection to
venue in the State of New York and any  objection to an action or  proceeding in
the State of New York on the basis of forum non conveniens.

                                       13
<PAGE>

          (i) EACH PARTY HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE  RIGHTS TO
A JURY TRAIL OF ANY CLAIM OR CAUSE OF ACTION  BASED UPON OR ARISING  OUT OF THIS
AGREEMENT.  THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL  ENCOMPASSING  OF ANY
DISPUTES  THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATER OF
THIS AGREEMENT,  INCLUDING  WITHOUT  LIMITATION  CONTRACT  CLAIMS,  TORT CLAIMS,
BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.  EACH PARTY
HERETO  ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT FOR EACH PARTY TO
ENTER INTO A BUSINESS  RELATIONSHIP,  THAT EACH PARTY HAS ALREADY RELIED ON THIS
WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH PARTY WILL CONTINUE TO RELY
ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH PARTY FURTHER WARRANTS AND
REPRESENTS  THAT IT HAS REVIEWED  THIS WAIVER WITH ITS LEGAL  COUNSEL,  AND THAT
SUCH  PARTY HAS  KNOWINGLY  AND  VOLUNTARILY  WAIVES  ITS RIGHTS TO A JURY TRIAL
FOLLOWING  SUCH  CONSULTATION.   THIS  WAIVER  IS  IRREVOCABLE,   MEANING  THAT,
NOTWITHSTANDING  ANYTHING HEREIN TO THE CONTRARY,  IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT  AMENDMENTS,
RENEWALS AND SUPPLEMENTS OR MODIFICATIONS  TO THIS AGREEMENT.  IN THE EVENT OF A
LITIGATION,  THIS AGREEMENT MAY BE FILED AS A WRITTEN  CONSENT TO A TRIAL BY THE
COURT.

          (j) This Agreement may be executed in any number of counterparts, each
of which when so executed  shall be deemed to be an original  and,  all of which
taken together shall  constitute one and the same  Agreement.  In the event that
any  signature  is delivered by facsimile  transmission,  such  signature  shall
create a valid  binding  obligation  of the party  executing (or on whose behalf
such  signature is executed)  the same with the same force and effect as if such
facsimile signature were the original thereof.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       14
<PAGE>

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

                                        PEABODYS COFFEE, INC.

                                        By:___________________________________
                                            Todd N. Tkachuk
                                            President

                                        AJW PARTNERS, LLC
                                        By: SMS Group, LLC

                                        By:___________________________________
                                            Corey S. Ribotsky
                                            Manager

                                        AJW OFFSHORE, LTD.
                                        By:  First Street Manager II, LLC

                                        By:___________________________________
                                            Corey S. Ribotsky
                                            Manager

                                        AJW QUALIFIED PARTNERS, LLC
                                        By:  AJW Manager, LLC

                                        By:___________________________________
                                            Corey S. Ribotsky
                                            Manager

<PAGE>

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00046-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00046-of-00352.parquet"}]]